DECENT DIAMONDS PRIVATE LIMITED,MUMBAI vs. ITO WARD 5(1)(1), MUMBAI, MUMBAI

The Assessee has raised the following grounds of appeal:

The brief facts of the case are that the assessee company is engaged in the The brief facts of the case are that the assessee company is engaged in the The brief facts of the case are that the assessee company is engaged in the business of wholesale trading of diamonds and filed its return of income for business of wholesale trading of diamonds and filed its return of income for business of wholesale trading of diamonds and filed its return of income for Assessment Assessment Year Year 2017 2017-18 18 declaring declaring total total income income of of Rs.3,67,420/ Rs.3,67,420/-. Subsequently, on the basis of informat Subsequently, on the basis of information received from the Investigation Wing, ion received from the Investigation Wing, Surat, that certain entities namely M/s Dishita Diamonds Pvt. Ltd., M/s Galaxy Surat, that certain entities namely M/s Dishita Diamonds Pvt. Ltd., M/s Galaxy Surat, that certain entities namely M/s Dishita Diamonds Pvt. Ltd., M/s Galaxy Impex, M/s Supreme Traders and M/s Parul Gems Pvt. Ltd. were engaged in Impex, M/s Supreme Traders and M/s Parul Gems Pvt. Ltd. were engaged in Impex, M/s Supreme Traders and M/s Parul Gems Pvt. Ltd. were engaged in providing accommodation entries, the Assessing Officer reopened the providing accommodation entries, the Assessing Officer reopened providing accommodation entries, the Assessing Officer reopened assessment by issuing notice under section 148 of the Act. According to the assessment by issuing notice under section 148 of the Act. According to the assessment by issuing notice under section 148 of the Act. According to the information received, the assessee had obtained accommodation entries information received, the assessee had obtained accommodation entries information received, the assessee had obtained accommodation entries amounting to Rs.4,96,63,898/ amounting to Rs.4,96,63,898/- from the aforesaid parties during the relevant from the aforesaid parties during the relevant previous year. During the re previous year. During the reassessment proceedings, the Assessing Officer assessment proceedings, the Assessing Officer observed that the assessee had failed to furnish details to substantiate the observed that the assessee had failed to furnish details to substantiate the observed that the assessee had failed to furnish details to substantiate the genuineness of the transactions. The Assessing Officer further observed that the genuineness of the transactions. The Assessing Officer further observed that the genuineness of the transactions. The Assessing Officer further observed that the bank accounts of the concerned parties showed freque bank accounts of the concerned parties showed frequent debit and credit nt debit and credit transactions and by merely routing transactions through banking channels, it did transactions and by merely routing transactions through banking channels, it did transactions and by merely routing transactions through banking channels, it did not establish the genuineness of the transactions or the creditworthiness of the not establish the genuineness of the transactions or the creditworthiness of the not establish the genuineness of the transactions or the creditworthiness of the parties. Accordingly, the Assessing Officer completed the assessment under parties. Accordingly, the Assessing Officer completed the assessment unde parties. Accordingly, the Assessing Officer completed the assessment unde section 147 read with sections 144 and 144B of the Act and the amount of section 147 read with sections 144 and 144B of the Act and the amount of section 147 read with sections 144 and 144B of the Act and the amount of Rs.4,96,63,898/- was treated as unexplained cash credit under section 68 of the was treated as unexplained cash credit under section 68 of the was treated as unexplained cash credit under section 68 of the Act, resulting in assessment of total income at Rs.5,00,31,318/ Act, resulting in assessment of total income at Rs.5,00,31,318/-.

Aggrieved by the assessment ord Aggrieved by the assessment order, the assessee preferred an appeal er, the assessee preferred an appeal before the CIT(Appeals). In the statement of facts filed along with Form No.35, before the CIT(Appeals). In the statement of facts filed along with Form No.35, before the CIT(Appeals). In the statement of facts filed along with Form No.35, the assessee challenged the validity of reopening under section 148 of the Act the assessee challenged the validity of reopening under section 148 of the Act the assessee challenged the validity of reopening under section 148 of the Act and contended that the reassessment was based merely on suspicion and and contended that the reassessment was based merely on sus and contended that the reassessment was based merely on sus assumptions. The assessee stated in Grounds of Appeal that the books of assumptions. The assessee stated in Grounds of Appeal that the books of assumptions. The assessee stated in Grounds of Appeal that the books of account of the assessee were duly maintained and audited under section 44AB of account of the assessee were duly maintained and audited under section 44AB of account of the assessee were duly maintained and audited under section 44AB of the Act and had been accepted in the original assessment proceedings. The the Act and had been accepted in the original assessment proceedings. The the Act and had been accepted in the original assessment proceedings. The assessee further stated that purchases and sales recorded in the books had not ted that purchases and sales recorded in the books had not ted that purchases and sales recorded in the books had not been rejected under section 145 of the Act and there could not be sales without been rejected under section 145 of the Act and there could not be sales without been rejected under section 145 of the Act and there could not be sales without corresponding purchases. The assessee also stated (in Grounds of Appeal) that corresponding purchases. The assessee also stated (in Grounds of Appeal) that corresponding purchases. The assessee also stated (in Grounds of Appeal) that the Assessing Officer had completed th the Assessing Officer had completed the reassessment without granting adequate e reassessment without granting adequate opportunity, without furnishing the material relied upon and without issuing a opportunity, without furnishing the material relied upon and without issuing a opportunity, without furnishing the material relied upon and without issuing a draft assessment order. The assessee submitted that the addition made under draft assessment order. The assessee submitted that the addition made under draft assessment order. The assessee submitted that the addition made under section 68 of the Act be deleted. section 68 of the Act be deleted.

However, during the ap However, during the appellate proceedings, despite several notices issued pellate proceedings, despite several notices issued by the CIT(Appeals) on different dates, the assessee did not make any by the CIT(Appeals) on different dates, the assessee did not make any by the CIT(Appeals) on different dates, the assessee did not make any compliance. The CIT(Appeals) observed that the assessee had failed to avail the compliance. The CIT(Appeals) observed that the assessee had failed to avail the compliance. The CIT(Appeals) observed that the assessee had failed to avail the opportunities provided and had not furnished any writt opportunities provided and had not furnished any written submissions or en submissions or supporting evidence in support of the grounds raised in appeal. The supporting evidence in support of the grounds raised in appeal. The supporting evidence in support of the grounds raised in appeal. The CIT(Appeals) by referring to the maxim " CIT(Appeals) by referring to the maxim "Vigilantibus Non Dormientibus Jura Vigilantibus Non Dormientibus Jura Subveniunt" held that law assists those who are vigilant and not those who sleep " held that law assists those who are vigilant and not those who sleep " held that law assists those who are vigilant and not those who sleep over their rights. The CIT(Appeals) further observed that the assessee was not hts. The CIT(Appeals) further observed that the assessee was not hts. The CIT(Appeals) further observed that the assessee was not keen to pursue the appeal and, in the absence of any material or arguments on keen to pursue the appeal and, in the absence of any material or arguments on keen to pursue the appeal and, in the absence of any material or arguments on record, the grounds of appeal had no legs to stand. The CIT(Appeals) also record, the grounds of appeal had no legs to stand. The CIT(Appeals) also record, the grounds of appeal had no legs to stand. The CIT(Appeals) also observed that the Assessing Officer had observed that the Assessing Officer had rightly treated the amount of rightly treated the amount of Rs.4,96,63,898/- as unexplained cash credits under section 68 of the Act and as unexplained cash credits under section 68 of the Act and as unexplained cash credits under section 68 of the Act and dismissed the appeal of the assessee. dismissed the appeal of the assessee.

The assessee is in appeal before us against the order passed by the The assessee is in appeal before us against the order passed by the The assessee is in appeal before us against the order passed by the CIT(Appeals) dismissing the appeal of CIT(Appeals) dismissing the appeal of the assessee.

We have heard the rival contentions and perused the material on record. We have heard the rival contentions and perused the material on record. We have heard the rival contentions and perused the material on record. We find that though the assessee had raised several grounds challenging the We find that though the assessee had raised several grounds challenging the We find that though the assessee had raised several grounds challenging the validity of reopening under section validity of reopening under section 148 of the Act, the addition made under the addition made under section 68 of the Act and the denial of opportunity, the impugned order passed the Act and the denial of opportunity, the impugned order passed the Act and the denial of opportunity, the impugned order passed by the CIT(Appeals) shows that the appeal was dismissed primarily for non- by the CIT(Appeals) shows that the appeal was dismissed primarily for non by the CIT(Appeals) shows that the appeal was dismissed primarily for non compliance and non-prosecution. Though the CIT(Appeals) has made certain prosecution. Though the CIT(Appeals) has made certain prosecution. Though the CIT(Appeals) has made certain observations on merits, in in the order as a whole the issues raised by the assessee ole the issues raised by the assessee were not adjudicated after examining the facts, evidences and legal contentions were not adjudicated after examining the facts, evidences and legal contentions were not adjudicated after examining the facts, evidences and legal contentions on record.

It is a settled principle of law that an appeal cannot be dismissed merely It is a settled principle of law that an appeal cannot be dismissed merely It is a settled principle of law that an appeal cannot be dismissed merely for want of prosecution without adjudicating th for want of prosecution without adjudicating the issues on merits.

Considering the entirety of facts and circumstances of the case and in the Considering the entirety of facts and circumstances of the case and in the Considering the entirety of facts and circumstances of the case and in the interest of justice, we deem it fit and proper to restore the matter to the file of interest of justice, we deem it fit and proper to restore the matter to the file of interest of justice, we deem it fit and proper to restore the matter to the file of CIT(Appeals) for de novo adjudication. The CIT(Appeals) shall examine the CIT(Appeals) for de novo adjudication. The CIT(Appeals) shall examine th CIT(Appeals) for de novo adjudication. The CIT(Appeals) shall examine th grounds raised by the assessee relating to the validity of reopening under section grounds raised by the assessee relating to the validity of reopening under section grounds raised by the assessee relating to the validity of reopening under section issued notice u/s 148 of the Act. of the Act, the addition made under section 68 issued notice u/s 148 of the Act. of the Act, the addition made under section 68 issued notice u/s 148 of the Act. of the Act, the addition made under section 68 of the Act and other connected issues and shall dispose of the appeal by a of the Act and other connected issues and shall dispose of the appeal by a of the Act and other connected issues and shall dispose of the appeal by a speaking order in accordance with law after considering the material and in accordance with law after considering the material and in accordance with law after considering the material and evidences placed on record. Needless to state, reasonable opportunity of hearing evidences placed on record. Needless to state, reasonable opportunity of hearing evidences placed on record. Needless to state, reasonable opportunity of hearing shall be afforded to the assessee and the assessee shall cooperate with the shall be afforded to the assessee and the assessee shall cooperate with the shall be afforded to the assessee and the assessee shall cooperate with the appellate proceedings and furnish all nec appellate proceedings and furnish all necessary details and evidences in support essary details and evidences in support of its claim. We clarify that we have not expressed any opinion on the merits of of its claim. We clarify that we have not expressed any opinion on the merits of of its claim. We clarify that we have not expressed any opinion on the merits of the issues involved and all the contentions are left open to be decided afresh by the issues involved and all the contentions are left open to be decided afresh by the issues involved and all the contentions are left open to be decided afresh by the CIT(Appeals).

In the result, the appeal of th In the result, the appeal of the assessee is allowed for statistical purposes. e assessee is allowed for statistical purposes.