ITO, Wd.-5(4), Pune V. Shri Virendra A. Bhandari, Pune

ITA 228/PUN/2010

• Counselvise Citation: 22824514 RSA 2010
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 1998-1999
• Appeal Filed On: 09-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N DOSHI
• Assessee Lawyers: S K AMBASTHA
• Keywords: Bogus purchase; Income from undisclosed sources; Block assessment
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI G.S. PANNU (AM) ITA NO.228/PN/2010 (ASSTT. YEAR : 1998-99) INCOME TAX OFFICER ... APPELLANT WARD 5(4), PUNE V. SHRI. VIRENDRA A. BHANDARI, RESPONDENT 375/376, SHUKRAWAR PETH, PUNE PAN : NOT AVAILABLE APPELLANT BY : SHRI S.N. DOSHI RESPONDENT BY : SHRI S.K. AMBASTHA ORDER PER I.C. SUDHIR, JM THE REVENUE HAS IMPUGNED FIRST APPELLATE ORDER ON SEVERAL GROUNDS INVOLVING THE ISSUE AS TO WHETHER LD CIT(A) HAS ERR ED IN DELETING THE ADDITION OF RS. 28,11,232/- REPRESENTING THE CLAI MED SALE PROCEEDS OF DIAMOND JEWELLERY DISALLOWED BY THE A.O. 2. AT THE OUTSET OF HEARING, THE LD. A.R. POINTED O UT THAT THE ISSUE RAISED IN THE GROUNDS HAS ALREADY BEEN DECIDED IN F AVOUR OF THE ASSESSEE BY PUNE BENCH OF THE TRIBUNAL UNDER SIMILAR FACTS A ND CIRCUMSTANCES IN THE CASE OF ITO V/S. SHRI AMOLAKCHAND KUNDANMAL BHA NDARI, ITA NO. 1285/PN/2009 (A.Y. 1998-99), ORDER DATED 1.7.2011. HE ALSO PLACED RELIANCE ON THE FOLLOWING DECISIONS : I) NEETA V/S. RIRA , ITA NO. 5022/MUM/2005 II) SURESHCHAND GANATYRA, ITA NO. 2815/MUM/2006 III) ITO V/S. SMT. KAMAL AMOLAKCHAND BHANDARI (H UF) VICE VERSA, ITA NOS. 1286 1284/PN/09 (A.Y. 1998-99), O RDER DATED 30 TH JUNE 2011. ITA . NO 228/PN/2010 SHRI. VIRENDRA A. BHANDARI A.Y 1998-99 PAGE OF 4 2 III) MOHANLAL R. DAGA V/S. ITO, 92 TTJ 1236(MU M). IV) UTTAMCHAND P. JAIN V/S. ITO, 103 ITD 1( TM ) ( MUM) (APPEAL PREFERRED BY DEPARTMENT HAS BEEN DISMISSED BY THE HONBLE BOMBAY HIGH COURT IN ITA 634 OF 2009 VIDE O RDER DATED 2.7.2009). V) H.N. LAKHANI, 147 ITR 552 (BOM) VI) INDER V. NANKANI, ITA NO. 128 OF 2009, JUDGMENT DT. 24.2.2009 (BOM). 3. THE LD. D.R., HOWEVER, TRIED TO JUSTIFY THE ASSE SSMENT ORDER WHEREIN THE A.O HAS OBSERVED THAT SHRI KAMAL KUMAR JOHRI AND SHRI HARI OM SHARMA HAD RUN MANY CONCERNS AND M/S. GALAXY EX PORTS WAS ONE OF THEM. THE A.O HAS ALSO OBSERVED THAT IN THE CASE O F M/S. GALAXY EXPORTS, MUMBAI, THE A.O HAD COMPLETED THE BLOCK ASSESSMENT WHEREIN UNREGISTERED PURCHASES MADE FROM THE VDIS DECLARANT S DURING THE A.Y.1998-99 HAD BEEN HELD AS BOGUS PURCHASES AND TH E ASSESSEE WAS ONE OF SUCH DECLARANTS. 4. WE FIND THAT UNDER ALMOST SIMILAR FACTS AND CIRC UMSTANCES, THE PUNE BENCH OF THE TRIBUNAL IN ITS RECENT DECISION DATED 1 ST JULY 2011 HAS DECIDED AN IDENTICAL ISSUE IN FAVOUR OF THE ASSESS EE IN THE CASE OF ITO V/S. SHRI AMOLAKCHAND KUNDANMAL BHANDARI (SUP) RELI ED UPON BY THE LD. A.R. IN THE PRESENT CASE BEFORE US, THE A.O DOUBTE D THE CLAIMED SALE PROCEEDS OF RS. 25,55,666/- OF DIAMOND JEWELLERY RE CEIVED FROM GALAXY EXPORTS, ON THE BASIS OF RESULT OF SEARCH AND SEIZU RE OPERATION CARRIED OUT IN THE CASE OF SHARMA AND JOHRI GROUP, WHEREIN IT W AS FOUND THAT BOGUS PURCHASES OF DIAMOND JEWELLERY DECLARED UNDER VDIS -1997 WAS MADE BY M/S. GALAXY EXPORTS FROM VARIOUS DECLARANTS. HE OBS ERVED THAT THE ITA . NO 228/PN/2010 SHRI. VIRENDRA A. BHANDARI A.Y 1998-99 PAGE OF 4 3 ASSESSEE WAS ONE OF THEM. THE A.O. ACCORDINGLY HEL D THAT THERE WAS NO ACTUAL SALE OF DIAMONDS TO GALAXY EXPORTS AS CLAIME D BY THE ASSESSEE AND HELD THE SALE CERTIFICATE OF SAME ISSUED BY GALAXY EXPORTS TO ASSESSEE AS AGAINST THE NON-EXISTENT DIAMONDS DECLARED UNDER VD IS 1997. THE A.O ACCORDINGLY MADE THE ADDITION OF RS.25,55,666/- ON THIS ACCOUNT AGAINST THE ASSESSEE AS INCOME FROM UNDISCLOSED SOURCES. UN DER SIMILAR CIRCUMSTANCES, THE TRIBUNAL IN THE CASE OF ITO V/S. SHRI AMOLAKCHAND KUNDANMAL BHANDARI (SUPRA) VIDE ITS ORDER DATED 1 ST JULY 2011 HAS DELETED SIMILAR ADDITION WITH FOLLOWING FINDING IN PARA NO.3 OF THE SAID ORDER. FOR A READY REFERENCE, THE SAME IS BEING RE PRODUCED HEREUNDER : 3 WE HAVE HEARD BOTH THE PARTIES AND RELIED ON THE RELEVANT JUDGMENTS ON THE RECORDS. WE FIND THAT THE AO DISB ELIEVED THE TRANSACTION HOLDING THAT THE SALE OF DECLARED ITEMS AS A MERE PAPER TRANSACTION. HE FURTHER DISBELIEVED THE FACT THAT THE RECEIPT OF THE SAID AMOUNTS FROM M/S GALAXY EXPORTS IS NOT A GENU INE TRANSACTION. THE ADDITION WAS MADE U/S 68 OF THE A CT. CIT(A) DELETED THE SAME RELYING ON THE DECISION OF THE B OMBAY TRIBUNAL IN THE CASE OF K K JOHRI. IDENTICAL APPEALS CAME-U P BEFORE US INVOLVING THE SIMILAR SALES OF THE GALAXY EXPORTS A ND GOLD JEWELERS AND RECEIPT OF THE MONEY FROM THE SAID CONCERN. TH IS CONCERN UNDISPUTEDLY RELATES TO SHARMA AND JOHRI CONCERNS. M/S GALAXY EXPORTS IS FOUND TO BE A GENUINE CONCERN BY THE TR IBUNAL WHILE DEALING WITH THE BLOCK ASSESSMENT PROCEEDINGS OF TH E SHARMA AND JOHRI GROUP OF CASES. THEREFORE, THE GENUINENESS OF TRANSACTIONS OF SALE OF THE DECLARED JEWELLERY IS BEYOND DOUBT. RE SULTANTLY, THE CREDIT OF THE TRANSACTIONS INVOLVING THE SALE PRO CEEDS RECEIVED FROM M/S GALAXY EXPORTS AND OTHERS IS ALSO GENUINE TRANSACTION AND NOT A PAPER TRANSACTION AS HELD BY THE AO. CON SEQUENTLY, THE APPEAL OF THE REVENUE IS COVERED AGAINST THEM BY VA RIOUS ORDERS OF THE TRIBUNAL INCLUDING THAT OF NEETA V RIRA (ITA 50 22/MUM/05) AND SURESH CHANDRA GANATYRA (VIDE ITA NO. 2815/MUM/06). FURTHER, THE HONBLE BOMBAY HIGH COURTS JUDGMENTS IN THE CA SE OF HN LAKHANI (147 ITR 552) AND INDER V NANKANI ITA NO 12 8 OF 2009 DATED 24.2.2009 AFFIRMS THE POSITION IN FAVOUR OF T HE ASSESSEE. CONSEQUENTLY, THE APPEAL OF THE REVENUE IS COVERED AGAINST THEM BY ITA . NO 228/PN/2010 SHRI. VIRENDRA A. BHANDARI A.Y 1998-99 PAGE OF 4 4 THE ABOVE REFERRED ORDERS. ACCORDINGLY, THE GROUND S OF THE REVENUE ARE DISMISSED. FOLLOWING THE ABOVE DECISION, THE ISSUE RAISED IN T HE GROUNDS OF APPEAL REGARDING THE VALIDITY OF THE FIRST APPELLATE ORDER WHEREBY LD CIT(A) HAS DELETED THE ADDITION OF RS. 25,55,666/- MADE BY THE A.O ON ACCOUNT OF DENIAL OF THE CLAIMED SALE PROCEEDS OF DIAMOND JEWE LLERY IS DECIDED IN FAVOUR OF THE ASSESSEE. THE FIRST APPELLATE ORDER IN THIS REGARD IS THUS UPHELD. THE GROUNDS INVOLVING THE ISSUE ARE ACCORD INGLY REJECTED. 5. IN RESULT, APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 27TH JULY 2011. SD/- SD/- ( G.S. PANNU ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 273TH JULY, 2011 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-III, PUNE 4. THE CIT(A)- III, PUNE 5. THE D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE