ITAT Remands Bogus Purchase Addition Case for Fresh Adjudication:

The assessee is a partnership firm engaged in the business of trading in cut and polished diamonds, had originally filed its return for AY 2008-09 declaring total income of Rs. 2,63,530. Subsequently, based on information arising from a search and seizure operation conducted in the Rajendra Jain Group, Dharamchand Jain Group and Sanjay Choudhary Group, the AO alleged that the assessee had obtained accommodation entries towards bogus purchases amounting to Rs. 1,23,00,076 from M/s Aadi Impex and M/s Sun Diam. Accordingly, an ex parte assessment was completed under Section 144 read with Section 147 of the Act on March 18, 2016, and the entire amount of Rs. 1.23 crore was added to the assessee’s income.

The assessee subsequently filed an appeal before the CIT(A) which was dismissed. 

Before the Tribunal, the assessee explained that its original business premises had been sold in 2008 and that it had thereafter shifted to a new address. Importantly, a notice issued under Section 143(2) in 2014 had been served at the new address, demonstrating that the AO was aware of the change of address. However, the notice under Section 148 and the subsequent assessment order dated March 18, 2016, were issued at the old address and were never received by the assessee.

The Tribunal observed that the notice under Section 143(2) had admittedly been issued at the assessee’s new address, indicating that the change of address was within the knowledge of the AO. The Tribunal further noted that the documentary evidence furnished by the assessee in support of the delay had not been controverted by the Revenue.

Accordingly, the Tribunal condoned the delay of 1,890 days under Section 249(3) in the interest of substantial justice and to enable adjudication of the dispute on merits. Since the additional evidence required factual examination, the Tribunal restored the matter to the file of the AO for fresh adjudication in accordance with law.