KAMLESH KUMAR SHARMA, NEW DELHI V. ITO, WARD- 51(5), NEW DELHI

ITA 4271/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3076 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 28-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R KAUSHIK
• Assessee Lawyers: RAM SAMUJH
• Keywords: Business income; Opportunity of being heard
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC , NEW DELHI BEFORE SH. N. K. SAINI, ACCOUNTANT MEMBER ITA NO. 4271 /DEL/2017 : ASSTT. YEAR : 2013 - 1 4 KAMLESH KUMAR SHARMA, SHOP NO. 7, BASEMENT, 2606 - 07, B EADON PURA, KAROL BAGH, NEW DELHI - 110005 VS INCOME TAX OFFICER, WARD - 51(5 ), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A WXPS3924N ASSESSEE BY : SH. RAM SAMUJH , ADV. REVENUE BY : SH. S. R. KAUSHIK , SR. DR DATE OF HEARING : 11.01 .2 01 8 DATE OF PRONOUNCEMENT : 26 . 0 3 .201 8 ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 24.04.2017 OF LD. CIT(A) - 17 , NEW DELHI . 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THAT THE LD. CIT (A) HAS ERR ED IN LAW AS WELL AS IN FACTS IN UPHOLDING THE ADHOC ADDITION OF RS. 6,41,443 / - I.E. 20% OF THE TOTAL PURCHASE MADE FROM M/S NICE DIAMONDS WITHOUT APPRECIATING THE FACT THAT THE TRANSACTION WERE DULY ROUTED THROUGH BANKING CHANNELS. 2. THAT THE LD. CIT (A ) ERRED IN LAW AS WELL AS IN FACTS BY NOT APPRECIATING THE FACT THAT THE PAYMENT AGAINST THE PURCHASES WERE MADE THROUGH ACCOUNT PAYEE CHEQUES. 3. THAT THE LD.CIT (A) ERRED IN LAW AS WELL AS IN FACTS BY CONFIRMING THE ADDITION MADE MERELY ON BASIS OF DIT( LNV) REPORT AND WITHOUT CONDUCTING INDEPENDENT ENQUIRIES BY LD.AO. ITA NO. 4271 /DEL /201 7 KAMLESH KUMAR SHARMA 2 4. THAT THE LD. CIT (A) ERRED IN LAW AS WELL AS FACTS IN FACTS BY CONFIRMING THE ADDITION MADE WITHOUT GIVING THE PROPER OPPORTUNITY TO CROSS EXAMINE DIT(INV) REPORT AND THE PARTIES ON THE BASIS OF WHOSE STATEMENT THE ADDITION WAS MADE. 5. THAT THE LD. CIT (A) ERRED IN LAW AS WELL AS FACTS IN FACTS BY NOT PROVIDING THE PROPER OPPORTUNITY OF BEING HEARD. 6. THAT THE LD. CIT (A) ERRED IN LAW AS WELL AS FACTS IN PASSING THE ORDER WITHOUT TAK ING INTO CONSIDERATION THE DETAILS AND EVIDENCES SUBMITTED BY THE APPELLANT . 7. THAT THE APPELLANT CRAVES LEAVE TO ADD. AMEND, ALTER, MODIFY OR DELETE ALL OR ANY OF THE GROUNDS OF THE APPEAL ON OR BEFORE THE DATE OF HEARING OF APPEAL. 3. FACTS OF THE CA SE IN BRIEF ARE THAT THE ASSESSEE E - FILED THE RETURN OF INCOME ON 26.09.2013 DECLARING AN INCOME OF RS.3,46,590/ - . THE CASE WAS SELECTED FOR SCRUTINY, O N THE BASIS OF INFORMATION FROM DIRECTORATE OF INCOME TAX (INVESTIGATION) TO THE EFFECT THAT THE ASSESSE E WAS A BENEFICIARY OF AN ACCOMMODATION ENTRY OF RS.32,07,215/ - WHICH WAS TAKEN AS ALLEGED PURCHASES OF DIAMONDS FROM M/S NICE DIAMONDS SURAT, WHICH IS A CONCERN OF THE GROUP OF B HANWAR LAL JAIN IN WHOSE PREMISES A SEARCH & SEIZURE OPERATION WAS CARRIED ON 03.10.2013 WHERE IT WAS ADMITTED IN STATEMENT ON OATH U/S 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) THAT IN THE NAME OF VARIOUS CONCERNS BILLS WERE ISSUED WITHOUT SUPPLY OF DIAMONDS FOR THE BENEFIT OF THEIR CLIENTS. THE AO ASKED THE EXPLANATION OF THE ASSESSEE. I N RESPONSE , IT WAS SUBMITTED THAT THERE WERE TWO PURCHASES FROM M/S NICE DIAMONDS SURAT AS PER FOLLOWING DETAILS: BILL DATED 14.07.2012 RS.15,56,975/ - BILL DATED 01.08.2012 RS.16,50,240/ - RS.32,07,215/ - ITA NO. 4271 /DEL /201 7 KAMLESH KUMAR SHARMA 3 4. IT WAS FURTHER STATED THAT THE PAYMENTS FOR THE PURCHASES WERE MADE THROUGH BANKING CHANNELS A ND THESE DIAMONDS WERE PURCHASED THROUGH THE AGENTS OF THE PARTY IN DELHI AND THAT THE PAYMENT WAS DIRECTLY MADE TO THOSE PARTIES IN SURAT. IT WAS EXPLAINED T HAT THE GOODS WERE TAKEN INTO STOCKS AND ISSUED TO THE KARIGARS FOR MAKING JEWELLERY WHICH WAS SOLD IN OPEN MARKET AND INCLUDED IN TOTAL SALES DECLARED BY THE ASSESSEE. HOWEVER, THE AO DID NOT FIND MERIT IN THE SUBMISSION OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE HAD NOT BEEN ABLE TO PROVE THE JEWELLERY WHICH WAS ALLEGEDLY GOT MADE FROM DIAMONDS SO PURCHASED FROM M/S NICE DIAMONDS, SURAT AND THE NAMES AND ADDRESS OF THE PERSONS TO WHOM THOSE WERE SOLD. HE ALSO OBSERVED THAT THE DETAILS OF DIAMOND PURCH ASED FROM M/S NICE DIAMONDS, SURAT AND GIVEN TO KARIGARS FILED BY THE ASSESSEE WAS AN ATTEMPT TO INFLATE THE PURCHASE TO REDUCE THE INCIDENCE OF TAX. HE, THEREFORE, TREATED THE SAID PURCHASE S AS BOGUS AND ESTIMATED THE PROFIT @ 25% OF THOSE PURCHASES. ACCO RDINGLY, AN ADDITION OF RS.8,01,804/ - WAS MADE TO THE INCOME OF THE ASSESSEE. 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO RESTRICTED THE ADDITION ON ACCOUNT OF PROFIT @ 20% OF THE PURCHASES , BY FOLLOWING THE DECISION OF THE IT AT DELHI BENCH SMC , NEW DELHI IN THE CASE OF SH. MOHINDRA KUMAR KHANNA VS ACIT IN ITA NO. 6176/DEL/2015 FOR THE ASSESSMENT YEAR 2006 - 07. 6 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHO RITIES BELOW AND FURTHER SUBMITTED THAT THE AO HIMSELF ADMITTED THAT THE ASSESSEE FURNISHED THE DETAILS OF PURCHASES FROM NICE DIAMONDS, SURAT AND THOSE DIAMONDS WERE GIVEN TO THE KARI GARS FOR MAKING THE JEWELLERY , THEREFORE, HE WAS NOT JUSTIFIED IN TREATI NG THE PURCHASES AS BOGUS. IT WAS FURTHER SUBMITTED THAT THE AO ACCEPTED THE SALES FROM THOSE PURCHASES AND ALSO ITA NO. 4271 /DEL /201 7 KAMLESH KUMAR SHARMA 4 ACCEPTED THE GP RATE DECLARED BY THE ASSESSEE ALONGWITH THE OPENING AND CLOSING STOCK. THEREFORE, THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. 7. IN HIS RIVAL SUBMISSIONS, THE LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8 . I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD . IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THE AO ACCEPTED THE DETAILS AND EVIDENCES OF THE PURCHASES FROM M/S NICE DIAMONDS, SURAT FURNISHED BY THE ASSESSEE AND THAT THE DIAMOND S WERE GIVEN TO THE KARGIARS FOR MAKING THE JEWELLERY. IN THE PRESENT CASE, THE CONTENTION OF T HE ASSESSEE THAT THE ENTRIES IN STOCK REGISTER WERE MADE AND THE SALES WERE ENTERED IN THE BOOKS OF ACCOUNTS HAS NOT BEEN REBUTTED BY THE DEPARTMENT , E VEN THEN, THE AO CON SIDERED THE PURCHASES AS BOGUS AND ESTIMATED THE GROSS PROFIT ON T HE SAID PURCHASES @ 25% WHICH THE LD. CIT(A) RESTRICTED TO 20% . IN OUR OPINION, WHEN THE SALES HAD BEEN ACCEPTED AND GROSS PROFIT WAS APPLIED ON THE PURCHASES ENTERED IN THE BOOKS OF ACCOUNTS MAINTAINED IN THE REGULAR COURSE OF BUSINESS WHICH WERE ACCEPTED THE N THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. I, THEREFORE, DELETE THE IMPUGNED ADDITION . 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . (ORD E R PRONOUNCED IN THE COU RT ON 26 /0 3 /2018 ) (N. K. SAINI) ACCOUNTANT MEMBER DAT ED: 26 /03 /2018 *SUBODH*