ACIT, Central Cir-3(3), Chennai V. G R Thangamalai, Chennai

ITA 62/CHNY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6347 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 08-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAILENDRA MAMIDIPCIT
• Keywords: Bogus purchase; Search and seizure; Opportunity of cross examination; Third party statement; Accommodation entries; Set aside
• Section: 153A; 80IA; 251

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH : CHENNAI , . , [BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ] !' ./I.T.A. NOS.53, 54, 55, 56 &57/CHNY/2019. #$% &$ / ASSESSMENT YEARS : 2008-09, 2009-10, 2010-11 , 2011-12 & 2012-2013. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3(3) CHENNAI. VS. M/S. G R THANGAMALIGAI & SONS, NO.138, USMAN ROAD, T. NAGAR, CHENNAI 600 017. [PAN AAGFG 3557L] !' ./I.T.A. NOS.58, 59, 60, 61, 62 & 63/CHNY/2019. #$% &$ / ASSESSMENT YEARS : 2007-08, 2008-09, 2009-10, 2010-11, 2011-12 & 2012-13. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3(3) CHENNAI. VS. M/S. G R THANGAMALIGAI FIRM, NO.136, USMAN ROAD, T. NAGAR, CHENNAI 600 017. [PAN AADFG 7966Q] !' ./I.T.A. NOS.64, 65 & 66/CHNY/2019. #$% &$ / ASSESSMENT YEARS : 2010-11, 2011-12 & 2012- 13. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3(3) CHENNAI. VS. M/S. G R T JEWELLERS (INDIA) PVT LTD, NO.136, USMAN ROAD, T. NAGAR, CHENNAI 600 017. [PAN AAACR 3582R] ( / APPELLANT) ( /RESPONDENT) ITA NOS.53 TO 66 /2019 :- 2 -: !' '( ) * / APPELLANT BY : SHRI. SAILENDRA MAMIDI, PCIT. +,'( ) * /RESPONDENT BY : SHRI. B. RAMAKRISHNAN, C.A. # - ) . /DATE OF HEARING : 08-05-2019 /0&% ) . /DATE OF PRONOUNCEMENT : 28-06-2019 / O R D E R PER BENCH:- THESE ARE APPEALS FILED BY THE REVENUE DIRECTE D AGAINST THE DIFFERENT ORDERS OF THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS)-19, CHENNAI (HEREINAFTER CALLED AS CIT( A)) DATED 04.10.2018 IN THE CASES OF M/S. G R THANGAMALIGA I & SONS FOR ASSESSMENT YEARS 2008-09, 2009-10, 2010-11, 2011-12 AND 2012-13, M/S. G R THANGAMALIGAI FIRM, FOR ASSESSMENT YEARS 2007-08, 2008- 09, 2009-10, 2010-11, 2011-12 AND 2012-13 AND M/S. G R T JEWELLERS (INDIA) PVT LTD FOR ASSESSMENT YEARS 2010-11, 2011- 12 AND 2012-13 RESPECTIVELY. 2. SINCE, THE IDENTICAL FACTS AND ISSUES ARE INVOLVED IN THESE APPEALS, WE PROCEED TO DISPOSE THE SAME VIDE THIS C OMMON ORDER. 3. FOR THE SAKE OF CONVENIENCE AND CLARITY THE FACTS R ELEVANT TO THE APPEAL IN ITA NO.54/CHNY/2019 IN THE CASE OF M/S. G R THANGAMALIGAI & SONS, FOR ASSESSMENT YEAR 2009-10 ARE STATED HERE IN. ITA NOS.53 TO 66 /2019 :- 3 -: 4. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) IS ERRONEOUS ON FACTS OF THE CASE AND IN LAW. 2.1. THE ID. CIT(A) ERRED IN DIRECTING THE ASSESSIN G OFFICER TO ALLOW THE ASSESSEES CLAIM OF PURCHASES OF DIAMONDS OF RS. 9,04,15,440/-. 2.2. THE ID. CIT(A) FAILED TO APPRECIATE THAT SOME OF THE CONCERNS FROM WHOM THE ASSESSEE CLAIMED TO HAVE PUR CHASED THE DIAMONDS HAD BEEN OPERATED BY SHRI. BANWARILAL AND HIS SONS, WHO WERE PROVIDING ACCOMMODATION ENTRIES TO V ARIOUS ENTITIES, BY ISSUING INVOICES, THROUGH VARIOUS BENA MI CONCERNS OPERATED BY THEM, WITHOUT ACTUALLY SUPPLYING THE GO ODS. 2.3. THE ID. CIT(A) OUGHT TO HAVE NOTED THAT, BY HI S INFERENCE THAT THE ACTUAL MATERIAL (DIAMONDS) WERE SUPPLIED B Y SOME OTHER PERSONS AND TO ACCOMMODATE SUCH SUPPLIES, SHRI.BANWARILAL JAM GROUP ISSUED THE ACCOMMODATION INVOICES, THE ID. CIT(A) HAS ENDORSED THE VIEW THAT THERE IS NOTHING ERRONEOUS IN AN ASSESSEE PURCHASING THE GOO DS FROM SOMEONE AND GETTING THE BILLS FROM ANOTHER, WHICH W OULD DEFEAT THE INTENT AND PURPOSE OF THE PROFIT & LOSS ACCOUNT TO REFLECT THE TRUE STATE OF AFFAIRS OF A BUSINESS ENT ITY. 2.4. THE ID. CIT(A) FAILED TO NOTE THAT A PERSON SE LLING HIS GOODS IS EXPECTED TO ISSUE THE GOODS AND THE SELLER CANNOT BE DIFFERENT FROM THE PERSON WHO ISSUES THE BILLS IN F AVOUR OF THE ASSESSEE. 3. FOR THESE GROUNDS AND ANY OTHER GROUND INCLUDING AMENDMENT OF GROUNDS THAT MAY BE RAISED DURING THE COURSE OF THE APPEAL PROCEEDINGS, THE ORDER OF LEARNED CIT (APPEALS) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5. THE BRIEF FACTS OF THE CASE ARE AS UNDER:- THE RESPONDENT-ASSESSEE NAMELY M/S. G R THANGAMALIG AI & SONS, IS A FIRM ENGAGED IN THE BUSINESS OF TRADING OF GOLD AND ITA NOS.53 TO 66 /2019 :- 4 -: DIAMOND JEWELLERY. THE RETURN OF INCOME FOR THE A Y 2009-10 WAS FILED ON 26.09.2009 DISCLOSING TOTAL INCOME OF RS.18,32,6 2,730/-. THERE WAS A SEARCH & SEIZURE OPERATIONS U/S.132 OF THE AC T ON THE ASSESSEE ON 16.05.2013. THE ASSESSING OFFICER ISSUED NOTICE U/S.153A OF THE ACT. IN RESPONSE TO NOTICE, THE ASSESSEE FILED ITS RETURNS OF INCOME ADMITTING G24,32,71,490/-. THE ASSESSING OFFICER W HILE COMPLETING THE ASSESSMENT U/S.143(3) R.W.S. 153A OF THE ACT ASSESS ED TOTAL INCOME OF G28,39,43,517/- BY MAKING ADDITIONS ON ACCOUNT OF ( I) UNPROVED (BOGUS) PURCHASES OF DIAMONDS (II) DISALLOWANCE OF DEDUCTION CLAIMED U/S.80-IA OF THE ACT AND (III) DISALLOWANCE OF EXPE NSES U/S.14A OF THE ACT. DURING THE SEARCH AND SEIZURE PROCEEDINGS, IT IS FOUND THAT RESPONDENT- ASSESSEE HAD PURCHASED DIAMONDS FROM TH E FOLLOWING PARTIES NAMELY (A) PARVATHI EXPORTS (B) MEENAKSHI EXPORTS AND (C) MALHAR EXPORTS. SUBSEQUENTLY THERE WAS A SEARCH O PERATION CONDUCTED IN THE CASES OF SHRI. BHANWARLAL M JAIN & GROUP, WHEREIN IT WAS FOUND THAT THE SAID GROUP WAS ENGAGED IN PROVID ING ACCOMMODATION ENTRIES BY WAY OF ISSUING PURCHASE B ILLS WITHOUT ACTUAL PHYSICAL SALES OF GOODS TO VARIOUS PARTIES. IT IS ALSO FOUND THAT RESPONDENT - ASSESSEE WERE ONE OF THE BENEFICIARIE S OF SUCH ACCOMMODATION ENTRIES. THE ASSESSING OFFICER NOTED THAT DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2009-10, SUM OF G4,01,93,808/- WAS SHOWN AS PURCHASES MADE FROM SHRI. BHANWARLAL ITA NOS.53 TO 66 /2019 :- 5 -: M JAIN & GROUP. BASED ON THIS INFORMATION, THE A SSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS CALLED UPON THE ASSESSEE VIDE LETTER DATED 17.12.2015 TO FURNISH DETAILS OF DIAMONDS PURCHASED. IN RESPONSE TO THE LETTER DATED 17.12.2015, THE RE SPONDENT - ASSESSEE HAS SUBMITTED COPIES OF INVOICES RAISED A ND ACCOUNTS COPY OF THE SAID PARTIES IN THE BOOKS OF THE RESPONDENT - ASSESSEE FIRM. HOWEVER, THE ASSESSING OFFICER INFERRED THAT PURC HASES MADE FROM THE SAID SHRI. BHANWARLAL M JAIN & GROUP FOR THE AS SESSMENT YEAR 2009-2010 TO THE TUNE OF G4,01,93,808/- ARE BOGUS THE SEARCH AND SEIZURE OPERATIONS CARRIED OUT IN THE CASE OF SHRI . BHANWARLAL M JAIN & GROUP SHOWED THAT THEY ARE PROVIDING ONLY ACCOMMOD ATION ENTRIES. THE ASSESSING OFFICER ALSO DISCUSSED MODUS OPERANDI ADOPTED BY THE SAID GROUP AT PARA 6 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER ISSUED COMMISSION U/S.131(D) OF THE ACT TO THE DDI T (INV) UNIT-II, SURAT TO EXAMINE THE SAID PARTIES, WHO IN TURN R EPORTED THAT SUMMONS COULD NOT BE SERVED ON THE GIVEN ADDRESS. BASED ON THIS INFORMATION, THE ASSESSING OFFICER INFERRED THAT THESE ENTITIES ARE NOT OPERATIVE IN THE GIVEN ADDRESS AND THEY ARE BOGU S FIRMS. THE ASSESSING OFFICER HELD THAT MERE PRODUCTION OF P A NUMBERS, IT RETURNS AND BILLS DOES NOT ESTABLISH THE GENUINENES S OF THE PURCHASES IN VIEW OF MODUS OPERANDI ADOPTED BY THE SAID GROU P. THE ASSESSING OFFICER THEREFORE INFERRED THAT THE PURCHASES MADE FROM THE ABOVE ITA NOS.53 TO 66 /2019 :- 6 -: SAID PARTIES ARE BOGUS AND ACCORDINGLY DISALLOWED THE PURCHASES TO THE EXTENT OF G4,01,93,808/-. THE ASSESSING OFFICER ALSO MADE DISALLOWANCES U/S.14A AND 80IA OF THE ACT. 6. BEING AGGRIEVED BY THE ABOVE ADDITIONS, AN APPEAL W AS PREFERRED BEFORE THE LD. CIT(A) CHALLENGING THE V ERY VALIDITY OF JURISDICTION U/S.153A OF THE ACT IN THE ABSENCE OF ANY INCRIMINATING MATERIALS ON RECORD AND CHALLENGING THE FINDINGS O F THE ASSESSING OFFICER THAT PURCHASES MADE FROM THE GROUP COMPAN IES NAMELY (A) PARVATHI EXPORTS (B) MEENAKSHI EXPORTS AND (C) MAL HAR EXPORTS ARE BOGUS ON THE GROUND THAT ASSESSEE HAD DISCHARGED HIS ONUS BY FILING EVIDENCE IN THE FORM OF INVOICES, COPIES OF THE DET AILS OF THE PAYMENTS MADE, PA NUMBER, NAME AND ADDRESS OF THE PARITIES . THE CIT(A) UPON CONSIDERATION DETAILS OF PURCHASES, SALES AN D CLOSING STOCK AND THE STATEMENTS GIVEN BY SHRI. BHANWARLAL M JAIN HEL D THAT THE PURCHASES CANNOT TO BE HELD AS BOGUS. THE MODUS O PERANDI OPERATED BY SHRI. BHANWARLAL M JAIN & GROUP , THE L D. CIT(A) FELT THAT THERE WERE ACTUAL SUPPLY OF DIAMONDS, INVOICES WERE RAISED AND PAYMENTS WERE ALSO MADE AND HE ALSO NOTED THAT SHRI . BHANWARLAL M JAIN NEVER STATED THAT THE MONEY RECEIVED FROM THE RESPONDENT - ASSESSEE WAS RETURNED TO THE ASSESSEE. BASED ON TH IS INFORMATION, COUPLED WITH THE FACT THAT THE QUANTITATIVE DETAILS OF PURCHASES, SALES ITA NOS.53 TO 66 /2019 :- 7 -: AND STOCK OF DIAMONDS WERE MAINTAINED FOUND TO BE TALLYING, HE HELD THAT THE PURCHASES MADE BY THE ASSESSEE CANNOT BE HELD TO BE BOGUS. FURTHER THE LD. CIT(A) PLACING RELIANCE ON THE DECI SIONS OF HONBLE BOMBAY HIGH COURT IN THE CASE OF BABULAL C. BORANA VS. ITO, 282 ITR 251, HONBLE GUJARAT HIGH COURTS IN THE CASE OF CI T VS. BHOLANATH PLY FAB (P) LTD 355 ITR 290 AND CIT VS. M.K. BROTHERS, 163 ITR 249 HELD THAT WHERE THE ASSESSEE PROVES THE IDENTITY OF THE SUPPLIERS OF MATERIAL, FURNISHES THE COPIES OF THE PURCHASE INVO ICES AND THE PAYMENTS ARE MADE THROUGH BANKING CHANNELS, THE P URCHASE MADE BY THE ASSESSEE CANNOT BE DOUBTED AND ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION OF G4,01,9 3,808/- MADE BY THE ASSESSING OFFICER. THE LD. CIT(A) ALSO DIRECTED TH E ASSESSING OFFICER TO ALLOW THE DEDUCTION U/S.80IA(5) OF THE ACT WITHOUT SETTING OFF THE LOSSES THE EARLIER YEARS FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASES OF VELAYUDHASWAMY SPINNING MILLS & OTHER VS. ACIT, 231 CTR 369 AND PCIT VS. GRT HOTELS & RES ORTS P LTD, 392 ITR 440. THUS, THE APPEAL FILED BY THE ASSESSEE BE CAME PARTLY ALLOWED. 7. BEING AGGRIEVED BY THE ABOVE DECISION OF THE CIT( A), THE REVENUE IS IN APPEAL BEFORE US CHALLENGING THE CO RRECTNESS OF THE ORDER OF THE CIT(A) DELETING THE ADDITION MADE ON ACCOUNT OF ALLEGED BOGUS PURCHASES. THE LD. PCIT- DEPARTMENTAL REPRESE NTATIVE HAS ITA NOS.53 TO 66 /2019 :- 8 -: SUBMITTED THAT THE LD. CIT(A) OUGHT NOT HAVE GRANT ED RELIEF. THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE INV OICE COPIES WOULD NOT BY ITSELF ESTABLISH THE GENUINENESS OF THE TRA NSACTION OF THE PURCHASES. THE MODUS OPERANDI ADOPTED BY SHRI. BHA NWARLAL M JAIN & GROUP CLEARLY SHOWS THAT THE PURCHASES ARE BOGUS A ND THE STATEMENTS RECORDED U/S.132 (4) OF THE ACT IS VALID EVIDENCE F OR THE PURPOSE OF MAKING ADDITION. THEREFORE THE LD. CIT(A) OUGHT NOT HAVE GRANTED RELIEF TO THE ASSESSEE FIRM. 8. ON THE OTHER HAND, LD. COUNSEL SHRI. B. RAMAKRISHNA N SUBMITTED THAT VERY ASSUMPTION OF JURISDICTION U/S. 153A OF THE ACT IS INVALID IN LAW, IN AS MUCH AS NO DISCRIMINATING MA TERIALS WERE FOUND DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS IN RESPONDENT - ASSESSEE FIRM. IN THIS REGARD, HE PLACED RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS. M EETA GUTGUTIA, 82 TAXMANN.COM 287 SPECIAL LEAVE PETITION AGAINST TH E SAID DECISION WAS DISMISSED BY THE HONBLE SUPREME COURT IN PC IT VS. MEETA GUTGUTIA, 96 TAXMANN.COM 468. HE SUBMITTED THAT T HE STATEMENTS OF THE THIRD PARTY CANNOT CONSTITUTE INCRIMINATING M ATERIALS WITHOUT PREJUDICES TO THE ABOVE ARGUMENTS. HE FURTHER SU BMITTED THAT THE ASSESSEE HAD DISCHARGED HIS ONUS BY FILING PRIMARY DETAILS OF NAME, ADDRESS, PA NUMBER AND PARTICULARS OF DETAILS OF PA YMENTS OF THE PARTIES WHO SUPPLIED THE DIAMONDS. IT IS FURTHER S UBMITTED THAT THE ITA NOS.53 TO 66 /2019 :- 9 -: SALES TAX AUTHORITIES FOUND NO DISCREPANCIES IN TH E SALES/ PURCHASES MADE BY THE ASSESSEE, WHICH FINDINGS IS RELEVANT FOR INCOME TAX PURPOSE AND PLACING RELIANCE ON THE DECISION OF JUR ISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SMT. SAKUNTALA DEVI KHETAN (2013) 33 TAXMANN.COM 98 . IN ANY EVENT, IT IS SUBMITTED THAT THE ADDITIO N IS MADE BASED ON THE STATEMENTS RECORDED FROM THIRD PA RTIES, SUCH ADDITIONS CANNOT BE SUSTAINED IN THE EYE OF LAW AS NO OPPORTUNITY TO CROSS EXAMINE THE THIRD PARTY WAS PROVIDED TO TH E ASSESSEE AND RELIANCE IN THIS REGARD IS ALSO PLACED BY THE DE CISION OF HON'BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTR IES VS. CCE (CIVIL APPEAL NO.4228 OF 2006). 9. ON MERITS, LD. COUNSEL SUBMITTED THAT WHEN THE BOOK S OF ACCOUNTS ARE ACCEPTED BY THE ASSESSING OFFICER AND THE PROFITS OFFERED OUT OF SALES ARE ALSO ACCEPTED, NO ADDITION CAN B E MADE IN RESPECT OF PURCHASES. IN SUPPORT OF THIS CONTENTION, HE PLACED RELIANCE ON THE FOLLOWING DECISIONS. (I) BABULAL C. BORANA V. ITO (2006) 282 ITR 251 (B OM)(HC) (II) CIT V. M.K. BROS. (1987) 163 (TR 249 (GUJ.)(HC ) (III) NIKUNJ EXIMP ENTERPRISES 372 ITR 619 (BOMBAY HC) (IV) RAJESH P SONI V. ACIT (2006)100 TTJ 464 (AHD.) (TRIB) (V) SHRI MADHUKANT B. GANDHI V. ITO (TA NO 1950 /M /2009 BENCH B DT.231212010(AY. 2005-06) (MUM.(TRIB.) (VI) CIT .V. BHOLANATH POLY FAB (P.) LTD. (2013)355 ITR 290/40 TAXMANN.COM 494 / (2014) 220 TAXMAN 82 (MAG.) (GU J.XHC) (VII) CIT V. KASHIRAM TEXTILE MILLS (P) LTD (2006) 284 ITR 61 (GUJ.)(HC) (VIII) THE PCIT VS. MOHAMMAD HAI ADAN & CO. (BOMBAY HC) DATED ITA NOS.53 TO 66 /2019 :- 10 -: 11.02.2019 AND FINALLY, HE SUBMITTED THAT THE FINDINGS OF THE LD. CIT(A) IS BASED ON PROPER APPRECIATION OF RECORDS AND THE ORDER OF THE LD. CIT(A) DOES NOT REQUIRE ANY INTERFERENCES. 10. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE SHORT ISSUE INVOLVED IN THE PRESENT APP EAL REVOLVES AROUND THE FINDINGS OF THE ASSESSING OFFICER THAT THE PU RCHASES MADE BY THE RESPONDENT - ASSESSEE FROM SHRI. BHANWARLAL M JAIN & GROUP ARE BOGUS. ADMITTEDLY, THE ASSESSING OFFICER HAD COME TO A CONCLUSION THAT THE PURCHASES MADE FROM SHRI. BHANWARLAL M JAI N & GROUP ARE BOGUS NOT BASED ON THE INCRIMINATING MATERIAL FOUN D DURING THE SEARCH AND SEIZURE OPERATION CONDUCTED IN RESPONDENT ASS ESSEE BUT BASED ON THE STATEMENT RECORDED FROM SHRI. BHANWARLAL M JAIN DURING THE COURSE OF SEARCH AND SEIZURE OPERATION OF THAT GROU P AND THE STATEMENTS RECORDED FROM THE DIRECTOR OF SAID G ROUP. IN THE BACKDROP OF THESE FACTS, THE QUESTION THAT MAY ARIS E IS WHETHER IS ASSESSING OFFICER JUSTIFIED IN MAKING AN ADDITION O N ACCOUNT OF ALLEGED BOGUS PURCHASES IN THE ASSESSMENT MADE PURSUANT T O NOTICE ISSUE U/S.153A OF THE ACT. IT IS SETTLED PREPOSITION OF LAW THAT THIRD PARTY STATEMENTS RECORDED DURING THE COURSE OF SEARCH ACT ION SHALL NOT CONSTITUTE INCRIMINATING MATERIALS FOR THE PURPOSE OF MAKING ADDITION IN THE HANDS OF ASSESSEE OTHER THAN THE SEARCHED PER SON THAT TO ITA NOS.53 TO 66 /2019 :- 11 -: WITHOUT AFFORDING CROSS EXAMINATION OF THE ASSESSEE . THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS.RAJ PAL BHAT IA, 333 ITR 315 HELD THAT STATEMENT WAS NOT THE DOCUMENT WHICH WA S FOUND DURING SEARCH. IN FACT THIS WAS THE DOCUMENT WHICH CAME TO THE CREATED DURING THE SEARCH AS THE STATEMENT WAS RECORDED AT THE TIME OF SEARCH. THEREFORE, IT CANNOT BE SAID THAT THE STATEMENT WAS SEIZED DURING THE SEARCH AND THUS, WOULD NOT QUALIFY THE EXPRESSION DOCUMENT HAVING BEEN SEIZED DURING THE SEARCH. EVEN THE STATEMENT R ECORDED FROM THE DIRECTOR OF PRAVIN K. JAIN GROUP AND SHRI. BHAN WARLAL M. JAIN & GROUP IS NOT CONSEQUENT UPON ANY MATERIAL FOUND DUR ING THE COURSE OF SEARCH OF THE RESPONDENT- ASSESSEE. 11. NOW THE LAW IS SETTLED TO THE EXTENT THAT IN THE AB SENCE OF ANY INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS, NO ADDITION CAN BE MADE U/S.15 3A OF THE ACT. RELIANCE CAN BE PLACED ON THE DECISION OF HONBLE D ELHI HIGH COURT IN THE CASE OF PCIT VS. MEETA GUTGUTIA, (2017) 82 TAXMANN.COM 287 AFFIRMED BY THE HONBLE SUPREME COURT BY DISMISSAL OF THE SPECIAL LEAVE PETITION IN THE CASE OF PCIT VS. MEETA GUTPUTIA, (2018) 96 TAXMANN.COM 468. THERE IS A LONG LINE OF AUTHORITIES IN SUPPORT O F THE PROPOSITION OF LAW THAT IN THE ABSENCE OF INCRIMINA TING MATERIAL FOUND AS A RESULT OF SEARCH NO ADDITION CAN BE MADE IN THE ASSESSMENT MADE PURSUANT TO NOTICE U/S.153A OF THE ACT. PLEAS E REFER TO THE ITA NOS.53 TO 66 /2019 :- 12 -: DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA (2016) 380 ITR 573 AND HONBLE GUJARAT HIGH COURT IN THE CASE OF PCIT VS. SUNRISE FINLEASE (P) LTD, (2018) 89 TA XMANN.COM 1 AND HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CO NTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD, (2015) 374 ITR 645. THUS, WE FIND THAT THE ASSESSING OFFICER LACK JURI SDICTION TO MAKE ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES IN T HE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND. 12. EVEN OTHERWISE ON THE MERITS OF ADDITION RESPONDEN T - ASSESSEE HAD DISCHARGED THE ONUS OF ESTABLISHING TH E GENUINENESS OF TRANSACTION OF PURCHASES BY FILING NAMES, ADDRES SES, PA NUMBERS, INVOICE COPIES AND DETAILS OF PAYMENTS OF SUPPLI ERS. WHEN IT WAS REPORTED BY ADIT, OF SURAT THAT THE SUPPLIERS WERE NOT FOUND AT GIVEN ADDRESSES, THERE IS NOTHING ON RECORD TO SHOW THAT THE RESPONDENT- ASSESSEE WAS ASKED TO PRODUCE THE PARTIES BEFORE AS SESSING OFFICER. IN SUCH CASES, ASSESSEE CANNOT BE HELD RESPONSIBLE FOR NON APPEARANCE OF PARTIES IN PERSON BEFORE THE ASSESSIN G OFFICER IN RESPONSE TO THE NOTICES. THE DETAILS FILED BY THE RESPONDENT - ASSESSEE IS SUFFICIENT FOR THE ASSESSING OFFICER TO TAKE FURTHER STEPS, IF HE STILL DOUBTED THE GENUINENESS OF THE PURCHASES, THE ASSESSING OFFICER HAD CHOSEN NOT TO CARRY OUT NECESSARY ENQUI RES. IN THE SIMILAR SITUATION, THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF PCIT VS. ITA NOS.53 TO 66 /2019 :- 13 -: CHAWLA INTERBILD CONSTRUCTION CO. (P) LTD, (2019) 1 04 TAXMANN.COM 402 WITHOUT IDENTICAL FACTS HELD THAT ASSESSEE CO ULD NOT BE HELD RESPONSIBLE FOR SUPPLIERS NOT APPEARING IN PERSON AND DELETED THE ADDITION MADE. PARA 7 OF THE JUDGMENT IS EXTRACTED HEREUNDER:- 7. WE FIND THAT THE ASSESSING OFFICER WHILE PASSING TH E ASSESSMENT ORDER HAS DIS-ALLOWED 40% OF THE TOTAL PAYMENTS MADE ON THE BASIS OF THE PAYMENTS MADE TO 13 PARTIES, WHO WERE NOT PRODUCED BEFORE HIM DURING TH E ASSESSMENT PROCEEDINGS. THIS ON THE GROUND THAT PAY MENTS ARE NOT GENUINE. WE ARE UNABLE TO UNDERSTAND ON WHA T BASIS THE DIS-ALLOWANCE IS MADE ON THE TOTAL PAYMEN TS, IF AT ALL IT SHOULD HAVE BEEN RESTRICTED ONLY TO THE AMOU NTS PAID TO THE 13 PERSONS WHO ARE NOT PRODUCED BEFORE THE ASSESSING OFFICER. BE THAT AS IT MAY, WE FIND THAT THE RESPONDENT - ASSESSEE HAD DONE EVERYTHING TO PRODUC E NECESSARY EVIDENCE, WHICH WOULD INDICATE THAT THE P AYMENTS HAVE BEEN MADE TO THE PARTIES CONCERNED. THE DETAIL S FURNISHED BY THE RESPONDENT ASSESSEE WERE SUFFICIEN T FOR THE ASSESSING OFFICER TO TAKE FURTHER STEPS IF HE STILL DOUBTED THE GENUINENESS OF THE PAYMENTS TO EXAMINE WHETHER OR N OT THE PAYMENT WAS GENUINE. THE ASSESSING OFFICER ON RECEI PT OF FURTHER INFORMATION DID NOT CARRY OUT THE NECESSARY ENQUIRIES ON THE BASIS OF THE PAN NUMBERS, WHICH WE RE AVAILABLE WITH HIM TO FIND OUT THE GENUINENESS OF T HE PARTIES. THE CIT(A) AS WELL AS THE TRIBUNAL HAVE CO RRECTLY HELD THAT IT IS NOT POSSIBLE FOR THE ASSESSEE TO CO MPEL THE APPEARANCE OF THE PARTIES BEFORE THE ASSESSING OFFI CER. THE OTHER IMPORTANT ASPECT IS TO BE CONSIDERED IS T HAT THE LD. CIT(A) HAD EXAMINED THE QUANTITATIVE DETAILS OF PURCHASES, SALES AND CLOSING STOCK AND ALSO RECORDED FINDING THAT THE ASSESSEE HAD BEEN MAINTAINING STOCK REGISTER SHOWING THE PURCHASES, S ALES AND CLOSING ITA NOS.53 TO 66 /2019 :- 14 -: STOCK OF DIAMONDS AND GAVE A FINDINGS THAT QUANTI TATIVE DETAILS WERE TALLYING. WHEN THE SALES WAS ACCEPTED, THERE WAS NO REASON TO DOUBT THE PURCHASES MADE OR TO DOUBT THE GENUINENESS OF T HE PURCHASES AND MAKE ADDITION IN VIEW OF THE SETTLED LEGAL POSITION OF LAW LAID IN THE DECISIONS RELIED UPON BY THE ASSESSEE CITED SUPRA. FURTHER, THE FINDINGS OF THE LD. CIT(A) THAT THERE IS NO EVIDENC E ON RECORD THAT ALLEGED SELLERS HAD RETURNED THE MONEY TO THE ASSES SEE REMAINS UNCONTROVERTED. THE HONBLE GUJARAT HIGH COURT IN T HE CASE OF PCIT VS. TEJUA ROHITKUMAR KAPADIA, (2018) 94 TAXMANN.COM 324 HELD THAT WHEN THE PURCHASES ARE MADE BY THE ASSESSEE WAS DUL Y SUPPORTED BY BILLS AND PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQ UES AND IN THE ABSENCE OF EVIDENCE TO SHOW THAT THE AMOUNT WAS RE CYCLED BACK TO THE ASSESSEE AND THE SALES OUT OF PURCHASES MADE F ROM THE SELLER WERE ALSO ACCEPTED BY THE REVENUE, PURCHASES CANNO T BE TREATED AS BOGUS. THIS DECISION OF THE HONBLE GUJARAT HIGH C OURT WAS AFFIRMED BY HONBLE SUPREME COURT BY DISMISSAL OF SLP IN PC IT VS. TEJUA ROHITKUMAR KAPADIA, (2018) 94 TAXMANN.COM 325. IN VIEW OF THE ABOVE SETTLED LEGAL POSITION, NO PURCHASES CAN BE D ISALLOWED BY ALLEGING THAT PURCHASES MADE ARE BOGUS. THE LD. C IT(APPEALS) ALSO CONSIDERED THE STATEMENT GIVEN BY THE DIRECTOR OF M /S. BHANWARLAL M.JAIN GROUP AND COME TO CONCLUSION THAT THE STATE MENT DOES NOT REVEAL THAT THE PURCHASES ARE BOGUS, IT IS ONLY STA TED THAT THE ACTUAL ITA NOS.53 TO 66 /2019 :- 15 -: SUPPLIES ARE MADE BY SOME OTHER PERSON ON WHOSE BE HALF THE INVOICES ARE ISSUED BY THIS GROUP. THE STATEMENT ONLY REINFO RCES THE CONTENTION OF THE RESPONDENT ASSESSEE THAT ACTUAL PURCHASES AR E MADE. THE LD. CIT(APPEALS) ALSO CONSIDERED THE PREVAILING BUSINE SS PRACTICES IN THE SAME LINE OF BUSINESS AND COME TO CONCLUSION THAT THE ACTUAL SUPPLIERS ARE MADE BY ONE PARTY AND THE INVOICES ARE ISSUED BY ANOTHER PARTY, WHICH DOES NOT MEAN THE PURCHASES ARE BOGUS. THUS, THE ORDER OF THE LD. CIT(A) IS BASED ON DUE APPRECIATION OF MATERIA LS ON RECORD AND THE LAW GOVERNING THE ISSUE OF THE BOGUS PURCHASES. THE REFORE WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) ON THE ISSUE OF BOGUS PURCHASES. THUS, VIEWED FROM ANY ANG LE THE IMPUGNED ASSESSMENT ORDER CANNOT BE SUSTAINED IN THE EYES OF LAW. THE ORDER OF THE LD. CIT(APPEALS) IS BASED ON THE DUE APPRECIATI ON OF MATERIAL ON RECORD AND IN CONSONANCE WITH THE SETTLED PRINCIPLE OF LAW AND THEREFORE WE DO NOT FIND ANY REASON TO INTERFERE WI TH THE ORDER OF THE LD. CIT(A). ACCORDINGLY, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ITA NOS. 53, 55, 56,57, 58, 59, 60, 61, 62, 63, 64, 65 AND 66/CHNY/ 2019 , SINCE, THE FACTS IN THE PRESENT APPEALS ARE IDENTI CAL TO THE FACTS IN ITA NO.54/CHNY/2019, FOR THE REASONS MENTI ONED THEREIN, WE DISMISS THE APPEALS FILED BY THE REVENUE ON THE SA ME LINES INDICATED ITA NOS.53 TO 66 /2019 :- 16 -: IN APPEAL ITA NO.54/CHNY/2018 SUPRA. HENCE, THE ABO VE CAPTIONED APPEALS FILED BY THE REVENUE ARE DISMISSED. 13. IN THE RESULT, THE APPEALS IN ITA NOS.53 TO 66/CHNY /2019 FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON 28TH DAY OF JUNE, 2019, AT CHENNAI. SD/- SD/- ( . ! ) (DUVVURU RL REDDY) ' # /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER 1 #- / CHENNAI 2# / DATED:28TH JUNE, 2019. KV 3 ) +.4 5' !6 5&. / COPY TO: 1 . !' '( / APPELLANT 3. 7. (!' ) / CIT(A) 5. 5 :; +.#< / DR 2. +,'( / RESPONDENT 4. 7. / CIT 6. ;$ =- / GF