ITO, New Delhi V. Rekha Khandelwal, New Delhi

ITA 2366/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3512 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 20-07-2010
• Assessment Year: 1999-2000
• Appeal Filed On: 18-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BANITA DEVI NAOREM
• Keywords: Reopening of assessment; Bogus purchase; Additional evidence; Accommodation entries
• Section: 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI I.P.BANSAL, JM AND SHRI R.C.SHARMA, AM ITA NO.2366/DEL/2010 ASSESSMENT YEAR : 1999-2000 INCOME TAX OFFICER, WARD-7(4), NEW DELHI. VS. MS.REKHA KHANDELWAL, F-17, GITANJALI ENCLAVE, NEW DELHI. PAN NO.AAIPK9469M. (APPELLANT) (RESPONDENT) APPELLANT BY : MS.BANITA DEVI NAOREM, SR.DR. RESPONDENT BY : SHRI R.S.SINGHVI, CA. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 16.2.2010 FOR THE AY 1999-2000, IN THE MATTER OF OR DER PASSED U/S 143(3)/147 OF THE IT ACT, WHEREIN REVENUE IS AGGRIEVED FOR DELETI ON OF ADDITION OF RS.11,08,640/- MADE BY THE AO U/S 68 OF THE IT ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT THERE WAS SEARCH U/S 132 IN THE CASE OF SHRI B ISHAN CHAND, SHRI MANOJ AGGARWAL AND THEIR ASSOCIATE CONCERNS ON 3.8.2000. ON THE BASIS OF ENQUIRIES MADE DURING THE COURSE OF SEARCH, IT WAS FOUND THAT BISHAN CHAND MUKESH KUMAR WAS NOT ENGAGED IN ANY REAL BUSINESS OF SALE AND PU RCHASE OF JEWELLERY BUT WAS ENGAGED IN PROVIDING BOGUS ACCOMMODATION ENTRIES TH ROUGH VARIOUS PERSONS. THE ASSESSEE WAS FOUND TO BE ONE OF SUCH BENEFICIARIES OF SUCH TRANSACTION RELATING TO THE BOGUS SALE OF JEWELLERY AMOUNTING TO RS.11,08,6 40/-. ON THE BASIS OF THIS INFORMATION, AN ADDITION OF RS.11,08,640/- WAS MADE IN ASSESSEES HANDS U/S 68 OF THE ACT, AFTER REOPENING OF ASSESSMENT U/S 147. BY THE IMPUGNED ORDER, CIT(A) DELETED THE ADDITION BY OBSERVING THAT ASSESSEE HAS ACTUALLY SOLD THE JEWELLERY TO BISHAN CHAND MUKESH KUMAR AND PAYMENT WAS RECEIVED BY CHEQUE. THE PERSON ITA-2366/DEL/2010 2 I.E. FIRM WHO PAID THE MONEY IS IDENTIFIED WHO HAS ALSO CONFIRMED THE TRANSACTION. THE SOURCE OF PAYMENT IS THE BANK ACCOUNT OF THE FI RM AND THE AMOUNT PAID WAS ON ACCOUNT OF CONSIDERATION FOR SALE OF JEWELLERY. TH E CIT(A) CATEGORICALLY RECORDED A FINDING TO THE EFFECT THAT THERE WAS NO MATERIAL ON RECORD TO PROVE THAT THE MONEY RECEIVED BY CHEQUE CAME BACK IN THE FORM OF CASH FR OM THE ASSESSEE. THE CIT(A) FURTHER HELD THAT THE AO HAS NOT REBUTTED ANY OF TH E FACTS OF THE CASE BUT HAS PROCEEDED TO MAKE THE ADDITION ON THE BASIS OF ASSE SSMENT MADE IN THE CASE OF THE PURCHASER. AGGRIEVED BY THIS ORDER OF CIT(A), THE REVENUE IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, GONE T HROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT JEWELLERY WAS DECL ARED BY THE ASSESSEE IN VDIS. THE SAME WAS SOLD TO BISHAN CHAND MUKESH KUMAR, PAY MENT OF WHICH WAS RECEIVED BY ACCOUNT PAYEE CHEQUES AND DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. EVEN THE FIRM WHO HAS PURCHASED THE JEWE LLERY HAS ALSO CONFIRMED THE TRANSACTION AS HAVING BEEN ENTERED WITH THE ASSESSE E. THE CIT(A) HAD RECORDED CATEGORICAL FINDINGS WITH RESPECT TO TRANSACTION OF ACTUAL SALE AND PAYMENT OF SALE CONSIDERATION BY ACCOUNT PAYEE CHEQUE. LEARNED AR CONTENDED THAT UNDER THESE FACTS AND CIRCUMSTANCES, THE ISSUE IS COVERED BY TH E DECISION OF ITAT SPECIAL BENCH IN THE CASE OF TEJINDER SINGH, HUF AND THE AP PEAL FILED IN THE SAID CASE HAS BEEN DISPOSED OF BY THE SPECIAL BENCH OF ITAT AT DE LHI VIDE AN ORDER DATED 25.7.2008 PASSED IN IT(SS) A.NO.404/DEL/2003 AND OT HERS WHEREIN THE SAID ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN PARAGRAPH NO.16 6 AS UNDER:- 166. AFTER HEARING THE ARGUMENTS OF THE LEARNED RE PRESENTATIVES OF ALL THE SIDES IN THESE CASES, WE FELT THAT IT WOULD BE APPROPRIATE TO CONSIDER AND DECIDE THE APPEALS FILED IN THE CASE O F M/S BISHAN CHAND MUKESH KUMAR AND SHRI MANOJ AGGARWAL/BEMCO JE WELLERS FIRST AS THE ISSUE RELATING TO GENUINENESS OF THE T RANSACTIONS OF PURCHASE AND SALE OF JEWELLERY IN THE SAID CASES HA VE BEEN INVESTIGATED IN DETAIL AND THE DECISION THEREON WIL L HAVE A DIRECT BEARING ON THE ULTIMATE FATE OF THE CASE OF THE ASS ESSEE I.E. TEJINDER ITA-2366/DEL/2010 3 SINGH, HUF. ACCORDINGLY, THE APPEALS FILED IN THE CASE OF M/S BISHAN CHAND MUKESH KUMAR HAVE ALREADY BEEN DISPOSE D OF BY US IN THE FOREGOING PORTION OF THIS ORDER WHEREIN THE ASSESSMENT MADE U/S 158BC READ WITH SECTION 158BD HAS BEEN HELD TO BE BAD IN LAW ON THE GROUNDS AND FOR THE REASONS SET OUT THEREIN. CONSEQUENTLY, THE SAID ASSESSMENT MADE IN THE CASE OF M/S BISHAN CHAN D MUKESH KUMAR HAS BEEN QUASHED BY US HOLDING THE SAME TO BE INVALID AND KEEPING IN VIEW THIS DECISION ON THE PRELIMINARY LE GAL ISSUES, WE HAVE REFRAINED OURSELVES FROM CONSIDERING AND DECID ING THE OTHER ISSUES INVOLVED IN THE SAID CASE ON MERITS INCLUDIN G THE ISSUE RELATING TO GENUINENESS OF THE TRANSACTIONS OF PURCHASE AND SALE OF JEWELLERY. ASSUMING THE POSSIBILITY OF SUCH AN EVENTUALITY AND KEEPING IN VIEW THAT THE MATERIAL COLLECTED DURING THE COURSE OF AS SESSMENT PROCEEDINGS IN THE CASE OF M/S BISHAN CHAND MUKESH KUMAR, WHICH HAS ALREADY BEEN FILED AND ADMITTED AS ADDITIONAL E VIDENCE IN THE CASE OF TEJINDER SINGH, HUF, CAN STILL BE UTILIZED, SHRI S.D.KAPILA HAS URGED THAT THE CASE OF SHRI TEJINDER SINGH SHOU LD BE RESTORED TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER AND D ECIDE THE SAME AFRESH IN THE LIGHT OF THE SAID ADDITIONAL EVIDENCE . HE HAS SUBMITTED THAT THIS WILL ALSO FACILITATE IN GIVING AN OPPORTU NITY TO THE ASSESSEE TO CROSS-EXAMINE THE DEPONENTS WHOSE STATEMENTS HAVE B EEN SOUGHT TO BE RELIED UPON BY THE DEPARTMENT AND ALSO TO RELY U PON THE LETTERS/AFFIDAVITS OF THE SAID DEPONENTS WHICH HAVE BEEN FILED BY HIM AND ADMITTED BY THE TRIBUNAL AS ADDITIONAL EVIDENCE . HE HAS CONTENDED THAT THIS WILL ENABLE THE ASSESSING OFFIC ER TO REACH A PROPER CONCLUSION AFTER TAKING INTO CONSIDERATION T HIS ENTIRE EVIDENCE WHICH HAS BEEN GATHERED AFTER THE COMPLETION OF ASS ESSMENT IN THE CASE OF TEJINDER SINGH, HUF AND WHICH IS RELEVANT T O DECIDE THE ISSUES INVOLVED IN THE SAID CASE. ALTHOUGH THIS PL EA OF SHRI S.D.KAPILA SOUNDS TO BE LOGICAL AND LEGALLY TENABLE , WE FIND IT DIFFICULT TO ACCEPT THE SAME IN VIEW OF OUR DECISIO N RENDERED IN THE CASES OF SHRI MANOJ AGGARWAL AND BEMCO IN THE FOREG OING PORTION OF THIS ORDER. IT IS NO DOUBT TRUE THAT THE JEWELL ERY BY TEJINDER SINGH, HUF WAS SOLD TO M/S BISHAN CHAND MUKESH KUMAR AND T HE ISSUE ABOUT THE GENUINENESS OF THE TRANSACTIONS OF PURCHA SE AND SALE OF JEWELLERY BY M/S BISHAN CHAND MUKESH KUMAR INCLUDIN G THE PURCHASE OF JEWELLERY FROM THE ASSESSEE HAS NOT BEE N CONSIDERED AND DECIDED BY US ON MERITS. HOWEVER, A SIMILAR ISSUE INVOLVED IN THE CASE OF BEMCO/MANOJ AGGARWAL HAS BEEN CONSIDERED AN D DECIDED BY US ON MERITS. IN THE SAID CASES, THE FACTS INVOLVE D WERE ALMOST SIMILAR TO THE FACTS INVOLVED IN THE CASE OF M/S BI SHAN CHAND MUKESH KUMAR INASMUCH AS THE TRANSACTIONS RELATING TO PURCHASE AND SALE OF JEWELLERY WERE HELD TO BE BOGUS BY THE DEPARTMENT ALLEGING THAT SUCH TRANSACTIONS WERE ENTERED INTO I N ORDER TO GIVE ITA-2366/DEL/2010 4 ACCOMMODATION ENTRIES ON COMMISSION BASIS. THIS AL LEGATION WAS BASED ON THE SIMILAR TYPE AND NATURE OF EVIDENCE CO LLECTED BY THE DEPARTMENT AND THE MODUS OPERANDI ALLEGEDLY FOLLOWED BY BEMCO/MANOJ AGGARWAL WAS THE SAME AS ALLEGED TO BE FOLLOWED BY M/S BISHAN CHAND MUKESH KUMAR WHILE GIVING ACCOMMOD ATION ENTRIES IN THE FORM OF BOGUS SALES ENTRIES OF JEWEL LERY. THE CASE SOUGHT TO BE MADE OUT BY THE DEPARTMENT ABOUT THE A LLEGED BOGUS PURCHASE AND SALE OF JEWELLERY TRANSACTIONS ON THE BASIS OF SIMILAR NATURE OF EVIDENCE HAS BEEN EXAMINED BY US IN DETAI L AND ON SUCH EXAMINATION, WE HAVE HELD THAT THE EVIDENCE COLLECT ED BY THE REVENUE AUTHORITIES WAS NOT SUFFICIENT TO ESTABLISH THEIR STAND THAT THE JEWELLERY TRANSACTIONS CARRIED ON BY BEMCO JEWELLER S PVT.LTD. WERE ONLY PAPER TRANSACTIONS OR BOGUS AND THE SAME WERE PUT THROUGH BY ACCOMMODATION ENTRIES IN ORDER TO EARN COMMISSION I NCOME THEREFROM. WE HAVE FOUND IT DIFFICULT TO REJECT THE ASSESSEES PLEA ABOUT THE GENUINENESS OF THE JEWELLERY TRANSACTIONS AS OPPOSED TO THE NORMAL COURSE OF HUMAN CONDUCT EVEN APPLYING THE PR INCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASES OF D URGA PRASAD MORE (SUPRA) AND SUMATI DAYAL (SUPRA). WE HAVE ALS O FOUND THAT THE CIRCUMSTANCES SURROUNDING THE CASE WERE NOT STRONG ENOUGH TO HOLD THE CLAIM OF THE ASSESSEE ABOUT GENUINENESS OF THE JEWELLERY TRANSACTIONS AS TOTALLY UNBELIEVABLE OR OUTRAGEOUS. WE HAVE ALSO FOUND THAT NO EVIDENCE OF ANY CONSEQUENCE WAS UNEAR THED DURING THE COURSE OF SEARCH TO DIRECTLY SHOW THAT THE JEWELLER Y BUSINESS WAS BOGUS AND THAT IT WAS ONLY ACCOMMODATION ENTRY BUSI NESS. ON THE OTHER HAND, THE EVIDENCE BROUGHT ON RECORD BY THE A SSESSEE ESPECIALLY THE EVIDENCE IN THE FORM OF SALES TAX AS SESSMENT ORDER WHEREIN THE TRANSACTIONS OF PURCHASE AND SALE OF JE WELLERY WERE ACCEPTED BY THE SALES-TAX AUTHORITIES WAS FOUND TO BE RELIABLE BY US TO SUPPORT THE CASE OF THE ASSESSEE THAT THE RELEVA NT TRANSACTIONS OF PURCHASE AND SALE OF JEWELLERY WERE GENUINE. AS TH E ISSUE INVOLVED IN THE CASE OF BEMCO/MANOJ AGGARWAL AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO INCLUDING THE EVIDENCE BROUG HT ON RECORD ARE SIMILAR TO THE CASE OF M/S BISHAN CHAND MUKESH KUMA R, WE ARE OF THE VIEW THAT THE DECISION RENDERED IN THE CASE OF BEMCO/MANOJ KUMAR ON THE SAID ISSUE IS APPLICABLE EVEN IN THE C ASE OF M/S BISHAN CHAND MUKESH KUMAR WITH EQUAL FORCE AND THIS BEING SO, NO MEANINGFUL PURPOSE WILL BE SERVED BY SENDING THE MA TTER BACK TO THE AO FOR RECONSIDERATION AND RE-DECISION MERELY BECAU SE THE ISSUE HAS NOT BEEN DECIDED ON MERITS IN THE CASE OF M/S BISHA N CHAND MUKESH KUMAR. IN OUR OPINION, THIS EXERCISE WOULD PROVE T O BE MERELY ACADEMIC AND IT WOULD RESULT ONLY IN MULTIPLICITY O F LITIGATION. IN THAT VIEW OF THE MATTER AND KEEPING IN VIEW THE REA SONS GIVEN ABOVE, WE DO NOT FIND ANY JUSTIFIABLE REASON TO SEND THIS MATTER TO THE ITA-2366/DEL/2010 5 ASSESSING OFFICER FOR RECONSIDERATION AS SOUGHT BY SHRI KAPILA AND FOLLOWING OUR CONCLUSION DRAWN IN THE CASE OF BEMCO /MANOJ AGGARWAL, WE HOLD THAT THE TRANSACTION RELATING TO SALE OF JEWELLERY IN THE CASE OF THE PRESENT ASSESSEE I.E. TEJINDER SINGH, HUF IS GENUINE . ACCORDINGLY, WE DELETE THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT (APPEALS ) UNDER SECTION 68 AND ALLOW THIS APPEAL OF THE ASSESSEE. (EMPHASIS IN BOLD LETTERS SUPPLIED BY US). 4. AS THE ISSUE IS SQUARELY COVERED BY THE ORDER OF THE SPECIAL BENCH, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR D ELETING THE ADDITION MADE U/S 68 OF THE ACT. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 23 RD JULY, 2010. SD/- SD/- (I.P.BANSAL) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23.07.2010. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR ITA-2366/DEL/2010 6