KUNDAN JEWELLERS PRIVATE LIMITED,GANDHI CHOWK, SADAR BAZAR, MUKTSAR vs. THE INCOME TAX OFFICER, WARD-2(2), MUKTSAR, MUKTSAR

3. That the Ld. CIT(A) NFAC, vide order u/s 250 of the Act dt. 20.02.2025, has erred while arbitrarily rejecting the grounds of appeal of the assessee that while disposing the objections filed against the issue of notice u/s 148 of the Act neither all the objections has been delt with by the AO nor proper reasons have been given for conclusion.

of the assessee that the assessment order u/s 147 r.w.s. 144B of the Act dt. 30.03.2022 is liable to be quashed because the information received by the AO from ACIT Central Circle-1(2) Ahmedabad on the basis of which proceedings u/s 147/148 of the Act have been initiated and addition of 3.

Assessment Year: 2014-15

Rs. 70,09,601/- u/s 69A r.w.s. 115BBE has been made has not been provided to the assessee despite specific request during the course of assessment proceedings.

5. That the Ld. CIT(A) NFAC, vide order u/s 250 of the Act dt. 20.02.2025, has erred while arbitrarily rejecting the grounds of appeal of the assessee that the assessee did not receive any alleged accommodation entry of Rs.70,09,601/- from Ridhi International from the bank accounts of Saraswat Cooperative Bank and Canara Bank as the assessee does not have any account with these banks.

6. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed of.”

The assessee has filed additional grounds of appeal on 6th Jan., 2026 claiming 3. the same to be a legal ground and requested admission of the same placing reliance on the judgment of the Hon’ble Apex Court in the case of National Thermal Power Corporation Ltd. v. CIT 1998 229 ITR 383 (SC).

4. The additional grounds raised are as under:

“1. That the issuance of notice u/s 148 by the Assessing Officer is bad in law since if, at all, the proceedings were liable to be initiated, the same could have been initiated only by issuance of notice u/s 153C and, thus, assessment as framed by the Assessing Officer u/s 148/143(3) deserves to be quashed.

2. That the Ld. CIT(A) has ignored the binding judgment of the Hon'ble Apex Court in the case of Vikram Sujit Kumar Bhatia reported in 453 ITR page 417 and that binding judgment have been ignored in a summary manner.

6. Subsequently, on the basis of information gathered from the insight portal, that the assessee is engaged in providing accommodation entries to various beneficiaries, specifically based on information received from ACIT, Circle-1(2), Ahemadabad, that the assessee has entered into transactions amounting to Rs. 70.09 lacs, with one Mr. Shripal Vohra (bearing PAN AELPV5937J), the case of the assessee has been reopened (after necessary approval from higher authorities) vide notice u/s 148 dated 30.03.2021, in response to which return has been submitted by the assessee on 31.05.2021 declaring a total income of Rs. 14,760/-.

Assessment Year: 2014-15 statements with HDFC Bank A/c No.xxxxxx 00863, along with computation of income and all other necessary particulars accompanied by written submissions explaining the facts of the case , the assessment has been ultimately completed, with an addition of Rs. 70.09 lacs u/s 69A of the Act, based on allegations, that the assessee has carried out undisclosed transaction, with one party namely Ridhi International, operated by Sh. Shripal Vohra from whom, the assessee has been alleged to have received an undisclosed amount of Rs. 70.09 lakhs in its bank accounts, held with “Saraswat Cooperative Bank” and with “Canara Bank” totaling the said amount.

“5.1. I have carefully considered the relevant and material facts on record, in respect of this ground of appeal, as brought out in the assessment order. During the assessment proceedings, AO observed that the assessee had undisclosed income of Rs. 70,09,601/. The assessee failed to give a satisfactory reply and provide any required details. Hence, the A.O. completed the assessment and passed order u/s. 147/147B of the Income-tax Act dated 30.03.2022 Assessing total Income at Rs. 70,23,560/-.

5.2. It is further noted and as detailed in preceding para above that during the appellate proceedings, the appellant has not furnished any substantial evidence in support of its grounds of appeal. The appellant has challenged the addition in the different grounds of appeal. However, the appellant has not furnished any substantial written submission or documentary evidence in support of its grounds of appeal challenging the addition. The appellant has also not submitted any copy of its written submission or documentary evidence filed during the assessment proceedings. The onus lies on the appellant to support any claim by bringing in cogent documentary evidence. In absence of any substantial written submission or documentary evidence in support of its grounds of appeal, I have no basis to take a contrary view in the appellate proceedings as I have no reason to interfere with the assessment order. As such, I do not find any infirmity in the order of Assessing Officer. Therefore, Addition of Rs. 70,09,601/- (Assessing total Income at Rs. 70,23,560/-) is hereby sustained on merits.

10. Now, the assessee is before the Tribunal on the grounds contained in the memorandum of appeal. In course of hearing, the ld. AR of the assessee argued on legal as well as on merits and submitted that the assessee company is only earing labour charges from doing the work of a skilled metal worker ( goldsmith ) who specializes in working with gold and other precious metals and has not engaged in any transaction of purchase or sale of goods and the gross receipts against such labour

Assessment Year: 2014-15 charges has been duly disclosed in the audited financials and return of income. He further submitted that in the instant case, proceedings initiated vide notice u/s 148 is void ab-initio because in the reasons recorded the AO, has stated that the assessee has purchased goods amounting to Rs. 70.09 lacs from one Mr. Vohra and it has also been alleged that the assessee has obtained various accommodation entries to the tune of Rs.

70.09 lacs against which payment has been received through bank channel, which itself proves that the reasons recorded are absolutely contradictory in nature.

Assessment Year: 2014-15 14. Referring to the above documentary evidences brought on record, the ld. AR submitted that the addition has been made by the AO in the case of the assessee out of inadvertent error where the AO has mistakenly assumed that there was only one company in the name of Kundan Jewellers Pvt. Ltd, but in reality there are two different companies registered with Ministry of Corporate Affairs (MCA), one in the state of Punjab and other in the state of Maharashtra, and all the entries are found recorded in the bank account of the company registered in the state of Maharashtra. He further submitted that in the instant case, the assessee has fully provided all details and has explained his case and has discharged the initial burden of proof with lay upon the assessee, and now the onus has shifted on the revenue.

“ITO vs. Sukhvir Singh as reported in [2024]165 taxmann.com 197 (Amritsar).

It has been reported as under "Where Assessing Officer received AIR Information that assessee had deposited substantial amount of cash in bank account and issued reopening notice, since AlR information relied upon was incorrect and Assessing Officer failed to verify amount of cash deposited in bank from copies of bank statements duly furnished by assessee during course of assessment proceedings, there was non-application of mind by Assessing Officer and thus, impugned reopening notice was void ab initio.

BIC CELLO (INDIA) PVT. LTD. vs. ACIT as reported in (2025) 475 ITR 463 (Bom)

"Notice based on erroneous fact…… in our view if the reasons for reopening the assessment are based on incorrect facts or conclusions, certainly the notice issued for reopening cannot be sustained.

ITO vs. Baba Kartar Singh Dukki Educational Trust as reported in (2016) 158 ITD 965 (CHD).

"Where Assessing Officer processed under section 143(1) returns of income filed by assessee for assessment years 2001-02 to 2003-04 and subsequently, he reopened said assessments on sole basis that assessee had not filed returns for years preceding to assessment year 2004-05 and, therefore, its income having escaped assessment, reopening of assessment was on basis of suspicion and non-existent and incorrect facts and it was invalid" dated 28.02.2020-CHD Trib

"10.6 in the present case also the A.O. reopened the assessment on the basis of wrong facts, so respectfully following the ratio laid down in the aforesaid referred to cases, I am of the view that the reopening of the assessment in the present case was not valid, accordingly, the same is quashed.

Fortune Metaliks Limited vs. DCIT, dated 12.01.2021-CHD Trib

"7. We have heard both the parties. We find merit in the contention of the Id. counsel for the assessee that the reassessment proceedings undertaken by the AO in the present case were invalid since the reasons recording his satisfaction of escapement of Income were based on incorrect facts and there was no application of mind at all by the AO. The fallacies in the facts pointed out by the id. counsel for the assessee, regarding the quantum of bogus purchases noted by the AG In his reasons as the AD In the reasons that the bogus bills had been debited to the Profit & Loss Account wat incorrect which is evident from the fact that the Id. CIT(A) in his order passed on merits has found these bills to be relating to pure relating to purchase of fixed assets and has accordingly, made the disallowance of only depreciation relating to the same, which has not been challenged by the Revenue before us. It is clearly evident that on receiving information from the Commercial Tax Department, the Id. AO did not even care to verify the same from his records from where all these factual Inaccuracies would have been brought out. There was clearly total non-application of mind by the AG and the belief of escapement of income is definitely not his own but borrowed from that of the commercial tax officer who had forwarded the information.

The basic requirement of low for reopening an assessment is application of mind by the AD to the material or information in his possession to conclude and arrive at a satisfaction therefrom that Income has escaped assessment. Both application of mind and satisfaction / belief of the AO are lacking in the present case. The reassessment therefore we hold is invalid. The case lows relied upon by the Ld. Counsel for the assessee support the case of the assessee, the order passed by the AO is therefore, set aside."

Gaurav Joshi vs. ITO as reported ot (2019) 55 CCH 0083 (Jalandhar Camp)

"Held, AO while Issuing notice u/s 148 had mentioned that assessee hod deposited cash during FY 2009-10 in bank account which had escaped assessment-On contrary, in Assessment Year: 2014-15 assessment order, he mentioned that cash deposited in assessee's bank account was less than amount mentioned in reopening notice-Therefore, reasons recorded by AO were not emerging from record available with him-AO recorded reasons which were not found to exist on record, therefore, reassessment framed deserved to be quashed-Assessee's appeal allowed."

Kissan Fats Limited, Hazi Rattan Link Road, Bathinda. vs. The DCIT, Central Circle-1, Ludhiana in ITA No. 407/CHD/2023

Therefore, the reopening of the case made by the Ld. AD on the basis of incorrect facts and figures is vold-ab-initio and the reassessment proceeding deserves to be quashed.”

“Yes, I find this case fit for issue of notice u/s 148 of the Act, for reasons recorded by the Assessing Officer and the undisclosed/unexplained facts of purchase of goods of Rs.70,09,601/- and profit of Rs. 7,00,960/- did not declare in return of income.”

The approval itself has been granted on incorrect and contradictory recording , which speaks of goods purchase, when the allegation of the AO is receipt of funds in bank account.

Order pronounced in accordance with Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 as on 06.04.2026