SANKALP EXIM PRIVATE LIMITED,SURAT vs. INCOME TAX OFFICER, WARD 2(1)(3) , SURAT

The grounds of appeals are as under:- ITA No. 591/Srt/2024 A.Y. 2015-16 “1. In the facts and circumstances of the case and in law, the order of CIT(A) is bad in law & therefore liable to be quashed. 2. In the facts & circumstance of the case and in law CIT(A) erred in dismissing appeal on the ground of non-prosecution of appeal on the part of the appellant.

The assessee company is engaged in the business of trading of diamond. The assessee filed return of income for assessment year 2015-16 showing total income of Rs. 15,63,410/- on 28-09-2015. The statutory notices were issued and in response, the assessee made written submissions vide letter dated 17-08-2017. The assessee submitted the audited report in Form No. 3CA/3CD, balance sheet, profit and loss account and other relevant accounts, computation of income. During the course of assessment proceedings, notices u/s. 133(6) were issued to various parties from where the assessee has shown purchase/sale of rough diamond. The name and details of the parties are as follows:-

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

The ld. Ld. A.R. submitted that the AO is not justified in adding Rs 2,61,40,000/- as bogus/non-genuine purchases as having accepted the purchases from the various other parties without finding out any purchases to be bogus/non-genuine. The AO having accepted the purchases as per books except Rs 4,50,000/- to be genuine is not justified in making addition of Rs 2,60,45,900/- as bogus/non-genuine purchase. The ld. A.R. further submitted that the assessment was framed u/s. 144 of the Act but the assessee has replied all the notices and submitted all the details before the Assessing Officer.

The ld. D.R. relied upon the assessment order and the order of the CIT(A).

We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that from perusal of polished diamond stock register which was produced by the ld. A.R. from page 55 till page 77 the assessee has given details of parties, receipts, but the opening balance remained zero as on 31st March, 2013. The ld. A.R. submitted that the purchase was not doubted and rather accepted by the Assessing Officer, but the Assessing Officer has categorically held that the parties to whom the assessee purchased the diamond which was sold to the other parties has not confirmed the same in respect of non-attendance of the assessment proceedings for replying the summons u/s. 131 of the Act. The fact remains that the said parties has placed the reply before the Assessing Officer which is at page 79 to 87 with the retail invoices issued by the assessee. The complete stock statement and after taking cognizance of the ledger accounts of Jay Rashmi Diamond Pvt. Ltd. and the bills against sales, the assessee has not produced the purchase invoices though it is mentioned in the index of the paper book. Thus, the purchase was very well doubted by the Assessing Officer and the genuineness of purchases was not established by the assessee. The contention of the ld. A.R. submitted that the order is passed u/s. 144 r.w.s. 143(3) cannot be the proper assessment order once the assessee has participated in assessment proceedings. The assessment ultimately is passed u/s. 143(3) only merely mentioning section 5 144 of the Act will not invalidate the assessment order. Thus, ITA No. 591/Srt/2024 is dismissed.

As regards, ITA No. 801/Srt/2024, the same is dealing with identical issue of bogus purchases and in this year as well, the Assessing Officer has doubted the purchases and the assessee could establish the genuineness of the same with evidences, Thus, ITA No. 801/Srt/2024 is dismissed.

In the result, both the appeals of the assessee are dismissed.