Appellant/Assessee v. Commissioner Income Tax-I, New Central Revenue Building, Statute Circle, Jaipur. 2. The Ito Ward 2(5), New Central Revenue Building, Statute Circle, Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D. B. Income Tax Appeal No. 251/2018 M/s. Goenka Jewellers, 401, Panchratna, MSB Ka Rasta, JohriBazar, Jaipur, Rajasthan through its partner Sh. Nand Lal GoenkaS/o. Shubhkaran Goenka R/o. Flat No. 4, Mount Unique Building,62-A, Peddar Road, Mumbai-400026. ---Appellant/Assessee Versus1. Commissioner Income Tax-I, New Central Revenue Building,Statute Circle, Jaipur.2. The ITO Ward 2(5), New Central Revenue Building, StatuteCircle, Jaipur. ---Respondents. For Appellant(s) : Mr. Pradeep Choudhary.For Respondent(s): Mr. Anuroop Singhi with Mr. Aditya Vijay. HON'BLE MR. JUSTICE MOHAMMAD RAFIQ HON'BLE MR. JUSTICE GOVERDHAN BARDHAR Judgment 30/10/2018 (Per Hon’ble Mr. Justice Mohammad Rafiq) This income tax appeal under Section 260A of the Income Tax Act, 1961 (for short ‘the Act’) seeks to challenge thejudgment dated 07.05.2018 passed by the Income Tax AppellateTribunal, Jaipur Bench, Jaipur (for short ‘the Tribunal’) wherebythe appeal filed by the appellant has been dismissed. The dispute pertains to assessment year 2007-08. Theappellant-assessee is a firm engaged in the manufacturing ofdiamonds. The appellant-assessee filed its return of incomedeclaring loss of Rs. 1,60,82,698/- after claiming deduction underSection 10AA of the Act to the tune of Rs. 3,50,21,661/- being theprofit and gains derived from the export made by its unit situatedat SEZ, Surat. Original assessment under Section 143(3) of the Act was completed on returned income allowing deduction underSection 10AA of the Act. The Commissioner of Income Tax-I,Jaipur under Section 263 of the Act cancelled the aforesaidassessment holding that the Assessing Officer wrongly alloweddeductions under Section 10AA of the Act and directed de-novoassessment. The Assessing Officer in the de-novo proceedingsunder Section 143(3)/263 of the Act disallowed the deductionsmade under Section 10AA of the Act and assessed the income ofthe appellant-assessee at Rs. 3,49,54,100/-. The appellant-assessee then filed appeal before the Commissioner of Income Tax(Appeals)-I, Jaipur against the de-novo assessment order passedunder Section 143(3)/263 of the Act. CIT(A)-I allowed the appealas also deductions claimed by the assessee under Section 10AA ofthe Act. The appellant-assessee further filed appeal before theTribunal which vide order dated 03.10.2015 allowed the same. The Assessing Officer again initiated proceedings byissuing notice under Section 148 of the Act on 27.03.2014 byrecording the reason that “the assessee is a beneficiary of havingmade bogus purchases of Rs. 59,45,850/- from M/s. Ankit ExportsMumbai during A.Y. 2007-2008 as reported by DIT(INV.)-II,Mumbai vide letter dated 13.03.2014 and purchase of Rs.1,50,00,000/- from M/s. Natasha Enterprises Mumbai as reportedby DIT(INV.), Mumbai vide letter dated 07.03.2014”. Theappellant-assessee submitted its objections demanding copy of thestatements on the basis of which the re-assessment was proposedbut the Assessing Officer rejected the objection and carried out re-assessment proceedings. Total income of the appellant was thenassessed at Rs. 4,01,90,562/- vide re-assessment order dated 30.01.2015, which was again rectified by the Assessing Officerunder Section 154 of the Act because in the appeal preferred bythe assessee against the de-novo assessment order, the CIT(A)-I,Jaipur vide its judgment dated 28.11.2013 passed in ITA No.281/12-13 allowed the deductions of Rs. 3,49,54,100/- underSection 10AA of the Act, which was considered in the total incomeof the assessee by mistake in the re-assessment order. Afterrectification, the re-assessment order was finally passed for thetotal income of Rs. 52,36,460/-. Aggrieved by the re-assessmentorder dated 30.01.2015 as rectified vide order dated 27.02.2015by which an income of Rs. 52,36,460/- was added against the nongenuine purchase, the assessee preferred an appeal before theCommissioner of Income Tax (Appeals)-I, Jaipur [for short ‘theCIT(A)’] who partly allowed the appeal of the assessee vide orderdated 07.12.2015 by which the disallowance on the alleged boguspurchase of Rs. 2,09,45,850/- was restricted to only 15% in placeof 25%. Being aggrieved by the order passed by CIT(A), theappellant preferred appeal before the Tribunal. Case of theappellant before the Tribunal was that reassessment proceedingsunder Section 147/148 of the Act have been initiated by theAssessing Officer merely on the basis of change of opinion, as allthe primary facts viz. the purchase made by the assessee, booksof accounts, bills of purchase were produced before the AssessingOfficer during assessment proceedings and were already known tothe Assessing Officer. The Assessing Officer after considering allthe facts allowed the expenditure as genuine purchase andthereafter he reopened the entire proceedings for the sameexpenditure, which according to assessee tantamount to change of opinion. The Tribunal vide order dated 07.05.2018 dismissed theappeal of the appellant by holding that this was not a case ofchange of opinion as the Assessing Officer has done the re-assessment after receiving the fresh information. Mr. Pradeep Choudhary, learned counsel for theappellant argued that the Tribunal committed serious illegality byholding that reassessment order dated 30.01.2015 does nottantamount to change of opinion under Section 143(3)/148 of theAct. It is well settled law that if the entire material and primaryfacts were available before the Assessing Officer while passingoriginal assessment, then reassessment cannot be made on thebasis of similar material. No additional facts were made beforethe Assessing Officer except the confessional statement made by athird person i.e. Shri Praveen Jain during search operation at hispremises. It is argued that addition could not have been mademerely on the basis of uncontroverted confessional statement.The authorities below failed to consider that copy of statement ofShri Praveen Jain and other relevant persons were not provided tothe appellant assessee and he was not afforded any opportunity tocross-examine him. In any case, it was the bounden duty of theRevenue to discharge its burden by producing cogent evidence forreassessment. The Tribunal has wrongly shifted that burden onthe appellant-assessee. Learned counsel argued that theAssessing Officer wrongly added Rs. 2,09,45,850/- under Section69C of the Act as unexplained expenditure, merely on the groundthat M/s. Ankit Export and M/s. Natasha Enterprises, from whomthe bills of purchase were obtained, were not in existence becausethey have not responded to the notice of the department. It is argued that the Tribunal has failed to appreciate that at the timeof original assessment, the appellant produced all the bills ofpurchase, books of accounts and the bank statements whichclearly established that the purchase was genuinely made by theassessee. The Tribunal has further failed to see that the purchaseof rough material in the Gems Stones business is made throughthe broker and the firm rarely meets the supplier. Once the goodsare finalized, the same are delivered by the broker and thepayment is made to the concerned supplier firm through chequeand the relevant entries are made in the books of accounts. It istherefore prayed that present appeal be allowed and thesubstantial questions of law framed at Page 10 and 11 of thememo of the appeal may be answered in favour of the appellant-assessee. Learned counsel in support of his arguments reliedupon the judgment of the Supreme Court in Commissioner ofIncome Tax, Delhi Vs. M/s. Kelvinator of India Limited(Civil Appeal No. 2009-2011 of 2003 decided on18.01.2010). Mr. Anuroop Singhi, learned counsel appearing onbehalf of the respondent-Revenue opposed the appeal. Learnedcounsel citing the judgment of Calcutta High Court in HindustanTobacco Company Vs. Commissioner of Income Tax, (2012) 77 DTR 0237 argued that in the present case no prejudice can besaid to have been caused to the appellant for the reason that hedid not have the opportunity to cross-examine Shri Praveen Jain.In any case, the appellant did not make any such prayer beforethe Assessing Officer or even before the CIT(A) to recall ShriPraveen Jain for cross-examination. Plea of the alleged breach of principles of natural justice was taken for the first time at theappellate stage therefore the same is liable to be rejected. We have given our anxious consideration to rivalsubmissions and carefully perused the material on record. The Tribunal in its order has noted that the appellant- assessee has shown purchases of Rs. 2,09,45,850/- from twoconcerns namely M/s. Ankit Exports (Rs. 59,45,850/-) and M/s.Natasha Enterprises (Rs. 1,50,00,000/-), Mumbai. These firmswere controlled by Shri Praveen Jain who was the key person ofthese companies engaged in providing entries for boguspurchases. During the course of search of premises of Mr. PraveenJain, many incriminating documents were found and seized.Statements of various key persons including Shri Praveen Jainwere recorded under Section 132(4) of the Act wherein it has beenestablished that the group was indulging in providingaccommodation entries for bogus purchases and sale throughthese concerns. The concerns controlled by him were found non-existing at the given addresses and also non-genuine. ShriPraveen Jain also admitted this fact in his sworn statements duringthe course of search operation. From the documents andevidence, it was clearly established that the assessee wasbeneficiary of accommodation entries from Shri Praveen Jain andhis concerns by obtaining bogus purchase bill amounting to Rs.2,09,45,850/- from M/s. Ankit Exports, Mumbai and M/s. NatashaEnterprises, Mumbai. These were the paper concerns of ShriPraveen Jain Group of Mumbai. The Assessing Officer asked theassessee to produce these parties with the books of accounts inorder to prove the genuineness and verification of the transactions made but the assessee failed to do so. Notice send to theseparties returned back unserved. The Tribunal therefore held thatthe assessee failed to prove the genuineness of the purchasemade from these two concerns. The assessee also failed todischarge the primary onus to establish the genuineness ofpurchases from these concerns. The Assessing Officer madedisallowance of Rs. 52,36,462/- (25% of the total purchase of Rs.2,09,45,850/-). The CIT(A) has restricted the disallowance to theextent of 15% in view of the decision of ITAT Jaipur Bench in thecase of Shri Anuj Kumar Varshney Vs. ITO and Others (ITA No.187/JP/2012 dated 22.10.2014). Having heard learned counsel for the parties andperused the material on record, we are inclined to concur with theview taken by the Tribunal, which is based on the facts proved bystatement of Shri Praveen Jain. The appellant despite beingprovided opportunity failed to prove the genuineness of thetransactions and failed to produce the parties along with theirbooks of accounts from whom such transactions were made toverify the same. Relied judgment of the Supreme Court in Commissioner of Income Tax, Delhi Vs. M/s. Kelvinator ofIndia Limited (Supra) does not offer any assistance to theappellant in the present case. It cannot be said that the AssessingOfficer in the subsequent assessment order has arrived at a viewthat it has taken only on the basis of whatever material wasavailable with him at the time of framing of initial assessmentorder. Indisputably, the Assessing Officer at the subsequent stagehas relied upon the statement of Shri Praveen Jain recorded under Section 132 (4) of the Act. It is on that basis that he called uponthe appellant to prove the genuineness of the transactions.Therefore, the Assessing Officer has rightly disallowed thededuction under Section 10AA of the Act. As regards the argument of the appellant for notproviding him opportunity of cross examine Shri Praveen Jain, inthe first place, the Assessing Officer himself required the appellantto produce representative of the concerned parties along with theirbooks of accounts and he failed to produce them. Secondly, nosuch prayer was ever made by the appellant before the AssessingOfficer to summon Shri Praveen Jain for his cross-examination.We may at this juncture usefully refer to the observations of theSupreme Court inThe Chairman, Board of MiningExamination and Chief Inspector of Mines & Another Vs. Ramjee, (1977) 2 SCC 256 wherein concept of natural justicewas succinctly summarized in the following terms: “xxxxxxxxxx Natural justice is no unruly horse, nolurking land mine, nor a judicial cure-all. If fairnessis shown by the decision-maker to the manproceeded against, the form, features and thefundamentals of such essential processual proprietybeing conditioned by the facts and circumstances ofeach situation, no breach of natural justice can becomplained of. Unnatural expansion of naturaljustice, without reference to the administrativerealities and other factors of a given case, can beexasperating. We can neither be financial norfanatical but should be flexible yet firm in thisjurisdiction. No man shall be hit below the belt-thatis the conscience of the matter.” Calcutta High Court in Hindustan Tobacco Company (supra) in somewhat similar circumstances rejected identicalargument in para 34 of the judgment which reads as under: Calcutta High Court in Hindustan Tobacco Company (supra) in somewhat similar circumstances rejected identicalargument in para 34 of the judgment which reads as under: “34. If the assessee felt that cross-examining of anyperson was necessary for establishing its case it wasincumbent upon the assessee to make such prayerbefore the Assessing Officer during the assessmentproceeding. If a party fails to avail of theopportunity to cross-examine a person at theappropriate stage in he proceeding, the said partywould be precluded from raising such issue at alatter stage of the proceeding. Therefore thebelated claim of the assessee at the appellate stagethat it was denied the opportunity of cross-examining witnesses in the assessment proceedingis wholly untenable in law.” In view of above discussion, no question of law, muchless substantial question of law, arises in this appeal. We aretherefore not inclined to entertain this appeal and the same isaccordingly dismissed being devoid of merits. Stay Application No. 3261/2018 also stands dismissed. (GOVERDHAN BARDHAR),J (MOHAMMAD RAFIQ),J Manoj/7