ITO 19(3)(1), MUMBAI V. BOBBY PHILIPS, MUMBAI

ITA 1460/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0962 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 1998-1999
• Appeal Filed On: 04-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Search and seizure; Accommodation entries; Competent authority
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, AM AND SHRI V.DURG A RAO, JM I.T.A.NO.1460/MUM/2009 ASSESSMENT YEAR : 1998-99 THE INCOME-TAX OFFICER-19(3)(1), R.NO. 307, 3 RD FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI 400 050. VS. BOBBY PHILIPS, 1, NAV BAHAR, 40, CARTER ROAD, BANDRA (W), MUMBAI 400 050. PAN: AACPP 9181 F (APPELLANT) (RESPONDENT) APPELLANT BY : MS. ASHIMA GUPTA/SHRI S.S.RANAL RESPONDENT BY : MS. USHA DALAL O R D E R PER J. SUDHAKAR REDDY, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XIX, MUMBAI, D ATED 02.01.2009, FOR THE ASSESSMENT YEAR 1998-99. 2. THE GROUNDS TAKEN BY THE REVENUE READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS .9,75,000/- MADE UNDER SEC. 68 IGNORING THIS ADDITION WAS MADE ON THE BASIS OF WELL ESTABLISHED PRINCIPLE OF PRE-PONDERENCE OF PROBABILITIES AND IN THE LIGHT OF FINDINGS MADE IN THE CASE OF MR. KA MAL JOHAN AND MR. HARI OM SHARMA. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS .78,000/- MADE U/S.69C OF THE INCOME-TAX ACT, 1961. 3. IN REGARD TO GROUND NO. 1, THE FACTS OF THE CASE I N BRIEF ARE THAT THE ASSESSEE HAD DECLARED DIAMONDS IN THE VDIS SCHEME 1 997 WHICH WAS ACCEPTED BY THE CIT AND A CERTIFICATE TO THAT EFFECT WAS ISSUED . DURING THE ACCOUNTING PERIOD THE RELEVANT TO THE ASSESSMENT YEAR THE ASSESSEE HAS SO LD DIAMONDS AND DECLARED THE I.T.A.NO.1460/MUM/2009 BOBBY PHILIPS. 2 CAPITAL GAIN ON SUCH VALUABLES SOLD TO M/S. GALAXY EXPORTS FOR A CONSIDERATION OF RS. 9,75,000/- AND THE SALE PROCEEDS WERE RECEIVED THOU GH ACCOUNT PAYEE CHEQUES. 4. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT T HE RESIDENCE AND BUSINESS PREMISES OF TWO PERSONS, NAMELY SHRI KAMAL KUMAR JO HARI AND SHRI HARI OM SHARMA, CHARTERED ACCOUNTANTS ON 14 TH MARCH 2000. A SEARCH WAS ALSO CONDUCTED ON SHRI GHANSHYAMDAS JOHARI AND OTHERS. DURING THE COURSE O F SEARCH THE DIT(INVESTIGATION) PUNE CAME TO KNOW THAT THE TWO C HARTERED ACCOUNTANTS IN COGNIZANCE WITH FEW OF THEIR RELATIVES AND FRIENDS FLOATED CERTAIN CONCERNS AND ISSUED BOGUS CHEQUES OF SALE PROCEEDS OF VALUABLES TO VDI S DECLARATION AND SUCH INVESTIGATION REPORT WAS SENT TO THE AO. ON WHICH R ECEIPT OF SUCH REPORT, THE AO REOPENED THE ASSESSMENT AND ASSESSED THE INCOME OF THE APPELLANT U/S.143(3) READ WITH SECTION 147. IN APPEAL, THE CIT(A) DELETED TH E ADDITION MADE BY THE A.O. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O PERUSED THE MATERIALS PLACED ON RECORD. 6. IN REGARD TO GROUND NOS.1 & 2, THE ASSESSING OF FICER IN HIS ORDER OBSERVED THAT DURING THE COURSE OF SEARCH ON THE PREMISES IT WAS NOTED THAT THEY HAVE GIVEN ACCOMMODATION ENTRIES FOR SALE OF NON-EXISTING DIAM ONDS BY USING MULTILAYERED SYSTEM. AO GROUPED VARIOUS ENTITIES INTO THREE TIR E CONCERNS NAMELY, FRONT CONCERN, BULK CONCERN AND RETAIL CONCERN. IN T HE FRONT CONCERN THERE ARE FOUR ENTITIES VIZ. M/S. GALAXY EXPORTS, M/S. MINI EXPORT S, KARTIK EXPORTS AND M/S. KUNAL EXPORTS WHO ARE NON EXISTENTS. THESE CONCERNS HAVE SHOWN PURCHASES MADE FROM VDIS DECLARATION AND FURTHER SOLD TO FIVE BULK CON CERNS. FROM THIS BULK CONCERNS, THE TEN RETAIL CONCERNS HAVE PURCHASED THE DIAMOND S. SOLELY ON THE INVESTIGATION REPORT THE ASSESSING OFFICER DOUBTED THE SALES OF D IAMONDS BY THE ASSESSEE AND FORMED AN OPINION THAT THE ASSESSEE WAS HAVING UNEX PLAINED MONEY WHICH HAVE I.T.A.NO.1460/MUM/2009 BOBBY PHILIPS. 3 BEEN ROUTED THROUGH THESE PERSONS IN THE BOOKS OF A CCOUNTS AND HAVE MADE AN ADDITION U/.68 AS WELL AS U/S.69C BEING INCURRED IN PROCURING SUCH BOGUS CHEQUES. 7. ON APPEAL THE CIT(A) DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER BY FOLLOWING THE TRIBUNAL DECISIONS IN THE CASES OF M /S. GALAXY EXPORTS, M/S. MINI EXPORTS, M/S. KARTIK EXPORTS AND M/S. KUNAL EXPORTS . AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIE S AND HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD. BOTH PARTIES AGREED THA T THE ISSUE IS SAME AS THAT WHICH AROSE IN THE CASE OF M/S. GALAXY EXPORTS, ETC. IN THE CASE OF SMT. KOKILABEN P. KAMDAR, ITA NO. 6415/MUM/05, ORDER DATED 20 TH JUNE, 2008 AND C BENCH OF THE TRIBUNAL IN THE CASE OF PRVIN K. GOHIL, ITA NO. 691 2/MUM/05, ORDER DATED 22.1.2009, IT IS HELD AS FOLLOWS: WE HAVE HEARD THE LEARNED DR FOR THE REVENUE. NONE IS PRESENT FOR THE ASSESSEE. IN THIS CASE THE DECLARATION WAS MADE BY THE ASSESSEE UNDER THE VDIS 1997 AND ENTIRE CONTROVERSY IS REVOLVING ON TH E ISSUE OF THE GENUINENESS OF THE DIAMOND JEWELLERY DECLARED BY TH E ASSESSEE. AS PER THE CASE OF THE ASSESSING OFFICER DE FACTO THE ASSESSEE WAS NOT HAVING ANY DIAMOND JEWELLERY AND ASSESSEE MADE THE DECLARATION IN RESPECT OF NON- EXISTENT DIAMOND JEWELLERY. THERE IS NO DISPUTE AB OUT THE FACT THAT DECLARATION MADE BY THE ASSESSEE WAS ACCEPTED BY TH E COMPETENT AUTHORITY I.E. THE CIT, MUMBAI AND AS PER THE SCHEME A CERTIF ICATE U/S.68(2) OF THE ACT WAS ALSO ISSUED. SUBSEQUENTLY, THERE WAS A SEARCH ACTION AGAINST THE TWO CAS WHO HAD ALLEGEDLY FLOATED DIFFERENT FIRMS TO TH E ASSESSEE HAS SOLD THE ALLEGED DIAMOND JEWELLERY WHICH WAS DECLARED UNDER THE VDIS. THE LEARNED DR FAIRLY CONCEDED THAT IN THE CASES OF M/S. GALAXY EXPORTS SHRI JOHARI AND SHRI SHARMA, THE TRIBUNAL HAD ACCEPTED THEIR PLEA A S REFERRED BY THE LEARNED CIT(A) AS THE ASSESSMENT MADE IN THE GROUP OF SHARM A AND JOHARI GROUP ARE NOT ACCEPTED BY THE TRIBUNAL. IN OUR OPINION THE C IT(A) IS RIGHT IN DELETING THE ADDITION. WE MAY LIKE TO EXPRESS HERE THAT THE VDIS 1997 WAS NOT INTENDED ONLY FOR THE PERSONS WHO UNDER BONAFIDE MI STAKE DID NOT DECLARE THEIR INCOME BUT ALSO TO THE DISHONEST ASSESSEE. T HAT WAS THE BASIC PURPOSE OF THE SCHEME. IN OUR OPINION, THERE IS NO REASON TO INTERFERE IN THE DETAILED ORDER PASSED BY THE CIT(A). IN THE RESULT REVENUES APPEAL STANDS DISMISSED. SINCE THE VERY BASIS ON WHICH THE ADDITION HAS BEE N MADE BY THE ASSESSING OFFICER HAS BEEN DELETED BY THE TRIBUNAL AND SINCE THE LEARNED CIT(A)HAS FOLLOWED THE ORDER OF THE TRIBUNAL, THEREFORE, IN A BSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) DELETING THE ADDITION. WE ACCORDINGLY U PHOLD THE ORDER OF THE CIT(A) AND THE GROUNDS RAISED BY THE REVENUE ARE DI SMISSED. I.T.A.NO.1460/MUM/2009 BOBBY PHILIPS. 4 AS THE FACTS AND CIRCUMSTANCES OF THE CASE IN HAND IS SIMILAR TO THE APPEALS DECIDED BY THE TRIBUNAL, WE UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 9 TH DAY OF JULY, 2010. SD. SD. (V.DURGA RAO) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE 29 TH JULY, 2010. KN COPY TO: 1. THE ASSESSEE 2. THE ITO, RANGE -18(1)(2), MUMBAI 3. THE CIT, M.CITY XVIII, MUMBAI 4. THE CIT(A)-XVIII, MUMBAI 5. THE DR B BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, ITAT, MUMBAI