9911796707
TMI Blog2025 (3) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case and in law, the re-assessment order passed u/s 147 is bad in law, since the order u/s 148A(d) and notice u/s 148 had been issued by jurisdictional Assessing Officer (JAO) and had not been issued by the Faceless Assessing Officer (FAO), thereby violating the provision of Sec. 151A of the Act. 2.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the validity of notice u/s 148, though issued without following the procedure prescribed u/s 148A and in absence of information that suggests the income chargeable to tax has escaped assessment. 3.0 On facts and circumstances of the case and in law, Ld.CIT(A), without any justification and speaking order, erred in confirming the rejection of appellant's books of account u/s 145(3) of the Act. 4.0 On facts and circumstances of the case and in law, Ld.CIT(A) erred in confirming the estimation of income of Rs. 3,15,32,571/- @ 10% of entire purchase and sales turnover disclosed in audited P&L a/c of Rs. 31.53 crores (purchases of 15.43 crores + sales of Rs. 16.09 crores). 5.0 The Ld.CIT(A) before confirming the addition u/s 28 of business income of Rs. 3,15,32,571/- ought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation that assessee entered into bogus sales and purchase transaction during financial year i.e., 2019-20. Thus, AO issued show cause notice under section 148A(b) of the Act vide notice issued on 15.03.2022. The AO in para-2 of the assessment order recorded that notice under section 148 of the Act dated 29.03.2022 was issued to file return of income within 30 days. The assessee filed his return of income in response to notice under section 148 on 28.04.2022. Notice under section 143(2) dated 28.09.2022 was issued and served on the assessee. The AO recorded that notice under section 142(1) dated 22.10.2022 was also issued to the assessee for making compliance on 25.10.2022, the assessee sought adjournment and part reply was given and remaining details were furnished on 23.11.2022. Show cause notice, dated 22.03.2023 was again issued for making compliance on 28.02.2023. The assessee filed his response on 28.02.20023. The AO further recorded that as per information with him the assessee entered into bogus sales and transaction with eight parties/entities, details thereof is recorded in para-4.6 in assessment order. The AO recorded nature and transaction against such parties either in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d various documentary evidence to justify the genuineness of purchase and sales of goods (diamond) and profit earned thereon. The assessee furnished copies of purchase bills, sale bills, ledger, confirmation, bank statements regarding purchase and sale registers, quantitative tally, stock register, GST report and other documents to justify the genuineness of purchase and sales of goods and profit earned thereon. The assessee also submitted copy of PAN, ITR, bank statement of disputed parties. The assessee submitted that there are corresponding sales against disputed purchase of goods, once sale is accepted as genuine then addition on entire purchase cannot be made and only a reasonable profit on disputed purchases could be brought to tax. In similar manner, there is corresponding purchase against disputed sales of goods and once the purchase is accepted as genuine then addition of entire sale cannot be made and only reasonable profit on disputed sales could be brought to tax. The assessee also submitted that entire payments made or received through banking channel or account payee cheques or through RTGS. All transactions are recorded in audited books of account. The assessee deman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t disproved the correctness of such documents and has not pointed out any single defects in such documents. The AO except raising doubt has not brought any contrary material on record to disbelieve the bona fide transaction of the assessee. The AO erred in rejecting the books of account under section 145(3) of the Act and in making estimation @10% profit as business income on purchase as well as sales turnover. The assessee furnished complete evidence to substantiate the purchase and sales which includes purchase bills, sale bills, ledger, confirmations, bank statements, quantitative tally, stock register, GST returns and other documents during assessment and discharged onus to establish the genuineness in purchase and sale. The assessee also filed copy with GST returns filed periodically. The GST Department had not disputed the correctness of purchase and sales on which CGST, SGST & IGST were paid, all transactions were made through banking channel and no opportunity of cross-examination was provided nor any contrary material available with the AO was provided to assessee. To support such contention, assessee relied upon the decision of Hon'ble Supreme Court in the case of Andaman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suppliers and customers were also furnished which is scanned on pages 24 of the impugned order. The Ld. CIT(A) held that on the sheet of sales and purchase there is no signature of assessee, further confirmations of parties were not filed. The Ld. CIT(A) further noted that supplier replied to the notice under section 133(6) and confirmation of the transaction with supporting evidence was not filed. The AO made reference to Verification Unit, report of Verification Unit was also scanned by Ld. CIT(A) in his order. The Ld. CIT(A) ultimately held that during appellate proceedings, assessee has not filed any confirmation nor submitted any ledger to justify such transaction. Case relied upon by assess is not similar to the facts and circumstances of the case of assessee and confirmed the action of AO. Further, aggrieved the assessee has filed present appeal before Tribunal. 8. We have heard the rival submissions of both the parties and have gone through order of lower authorities carefully. First, we are considering the plea of admission of additional grounds of appeal. The Ld Authorized Representative (Ld. AR) for the assessee submits that he is not pressing ground No.1 raised origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 148A(d) is also filed on record. The ld AR of the assessee submits that the AO has not followed the mandate of procedure for issuing notice under section 148, thus, order under section 148A(d) as well as notice under section 148 is liable to be quashed. Once notice under section 148 is quashed entire proceedings will become void-ab-initio. To support his submissions, the ld AR of the assessee relied on the following case laws; * Kanishka Prints Pvt Limited Vs ACIT (2024) 163 taxmann.com 178 (Guj), * Shell Gas BV Vs ACIT (2024) 164 taxmann.com 555 (Guj), * Hardev Singh Vs ITO (2022) 140 taxmann.com 67 (Delhi), * Anu Gupta Vs ITO (2023) 153 taxmann.com 99 (Delhi), * Meenu Chaufla Vs ITO (2022) 139 taxmann.com 170 (Delhi). 12. On the other hand, Ld. CIT-DR for the Revenue supported the order of lower authorities. Against the submissions on additional ground of appeal, the ld Sr DR for the revenue submits that before passing order under section 148A(d), the AO had given sufficient opportunity to the assessee. As per order under section 148A(d) no reply was given by the assessee, thus, the AO has no option except to pass order within the time frame prescribed in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have already dismissed. Therefore, this ground of appeal is also dismissed. 16. Ground No.3 relates to rejection of books of account, Ground No.4 and 5 relates to estimation of income @ 10% of entire purchases and sales. The ld. AR of the assessee submits that case of assessee was re-opened after passing assessment order under section 148A(d) on 28.03.2022. The AO at the time of re-opening of the case, recorded that assessee is beneficiary of sales and purchases from 10 parties aggregating of Rs. 11.86 crore. However, at the time of passing assessment order, the AO considered entire sales and purchases for making disallowance, which was not the case of AO at the time of re-opening. The AO has not disputed the sales or purchases. The book profit of assessee was not doubted. The AO simply rejected the books of account without recording any satisfaction as to how the books result is not correct. The AO acted on the basis of report of Verification Unit. By referring the contents of report of Verification Unit, the ld. AR of the assessee submits that for Paradise Gems Pvt. Ltd. and Namo Diamonds Pvt. Ltd., the Verification Unit reported that their shops are closed. For Ronak Jain and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A No.445/SRT/2023. In alternative and without prejudice, the ld. AR of the assessee submits that assessee has shown net profit @ net profit @ 0.29% on sales which is in excess of net profit disclosed in earlier year @ 0.23% on sales and the industry standard, so to avoid the litigation with the Revenue, disallowance @ 0.29% either on the disputed sales or on the disputed purchases may be made. 17. On the other hand, the ld. CIT-DR for the revenue supported the order of lower authorities. The ld. CIT-DR for the revenue submits that Assessing Officer before making the addition rejected the books of accounts. No specific finding is required before rejecting the books of accounts. It is the satisfaction of the Assessing Officer about the correctness of books result. On the addition of sales and purchase, the ld. CIT-DR submits that Assessing Officer has made a reasonable disallowance, therefore, the disallowance made by Assessing Officer may be sustained. 18. We have considered the rival submission of both parties and gone through the orders of lower authorities. We have also deliberated on the case laws relied by ld. AR of the assessee. we find that at the time of re-opening of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modation entry, the addition should have been made to the extent of profit element embedded in availing such entry, that to only on the amount of alleged/ impugned/ bogus entry and not on the substantial part of transaction. We find that the AO while making additions/ disallowance taken all the transactions of sales and purchases, which is not justified. Such addition is made without making further investigation in respect of other sales and purchases bills. The AO solely relied on the report of Verification Unit without providing copy of such report to the assessee. It is settled law under Income Tax that only real income or profit after allowing set off of expenditure, can be brought to tax and not the substantial part of transaction. Thus, the addition made by AO @ 10% of total sales and purchases are not justified. 20. Now adverting to the quantum of the disallowance. We find that assessee is engaged in the business of diamonds, the assessee in his own reply has accepted that he has shown purchase of Rs. 3,11,75,748/- and sales of Rs. 6,20,94,701/-, which is not disputed by the lower authorities. Thus, considering the nature of transaction and keeping in view of the facts that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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