DCIT CEN CIR 3(3) CEN RG 3, MUMBAI V. SUNJYOT GEMS, MUMBAI

ITA 3239/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9237 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 03-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3); 147; 148

Judgement Text

ITA NO.3239/M/2017 SUNJYOT GEMS ASSESSMENT YEAR 2007-08 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 3239/MUM/2017 ( / ASSESSMENT YEAR: 2007-08) DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 3(3) R.NO.1913 AIR INDIA BUILDING 19 TH FLOOR, NARIMAN POINT MUMBAI 400 021 / VS. SUNJYOT GEMS AE 7030 BHARAT DIAMOND BOURSE BANDRA KURLA COMPLEX BANDRA EAST MUMBAI 400 0 51 ./ ./PAN/GIR NO. AAKFS-9404-Q ( ! /APPELLANT ) : ( '#! / RESPONDENT ) A SSESSEE BY : NONE RE VENUE BY : SUMAN KUMAR, LD. DR / DATE OF HEARING : 07/09/2017 / DATE OF PRONOUNCEMENT : 04/10/2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2007- 08 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INC OME-TAX (APPEALS)- 51 [CIT(A)], MUMBAI DATED 15/02/2017 QUA RELIEF PROVIDED TO THE ASSESSEE ON ACCOUNT OF CERTAIN BOGUS PURCHASES. NONE HAS APPEARED ITA NO.3239/M/2017 SUNJYOT GEMS ASSESSMENT YEAR 2007-08 2 FOR ASSESSEE DESPITE NOTICE. LEFT WITH NO OPTION, W E DISPOSE-OFF THE SAME ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AF TER HEARING LD. DEPARTMENTAL REPRESENTATIVE [DR]. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT FIRM ENGAGED IN THE BUSINESS OF DIAMONDS, WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 27/03/2015 AT RS.81,75,030/- AFTER ADDITION OF CERTAIN BOGUS PURCHASES FOR RS.76,00,607/-. THE ORIGINAL RETURN WAS E-FILED ON 29/10/2007 AT RS.5,74,418/- WHICH WAS ASSESSED AT SAME FIGURES U/ S 143(3) ON 19/11/2009. THE SOLITARY ADDITION OF BOGUS PURCHASES OF RS.76,00,607/- IS THE SUBJECT MATTER OF THIS APPEAL. NOTICE U/S 14 8 DATED 28/03/2014 WAS ISSUED TO THE ASSESSEE WHICH WAS FOLLOWED BY ST ATUTORY NOTICES U/S 143(2) & 142(1). 2.2 PURSUANT TO SEARCH & SEIZURE ACTION ON BHANWARLAL JAIN GROUP BY DGIT (INV.), IT WAS NOTED THAT THE ASSESSEE MADE IMPUGNED PURCHA SES FROM TWO ENTITIES OF THE GROUP AS PER THE FOLLOWING DETAILS:- THE SEARCH / SURVEY ACTIONS ON THE SAID GROUP REVEA LED THAT THE SAID GROUP CONSISTING OF NUMEROUS BUSINESS ENTITIES WAS ENGAGED IN PROVIDING ACCOMMODATION PURCHASES BILLS & ACCOMMODATION LOANS & ADVANCES. CONSEQUENTLY, THE ASSESSEE WAS CALLED UPON TO SUBS TANTIATE THE PURCHASE TRANSACTIONS. THE ASSESSEE DEFENDED TH E PURCHASES MADE NO. NAME AMOUNT (RS.) 1. LITTLE DIAM 45,30,643/- 2. KOTHARI & CO. 30,69,964/- TOTAL 76,00,607/- ITA NO.3239/M/2017 SUNJYOT GEMS ASSESSMENT YEAR 2007-08 3 BY HIM. HOWEVER, NOT CONVINCED, LD. AO DISALLOWED T HE SAME AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 15/02/2 017 WHERE THE ASSESSEE CONTENDED THAT THE ADDITIONS HAVE BEEN MAD E WITHOUT MAKING INDEPENDENT INQUIRIES AND NO OPPORTUNITY OF CROSS E XAMINATION WAS PROVIDED TO THE ASSESSEE AND THEREFORE, ADDITIONS W ERE NOT JUSTIFIED PARTICULARLY WHEN THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND CORRESPONDING SALES DETAILS WERE PROV IDED BY THE ASSESSEE. THE LD. CIT(A) AFTER CONSIDERING ASSESSEES SUBMISSION, REMAND REPORT, JUDICIAL PRONOUNCEMENTS ON THE SUBJE CT NOTED THAT NO INDEPENDENT INQUIRIES WERE MADE BY LD. AO WHEREAS T HE ASSESSEE SUPPLIED REQUISITE DOCUMENTS AND THE PAYMENTS WERE THROUGH BANKING CHANNELS. FINALLY, PLACING RELIANCE ON CBDT CIRCULAR NO. 2/98 DATED 22/02/1998 AND DECISION OF HONBLE GUJARAT HIGH COURT IN SIMIT P.SHETH 356 ITR 451 , LD. CIT(A) ESTIMATED THE ADDITIONS @6%. AGGRIEVED , THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] PLACED RELIANCE ON THE STAND OF LD. AO AND CONTENDED THAT THE ASSESSEE COU LD NOT PRODUCE ANY OF THE PARTY FOR CONFIRMATION OF TRANSACTIONS. FURT HER, THE SEARCH / SURVEY ACTION ON THE CONCERNED GROUP CLEARLY REVEALED THAT THE TRANSACTIONS WERE MERELY ACCOMMODATION ENTRIES AND THEREFORE, LD . CIT(A) ERRED IN GRANTING SUBSTANTIAL RELIEF TO THE ASSESSEE. 5. HEARD AND PERUSED RELEVANT MATERIAL ON RECORD. W E ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALE WITH OUT PURCHASE OF ITA NO.3239/M/2017 SUNJYOT GEMS ASSESSMENT YEAR 2007-08 4 MATERIAL KEEPING IN VIEW THE NATURE OF ASSESSEES B USINESS. THE TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISP UTED BY THE REVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANN ELS. THE ASSESSEE PRODUCED DETAILS OF PURCHASE AND CORRESPON DING SALES BEFORE LD. AO. AT THE SAME TIME, THE ASSESSEE COULD NOT PR ODUCE ANY OF THE SUPPLIER BEFORE LOWER AUTHORITIES AND THE SEARCH / SURVEY AC TION ON THE GROUP CASTED A SERIOUS DOUBT ON ASSESSEES CLAIM. T HEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS T O ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHAS E OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST ALLEGED BOGUS PURCHASES, WHICH LD.CIT(A) HAS RIGHTLY DONE. THEREF ORE, WE SEE NO REASON TO INTERFERE WITH THE STAND OF LD. CIT(A). 6. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH OCTOBER, 2017. SD/- SD/- (MAHAVIR SINGH) (M ANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04. 10.2017 SR.PS:- THIRUMALESH ITA NO.3239/M/2017 SUNJYOT GEMS ASSESSMENT YEAR 2007-08 5 / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. '%- , - , / DR, ITAT, MUMBAI 6. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI