ITO, Pune V. Vinay C. Shah, Pune

ITA 1372/PUN/2009

• Counselvise Citation: 137224514 RSA 2009
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 1998-1999
• Appeal Filed On: 02-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Search and seizure; Valuation report
• Section: 69C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 1372/PN/2009 (ASSTT. YEAR: 1998-99) INCOME TAX OFFICER, A PPELLANT WARD 2(2), INCOME TAX OFFICE, 4 TH FLOOR, B WING, PMT COMMERCIAL COMPLEX, SWARGATE, PUNE 411 037 V. VINAY C. SHAH , ... RESPONDENT 12 GOMATI GIRIDHAR THAKKAR ROAD, OFF MANGALDAS ROAD, PUNE 411001 PAN: AHOPS2150E APPELLANT BY : MS. NEERA MALHOTRA RESPONDENT BY : MS. DEEPA KHARE DATE OF HEARING : 28.11.11 DATE OF PRONOUNCEME: 3 0 .11.11 ORDER PER I.C. SUDHIR, JM THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER ON SEVERAL GROUNDS INVOLVING THE ISSUE AS TO WHETHER LD CIT(A) HAS E RRED IN DELETING THE ADDITION OF RS. 782750/- MADE BY THE A.O U/S. 69A OF THE ACT O N THE BASIS THAT THE ASSESSEE HAD FAILED TO ESTABLISH THE SOURCE OF RECEIPT FROM THE ALLEGED SALE OF DIAMOND AND IN DELETING THE ADDITION OF RS. 78,275/- MADE BY THE A .O U/S. 69 C OF THE ACT TOWARDS UNEXPLAINED EXPENDITURE. 2. AT THE OUTSET OF HEARING, THE LD. A.R. POINTED O UT THAT THE ISSUE RAISED IN THE GROUND IS FULLY COVERED BY THE DECISIONS OF HONBL E BOMBAY HIGH COURT IN THE CASE OF CIT VS. INDER V. NANKANI, ITA NO. 128 OF 2009, O RDER DATED 24.2.2009 AND IN THE CASE OF CIT VS. UTTAMCHAND JAIN (2009) 26 DTR (BOM) 23. THE LD CIT(A) HAS ITA . NO. 1372 /PN/2009 VINAY C. SHAH A.Y. 1998-99 PAGE OF 4 2 DECIDED THE ISSUE RESPECTFULLY FOLLOWING THESE BIND ING DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT. 3. THE LD. D.R. HAS NOT DISPUTED THE ABOVE SUBMISS IONS, AT THE SAME TIME, HE PLACED RELIANCE ON THE ASSESSMENT ORDER. 4. THE RELEVANT FACTS OF THE PRESENT CASE ARE THAT IN THE ASSESSMENT FRAMED U/S. 147 R.W.S. 143(3) OF THE ACT, THE A.O HAS DOUBTED A ND DENIED THE CLAIMED RECEIPT OF RS. 7,82,750/- FROM THE ALLEGED SALE OF DIAMOND. T HE ASSESSEE HAD DECLARED THE RECEIPT FROM SALE OF SAID DIAMONDS UNDER VDIS. THE A.O ACCORDINGLY MADE ADDITION OF RS. 7,82,750/- U/S. 69A OF THE ACT AND FURTHER A DDITION OF RS. 78,275/- U/S. 69C OF THE ACT (TOWARDS UNEXPLAINED EXPENDITURE). THE A.O ON THE BASIS OF INFORMATION GATHERED IN THE CASE OF SHRI KAMAL KUMAR JOHARI, C. AS, SUBJECTED TO SEARCH AND SEIZURE ACTION, CAME TO THE CONCLUSION THAT A HAWAL A RACKET WAS BEING RUN BY SHRI KAMAL KUMAR JOHARI ALONG WITH SHRI HARI OM SHARMA C.AS. AND OTHER RELATIVES OR ASSOCIATED CONCERNS WERE INDULGING IN SHOWING PURCH ASES OF DIAMONDS DISCLOSED UNDER VDIS 1997 BY VARIOUS PERSONS AND SUBSEQUENTLY THE SAME WERE SHOWN AS SOLD IN CASH ON RETAIL BASIS TO SOME IDENTIFIABLE P ERSONS FROM SURAT. SUCH SALE PROCEEDS WERE THEN DEPOSITED IN BANK ACCOUNTS OPENE D IN THE NAMED GROUP CONCERNS OF THESE PERSONS AND AFTER ROUTING THIS MO NEY THROUGH VARIOUS BANK ACCOUNTS, CHEQUE/DEMAND DRAFTS WERE ISSUED TO THE B ENEFICIARIES I.E. THE SO-CALLED DECLARANTS UNDER VDIS OF 1997. HE FURTHER OBSERVED THAT ASSESSEE IN THIS CASE WAS ONE OF THOSE BENEFICIARIES WHO HAD RECEIVED THE SAL E PROCEEDS IN RESPECT OF THE BOGUS SALES OF THE NON-EXISTING DIAMOND. THE LD CI T(A) HAS DELETED THE ADDITION IN QUESTION FOLLOWING THE ABOVE CITED DECISIONS OF THE HONBLE JURISDICTIONAL BOMBAY HIGH COURT. FOR A READY REFERENCE, PARA NO. 5.5 O F THE FIRST APPELLATE ORDER IS BEING REPRODUCED HEREUNDER : 5.5 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND PERUSED MATERIAL ON RECORD. IT IS AN UNDISPUTED FA CT THAT DIAMONDS FROM SALE OF WHICH INCOME UNDER THE HEAD CAPITAL GAINS HAS BEEN SHOWN BY THE APPELLANT WERE DECLARED UNDER THE VDIS, 1997. THE COPY OF VALUATION REPORT ITA . NO. 1372 /PN/2009 VINAY C. SHAH A.Y. 1998-99 PAGE OF 4 3 OF GOVT. APPROVED VALUER IN RESPECT OF THE VARIOUS ITEMS OF JEWELLERY, THEIR DESCRIPTION , WEIGHT ETC. WAS ALSO FILED WITH THE A.O AND DURING THE APPELLATE PROCEEDINGS, BASED ON WHICH THE CERTIFICATE UNDER VDIS WAS ISSUED BY THE CIT. AS A RESULT OF THE DECLARATION, DUE TAX THER EON HAS BEEN PAID AS PER THE SCHEME AND SUCH DISCLOSURE HAS BEEN ACCEPTED BY TH E CONCERNED CIT AND A CERTIFICATE UNDER THE VDIS WAS ISSUED TO THE APPEL LANT. THE APPELLANT CLAIMS TO HAVE SOLD THE DIAMONDS TO M/S. GALAXY EXPORTS AN D SALE PROCEEDS OF WHICH HAVE BEEN RECEIVED THROUGH CHEQUES. IN SUPPORT OF ITS CLAIM REGARDING SALE OF DIAMONDS, THE APPELLANT HAS SUBMITTED COPIES OF BILLS AND PASSBOOK AND ALSO AN AFFIDAVIT OF THE PURCHASER I.E. .K.K. JOSHI , KARTA OF K.K. JOSHI (HUF) BEFORE THE ASSESSING OFFICER. TAKING INTO ACCOUNT THESE ASPECTS OF THE MATTER AND SUBMISSION OF THE APPELLANT, IT IS NOTIC ED THAT IN THE DECISIONS OF ITAT, PUNE BENCH IN THE CASE OF SHRI BALBHIM D. SHI NDE IN ITA NO. 1362 & 1364/PN/05 DATED 31.8.2007 (FOR A.Y. 1998-99); AND IN THE DECISION OF ITAT, MUMBAI IN THE CASE OF MOHANLAL R. DAGA VS. ITO 92 T TJ 1236(2005) (MUM) AND UTTAMCHAND JAIN QUOTED SUPRA, EXACTLY THE SAME ISSUE HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT. SUBSEQUENTLY, THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INDER V. NANKANI IN ITA NO. 128 OF 2009 (SUPRA) AND IN ANOTHER DECISION, THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. UTTAMCHAND JAIN IN ITA NO. 634 OF 2009, (2009) 26 DTR 23 (BOM) HAVE ALSO HELD IN FAVOUR OF THE APPELLANT AND AGAI NST THE REVENUE ON THIS ISSUE, BY UPHOLDING THE RESPECTIVE ITAT DECISIONS. RESPECTFULLY FOLLOWING THESE JUDGMENTS OF THE HONB LE JURISDICTIONAL HIGH COURT, ALONG WITH THE ABOVE REFERRED TO ITAT DECIS IONS, IT IS HELD THAT THE ADDITION MADE BY THE ASSESSING OFFICER RS. 7,82,750 /- ON ACCOUNT OF CONSIDERATION RECEIVED OUT OF SALE OF DIAMONDS SHOW N UNDER VDIS AND RS. 78,275/- . ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/ S 69C CANNOT BE SUSTAINED. ACCORDINGLY, THESE ADDITION MADE ARE HE REBY DELETED. GROUNDS OF APPEAL NOS. 3 TO 7 ARE, THEREFORE, ALLOWED. 5. SINCE THE FIRST APPELLATE ORDER ON THE ISSUE IS FULLY COVERED BY THE DECISION OF THE HONBLE JURISDICTIONAL BOMBAY HIGH COURT AS DI SCUSSED ABOVE, WE DO NOT FIND REASON TO INTERFERE THEREWITH. THE SAME IS UPHELD. THE ISSUE IS THUS DECIDED AGAINST THE REVENUE. THE RELATED GROUNDS ARE THUS REJECTED. 6. IN RESULT, APPEAL IS DISMISSED. ITA . NO. 1372 /PN/2009 VINAY C. SHAH A.Y. 1998-99 PAGE OF 4 4 THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30TH NOVEMBER 2011. SD/- SD/- ( G.S. PANNU ) ACCOUNTANT MEMBER (I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 30TH NOVEMBER, 2011 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT II, PUNE 4. THE CIT(A)-II, PUNE 4. THE D.R. B BENCH, PUNE 5. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE