Reopening of assessment must follow proper statutory procedures under sections 153A and 153C when based on evidence from search operations.

ORDER

PER: RATHOD KAMLESH JAYANTBHAI, AM

The present appeal is filed by the assessee aggrieved from the order of the order of the Commissioner of Income Tax (Appeals), Jaipur -4 [here in after ld. CIT(A) ] dated 23/01/2025 for assessment year 2012-13. The said order of the ld. CIT(A) arises as against the order dated 31.12.2019 passed under section 147 r.w.s 143(3) of the Income Tax Act, 1961 [ for short Act] by ACIT, Central Circle-03, Jaipur.

2. In this appeal, the assessee has raised following grounds: -

1. On the facts and in the circumstances of the case and in law, Id. CIT(A) has grossly erred in confirming the actions of ld. AO in re-opening the case u/s 147 of the Income Tax Act, 1961 arbitrarily.

1.1 On the facts and in the circumstances of the case, Id. CIT(A) has grossly erred in not appreciating the fact that the reason recorded on the basis of which case was reopened and the order passed are on different footings. Hence the order so upheld is bad in law & deserves to be quashed.

2. On the facts and in the circumstances of the case and in law, Id. CIT(A) has grossly erred ignoring the fact that Id. AO in the very case of assessee in subsequent years has added only the profit on sale pertaining to such purchases and further erred in not appreciating that contrary view taken by Id. AO in this year of adding the entire purchases is totally against the provisions of law.

2.1 Without prejudice to above ground, the Ld. CIT(A) has erred in not appreciating the fact that in case if any grit has been purchased which has not been found recorded in the books of accounts then the said product was sold and what utmost can be considered is the profit earned by the appellant company in the on sale of such grit. Hence the resultant addition can only be to the extent of net profit earned and balance addition of the entire amount on account of unexplained investment deserves to be deleted.

3. On the facts and in the circumstances of the case and without prejudice to above, the Ld. CIT(A) has grossly erred in confirming the entire addition of Rs. 2,68,19,218/- u/s 69C of the Income Tax Act, 1961 on the allegation that the purchase of grit being out of books is unexplained investment ignoring the fact that these alleged purchases are spread over whole 12 months period and initial investment, if any, is out of unaccounted income offered in the group in the hands of Shri Mahesh Gupta.

4. The appellant craves leave to add, alter, amend or substitute one or more grounds of appeal as and when necessary.

3. Succinctly, the fact as culled out from the records is that the assessee filed his return of income on 30.09.2012 declaring a total income of Rs 45,61,860/-. The case of the assessee was subjected to scrutiny, and the assessment was completed u/s 143(3) of the Act determining income at Rs. 61,82,380/-.

Thereafter, the case was reopened u/s 148 after recording the reasons to the satisfaction of the ld. AO and after obtaining due approval. Notice u/s 148 was issued on 29.03.2019, which was duly served upon the assessee. The copy of the reasons recorded for issuing notice u/s 148 were provided vide letter dated 16.09.2019. In response to the statutory notices issued during the proceedings details called for were filed.

As there was a search action in the case of Gupta Group, Jaipur on 23.01.2019 in which the assessee was also covered. During the search proceedings various documents were seized from the residence of the director of the assessee company. On examination of these documents, it was found that the assessee company has made unaccounted purchases form M/s Triveni Grit manufacturing Company. Also, it is mentioned that entire purchases were made in cash an