Asst. Commissioner of Income Tax, Circle-4(1), Hyderabad V. Devaki Nandan Verma, Hyderabad

ITA 1984/Hyd/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0826 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 07-04-2021
• Assessment Year: 2008-2009
• Appeal Filed On: 03-10-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S RAMA RAO
• Keywords: Reopening of assessment; Bogus purchase; Search and seizure; Wrong claim; Accommodation entries
• Section: 143(3); 133A; 153A; 13; 153C; 148; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD (THROUGH VIRTUAL HEARING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 350/HYD/2017 A.Y.: 2007 - 08 DEVAKI NANDAN VERMA, PROP. OM KARNI JEWELLERS, 3 - 55 - 996, NARAYANAGUDA, HYDERABAD. PAN: ACBPV 4247 R VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 4(1), HYDERABAD. (APPELLANT) (RESPONDENT) ITA NO.1984/HYD/2018 A.Y. 2008 - 09 ACIT, CIRCLE - 4(1), HYDERABAD. VS. DEVAKI NANDAN VERMA, HYDERABAD. PAN: ACBPV 4247 R (APPELLANT) (RESPONDENT) ASSESSEE BY SRI S. RAMA RAO REVENUE BY SRI SUNIL KUMAR PANDEY, DR DATE OF HEARING: 07 /0 4 /2021 DATE OF PRONOUNCEMENT: 0 8 /07/2021 ORDER PER A. MOHAN ALANKAMONY , A.M: THE CAPTIONED APPEAL ITA NO. 350/HYD/2017 IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) - 1, HYDERABAD IN APPEAL 2 NO.0103/CIT(A) - 1/HYD/2015 - 16/2016 - 17, DATED 30/11/2016 PASSED U/S. 143(3) R.W.S 147 OF THE A CT FOR THE A.Y. 2007 - 08 . THE OTHER APPEAL ITA NO. 1984/HYD/2018 IS FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) - 1, HYDERABAD IN APPEAL NO. 0101/CIT(A) - 1, HYD/2016 - 17/2018 - 19, DATED 11/07/2018 PASSED U/S. 143(3) R.W.S 147 OF THE ACT FOR THE A.Y . 2008 - 09. 2. THE ASSESSEE HAS RAISED SEVEN GROUNDS IN HIS APPEAL FOR THE AY 2007 - 08 IN ITA NO. 350/HYD/2017 HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LD. CIT (A) HAS ERRONEOUSLY UPHELD THE ORDER OF THE LD. AO WHO HAD MADE ADDITION ON ACCOUNT OF BOGUS PURCHASES OF DIAMONDS TO THE EXTENT OF RS. 84,25,604/ - . 3. THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUND IN HIS APPEAL QUESTIONING THE REOPENING OF ASSESSMENT U/S. 147 OF THE ACT INSTEAD OF INITIATING PROCEEDINGS U/S. 153C OF THE ACT. 4. IN THE REVENUES APPEAL FOR THE AY 2008 - 09 IN ITA NO. 1984/HYD /2018 FIVE GROUNDS ARE RAISED; HOWEVER, THE CRUX OF THE ISSUE IS THAT T HE LD. CIT (A) HAS ERRED IN SUSTAINING THE ADDITION MADE BY THE LD. AO ONLY TO THE EXTENT OF 5% OF THE ALLEGED BOGUS PURCHASES OF DIAMONDS FOR RS.1,55,76,364/ - AS AGAINST THE ADDITION MADE BY 3 THE LD. AO FOR RS.1,55,76,364/ - TOWARDS BOGUS PURCHASES OF DIAMONDS RECORDED IN THE BOOKS OF ACCOUNTS . ITA NO. 350/HYD/2017 (ASSESSEES APPEAL) 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN I NDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING IN JEWELLERY IN THE NAME AND STYLE OF M/S. OM KARNI JEWELLERS. A SURVEY OPERATION U/S. 133A WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE AND ITS TWO SISTER CONCERNS ON 2/2/2007. DURING THE COURSE OF TH E SURVEY PROCEEDINGS IT WAS REVEALED THAT THE ASSESSEE HAD MADE UNACCOUNTED PURCHASES OF DIAMONDS AND THERE WERE VARIATION IN STOCK ALSO . THE ASSESSEE ADMITTED THE SAME AND OFFERED TO TAX AND THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT ON 29/12/2009 BY ASSESSING THE INCOME OF THE ASSESSEE AT RS. 33,98,644/ - BY ACCEPTING THE RETURN OF THE ASSESSEE. THEREAFTER, INFORMATION WAS RECEIVED FROM DIT (I NV.) - II, MUMBAI THAT THE ASSESSEE VIZ., M/S. OM KARNI JEWELLERS HAD OBTAINED BOGUS PURCHASE BILLS TO THE EXTENT OF RS. 85,25,604/ - FROM A - 2 JEWELLS OF BHANWARLAL JAIN GROUP DURING THE F.Y. 2006 - 07. THEREFORE, THE ASSESSMENT WAS REOPENED U/S. 147 OF THE ACT AND NOTICE WAS ISSUED TO THE ASSESSEE U/S. 148 ON 27/3/2014. IN RESPONSE TO THE NOTICE THE ASSESSEE HAD RESPONDED STATING THAT THE RETURN FILED BY HIM EARLIER WHEREIN THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT MAY BE TREATED AS THE RETURN FILED IN RESPONSE TO NOTICE U/S. 148 OF THE ACT. THE INVESTIGATION WING AT 4 MUMBAI INFORMED THE LD. AO VIDE LETTER DATED 13/3/2014 THAT SRI BHANWARLAL JAIN ALONG WITH HIS SONS SRI RAJESH BANWARLAL JAIN AND SRI MANISH BANWARLAL JAIN ARE OPERATING AND MANAGING 70 BI NAMI CONCERNS THROUGH WHICH THEY HAD PROVIDED ACCOMMODATION ENTRIES OF UNSECURED LOANS AND BOGUS PURCHASES TO VARIOUS BENEFICIARIES AMONGST WHICH M/S. OM KARNI JEWELLERS HAD OBTAINED INVOICES FO R BOGUS PURCHASE TO THE EXTENT OF RS. 84,25,604/ - DURING THE F Y 2006 - 07. THE ABOVE DETAILS WERE FOUND FROM THE LEDGER ACCOUNT MAINTAINED IN THE PEN - DRIVE OF BANWARI GROUP. ON QUERY, THE ASSESSEE HAD SUBMITTED THAT THE PURCHASES WERE GENUINE AGAINST WHICH PAYMENTS WERE MADE THROUGH CHEQUE AND THE DIAMONDS WERE BROUGH T PHYSICALLY BY ROAD. THE ASSESSEE HAD MADE VARIOUS OTHER SUBMISSIONS STATING THAT STOCK REGISTERS WERE MAINTAINED ETC., WHICH ARE RECORDED IN THE ASSESSMENT ORDER IN DETAIL. HOWEVER, THE LD. AO MADE ADDITION WITH RESPECT TO THE ENTIRE BOGUS INVOICES FOR THE BOGUS PURCHASE OF DIAMONDS AMOUNTING TO RS.84,25,604/ - BY OBSERVING AS FOLLOWS: - THE ABOVE EXPLANATION IS NOT ACCEPTABLE FOR THE REASON IN THE STATEMENTS RECORDED DURING THE COURSE OF SEARCH OPERATIONS CONDUCTED IN BANWARLAL GROUP OF CASES IT WAS STATED THAT THE GROUP CONCERNS DO NOT HAVE ANY STOCK OF DIAMONDS AND ALSO NOT SOLD ANY DIA MONDS. THEY HAVE PROVIDED ACCOMMODATION BILLS TO M/S. OM KARNI AND THE SALE CONSIDERATION RECEIVED THROUGH KTGS HAS BEEN AID IN CASH AS SHOWN IN THE LEDGER ACCOUNTS MAINTAINED IN THE PEN DRIVE. 6. ON APPEAL THE LD. CIT (A) CONFIRMED THE ORDER OF THE LD. AO BY OBSERVING AS UNDER: - 5 I DISAGREE WITH THE CONTENTION OF THE APPELLANT FOR THE FOLLOWING REASONS: A. THE APPLICANT SUBMITTED THAT THE PAYMENT WAS MADE ONLY AFTER THE SALE OF DIAMONDS. THIS IS NOT POSSIBLE S THE DIAMONDS SOLD, THE SELLER CANNOT KEEP A TRACT OF DIAMOND USED AND WHETHER THAT PRODUCT HAS BEEN SOLD AS CONTENDED BY THE APPELLANT. THE SELLER IS IN SURAT WHILE THE APPLICANT WHO IS THE PURCHASER IS IN HYDERABAD. THE CONTENTION OF HAVING FAITH DOS NOT ARISE IN REGARD TO COMMODITY OF HIGH VALUE A ND BELIEF CANNOT BE KEPT WITH SOLD GOODS. B. THE RECEIPT OF PURCHASES ALSO COULD NOT BE CONFIRMED AS THE APPLICANTS FATHER HAS PHYSICALLY RECEIVED. C. THE APPLICANT HAS POINTED THAT DURING THE SURVEY THESE ISSUES WERE INFORMED. THIS IS PERTINENT TO NOTE THAT T HIS INFORMATION WAS NOT GENERALLY IN HYDERABAD. THE INFORMATION WAS RECEIVED FROM BOMBAY AFTER SEARCH AND SEIZURE OPERATION CONDUCTED IN SRI BHANWARLAL GROUP IN WHOSE A1 JEWELLES ARE PART OF IT. HENCE, THE CONTENTION THAT DURING THE SURVEY, INFORMATION HA S TAKEN ITS FINALITY, CANNOT BE PRESUMED. D. THE APPLICANT HAS NOT SUBMITTED ANY DOCUMENTS REGARDING GENUINENESS OF A2 JEWELS, SURAT. WHEN THE A2 JEWELS THEMSELVES HAS CONFIRMED THAT THESE ACCOMMODATION ENTRIES AND REVEALED THEIR MODUS OPERANDI, THE EXPLANAT ION GIVEN BY THE APPLICANT FALLS FLAT. THE APPLICANT HAS NOT BROUGHT ANY EVIDENCE TO SHOW THAT STATEMENT OF BHANWARLAL GROUP WERE INCORRECT OR OTHERWISE. E. ONLY INFORMATION TH A T PAYMENTS HAVE BEEN MADE IN CHEQUE CANNOT BE ACCEPTED. AS PER THE MODUS OPERAND I GIVEN DURING THE SEARCH OF BHANWARLAL GROUP THAT THE WHOLE TRANSACTION WOULD BE CONDUCTED THROUGH BANK ENTRIES AND THE AMOUNT OF MONEY WILL BE RETURNED IN CASH. SINCE APPLICANT HIMSELF HAS SUBMITTED THAT HIS FATHER WOULD HANDLE THE PURCHASE ETC AND WOUL D GO TO SURAT FOR IT BY ROAD, CASH TRANSACTION AT THIS MEETING POINTS CANNOT BE RULED OUT. IN VIEW OF THE ABOVE, I FIND THAT THE APPLICANT HAS NOT BEEN ABLE TO DISPROVE THE FINDING OF THIS SEARCH IN THE BHANWARLAL GROUP CASE. WHEN THE SELLER HIMSELF HAS ACCEPTED THAT THESE ARE BOGUS ENTRIES, I FIND NO HESITANCY TO CONFIRM THE ADDITION MADE. THIS ALSO HAS BEEN PROVED BY EXISTENCE OF PARALLEL ACCOUNTS CONTAINING CASH TRANSACTIONS IN THE PEN DRIVE. IN THE LIST, THE NAME OF A2 JEWELLS APPEAR. THE ACCOUNTS IN THE PEN DRIVE HAS NOT BEEN DISPUTED BY THE APPLICANT BEFORE THE ASSESSING OFFICER OR BEFORE ME. HENCE, I UPHELD THE ADDITION OF RS. 84,25,601/ - AS BOGUS PURCHASES INTRODUCED IN THE BOOKS OF ACCOUNT. 7. THE LD. AR ARGUED BEFORE US BY STATING THAT SINCE THE ASSESSMENT WAS REOPENED PURSUANT TO SEARCH AND SEIZURE OPERATIONS CONDUCTED U/S. 132 OF THE ACT IN THE PREMISES OF BHANWARLAL JAIN AND HIS SONS NAMELY SRI RAJESH BHANWARLAL JAIN AND SRI MANISH BHANWARLA L JAIN 6 THE ASSESSING OFFICER IS BOUND TO ISSUE NOTICE TO THE ASSESSEE U/S. 153A OR 153C OF THE ACT CONSEQUENTLY THE ORDER PASSED IN THE CASE OF THE ASSESSEE U/S. 143(3) R.W.S 147 IS ILLEGAL AND ARBITRARY. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICE R HAD NOT FURNISHED ANY REASONS FOR REOPENING THE ASSESSMENT. IT WAS ALSO SUBMITTED THAT THE LD. AO HAD ERRED IN TAKING ACTION U/S. 147 OF THE ACT AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE LD.DR ON THE OTHER HAND ARGU ED BY STATING THAT RE - OPENING THE ASSESSMENT IN THE CASE OF THE ASSESSEE IS VALID BECAUSE SOME MATERIAL FACTS AGAINST THE ASSESSEE WAS DISCOVERED BY THE REVENUE. 8. AFTER HEARING BOTH THE PARTIES AND CAREFULLY EXAMINING THE FACTS OF THE CASE WE ARE OF THE VIEW THAT , THE LD. AO HAD REASONS TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX IN THE CASE OF THE ASSESSEE HAS ESCAPED ASSESSMENT DUE TO THE INFORMATION RECEIVED FROM THE DIT, INVESTIGATION WING MUMBAI REGARDI NG THE FINDING OF THE REVENUE THAT THE ASSESSEE WAS OBTAINING BOGUS INVOICES FROM BHANWARLAL JAIN GROUP OF CONCERNS. FROM THIS FACTUAL FINDING OF THE REVENUE, IT IS ALSO OBVIOUS THAT THERE IS A FAILURE IN THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS THAT ARE REQUIRED FOR MAKING THE ASSESSMENT. HENCE, IN OUR VIEW, REOPENING OF THE ASSESSMENT IN THE CASE OF THE ASSESSEE IS VALID EVEN TH OUGH IT WAS BEYOND FOUR YEARS BUT WITHIN THE STIPULATED PERIOD MENTIONED IN THE ACT. I T IS ALSO PERTINENT TO MENTION 7 THAT IN THE CASE OF THE ASSESSEE NOTICE U/S. 153C OF THE ACT IS NOT NECESSARY BECAUSE NONE OF THE BELONGINGS OF THE ASSESSEE WAS FOUND IN T HE COURSE OF THE SEARCH CONDUCTED IN THE PREMISES OF SRI BHANWARLAL JAIN GROUP OF CONCERNS. IT WAS ONLY REVEALED FROM THE DOCUMENTS AND ACCOUNTS OF BHANWARLAL JAIN GROUP OF CONCERNS THAT THEY HAVE BEEN ISSUING BOGUS BILLS TO THE ASSESSEE AGAINST CHEQUE PAY MENTS. FROM THE ORDER OF THE LD. AO IT IS APPARENT THAT THE NOTICE U/S. 147 WAS ISSUED TO THE ASSESSEE CITING THE REASONS RECORDED FOR REOPENING THE CASE WHICH THE LD. AR COULD NOT SERIOUSLY CONFRONT BEFORE US AT THE TIME OF HEARING. THEREFORE, THE ADDITIO NAL GROUND RAISED BY THE ASSESSEE IS DEVOID OF MERITS AND ACCORDINGLY DISPOSED OFF. 9. FURTHER, WITH RESPECT TO THE ISSUE ON MERITS THE LD. AR REITERATED THE SUBMISSIONS MADE BEFORE THE LD. REVENUE AUTHORITIES AND ARGUED BY STATING THAT , EVEN IF THE PURCHASE TO THE TUNE OF RS. 84,25,604/ - IS FOUND TO BE BOGUS , ADDITION CANNOT BE MADE ON THE ENTIRE AMOUNT. IT IS ONLY THE ESTIMATED PROF IT ARISING OUT OF THE SALE OF THOSE BOGUS PURCHASES COULD BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE. THE LD. DR ON THE OTHER HAND RELIED ON THE ORDER OF THE LD. CIT (A) AND PRAYED FOR CONFIRMING THE SAME. 10. WE HAVE HEA RD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE, IT IS APPARENT THAT THE 8 ASSESSEE HAS MADE PARALLEL ENTRIES IN HIS BOOKS OF ACCOUNTS WITH RESPECT TO THE BOGUS PURCHASES IDENTIFIED AT THE TIME OF SEARCH IN THE CASE OF BHANWARLAL GROUP OF CONCERNS WHEREIN SIMILAR ENTRIES WERE ALSO RECORDED IN THEIR BOOKS OF ACCOUNTS . THE ASSESSEE HAS ALSO CONCEDED THAT THE PAYMENT S WERE MADE TO BHANWARLAL GROUP OF CONCERNS BY CHEQUE TO THE EXTENT OF RS. 84,25,604/ - FOR PURCHASES OF DIAMONDS . IT WAS ALSO REVEALED FROM THE SEARCH CONDUCTED IN THE CASE OF BHANWARLAL GROUP OF CONCERNS THAT THE ASSESSEE HAD PAID CHEQUE TO BHANWARLAL GROUP OF CONCERNS FOR PURCHASE OF DIAMONDS THOUGH ACTUALLY DIAMONDS DID NOT E XIST . IT IS ALSO APPARENT THAT T HE ASSESSEE HAS NOT MAINTAINED PROPER STOCK RECORDED CORROBORATING THE OPENING STOCK OF DIAMONDS AND PURCHASE OF DIAMONDS WITH THE CORRESPONDING SALE OF DIAMONDS AND CLOSING STOCK . IN THIS CIRCUMSTANCE, THE AMOUNT DEBITED I N THE P & L ACCOUNT OF THE ASSESSEE FOR RS. 84,25,604/ - TOWAR DS PURCHASE OF DIAMONDS IS NOTHING BUT BOGUS CLAIM OF DEDUCTION IN ORDER TO REDUCE THE PROFIT OF THE ASSESSEE. IN THIS SITUATION, IT WILL NOT BE PROPER TO ESTIMATE THE INCOME OF THE ASSESSEE ON THE BASIS OF PRESUMPTION THAT THE ASSESSEE WOULD HAVE SOLD THE DIAMONDS WHEN THE SO - CALLED DIAMONDS SAID TO HAVE BEEN PURCHASED BY THE ASSESSEE NEVER EXISTED AB - INIT IO . THEREFORE, THE DECISIONS RELIED BY THE ASSESSEE ARE NOT APPROPRIATE BECAUSE THE FACTS IN THOSE CASES ARE NOT IDENTICAL TO THE FACTS OF THE CASE OF THE ASSESSEE. FURTHER, ON AN IDENTICAL SITUATION, IN THE CASE OF THE FIRM M/S. KARNI JEWELLERS , WHEREIN TH E ASSESSEE IS A 9 PARTNER , THE DIVISION BENCH OF THE HYDRABAD TRIBUNAL IN ITA NO. 351/HYD/2017 FOR THE AY 2007 - 08 VIDE ORDER DATED 17/12/2020 HAD CONFIRMED THE ADDITION MADE BY THE LD. AO. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED HEREIN BELOW FOR REFERENCE: 8. WE HAVE HEARD THE RIVAL SUBMISSIONS THROUGH VIDEO CONFERENCE AND CAREFULLY PERUSED THE MATERIAL ON RECORD. ON EXAMINING THE BALANCE SHEET AND EXAMINING THE DETAILS SUBMITTED BY THE ASSESSEE IN ITS PAPER BOOK, WE FIND THAT THE TOTAL TURNOVER OF THE ASSESSEE IS AS FOLLOWS: S.NO. AMOUNT RS. 1 SALE OF GOLD ORNAMENTS WITHIN THE STATE 6,29,910 PB PG.NO.16,18 2 SALE OF GOLD ORNAMENTS OUT OF STATE 3,88,61,050 PB PG.NO.16,18 3 SALE OF DIAMONDS 10,60,000 PB PG.NO.16,17 TOTAL: 4,05,50,960 8.1. AGAINST THE TURNOVER OF RS.4,05,50,960/ - , THE ASSESSEE HAS DECLARED NET PROFIT OF RS.1,33,921/ - ONLY. THUS, THE ASSESSEES NET PROFIT FROM TRADING OF GOLD JEWELLERY AND DIAMONDS IS ONLY 0.33% OF TURNOVER WHICH IS ABNORMALLY LOW TAKING INTO ACCOUNT OF THE NATURE OF BUSINESS OF THE ASSESSEE. IT APPARENTLY APPEARS THAT THE ASSESSEE HAS MANIPULATED THE ACCOUNTS TO ARRIVE AT A LOW ER PROFIT, BECAUSE IT HAD ALREADY DECLARED RS.40,45,000/ - AS ITS UN - ACCOUNTANT INCOME IN ITS RETURN TOWARDS EXCESS STOCK OF DIAMONDS FOUND DURING THE SURVEY. IN THIS SITUATION, THE BOOKS OF ACCOUNT AND THE STATEMENT OF ACCOUNTS FURNISHED BY THE ASSESSEE CA NNOT BE RELIED UPON. MOREOVER, THERE IS A CATEGORICAL FINDING BY THE INVESTIGATION DEPARTMENT OF THE REVENUE THAT THE ASSESSEE HAD RECEIVED BOGUS BILLS AGGREGATING TO RS.98,69,702/ - TOWARDS ITS PURCHASES WHEREIN THE PAYMENTS WERE MADE THROUGH BANKING CHANNE LS. IT IS ALSO THE FINDING OF THE INVESTIGATION WING OF THE REVENUE THAT THOSE CONCERNS WHO HAD ISSUED BOGUS BILLS TO THE ASSESSEE WERE CONCERNS EXISTING ONLY ON PAPERS FOR THE PURPOSE OF ISSUING BOGUS BILLS AND WERE NOT TRADING OR MANUFACTURING CONCERNS. FURTHER, IT IS APPARENT THAT THE ASSESSEE HAS NOT REQUESTED THE REVENUE AUTHORITIES FOR CROSS EXAMINING THE VENDORS AT THE TIME OF THE PROCEEDINGS BEFORE THEM. THEREFORE, THE ARGUMENT OF THE ASSESSEE THAT PROPER OPPORTUNITY WAS NOT GIVEN TO THE ASSESSEE FO R CROSS - EXAMINING THE VENDORS WHO HAD CONCEDED FOR GIVING BOGUS BILLS TO THE ASSESSEE FOR PURCHASE OF DIAMONDS, DOES NOT HAVE ANY MERIT. MOREOVER, JUST BECAUSE THE ASSESSEE HAD MADE PAYMENTS THROUGH BANKING CHANNELS TO THE VENDORS AND RECORDED THE DIAMONDS PURCHASED IN ITS STOCK BOOK DOES NOT MAKE THE TRANSACTIONS TO BE GENUINE WITH CONCLUSIVE EVIDENCE. FURTHER 10 THERE IS NO MATERIALS ON RECORD TO JUSTIFY THAT THE STOCK IS RECONCILED WITH RESPECT TO PURCHASES, SALES AND CLOSING STOCK ITEM WISE. NEEDLESS TO ME NTION THAT THERE IS EVERY POSSIBILITY FOR THE ASSESSEE TO MAKE PAYMENT THROUGH BANKING CHANNEL AND RECEIVE THE SAME BACK BY WAY OF CASH AND OBTAIN BOGUS PURCHASE BILLS. IT IS ALSO OBVIOUS THAT IN THE NATURE OF BUSINESS CARRIED OUT BY THE ASSESSEE, 0.33% NE T PROFIT DECLARED BY THE ASSESSEE IS TOO LOW AND CANNOT BE ACCEPTED. FURTHER EVEN IF 24% OF THE TURNOVER IS ESTIMATED AS THE INCOME OF THE ASSESSEE, THE ASSESSEE SHOULD HAVE EARNED NET INCOME OF APPROX. RS. 98,00,000/ - . BUT IN THE CASE OF THE ASSESSEE IT H AS ONLY DECLARED NET PROFIT OF RS. 1,33,921/ - . CONSIDERING THESE FACTS AND CIRCUMSTANCES OF THE CASE AND THE REPORT OF THE INVESTIGATION DEPARTMENT OF THE REVENUE, WE ARE OF THE CONSIDERED VIEW THAT THE ADDITION MADE BY THE LD.AO FOR RS.98,69,702/ - IS JUST IFIABLE WHEN THERE IS A CORROBORATIVE EVIDENCE FROM THE RECORDS MAINTAINED BY THE VENDORS OF THE ASSESSEE THAT THE PURCHASES MADE BY THE ASSESSEE IS BOGUS. IT IS ALSO PERTINENT TO MENTION THAT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE THE DECISIO NS CITED AND RELIED BY THE ASSESSEE ARE NOT RELEVANT. HENCE, WE HEREBY CONFIRM THE ORDER OF THE LD.CIT(A) IN THE CASE OF ASSESSEE. 11. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE BEFORE US AND THE REASONS RECORDED HEREIN ABOVE, WE HER EBY CONFIRM THE ORDER OF THE LD. CIT (A) OF THIS ISSUE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO. 350/HYD/2017 IS DISMISSED. ITA NO.1984/HYD/2018 (REVENUES APPEAL) 13. THE BRIEF FACTS OF THE CASE ARE THAT , IN THE CASE OF THE ASSESSEE THE LD.AO HAD RECEIVED INFORMATION FROM ADDL. CIT, CENTRAL RANGE, SURAT THAT THE ASSESSEE SHRI DEVAKI NANDAN VERMA HAD OBTAINED BOGUS PURCHASE BILLS TO THE EXTENT OF RS. 1,55,76,364/ - DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2008 - 09 FROM SPARSH EXPORTS PRIVATE LIMITED, AADI IMPEX, SUN DIAM AND AVI EXPORTS OF RAJENDRA JAIN 11 GROU P. THEREFORE, THE CASE OF THE ASSESSEE WAS REOPENED U/S. 148 OF THE ACT AND THE NOTICE WAS ISSUED ON 27/3/2015. IN RESPONSE, THE ASSESSEE HAD FILED A LETTER STATING THAT THE RETURN OF INCOME FILED BY HIM EARLIER MAY BE ADOPTED AS THE RETURN FILED IN RESPO NSE TO THE NOTICE ISSUED U/S. 148 OF THE ACT. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD EXPLAINED BEFORE THE LD.AO THAT HE WAS MAINTAINING STOCK REGISTER AND OTHER RECORDS TO JUSTIFY THAT THE DIAMOND PURCHASE D BY HIM WERE GENUI NE. HE HAD ALSO SUBMITTED THAT ALL THE PURCHASE OF DIAMONDS WERE MADE BY WAY OF CHEQUE PAYMENT AND HE HAD ALSO RECEIVED INVOICES FOR THE PURCHASES. HOWEVER, THE LD. AO REJECTED THE CONTENTION OF THE ASSESSEE BY OBSERVING AS UNDER: THE EXPLANATIONS OFFERED BY THE ASSESSEE ARE NOT ACCEPTABLE. IN THE STATEMENTS RECORDED DURING THE COURSE OF SEARCH OPERATIONS CONDUCTED IN RAJENDRA JAIN GROUP OF CASES IT WS STATED THAT THE GROUP CONCERNS DO NOT HAVE ANY STOCK OF DIAMONDS AND ALSO NOT SOLD ANY DIAMONDS. THEY HAVE ONLY PROVIDED ACCOMMODATION BILLS TO SRI DEVAKI NANDAN VERMA AND THE SALE CONSIDERATION RECEIVED THROUGH RTGS HAS BEEN PAID IN CASH AS SHOWN IN THE PARALLEL LEDGER ACCOUNTS MAINTAINED IN THE PEN DRIVE. THE ACCOMMODATION ENTRIES CLAIMED TO HAVE BEEN PROVIDED BY RAJENDRA GRUPO ARE TALLYING WITH THE PURCHASE BILLS PRODUCED BY THE ASSESSEE. AS SUCH THE ASSESSEES CONTENTION THAT HE HAD ACTUALLY PURCHASED DIAMONDS FROM SPARSH EXPORTS (P) LTD., AADI IMPEX, SUN DIAM AND AVI EXPORTS CANNOT BE ACCEPTED. THE ARGUMENT THAT IF THE PURCHASES ARE TREATED AS BOGUS, SIMULTANEOUSLY SALES ARE TO BE TREATED A S BOGUS IS ALSO NOT CORRECT FOR THE REASON THAT BOGUS PURCHASES ARE INTRODUCED TO REDUCE THE PROFIT. FURTHER, THE ESTIMATING FOR THE PROFIT ON BOGUS PURCHASES IS NOT APPLICABLE TO THE FACTS OF THE CASE SINCE THIS IS NOT THE CASE WHERE THE PURCHASES AS WEL L AS SALES ARE SUPPRESSED. IT MAY BE MENTIONED THAT N COGNIZANCE NEED BE GIVEN TO THE ASSESSMENT ORDER PASSED BY ANOTHER ASSESSING OFFICER SINCE THE FACTS ARE DIFFERENT FOR EACH CASE AND ALSO IT IS NOT A JUDICIAL PRONOUNCEMENT WHICH IS TO BE FOLLOWED. IN VIEW OF THE ABOVE, ARGUMENT OF THE ASSESSEE IS REJECTED AND THE PURCHASES MADE FROM SPARSH EXPORTS (P) LTD., AADI IMPEX, SUN DIA, AND AVI EXPORTS TO EXTENT OF RS. 1,55,76,364/ - IS TREATED AS ACCOMMODATION. 12 14. ON APPEAL, THE LD. CIT (A) DIRECTED THE LD. AO TO ADOPT THE FINDING OF THE LD. AO FOR THE SUBSEQUENT ASSESSMENT YEAR 2009 - 10 WHEREIN HE HAD ESTIMAT ED THE INCOME OF THE ASSESSEE TOWARDS THE BOGUS PURCHASE OF DIAMONDS AT 5% OF THE ALLEGED BOGUS PURCHASES. A GGRIEVED BY THE ORDER OF THE LD. CIT (A), THE REVENUE IS NOW O N APPEAL BEFORE US. 15. AT THE OUTSET, WE FIND THE ISSUE IN THE APPEAL IS IDENTICAL TO THE CASE OF THE ASSESSEE FOR THE AY 2007 - 08 WHEREIN WE HA VE HELD THAT THE ENTIRE BOGUS PURCHASES HAVE TO BE DISALLOWED AS ALLOWABLE DEDUCTION WHILE COMPUTING THE INCOME OF THE ASSESSEE. THIS IS A CASE WHERE THE ASSESSEE HAS CLAIMED BOGUS PURCHASES OF DIAMONDS TO THE TUNE OF RS. 1,55,76,364/ - AS ITS EXPENDITURE WHEN THE DIA MONDS DID NOT EXIST AT ALL . FURT HER T HE ASSESSEE HAS NEITHER DISCLOSED THE SALE OF THESE DIAMONDS IN ITS P & L ACCOUNT NOR SHOWN THE UNSOLD DIAMONDS AS CLOSING STOCK. THEREFORE, THE CORRESPONDING REVENUE FROM SALE OF DIAMONDS AND THE STOCK POSITION IS NOT DISCLOSED IN THE P & L ACCOUNT. MOREOVER, THERE IS EVIDENCE RECEIVED BY THE REVENUE THAT THE ENTIRE PURCHASES MADE BY THE ASSESSEE IS BOGUS I.E., THE ASSESSEE HAS NOT RECEIVED ANY DIAMONDS THOUGH IT HAS DEBITED THE PURCHASE VALUE OF DIAMONDS IN HIS BOOKS OF ACCOUNTS. THIS FACT IS NOT DIS PROVED. WHEN NO DIAMONDS ARE RECEIVED BY THE ASSESSEE THERE IS NO POSSIBILITY OF THOSE DIAMONDS BEING SOLD. HENCE ESTI MATION OF PROFIT ON SALE OF DIAMONDS WHICH NEVER EXISTED IS NOT APP ROPRIATE. FOR THE ABOVE STATED REASONS, 13 WE DO NOT FIND ANY MERIT IN THE ORDER OF THE LD. CIT (A) ON THIS ISSUE . ACCORDINGLY, WE HEREBY REINSTATE THE ORDER OF THE LD. AO. 16. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED. 17. CONCLUSIVELY, IN THE RESULT, THE ASSESSEES APPEAL IN ITA NO. 350/HYD/2017 IS DISMISSED AND THE REVENUES APPEAL IN ITA NO. 1984/HYD/2018 IS ALLOWED. 18. BEFORE PARTING, IT IS WORTHWHILE TO MENTION THAT THIS ORDER IS PRONOUNCED AFTER 90 DAYS OF HEARING THE APPEAL, WHICH IS THOUGH AGAINST THE USUAL NORMS, WE FIND IT APPROPRIATE, TAKING INTO CONSIDERATION OF THE EXTRA - ORDINARY SITUATION IN THE LIGHT OF THE LOCK - DOWN DUE TO COVID - 19 PANDEMIC. WHILE DOING SO, WE HAVE RELIED IN THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. JSW LTD. IN ITA NO.6264/M/ 2018 AND 6103/M/2018 FOR AY 2013 - 14 ORDER DATED 14TH MAY 2020. PRONOUNCED IN THE OPEN COURT ON THE 08 TH JULY, 2021. SD/ - SD/ - (P. MADHAVI DEVI) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 08 TH JULY , 2021. OKK COPY TO: - 14 1) DEVAKI NANDAN VERMA C/O. SRI S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, 3 - 6 - 643, STREET NO.9, HIMAYAT NAGAR, HYDERABAD 500 029. (II) DEVAKI NANDAN VERMA, PROP. OF OM SRI KARNI JEWELLERS, 3 - 5 - 996, NARAYANAGUDA, HYDERABAD. 2) ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 4(1), INCOME TAX TOWERS, AC GUARDS, HYDERABAD. (II) ACIT, CIRCLE - 4(1), R.NO. 742, D - BLOCK, 7 TH FLOOR, IT TOWERS, AC GUARDS, MASAB TANK, HYDERABAD. 3) THE CIT(A) - 1, HYDERABAD. 4) THE PR. CIT - 1, HYDERABAD. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE