Smt. Savita Karnani , Kolkata V. ITO, Ward - 36(3) , Kolkata

ITA 2458/KOL/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6636 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-07-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 26-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NICKOLAS MURMU CITSRDR
• Assessee Lawyers: RAKESH JAIN
• Keywords: Bogus purchase; Unexplained investment; Search and seizure; Source of fund; Accommodation entries
• Section: 143(3); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH SMC KOLKATA BEFORE SHRI S.S, GODARA, JUDICIAL MEMBER ITA NO.2458/KOL/2018 ASSESSMENT YEAR:2009-11 SMT. SAVITA KARNANI 33, BRABOURNE ROAD, 7 TH FLOOR, KOLKATA-700001 [ PAN NO.AFJPK 6850 L ] / V/S . INCOME TAX OFFICER WARD-36(3), 110, SHANTI PALLY, AAYAKAR BHAWAN, POORVA, KOLKTA-107 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI RAKESH JAIN, FCA /BY RESPONDENT SHRI NICKOLAS MURMU, ADDL. CIT-SR-DR /DATE OF HEARING 18-07-2019 /DATE OF PRONOUNCEMENT 31-07-2019 /O R D E R THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2009-10 , ARISES AGAINST THE COMMISSIONER OF INCOME-TAX (APPEALS)-13, KOLKATAS ORDER DATED 18.07.2018 PASSED IN CASE NO.255/CIT(A)-13/KOL/2015-16, INVOLVING PR OCEEDINGS U/S. 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. FOR THE REASON STATED IN CONDONATION PETITION DA TED 26.11.2018, I CONDONE THE IMPUGNED DELAY OF 10 DAYS IN INSTANT FILING ON ACCO UNT OF NO OBJECTION RAISES AT THE REVENUES BEHEST. THIS APPEAL IS NOW TAKEN UP FOR A DJUDICATION ON MERITS. 3. COMING TO MERITS, THE ASSESSEE RAISED TWO SUBSTA NTIVE GROUNDS INTER ALIA CHALLENGING VALIDITY OF THE IMPUGNED RE-OPENING AND UNEXPLAINED DIAMOND PURCHASE ITA NO.2458/KOL/2018 A.Y. 2009 -10 SMT. SAVTA KARNANI VS. ITO WD-3 6(3) PAGE 2 ADDITION AMOUNTING TO RS.328700/-. LEARNED COUNSEL IS FAIR ENOUGH IN NOT PRESSING FOR THE ABOVE STATED FORMER SUBSTANTIVE GROUND. 4. I NOW ADVERT TO THE ASSESSEES LATTER SUBSTANTIV E GRIEVANCE. HE CLAIMED TO HAVE PURCHASED THE IMPUGNED DIAMOND FROM SHI P.K. JAIN O N 01.10.2013. THE DEPARTMENT AUTHORITIES APPEAR TO HAVE CONDUCTED A SEARCH / SUR VEY AT THE SAID SUPPLIERS PREMISES REVEALING THAT HE HAD BEEN GIVING ACCOMMODATION ENT RIES OF DIAMOND. THE ASSESSING OFFICER HEREIN THEREAFTER RE-OPEN THE ASSESSEES AS SESSMENT ON THE GROUND THAT THE DDIT(INV) INFORMATION TO THIS EFFECT REVEALED THAT ASSESSEE HAVING TAKEN BOGUS ACCOMMODATION ENTRY OF DIAMOND PURCHASE HAD CULMINA TED IN ITS TAXABLE INCOME AS TO HAVE ESCAPED ASSESSMENT. ALL THIS LED TO THE INCOME IMPUGNED RE-ASSESSMENT FRAMED ON 18.12.2015 TREATING THE IMPUGNED PURCHASE SHOWN AS INVESTMENT IN THE BALANCE- SHEET AS MADE FROM UNEXPLAINED SOURCE AND INCOME F OR ASSESSMENT YEAR 2009-10. THE CIT(A) HAS CONFIRMED THE ASSESSING OFFICERS ACTION IN HIS LOWER APPELLATE FINDINGS. 5. I HAVE GIVEN MY THOUGHTFUL CONSIDERATION TO RIVA L CONTENTIONS AGAINST AND IN SUPPORT OF THE IMPUGNED UNEXPLAINED SOURCE. THERE I S NO DISPUTE THAT THE ASSESSEES BOOKS AND ALL OTHER DETAILED EVIDENCE HAVE MADE IT CLEAR THAT SHE HAD SHOWN REFLECTED THE SAID PURCHASE IN HER BALANCE-SHEET FOLLOWED BY PAYMENTS THROUGH BANKING CHANNEL. THIS TRIBUNALS CO-ORDINATE BENCHS DECISION IN SANJU JALAN VS. ITO WARD-36(2) , IN ITA NO.634/KOL/2017 DECIDED ON 10.01.2018 HOLDS THAT SEC. 69 OF THE AC T DOES NOT APPLY IN SUCH A FACTUAL BACKDROP AS UNDER:- 10. FIRST WE WILL TAKE UP FOR CONSIDERATION GROUND NO.5 WITH REGARD TO THE ADDITION ON ACCOUNT OF BOGUS PURCHASES OF DIAMONDS. ON THE A BOVE ISSUE THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MAD E BEFORE THE REVENUE AUTHORITIES. THE LD DR RELIED ON THE ORDER OF THE REVENUE AUTHOR ITIES. 11. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE A SSESSEE PURCHASED JEWELLERY WORTH RS.14,55,472/- FROM NICE DIAMONDS, MUMBAI ON 17.3.2 012. THE ASSESSEE PAID NICE DIAMONDS THE PURCHASE VALUE OF THE JEWELLERY BY TWO CHEQUES FOR RS.10,02,472 AND RS.4,53,000 RESPECTIVELY DATED 27.3.2012 AND 28.3.2 012 RESPECTIVELY. IN THE BALANCE SHEET AS ON 31.3.2013 THE ASSESSEE HAS SHOWN THE VA LUE OF THE JEWELLERY AS ADDITION TO HIS CAPITAL. THE DOCUMENTARY EVIDENCE LIKE BILLS, I NVOICES, BANK STATEMENTS ETC., WERE FURNISHED BY THE ASSESSEE AND THERE IS NO DISPUTE O N THIS ASPECT. 12. THE RETURN OF INCOME FILED BY THE ASSESSEE FOR AY 2012-13 WAS ACCEPTED AND AN INTIMATION WAS ISSUED U/S.143(1) OF THE ACT. ITA NO.2458/KOL/2018 A.Y. 2009 -10 SMT. SAVTA KARNANI VS. ITO WD-3 6(3) PAGE 3 13. IT APPEARS THAT THERE WAS INFORMATION RECEIVED BY THE AO OF THE ASSESSEE FROM D.I.T. (INVESTIGATION)-II, MUMBAI. THE INFORMATION RECEIVED WAS THAT THERE WAS A SEARCH AND SEIZURE OPERATION CONDUCTED IN THE CASE OF BHAWARLAL JAIN GROUP OF CASES ON 03.10.2013. CONSEQUENT TO THE SAID SEARCH AND IN VESTIGATION CONDUCTED, IT CAME TO LIGHT THAT BHAWARLAL JAIN GROUP WAS PROVIDING BOGUS /ACCOMMODATION ENTRIES TO SEVERAL PERSONS AND ENTITIES AND THESE ENTRIES WERE BOGUS ENTRIES. NICE DIAMONDS IS ONE OF THE ENTITIES BELONGING TO BHAWARLAL JAIN GRO UP OF CASES. SINCE THE ASSESSEE CLAIMED TO HAVE MADE PURCHASES FROM NICE DIAMONDS, THE ASSESSMENT IN THE CASE THE ASSESSEE WAS REOPENED U/S 147 OF THE INCOME TAX ACT , 1961 (ACT.). 14. IN THE ASSESSMENTS CONCLUDED, THE AO AFTER MAKI NG REFERENCE TO ALL THE EVIDENCES FILED BY THE ASSESSEE TO PROVE THE SOURCE OF FUNDS AS WELL AS EVIDENCE OF PAYMENTS AND CAME TO THE CONCLUSION THAT THE PURCHASES IN QUESTI ON WERE NOT GENUINE. ULTIMATELY THE AO MADE AN ADDITION IN THE CASE OF THE ASSESSEE BY OBSERVING THAT SINCE THE ASSESSEE IN THE BALANCE SHEET HAS SHOWN INCREASE IN JEWELRY THERE IS NO EVIDENCE ON RECORD TO DOUBT THAT HE DIDN'T MAKE ANY PURCHASE IN THE FY-2011-12 BUT THE PURCHASES WERE MADE BY THE ASSESSEE FROM SOME OTHER PARTY IN EARLIER YEAR BUT THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF THE SAME. ACCORDINGLY, EXPENDITURE INCURRED TOWARDS PURCHASE OF DIAMONDS SHOWN AS JEWELERY IN THE BALAN CE SHEET IS CONSIDERED AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT AND DEEMED TO BE THE INCOME OF THE ASSESSEE FOR THE FINANCIAL YEAR 2009-10. ON APPEAL BY THE AS SESSEE THE CIT(A) CONFIRMED THE ORDERS OF THE AO. 15. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COUNSE L FOR THE ASSESSEE AND THE LD. DR. THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT T HE JEWELLERY IN QUESTION HAS BEEN PURCHASED BY THE ASSESSEE WHICH WAS CONFIRMED BY NI CE DIAMONDS AND THE PAYMENT HAS BEEN MADE BY CHEQUES. MORE IMPORTANT IT WAS POI NTED OUT THAT THE INVESTMENTS HAS BEEN SHOWN IN THE BOOKS OF ACCOUNTS AND THE SOU RCE HAD BEEN DULY EXPLAINED AS FROM THE DISCLOSED BANK ACCOUNTS OF THE ASSESSEE. I T WAS SUBMITTED THAT IN THE CIRCUMSTANCES THE ADDITION MADE U/S 69 OF THE ACT C ANNOT BE SUSTAINED. THE LD. DR RELIED ON THE ORDERS OF CIT(A). 16. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO T HE RIVAL SUBMISSIONS. IT IS AN UNDISPUTED POSITION THAT ADDITION IN CASE OF THE AS SESSEE HAS BEEN MADE U/S 69 OF THE ACT. SECTION 69 OF THE ACT READS AS FOLLOWS: - UNEXPLAINED INVESTMENTS 69. WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINT AINED BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION A BOUT THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERED BY HI M IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE VALUE OF T HE INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FIN ANCIAL YEAR. 17. IN THE PRESENT CASE INVESTMENTS OF JEWELLERY IS DULY REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSES. THEREFORE THERE IS NO SCO PE OF APPLYING THE PROVISION OF SECTION 69 OF THE ACT. APART FROM THE ABOVE SOURCE OF FUNDS IS EVIDENCED BY THE PAYMENTS FROM DISCLOSED BANK ACCOUNTS. THEREFORE TH E SOURCE OF INVESTMENTS IS ALSO PROPERLY AND SATISFACTORILY EXPLAINED BY THE ASSESS ES. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ADDITIONS MADE BY THE AO AND CONF IRMED BY CIT(A) CANNOT BE ITA NO.2458/KOL/2018 A.Y. 2009 -10 SMT. SAVTA KARNANI VS. ITO WD-3 6(3) PAGE 4 SUSTAINED AND THE SAME IS DIRECTED TO BE DELETED. GROUND NO.5 RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED . 6. I ADOPT THE ABOVE DETAILED REASONING MUTATIS MUTANDIS TO HOLD THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN TREATING THE ASSESS EES INVESTMENT IN DIAMOND PURCHASE AS MADE FROM UNEXPLAINED SOURCE. THE IMPUGNED ADDIT ION STAND DELETED FOR THIS PRECISE REASON ALONE. 7. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN ABOV E TERMS. ORDER PRONOUNCED IN OPEN COURT ON 31/07/2019 (S.S. GODARA) JUDICIAL MEMBE R KOLKATA, *DKP/SR.PS - 31/07/2019 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-SMT. SAVITA KARANI, 33, BRABOURNE RD. 7 TH FL. KOLKATA-001 2. /RESPONDENT-ITO WARD-36(3), 110, SHANTI PALLY, AAYA KAR BHAVAN, POORVA, KOLKATA-107 3. ' % / CONCERNED CIT 4. % - / CIT (A) 5. & ))' , ' / DR, ITAT, KOLKATA 6. + / GUARD FILE. BY ORDER/ , /TRUE COPY/ ',