RBZ JEWELLERS LIMITED,AHMEDABAD vs. THE DY.CIT, CIRCLE-3(1)(1), AHMEDABAD

Without prejudice to the above, although the Ld. CIT(A) has restricted the addition to 5% of Rs. 45,18,019/- i.e. 2,25,900/- but he has erred in calculating the addition @12.5% of Rs. 45,18,019/- i.e. Rs. 5,64,752/-.

The appellant craves leave to add, alter or amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.”

The brief facts of the case are that the assessee, M/s. RBZ Jewellers Limited, filed its return of income for the Assessment Year 2023–24 declaring total income of Rs. 28,38,48,520/-. Subsequently, a search and seizure action under section 132 of the Income-tax Act, 1961 ("the Act") was carried out on 13.09.2023 in the case of Tirth Gold Group at Surat and Rajkot. During the course of search proceedings, it was found that the entities of Tirth Gold were using software known as “AUG-ERP” for recording their purchase and sales transactions and that the digital data relating to various branches such as Tirth Gold–Surat, Rajkot, Delhi, Ahmedabad and Bangalore were maintained in a common database. The Investigation Wing observed that the said software contained records of both accounted as well as unaccounted transactions and that a substantial part of the transactions recorded therein did not correspond with the transactions reported in their Income-tax and GST returns. On the basis of the material found during the search, the Investigation Wing came to the conclusion that the entities of Tirth Gold were engaged in unaccounted purchase and sales transactions. During the course of investigation, it was further observed that the assessee had made purchases from M/s. Tirth Gold and its sister concern M/s. S S Tirth Gold and accordingly the information was shared with the Assessing Officer stating that the assessee was one of the beneficiaries of the alleged transactions carried out by the said entities. Based on such information, the case of the assessee was selected for compulsory scrutiny in order to verify the purchases made by the assessee from the said concerns. Asst. Year –2023-24 - 3–

During the course of assessment proceedings, notice under section 143(2) dated 27.06.2024 and other notices under section 142(1) of the Act were issued from time to time, which were complied with by the assessee. However, the Assessing Officer, relying upon the information received from the Investigation Wing, held that the purchases made by the assessee from the aforesaid parties were not fully verifiable. Accordingly, the Assessing Officer treated the purchases as non-genuine and made an addition of Rs.17,25,295/- being 12.5% of the alleged bogus purchases.

Aggrieved by the assessment order, the assessee preferred an appeal before the learned Commissioner of Income Tax (Appeals). The assessee challenged the validity of the assessment order and also contested the additions made by the Assessing Officer. With respect to Ground No. 1, the learned CIT(Appeals) observed that the ground was general in nature and accordingly treated the same as allowed without any specific adjudication. With regard to Ground Nos. 2, 2.1 and 4, which related to the addition of Rs.17,25,295/- on account of alleged bogus purchases, the assessee submitted that the addition was made merely on the basis of presumption and without any corroborative evidence. The assessee further contended that the purchases were supported by documentary evidence such as invoices containing PAN and GST details of the suppliers and that payments had been made through banking channels. It was also submitted that the Assessing Officer had issued notices under section 133(6) of the Act to the parties but the notices were sent to an incorrect branch and therefore no response was received. After considering the submissions and the material placed on record, the CIT(Appeals) observed that the Assessing Officer himself had accepted the transactions with M/s. S S Tirth Gold and that the addition had been wrongly computed on purchases of Rs.1,38,02,361/- whereas Asst. Year –2023-24 - 4–

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

Before us the ld. counsel for the assessee submitted that CIT(Appeals) while on one hand noted that the Assessing Officer had sent 133 (6) of the Act notices to a different branch rather than the branch to which the assessee was having transaction, yet he disallowed 5% of such expenditure which is not in accordance with law once having noted that summons were issued to an incorrect branch. In response, Ld. DR submitted that that CIT(Appeals) has restricted the disallowance to 5% on a reduced purchase figure of Rs. 45,018,019/- instead of Rs. 1,38,02,361/- as recorded by the Assessing Officer in the assessment order. Accordingly, the correct facts are not coming on record from the CIT(Appeals) order who has reduced the figure of purchase without confronting the Assessing Officer.

We have heard the rival contentions and perused the material on record.

It is observed that the Assessing Officer made an addition of Rs.17,25,295/- by estimating 12.5% of the alleged bogus purchases on the basis of information received from the Investigation Wing relating to transactions of Tirth Gold Group. In appeal, the learned CIT(Appeals) partly accepted the contention of the assessee and restricted the addition to Rs.5,64,752/- being 5% Asst. Year –2023-24 - 5–

Before us, the learned counsel for the assessee submitted that once the CIT(Appeals) had himself observed that the notices were issued to an incorrect branch, the disallowance of even 5% of the purchases could not be sustained in the absence of proper verification from the correct party. It was contended that the addition was made merely on presumption without conducting proper enquiries from the actual supplier from whom the purchases were stated to have been made. On the other hand, the learned Departmental Representative submitted that the CIT(Appeals) has already granted substantial relief to the assessee by restricting the disallowance to 5% on a reduced purchase figure of Rs.45,18,019/- instead of Rs.1,38,02,361/- as taken by the Assessing Officer. Asst. Year –2023-24 - 6–

Accordingly, in the interest of justice, we deem it appropriate to restore the matter to the file of the Assessing Officer with a direction to carry out necessary verification by (i) ascertaining the correct figure of purchases made by the assessee from the concerned party, and (ii) making appropriate enquiries from the correct entity or branch from whom the purchases are stated to have been made by the assessee. The Assessing Officer shall thereafter examine the issue afresh in accordance with law and grant appropriate relief to the assessee after providing reasonable opportunity of hearing.

In the result, the appeal of the assessee is allowed for statistical purposes. This Order is pronounced in the Open Court on 13/03/2026 (NARENDRA P. SINHA) JUDICIAL MEMBER Ahmedabad; Dated 13/03/2026