M/S. DIWANSONS JEWELLERS PVT. LTD., ,KOLKATA vs. PRINCIPAL CIT (CENTRAL) - 2, KOLKATA , KOLKATA

The only issue involved in both the appeals relates to assumption of jurisdiction by the Ld. Pr.CIT u/s. 263 of the Act in respect of assessments made u/s. 147/143(3) of the Act. The assessee has taken several grounds of appeal in each year in this respect which are not reproduced for the sake of brevity.

None appeared on behalf of the assessee. We have heard the Ld. DR and decided to dispose of both these appeals since this is the 24th time of listing these matters.

Brief facts as noted from the records are that according to the Ld. Pr. CIT, the AO had reopened the assessment of the assessee after receipt of information from the Investigation Wing of Mumbai that assessee had booked expenditure based on certain purchases from three entities viz. M/s. Atharv Business Pvt. Ltd., M/s. Casper Enterprises & 693/Kol/2018 M/s. Diwansons Jewellers Pvt. Ltd., AY: 2008-09 & 2013-14 Pvt. Ltd. and M/s. Mohit International. According to the Ld. Pr. CIT even after receipt of this information, though the AO reopened the assessment u/s. 147 of the Act, still he has not made enquiry which is necessary to bring out the genuineness of the purchases from the said three entities. The Ld. CIT, DR drew our attention to page 2 of the assessment order dated 29.03.2016 passed u/s. 143(3)/147 of the Act wherein after furnishing the assessee with the adverse information from the Investigation Wing, Mumbai, the AO has simply accepted the submission made by the assessee in respect of the purchases made from these three entities, supra and held as under:

According to the Ld. CIT, DR, from a mere perusal of the aforesaid finding and reasons given for making an estimation of 3% of the alleged bogus purchases as well as the fact that the AO himself admits that delivery of the alleged purchase material remains unverifiable, the Ld. Pr. CIT rightfully inferred that AO has not made enquiry as required by a prudent Investigating Officer. According to Ld. CIT, DR, the AO has a dual role to discharge while assessing an assessee, both as an Investigator and as an Adjudicator. According to him, when adverse information from Investigation Wing, Mumbai was before him, he was duty bound to investigate the veracity of the expenditure claimed by the assessee from these three entities, omission to do so, tantamount to not discharging the duty of an AO as an Investigator.

In this context, Hon’ble Jurisdictional High Court of Calcutta in the case of Commissioner of Income tax, Central-1 Kolkata v. Maithan International [2015] 56 taxmann.com 283 (Calcutta) on the role of Assessing Office as an Investigator and Adjudicator observed as under – "It is not the law that the Assessing Officer occupying the position of an investigator and adjudicator can discharge his function by perfunctory or inadequate investigation. Such a course is bound to result in erroneous and prejudicial order. Where the relevant enquiry was not undertaken, as in the case, the order is erroneous and prejudicial too and therefore revisable. Investigation should always & 693/Kol/2018 M/s. Diwansons Jewellers Pvt. Ltd., AY: 2008-09 & 2013-14 be faithful and fruitful. Unless all fruitful areas or enquiry are pursued the enquiry cannot be said to have been faithfully conducted."

We find considerable force in the submission of the Ld. CIT, DR and for the sake of brevity, we are not repeating the facts stated above. We fairly agree with the submission made by the Ld. CIT, DR and find that the AO in the instant case though armed with the adverse information of alleged bogus purchases, has simply relied upon the submission made by the assessee as gospel truth and completed the assessment by making an estimation of 3% as income on the alleged bogus purchases. We agree with the Ld. Pr. CIT that the AO failed to discharge his duty as an Investigator and therefore we are of the opinion that the Ld. Pr. CIT had jurisdiction to interfere and interdict the order of the AO. Accordingly, we dismiss both the appeals of the assessee.

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