LUMAR GEMS ,MUMBAI vs. ACIT CIRCLE 23(1), MUMBAI

(Assessment Year: 2018-19) Lunar Gems, ACIT, Circle-23(1), Room No. 113, 1st Floor, DE 5090, Bharat Diamond Bourse, Bandra Kurla Complex, Vs. Matru Mandir, Tardeo Road, Bandra (E), Mumbai-400051. Mumbai-400007. PAN: AAAFL0147K Appellant) : Respondent) : Shri Ajay Singh, AR Assessee / Appellant by Revenue / Respondent by : Shri Surendra Mohan, Sr. DR Date of Hearing 06.11.2025 : Date of Pronouncement : 11.11.2025 O R D E R

Per Padmavathy S, AM:

Lunar Gems “I. Addition of Rs. 1,71,51,300/- 1.

1. The learned CIT(A) erred in upholding the addition of Rs. 1,71,51.300/-treating the purchases of cut diamonds from three parties namely; Tanman Jewels Pvt Ltd. Antique Exim Pvt Ltd and Saffron Gems Pvt Ltd as non- genuine without considering the submission and primary documents i.e. stock register, purchase invoices, bank statement, export invoices, MCA portal status. GST portal status etc. furnished by the assessee, therefore the purchases cannot be treated as non-genuine and addition ought to be deleted.

2. The Ld. CIT(A) failed to considered that the purchases made from three parties are duly confirmed and supported by all the primary documents, therefore merely because the parties failed to appear before AO cannot lead to addition u/s. 69C of the Act more so when goods purchased are exported.

3. Without prejudice to the above, the AO failed to state and provide to the Appellant, copy of statements of the alleged parties, enquiry report of department nor provided cross examination, thus completing the assessment in pre-determined mind.”

2. The assessee is a partnership firm and filed the return of income for AY 2018-19 on 21.09.2018 declaring a total income of Rs. 1,64,380/-. The Assessing Officer (AO) received an information that the assessee has taken accommodation entries towards bogus purchases. Accordingly, the AO issued a notice u/s 148A(b) dated 25.03.2022. The AO subsequently passed an order u/s. 148A(d) dated 20.04.2022 and issued notice u/s. 148 on the same date. The AO completed the assessment u/s. 147 by making an addition of Rs. 1,71,51,300/- u/s. 68 of the Act towards bogus purchases. Aggrieved the assessee filed further appeal before the CIT(A) who confirmed the addition made by the AO. Aggrieved the assessee is in appeal before the Tribunal.

3. The assessee raised additional grounds raising the legal contention that the notice u/s. 148 dated 20.04.2022 issued by the AO is not valid for the reason that the AO has not obtained the approval from the appropriate authority as per section Lunar Gems 151 of the Act. The ld. AR submitted that if the additional ground is admitted and allowed then the grounds raised on merits would become academic. The additional ground raised is purely legal issue, which does not require investigation of any new facts. Hence, placing reliance on the judgment of the Hon’ble Apex Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC), we admit the additional grounds.

4. We heard the parties and perused the material on record. The ld. AR submitted that the notice under section 148 dated 20.04.2022 is beyond the period of 3 years and therefore as per the provisions of Section 151 of the Act the AO should have obtained the approval from Principle Chief Commissioner of Income Tax (PCCIT). The ld AR further submitted that in the present case the AO has obtained approval from Principle Commissioner of Income Tax (PCIT) while issuing notice under section 148 and therefore the notice is invalid. The ld. DR rebutted the said argument stating that the AO initiated the proceedings by issue of notice u/s. 148A(b) on 25.03.2022 which is within 3 years and therefore the AO has rightly obtained the approval from PCIT. In this regard, we notice that the Hon'ble Bombay High Court in the case of M/s. Vodafone Idea Limited Vs DCIT (WP No. 2768 of 2022 dated 06.02.2024) has considered and identical issue and held that- 1. Petitioner is impugning a notice dated 19th March 2022 issued under Section 148A(b) of the Income Tax Act, 1961 ("the Act"), the order passed under Section 148A(d) of the Act and the notice both dated 7th April 2022 issued under Section 148 of the Act. One of the grounds raised

is that the sanction to pass the order under Section 148A(d) of the Act and issuance of notice under Section 148 of the Act is invalid inasmuch as the sanction has been admittedly issued by the Principal Commissioner of Income Tax ("PCIT") and not by the Principal Chief Commissioner of Income Tax (PCCIT").

2. Petitioner's request for a copy of the sanction has also been denied. Even in the affidavit in reply, the Department is refusing to give the sanction which makes us Lunar Gems wonder what is the national secret involved in that, that Assessee is being refused what he is rightfully entitled to receive from the Department. In the affidavit in reply, the stand taken by the Revenue is it will be made available during the re- assessment proceeding.