SIDDHANT DIAMONDS PRIVATE LIMITED ,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE -5(3)(1), MUMBAI

Aggrieved, the assessee contested the same on legal ground as well as on merits with partial success before Ld. CIT(A) vide impugned order dated 21/11/2017 wherein Ld. CIT(A) while upholding the invocation of reassessment proceedings, restricted the additions to 8%. Still aggrieved, the assessee is in further appeal before us.

The Ld. Authorized Representative for assessee, Ms. Mrugakshi Joshi, while drawing our attention to the documents placed in the paper- book contested the additions as sustained by lower authorities which were controverted by Ld. Departmental Representative, Ms.N.Hemalatha.

We have carefully considered the rival contentions and perused relevant material on record including cited case laws. So far as the legality of reassessment proceedings are concerned, we find that original return filed by the assessee has been processed u/s 143(1) and therefore, the only requirement to be fulfilled to initiate the reassessment proceedings was that Ld. AO had reasons to believe that certain income has escaped assessment. In the present case, the reopening has been initiated upon receipt of concrete information from investigation wing which suggested escapement of income in the hands of the assessee. Therefore, we concur with the stand of Ld. first appellate authority in this regard and dismiss this ground of assessee’s appeal.

So far as the merits of the case are concerned, the main stress of Ld. AR’s argument is that the purchases were made by the assessee ITA.No.1103/Mum/2018 Siddhant Diamonds Private Limited Assessment Year- 2009-10 from the said entity and the same was accounted for in the books of accounts and the supplier, by way of an affidavit, confirmed the transactions and therefore the additions were not justified. We are of the considered opinion that there could be no sale without purchase of material keeping in view the assessee’s nature of business. The turnover achieved by the assessee has not been disputed by the revenue and the payments were through banking channels. The assessee reconciled quantitative details also to some extent. However, at the same time, the assessee reflected purchases from an entity which was being controlled by Bhanwarlal Jain Group. The search / survey action on the said group on 03/10/2013 by DGIT (Inv.) revealed that the said group consisting of numerous business entities, numbering more than 70, was engaged in providing accommodation purchases bills & accommodation loans & advances. It was found out that the employees / their relatives etc. of the said group were merely name lending directors / partners / proprietors of numerous concerns which were operating under the control of said group. The statements of concerned persons revealed that the firms were indulging in accommodation bills without doing any actual business and those persons had no knowledge about the business being carried out by the said concerns. In such a scenario, affidavit of the partner which is filed after considerable period of time could not be relied upon much in the given circumstances. The complete onus to prove the transactions by conclusive evidences was on the assessee. Therefore, in such a scenario, the action of Ld. CIT(A) in estimating the impugned additions @8% was quite justified and do not call for any interference from our side in any manner. So far as the ITA.No.1103/Mum/2018 Siddhant Diamonds Private Limited Assessment Year- 2009-10 reliance of Ld. AR on certain judicial pronouncements is concerned, we find that the same have been rendered on peculiar facts of each case and therefore, could not be relied upon blindly without considering the factual matrix of each case. This ground of assessee’s appeal stand dismissed.

Resultantly, the appeal filed by the assessee stand dismissed.