H.S.Varma Gems & Jewels , Secunderabad V. Income Tax Officer, Ward-10(4), Hyderabad

ITA 1317/Hyd/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7810 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2009-2010
• Appeal Filed On: 23-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Search and seizure; Principle of natural justice; Accommodation entries; Assessment record; Onus to prove; Set aside
• Section: 143(3); 143(1); 148

Judgement Text

ITA NOS 1316 AND 1317 OF 2019 HS VARMA GEMS AND JEW ELLS SECUNDERABAD. PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A SMC BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NOS.1316 & 1317/HYD/2019 ASSESSMENT YEARS: 2008-09 & 2009-10 M/S. H.S. VARMA GEMS AND JEWELLS, SECUNDERABAD PAN:AADFH2019K VS. INCOME TAX OFFICER WARD 10(4) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI K.C. DEVDAS REVENUE BY : SRI SUNKU SRINIVAS, DR DATE OF HEARING: 04/11/2019 DATE OF PRONOUNCEMENT: 22/01/2020 ORDER BOTH ARE ASSESSEES APPEALS FOR THE A.YS 2008-09 & 2009-10 AGAINST THE INDIVIDUAL ORDERS OF THE CIT (A )-6, HYDERABAD, DATED 5.6.2019 RESPECTIVELY. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI RM IS INTO BUSINESS OF PURCHASE AND SALE OF DIAMONDS, PRECIOUS AND SEMI- PRECIOUS STONES, STUDDED JEWELLERY, GOLD JEWELLERY AND ALLIED ITEMS. IT FILED ITS RETURN OF INCOME FOR THE A.Y 20 08-09 ON 30.07.2008 ADMITTING INCOME OF RS.13,830/- AND FOR THE A.Y 2009-10, THE RETURN OF INCOME WAS FILED ON 28.7.200 9 ADMITTING INCOME OF RS.14,810/-. BOTH THE RETURNS WERE PROCES SED U/S 143(1) OF THE I.T. ACT. SUBSEQUENTLY, THE AO RECEIV ED INFORMATION FROM THE DGIT (INV.) MUMBAI THAT THE ASSESSEE FIRM IS ONE OF THE BENEFICIARIES OF THE ACCOMMODATION ENTRIES GIVEN BY CERTAIN PARTIES AT MUMBAI AND SURAT AS WAS FOUND DURING THE COURSE OF ITA NOS 1316 AND 1317 OF 2019 HS VARMA GEMS AND JEW ELLS SECUNDERABAD. PAGE 2 OF 10 SEARCH AND SEIZURE OPERATION IN THE GROUP CASES CAR RIED OUT IN SURAT BASED NON-GENUINE DIAMOND CONCERNS ON 03.10.2 013 AND THAT THE GROUP OF CASES COVERED ARE REFERRED TO AS GAUTAM JAIN & OTHERS WHO WERE BELIEVED TO BE CONCERNS ACTIVELY INVOLVED IN PROVIDING NON-GENUINE PURCHASE BILLS AND ALSO UNSEC URED LOAN ACCOMMODATION ENTRIES TO VARIOUS INTERESTED PARTI ES. IT WAS FURTHER INFORMED THAT AS A RESULT OF THE SEARCH & S EIZURE ACTION, IT WAS CONCLUSIVELY PROVED THAT THESE DIAMOND CONCERNS ARE ONLY PAPER BASED COMPANIES WITH NO REAL BUSINESS ACTIVIT IES AS THE DIRECTORS/PROPRIETORS OF ALL THESE CONCERNS ADMITTE D ON OATH THAT THEY ARE NOTHING BUT PAPER COMPANIES WITH NO GENUIN E BUSINESS. IT WAS ALSO INFORMED THAT ON PERUSAL OF THE COMPILA TIONS OF THE LETTERS OF BENEFICIARIES, THE DGIT (INV.) MUMBAI FO UND THE NAME OF THE CONCERNS IN THE LIST OF BENEFICIARIES OF THE AC COMMODATION ENTRIES AND FORWARDED THE SAME FOR NECESSARY ACTION TO THE AO. 3. IN VIEW OF THIS INFORMATION FROM DGIT (INV.), MU MBAI, THE AO VERIFIED THE INFORMATION PROVIDED TO HIM AND FOUND THAT THE ASSESSEE FIRM I.E. H.S. VARMA GEMS & JEWELLS HA D A TRANSACTION OF RS.14,06,860/- WITH BOGUS DIAMOND CO NCERN M/S KRISHNA DIAM IN THE FINANCIAL YEAR 2007-08 RELEVAN T A.Y 2008- 09. THE AO VERIFIED THE ASSESSMENT RECORDS AND FOUN D THAT THE ASSESSEE HAD NOT FILED ITS RETURN OF INCOME FOR THE A.Y 2008-09 AND THEREFORE, TO VERIFY THE GENUINENESS OF THE TRA NSACTION AND ASSESS/RE-ASSESS THE CORRECT INCOME OF THE ASSESSEE , A NOTICE U/S 148 WAS ISSUED ON 24.03.2015. IN RESPONSE TO THE SA ME, THE ASSESSEE FILED THE LETTER DATED 17.04.2015 AND SUBM ITTED A COPY OF THE RETURN OF INCOME ALONG WITH ENCLOSURES SUBMITTE D ON 30.07.2008 AND ALSO COPY OF THE INTIMATION U/S 143( 1). ON ITA NOS 1316 AND 1317 OF 2019 HS VARMA GEMS AND JEW ELLS SECUNDERABAD. PAGE 3 OF 10 VERIFICATION OF THESE DETAILS, AO FOUND THAT THE AS SESSEE HAD A TRANSACTION OF RS.14,06,840/- WITH M/S KRISHNA DIAM FOR RS.9,06,750/- ON 24.12.2007 AND RS.5,00,110/- ON 14 .01.2008. THEREFORE, THE ASSESSEE WAS REQUIRED TO PRODUCE THE BOOKS OF ACCOUNT AND ALSO THE DETAILS OF THE PURCHASES. THE ASSESSEE FILED LETTERS DATED 12.02.2016 & 04.03.2016 ALONG WITH CO PIES OF THE RETAIL INVOICE NO.155 DATED 24.12.2007 FOR RS.9,06, 750/-, RETAIL INVOICE NO.163 DATED 14.01.2008 FOR RS.5,00,110/- W ITH PROOF IN SUPPORT OF PAYMENTS THROUGH CHEQUE, CONFIRMATION OF THE ACCOUNT FOR THE FINANCIAL YEAR 2007-08 BY M/S. KRISHNA DIAM WHEREIN THE SUPPLIERS HAD CONFIRMED THE TRANSACTIONS ENTERED IN TO. THE ASSESSEE FIRM ALSO SUBMITTED COPIES OF THE VAT FORM ALONG WITH THE SALE BILLS. IT WAS ALSO STATED THAT FROM THE ST OCK OF PURCHASES MADE FROM KRISHNA DIAM, THE ASSESSEE HAS SOLD STOCK S WORTH RS.8,19,035/- TO M/S. VITTALDAS & CO., ON 18.01.200 8 AND ENCLOSED A CHEQUE RECEIVED FROM M/S. VITHALDAS & CO . FOR THE SAID SUM. 4. THE AO, HOWEVER, WAS NOT CONVINCED WITH THE SAID CONFORMATIONS AND EVIDENCE FILED BY THE ASSESSEE. H E HELD THAT THE PARTIES SEARCHED I.E. GAUTAM JAIN AND OTHERS HA VE SAID THAT THEY ARE NOT INTO THE REAL BUSINESS BUT HAVE ONLY I SSUED ACCOMMODATION ENTRIES. THEREFORE, HE HELD THAT WHEN THE BOGUS COMPANY KRISHNA DIAM IS NOT LEFT WITH ANY PHYSICAL STOCK, IT IS NOT KNOWN AS TO HOW THE SALE HAD TAKEN PLACE AND HO W IT HAS SOLD DIAMONDS FOR RS.14,06,860/-. THEREFORE, HE DISBELIE VED THE PURCHASE BILLS ISSUED BY M/S. KRISHNA DIAM AND BROU GHT THE ENTIRE SUM OF RS.14,06,860/- TO TAX. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) FOR THE A.Y 2008-09 ITA NOS 1316 AND 1317 OF 2019 HS VARMA GEMS AND JEW ELLS SECUNDERABAD. PAGE 4 OF 10 CHALLENGING BOTH THE VALIDITY OF THE ASSESSMENT U/S 148 OF THE ACT AND THE ADDITION MADE BY THE AO. 5. THE CIT (A) HELD THAT THE RETURN OF INCOME FILED BY THE ASSESSEE ON 30.07.2008 WAS ONLY ACCEPTED BY ISSUANC E OF INTIMATION U/S 143(1) AND THEREFORE, IT CANNOT BE H ELD THAT THERE HAS BEEN ANY ASSESSMENT OF INCOME AND THEREFORE, WI THIN 4 YEARS THEREAFTER, THE RECEIPT OF INFORMATION THAT THE ASS ESSEE IS ONE OF THE BENEFICIARIES OF ACCOMMODATION ENTRIES IS A VAL ID REASON FOR REOPENING OF THE ASSESSMENT BY ISSUANCE OF NOTICE U /S 148 OF THE ACT. HE ALSO OBSERVED THAT THE AO HAS RECORDED THE REASONS FOR REOPENING BEFORE ISSUANCE OF A NOTICE U/S 148. THER EFORE, HE UPHELD THE VALIDITY OF THE REOPENING. 6. AS REGARDS THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES, THE CIT (A) HELD THAT THE ASSESSEE HAS N OT BEEN ABLE TO PROVE WITH ANY EVIDENCE THAT THE ASSESSEES REPRESE NTATIVE HAD TRAVELLED TO SURAT TO TAKE DELIVERY OF THE GOODS OR THAT THE ASSESSEE HAD PHYSICAL STOCK WITH IT WHICH HAS SUBSEQUENTLY B EEN SOLD. AS REGARDS PAYMENT THROUGH BANKING CHANNELS ALSO, THE CIT (A) HELD THAT IT IS OF LITTLE VALUE SINCE IN THE ACCOMMODATI ON ENTRIES, THE PAYMENT WAS ALSO MADE THROUGH BANKING CHANNELS. 7. AS REGARDS THE ASSESSEES REQUEST FOR AN OPPORTU NITY TO CROSS EXAMINE OF MR. GAUTAM JAIN AND OTHERS, THE CI T (A) HELD THAT THE BURDEN OF PROOF LIES ON THE PERSON WHO MAD E THE CLAIM AND SINCE THE ASSESSEE FAILED TO PROVE THAT THE ASS ESSEE HAS PURCHASED THE DIAMONDS FROM M/S. KRISHNA DIAM, THER E WAS NO NEED TO ALLOW CROSS EXAMINATION PARTICULARLY WHEN T HE FIRM ITA NOS 1316 AND 1317 OF 2019 HS VARMA GEMS AND JEW ELLS SECUNDERABAD. PAGE 5 OF 10 KRISHNA DIAM HAS NOT BEEN EXAMINED BY THE AO. AGAIN ST THESE FINDINGS OF THE CIT (A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-6, HYDERABAD (CIT (A)) IN SUSTAINING THE ORDER OF THE LEARNED ASSESSING OFFICER ('AO) IS ERRONEOUS A ND UNSUSTAINABLE BOTH ON FACTS AND IN LAW 2. THE CIT(A) FAILED TO NOTE THAT THERE WAS NO TANG IBLE MATERIAL BROUGHT ON RECORD BY THE AA TO BELIEVE THA T INCOME HAS ESCAPED ASSESSMENT AND THE REASON SHOULD NOT AR ISE FROM ANOTHER AUTHORITY OR DEPARTMENT, THUS BEING CO NTRARY TO THE PROVISIONS CONTAINED IN SECTION 147,148,149,150 ,151 OF THE IT ACT, 1961. 3. THE CIT(A) FAILED TO NOTE THAT THE ASSESSMENT PR OCEEDING WAS CONDUCTED MERELY ON THE BASIS OF THE INFORMATIO N RECEIVED BY THE DGIT, MUMBAI DESPITE SUBMITTING ALL THE NECESSARY EVIDENCES AND AS SUCH THERE WAS NO INDEPE NDENT APPLICATION OF MIND TO ASSESS THE GENUINENESS OF TH E PURCHASES. 4. THE CIT(A) FAILED TO NOTE THAT THE ENTIRE PURCHA SE OF RS 14,06,860/- WAS GENUINE, DULY RECORDED IN THE BOOKS OF ACCOUNTS AND WAS CORROBORATED WITH THE NECESSARY EV IDENCES BEING. PURCHASE BILLS, SALES BILLS, VAT RETURNS, CO NFIRMATION FROM THE SUPPLIER OF THE TRANSACTIONS AND BANK STAT EMENTS THEREFORE, THE ENTIRE ORDER PASSED BY THE CIT(A) IS ERRONEOUS AND UNSUSTAINABLE ON FACTS. 5. THE CIT(A) ERRED IN DISMISSING THE GROUND WHEREI N THERE WAS NO OPPORTUNITY PROVIDED TO CROSS EXAMINE THE PE RSONS WERE WITNESSES OF THE DEPARTMENT 6. ANY OTHER GROUND(S) THAT MAY BE URGED AT THE TIM E OF HEARING. 8. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE AUTHORI TIES BELOW AND SUBMITTED THAT THE ASSESSMENT HAS BEEN REOPENED BY THE AO MERELY ON THE BASIS OF A THIRD PARTY INFORMATION WI THOUT MAKING HIS OWN ENQUIRIES AND THEREFORE, INITIATION OF RE-A SSESSMENT PROCEEDINGS ITSELF IS BAD IN LAW. IN SUPPORT OF THI S CONTENTION, HE ITA NOS 1316 AND 1317 OF 2019 HS VARMA GEMS AND JEW ELLS SECUNDERABAD. PAGE 6 OF 10 PLACED RELIANCE UPON THE UNREPORTED JUDGMENT OF THE HON'BLE SUPREME COURT REVIEW PETITION (C) DIARY NO.22394 OF 2019 IN CIVIL APPEAL NOS.9604 & 9605 OF 2018 DATED 21 ST AUGUST, 2019. ON MERITS ALSO, THE LEARNED COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE ASSESSEE HAS PURCHASED THE DIAMONDS FROM M /S. KRISHNA DIAM AS IS EVIDENT FROM COPIES OF THE INVOICE BILLS AS WELL AS SALE BILLS AND ALSO PROVED THAT THESE DIAMONDS HAVE SUBS EQUENTLY BEEN SOLD TO ANOTHER PARTY AND THE PAYMENT HAS BEEN RECEIVED BY WAY OF CHEQUES. THEREFORE, ACCORDING TO HIM, THE AS SESSEE HAS PROVED THE TRANSACTIONS AND WHEN THE ASSESSEE HAS A SKED FOR AN OPPORTUNITY TO CROSS EXAMINE THE PARTY WHO HAS ALLE GEDLY GIVEN A STATEMENT THAT HE WAS GIVING ONLY AN ACCOMMODATION ENTRIES, HE OUGHT TO HAVE BEEN PROVIDED WITH THE SAME AND SINCE NO SUCH OPPORTUNITY WAS PROVIDED, THE ASSESSMENT IS BAD IN LAW. SIMILAR ARGUMENTS HAVE BEEN MADE FOR THE A.Y 2009-10 AS WEL L WHEREIN THE PARTIES WHO HAS BEEN ALLEGEDLY SOLD DIAMONDS TO THE ASSESSEE WERE M/S. SUN DIAM AND KRIYA IMPEX PVT. LTD. IN THE CASE FOR THE A.Y 2009-10, THE ASSESSEE HAD ALSO SUBMITTED THE AF FIDAVIT OF SHRI RAJENDRA JAIN, PROPRIETOR OF M/S. KRIYA IMPEX PVT L TD AND SUN DIAM REFUTING THE EVIDENCE OF THE SEARCH AND SEIZUR E PARTY AND ALSO RETRACTING THE STATEMENT GIVEN DURING THE COUR SE OF SEARCH AND SEIZURE. 9. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE PARTIES SEARCHED IN MUMBAI AND SURAT HAVE CLEARLY STATED TH AT THEY ARE NOT INTO THE REAL BUSINESS OF PURCHASE AND SALE OF DIAMONDS BUT ARE ONLY ISSUING ACCOMMODATION ENTRIES AND THEREFOR E, THERE COULD NOT HAVE BEEN ANY REAL TRANSACTION DONE BY THE ASSE SSEE WITH ITA NOS 1316 AND 1317 OF 2019 HS VARMA GEMS AND JEW ELLS SECUNDERABAD. PAGE 7 OF 10 THEM AND THE TRANSACTIONS ARE ONLY SHOWN ON PAPER A ND THE PAYMENTS THROUGH CHEQUES ARE CLEARLY ACCOMMODATION ENTRIES WITHOUT ANY SUBSTANCE. HE, THEREFORE, SUBMITTED THA T THE ORDER OF THE AO AND THE CIT (A) SHOULD BE CONFIRMED FOR BOTH THE A.YS. BOTH THE PARTIES HAVE RELIED UPON SEVERAL CASE LAW AND HAVE FILED COPIES BEFORE THE TRIBUNAL. BOTH THE PARTIES ALSO F ILED WRITTEN SUBMISSIONS AS WELL. 10. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, I FIND THAT THE RESULT OF THE SEARCH AT MUM BAI & SURAT WAS THAT THE PARTIES WHO HAVE BEEN SEARCHED HAD GIVEN STATEM ENTS ON OATH THAT THEY ARE INTO ACCOMMODATION ENTRY BUSINESS AND THAT THEY ARE NOT INTO REAL TRADING OF DIAMONDS. IN SUCH CIRCUMSTANCES, TH E DGIT (INV.) MUMBAI HAS FORWARDED THE REPORT TO THE AO OF THE AS SESSEE SINCE THE NAME OF THE ASSESSEE APPEARED AS ONE OF THE BENEFIC IARIES OF THE ACCOMMODATION ENTRIES PROVIDED BY SUCH SEARCHED PAR TIES. THE AO AFTER RECEIPT OF THE SAID REPORT SEEMS TO HAVE EXAMINED W HETHER THE ASSESSEE IS BEING THE BENEFICIARY OF SUCH ACCOMMODATION ENTR IES AND SINCE HE DID NOT FIND THE RETURN OF INCOME FILED BY THE ASSESSEE IN ORDER TO VERIFY THE SAME, A NOTICE U/S 148 HAS BEEN ISSUED. THEREAFTER, THE ASSESSEE HAS FILED THE COPY OF THE RETURN OF INCOME AND REQUEST FOR COPY OF THE REASONS FOR REOPENING, WHICH HAVE BEEN SUPPLIED TO HIM AND IT IS SEEN THEREFROM THAT THE REPORT OF THE DGIT (INV.) MUMBAI IS THE BASIS FOR ISSUANCE OF NOTICE U/S 148. AS RIGHTLY OBSERVED BY THE CIT (A), THERE WAS NO ASSESSMENT U/S 143(3) AND IT WAS ONLY AN INT IMATION U/S 143(1). AS RIGHTLY HELD BY THE CIT (A), 143(1) INFO RMATION CANNOT BE TREATED AS AN ASSESSMENT AS HELD BY THE HON'BLE SUP REME COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS (P) L TD IN CIVIL APPEAL NO. 2830 OF 2007 DATED 23.05.2007. SINCE NO ASSESSMENT WAS MADE, THERE ITA NOS 1316 AND 1317 OF 2019 HS VARMA GEMS AND JEW ELLS SECUNDERABAD. PAGE 8 OF 10 IS NO QUESTION OF FORMING ANY OPINION AND ON RECEIP T OF THE INFORMATION FROM DGIT (INV.) MUMBAI, THE AO WAS WITHIN HIS POWE RS TO INITIATE RE- ASSESSMENT PROCEEDINGS U/S 148 OF THE ACT. THEREFOR E, THE GROUNDS AGAINST THE VALIDITY OF THE RE-ASSESSMENT PROCEEDIN GS ARE REJECTED. THE ASSESSEE HAS PLACED RELIANCE UPON THE UNREPORTED DE CISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. M/S. O DEON BUILDERS PVT. LTD. I FIND THAT THE SAID CASE IS DISTINGUISHABLE F ROM THE FACTS TO THE CASE BEFORE THE TRIBUNAL. IN THE ABOVE CASE, THE IS SUE WAS OF BOGUS PURCHASE OF RAW MATERIAL FOR CONSTRUCTION BUSINESS OF THE ASSESSEE AND THE ASSESSEE THEREIN HAD PROVED THAT RELEVANT MATER IAL HAS BEEN PURCHASED AND ALSO TRANSPORTED TO THE ASSESSEE. IT WAS ON THE BASIS OF THE FACTUAL INFORMATION FILED WHICH HAD BEEN VERIFI ED BY THE CIT (A) AND HAD ALLOWED THE ASSESSEES APPEAL AND THE HONBLE S UPREME COURT HAS ALSO CONFIRMED THE SAME. IN THE CASE BEFORE US, EXC EPT FOR SUBMITTING THE INVOICES, THE ASSESSEE HAS NOT BEEN ABLE TO PRO VE WITH ANY OTHER EVIDENCE (SUCH AS TRANSPORTATION CHARGES), THE RECE IPT OF DIAMONDS. HOWEVER, ONE THING THAT IS COMMON IN BOTH THE CASES IS THAT THOUGH THE ASSESSEE HAS ASKED FOR AN OPPORTUNITY TO CROSS EXAM INE THE SUPPLIERS, THE ASSESSEE WAS NOT PROVIDED WITH SUCH AN OPPORTUN ITY. THE CIT (A) HAS OBSERVED THAT THE RELEVANT PARTY HAS NOT BEEN E XAMINED BY THE AO AND THEREFORE, THERE IS NO QUESTION OF PROVIDING AN OPPORTUNITY TO CROSS EXAMINE. THIS FINDING OF THE CIT (A) CANNOT BE SUST AINED. THE REVENUE HAS RECORDED THE STATEMENT OF THE PROPRIETORS OF M/ S. KRISHNA DIAM, M/S. SUN DIAM AND M/S. KRIYA IMPEX DURING THE COURS E OF SEARCH AND SURVEY AND ON THE BASIS OF SUCH STATEMENTS ONLY, TH E ASSESSMENTS OF THE ASSESSEE FOR BOTH THE YEARS HAVE BEEN REOPENED. THE SAID STATEMENT IS ALSO THE BASIS FOR NOT BELIEVING THE EVIDENCE FI LED BY THE ASSESSEE AND MAKING ADDITIONS TO THE RETURNED INCOMES FOR BOTH T HE AYS. THEREFORE, THERE IS CLEARLY A STATEMENT ON THE BASIS OF WHICH THE ADDITIONS HAVE ITA NOS 1316 AND 1317 OF 2019 HS VARMA GEMS AND JEW ELLS SECUNDERABAD. PAGE 9 OF 10 BEEN MADE IN THE HANDS OF THE ASSESSEE. IT IS SETTL ED POSITION OF THE PRINCIPLES OF NATURAL JUSTICE THAT THE ASSESSEE SHO ULD NOT BE DEPRIVED OF AN OPPORTUNITY TO CROSS EXAMINE A PERSON WHOSE STAT EMENT IS BEING RELIED UPON TO MAKE THE ADDITION IN THE HANDS OF TH E ASSESSEE. WHEN THE ASSESSEE HAS SUBSEQUENTLY REQUESTED THE AO TO P ROVIDE AN OPPORTUNITY TO CROSS EXAMINE THE PERSON, WHOSE STAT EMENT IS BEING RELIED UPON, HE OUGHT TO HAVE BEEN PROVIDED THE SAM E OR AT LEAST HE COULD HAVE BEEN PROVIDED WITH THE STATEMENT OF THE SAID PERSON TO ENABLE THE ASSESSEE TO REBUT SUCH STATEMENT WITH NE CESSARY EVIDENCE. 11. IN VIEW OF THE SAME, I DEEM IT FIT AND PROPER T O REMAND THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO PROVIDE A COPY OF THE STATEMENT (WHEREIN THE ASSESSEES NAME IS MENTIONED AS BENEFI CIARY) TO THE ASSESSEE AND PROVIDE IT WITH AN OPPORTUNITY TO CROS S EXAMINE SUCH PERSON, IF NECESSARY. 12. IN THE CASE FOR THE AY 2009-10, THE ASSESSEE HA D ALSO FILED A COPY OF THE AFFIDAVIT OF MR. RAJENDER JAIN RETRACTI NG THE STATEMENT MADE BY HIM DURING THE COURSE OF SEARCH. IN SUCH A SITUA TION, IT IS EVEN MORE IMPORTANT THAT THE ASSESSEE SHOULD BE GIVEN AN OPPO RTUNITY TO CROSS EXAMINE THE PARTY PARTICULARLY WHEN HE HAS CONFIRME D THE TRANSACTION MADE BY THE ASSESSEE. ANOTHER FACTOR WHICH COULD GO IN FAVOUR OF THE ASSESSEE IS THAT THE ASSESSEE HAS ALSO SHOWN THE SA LE OF SUCH DIAMONDS SUBSEQUENTLY TO ONE OF THE PARTIES IN HYDERABAD WHO HAVE BEEN CONFIRMED THE TRANSACTION AND THE ASSESSEE HAS ALSO RECEIVED THE CONSIDERATION THROUGH BANKING CHANNELS. THERE CANNO T BE ANY SALE OF STOCK IF THERE WERE NO PURCHASES. THEREFORE, THIS F ACTOR ALSO NEEDS TO BE CONSIDERED. IN VIEW OF THE SAME, THE ASSESSMENTS FO R BOTH THE YEARS ARE SET ASIDE AND ARE REMANDED TO THE FILE OF THE AO FO R RECONSIDERATION AND ITA NOS 1316 AND 1317 OF 2019 HS VARMA GEMS AND JEW ELLS SECUNDERABAD. PAGE 10 OF 10 FOR RE-ADJUDICATION AS DIRECTED ABOVE. I ALSO MAKE IT CLEAR THAT IF THE AO IS NOT ABLE TO PROVIDE A COPY OF THE STATEMENT TO T HE ASSESSEE OR PROVIDE AN OPPORTUNITY TO CROSS EXAMINE THE PARTIES, THEN T HE ADDITIONS CANNOT BE SUSTAINED. 13. IN THE RESULT, ASSESSEES APPEALS ARE TREATED A S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JANUARY, 2020. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 22 ND JANUARY, 2020. VINODAN/SPS COPY TO: 1 M/S. HS VARMA GEMS & JEWELLS C/O M/S. SEKHAR & CO . 133/4, RASHTRAPATHI ROAD, SECUNDERABAD 2 ITO WARD 10(4) HYDERABAD 3 CIT (A)-6 HYDERABAD 4 PR. CIT 6, HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER