VARUN JEWELS PVT.LTD., MUMBAI V. ASSTT.CIT CENTRAL CIRCLE - 34, MUMBAI

ITA 3421/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0990 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: F
• Next Hearing Date: 02-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 13-05-2014
• Court: TRIBUNAL
• Keywords: Bogus purchase; Accommodation entries; Retraction
• Section: 69C; 133A; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE S/ SHRI B.R. BASKARAN (AM) & SANDEEP GOSAIN (JM) I.T.A. NO. 3421 /MUM/20 14 (ASSESSMENT YEAR 20 07 - 08 ) I.T.A. NO. 3422/MUM/2014 (ASSESSMENT YEAR 2008 - 09) M/S. VARUN JEWELS PVT. LTD. 12,SHANKES HWAR DARSHAN A.G. PAWAR CROSS LANE BYCULLA EAST MUMBAI - 400 027. VS. ADDL. CIT CENTRAL CIRCLE 34 MUMBAI ( APPELLANT ) ( RESPONDENT ) PAN NO . AABCV6995R ASSESSEE BY NONE DEPARTMENT BY MS. S. PADMAJA DATE OF HEARING 24 . 4 . 201 7 DATE OF PRONOUNC EMENT 24 . 4 . 201 7 O R D E R PER B ENCH : - BOTH THE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST A COMMON ORDER DATED 28.2.2014 PASSED BY THE LEARNED CIT(A) - 41, MUMBAI AND IT RELATES TO A.Y. 2007 - 08 & 2008 - 09. 2. EVEN THOUGH THE APPEAL WAS FILED BY THE ASSESSEE WAY BACK IN MAY 2014, NONE APPEARED ON BEHALF OF THE ASSESSEE ON ALL THE OCCASIONS. THE NOTICES SEND BY REGISTERED POST ON MORE THAN ONE OCCASION WERE RETURNE D BACK BY THE POSTAL DEPARTMENT AND HENCE THE REVENUE WAS DIRECTED TO SERVE THE N OTICE TO THE ASSESSEE. LEARNED DEPARTMENTAL REPRESENTATIVE HAS FILED A LETTER DATED 24.4.2017 ATTACHING REPORT OF THE INSPECTOR, WHO HAS SERVED THE NOTICE BY WAY OF AFFIXTURE. UNDER THESE SET OF FACTS, WE PROCEED TO DISPOSE OF THESE APPEALS EX - PARTE, WITH OUT PRESENCE OF THE ASSESSEE. M/S. VARUN JEWELS PVT. LTD. 2 3. WE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. THE ASSESSEE IS CHALLENGING THE ADDITION OF ` 155.34 LAKHS AND ` 19.11 LAKHS RELATING TO BOGUS PURCHASES CONFIRMED BY THE LEARNED CIT(A) RESPECTIVELY FO R A.Y. 2007 - 08 & 2008 - 09. 4. THE ASSESSEE COMPANY IS A SUBSIDIARY OF M/S. VARUN INDUSTRIES LIMITED. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN POLISHED GEMS, DIAMONDS, PEARLS ETC. THE ASSESSEES GROUP WAS SUBJECTED TO SEARCH U/S. 132 OF THE ACT ON 23.7.2009. DURING THE COURSE OF SEARCH THE CHAIRMAN AND MANAGING DIRECTOR OF THE GROUP, SHRI KIRAN N. MEHTA DISCLOSED ADDITIONAL INCOME OF ` 72.16 CRORES IN THE HANDS OF ENTIRE GROUP , WHICH INCLUDED A SUM OF ` 1.54 CRORES IN THE HANDS OF THE ASSESSEE FO R A.Y. 2007 - 08 AND ` 0.54 CRORES IN A.Y. 2008 - 09. BOTH DISCLOSURES RELATING TO THE ASSESSEE WERE IN RESPECT OF BOGUS PURCHASES MADE BY IT FROM M/S. SI MR A N GEMS AND M/S. MIHIR DIAMOND. IT IS PERTINENT TO NOTE THAT THE REVENUE HAD CONDUCTED A SURVEY IN THE H ANDS OF SHRI GAUTAM B. JAIN U/S. 133A ON 20.10.2008 AND IT WAS FOUND THAT SHRI GAUTAM B. JAIN WAS PROVIDING ONLY ACCOMMODATION ENTRIES BY SUPPLYING BOGUS BILLS. BOGUS BILLS SUPPLIED BY THE ABOVE SAID PERSON INCLUDED THE BILLS SUPPLIED THROUGH M/S. SI MRAN G EMS AND M/S. MIHI R DIAMOND, FROM WHOM THE ASSESSEE HAD MADE PURCHASES. SUBSEQUENTLY, THE ASSESSEES GROUP WAS SUBJECTED TO SEARCH AND AS STATED EARLIER THE CHAIRMAN AND MANAGING DIRECTOR DISCLOSED ADDITIONAL INCOME DURING THE COURSE OF SEARCH. THEREAFTER T HE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S. 15 3A OF THE ACT BY MAKING ADDITION OF ` . 1.54 CRORES AND ` 0.54 CRORES RESPECTIVELY IN A.Y. 2007 - 08 & 2008 - 09 TOWARDS BOGUS PURCHASES MADE FROM M/S. SIMRAN GEMS AND M/S. MIHIR DIAMOND. 5. EVEN THOUGH THE ASSESSEES CHAIRMAN HAD ADMITTED ADDITIONAL INCOME, YET THE ASSESSEE CHALLENGED THE ADDITION MADE IN BOTH YEARS BY FILING APPEALS BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) CONFIRMED THE ADDITION OF ` 1.54 CRORES MADE IN A.Y. 2007 - 08 AND IN A.Y. 2008 - 0 9, THE LEARNED CIT(A) NOTICED THAT THE AMOUNT OF ` 0.54 CROES INCLUDED OPENING BALANCE OF ` 0.34 CRORES, M/S. VARUN JEWELS PVT. LTD. 3 MEANING THEREBY PURCHASES TO THE EXTENT OF ` 0.34 CROES WAS NOT MADE DURING THE RELEVANT ASSESSMENT YEAR 2008 - 09. ACCORDINGLY, HE GRANTED RELIEF TO TH E EXTENT OF ` 0.34 CRORES AND CONFIRMED THE ADDITION OF BALANCE AMOUNT IN AY 2008 - 09 . STILL AGGRIEVED THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 6. WE NOTICED THAT THE LEARNED CIT(A) HAS ADDRESSED VARIOUS POINTS URGED BY THE ASSESSEE IN PARAGRAPH NO. 4.3.4 OF HIS ORDER. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE OBSERVATIONS MADE BY THE LEARNED CIT(A) IN PARAG RAPH REFERRED ABOVE : - 4.3.4 VIEWED IN LIGHT OF THE AFORESAID LEGAL POSITION, IT IS EVIDENT THAT THE STATEMENTS MADE BY THE JMD AS WELL AS THE CMD OF THE APPELLANT U/S.132(4) OF THE ACT ON 24.07.2009 ADMITTING THE TRANSACTIONS WITH MR. GAUTAM B. JAM/HIS CONCERNS TO BE MERE ACCOMMODATION ENTRIES WERE VOLUNTARY AND THERE WAS NO EVIDENCE OF ANY COERCION, THREAT OR DURESS EXERTED BY THE INCOM E TAX AUTHORITIES. SO FAR AS THE RETRACTION AFFIDAVITS OF THE JMD AND CMD OF THE APPELLANT DATED 27.07.2009/31.07.2009 ARE CONCERNED, IT IS FOUND THAT THE SAID AFFIDAVITS WERE MERELY KEPT BY AFORESAID PERSONS WITH THEMSELVES AND FILED FOR THE FIRST TIME WI TH THE DEPARTMENT ON 03.06.2010 AFTER A LAPSE OF OVER 10 MONTHS AND, THEREFORE, THESE CANNOT BE CONSIDERED TO BE A VALID RETRACTION. IF AT ALL THEY DESIRED TO RETRACT THEIR STATEMENTS DATED 24.07.2009, THEY COULD HAVE RAISED THE ISSUE BEFORE THE HIGHER AUT HORITIES IN THE DEPARTMENT AT THE EARLIEST POSSIBLE OPPORTUNITY BUT FOR REASONS BEST KNOWN TO THEM, THEY KEPT SILENT FOR A PERIOD OF OVER 10 MONTHS. THERE IS ALSO NOTHING TO INDICATE THAT THE STATEMENTS WERE MADE BY THE JIMD AND THE CMI) UNDER ANY MISTAKEN NOTION OF LAW OR FACTS. THE A.O. HAS, THUS, RIGHTLY REJECTED THE RETRACTION OF THE SWORN STATEMENTS U/S.132(4) AS AN AFTER - THOUGHT AND DISMISSED THE AFFIDAVITS OF THE JMD AND THE CMD DATED 27.07.2009/31.07.2009 AS NOTHING MORE THAN SELF - SERVING DOCUMENTS. THEREFORE, I FIND THAT THE ORIGINAL STATEMENTS OF SHRI KAILASH S. AGRAWAL AND SHRI KIRAN MEHTA DATED 24.07.2009 RECORDED U/S.132(4) HAVE RIGHTLY BEEN TREATED AS VALID STATEMENTS AND RELIED UPON BY THE A.O. FOR MAKING THE IMPUGNED ADDITIONS. IT IS ALSO NOT ED THAT IN HIS STATEMENT RECORDED ON 07.08.2009 (SUBSEQUENT TO THE AFFIDAVIT DATED 31.07.2009), SHRI KIRAN MEHTA, THE CMI) OF THE APPELLANT COMPANY, HAD CATEGORICALLY CONFIRMED THE CONTENTS OF HIS PREVIOUS STATEMENT RECORDED ON 24.07.2009 ADMITTING THE TRA NSACTIONS WITH SHRI GAUTAM B. JAIN TO BE ACCOMMODATION ENTRIES. FURTHER, THE PLEA OF HAVING MADE PAYMENTS TO SUPPLIERS BY ACCOUNT PAYEE CHEQUES WILL BE OF NO HELP TO THE APPELLANT, ESPECIALLY WHEN MR.GAUTAM B. JAIN HAD CLEARLY ADMITTED IN HIS SWORN STATEME NT THAT SALES OF CUT AND POLISHED DIAMONDS SHOWN TO HAVE BEEN MADE TO THE APPELLANT BY M/S.SIMRAN GEMS AND M/S.MIHIR DIAMOND IN THE A.Y.S UNDER CONSIDERATION WERE ONLY M/S. VARUN JEWELS PVT. LTD. 4 ACCOMMODATION ENTRIES. FURTHERMORE, THE APPELLANT IS NOT AT ALL JUSTIFIED IN PUTTING THE ONUS ON THE A.O. OF PROVING THAT THE APPELLANT HAD RECEI V ED BACK CASH AGAINST THE SAID (BOGUS) PURCHASES MADE FROM M/S.SIMRAN GEMS AND M/S.MIHIR DIAMOND. IT IS COMMON KNOWLEDGE THAT TRANSACTIONS OF ACCOMMODATION ENTRIES TAKE PLACE IN SECRET AND DIRECT EVI DENCE ABOUT SUCH 'CORNING BACK OF CASH' WOULD BE RARELY AVAILABLE. UNDER SECTION 69C OF THE ACT, THERE IS NO SUCH BURDEN ON THE REVENUE TO ESTABLISH THAT THE OFFENDING TRANSACTION WAS CARRIED OUT THROUGH FRAUDULENT OR DISHONEST MEANS. IN ORDER TO SEE WHETH ER THE APPARENT IS THE REAL STATE OF AFFAIRS, THE TAXING AUTHORITIES ARE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY AND THE MATTER HAS TO BE CONSIDERED BY APPLYING THE TEST OF HUMAN PROBABILITIES [ SUMATI DAYAL V. CIT 214 IT R 801 (SC)]. IN VIEW OF THIS POSITION, THE FILING OF MERE CONFIRMATIONS OF M/S.SIMRAN GEMS AND M/S.MIHIR DIAMOND WILL BE OF NO HELP TO THE APPELLANT IN THE FACE OF CONFESSIONAL STATEMENT OF THEIR PROPRIETOR, MR.GAUTAM B. JAIN MADE U/S.131 THAT THESE BILLS WERE ONLY ACCOMMODATION ENTRIES. 7. WE HAVE GONE THROUGH THE ORDER PASSED BY THE LEARNED CIT(A) AND NOTICED THAT THE FIRST APPELLATE AUTHORITY HAS ADDRESSED VARIOUS CONTENTIONS RAISED BY THE ASSESSEE AND HAS TAKEN CONSCIOUS DECISION IN THE MATTER. BEFORE US, THE ASSESSEE HAS NOT FILED ANY MATERIAL TO CONTROVERT THE FINDINGS GIVEN BY THE LEARNED CIT(A). HENCE, WE DO NOT FIND ANY REASON TO INTERFERE WITH HIS ORDER PASSED IN BOTH YEARS. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER HAS BE E N PRONOUNCED IN THE COURT ON 24 . 4 .201 7. SD/ - SD/ - (SANDEEP GOSAIN ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 24 / 4 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI