PINKAL DILIP BHANSALI ,MUMBAI vs. INCOME TAX OFFICER 19(2)(4), MUMBAI

2. At the outset, the learned counsel for the assessee invited our 2. At the outset, the learned counsel for the assessee invited our 2. At the outset, the learned counsel for the assessee invited our attention to the delay of 101 days in filing the present appeal, as attention to the delay of 101 days in filing the present appeal, as attention to the delay of 101 days in filing the present appeal, as noted by the Registry. It was noted by the Registry. It was submitted that the order of the learned submitted that the order of the learned CIT(A) was not communicated to the assessee through the CIT(A) was not communicated to the assessee through the CIT(A) was not communicated to the assessee through the registered primary or secondary e registered primary or secondary e-mail address. As a result, the mail address. As a result, the assessee remained unaware of the passing of the appellate order assessee remained unaware of the passing of the appellate order assessee remained unaware of the passing of the appellate order and came to know of it only upo and came to know of it only upon subsequently accessing the n subsequently accessing the Income-tax Portal to verify the status of the proceedings after a tax Portal to verify the status of the proceedings after a tax Portal to verify the status of the proceedings after a considerable lapse of time. It was thus contended that the delay considerable lapse of time. It was thus contended that the delay considerable lapse of time. It was thus contended that the delay was neither deliberate nor attributable to any lack of diligence, but was neither deliberate nor attributable to any lack of diligence, but was neither deliberate nor attributable to any lack of diligence, but occurred for bona fide and occurred for bona fide and unavoidable reasons.

2.1 We have considered the rival submissions on the issue of We have considered the rival submissions on the issue of We have considered the rival submissions on the issue of condonation of delay. In our considered view, the assessee has condonation of delay. In our considered view, the assessee has condonation of delay. In our considered view, the assessee has placed on record a reasonable and satisfactory explanation placed on record a reasonable and satisfactory explanation placed on record a reasonable and satisfactory explanation constituting sufficient cause for the delay in fili constituting sufficient cause for the delay in filing the appeal. The ng the appeal. The delay delay delay being being being unintentional unintentional unintentional and and and supported supported supported by by by bona bona bona fide fide fide circumstances, the same is condoned. Consequently, the appeal is circumstances, the same is condoned. Consequently, the appeal is circumstances, the same is condoned. Consequently, the appeal is admitted for adjudication on merits. admitted for adjudication on merits.

2.2 Briefly stated, t y stated, the facts of the case are that the facts of the case are that the assessee filed its return of income for the relevant assessment year on 27.09.2011 its return of income for the relevant assessment year on 27.09.2011 its return of income for the relevant assessment year on 27.09.2011 declaring a total income of ₹1,83,630/-. Subsequently, information declaring a total income of . Subsequently, information was was was received received received from from from the the the Director Director Director General General General of of of Income-tax Income Income (Investigation), Mumbai, that the assessee had allegedly obtained (Investigation), Mumbai, that the assessee had allege (Investigation), Mumbai, that the assessee had allege accommodation purchase bills amounting to ₹2,24,75,072/ accommodation purchase bills amounting to 2,24,75,072/- from M/s Nazar Impex Pvt. Ltd., a concern stated to be controlled and M/s Nazar Impex Pvt. Ltd., a concern stated to be controlled and M/s Nazar Impex Pvt. Ltd., a concern stated to be controlled and operated by the Rajendra Jain / Sanjay Choudhary / Dharmichand operated by the Rajendra Jain / Sanjay Choudhary / Dharmichand operated by the Rajendra Jain / Sanjay Choudhary / Dharmichand Jain group. The said group was subjected to search and survey Jain group. The said group was subjected to search an Jain group. The said group was subjected to search an operations on 03.10.2013, wherein it was unearthed that several operations on 03.10.2013, wherein it was unearthed that several operations on 03.10.2013, wherein it was unearthed that several concerns concerns concerns under under under their their their control control control were were were engaged engaged engaged in in in providing providing providing accommodation entries through paper entities without any actual accommodation entries through paper entities without any actual accommodation entries through paper entities without any actual business activity.

2.3 On the basis of this information, the Ass On the basis of this information, the Ass On the basis of this information, the Assessing Officer recorded reasons to believe that income chargeable to tax had recorded reasons to believe that income chargeable to tax had recorded reasons to believe that income chargeable to tax had escaped assessment and accordingly issued notice under section escaped assessment and accordingly issued notice under section escaped assessment and accordingly issued notice under section 148 of the Income-tax Act, 1961 and served upon the assessee. tax Act, 1961 and served upon the assessee. tax Act, 1961 and served upon the assessee. Despite issuance of statutory notices, the assessee failed to Despite issuance of statutory notices, the assessee f Despite issuance of statutory notices, the assessee f respond. Ultimately, a show cause notice dated 01.12.2018 was respond. Ultimately, a show cause notice dated 01.12.2018 was respond. Ultimately, a show cause notice dated 01.12.2018 was issued, to which the assessee replied on 18.12.2018, asserting that issued, to which the assessee replied on 18.12.2018, asserting that issued, to which the assessee replied on 18.12.2018, asserting that the purchases were genuine and furnishing copies of invoices and the purchases were genuine and furnishing copies of invoices and the purchases were genuine and furnishing copies of invoices and bank statements.

2.4 Thereafter, the Assessing Offi Thereafter, the Assessing Officer supplied to the assessee cer supplied to the assessee copies of statements of Shri Sanjay Kailashchand Choudhary, copies of statements of Shri Sanjay Kailashchand Choudhary, copies of statements of Shri Sanjay Kailashchand Choudhary, Director of M/s Nazar Impex Pvt. Ltd., recorded during survey Director of M/s Nazar Impex Pvt. Ltd., recorded during survey Director of M/s Nazar Impex Pvt. Ltd., recorded during survey proceedings proceedings proceedings on on on 03.10.2013 03.10.2013 03.10.2013 and and and 10.01.2014, 10.01.2014, 10.01.2014, wherein wherein wherein he he he categorically admitted that his concerns were engaged only in categorically admitted that his concerns were engage categorically admitted that his concerns were engage providing accommodation entries and did not carry on any real providing accommodation entries and did not carry on any real providing accommodation entries and did not carry on any real trading in diamonds. No rebuttal or explanation was furnished by trading in diamonds. No rebuttal or explanation was furnished by trading in diamonds. No rebuttal or explanation was furnished by the assessee to these statements. Consequently, the Assessing the assessee to these statements. Consequently, the Assessing the assessee to these statements. Consequently, the Assessing Officer completed the reassessment by treating the impugned Officer completed the reassessment by treating the impugn Officer completed the reassessment by treating the impugn purchases as unexplained expenditure under section 69C and purchases as unexplained expenditure under section 69C and purchases as unexplained expenditure under section 69C and added the entire amount of added the entire amount of ₹2,24,75,072/- to the assessee’s to the assessee’s income.

2.5 The Assessing Officer noted that during the search and survey The Assessing Officer noted that during the search and survey The Assessing Officer noted that during the search and survey action conducted by the Investigation Wing, it was conclusively action conducted by the Investigation Wing, it was conclusiv action conducted by the Investigation Wing, it was conclusiv established that the concerns controlled by the Jain/Choudhary established that the concerns controlled by the Jain/Choudhary established that the concerns controlled by the Jain/Choudhary group were mere paper entities. The so group were mere paper entities. The so-called directors and called directors and proprietors were found to be name proprietors were found to be name-lenders with no control over lenders with no control over business operations. Statements recorded under oath revealed that business operations. Statements recorded under oath revealed that business operations. Statements recorded under oath revealed that these entities neither maintained nor dealt in any physical stock of these entities neither maintained nor dealt in any physical stock of these entities neither maintained nor dealt in any physical stock of diamonds and were only issuing accommodation bills in lieu of diamonds and were only issuing accommodation bills in lieu of diamonds and were only issuing accommodation bills in lieu of commission.

2.6 In particular, Shri Sanjay Choudhary, Director of M/s Nazar In particular, Shri Sanjay Choudhary, Director of M/s Nazar In particular, Shri Sanjay Choudhary, Director of M/s Nazar Impex Pvt. Ltd., admitted that the company was engaged in “bill Impex Pvt. Ltd., admitted that the company was en Impex Pvt. Ltd., admitted that the company was en shopping” and that no physical stock of diamonds was ever held by shopping” and that no physical stock of diamonds was ever held by shopping” and that no physical stock of diamonds was ever held by it. The detailed modus operandi explained in his statements it. The detailed modus operandi explained in his statements it. The detailed modus operandi explained in his statements demonstrated that the entire business was confined to maintaining demonstrated that the entire business was confined to maintaining demonstrated that the entire business was confined to maintaining books of accounts without any corresponding movement of goods. books of accounts without any corresponding movem books of accounts without any corresponding movem 2.7 The The The Assessing Assessing Assessing Officer Officer Officer further further further observed observed observed that, that, that, despite despite despite opportunity, the assessee failed to produce any evidence of actual opportunity, the assessee failed to produce any evidence of actual opportunity, the assessee failed to produce any evidence of actual delivery of diamonds such as delivery challans, transport delivery of diamonds such as delivery challans, transport delivery of diamonds such as delivery challans, transport documents, stock registers, or inward registers. Mere production of documents, stock registers, or inward registers. Mere produc documents, stock registers, or inward registers. Mere produc invoices and bank statements was held to be insufficient to invoices and bank statements was held to be insufficient to invoices and bank statements was held to be insufficient to establish the genuineness of the transactions, particularly in the establish the genuineness of the transactions, particularly in the establish the genuineness of the transactions, particularly in the face of overwhelming incriminating material gathered during search face of overwhelming incriminating material gathered during search face of overwhelming incriminating material gathered during search and survey proceedings. and survey proceedings.

2.8 The Assessing Officer also The Assessing Officer also held that the surrounding held that the surrounding circumstances and human probabilities clearly indicated that the circumstances and human probabilities clearly indicated that the circumstances and human probabilities clearly indicated that the transactions were sham and designed to inflate purchases and transactions were sham and designed to inflate purchases and transactions were sham and designed to inflate purchases and suppress taxable income. Reliance was placed on the principle that suppress taxable income. Reliance was placed on the principle that suppress taxable income. Reliance was placed on the principle that apparent transactions must be tested apparent transactions must be tested against the reality of against the reality of surrounding facts and conduct of parties. surrounding facts and conduct of parties.

2.9 It was emphasized that the burden to prove the genuineness of It was emphasized that the burden to prove the genuineness of It was emphasized that the burden to prove the genuineness of expenditure claimed squarely lies upon the assessee. Where the expenditure claimed squarely lies upon the assessee. Where the expenditure claimed squarely lies upon the assessee. Where the suppliers themselves admit on oath that they are merely providing suppliers themselves admit on oath that they are merely provi suppliers themselves admit on oath that they are merely provi accommodation entries and no actual goods are traded, the accommodation entries and no actual goods are traded, the accommodation entries and no actual goods are traded, the assessee cannot discharge its onus merely by producing self-serving assessee cannot discharge its onus merely by producing self assessee cannot discharge its onus merely by producing self documents such as invoices and bank statements. documents such as invoices and bank statements.

2.10 The Assessing Officer observed that banking channels, though The Assessing Officer observed that banking channels, though The Assessing Officer observed that banking channels, though relevant, are not conclusive proof of genuineness when the re not conclusive proof of genuineness when the re not conclusive proof of genuineness when the surrounding facts establish a façade. The absence of stock, absence surrounding facts establish a façade. The absence of stock, absence surrounding facts establish a façade. The absence of stock, absence of movement of goods, categorical admissions by the suppliers, and of movement of goods, categorical admissions by the suppliers, and of movement of goods, categorical admissions by the suppliers, and failure of the assessee to rebut such evidence cumulatively failure of the assessee to rebut such evidence cumulatively failure of the assessee to rebut such evidence cumulatively demolish the claim of genuine purchases. claim of genuine purchases.

2.11 The principle laid down by the Hon’ble Supreme Court in The principle laid down by the Hon’ble Supreme Court in The principle laid down by the Hon’ble Supreme Court in McDowell & Co. Ltd. v. CIT (154 ITR 148) was invoked to hold that (154 ITR 148) was invoked to hold that McDowell & Co. Ltd. v. CIT colourable devices cannot be part of legitimate tax planning and colourable devices cannot be part of legitimate tax planning and colourable devices cannot be part of legitimate tax planning and that transactions structured only to evade tax must be disregarded. that transactions structured only to evade tax must be disregarded. that transactions structured only to evade tax must be disregarded.

2.12 Reliance was also placed on the decision of the Hon’ble Reliance was also placed on the decision of the Hon’ble Reliance was also placed on the decision of the Hon’ble Gujarat High Court in Gujarat High Court in N.K. Proteins Ltd. v. DCIT, affirmed by the , affirmed by the Hon’ble Supreme Court, wherein it was held that once purchases Hon’ble Supreme Court, wherein it was held that once purchases Hon’ble Supreme Court, wherein it was held that once purchases are found to be bogus, the entire amount is liable to be disallowed are found to be bogus, the entire amount is liable to be disallowed are found to be bogus, the entire amount is liable to be disallowed and there is no justification for restricting the disallowance to a and there is no justification for restricting the disallowance to a and there is no justification for restricting the disallowance to a percentage thereof.

2.13 On a cumulative consideration of the material on record, the On a cumulative consideration of the material on record, the On a cumulative consideration of the material on record, the Assessing Officer held that: Assessing Officer held that:

2.14 Accordingly, the purchases amounting to Accordingly, the purchases amounting to ₹2,24,75,072/ 2,24,75,072/- were treated as unexplained expenditure under section 69C of the Act. unexplained expenditure under section 69C of the Act. unexplained expenditure under section 69C of the Act. The books of account were rejected under section 145(3). The The books of account were rejected under section 145(3). The The books of account were rejected under section 145(3). The addition was made in full, and penalty proceedings under section addition was made in full, and penalty proceedings under section addition was made in full, and penalty proceedings under section 271(1)(c) were initiated separately. 271(1)(c) were initiated separately.

3. On further appeal, the Ld. CIT(A) r On further appeal, the Ld. CIT(A) rejected the ground ejected the ground challenging the validity of the reassessment observing as under: challenging the validity of the reassessment observing as under: challenging the validity of the reassessment observing as under:

“7.1 The appellant has challenged the reopening of the 7.1 The appellant has challenged the reopening of the 7.1 The appellant has challenged the reopening of the assessment u/s 148 of the act. The appellant filed the return of assessment u/s 148 of the act. The appellant filed the return of assessment u/s 148 of the act. The appellant filed the return of income on 27.09.2011 for the AY 2011 income on 27.09.2011 for the AY 2011-12 declaring income of 12 declaring income of Rs.1,83,630. The AO received information from the Investigation Rs.1,83,630. The AO received information from the Investigation Rs.1,83,630. The AO received information from the Investigation wing that the wing that the appellant availed accommodation entry from the appellant availed accommodation entry from the group ShriRajendra Jain/ Sanjay Chudary/ Dharmichand Jain group ShriRajendra Jain/ Sanjay Chudary/ Dharmichand Jain group ShriRajendra Jain/ Sanjay Chudary/ Dharmichand Jain and this was unearthed during the search action u/s 132 of the and this was unearthed during the search action u/s 132 of the and this was unearthed during the search action u/s 132 of the act on 03.10.2013. In his statement, ShriRajendra Jain admitted act on 03.10.2013. In his statement, ShriRajendra Jain admitted act on 03.10.2013. In his statement, ShriRajendra Jain admitted that the group controll that the group controlled by him was indulging in providing ed by him was indulging in providing accommodation entry and the appellant was one of the accommodation entry and the appellant was one of the accommodation entry and the appellant was one of the beneficiaries. The AO based on this information reopened the beneficiaries. The AO based on this information reopened the beneficiaries. The AO based on this information reopened the assessment and issued notice u/s 148 of the act dated assessment and issued notice u/s 148 of the act dated assessment and issued notice u/s 148 of the act dated 30.03.2018 for which the appellant did not file any 30.03.2018 for which the appellant did not file any response. The response. The Assessing Officer reopened the assessment based on the Assessing Officer reopened the assessment based on the Assessing Officer reopened the assessment based on the information received from the Investigation Wing and the information received from the Investigation Wing and the information received from the Investigation Wing and the appellant had made bogus purchases from one of the parties viz., appellant had made bogus purchases from one of the parties viz., appellant had made bogus purchases from one of the parties viz., M/s Nararimpex P Ltd. There is the clear information and factual M/s Nararimpex P Ltd. There is the clear information and factual M/s Nararimpex P Ltd. There is the clear information and factual finding that certain information was received by the Ld. A.O. and finding that certain information was received by the Ld. A.O. and finding that certain information was received by the Ld. A.O. and this was absolutely authentic based on statements recorded by this was absolutely authentic based on statements recorded by this was absolutely authentic based on statements recorded by the Investigation Wing during search and seizure operation of the the Investigation Wing during search and seizure operation of the the Investigation Wing during search and seizure operation of the Sanjay Choudhury Group, Mumbai. The appellant only filed Sanjay Choudhury Group, Mumbai. The appellant only filed Sanjay Choudhury Group, Mumbai. The appellant only filed submissions on 18.12.2018 stating that the transaction was issions on 18.12.2018 stating that the transaction was issions on 18.12.2018 stating that the transaction was genuine. The above facts shows that the case was reopened as genuine. The above facts shows that the case was reopened as genuine. The above facts shows that the case was reopened as per the act and the appellant did not file the return of income in per the act and the appellant did not file the return of income in per the act and the appellant did not file the return of income in response to the notice u/s 148 of the act and did not raise response to the notice u/s 148 of the act and did not raise response to the notice u/s 148 of the act and did not raise objection for reopening before the AO. The ground challenging the reopening before the AO. The ground challenging the reopening before the AO. The ground challenging the reopening lacks merit and it is dismissed. reopening lacks merit and it is dismissed.” 3.1 As far as merit of the addition is concerned, the Ld. CIT(A) As far as merit of the addition is concerned, the Ld. CIT(A) As far as merit of the addition is concerned, the Ld. CIT(A) rejected the contention of the assessee observing as under: rejected the contention of the assessee observing as under: rejected the contention of the assessee observing as under:

“7.2 A perusal of the record would 7.2 A perusal of the record would suggest that the assessee is suggest that the assessee is engaged in the business of trading of diamond jewellery. The engaged in the business of trading of diamond jewellery. The engaged in the business of trading of diamond jewellery. The accounts were duly audited. The assessee has filed its return of accounts were duly audited. The assessee has filed its return of accounts were duly audited. The assessee has filed its return of income on the strength of those accounts. When the Id. Assessing income on the strength of those accounts. When the Id. Assessing income on the strength of those accounts. When the Id. Assessing Officer has confronted the assessee Officer has confronted the assessee for explaining its position for explaining its position with regard to certain purchases made from M/s. NazarImpex (P) with regard to certain purchases made from M/s. NazarImpex (P) with regard to certain purchases made from M/s. NazarImpex (P) Ltd. in A.Y. 2011 Ltd. in A.Y. 2011-12, the assessee has submitted copy of the 12, the assessee has submitted copy of the audited balance audited balance-sheet, Profit & Loss A/c. along with auditor's sheet, Profit & Loss A/c. along with auditor's report, the complete stock tally of the report, the complete stock tally of the ornaments. It has also filed ornaments. It has also filed copy of the stock register exhibiting opening stock, purchase, copy of the stock register exhibiting opening stock, purchase, copy of the stock register exhibiting opening stock, purchase, sales and closing stock. The assessee thereafter filed purchase sales and closing stock. The assessee thereafter filed purchase sales and closing stock. The assessee thereafter filed purchase bills issued by M/s. NazarImpex (P) Ltd. in the respective year. bills issued by M/s. NazarImpex (P) Ltd. in the respective year. bills issued by M/s. NazarImpex (P) Ltd. in the respective year. The assessee has made the payments The assessee has made the payments to its suppliers through to its suppliers through banking channel. The seller of the diamonds was having PAN, banking channel. The seller of the diamonds was having PAN, banking channel. The seller of the diamonds was having PAN, VAT, TIN and CST no. Those details were submitted by the VAT, TIN and CST no. Those details were submitted by the VAT, TIN and CST no. Those details were submitted by the assessee to the Id. Assessing Officer during the course of assessee to the Id. Assessing Officer during the course of assessee to the Id. Assessing Officer during the course of assessment proceedings. The Investigation Wing conducte assessment proceedings. The Investigation Wing conducte assessment proceedings. The Investigation Wing conducted detailed enquiry and held that the company M/s NazarImpex P detailed enquiry and held that the company M/s NazarImpex P detailed enquiry and held that the company M/s NazarImpex P Ltd. was providing accommodation entries in respect of purchase Ltd. was providing accommodation entries in respect of purchase Ltd. was providing accommodation entries in respect of purchase of diamonds. It was also proved that at the time of search in the of diamonds. It was also proved that at the time of search in the of diamonds. It was also proved that at the time of search in the premises, there was no evidence of stock of diamond and it was premises, there was no evidence of stock of diamond and it was premises, there was no evidence of stock of diamond and it was also accepted by Sanjay Choudary that there was no physical lso accepted by Sanjay Choudary that there was no physical lso accepted by Sanjay Choudary that there was no physical stock of diamonds and it was engaged in providing bogus bills stock of diamonds and it was engaged in providing bogus bills stock of diamonds and it was engaged in providing bogus bills for purchases and they were earning commission income for for purchases and they were earning commission income for for purchases and they were earning commission income for providing accommodation entries to the assessees and there was providing accommodation entries to the assessees and there was providing accommodation entries to the assessees and there was no actual sale no actual sale. In this regard, it is pertinent to mention that in the statement In this regard, it is pertinent to mention that in the statement In this regard, it is pertinent to mention that in the statement recorded under Sec.132(4), the director of the company had recorded under Sec.132(4), the director of the company had recorded under Sec.132(4), the director of the company had admitted the rate of commission received by him for raising admitted the rate of commission received by him for raising admitted the rate of commission received by him for raising bogus bills and he had also stated that the beneficiaries were bogus bills and he had also stated that the beneficiaries were bogus bills and he had also stated that the beneficiaries were already identified and only commission income was earned by identified and only commission income was earned by identified and only commission income was earned by the company and the corresponding sales for supplying the company and the corresponding sales for supplying the company and the corresponding sales for supplying diamonds were bogus sales. diamonds were bogus sales. The financial statement of the appellant has been examined. The financial statement of the appellant has been examined. The financial statement of the appellant has been examined. Firstly, the stock details as per the audit report annexed wit Firstly, the stock details as per the audit report annexed wit Firstly, the stock details as per the audit report annexed with the appeal papers have been carefully verified which shows: appeal papers have been carefully verified which shows: appeal papers have been carefully verified which shows: Opening stock Opening stock NIL Purchases Purchases 3009.10 carats Sales 2783.59 carats Closing Stock Closing Stock 225.51 carats Appellant has admitted the purchases at Rs.6,45,32,192 and the Appellant has admitted the purchases at Rs.6,45,32,192 and the Appellant has admitted the purchases at Rs.6,45,32,192 and the sales at Rs.6,06,45,589 and the sales at Rs.6,06,45,589 and the gross profit was admitted at gross profit was admitted at Rs.9,49,612 and the closing stock was admitted at 48,36,215. Rs.9,49,612 and the closing stock was admitted at 48,36,215. Rs.9,49,612 and the closing stock was admitted at 48,36,215. Further, it could be seen from the Further, it could be seen from the administrative expenditure, the administrative expenditure, the commission and brokerage were stated to be Rs.5,00,870 and commission and brokerage were stated to be Rs.5,00,870 and commission and brokerage were stated to be Rs.5,00,870 and there is no other significant expenditu there is no other significant expenditure found in the profit and re found in the profit and loss account as all other expenses were regular sundry expenses loss account as all other expenses were regular sundry expenses loss account as all other expenses were regular sundry expenses totaling Rs. 1,53,671. Thus, it could be seen from the total sales totaling Rs. 1,53,671. Thus, it could be seen from the total sales totaling Rs. 1,53,671. Thus, it could be seen from the total sales turnover of Rs.6 crores, the expenditure incurred excluding turnover of Rs.6 crores, the expenditure incurred excluding turnover of Rs.6 crores, the expenditure incurred excluding purchases is abysmal. In the balance s purchases is abysmal. In the balance sheet, sundry creditors is heet, sundry creditors is shown shown shown at at at Rs.1,04,90,112 Rs.1,04,90,112 Rs.1,04,90,112 whereas whereas whereas sundry sundry sundry debtors debtors debtors at at at Rs.41,05,621. The net profit of Rs.2,95,070 is not added back in Rs.41,05,621. The net profit of Rs.2,95,070 is not added back in Rs.41,05,621. The net profit of Rs.2,95,070 is not added back in the capital account and the opening capital account is Rs.96,909. the capital account and the opening capital account is Rs.96,909. the capital account and the opening capital account is Rs.96,909. Thus, there are omission and the accounts are not Thus, there are omission and the accounts are not accurate and accurate and it is also stated that the accounts are audited by a Chartered it is also stated that the accounts are audited by a Chartered it is also stated that the accounts are audited by a Chartered Accountant. When the capital introduced is Rs,96,900 and the Accountant. When the capital introduced is Rs,96,900 and the Accountant. When the capital introduced is Rs,96,900 and the profit is not even Rs.2,95,070, how appellant was able to lend profit is not even Rs.2,95,070, how appellant was able to lend profit is not even Rs.2,95,070, how appellant was able to lend loan of Rs.8,49,501. The point for consideration is how loan of Rs.8,49,501. The point for consideration is how loan of Rs.8,49,501. The point for consideration is how the appellant was able to purchase diamond in the month of April for appellant was able to purchase diamond in the month of April for appellant was able to purchase diamond in the month of April for Rs.24 lakhs without any underlying security to pay the sum and Rs.24 lakhs without any underlying security to pay the sum and Rs.24 lakhs without any underlying security to pay the sum and the sales during the month was stated to be Rs.12 lakhs. Thus, the sales during the month was stated to be Rs.12 lakhs. Thus, the sales during the month was stated to be Rs.12 lakhs. Thus, Rs.12 lakhs stood as sundry credit in the month of April 10. Rs.12 lakhs stood as sundry credit in the month of April 10. Rs.12 lakhs stood as sundry credit in the month of April 10. Further the rate per carat in respect of Shubhi Gems was Further the rate per carat in respect of Shubhi Gems was Further the rate per carat in respect of Shubhi Gems was Rs.3305 per carat and the appellant purchased 259.90CTS. Rs.3305 per carat and the appellant purchased 259.90CTS. Rs.3305 per carat and the appellant purchased 259.90CTS. Whereas on 06.04.2010, appellant purchased 36 CTS from one Whereas on 06.04.2010, appellant purchased 36 CTS from one Whereas on 06.04.2010, appellant purchased 36 CTS from one Satyarth Exports and the rate per carat is Rs.13,311. The Satyarth Exports and the rate per carat is Rs.13,311. The Satyarth Exports and the rate per carat is Rs.13,311. The difference between the r difference between the rate on 02.04.2010 and 06.04.2010 is ate on 02.04.2010 and 06.04.2010 is Rs.10,000 per carat approximately. It is to be seen whether the Rs.10,000 per carat approximately. It is to be seen whether the Rs.10,000 per carat approximately. It is to be seen whether the rate per carat would vary according to the standard/purity of the rate per carat would vary according to the standard/purity of the rate per carat would vary according to the standard/purity of the gem to the extent of 300%. Further the payment for the purchases gem to the extent of 300%. Further the payment for the purchases gem to the extent of 300%. Further the payment for the purchases made in the month of Apri made in the month of April and May 2010 starts only from the l and May 2010 starts only from the month of June 2010. Thus, the transactions involved in the month of June 2010. Thus, the transactions involved in the month of June 2010. Thus, the transactions involved in the appellant's case gives rise to the suspicion whether any prudent appellant's case gives rise to the suspicion whether any prudent appellant's case gives rise to the suspicion whether any prudent business man would sell the valuable item like diamond with a business man would sell the valuable item like diamond with a business man would sell the valuable item like diamond with a credit period of more than 3 month credit period of more than 3 months to the appellant, that too s to the appellant, that too when the appellant just started its business with an abysmal when the appellant just started its business with an abysmal when the appellant just started its business with an abysmal amount of Rs.96,000 as capital. In the month of May, as per the amount of Rs.96,000 as capital. In the month of May, as per the amount of Rs.96,000 as capital. In the month of May, as per the stock stock stock register, register, register, appellant appellant appellant has has has purchased purchased purchased diamonds diamonds diamonds from from from NazarImpex Ltd.and the total cost during the mon NazarImpex Ltd.and the total cost during the month of May from th of May from Nazarlmpex alone is Rs.1,82,95,012 and the quantity purchased Nazarlmpex alone is Rs.1,82,95,012 and the quantity purchased Nazarlmpex alone is Rs.1,82,95,012 and the quantity purchased is 1010 carats and in the month of July 2010, there was a is 1010 carats and in the month of July 2010, there was a is 1010 carats and in the month of July 2010, there was a purchase from NazarImpex which is Rs.42.00 lakhs and the purchase from NazarImpex which is Rs.42.00 lakhs and the purchase from NazarImpex which is Rs.42.00 lakhs and the quantity purchased is 247.10 carats. In the month of March quantity purchased is 247.10 carats. In the month of March quantity purchased is 247.10 carats. In the month of March 2011, there were no purchases and there were only sales and there were no purchases and there were only sales and there were no purchases and there were only sales and after 1st February there were no purchases according to the after 1st February there were no purchases according to the after 1st February there were no purchases according to the stock register and there were only sales. Further the said stock register and there were only sales. Further the said stock register and there were only sales. Further the said payment of Rs.2.20 crores was paid from July 2010 to March payment of Rs.2.20 crores was paid from July 2010 to March payment of Rs.2.20 crores was paid from July 2010 to March 2011. The sundry credit 2011. The sundry creditor shows a sum of Rs.1.02 crores. No or shows a sum of Rs.1.02 crores. No creditor would allow such a waiting period to settle the dues in creditor would allow such a waiting period to settle the dues in creditor would allow such a waiting period to settle the dues in this line of business. this line of business. It is seen from the bank account of SBI, the entries start from It is seen from the bank account of SBI, the entries start from It is seen from the bank account of SBI, the entries start from 10.06.2010 and there is a deposit transfer from Bank of India to 10.06.2010 and there is a deposit transfer from Bank of India to 10.06.2010 and there is a deposit transfer from Bank of India to the extent of Rs.6,00,000 and on 06.07.2010 there is a transfer e extent of Rs.6,00,000 and on 06.07.2010 there is a transfer e extent of Rs.6,00,000 and on 06.07.2010 there is a transfer from Indian Overseas Bank for a sum of Rs.79,69,639. Not only from Indian Overseas Bank for a sum of Rs.79,69,639. Not only from Indian Overseas Bank for a sum of Rs.79,69,639. Not only in this month and even in other months also there were transfers in this month and even in other months also there were transfers in this month and even in other months also there were transfers for IOB Ahmedabad. Appellant stated that the current accounts for IOB Ahmedabad. Appellant stated that the current accounts for IOB Ahmedabad. Appellant stated that the current accounts operated by him as SBI and Indus Ind Bank. Hence, the details ted by him as SBI and Indus Ind Bank. Hence, the details ted by him as SBI and Indus Ind Bank. Hence, the details of these deposit transfers from other bank accounts were not of these deposit transfers from other bank accounts were not of these deposit transfers from other bank accounts were not provided. Since the financial statement provided by the appellant provided. Since the financial statement provided by the appellant provided. Since the financial statement provided by the appellant does not project the source for making initial investment to do does not project the source for making initial investment to do does not project the source for making initial investment to do such a business and considering the volume of transactions usiness and considering the volume of transactions usiness and considering the volume of transactions which is nearly Rs.6 crores, this gives rise to the suspicion which is nearly Rs.6 crores, this gives rise to the suspicion which is nearly Rs.6 crores, this gives rise to the suspicion whether there were actual movement of stock in respect of the whether there were actual movement of stock in respect of the whether there were actual movement of stock in respect of the above items which were purchased from M/s NazarImpex P Ltd. above items which were purchased from M/s NazarImpex P Ltd. above items which were purchased from M/s NazarImpex P Ltd. as the appellant made as the appellant made maximum purchases of nearly 1256.18 maximum purchases of nearly 1256.18 carats ofdiamond and the transactions really took place. Thus, carats ofdiamond and the transactions really took place. Thus, carats ofdiamond and the transactions really took place. Thus, after comparing the stock register and the bank statement after comparing the stock register and the bank statement after comparing the stock register and the bank statement furnished by the appellant, the fact that emerges from the furnished by the appellant, the fact that emerges from the furnished by the appellant, the fact that emerges from the statement is, the impugned payment was statement is, the impugned payment was made in favour of the made in favour of the alleged seller several days after the date on which the appellant alleged seller several days after the date on which the appellant alleged seller several days after the date on which the appellant has claimed to have made the purchase. Thus, such a happening has claimed to have made the purchase. Thus, such a happening has claimed to have made the purchase. Thus, such a happening is very unlikely because no seller would sell goods to an is very unlikely because no seller would sell goods to an is very unlikely because no seller would sell goods to an unknown buyer on credit, and therefore it milita unknown buyer on credit, and therefore it militates against basic tes against basic tenets of commercial transactions and the seller(s) may wait for tenets of commercial transactions and the seller(s) may wait for tenets of commercial transactions and the seller(s) may wait for one month for payment from an unknown buyer. one month for payment from an unknown buyer. Further the major expenditure in the profit and loss account is Further the major expenditure in the profit and loss account is Further the major expenditure in the profit and loss account is only commission which is Rs.5,00,870. The Investigation Report only commission which is Rs.5,00,870. The Investigation Report only commission which is Rs.5,00,870. The Investigation Report in the case of M/s Nazarimpex P Ltd. is vital as the enquiries n the case of M/s Nazarimpex P Ltd. is vital as the enquiries n the case of M/s Nazarimpex P Ltd. is vital as the enquiries carried out by the Wing and statement recorded at the time of carried out by the Wing and statement recorded at the time of carried out by the Wing and statement recorded at the time of search brought on record, the company was not doing real search brought on record, the company was not doing real search brought on record, the company was not doing real business and it is an accommodation entry provider and the business and it is an accommodation entry provider and the business and it is an accommodation entry provider and the modus operandi w modus operandi was clearly explained in the assessment order. as clearly explained in the assessment order. Considering the transactions in the books of accounts and after Considering the transactions in the books of accounts and after Considering the transactions in the books of accounts and after examining the availability of funds to incur such expenditure, the examining the availability of funds to incur such expenditure, the examining the availability of funds to incur such expenditure, the Assessing Officer's action in treating the transaction with M/s Assessing Officer's action in treating the transaction with M/s Assessing Officer's action in treating the transaction with M/s NazarImpex NazarImpex Ltd. Ltd. amounting amounting to to Rs.2,24,75,072as Rs.2,24,75,072as bogus bogus purchases is upheld. The grounds raised on this issue are purchases is upheld. The grounds raised on this issue are purchases is upheld. The grounds raised on this issue are "Dismissed".” ”

4. Before us, the learned counsel for the assessee filed a Paper Before us, the learned counsel for the assessee filed a Paper Before us, the learned counsel for the assessee filed a Paper Book comprising pages 1 to 42, containing, inter alia, copies of Book comprising pages 1 to 42, containing, inter alia, copies of Book comprising pages 1 to 42, containing, inter alia, copies of purchase bills, confirmation letters, stock registers, audit report onfirmation letters, stock registers, audit report onfirmation letters, stock registers, audit report and bank statements evidencing payments made through account- and bank statements evidencing payments made through account and bank statements evidencing payments made through account payee cheques.

4.1The learned counsel submitted that the Assessing Officer erred The learned counsel submitted that the Assessing Officer erred The learned counsel submitted that the Assessing Officer erred in making a 100% addition of ₹2,24,75,072/- by treating the in making a 100% addition of by treating the purchases as bogus, despite the assessee having produced complete purchases as bogus, despite the assessee having produced complete purchases as bogus, despite the assessee having produced complete documentary evidence. It was contended that the assessee documentary evidence. It was contended that the assessee documentary evidence. It was contended that the assessee furnished purchase bills, confirmations, quantitative stock details furnished purchase bills, confirmations, quantitative stock details furnished purchase bills, confirmations, quantitative stock details reflecting opening stock, purchases, sales and closing stock, as well reflecting opening stock, purchases, sales and closing stock, as reflecting opening stock, purchases, sales and closing stock, as as bank statements showing payments through banking channels. as bank statements showing payments through banking channels. as bank statements showing payments through banking channels. It was further submitted that the supplier, M/s Nazar Impex Pvt. It was further submitted that the supplier, M/s Nazar Impex Pvt. It was further submitted that the supplier, M/s Nazar Impex Pvt. Ltd., was duly registered and possessed PAN, VAT, TIN and CST Ltd., was duly registered and possessed PAN, VAT, TIN and CST Ltd., was duly registered and possessed PAN, VAT, TIN and CST numbers.

4.2 It was submitted that complete quantitative detai It was submitted that complete quantitative detai It was submitted that complete quantitative details was given audit report for the year under consideration. audit report for the year under consideration. The learned counsel The learned counsel argued that once the sales effected by the assessee were accepted argued that once the sales effected by the assessee were accepted argued that once the sales effected by the assessee were accepted as genuine, the corresponding purchases could not be disallowed in as genuine, the corresponding purchases could not be disallowed in as genuine, the corresponding purchases could not be disallowed in entirety, as this would lead to an illogica entirety, as this would lead to an illogical result and render the l result and render the trading account unworkable. It was submitted that the assessee trading account unworkable. It was submitted that the assessee trading account unworkable. It was submitted that the assessee had purchased 1,256.18 carats of diamonds and, if such purchases had purchased 1,256.18 carats of diamonds and, if such purchases had purchased 1,256.18 carats of diamonds and, if such purchases were treated as bogus, the stock position would turn negative, were treated as bogus, the stock position would turn negative, were treated as bogus, the stock position would turn negative, which was neither alleged nor demonstrate which was neither alleged nor demonstrated by the Assessing d by the Assessing Officer.

4.3 It was further contended that the Assessing Officer relied It was further contended that the Assessing Officer relied It was further contended that the Assessing Officer relied exclusively on third- -party statements recorded during search and party statements recorded during search and survey proceedings without granting the assessee an opportunity of survey proceedings without granting the assessee an opportunity of survey proceedings without granting the assessee an opportunity of cross-examination, thereby violat examination, thereby violating the principles of natural ing the principles of natural justice. It was also argued that there was no material to establish justice. It was also argued that there was no material to establish justice. It was also argued that there was no material to establish that the assessee paid any commission or that unaccounted cash that the assessee paid any commission or that unaccounted cash that the assessee paid any commission or that unaccounted cash was routed back to the assessee. The learned counsel sought to was routed back to the assessee. The learned counsel sought to was routed back to the assessee. The learned counsel sought to distinguish the decision of the distinguish the decision of the Hon’ble Bombay High Court in Hon’ble Bombay High Court in Kanak Impex Pvt. Ltd. Kanak Impex Pvt. Ltd. (172 taxmann.com 283), submitting that the (172 taxmann.com 283), submitting that the facts of the present case were materially different and, therefore, the facts of the present case were materially different and, therefore, the facts of the present case were materially different and, therefore, the said decision was not applicable. said decision was not applicable.

4.4 Per Per Per contra, contra, contra, the the the learned learned learned Departmental Departmental Departmental Representative Representative Representative supported the orders of the lower authorities and pointed out supported the orders of the lower authorities and pointed out supported the orders of the lower authorities and pointed out certain deficiencies or contradiction in the signature of the Director certain deficiencies or contradiction in the signature of the Director certain deficiencies or contradiction in the signature of the Director of M/s Nazar Impex Ltd. on the sales bills as well as statement of M/s Nazar Impex Ltd. on the sales bills as well as statement of M/s Nazar Impex Ltd. on the sales bills as well as statement recorded on 05.10.2013 vis recorded on 05.10.2013 vis-a-vis confirmation of the ledger vis confirmation of the ledger account of the assessee in the books of M/s Nazar Impex Pvt. Ltd. It was of the assessee in the books of M/s Nazar Impex Pvt. Ltd. of the assessee in the books of M/s Nazar Impex Pvt. Ltd. submitted that on verification of the Paper Book and the submitted that on verification of the Paper Book and the submitted that on verification of the Paper Book and the assessment records, the following discrepancies were noticed: assessment records, the following discrepancies were noticed: assessment records, the following discrepancies were noticed:

(i) The signature of Shri Sanjay Choudhary, Director of M/s The signature of Shri Sanjay Choudhary, Director of M/s The signature of Shri Sanjay Choudhary, Director of M/s Nazar Impex Pvt. Ltd., appearing on the statement recorded on Impex Pvt. Ltd., appearing on the statement recorded on Impex Pvt. Ltd., appearing on the statement recorded on 05.10.2013, materially differs from the signature appearing on 05.10.2013, materially differs from the signature appearing on 05.10.2013, materially differs from the signature appearing on the sales bills (PB: 10 (PB: 10-12) produced by the assessee. produced by the assessee. (ii) The signature on the confirmation of the ledger account of the The signature on the confirmation of the ledger account of the The signature on the confirmation of the ledger account of the assessee in the book assessee in the books of M/s Nazar Impex Pvt. Ltd. s of M/s Nazar Impex Pvt. Ltd. ( PB: 9) also differs from the signature on the sworn statement. also differs from the signature on the sworn statement. also differs from the signature on the sworn statement. Further, the said confirmation is undated. Further, the said confirmation is undated. (iii) The Assessing Officer rejected the books of account The Assessing Officer rejected the books of account The Assessing Officer rejected the books of account under section 145(3), and the learned CIT(A) recorded specific under section 145(3), and the learned CIT(A) recorded specific under section 145(3), and the learned CIT(A) recorded specific findings regarding discrepancies in the capital account, loans ndings regarding discrepancies in the capital account, loans ndings regarding discrepancies in the capital account, loans and advances, sundry creditors and sundry debtors, which and advances, sundry creditors and sundry debtors, which and advances, sundry creditors and sundry debtors, which remained unexplained by the assessee. remained unexplained by the assessee. (iv) No cogent details of corresponding sales, with supporting No cogent details of corresponding sales, with supporting No cogent details of corresponding sales, with supporting evidence, were furnished before the Assess evidence, were furnished before the Assessing Officer. ing Officer.

4.5 In view of the above infirmities and relying upon the judgment In view of the above infirmities and relying upon the judgment In view of the above infirmities and relying upon the judgment of the Hon’ble Bombay High Court in of the Hon’ble Bombay High Court in Kanak Impex Pvt. Ltd. Kanak Impex Pvt. Ltd. (supra), the learned Departmental Representative submitted that the the learned Departmental Representative submitted that the the learned Departmental Representative submitted that the addition made by the Assessing Officer and sustain addition made by the Assessing Officer and sustained by the CIT(A) ed by the CIT(A) deserves to be upheld. deserves to be upheld.

5.1 The case of the Assessing Officer is that the assessee obtained The case of the Assessing Officer is that the assessee obtained The case of the Assessing Officer is that the assessee obtained accommodation purchase entries from M/s Nazar Impex Pvt. Ltd. accommodation purchase entries from M/s Nazar Impex accommodation purchase entries from M/s Nazar Impex This conclusion is founded upon extensive material unearthed This conclusion is founded upon extensive material unearthed This conclusion is founded upon extensive material unearthed during search and survey operations conducted in the cases of during search and survey operations conducted in the cases of during search and survey operations conducted in the cases of concerns controlled and managed by Shri Rajendra Jain and Shri concerns controlled and managed by Shri Rajendra Jain and Shri concerns controlled and managed by Shri Rajendra Jain and Shri Sanjay Choudhary. The Investigation Wing recorded categorical Sanjay Choudhary. The Investigation Wing recorded categoric Sanjay Choudhary. The Investigation Wing recorded categoric findings that such concerns had no genuine business activity: no findings that such concerns had no genuine business activity: no findings that such concerns had no genuine business activity: no physical stock of diamonds was found, the so physical stock of diamonds was found, the so-called directors were called directors were unaware of the nature of business, no books of account were unaware of the nature of business, no books of account were unaware of the nature of business, no books of account were available at the registered premises, and the concerns existed available at the registered premises, and the concerns existe available at the registered premises, and the concerns existe merely on paper. merely on paper. These merely on paper. These facts, taken cumulatively, clearly These facts, facts, taken cumulatively, clearly taken cumulatively, clearly established that the entities were engaged solely in issuing established that the entities were engaged solely in issuing established that the entities were engaged solely in issuing accommodation bills against commission and not in actual trading accommodation bills against commission and not in actual trading accommodation bills against commission and not in actual trading of diamonds.

5.2 During the course of assessment proceedings, the Asse During the course of assessment proceedings, the Asse During the course of assessment proceedings, the Assessing Officer furnished to the assessee copies of statements recorded from Officer furnished to the assessee copies of statements recorded from Officer furnished to the assessee copies of statements recorded from the key persons of the supplier concern. Despite being afforded the key persons of the supplier concern. Despite being afforded the key persons of the supplier concern. Despite being afforded such opportunity, the assessee neither sought cross-examination of such opportunity, the assessee neither sought cross such opportunity, the assessee neither sought cross the deponents nor furnished any rebuttal to the incriminating the deponents nor furnished any rebuttal to the in the deponents nor furnished any rebuttal to the in material. The silence of the assessee in the face of such adverse material. The silence of the assessee in the face of such adverse material. The silence of the assessee in the face of such adverse evidence assumes significance. evidence assumes significance.

5.3 Before us, the learned Departmental Representative further Before us, the learned Departmental Representative further Before us, the learned Departmental Representative further pointed out discrepancies in the signatures appearing on the pointed out discrepancies in the signatures appearing on the pointed out discrepancies in the signatures appearing on the confirmation letters, p confirmation letters, purchase bills, and statements recorded urchase bills, and statements recorded during survey proceedings in the case of M/s Nazar Impex Pvt. Ltd. during survey proceedings in the case of M/s Nazar Impex Pvt. Ltd. during survey proceedings in the case of M/s Nazar Impex Pvt. Ltd. These discrepancies were not satisfactorily explained by the These discrepancies were not satisfactorily explained by the These discrepancies were not satisfactorily explained by the assessee. Significantly, the assessee also failed to produce the assessee. Significantly, the assessee also failed to produce the assessee. Significantly, the assessee also failed to produce the Director or authorised r Director or authorised representative of M/s Nazar Impex Pvt. Ltd. epresentative of M/s Nazar Impex Pvt. Ltd. either before the Assessing Officer or before the first appellate either before the Assessing Officer or before the first appellate either before the Assessing Officer or before the first appellate authority to substantiate the genuineness of the transactions. authority to substantiate the genuineness of the transactions. authority to substantiate the genuineness of the transactions.

5.4 In such circumstances, the claim that the purchases were In such circumstances, the claim that the purchases were In such circumstances, the claim that the purchases were genuine remains unsubst genuine remains unsubstantiated. The reliance placed by the antiated. The reliance placed by the assessee on bank statements, ledger accounts, and invoices cannot, assessee on bank statements, ledger accounts, and invoices cannot, assessee on bank statements, ledger accounts, and invoices cannot, by itself, discharge the burden of proof. These documents merely by itself, discharge the burden of proof. These documents merely by itself, discharge the burden of proof. These documents merely constitute a paper trail maintained to comply with statutory constitute a paper trail maintained to comply with statutory constitute a paper trail maintained to comply with statutory formalities. When overwhel formalities. When overwhelming adverse material emerges from ming adverse material emerges from search and survey proceedings establishing that the supplier was a search and survey proceedings establishing that the supplier was a search and survey proceedings establishing that the supplier was a paper paper paper concern concern concern engaged engaged engaged in in in accommodation accommodation accommodation entries, entries, entries, such such such documentary evidence loses its probative value. The apparent must documentary evidence loses its probative value. The apparent must documentary evidence loses its probative value. The apparent must yield to the real, particularly whe yield to the real, particularly when tested on the touchstone of n tested on the touchstone of human probabilities and surrounding circumstances. human probabilities and surrounding circumstances. human probabilities and surrounding circumstances.

5.5 We therefore find no infirmity in the conclusion drawn by the We therefore find no infirmity in the conclusion drawn by the We therefore find no infirmity in the conclusion drawn by the Assessing Officer, as affirmed by the learned CIT(A), that the Assessing Officer, as affirmed by the learned CIT(A), that the Assessing Officer, as affirmed by the learned CIT(A), that the impugned purchases from M/s Nazar Impex Pvt. Ltd. were non- impugned purchases from M/s Nazar Impex Pvt. L impugned purchases from M/s Nazar Impex Pvt. L genuine. The addition made on this count is accordingly upheld. genuine. The addition made on this count is accordingly upheld. genuine. The addition made on this count is accordingly upheld.

5.6 Ground No. 2 raised by the assessee, challenging the addition Ground No. 2 raised by the assessee, challenging the addition Ground No. 2 raised by the assessee, challenging the addition on merits, is dismissed. on merits, is dismissed.

6.1 We have considered the submissions and examined the We have considered the submissions and examined the We have considered the submissions and examined the reasons recorded for reopening. It is evident that the Assessing reasons recorded for reopening. It is evident that the Assessing reasons recorded for reopening. It is evident that the Assessing Officer initiated reassessment proceedings on the basis of specific Officer initiated reassessment proceedings on the basis of specific Officer initiated reassessment proceedings on the basis of specific and credible information received from the Investigation Wing of the and credible information received from the Investigation Wing of the and credible information received from the Investigation Wing of the Department. The information clearly identified the assessee as a partment. The information clearly identified the assessee as a partment. The information clearly identified the assessee as a beneficiary of an accommodation purchase entry amounting to beneficiary of an accommodation purchase entry amounting to beneficiary of an accommodation purchase entry amounting to ₹2,24,75,072/- from M/s Nazar Impex Pvt. Ltd. The reasons from M/s Nazar Impex Pvt. Ltd. The reasons from M/s Nazar Impex Pvt. Ltd. The reasons recorded explicitly refer to this transaction and the material forming recorded explicitly refer to this transaction and the material forming recorded explicitly refer to this transaction and the material forming the basis of the belief that income chargeable to tax had escaped basis of the belief that income chargeable to tax had escaped basis of the belief that income chargeable to tax had escaped assessment.

6.2 The formation of belief is thus founded on tangible material The formation of belief is thus founded on tangible material The formation of belief is thus founded on tangible material and bears a direct nexus with the assessee. The reopening cannot, and bears a direct nexus with the assessee. The reopening cannot, and bears a direct nexus with the assessee. The reopening cannot, therefore, be characterised as vague or based on mere borrowed therefore, be characterised as vague or based on me therefore, be characterised as vague or based on me satisfaction. At this stage, the sufficiency or correctness of the satisfaction. At this stage, the sufficiency or correctness of the satisfaction. At this stage, the sufficiency or correctness of the material is not open to judicial scrutiny; what is required is material is not open to judicial scrutiny; what is required is material is not open to judicial scrutiny; what is required is existence of relevant material, which is clearly present in the existence of relevant material, which is clearly present in the existence of relevant material, which is clearly present in the instant case.

6.3 Accordingly, all objections rais Accordingly, all objections raised by the assessee challenging ed by the assessee challenging the validity of the reassessment proceedings are rejected. the validity of the reassessment proceedings are rejected. the validity of the reassessment proceedings are rejected.

6.4 Accordingly, the ground No. 1 of the appeal of the assessee is Accordingly, the ground No. 1 of the appeal of the assessee is Accordingly, the ground No. 1 of the appeal of the assessee is also rejected.