SHUBH DIAMONDS, CHENNAI V. ACIT NON CORPORATE CIRCLE 3(1), CHENNAI

ITA 2914/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7798 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 15-10-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR
• Keywords: Bogus purchase; Business income; Accommodation entries
• Section: 143(1)

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , , BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER & SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A.NO.2914/CHNY/2018 / ASSESSMENT YEAR :2012-13 M/S. SHUBH DIAMONDS, 128, OFFICE NO. 2, 5 TH FLOOR, CROWN BUILDING, CATHEDRAL, CHENNAI 600 006. [PAN: ABIFS0611G] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE WARD-3(1), CHENNAI. ( /APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENT BY : SHRI R. CLEMENT RAMESH KUMAR, ADDL.CIT / DATE OF HEARING : 01.07.2019 /DATE OF PRONOUNCEMENT : 19.07.2019 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-4, CHENNAI DATED 18.07.2018 RELEVANT TO THE ASSESSMENT YEAR 2012-13. THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF .19,49,125/- TREATING THE SAME AS BOGUS EXPENDITURE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 ON 21.08.2012 ADMITTING TOTAL INCOME OF . I.T.A. NO.2914/CHNY/18 2 31,55,090/-. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 [ACT IN SHORT]. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF INVESTIGATION BY THE INVESTIGATION WING OF THE DEPARTMENT AT MUMBAI, THE DEPARTMENT HAS NOTICED THAST THE ASSESSEE HAS AVAILED ACCOMMODATION ENTRIES IN THE NATURE OF BOGUS PURCHASES TO THE TUNE OF .19,49,125/-. THE SAID INVESTIGATION WAS CARRIED OUT IN THE GROUP CASES VIZ., SHRI RAJENDRA JAIN, SHRI SANJAY CHOUDHARY AND SHRI DHARMICHAND JAIN. IT WAS OBSERVED THAT M/S. NAZAR IMPEX PVT. LTD. WAS PROVIDING ACCOMMODATION ENTRIES AND BILLS TO THE PRESENT ASSESSEE M/S. SHUBH DIAMONDS. THE SWORN STATEMENT RECORDED ON 10.11.2014 DURING THE COURSE OF POST SEARCH/SURVEY ACTION IN THE CASE OF M/S. NAZAR IMPEX PVT. LTD., M/S. MAYANK IMPEX AND M/S. NAYAN GEMS FROM SHRI SANJAY CHOUDHARY WHO WAS A DIRECTOR OF M/S. NAZAR IMPEX PVT. LTD. AND M/S. MAYANK IMPEX, IT WAS FOUND THAT M/S. NAZAR IMPEX PVT. LTD. WAS DEALING DIAMONDS ONLY ON PAPERS WHICH MEANT THAT THERE WAS NO ACTUAL PHYSICAL DELIVERY OF DIAMONDS. HENCE, THE BOGUS PURCHASES TO THE TUNE OF .19,49,125/- WAS ADDED BACK TO THE BUSINESS INCOME OF THE ASSESSEE. ON APPEAL, SINCE THE ASSESSEE COULD NOT PRODUCE ANY DOCUMENTARY EVIDENCES REGARDING TRANSPORTATION OF SUCH DIAMONDS FROM THE PLACE OF DELIVERY TO THE BUSINESS PREMISES OF THE ASSESSEE, THE LD. CIT(A) CONFIRMED THE ADDITION. I.T.A. NO.2914/CHNY/18 3 3. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. DESPITE SERVICE OF NOTICE [RPAD ON RECORD], NONE APPEARED ON BEHALF OF THE ASSESSEE OR FILED ANY ADJOURNMENT PETITION. HENCE, WE PROCEED TO DECIDE THE APPEAL ON MERITS AFTER HEARING THE LD. DR. 4. WE HAVE HEARD THE LD. DR, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING IN DIAMOND AND GOLD JEWELLERY. ON PERUSAL OF THE ASSESSMENT ORDER, IT IS NOTICED THAT THE ASSESSEE HAD ALLEGED PURCHASE OF DIAMONDS TO THE TUNE OF .19,49,125/-FROM THE ACCOMMODATION ENTRY PROVIDERS. THIS FACT OF ACCOMMODATION ENTRY WAS UNEARTHED BY THE INVESTIGATION WING OF THE DEPARTMENT AT MUMBAI WHEN SEARCHES AND SURVEYS WERE CARRIED OUT IN THE CASES OF M/S. NAZAR IMPEX PRIVATE LIMITED, M/S. MAYANAK IMPEX AND M/S. NAYAN GEMS. THIS FACT WAS FURTHER CONFIRMED BY SHRI SANJAY CHOUDHARY WHO WAS A DIRECTOR OF M/S. NAZAR LMPEX PRIVATE LIMITED AND M/S. MAYANAK IMPEX IN A STATEMENT THAT M/S. NAZAR IMPEX PRIVATE LIMITED WAS DEALING IN DIAMONDS ONLY ON PAPERS. 4.1 BEFORE THE LD. CIT(A), THE ASSESSEE HAS SUBMITTED THAT M/S. NAZAR IMPEX PRIVATE LIMITED HAD ACTUALLY SUPPLIED LOOSE DIAMONDS WORTH .19,49,125/- WHICH WERE CONVERTED INTO ORNAMENTS AND SOLD DURING THE YEAR UNDER CONSIDERATION. IT WAS FURTHER SUBMITTED THAT THE TRANSACTION WITH M/S. NAZAR IMPEX PRIVATE LIMITED WAS CARRIED OUT THROUGH NORMAL BANKING I.T.A. NO.2914/CHNY/18 4 CHANNELS. HENCE, THE IMPUGNED TRANSACTION WAS CLAIMED TO BE BONAFIDE. HOWEVER, THE LD. CIT(A) HAS OBSERVED THAT IT IS AN ADMITTED FACT THAT IN SUCH TYPE OF ACCOMMODATION TRANSACTIONS, THE TRANSACTING PARTIES EVOLVE ALL POSSIBLE WAYS AND MEANS TO GIVE IT A COLOUR OF GENUINENESS AND BONAFIDE CHARACTER. THEREFORE, THE LD. CIT(A) WAS OF THE VIEW THAT THE CONTENTION OF THE ASSESSEE THAT PAYMENTS WERE MADE THROUGH BANKING CHANNEL TO THE SUPPLIER OF DIAMONDS HAS NO RELEVANCE. SECONDLY, THE CLAIM OF THE ASSESSEE WAS THAT THESE LOOSE DIAMONDS WERE CONVERTED INTO ORNAMENTS AND SOLD OUT DURING THE RELEVANT YEAR ITSELF WHICH HAD BECOME PART OF TOTAL TURNOVER. TO ACCEPT THE CLAIM OF THE ASSESSEE BONAFIDE, THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE AS TO WHICH LOOSE DIAMONDS WAS CONVERTED INTO ORNAMENTS. ONUS IS ALWAYS ON THE ASSESSEE TO PROVE SUCH CLAIM. IF AT ALL TO ACCEPT THE SUBMISSIONS OF THE ASSESSEE AS GENUINE THEN THE ONUS WAS AGAIN ON THE ASSESSEE TO FURNISH DOCUMENTARY EVIDENCES REGARDING TRANSPORTATION OF SUCH LOOSE DIAMONDS FROM THE PLACE OF DELIVERY TO THE BUSINESS PREMISES OF THE ASSESSEE. IN THIS REGARD THE ASSESSEE SHOULD HAVE FURNISHED THE NAME AND ADDRESS OF THE PERSON/EMPLOYEE WHO TRANSPORTED THE LOOSE DIAMONDS, THE LEDGER ACCOUNTS OF EXPENSES INCURRED TOWARDS HIS/HER LODGING, BOARDING AND TRAVEL FROM CHENNAI TO THE PLACE OF DELIVERY AND BANK. HOWEVER, NO SUCH DETAILS WERE EVER FURNISHED EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE LD. CIT(A) OR EVEN BEFORE THE TRIBUNAL. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) IN TREATING THE IMPUGNED TRANSACTION OF I.T.A. NO.2914/CHNY/18 5 PURCHASE OF DIAMONDS FROM M/S. NAZAR IMPEX PVT. LTD AS ONLY AN ACCOMMODATION ENTRY RESORTED TO BY THE ASSESSEE TO REDUCE ITS TAXABLE INCOME. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE STANDS DISMISSED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THE 19 TH JULY, 2019 AT CHENNAI. SD/- SD/- (S. JAYARAMAN) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 19.07.2019 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.