SAMA JEWELLERY PRIVATE LIMITED,MUMBAI vs. DCIT-8(1)(1), MUMBAI

O R D E R Per: Ratnesh Nandan Sahay, Accountant Member:

1. 1. This appeal has been filed against the order of the Ld. CIT Appeal passed u/s 250 of the Income Tax Act [the ‘Act’ in short] vide DIN & Order No. ITBA/ NFAC/S/250/2023-24/1056140099(1) Dated 15.9.2023 for the Assessment Year 2011-12.

2. The facts of the case, in brief, are that the appellant is a Private Limited Company engaged in the business of manufacturing and trading of jewelry. For the assessment year under consideration, the appellant filed its return of income electronically on 28.09.2011 declaring total income of Rs.1,35,53,039/- which was processed u/s. 143(1) of the Income Tax Act accepting the returned income.

3. In the meantime, a survey u/s. 133A was conducted in the business premises of the appellant on 04.2.2011 and certain discrepancy was found in the stock which was accepted by the director of the appellant company who offered, in the statement recorded u/s. 131 of the Income Tax Act, an additional income of Rs.50,00,000/- to cover up the discrepancies found during the course of survey. The regular assessment u/s. 143(3) was completed on 18.03.2014 determining the total income at Rs.1,35,53,039/-.

4. Subsequently, the assessment was reopened u/s 147 by issue of notice dated 30.03.2016 u/s. 148 of the Income Tax Act, 1961 on the ground that the assessee had received accommodation entries from one Mr. Rajendra Jain, an entry operator to the tune of Rs. 42,67,255/- in the Financial Year 2010-11.

5. The AO, in order to verify the genuineness of the transactions issued notice u/s 133(6) of the Act to the parties from whom the assessee had purchased the goods. When no confirmation was received and the notices returned ‘unserved’ the AO treated these purchases as bogus and made an addition of Rs. 48,79,486/- on this count.

6. The assessee filed appeal before the Ld. CIT, Appeal challenging both the reopening of the assessment made u/s 147 of the Act and the addition on account of bogus purchases. The Ld. CIT, Appeal upheld both the reopening of assessment and addition on the ground of bogus purchase. However, the Ld. CIT, Appeal restricted the addition of bogus purchases to Rs.23,42,153 being 48% of the bogus purchases. Aggrieved by the order of Ld. CIT Appeal this appeal has been preferred.

7. During the course of hearing before this Bench, the appellant also filed paper books containing the confirmation of accounts from the parties from whom alleged bogus purchases were made.

Order pronounced in the open court on 30.04.2024.