KUSUMBEN RAJENDRAKUMAR SONI,AHMEDABAD vs. THE ITO, WARD-6(1)(1), AHMEDABAD

The order is in violation of the principles of natural justice, as adequate opportunity was not granted to the appellant to rebut the findings of the Assessing Officer (AO) or cross-examine the parties whose statements or non-compliance were relied upon.

The initiation of penalty proceedings under Section 270A for alleged misreporting of income is unwarranted, as the appellant has disclosed all details and cooperated with the proceedings in good faith.”

The solitary issue in the present appeal pertains to addition made to the income of the assessee by treating the entire purchases as non-genuine amounting to Rs.5,21,27,915/-. The solitary contention of the Ld. Counsel for the assessee before us against the confirmation of the impugned disallowance by the Ld. CIT(A) was that the same had been confirmed without dealing with the assessee’s contention that the addition was made in gross violation of the principle of the natural justice without affording adequate opportunity of hearing to the assessee and without considering the material that was placed on record before the AO.

The contention of the Ld. Counsel for the assessee before us that it was pointed out to the Ld. CIT(A) that the assessee had Rajendrakumar Soni vs. ITO] - 4 – sought adjournment of 15 days on 1st December, 2022 and without considering the same, the assessment unit closed its portal, which the assessee realized when it attempted to upload its submissions dt. 6th December, 2022 on 7th December, 2022. He pointed out that the assessee thereafter filed the complete submission on mail to the Jurisdictional AO requesting him to forward it to the assessment unit. He contended that it was submitted to the Ld. CIT(A) that the assessee had also filed grievance electronically alongwith copy of submission containing the balance confirmation from the two parties, but however, the Ld. CIT(A) did not take into consideration the above submissions of the assessee and the documents, which were filed by the assessee to the Jurisdictional AO to prove the genuineness of the purchases made by it. He further pointed out that the assessment unit relied on the investigation report of proprietor of M/s. Viram jewelers i.e. Shri Vishal Ganeshbhai Adesara and on the purchases made by the assessee from the same. Likewise, he pointed out that even the sales made by the assessee were found to be not genuine to the tune of Rs.4,29,52,810/- based on an enquiry carried out by the assessment unit by issuing notice to the parties to whom sales were made more, particularly, M/s. Meet Jewels to whom sales of Rs.4.19 Crore was made and the transaction with whom was found to be suspicious. Ld. Counsel for the assessee contended that none of this adverse information was confronted to the assessee by assessment unit and this fact was brought to the notice of Ld. CIT(A) also who took no cognizance of the same. Ld.Counsel therefore contended that the order passed by the Ld. CIT(A)

The Ld. DR, however, relied on the orders of the authorities below.

We have heard rival submissions. We are in agreement of the Ld. Counsel for the assessee that the assessment in the present case needs to be redone. The assessee has fairly demonstrated before us that necessary details and information regarding the genuineness of the purchases, which were disallowed by the AO, were filed though not to the assessment unit but the Jurisdictional AO requesting him to forward it to the assessment unit but the same was neither done nor any cognizance taken of the same by the assessment unit. The assessee has also pointed out that the assessment unit conducted enquiries with respect to the sales made by the assessee also and found the same to be suspicious but none of the materials in this regard was confronted to the assessee. Ld. DR was unable to controvert the above. It is clear that the addition on account of non-genuine purchases has been made without giving a fair opportunity of hearing to the assessee and against the principles of natural justice. Moreover, we have noted that the assessment unit has found both the purchases and sales to be not genuine, which in fact means that they have found business conducted by the assessee to be bogus. But addition has been made only on account of purchases found to be not genuine which is not inconsonance with the findings of the assessment unit from the investigation conducted by it showing the entire business Rajendrakumar Soni vs. ITO] - 6 – conducted by the assessee to be bogus. In the light of the same, it is crystal clear that the assessment has been done in an ad hoc manner without any application of min or without adhering to the principles of natural justice. We, therefore, set aside the assessment order directing the AO to redo the assessment afresh after giving the assessee due opportunity of hearing confronting it with all materials in his possession and adhering with the principles of natural justice. The Ld.AO is thereafter directed to pass order in accordance with law.

In the result, appeal filed by the assessee is allowed for statistical purposes.