Nirmala Agarwal Vs ACIT (ITAT Jaipur)
The Jaipur ITAT allowed the assessee’s appeals and quashed the reassessment proceedings for Assessment Years 2007-08 and 2008-09, holding that the reopening of assessment under Sections 147/148 was invalid. The Tribunal found that the reassessment was initiated solely on the basis of information received from the Investigation Wing, Mumbai, without independent application of mind by the Assessing Officer and in violation of principles of natural justice.
The assessee, a proprietor engaged in trading and export of precious and semi-precious stones, including diamonds, had originally filed returns of income and assessments were completed under Section 143(3). In the original assessment for AY 2007-08, the Assessing Officer invoked Section 145(3), estimated gross profit on semi-precious stones, and accepted the gross profit declared in diamond trading. Subsequently, based on information from the Investigation Wing, Mumbai, the Assessing Officer reopened the assessments alleging that the assessee had obtained accommodation entries relating to diamond purchases from five parties associated with a person whose statement had been recorded during a search operation. Additions were made by treating a percentage of such purchases as non-genuine. The CIT(A) reduced the additions by applying a lower profit rate.
Before the Tribunal, the assessee challenged the validity of the reopening. It was argued that the Assessing Officer had merely relied on information supplied by the Investigation Wing and had not independently examined the material before forming a belief that income had escaped assessment. The assessee also contended that the reopening was based primarily on statements recorded from a third party during a search operation, which were later retracted, and that no corroborative evidence had been brought on record. The assessee further submitted that complete copies of the statements were not provided and that requests for cross-examination of the concerned persons were denied.
