ACIT CEN CIR 33, MUMBAI V. RONAK GEMS P.LTD, MUMBAI

ITA 4444/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3502 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 21-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 02-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RUPINDER BRAR
• Keywords: Bogus purchase; Business income; Tax effect
• Section: 133A; 153A; 69; 144; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI B.R.BASKARAN (AM) AND SHRI RAM LAL NEGI (JM) ITA NO 4443 TO 4445/MUM/2012 ASSESSMENT YEAR: 2006-07, 2008-09 & 2009-10 THE ACIT, CENTRAL CIRCLE 33, ROOM NO.32(2), GROUND FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MARINE LINES, MUMBAI-400020. VS. M/S. RONAK GEMS PVT. LTD. SHOP NO. 05, GR. FLOOR, 311, MEHTA BHAVAN, HINDUJA COLLEGE LANE, OPERA HOUSE, MUMBAI- 400004. PAN : AABCR7550G (APPELLANT) (RESPONDENT) & CO NO 18/MUM/2015 (ITA NO.4443/MUM/2012) ASSESSMENT YEAR: 2006-07 M/S. RONAK GEMS PVT. LTD. SHOP NO. 05, GR. FLOOR, 311, MEHTA BHAVAN, HINDUJA COLLEGE LANE, OPERA HOUSE , MUMBAI- 400004. PAN : AABCR7550G VS. THE ACIT, CENTRAL CIRCLE 33, ROOM NO.32(2), GROUND FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MARINE LINES, MUMBAI-400020. (APPELLANT) (RESPONDENT) APPELLANT BY : MS. RUPINDER BRAR RESPONDENT BY : SHRI. DHARMESH SHAH DATE OF HEARING: 23/02/2016 DATE OF PRONOUNCEMENT: 29/02/2016 2 ITA NO 4443-4445/MUM/2012 ASSESSMENT YEAR: 2006- 07, 2008-09 & 2009-10 & CO.18/MUM/2015 (ITA NO.4443/MUM/2012) ASSESSMENT YEAR: 2006-07 O R D E R PER RAM LAL NEGI, JM THESE APPEALS/CROSS OBJECTIONS PERTAIN TO THE ASSESSEE M/S. RONAK GEMS P. LTD. FOR THE ASST. YEAR 2006-07, 2008-09 & 2009- 10. ITA 4443/M/2010 IS THE DEPARTMENTAL APPEAL AGAINST THE ORDER OF THE CI T(A)-41 MUMBAI DT. 23/04/2012 FOR THE A.Y. 2006-07. THE ASSESSEE HAS F ILED THE CROSS OBJECTION NO. 18/MUM/2015. ITA 4444 & 4445/M/12 ARE DEPARTMEN TAL APPEALS AGAINST COMMON ORDER DT. 20/04/2012 PASSED BY THE LD. CIT(A ) FOR THE A.Y.2008-09 & 2009-10. SINCE ALL THE APPEALS / CROSS OBJECTION PE RTAIN TO THE SAME ASSESSEE, THE SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. ITA NO. 4443/MUM/2012 A.Y. 2006-07 & CO 18/MUM/2015 . 2.1 THE DEPARTMENT HAS CHALLENGED THE IMPUGNED ORDE R DATED 23/04/2012 PASSED BY THE LD. CIT(A) FOR THE A.Y. 2006-07 ON TH E FOLLOWING EFFECTIVE GROUNDS:- 1. (A) WHETHER ON THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE AND IN LAW, THE LD. CIT(A) IS ERRED IN HOLDING THAT BUSINESS INCOME OF THE ASSESSEE CANNOT BE ESTIMATED WHEN CIT(A) HIM SELF HAS UPHELD THE ACTION OF THE ASSESSING OFFICER IN FRAM ING ASSESSMENT UNDER SECTION 144 AS ASSESSEE HAS NOT FURNISHED NEC ESSARY DETAILS DURING ASSESSMENT PROCEEDINGS. 3 ITA NO 4443-4445/MUM/2012 ASSESSMENT YEAR: 2006- 07, 2008-09 & 2009-10 & CO.18/MUM/2015 (ITA NO.4443/MUM/2012) ASSESSMENT YEAR: 2006-07 (B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND IN LAW, THE LD. CIT(A) IS ERRED IN HOLDING THAT EST IMATION OF BUSINESS INCOME BY THE ASSESSING OFFICER IS NOT JUSTIFIED WH EN IT IS A FACT THAT ASSESSEE HAS NOT FILES ANY DETAILS IN ASSESSMENT PR OCEEDINGS AND THIS FORCED THE ASSESSING OFFICER TO ESTIMATE THE I NCOME OF THE ASSESSEE. (C) WHETHER ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND IN LAW, THE LD. CIT(A) IS ERRED IN UPHOLDING THE ES TIMATION OF BUSINESS INCOME OF THE ASSESSEE WHEN ASSESSING OFFI CER HAS MADE THE ESTIMATE ON COMPARABLE CASES. 2.2 AT THE OUTSET, IT IS NOTICED THAT THE TAX INV OLVED IN THIS CASE DOES NOT EXCEED RS.10,00,000/-. AS PER THE CBDT CIRCULAR NO. 21 OF 2015, DATED 10 TH DECEMBER, 2015, NEW GUIDELINES OF MONETARY LIMIT FO R FILING OF APPEALS BY THE DEPARTMENT HAS BEEN ISSUED, WHEREBY THE TAX EFFECT FOR FILING OF APPEAL BEFORE THE ITAT HAS BEEN PRESCRIBED AS AMOUNT EXCEEDING RS . 10 LAKHS. IN THE SAID CIRCULAR, IT HAS BEEN SPECIFICALLY CLARIFIED THAT T HE SAID INSTRUCTION WILL APPLY RETROSPECTIVELY TO ALL THE PENDING APPEALS. ACCORDI NGLY, THE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE AND IS DISMISSED IN LIMINE . 3. SO FAR AS THE CROSS OBJECTION OF THE ASSESSEE I S CONCERNED, SINCE WE HAVE DISMISSED THE APPEAL FILED BY THE DEPARTMENT ON THE GROUND OF JURISDICTION/MAINTAINABILITY OF THE APPEAL IN TERMS OF THE CBDT CIRCULAR DT. 10 TH DECEMBER, 2015, IN OUR CONSIDERED VIEW THERE IS NO NEED TO ADJUDICATE THE GROUNDS RAISED BY THE ASSESSEE IN CROSS OBJECTION. THE ASSESSEE ALSO DID NOT PURSUE THE SAME. THEREFORE, THE CROSS OBJECTION PET ITION FILED BY THE ASSESSEE IS ALSO DISMISSED. 4 ITA NO 4443-4445/MUM/2012 ASSESSMENT YEAR: 2006- 07, 2008-09 & 2009-10 & CO.18/MUM/2015 (ITA NO.4443/MUM/2012) ASSESSMENT YEAR: 2006-07 4. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T AS WELL AS CROSS OBJECTION FILED BY THE ASSESSEE FOR THE A.Y. 2006-07 ARE DISM ISSED. ITA NO. 4444/MUM /2012 FOR A.Y. 2008-09 THE DEPARTMENT HAS CHALLENGED THE IMPUGNED O RDER DT. 20/04/2012 PASSED BY THE LD. CIT(A)-41 MUMBAI FOR THE ASSESSME NT YEAR 2008-09 ON THE FOLLOWING EFFECTIVE GROUNDS:- 1. (A) WHETHER ON THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE AND IN LAW, THE LD. CIT(A) IS ERRED IN HOLDING THAT PURCHASE OF DIAMOND WORTH RS. 62,98,980/- FROM SHRI. MOHAN S. D HAMA ARE GENUINE ONLY ON THE GROUND THAT PAYMENTS ARE MADE B Y BANKING CHANNELS AND THERE ARE BILLS AND VOUCHERS IN RESPEC T OF PURCHASES MADE IGNORING OTHER EVIDENCES WHICH SHOW THAT PURCH ASES ARE NOT GENUINE. (B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND IN LAW, THE LD. CIT(A) IS ERRED IN HOLDING THAT PURCHASE OF DIAMOND WORTH RS. 62,98,980/- FROM SHRI. MOHAN S. D HAMA ARE GENUINE PURCHASES WITHOUT APPRECIATING THAT SHRI. M OHAN S. DHAMA COULD NOT PRODUCE EVIDENCE TO SHOW THAT HE WA S IN POSSESSION OF DIAMONDS ANS THE SAME ARE NOT REFLECT ED IN THE FINANCIAL ACCOUNTS OF THE PERSON. 5 ITA NO 4443-4445/MUM/2012 ASSESSMENT YEAR: 2006- 07, 2008-09 & 2009-10 & CO.18/MUM/2015 (ITA NO.4443/MUM/2012) ASSESSMENT YEAR: 2006-07 (C) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) IS ERRED IN HOLDING THAT SINCE THERE ARE CORRESPONDING SALES, PURCHASES CANNOT BE HELD GENUI NE IGNORING THE DECISION OF JURISDICTIONAL BENCH OF ITAT IN THE CASE OF LIFELINE DRUGS AND INTERMEDIATE LIMITED IN 5535/MUM/2007 WHE REIN IT WAS HELD THAT ONUS OF PROVING GENUINENESS OF PURCHA SES EVEN IF THERE ARE CORRESPONDING SALES IS ON THE ASSESSEE AN D IF THIS BURDEN IS NOT DISCHARGED DEDUCTION FOR PURCHASES CA NNOT BE ALLOWED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY RONAK GEMS PVT. LTD. IS ENGAGED IN BUSINESS OF TRADING IN ROUGH CUT AND POLISHED DIAMONDS, GOLD BARS, AND JEWELLARY. THE COMPANY IS MANAGED BY THE THREE DIRECTORS MR. JAYENDRA P. JHAVERI, MR. YOGIN JHAVERI AND MR. VISH AL J. JHAVERI. SURVEY ACTION U/S 133A WAS CONDUCTED ON 13/08/2008 AT THE BUSINESS PREMISES OF M/S. RONAK GEMS P. LTD. AT SHOP NO. 5, AND ITS OFFI CE. 3. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARI NG THE TOTAL INCOME OF RS. 28,41,187/-ON 30.9.2008. IN RESPONSE TO THE NOTICED ISSUED U/S 153A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), THE ASS ESSEE FILED ITS RETURN OF INCOME ALONG WITH STATUTORY AUDIT REPORT, AUDIT REP ORT U/S 44AB OF THE ACT, BALANCE SHEET AND PROFIT AND LOSS ACCOUNT ETC. IN R ESPONSE TO THE NOTICE DATED 3.8.2010 AND 3.9.2010 THE ASSESSEE FURTHER FILED LE DGER OF FIXED ASSETS, DETAILS OF IMPORT AND EXPORT RELATED TRANSACTIONS A ND WORKING OF EXCHANGE RATE FLUCTUATION GAIN/LOSS. 6 ITA NO 4443-4445/MUM/2012 ASSESSMENT YEAR: 2006- 07, 2008-09 & 2009-10 & CO.18/MUM/2015 (ITA NO.4443/MUM/2012) ASSESSMENT YEAR: 2006-07 4. APART FROM THE OTHER DISALLOWANCES, THE ASSESSI NG MADE AN ADDITION OF RS. 62,98,980/- TO THE INCOME OF THE ASSESSEE TREATING THE TRANSACTION OF PURCHASE OF CUT AND POLISHED DIAMOND BY THE ASSESSE E DURING THE RELEVANT PERIOD AS NOT GENUINE. 5. FEELING AGGRIEVED BY THE ASSESSMENT ORDER THE A SSESSEE FILED 1 ST APPEAL BEFORE THE APPELLATE AUTHORITY. ONE OF THE GROUNDS OF APPEAL WAS THAT THE LD. ASSESSING OFFICER HAD ERRED IN MAKING DISALLOWANCE OF RS. 62,98,980/- ON THE GROUND THAT THE PURCHASE BILL OF MR. MOHAN S. DAMA IS FICTITIOUS, WITHOUT APPRECIATING THE FACT THAT MR. MOHAN S. DAMA IS A W ALK-IN-CUSTOMER FORM WHOM THE DIAMONDS WERE PURCHASED FOR MONETARY CONSI DERATION AND THE CONSIDERATION WAS PAID BY PAYEES ACCOUNT CHEQUE AGA INST DELIVERY OF THE DIAMONDS. 6. BEFORE US THE LD. DR HEAVILY RELYING UPON THE ASSESSMENT ORDER SUBMITTED THAT THE LD. CIT(A) HAS WRONGLY DELETED THE ADDITIO N MADE BY THE AO BECAUSE THE ASSESSEE HAD FAILED TO ESTABLISH THE GENUINENES S OF THE TRANSACTION OF PURCHASE OF DIAMOND BEFORE THE ASSESSING OFFICER AN D THAT THE IMPUGNED ORDER IS NOT BASED ON THE SETTLED PRINCIPLES OF LAW THERE FORE, THE SAME LIABLE TO BE SET ASIDE. 7. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE ASSESSING OFFICER HAS VERIFIED THE QUANTITATIVE TAL LY STOCK REGISTER DURING THE ASSESSMENT PROCEEDING AND HAS NOT POINTED OUT A SIN GLE MISTAKE THEREIN. THE ASSESSING OFFICER HAS ACCEPTED THE SALES IN RESPECT IVE OF PURCHASES MADE FROM THE FOUR WALK-IN-CUSTOMERS AND THE PAYMENTS WERE MA DE BY PAYEES ACCOUNT CHEQUES WHICH WERE ENCASHED THROUGH THE BANKERS. LD . COUNSEL FURTHER 7 ITA NO 4443-4445/MUM/2012 ASSESSMENT YEAR: 2006- 07, 2008-09 & 2009-10 & CO.18/MUM/2015 (ITA NO.4443/MUM/2012) ASSESSMENT YEAR: 2006-07 SUBMITTED THAT PURCHASES MADE FROM THE WALK-IN-CUST OMERS WERE SOLD AND THE PROVISIONS OF TAX UNDER MAHARASHTRA VALUE ADDED TAX ACT, 2002 WERE COMPLIED WITH. DURING ASSESSMENT PROCEEDINGS THE SU MMONS WERE SERVED UPON ALL THE WALK-IN CUSTOMERS AND SOME OF THEM APP EARED BEFORE THE ASSESSING OFFICER AND FILED THE DETAILS CALLED FOR HENCE THERE IS NO REASON TO TREAT THE PURCHASES AS NON GENUINE. THE LD. COUNSEL RELYING ON THE DECISIONS PASSED BY THE ITAT MUMBAI IN GANPATRAJ SANGHVI ITA NO 2826/M/2013, SHRI HIRALAL CHUNILAL JAIN ITA NO 4547/M/2014 AND THE DE CISION OF THE HONBLE JURISDICTIONAL HIGH COURT PASSED IN CIT V. NIKUNJ E XIM ENTERPRISES PVT LTD. 372 ITR SUBMITTED THAT THE CASE OF THE ASSESSEE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE SAID DECISIONS. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS IN THE LIGHT OF THE DECISIONS/JUDGMENTS RELIED UPON AND THE DOCUMENTS P LACED BEFORE US INCLUDING THE ORDERS OF THE AUTHORITIES BELOW. THE LD. CIT(A) HAS ALLOWED THIS GROUND OF THE APPEAL OF THE ASSESSEE OBSERVING AS UNDER:- KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES, THE F ACTS OF THE PRESENT CASE ARE SQUARELY COVERED BY THE DECISION O F HONBLE COURTS WHERE IT IS HELD THAT SINCE THE PAYMENT WAS MADE BY ACCOUNT PAYEE CHEQUE AND WAS ENCASHED THROUGH BANKERS, THE DISALL OWANCE WAS NOT CALLED FOR. THE HONBLE JAIPUR AND AHMEDABAD TR IBUNAL HAS ALSO DEALT WITH THE CASES OF SIMILAR FACTS WHERE IT IS H ELD THAT THE PURCHASES MADE BY THE ASSESSEE WERE DULY RECORDED I N THE BOOKS OF ACCOUNT AND SUPPORTED BY AUTHENTICATED PURCHASE BIL LS/VOUCHERS FOR WHICH PAYMENT WAS MADE THROUGH BANKING CHANNELS AND SALES AGAINST THESE PURCHASES WAS NOT DOUBTED. THE ADDITI ON U/S 69 WAS NOT JUSTIFIED MERELY BECAUSE SUPPLIERS COULD NOT BE LOCATED AND WERE 8 ITA NO 4443-4445/MUM/2012 ASSESSMENT YEAR: 2006- 07, 2008-09 & 2009-10 & CO.18/MUM/2015 (ITA NO.4443/MUM/2012) ASSESSMENT YEAR: 2006-07 NOT PRODUCED FOR EXAMINATION. THE HONBLE MUMBAI TR IBUNAL IN THE ABOVE SAID CASE HAS ALSO HELD THAT WHEN SALES IS AC CEPTED FOR THE PURPOSE OF TAXATION, PURCHASES RELATED THERETO CANN OT BE HELD TO BE NOT GENUINE BECAUSE IF THERE IS NO PURCHASES HOW TH ERE CAN BE SALES POSSIBLE. IN VIEW OF THE DECISION OF HONBLE COURTS AND THE FACTS OF THE PRESENT CASE, IT IS HELD THAT THE TRADE OF THE ASSESSEE COMPANY IS SUCH THAT IT CANNOT HAVE REGULAR CUSTOMERS AND ALL TRANSACTIONS ARE MADE THROUGH WALK-IN-CUSTOMERS. THE NECESSARY DOCUM ENTS, I.E. IDENTITY, PAN, LEDGER ACCOUNT, BANK STATEMENT AND P AYMENT MADE THROUGH ACCOUNT PAYEE CHEQUES WERE SUBMITTED BEFORE THE ASSESSING OFFICER AND EVEN THE QUANTITY WAS DULY RE FLECTED IN THE STOCK REGISTER AND AGAINST ALL THESE PURCHASES, THE SALES HAVE BEEN MADE AND DULY REFLECTED IN THE STOCK REGISTER AND T HE LEDGER ACCOUNT. THEREFORE, MERELY BECAUSE THE PARTIES WERE NOT PROD UCED IN RESPONSE TO THE SUMMONS, THE ADDITION CANNOT BE MAD E IN VIEW OF THE DECISIONS OF HONBLE COURTS RELIED ON THE AR OF THE APPELLANT. IN TOTALITY OF FACTS AND CIRCUMSTANCES, IT IS HELD THA T THE FACTS OF THE PRESENT CASE ARE SQUARELY COVERED BY THE DECISIONS OF HONBLE COURTS, THEREFORE, THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES IS DELETED AND THE GROUND OF APPEAL IS ALLOWED. 9. ADMITTEDLY, IN THE PRESENT CASE THE ASSESSEE HA S PRODUCED LEDGER ACCOUNT OF SHRI MOHAN S. DAMA FOR THE YEAR ENDING 31.03.200 8, EXTRACT OF THE STOCK REGISTER, QUANTITATIVE DETAILS OF STOCK MAINTAINED BY THE ASSESSEE, EXTRACT OF STATEMENT OF BANK ACCOUNT OF THE ASSESSEE SHOWING P AYMENT OF PURCHASE AMOUNT BY CHEQUES, COPY OF ITR ACKNOWLEDGEMENT OF S H. MOHAN S. DAMA FOR THE A.Y. 2008-09, COPY OF COMPUTATION OF TOTAL INCO ME OF SH. MOHAN S. DAMA 9 ITA NO 4443-4445/MUM/2012 ASSESSMENT YEAR: 2006- 07, 2008-09 & 2009-10 & CO.18/MUM/2015 (ITA NO.4443/MUM/2012) ASSESSMENT YEAR: 2006-07 FOR THE RELEVANT PERIOD REFLECTING THE INCOME FROM SALE OF CUT AND POLISHED DIAMONDS ETC. BEFORE THE ASSESSING OFFICER DURING T HE ASSESSMENT PROCEEDINGS. PERUSAL OF THE SAID DOCUMENTS, AVAILABLE IN THE PAP ER BOOK FILED BY THE ASSESSEE, PRIMA FACIE ESTABLISHES THAT THE TRANSACT IONS IN QUESTION ARE NOT BOGUS AND IN THE ABSENCE OF ANY COGENT EVIDENCE TO DEMOLISH THE VERSION OF THE ASSESSEE IT CANNOT BE CONCLUDED THAT THE TRANSACTIO NS IN QUESTION ARE BOGUS. IN CIT VS. NIKUNJ EXIM ENTERPRISES P. LTD.(2015 372 IT R 619) MUMBAI , THE HONBLE JURISDICTION HIGH COURT OF MUMBAI HAS DISMI SSED THE APPEAL OF THE REVENUE HOLDING AS UNDER: WE HAVE CONSIDERED THE SUBMISSION ON BEHALF OF THE REVENUE. HOWEVER, FROM THE ORDER OF THE TRIBUNAL DATED 30.04 .2010, WE FIND THAT THE TRIBUNAL HAS DELETED THE ADDITIONS ON ACCOUNT OF BOGUS PURCHASES NOT ONLY ON THE BASIS OF STOCK STAT EMENT I.E. RECONCILIATION STATEMENT, BUT ALSO IN VIEW OF THE O THER FACTS. THE TRIBUNAL RECORDS THAT THE BOOKS OF ACCOUNTS OF THE RESPONDENT- ASSESSEE HAVE NOT BEEN REJECTED. SIMILARLY, THE SAL ES HAVE NOT BEEN DOUBTED AND IT IS AN ADMITTED POSITION THAT SU BSTANTIAL AMOUNT OF SALES HAVE BEEN MADE TO THE GOVERNMENT DEPARTMENT I.E. DEFENCE RESEARCH AND DEVELOPMENT LA BORATORY, HYDERABAD. FURTHER, THERE WERE CONFIRMATION LETTERS FILED BY THE SUPPLIERS, COPIES OF INVOICES FOR PURCHASES AS WELL AS COPIES OF BANK STATEMENT ALL OF WHICH WOULD INDICATE THAT THE PURCHASES WERE INFACT MADE. IN OUR VIEW, MERELY BECAUSE THE S UPPLIERS HAVE NOT APPEARED BEFORE THE ASSESSING OFFICER OR T HE CIT(A), ONE CANNOT CONCLUDE THAT THE PURCHASES WERE NOT MAD E BY THE RESPONDENT-ASSESSEE. THE ASSESSING OFFICER AS WELL AS CIT(A) HAVE DISALLOWED THE DEDUCTION OF RS.1.33 CRORES ON ACCOUNT OF 10 ITA NO 4443-4445/MUM/2012 ASSESSMENT YEAR: 2006- 07, 2008-09 & 2009-10 & CO.18/MUM/2015 (ITA NO.4443/MUM/2012) ASSESSMENT YEAR: 2006-07 PURCHASES MERELY ON THE BASIS OF SUSPICION BECAUSE THE SELLERS AND THE CANVASSING AGENTS HAVE NOT BEEN PRODUCED BE FORE THEM. WE FIND THAT THE ORDER OF THE TRIBUNAL IS WEL L A REASONED ORDER TAKING INTO ACCOUNT ALL THE FACTS BEFORE CONC LUDING THAT THE PURCHASES OF RS.1.33 CRORES WAS NOT BOGUS. NO FAULT CAN BE FOUND WITH THE ORDER DATED 30.04.2010 OF THE TRIBUN AL. 10. WE ARE OF THE VIEW THE FACTS OF THE PRESENT CA SE ARE SIMILAR TO THE FACTS OF THE CASES DISCUSSED ABOVE AND THE ISSUES INVOLVED I N THIS CASE IS COVERED BY THE RATIO LAID DOWN IN THE AFORESAID SAID CASE. IN THE LIGHT OF THE DECISIONS OF THE MUMBAI ITAT REFERRED ABOVE AND THE DECISION OF THE HONBLE BOMBAY HIGH COURT PASSED IN NIKUNJ EXIM ENTERPRISES LTD.(SUPRA) , THE ORDER PASSED BY THE LD. CIT (A) IS IN ACCORDANCE WITH THE LAW AND THE S AME DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. WE, THEREFORE, DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). ACCORDINGLY, WE UPHOLD THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND DISMISS THE GROUNDS RAISED BY THE DEPARTMENT. 11. IN THE RESULT, THE APPEAL FILED BY THE DEPARTM ENT IS DISMISSED. ITA 4445/MUM/2012 FOR A.Y. 2009-10 THE DEPARTMENT HAS CHALLENGED THE IMPUGNED OR DER DT. 20/04/2012 PASSED BY THE LD. CIT(A)-41 MUMBAI FOR THE ASSESSME NT YEAR 2009-10 ON THE FOLLOWING EFFECTIVE GROUNDS:- 1. (A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS ERRED IN HOLDING THAT PURCHA SE OF DIAMOND 11 ITA NO 4443-4445/MUM/2012 ASSESSMENT YEAR: 2006- 07, 2008-09 & 2009-10 & CO.18/MUM/2015 (ITA NO.4443/MUM/2012) ASSESSMENT YEAR: 2006-07 WORTH RS. 1,41,224/- FROM SHRI MOHAN S. DHAMA, SHRI PRIYANK PARMAR, SHRIMATI RITU DIWAN AND FROM SHRI DEVADITYA MAKHECHA ARE GENUINE ONLY ON THE GROUND THAT PAYMENTS ARE MA DE BY BANKING CHANNELS AND THERE ARE BILLD AND VOUCHERS IN RESPEC T OF PURCHASES MADE IGNORING OTHER EVIDENCES WHICH SHOW THAT PURCH ASES ARE NOT GENUINE. (B)WHETHER, ON FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, CIT(A) HAS ERRED IN HOLDING THAT PURCHASES OF RS. 17,80,880/- MADE FROM SHRI MOHAN. S. DHAMA ARE GENUINE PURCHASE S WITHOUT APPRECIATING THAT SHRI MOHAN S. DHAMA COULD NOT PRO DUCE EVIDENCE TO SHOW THAT HE WAS ON POSSESSION OF DIAMONDS AND T HE SAME ARE NOT REFLECTED IN THE FINANCIAL ACCOUNTS OF THE PERS ON. (C)WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING THAT PURCHA SES OF RS. 20,47,875/- MADE FROM SHRI PRIYANK PARMAR ARE GENUI NE PURCHASES WITHOUT APPRECIATING THAT SHRI PRIYANK PARMAR COULD NOT PRODUCE EVIDENCE TO SHOW THAT HE WAS IN POSSESSION OF DIAMO NDS AND THE SAME ARE ALSO NOT REFLECTED IN THE FINANCIAL ACCOUN TS OF THE PERSONS. (D) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN LAW, CIT(A) HAS ERRED IN HOLDING THAT THE PURCHASES OF RS. 13,55,90/- MADE FROM SHRI. RITU DIWAN AND PURCHASES OF RS. 9,45,582/- MADE FROM SHRI. DEVADITYA MAKHECHA ARE G ENUINE PURCHASES WITHOUT APPRECIATING THAT ASSESSEE COULD NOT PRODUCE THESE PERSON IN RESPONSE TO SUMMONS ISSUED AND ASSE SSEE HAS ALSO 12 ITA NO 4443-4445/MUM/2012 ASSESSMENT YEAR: 2006- 07, 2008-09 & 2009-10 & CO.18/MUM/2015 (ITA NO.4443/MUM/2012) ASSESSMENT YEAR: 2006-07 NOT EXPLAINED TO THE ASSESSING OFFICER THE REASON F OR NOT PRODUCING THESE PERSONS AND HENCE PURCHASES REMAIN SUBSTANTIA TED. (E) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN LAW, CIT(A) HAS ERRED IN HOLDING THAT SINCE THERE ARE CO RRESPONDING SALES, PURCHASES CANNOT BE HELD GENUINE IGNORING THE DECIS ION OF JURISDICTIONAL BENCH OF ITAT IN THE CASE OF LIFELIN E DRUGS AND INTERMEDIATE LTD. IN 5535/M/07 WHEREIN IT WAS HELD THAT ONUS OF PROVING GENUINENESS OF PURCHASES EVEN IF THERE ARE CORRESPONDING SALES IS ON THE ASSESSEE AND IF THIS BURDEN IS NOT DISCHARGED DEDUCTION FOR PURCHASES CANNOT BE ALLOWED 2. SINCE THE BASIC FACTS OF THE CASE DISCUSSED IN A PPEAL PERTAINING TO A.Y. 2008-09 ARE SIMILAR (EXCEPT THE NUMBER OF TRANSACTI ONS AND THE AMOUNT INVOLVED), TO THE FACTS OF THIS CASE, WE DO NOT FIN D IT NECESSARY TO MENTION THE SAME. HOWEVER, IT IS NECESSARY TO MENTION HERE THAT AS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE AO HAS WRONGLY ME NTIONED THE AMOUNT OF ALLEGED BOGUS PURCHASE DURING THE ASSESSMENT YEAR 2 009-10 AS RS. I,41,14,22/-IN PLACE OF TOTAL RS, 61,30,317/- I.E., PURCHASE FROM MR MOHAN S. DAMA RS. 17.80,880/-, FROM MR. PRIYANK H. PARMAR RS . 20,47,875/-, FROM MRS. RITU DEVAN RS. 13,55,980/)& FROM MR.S DEVADIT A R. MAKECHA RS. 9,45,582/-. THE LD. CIT(A) HAS ALLOWED THE APPEAL O F THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09 AND 2009-10 ON THE SAME GRO UNDS AS THE FACTS OF CASE AS WELL AS THE EVIDENCE AVAILABLE IN BOTH THE CASES ARE SIMILAR. SINCE THE ISSUES IN QUESTION INVOLVED IN THIS CASE ARE IDENTI CAL TO THE ISSUE INVOLVED IN THE CASE PERTAINING TO THE ASSESSMENT YEAR 2008-09 AND WE HAVE DISMISSED THE APPEAL OF THE DEPARTMENT FOR THE ASSESSMENT YEA R 2008-09, WE DISMISS THE 13 ITA NO 4443-4445/MUM/2012 ASSESSMENT YEAR: 2006- 07, 2008-09 & 2009-10 & CO.18/MUM/2015 (ITA NO.4443/MUM/2012) ASSESSMENT YEAR: 2006-07 ALL THE GROUNDS OF APPEAL OF THE DEPARTMENT FILED A GAINST THE ORDER OF THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2009-10. 3. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH FEBRUARY, 2016 SD/- SD/- ( B.R.BASKARAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 29/02/2016 / 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) , / ITAT, MUMBAI PRAMILA