LUCKY JEWELLERY ,MUMBAI vs. DCIT,19(1), MUMBAI

PER SHRI ANIKESH BANERJEE, (JM): The instant appeal of the assessee filed against the order of Ld. NFAC, Delhi [for brevity ‘the ld. CIT(A)], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for assessment year 2012-13, date of order 26.12.2025. The impugned order emanated from the order of Ld. ACIT-19(2), Mumbai passed under section 143(3) r.w.s. 147 of the Ac dated 15.1.2019.

“Grounds of Appeal 1. On the facts and circumstances of the case and in law, the Ld. A.O. erred in initiating the assessment u/s 147 of the Act and passing the assessment order u/s. 147 r.w.s. 143(3) of the Act, and disregarding the fact that jurisdiction of the impugned assessment was within the purview of section 153C of the Act, which begins with non-obstante clause and over-rides section 147 of the Act, since the information relating to or pertaining to the appellant was found and seized during the course of search on Bhanwarlal Jain Group. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not considering that the assumption of jurisdiction by the Ld. A.O. is bad in law as the conditions laid down under the Act for initiating reassessment proceeding u/s 147 of the Act have not been fulfilled. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition under section 69C of the Act amounting to Rs. 5,49,93,398/-, being 100% of alleged bogus purchases, without considering that the appellant has made genuine purchases from impugned purchase parties, duly substantiated by documentary evidence, with actual hand delivery of goods and for which payments have been made through banking channels. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition under section 69C of the Act amounting to Rs. 5,49,93,398/-, being 100% of alleged bogus purchases, without considering the fact that the assessee has subsequently sold the goods. 5. The appellant craves to add, alter, classify, reclassify, delete or modify any of the above grounds of appeal and requests to consider each of the above grounds without prejudice to one another. The assessee has also raised additional grounds which read as under : Additional Ground No. 01 On the facts and circumstances of the case and in law, the Ld. A.O. erred in initiating the assessment u/s 147 of the Act and passing the assessment order u/s. 147 r.w.s. 143(3) of the Act, and disregarding the fact that jurisdiction of the impugned assessment was within the purview of section 153C of the Act, which begins with non- obstante clause and over-rides section 147 of the Act, since the information relating to or pertaining to the appellant was found and seized during the course of search on Bhanwarlal Jain Group.

Sr.No. Particular Date ABP Page 1 Notice issued under section 148 of the 29.03.2019 32 Act 2 Objection against reasons recorded for 09.11.2019 38-39 reopening 3 Ld. AO without disposing objection filed 29.11.2019 by the assessee had directly issued show-cause notice

Ld. AR contended that without disposing objection of the assessee, assessment under section 148 of the Act is vitiated entire proceedings. Ld. AR respectfully relied on the order of Hon'ble Bombay High Court in the case of KSS Petron Private Limited (ITA No. 224 of 2014 order dated 3.10.2016). Relevant paragraph 7 to 9 is reproduced below :-

“7. On further Appeal, the Tribunal passed the impugned order. By the impugned order it held that the Assessing Officer was not justified in finalizing the Assessment, without having first disposed of the objections of the appellant. This impugned order holds the Assessing Officer is obliged to do in terms of the Apex Court's decision in GKN Driveshafts (India) Ltd., v/s. ITO 259 ITR 19. In the aforesaid circumstances, the order of the CIT(A) and the Assessing Officer were quashed and set aside. However, after having set aside the orders, it restored the Assessment to the Assessing Officer to pass fresh order after disposing of the objections to re-opening notice dated 28th March, 2008, in accordance with law. 8. We note that once the impugned order finds the Assessment Order is without jurisdiction as the law laid down by the Apex Court in GKN Driveshafts (supra) has not been followed, then there is no reason to restore the issue to the Assessing Officer to pass a further/fresh order. If this is permitted, it would give a licence to the Assessing Officer to pass orders on re- opening notice, without jurisdiction (without compliance of the law in accordance with the procedure), yet the only consequence, would be that in appeal, it would be restored to the Assessing Officer for fresh adjudication after following the due procedure. This would lead to unnecessary harassment of the Assessee by reviving stale/ old matters. 9. In fact, to ensure that re-opening notices are disposed of, expeditiously the parliament itself has provided in Section 153(2) of the Act a period of limitation within which the Assessing Officer must pass an order on the notice of re-opening i.e. within one year from the end of the financial year in which the notice was issued. In fact, Section 153 (2A) of the Act as in force at the relevant time itself provides that an order of fresh Assessment, consequent to the order of Tribunal under Section 254 of the Act, would have to be passed within one year from the end of the financial year in which the order under Section 254 of the Act, was passed by the Tribunal and received by the Commissioner of Income Tax.” 6. The Ld. AR contended that the identical fact is duly adjudicated by Hon'ble Madras High Court in the case of Jayanthi Natarajan vs. ACIT reported in 100 taxamnn.com 511 (Madras). Relevant paragraph 13 to 15 is reproduced below:

“13. The Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd., (supra), held that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the notice is to file a return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the notice is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. This procedure has been carved out by the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd.'s, (supra), which binds not only the assessee, but the revenue as well. It has been pointed out that on receipt of the reasons, the notice is entitled to file objections to issuance of notice for reopening and if he files such objections, the Assessing Officer is bound to dispose of the same by passing a speaking order. Thus, the procedure, which was required to be followed by the respondent is to dispose of the petitioner's objections by passing a speaking order.

“To, The Sr. Authorised Representative ITAT-7(2), Mumbai Sir/Madam, Sub: Factual Report in the case of M/s Lucky Jewellery, PAN: AAAFL99420, ΑΥ 2012- 13-ITA No. 906/M/2026-reg.

Kindly refer to your communication seeking comments on the assessee's additional ground alleging that objections against reopening were not diposed of by the Assessing Officer. 2 in this regard, it is submitted that notice u/s 148 was issued on 29.03.2019 and in response thereto the assessee filed return of income and sought reasons recorded for reopening. The reasons were duly supplied to the assessee. Thereafter, the assessee filed objections vide letter dated 19.11.2019 challenging the reopening proceedings 3. The objections raised by the assessee were duly examined and considered during the reassessment proceedings. The assessee was afforded adequate opportunities through notices issued u/s 143(2) and 142(1) and also through the final show-cause notice dated 29.11.2019. The final show-cause notice dated 29.11.2019 vide para no 3 specifically records that copies of reasons recorded were provided and that objections raised against reopening were duly considered and disposed of, wherever filed. Further, the notice records that the assessment records and material available on record were carefully examined and principles of natural justice were followed in letter and spirit. 4. The order sheet entries also establish that the assessee actively participated in the reassessment proceedings by filing submissions on various dates, including 25.04.2019, 04.11.2019, 08.11.2019, 25.11.2019 and 04.12.2019. Thus, the assessee was granted sufficient opportunity to present its case 5. Accordingly, the contention of the assessee that objections against reopening were not considered is factually incorrect. The reopening proceedings were conducted after due consideration of the objections and in compliance with the principles of natural justice. Therefore, the additional ground raised by the assessee is devoid of merit and deserves to be rejected.” 8. We have heard the rival submissions, perused the material available on record, and carefully considered the judicial precedents relied upon by the parties. The additional grounds raised by the assessee challenge the very assumption of jurisdiction by the Ld. AO and arise from the facts already available on record. Since no fresh investigation of facts is required, the additional grounds are admitted for adjudication. The short issue for our consideration is whether the reassessment framed under Section 147 read with Section 143(3) of the Act is legally sustainable when the objections filed by the assessee against the recorded reasons for reopening were not disposed of by way of a separate speaking order before completion of the reassessment. The chronology of events placed on record shows that the notice under Section 148 of the Act was issued on 29.03.2019, the assessee filed objections to the recorded reasons on 19.11.2019, and thereafter the Ld. AO proceeded to issue the final show-cause notice dated 29.11.2019 without first passing a separate speaking order disposing of such objections. Though the Ld. DR, relying upon the factual report of the Ld. AO dated 08.07.2026, contended that the objections were duly considered during the reassessment proceedings and that the show-cause notice records such consideration, the revenue has not been able to place on record any independent and separate speaking order disposing of the objections prior to completion of the reassessment.