MGV Jain Jewellers Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 2896/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8508 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 09-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Document seized; Documents seized
• Section: 143(2); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E, NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.2896/DEL/2017 ASSESSMENT YEAR: 2012-13 M/S. MGV JAIN JEWELLERS PVT. LTD., 2782/20, BEADON PURA, 1 ST FLOOR, KAROL BAGH, NEW DELHI VS. ITO, WARD-16(4), NEW DELHI PAN :AAGCM3999K (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AG AINST THE ORDER DATED 23/03/2017 PASSED BY THE LD. COMMISSION ER OF INCOME-TAX (APPEALS)-33, NEW DELHI [IN SHORT THE L D. CIT(A)] FOR ASSESSMENT YEAR 2012-13, RAISING FOLLOWING GROUNDS: 1. THAT THE LD. CIT (A) HAS ERRED IN GIVING PART RE LIEF TO THE ASSESSEE AND AGAINST THE ADDITION OF RS. 2,06,03,900/-, THE CIT(A) HAS GRANTED A RELIEF OF RS. 59,87,250/- AND HAS ERRED I N CONFIRMING THE OTHER ADDITION, WHICH IS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. APPELLANT BY NONE RESPONDENT BY M/S. RAKHI VIMAL, SR.DR DATE OF HEARING 14.01.2020 DATE OF PRONOUNCEMENT 21.01.2020 2 ITA NO.2896/DEL/2017 2. THAT THE LD.CIT(A) HAS ERRED IN CONSIDERING CERT AIN UNAUTHENTICATED LOOSE DOCUMENTS SEIZED FROM THE PRE MISES OF SOME OTHER PARTY, WHICH DO NOT HAVE THE CONFIRMATIO N/SIGNATURES OF THE ASSESSEE, CANNOT BE TAKEN AS CONCLUSIVE EVID ENCE AGAINST THE ASSESSEE FOR ALLEGED TRANSACTIONS OUTSIDE THE B OOKS OF ACCOUNTS AND THE JUDGEMENT OF THE HONBLE SUPREME C OURT IN THE CASE OF COMMON CAUSE VS UNION OF INDIA HAS BEEN IGN ORED SUMMARILY. 3. NOTWITHSTANDING THE ABOVE SAID FACTS, THERE CANN OT BE ANY ADDITION OF RS. 64,12,500/-, RS. 37,23,000/-(27,78, 500 ON 25.1.2012 AND RS. 9,44,500/- ON 09.02.2012) ALLEGED PAID IN CASH BY M/S KGE TO THE ASSESSEE AS THE SAME CAN ONL Y BE SAID TO BE AN ADVANCE BY THE SAID PARTY TO THE ASSESSEE AND , THUS, THE RECEIPT OF AMOUNT FROM M/S KGE BY THE APPLICANT UND ER NO CIRCUMSTANCES BE TREATED AS INCOME OF THE ASSESSEE. 4. THAT THE LD. CIT (A) HAS ALSO ERRED IN CONFIRMIN G THE ADDITION OF RS. 46,03,600/-, WHICH IS AGAINST THE FACTS AND CIR CUMSTANCES OF THE CASE, BASED ON UNAUTHENTICATED DOCUMENTS AND AL SO ON MERITS THE ADDITION IS NOT SUSTAINABLE. 5. THAT THE LD. CIT (A) HAS FAILED TO CONSIDER OUR DETAILED SUBMISSION MADE DURING THE COURSE OF HEARING AND SP ECIALLY, OUR SUBMISSION, DATED FEBRUARY 27, 2017. 6. THAT THE FINDING AND CONCLUSION AS ARRIVED BY TH E CIT(A) IN SUSTAINING THE PART ADDITION IS AGAINST THE FACTS A ND CIRCUMSTANCES OF THE CASE. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD OR DISPOS ED OFF. 2. AT THE OUTSET, WE MAY LIKE TO MENTION THAT DESPITE NOTIFYING THE DATE OF HEARING, NEITHER ANYONE APPEARED ON BEH ALF OF THE ASSESSEE NOR ANY ADJOURNMENT APPLICATION WAS FILED. IN VIEW OF THE FACTS AND CIRCUMSTANCES, WE WERE OF THE OPINION THAT THE ASSESSEE IS NOT INTERESTED IN PROSECUTING THE APPEA L. ACCORDINGLY, WE HEAD THE APPEAL EX-PARTE QUA THE ASSESSEE AFTER HEARING ARGUMENTS OF THE LEARNED DEPARTMENT REPRESENTATIVE. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED RETURN OF INCOME ON 30/03/2013, DECLARING TOTAL INC OME OF RS. 12,08,836/-. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE INCOME-TAX ACT, 1961 (I N SHORT THE 3 ITA NO.2896/DEL/2017 ACT) WAS ISSUED AND COMPLIED WITH. DURING THE SCRU TINY PROCEEDINGS, IT WAS NOTICED IN THE SEARCH AND SEIZU RE ACTION ON 04/20/2012 IN THE CASE OF M/S KAARTIKA GOLD ENTERPR ISES, BATALA CERTAIN INCRIMINATING DOCUMENT RELATED TO THE ASSES SEE WERE FOUND. THE ASSESSING OFFICER CONFRONTED THE DOCUMEN T TO THE ASSESSEE AND ALSO RECORDED STATEMENT OF THE DIRECTO RS OF THE ASSESSEE COMPANY UNDER SECTION 131 OF THE ACT. IN V IEW OF THE FAILURE ON THE PART OF THE ASSESSEE TO EXPLAIN THOS E DOCUMENTS, THE ASSESSING OFFICER MADE CERTAIN ADDITIONS AND AS SESSED THE TOTAL INCOME AT RS.2,18,12,740/- IN THE ASSESSMENT ORDER DATED 31/03/2015. AGGRIEVED, THE ASSESSEE FILED APPEAL BE FORE THE LD. CIT(A), WHO PARTLY ALLOWED THE APPEAL OF ASSESSEE. THE LD. CIT(A) UPHELD THE ADDITION IN RESPECT OF CASH AMOUNTING TO RS.27,78,500/- ON 25/01/2012; RS.9,44,500/- ON 9/02 /2012 AND RS. 64,12,500/- ON 06/03/2012. THE LD. CIT(A) A LSO UPHELD ADDITION IN RESPECT OF SALE OF JEWELRY AMOUNTING TO RS. 46,03,600/-. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRI BUNAL RAISING THE GROUNDS AS REPRODUCED ABOVE. 4. BEFORE US, THE LEARNED DEPARTMENT REPRESENTATIVE S UBMITTED THAT THE LD. CIT(A) HAS UPHELD THE ADDITIONS, WHERE VER THE ASSESSEE FAILED TO EXPLAIN OR RECONCILE THE DEPOSIT OR EXPENDITURE ALONG WITH THE BOOKS OF ACCOUNTS. ACCORDINGLY, SHE SUBMITTED TO UPHOLD THE DISALLOWANCE SUSTAINED BY THE LD. CIT(A) . 5. WE HAVE HEARD THE SUBMISSION OF THE LEARNED DEPART MENT REPRESENTATIVE AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER HAS MADE ADDITION ON THE BASIS OF THE MATERIAL SEIZED DURING THE COURSE OF THE SEARCH AT THE PREMI SES OF M/S KARTIKA GOLD ENTERPRISES. ALL THOSE DOCUMENTS WERE DULY 4 ITA NO.2896/DEL/2017 CONFRONTED BY THE ASSESSING OFFICER TO THE ASSESSEE . THE FINDING OF THE ASSESSING OFFICER IN RESPECT OF THE ADDITION OF RS.64,12,500/- IS REPRODUCED AS UNDER: 2-2 AS PER THE ENTRIES/TRANSACTIONS OF RS. 64,12,5 00/- AS SHOWN ON PAGE NO-179 OF ANNEXURE - A1/X2 SEIZED FROM THE PRE MISES OF M/S KGE REFLECTS THAT M/S KGE HAS PAID RS. 64,12,500/-T O THE ASSESSEE COMPANY ON 05.03.12. THE AR OF THE ASSESSEE COMPANY WAS ASKED TO EXPLAIN WHETHER THE CASH SO REFLECTED IN THE SEI ZED PAPERS AS ABOVE WAS ACCOUNT FOR IN THE BOOKS OF ACCOUNTS OR N OT. THE REPLY OF THE ASSESSEE PERUSED AS WELL AS ON VERIFICATION OF THE SEIZED MATERIAL AVAILABLE AND THE APPRAISAL REPORT REVEALE D THAT M/S KGE IS INVOLVED IN WHOLESALE BUSINESS OF GOLD AND BULLI ON. THE ASSESSEE COMPANY DURING THE YEAR HAS ALSO ENTERED INTO SOME TRANSACTIONS OF PURCHASE AND SALES OF GOLD WITH M/S KGE. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE IT IS CLEAR THA T THE ASSESSEE HAS MADE TRANSACTIONS OF SALE PURCHASE OF GOLD WITH M/S KGE AND TRANSACTIONS SHOWN ON THE SEIZED MATERIAL HAS ALSO RECONCILED PARTIALLY WITH THE BOOKS OF ACCOUNTS OF THE ASSESSE E COMPANY. THE PARTIAL RECONCILIATION/MATCHING OF THE ENTRIES WITH THE ASSESSEE'S BOOKS OF ACCOUNTS ITSELF ESTABLISHED THAT THE ASSES SEE HAS MADE ALL TRANSACTIONS AS SHOWN IN THE ABOVE TABLE IN PARA 2( 1) WITH M/S KGE. IN RESPECT OF THE ENTRIES/TRANSACTIONS OF RS. 64,12,500/- AS SHOWN ON PAGE NO-179 OF ANNEXURE -A1/X2 SEIZED FROM THE PREMISES OF M/S KGE REFLECTS THAT M/S KGE HAS PAID CASH OF RS. 6412500/-TO THE ASSESSEE COMPANY ON 05.03.212 AND M ENTIONED THE NAME OF THE ASSESSEE COMPANY AS JAIN JEW AGAINS T THE SAID AMOUNT. THE CASH SO RECEIVED BY THE ASSESSEE ON 05. 03.2012 FROM M/S KGE WAS NOT FOUND ACCOUNT FOR IN THE REGULAR BO OKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE COMPANY. THE ASSESSEE HA S NOT FILED ANY EXPLANATION IN RESPECT OF NON REFLECTION OF SAI D CASH IN THE BOOKS OF ACCOUNTS. THUS, IT IS HELD THAT THE ASSESSEE HAS RECEIVED CASH OF RS.64,12,500/- AGAINST THE UNACCOUNTED SALE OF GOLD AND THE SAME IS ADDED BACK WITH THE INCOME OF THE ASSESSEE COMPA NY. 5.1 REGARDING ADDITIONS OF RS.9,44,500/- AND RS.27,78, 500/-, THE FINDING OF THE ASSESSING OFFICER ARE REPRODUCED AS UNDER: 2-3 AS PER THE ENTRIES/TRANSACTIONS OF RS. 9,44,50 0/- AND RS. 27,78,500/- AS SHOWN IN ANNEXURE\ A2/X2 SEIZED FROM THE PREMISES OF M/S KGE REFLECTS THAT M/S KGE HAS PAID RS. 37,23000/- TO THE ASSESSEE COMPANY ON 09.02.12, AN D 25.01.2012 RESPECTIVELY. THE AR OF THE ASSESSEE COMPANY WAS AS KED TO EXPLAIN WHETHER THE CASH SO REFLECTED IN' THE SEIZED PAPERS AS ABOVE WAS ACCOUNT FOR IN THE BOOKS OF ACCOUNTS OR NOT. THE RE PLY FILED BY THE ASSESSEE PERUSED AND FOUND NO MERITS IN IT. IN RESP ECT OF THE 5 ITA NO.2896/DEL/2017 ENTRIES/TRANSACTIONS OF RS. 9,44,500/- AND RS. 27,7 8,500/- AS SHOWN IN ANNEXURE -A2/X2 SEIZED FROM THE PREMISES O F M/S KGE REFLECTS THAT M/S KGE HAS PAICFRS. 37,23,000/- IN T OTAL TO THE ASSESSEE COMPANY. THE NAME OF THE ASSESSEE COMPANY MENTIONED AGAINST THE SAID CASH TRANSACTION AS JAIN JEW. THE CASH SO RECEIVED BY THE ASSESSEE ON 09.02.2012 AND 25.01.20 12 RESPECTIVELY FROM M/S KGE WAS NOT REFLECTED/ACCOUNT FOR IN THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY. THE ASSESSEE HAS NOT FILED ANY EXPLANATION IN RESPECT OF NON REF LECTION OF SAID CASH IN THE BOOKS OF ACCOUNTS. THUS, IN ABSENCE OF ANY E XPLANATION, IT IS HELD THAT THE ASSESSEE HAS RECEIVED CASH OF RS. 37, 23,000/- AGAINST THE UNACCOUNTED SALE OF GOLD AND THE SAME IS ADDED BACK WITH THE INCOME OF THE ASSESSEE COMPANY. (ADDITION: 37,23,000/-) 5.2 THE LD. CIT(A) HAS UPHELD THE ADDITIONS OBSERVING AS UNDER: I HAVE CONSIDERED THE CIRCUMSTANCES OF THE CASE, T HE REASONING OF THE AO AND THE SUBMISSIONS OF THE APPELLANT. THE AP PELLANT HAS NOT DENIED RECEIPT OF CASH FROM M/S. KGE. FURTHER, SOME OF THE ENTRIES IN THE DOCUMENTS SEIZED FROM THE PREMISES OF M/S. KGE ARE FOUND IN THE BOOKS OF ACCOUNTS OF THE APPELLANT THEREBY AUTH ENTICATING THE TRANSACTIONS RECORDED IN THE SEIZED DOCUMENTS. THER EFORE, I FIND NO REASON TO INTERFERE WITH THE DECISION OF THE AO IN RESPECT OF THE ADDITIONS RELATED TO RECEIPT OF CASH AMOUNTING TO R S.27,78,500/- ON 25.01.2012, RS.9,44,500/- ON 09.02.2012 AND RS.64,1 2,500/- ON 06.03.2012. 5.3 WE FIND THAT ASSESSEE HAS PARTLY ACCEPTED THE ENTRI ES IN THE DOCUMENTS SEIZED, WHICH CONFIRM THAT THE DOCUMENTS WERE RELATED TO THE ASSESSEE , BUT THE ASSESSEE HAS FAIL ED TO EXPLAIN THE BALANCE ENTRIES REFLECTED IN THOSE DOCUMENTS, AND T HEREFORE, LOWER AUTHORITIES ARE JUSTIFIED IN SUSTAINING THE ADDITIO N IN DISPUTE. 5.4 REGARDING THE ADDITION OF RS. 46,03,600/-, THE FINDING OF THE ASSESSING OFFICER ARE REPRODUCED AS UNDER: 2-6 ON PERUSAL OF THE SEIZED MATERIAL IT IS NOTICE D THAT THE ANNEXURE-A3/X2 REFLECTED THE TRANSACTIONS IN RESPEC T OF PURCHASE OF GOLD/BULLION OF 5808.75 GRAMS BY M/S KGE FROM THE A SSESSEE COMPANY OH 06.03.2012. THE ASSESSEE COMPANY HAS SOL D 5808.75 GRAMS OF GOLD / BULLION TO M/S KGE ON 06.03.2012. I N RESPONSE OF 6 ITA NO.2896/DEL/2017 QUERY MADE TO THE SALE OF 5808.75 GRAMS OF GOLD/ BU LLION THE AR OF THE ASSESSEE COMPANY HAS ONLY SUBSTANTIATE THE SALE OF 4308.75 GRAMS OF GOLD/BULLION TO M/S KGE AND THE SALE OF RE MAINING 1500 GRAMS OF GOLD / BULLION ARE REMAINED UNEXPLAINED AN D NOT FOUND RECORDED IN THE BOOKS OF THE ASSESSEE COMPANY. IN R ESPECT OF NON REFLECTION OF THE SALE OF 1500 GRAMS OF GOLD / BULL ION , THE REPLY OF THE AR IS NOT FOUND SATISFACTORY. THUS, IN ABSENCE OF A NY EXPLANATION, IT IS HELD THAT THE ASSESSEE HAS MADE SALE OF 1500 GRA MS GOLD / BULLION EQUAL TO RS.33,57,750/- TO M/S KGE AND THE SALE CONSIDERATION RECEIVED ON THE SALE OF 1500 GRAMS GO LD / BULLION ARE ALSO NOT RECORDED IN THE BOOKS OF ACCOUNTS OF THE A SSESSEE COMPANY. THEREFORE, THE SALE OF 1500 GRAMS OF GOLD /BULLION IS TREATED AS UNACCOUNTED SALE OF GOLD / BULLION OF THE ASSESSEE COMPANY FOR THE YEAR UNDER CONSIDERATION AND THE ENTIRE SALE CONSID ERATION OF RS. 33,57,750/- IS ADDED BACK WITH THE INCOME OF THE AS SESSEE COMPANY. (ADDITION: 33,57,750/-) 5.5 THE LD. CIT(A) UPHELD THE ADDITION OF OBSERVING AS UNDER: 6.3.2. IN RESPECT OF THE ADDITION AMOUNTING TO RS. 46,03,600/- DISCUSSED IN PARA 2.5 OF THE ASSESSMENT ORDER, IT I S NOTED THAT DIFFERENCE OF 2000 GRAMS IS FOUND BETWEEN THE ENTRY IN THE SEIZED DOCUMENTS AND APPELLANTS REGULAR BOOKS OF ACCOUNTS . IN THIS CONTEXT, THE APPELLANT HAS CONTENDED THAT THE AOS ACTION OF MAKING ADDITION IN RESPECT OF BOTH CASH RECEIVED -AND SALE S MADE TANTAMOUNTS TO DOUBLE ADDITIONS. 6.3.2.1 I HAVE CONSIDERED THE SUBMISSIONS OF THE AP PELLANT. DURING THE APPELLATE STAGE, THE APPELLANT HAS CATEGORICALL Y SUBMITTED THAT BULLION SALE TAKES PLACE ONLY BY ACTUAL DELIVERY OF MONEY AT THE TIME OF SALE. IT WOULD THEREFORE BE WRONG TO ASSUME THAT IN RESPECT OF SALE MADE ON 04.01.2012, THE PAYMENT WOULD HAVE BEEN REC EIVED ON 25.01.2012. ACCORDING TO THE PRACTICE IN THE BULLIO N TRADE, THE APPELLANT WAS BOUND TO HAVE RECEIVED PAYMENT OF RS. 46,03,600/- ON 04.01.2012 ITSELF. IN VIEW OF THE ABOVE, I DO NO T FIND ANY NEED TO INTERFERE WITH THE DECISION OF THE AO IN RESPECT OF THE ADDITION OF RS.46,03,600/-. 5.6 AS THE ASSESSEE COULD EXPLAIN PART OF THE TRANSACT ION RECORDED IN SEIZED MATERIAL AND THE BALANCE SALE CO ULD NOT BE RECONCILED BY THE ASSESSEE, AND THEREFORE IN OUR OP INION, THE LOWER AUTHORITIES ARE JUSTIFIED IN SUSTAINING THE A DDITION. 7 ITA NO.2896/DEL/2017 5.7 ACCORDINGLY, THE GROUNDS OF APPEAL OF THE ASSESSEE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMI SSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 21 ST JANUARY, 2020. SD/- SD/- (BHAVNESH SAINI) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21 ST JANUARY, 2020. RK/-(D.T.D.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI