ITO, Pune V. Shri Satish K.Bora, Pune

ITA 715/PUN/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56581 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 1998-1999
• Appeal Filed On: 10-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained expenditure; Valuation report
• Section: 69C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 715/PN/2010 (ASSTT. YEAR: 1998-99) INCOME TAX OFFICER, ... APPELLANT WARD 2(1), PUNE V. SHRI. SATISH K BORA, ... RESPONDENT SAMRAT HOUSE, 1 ST , FLOOR, 39-D-, 2/6 SHANKAR SHETH ROAD, PUNE 411 037 PAN : AASPB 8219 J APPELLANT BY : SHRI NIKHIL PATHAK RESPONDENT BY : MS. NEERA MALHOTRA DATE OF HEARING :28.9.11 DATE OF PRONOUNCEMENT: .11.11 ORDER PER I.C. SUDHIR, JM THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER ON SEVERAL GROUNDS INVOLVING THE ISSUE AS TO WHETHER LD CIT(A) HAS ERR ED IN DELETING THE ADDITIONS OF RS. 6,79,150/-/- U/S. 68 OF THE ACT AND RS. 67,915/- U/ S. 69C OF THE ACT MADE BY THE A.O ON ACCOUNT OF UNDISCLOSED INCOME CLAIMED AS SAL E RECEIPT OF DIAMONDS AND UNEXPLAINED EXPENDITURE INCURRED THEREON RESPECTIVE LY. 2. AT THE OUTSET OF HEARING, THE LD. A.R. POINTED O UT THAT THE ISSUE RAISED IN THE GROUNDS IS FULLY COVERED BY RECENT DECISIONS OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASES OF ACIT VS. MRS. GUNWANTI OMPRAKASH RANKA, I TA NO. 665/PN/2009 (A.Y. 1998-99) DATED 30.9.2010 AND ITO VS. N.H. MOTWANI, ITA NO. 1282/PN/2009 (A.Y. 1998-99, ORDER DATED 29 TH JULY 2011 (COPIES SUPPLIED). 3. THE LD. D.R., ON THE OTHER HAND, TRIED TO JUSTI FY THE ASSESSMENT ORDER WITH THIS SUBMISSION THAT THE ASSESSEE THROUGH-OUT FAIL ED TO ESTABLISH THE SOURCE OF ITA . NO 715/PN/2010 SHRI SATISH K BORA PAGE OF 5 2 RECEIPT OF SUM OF RS. 6,79,150/- CLAIMED TO BE FRO M SALE OF DIAMONDS DECLARED UNDER VDIS. THE LD CIT(A) WAS THUS NOT JUSTIFIED I N DELETING THE ADDITION MADE BY THE A.O IN THIS REGARD. 4. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW, WE FIND THAT RETURN OF INCOME ORIGINALLY FILED BY THE ASSESSEE WAS PROC ESSED U/S. 143(1)(A) OF THE ACT. THE RE-OPENING PROCEEDINGS U/S. 147 WAS INITIATED O N THE BASIS OF INFORMATION GATHERED FROM SEARCH & SEIZURE ACTION IN THE CASE OF SHRI KAMAL KUMAR JOHARI, C.AS OF MUMBAI, WHEREIN IT WAS NOTICED THAT HE ALONG WIT H SHRI HARI OM SHARMA, C.A AND THEIR RELATIVES OR ASSOCIATED CONCERNS WERE INDULGI NG IN SHOWING PURCHASES OF THE DIAMONDS DISCLOSED UNDER VOLUNTARY DISCLOSURE SCHEM E OF 1997(VDIS) BY VARIOUS PERSONS AND SUBSEQUENTLY, THE SAME WAS SHOWN AS SOL D IN CASH ON RETAIL BASIS TO SOME UNIDENTIFIABLE PERSONS FROM SURAT. SUCH SALE PROCEEDS WERE THEN DEPOSITED IN BANK ACCOUNTS OPEN IN THE NAME OF GROUP CONCERNS OF THESE PERSONS AND AFTER ROUTING THE MONEY THROUGH VARIOUS BANK ACCOUNTS, C HEQUES/DEMAND DRAFTS WERE ISSUED TO THE BENEFICIARY I.E. THE SO CALLED DECLAR ANTS UNDER VDIS-1997. THE POST SEARCH ENQUIRY REVEALED THAT THERE WAS A RACKET OPE RATED BY SHRI KAMAL KUMAR JOHARI AND SHRI HARI OM SHARMA, C.AS THROUGH A CHAI N OF BOGUS CONCERNS TO CONVERT THE UNACCOUNTED CASH OF VARIOUS PERSONS INTO SALE P ROCEEDS OF PERSONS WHO DECLARED DIAMONDS UNDER VDIS. AFTER DISCUSSING IN DETAIL TH E MODUS OPERANDI OF THESE PARTIES, IT WAS MENTIONED BY THE A.O THAT A HAWALA RACKET WAS RUN BY AFORESAID PERSONS BY WAY OF BOGUS PURCHASE OF DIAMONDS AND LI QUIDATING THE SAME AS RETAIL SSALES IN CASH, THEREBY LAUNDERING OF UNACCOUNTED MONEY BY THESE VDIS DECLARANTS. THE A.O FOUND THAT THE PRESENT ASSESSEE SHRI SATISH K. BORA WAS ONE OF THE BENEFICIARIES WHO HAD RECEIVED THE SALE PROCEEDS IN RESPECT OF THE BOGUS SALES OF THE NON-EXISTING DIAMONDS. HE MENTIONED THAT THE R ECEIPT OF MONEY BY THE ASSESSEE SHOWN TO HAVE BEEN OUT OF SALES OF DIAMOND S WAS NOTHING BUT, HIS OWN UNACCOUNTED CASH AND, THEREFORE, THE A.O IN THE A SSESSMENT FRAMED U/S. 147 READ WITH SECTION 143(3) MADE ADDITION OF RS. 6,79,150/ - U/S. 68 OF THE ACT AND FURTHER ITA . NO 715/PN/2010 SHRI SATISH K BORA PAGE OF 5 3 ADDITION OF RS.67,915/- U/S. 69 OF THE ACT TOWARDS UNEXPLAINED EXPENDITURE INCURRED IN PROCURING THE SALE RECEIPT. 5. THE LD CIT(A) AFTER DISCUSSING ASSESSEES CASE I N DETAIL HAS HOWEVER DELETED THE ABOVE ADDITIONS. THE FINDING OF LD CIT(A) GIVE N IN PARA 4.5 OF THE FIRST APPELLATE ORDER IS BEING REPRODUCED HEREUNDER : 4.5 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS A N UNDISPUTED FACT THAT DIAMONDS FROM SALE OF WHICH INCOME UNDER THE HEAD CAPITAL GAINS HAS BEEN SHOWN BY THE APPELLANT WERE DECLARED UNDER THE VDI S, 1997. THE COPY OF VALUATION REPORT OF GOVT. APPROVED VALUER IN RESP ECT OF THE VARIOUS ITEMS OF JEWELLERY, THEIR DESCRIPTION, WEIGHT ETC. WAS ALSO FILED WITH THE A.O. AND DURING THE APPELLATE PROCEEDINGS, BASED ON WHICH TH E CERTIFICATE UNDER VDIS WAS ISSUED BY THE CIT. AS A RESULT OF THE DECLARATI ON, DUE TAX THEREON HAS BEEN PAID AS PER THE SCHEME AND SUCH DISCLOSURE HAS BEEN ACCEPTED BY THE CONCERNED CIT AND A CERTIFICATE UNDER THE VDIS WAS ISSUED TO THE APPELLANT. THE APPELLANT CLAIMS TO HAVE SOLD THE DIAMONDS TO M/S GALAXY EXPORTS AND SALE PROCEEDS OF WHICH HAVE BEEN RECEIVED THROUGH C HEQUES. IN SUPPORT OF ITS CLAIM REGARDING SALE OF DIAMONDS, THE APPELLANT HAS SUBMITTED COPIES OF BILLS ETC. AND ALSO AN AFFIDAVIT OF THE PURCHASER I .E., KAMAL KUMAR JOHARI KARTA OF K.K. JOHARI (HUF). TAKING INTO ACCOUNT THESE AS PECTS OF THE MATTER AND SUBMISSION OF THE APPELLANT, IT IS NOTICED THAT IN THE DECISIONS OF ITAT, PUNE BENCH IN THE CASE OF SHRI BALBHIM SHINDE AND SHRI B HAGWAN D. SHINDE IN ITA NO. 1362 & 1364/PN/05 DATED 31.8.2007 (FOR A.Y. 19 98-99); AND IN THE DECISION OF ITAT, MUMBAI IN THE CASE OF MOHANLAL R. DAGA VS. ITO, 92 TTJ (MUMBAI) 1236 (2005) AND UTTAMCHAND JAIN VS. ITO 1 03 TTJ (MUMBAI) (TM- 1) (2006), EXACTLY THE SAME ISSUE HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT. SUBSEQUENTLY, T HE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INDER V. NANKANI IN ITA NO. 128 OF 2009 ORD ER DATED 24.2.2009, AND IN ANOTHER DECISION, THE HONBLE BO MBAY HIGH COURT IN THE CASE OF CIT VS. UTTAMCHAND JAIN IN ITA NO. 6 34 OF 2009, (2009) 26 DTR 23 (BOM) ORDER DATED 2.7.2009 HAVE ALSO DECIDED IN FAVOUR OF THE APPELLANT AND AGAINST THE REVENUE ON THIS ISSUE, BY UPHOLDING THE RESPECTIVE ITAT DECISIONS. RESPECTFULLY FOLLOW ING THESE JUDGMENTS OF THE HONBLE JURISDICTIONAL HIGH COURT, ALONG WITH THE ABOVE REFERRED TO ITAT DECISIONS, IT IS HELD THAT THE ADDITION MADE BY THE ASSESSING OFFICER ITA . NO 715/PN/2010 SHRI SATISH K BORA PAGE OF 5 4 RS.6,79,150/- ON ACCOUNT OF CONSIDERATION RECEIVED OUT OF SALE OF DIAMONDS SHOWN UNDER VDIS AND RS. 67,915/- ON ACCOUNT OF UNE XPLAINED EXPENDITURE U/S 69C CANNOT BE SUSTAINED. ACCORDINGLY, THESE ADD ITION MADE ARE HEREBY DELETED. GROUNDS OF APPEAL NOS. 2 & 2.1 ARE, THEREFORE, ALLO WED. SO FAR AS GROUND NO. 22(A TO G) IS CONCERNED, IT IS CO VERED BY GROUND NOS. 2 AND 2.1 ABOVE, AND THEREFORE, THERE IS NO NE ED TO ADJUDICATE ON THE SAME WHEN GROUND NOS. 2 AND 2.1 HAVE ALREADY BEEN ALLOWED. WE FIND THAT THE LD CIT(A) HAS DELETED THE ADDITION S IN QUESTION RESPECTFULLY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INDER V.NANKANI IN ITA NO. 128 OF 2009, ORDER DT. 24.2. 2009 AND IN ITS ANOTHER DECISION, IN THE CASE OF CIT VS. UTTAMCHAND JAIN (2009) 26 DT R 23 (BOM.), ORDER DATED 2.7.2009. THE LD CIT(A) HAS ALSO FOLLOWED A DECIS ION OF PUNE BENCH OF THE TRIBUNAL ON AN IDENTICAL ISSUE IN THE CASE OF SHRI BALBHIM D . SHINDE AND SHRI BHAGWAN SHINDE IN ITA NOS. 1362 AND 1364/PN/2005, DATED 31 ST AUGUST 2007 (A.Y. 1998-99) AND THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CAS E OF MOHANLAL R. DAGA VS. ITO, 92 TTJ (MUM) 1326. WE FIND THAT EVEN IN THE ABOVE CITED DECISION, IN THE CASE OF ACIT VS. MRS. GUNWANTI OMPRAKASH RANKA (SUPRA) AND IN THE CASE ITO VS. N.H. MOTWANI (SUPRA) RELIED UPON BY THE LD. A.R., AN IDE NTICAL ISSUE UNDER SIMILAR FACTS HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. THE FI RST APPELLATE ORDER INCLUDING THE FINDING OF LD CIT(A) ON THE ISSUE IS COMPREHENSIVE AND REASONED ONE AND ALSO SUPPORTED BY THE DECISIONS OF HONBLE JURISDICTIONA L HIGH COURT AS WELL AS OF THE CO- ORDINATE BENCHES AS DISCUSSED ABOVE, WE THUS DO NOT FIND REASON TO INTERFERE WITH THE SAME. THE SAME IS UPHELD. THE ISSUE RASIED IN THE GROUNDS IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. THE GROUNDS ARE THUS REJECTED. 6. IN RESULT, APPEAL IS DISMISSED. ITA . NO 715/PN/2010 SHRI SATISH K BORA PAGE OF 5 5 THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 25TH NOVEMBER 2011. SD/- SD/- ( G.S. PANNU ) ACCOUNTANT MEMBER (I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 25TH NOVEMBER, 2011 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT -II, PUNE 4. THE CIT(A)-II, PUNE 4. THE D.R. B BENCH, PUNE 5. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE