DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, JAIPUR V. M/S JK INTERNATIONAL, JAIPUR

ITA 716/JPR/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5966 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 24-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Assessee Lawyers: S L PODDAR
• Keywords: Bogus purchase; Unexplained expenditure; Search and seizure; Principle of natural justice; Opportunity of cross examination; Accommodation entries; Block assessment
• Section: 69C; 43B; 143(3); 153A; 201; 69; 132

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,A JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA- @ ITA NO. 716, 717 & 718/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 20010-11 TO 2012-13 THE DCIT CENTRAL CIRCLE-2 JAIPUR CUKE VS. M/S. J.K. INTERNATIONAL F-29, SEZ-II, SITAPURA, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAEFJ 5334 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDER MEHTA, (JCIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI S.L. PODDAR,, ADVOCATE LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 30/09/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 03/10/2019 VKNS'K@ ORDER PER BENCH. THE PRESENT APPEALS HAVE BEEN FILED BY THE REVENUE AGAINST COMMON ORDER OF CIT(A)-4, JAIPUR DATED 23.03.201 8 FOR THE ASSESSMENT YEAR 2010-11 TO 2012-13 RAISING THEREIN FOLLOWING G ROUNDS OF APPEAL. ITA NO. 716/JP/2018 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S.J.K. INTERNAT IONAL, JAIPUR 2 A.Y. 2010-11- REVENUE 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE FACE, THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS . 2,25,68,600/- U/S 69C ON ACCOUNT OF BOGUS PURCHASES IGNORING THE FACT THAT ASSESSEE WAS INVOLVED IN TAKING THE ACCOMMODATION ENTRY FROM RAJ ENDRA JAIN AND BANWARI LAL JAIN GROUP. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE FACE, THE LD. CIT(A) WAS RIGHT IN ALLOWING THE DEDUCTION U/S 10AA/10A OF THE ACT IGNORING THE FACT THAT PROVISIONS OF SECTION 69 C OF THE ACT ARE APPLICABLE AND AS PER PROVISIONS OF SECTION 115BBE NO DEDUCTION IS ALLOWABLE TO THE ASSESSEE AS ASSESSEE PURCHASED THE MATERIAL FROM GREY MARKET IN CASH. A.Y. 2011-12- REVENUE 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE FACE, THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS . 2,73,47,135/- U/S 69C ON ACCOUNT OF BOGUS PURCHASES IGNORING THE FACT THAT ASSESSEE WAS INVOLVED IN TAKING THE ACCOMMODATION ENTRY FROM RAJ ENDRA JAIN AND BANWARI LAL JAIN GROUP. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE FACE, THE LD. CIT(A) WAS RIGHT IN ALLOWING THE DEDUCTION U/S 10AA/10A OF THE ACT IGNORING THE FACT THAT PROVISIONS OF SECTION 69 C OF THE ACT ARE APPLICABLE AND AS PER PROVISIONS OF SECTION 115BBE NO DEDUCTION IS ALLOWABLE TO THE ASSESSEE AS ASSESSEE PURCHASED THE MATERIAL FROM GREY MARKET IN CASH. A.Y. 2012-13- REVENUE 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE FACE, THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS . 3,23,21,845/- U/S 69C ON ACCOUNT OF BOGUS PURCHASES IGNORING THE FACT THAT ASSESSEE WAS INVOLVED IN TAKING THE ACCOMMODATION ENTRY FROM RAJ ENDRA JAIN AND BANWARI LAL JAIN GROUP. ITA NO. 716/JP/2018 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S.J.K. INTERNAT IONAL, JAIPUR 3 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE FACE, THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS . 32,868/- MADE U/S 36(1)(VA) OF THE ACT (I.E. P.F. ADDITION) WITHOUT A PPRECIATING THE FACT THAT IT WAS MADE AS PER PROVISION OF SECTION 36(1)( VA) OF THE I.T. ACT, 1961 . 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE FACE, THE LD. CIT(A) WAS RIGHT IN ALLOWING THE DEDUCTION U/S 10AA/10A OF THE ACT IGNORING THE FACT THAT PROVISIONS OF SECTION 69 C OF THE ACT ARE APPLICABLE AND AS PER PROVISIONS OF SECTION 115BBE NO DEDUCTION IS ALLOWABLE TO THE ASSESSEE AS ASSESSEE PURCHASED THE MATERIAL FROM GREY MARKET IN CASH. 2.1 FIRST OF ALL, WE TAKE UP THE GROUNDS OF APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2010-11 FOR ADJUDICATION. DURING TH E COURSE OF HEARING, THE LD. DR RELIED ON THE ORDER OF THE AO WHEREAS TH E LD.AR OF THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(A). 2.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED THAT THE LD. CIT(A ) HAS PASSED THE COMMON ORDER IN RESPECT OF THE ABOVE APPEALS RAISED BY THE REVENUE. IT IS FURTHER NOTED THAT THE AO MADE THE ADDITION OF RS. 2,25,68, 601/- FOR THE ASSESSMENT YEAR 2010-11 DEPICTING THE CASE OF THE A SSESSEE AS UNDER:- 24. LOOKING TO THE FACTS OF THE CASE OF THE ASSESSEE, IT IS CLEAR THAT ASSESSEE HAS TAKEN B OGUS PURCHASES BILLS FROM BHANWAR LAL JAIN AND RAJENDRA JAIN GROUP. THEREFORE, IN THE FACTS AND CIRCUMSTANC ES OF THE CASE IT IS CLEAR THAT ASSESSEE HAS ROTATED H IS CASH MONEY MANY TIME IN A YEAR TO PURCHASE THE DIAMOND FROM GRAY MARKET BY CASH. THUS I AM OF THE ITA NO. 716/JP/2018 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S.J.K. INTERNAT IONAL, JAIPUR 4 VIEW THAT IT IS REASONABLE AND JUSTIFIABLE TO TREAT 25% OF THE UNVERIFIABLE / BOGUS PURCHASES OF RS. S9,02,74,407/- WHICH WORKS OUT TO RS. 2,25,68,601/- AS UNEXPLAINED EXPENDITURE U/S 69C OF THE I.T. ACT, 19 61 WHICH WAS INCURRED BY THE ASSESSEE OUT OF ITS UNTA XED INCOME SO THE SAME IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. DEDUCTION U/S 10AA/10A IS NOT ALLOWABLE I N VIEW OF THE PROVISO TO SECTION 69C OF THE I.T. ACT, 1961 ADDITION OF RS. 2,25,68,601/- IT IS ALSO NOTED THAT THE LD. CIT(A) HAS CONCISED THE OBSERVATION IN RESPECT OF THE ISSUE AS UNDER:- FACTS AS SUMMARIZED FROM THE ORDER OF AO. 3. THE AO HAD INFORMATION FROM THE INVESTIGATION WING MUMBAI THAT THERE ARE CERTAIN ENTITIES CONTROLLED BY SHRI RAJENDRA JAIN WHO ARE PROVIDING BOGUS BILLS OF PURCHASES. AS PER THE INFORMATION, NO ACTUAL GOODS WERE TRANSACTED FROM T HE SAID PARTIES. A STATEMENT WAS RECORDED BY THE INVESTIGATION WING WHICH IS REPRODUCED BY THE AO IN THE ORDER3. IN THIS STATEMENT SHRI RAJENDRA JAIN EXPLAINED THE MODUS OPERANDI AND LISTED NAME OF THOSE CONCERNS (PROPRIETORSHIP, FIRMS AND LTD. COMPANIES) ENGAGED IN PROVIDING THE ACCOMMODATION ENTRIES. THE AO ON THE BASIS OF THE STATEMENT TREAT ED PURCHASE MADE FROM THESE CONCERNS AS BOGUS AND PROCEEDED TO MAKE THE ADDITION OF 25% OF SUCH PURCHASES A BOGUS U/S 69C. THE AO HAS TAXED SUCH DISALLOWANCE U/S 115BE OF THE INCOME TAX ACT. ITA NO. 716/JP/2018 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S.J.K. INTERNAT IONAL, JAIPUR 5 5. I HAVEGONE THROUGH THE ORDERS OF THE AO AND SUBMISSIONS MADE BY THE LD.AR . I HAVE ALSO GONE TH ROUGH THE VARIOUS CASE LAWS CITED AND LEGAL OBJECTION 5. THE ISSUE OF ADDITION MADE BY THE AO IN THE ASSESSMENT U/S 143(3) / 153A WITHOUT ANY REFERENCE TO INCRIMINATING SEIZED MATERIAL WAS CONSIDERED BYTHE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL LTD. VS ACIT (88 (DRR 1). THE HON'BLE COURT WAS OF THE VIEW IN C AE OF COMPLETED ASSESSMENT NO ADDITION CAN BE MADE IF NO INCRIMINATING SEIZED MATERIAL IS FOUND DURING THE C OURSE OF SEARCH. SIMILAR VIEW POINT WAS EXPRESSED BY THE HON'BLE DEL HI HIGH COURT IN THE CASE KABUL CHAWLA VS ACIT 380 ITR 573. 5.3 THE ISSUE OF ADDITIONS MADE BY THE AO WHILE FRA MING THE ASSESSMENT U/S 143(3)/ 153A IF NO INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH WAS CONSIDERED BY HON'BLE GUJARAT HIGH COURT IN THE CASE OF SOUMYA CONSTRUCTION PVT.VS CIT 387 ITR 529.. IN ITS ORDER DATED 14- 03-2016 HON'BLE COURT HAS CATEGORICALLY STATED THAT IN CASSE OF COMPLETED ASSESSMENT IF NO INCRIMINATING MATERIA L IS FOUND THEN NO ADDITION CAN BE MADE IN THE ASSESSMEN T FRAMED U/S 153A OF THE ACT. SIMILAR VIEW WAS ALSO TAKEN BY THE HON'BLE ITAT JAI PUR IN MANY CASES (AS MENTIONED LD. CIT(A)S ORDER AT PAGE 19) CONSIDERING THE ABOVE, I AM OF THE VIEW THAT AS THE ADDITIONS MADE BY THE AO ARE WITHOUT ANY REFERENCE TO THE SEI ZED MATERIAL THEY ARE NOT LEGALLY TENABLE. THE SAME ARE THEREFORE, DIRECTED TO BE DELETED. THE LEGAL GROUND TAKEN BY THE APPELLANT IS HUS ALLOWED. SINCE APPELLANT SUCCE EDS ON LEGAL IT WOULD BE ONLY ACADEMIC TO ADJUDICATE THE G ROUNDS ON MERITS FOR THE A.Y. 2009-10 TO 2011-12. ITA NO. 716/JP/2018 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S.J.K. INTERNAT IONAL, JAIPUR 6 5.54 I MAY ADD THAT THE STATEMENT OF SHRI RAJENDRA JAIN, A L3RD PARTY RECORDED IN A DIFFERENT SEARCH U/S 132, ITSELF DOES NOT CONSTITUTE INCRIMINATING MATERIAL. IT HAS BEEN HELD IN MANY JUDGMENTS THAT MERE STATEMENT OF PERSON SEARCH ED U/S 132 IS NOT SUFFICIENT TO MAKE AN ADDITION. A STATEM ENT MADE MUST BE RELATABLE TO INCRIMINATING MATERIAL FOUND D URING THE COURSE OF SEARCH OR THE STATEMENT MUST BE MADE RELA TABLE TO MATERIAL BY SUBSEQUENT INQUIRY/ INVESTIGATINS.(THE LD. CIT(A) RELIED ON THE JUDGEMENT OF HON'BLE DELHI HIGH COUR T IN THE CASE OF HARJEEV AGARWAL (70 TAXMANN.COM 95 ) 5.5 THOUGH THE ABOVE PRINCIPLE IS LAID DOWN IN RELA TION TO ASSESSMENT OF BLOCK PERIOD U/S 158BC OF THE ACT, TH E SAME WAS ALSO APPLIED IN RESPECT OF ASSESSMENT U/S 153A BY DELHI HIGH COURT IN CASE OF BEST INFRASTRUCTURE (84 TAXMA NN.COM 287 ) WHERE IT WAS HELD THUS: 38. FIFTLY, STATEMENT RECORDED U/S 132(4) OF TH E ACT DON NOT THEMSELVES CONSTITUTE INCRIMINATING MAT ERIALAS HAS BEEN EXPLAINED BY THIS COURT IN HARJEEV AGARWAL (SUPRA) 5.6 CONSIDERING THE ABOVE, I AM OF THE VIEW ADDITION ON ACCOUNT OF BOGUS PURCHASES MADE BY THE AO IS UNCALLED FOR. SAME IS DIRECTED TO BE DELETED FOR TH E A.Y. 2009-10 TO 2011-12. MERITS OF ADDITION MADE @ 25% OF THE ALLEGED BOGUS PURCHASE. 6. ON MERITS OF THE ISSUE ON MAKING ADDITION @ 25% OF ALLEGED BOGUS PURCHASES FOR A.Y. 2012-13 TO 2014- 15, I MAY ADD THE DISCUSSION UNDERNEATH APPLIES TO THE A.YRS WHICH HAVE NOT BEEN ABATED I.E. THE A.Y. 2009-10 TO 2011-12 ITA NO. 716/JP/2018 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S.J.K. INTERNAT IONAL, JAIPUR 7 I HAVE PERUSED THE ORDER OF THE AO FOR RESPECTIVE A.YRS AND SUBMISSIONS MADE BY THE LD.AR. IHAVE ALSO GONE THROUGH VARIOUS CASE LAWS RELIED UPON BY THE LD.AR . THE AO HAS RELIED ON THE INFORMATION PASSED ON BY THE INVE STIGATION WING MUMABI WHEREIN STATEMENT OF SHRI RAJENDRA JAIN WAS RECORDED UNDER OATH. IN THIS STATEMENT SHRI JAIN HA S ADMITTED MANAGING FEW CONCERNS WHICH ACCOMMODATION ENTRIES IN THE FORM OF BOGUS PURCHASE BILL TO VARIO US PEOPLE. THE MODUS OPERANDI IS EXPLAINED AND TABULATED IN TH E ASSESSMENT ORDER WHERE IN VARIOUS ENTITIES ARE LIST ED PROVIDING SUCH BOGUS BILLS. THE RELEVANT PORTION OF THE STATEMENT IS ALSO REPRODUCED IN THE ORDER PASSED U/ S 143(3) / 153A. 6.2 I HAVE CAREFULLY PERUSED THE ORDER AND I FIND THAT THE ADDITION MADE ON THE BASIS OF STATEMENT RE CORDED BY THE MUMBAI INVESTIGATION WING OTHER THAN THE STATEM ENT THE AO HAS MADE NOTHING IN HIS POSSESSION TO MAKE IMPUG NED ADDITION. I MAY POINT OUT THAT MERE STATEMENT OF A PERSON SEARCHED U/S 132 IS NOT SUFFICIENT TO MAKE ADDITION AND HERE THE AO HAS PROCEEDED TO MAKE ADDITION ON THE BEST O F 3 RD PARTY SUBJECT TO A DIFFERENT SEARCH. THE APPELLANT ON THE OTHER HAND HAS PRODUCED COPIES OF RELEVANT BILLS, V OUCHERS, DETAILS OF PAYMENTS MADE, RELEVANT ENTRIES IN THE S TOCK SO MAINTAINED AND THE AUDIT REPORT ETC. TO DISCHARGE T HE ONUS. 6.3 THUS MERE RELIANCE ON THE STATEMENT OF SHRI RAJENDRA JAIN/ BANWAWRI LAL JAINM, A 3 RD PARTY RECORDED IN A DIFFERENT SEARCH U/S 132, ITSELF DOES NOT CONSTIT UTE INCRIMINATING MATERIAL OF APPELLANT. IT HAS BEEN HE LD INMANY JUDGEMENTS THAT MERE STATEMENT OF A PERSON SEARCHED U/S 132 IS NOT SUFFICIENT TO MAKE AN ADDITION. A STATEMENT MADE MUST BE RELATABLE TO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OR THE STATEMENT MUST BE MADE RELA TABLE TO MATERIAL BY SUBSEQUENT INQUIRY/ INVESTIGATIONS. HON 'BLE ITA NO. 716/JP/2018 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S.J.K. INTERNAT IONAL, JAIPUR 8 DELHI HIFH COURT IN CASE OF HARJEEV AGARWAL 70 TAXMANN.COM 95) HELD THUS HOWEVER, SUCH STATEMENTS ON A STANDALONE BASIS WITHOUT REFERENCE TO ANY OTHER MATER3IAL DISC OVERED DURING SEARCH AND SEIZURE OPERATION WOULD NOT EMPOW ER THE ASSESSING OFFICER TO MAKE A BLOCK ASSESSMENT MERELY 8 BECAUSE ANY ADMISSION WAS MADE BY THE ASSESSEE DURI NG SEARCH OPERATION. THOUGH THE ABOVE PRINCIPLE IS LAID DOWN IN RELATION TO ASSESSMENT OF BLOCK PERIOD U/S 158B OF THE ACT, THE SAME WAS ALSO APPLIED IN RESPECT OF ASSESSMENT U/S 153A BY D ELHI HIGH COURT IN THE CASE OF BEST INFRASTRUCTURE (84 TAXMAN N.COM 287) 6.4 THE APPELLANT HAS ALSO RAISED THE GROUND OF NOT PROVIDING OPPORTUNITY OF CROSS EXAMINATION OF SHRI RAJENDRA JAIN. MANY COURTS HAVE HELD THAT NOT PROVIDING CROS S EXAMINATION TANTAMOUNT TO DENIAL OF NATURAL JUSTICE AND DOES NOT VITIATE THE ASSESSMENT. SAME VIEW HAS BEEN REIT ERATED BY THE HON'BLE APEX COURT ALSO. AS REGARDS THE NON-GRN AT OF OPPRTUITY TO CROSS EXAMINATION, THE HON'BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS CCE(SUP RA) WHILE DEALING THE ISSUE HAS HELD IN PARA 5 TO 8 (ME NTIONED IN LD. CIT(A)S ORDER). 6.5 THEREFORE, THE STATEMENT OF WITNESS CANNOT BE SOLE BASIS OF THE ASSESSMENT WITHOUT GIVING AN OPPO RTUNITY OF CROSS EXAMINATION AND CONSEQUENTLY IT IS A SERIOUS FLAW WHICH RENDERS THE ORDER A NULLITY. A MUMBAI SPECIAL BENCH OF THE TRIBUNAL IN CASE OF GTC INDUSTRIES VS ACIT (SUPRA)HAD THE OCCASION TO CONSIDER THE ADDITION MA DE BY THE AO ON THE BASIS OF SUSPICION AND SURMISES AND O BSERVED IN PARA 46. ITA NO. 716/JP/2018 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S.J.K. INTERNAT IONAL, JAIPUR 9 6.6 FURTHER, I MAY ADD THAT THE AO HIMSELF HAS RECORDED IN ALL THE ASSESSMENT ORDERS THAT A LETTER WAS ISSUED TO CUSTOM AUTHORITIES SEZ II, SITAPURA INDUSTRIAL AREA,JAIPUR TO VERIFY THE SAID PURCHASES. THE AO H AS RECORDED A FINDING THAT SEZ AUTHORITIES HAVE CONFIR MED THAT SAID PURCHASES ARE GENUINE AS DULY RECORDED IN THEI R RECORDS. THIS ITSELF CAST A DOUBT ON AOS CONCLUSIO N THAT PURCHASES MADE ARE BOGUS. IN FACT, WHEN IT IS CERTI FICATE FROM ANOTHER GOVT.AGENCY CERTIFYING THE GENUINENESS OF P URCHASES AND IT TILTS PREPONDERANCE OF PROBABILITY IN FAVOUR OF APPELLANT. ON ALL THE AFORESAID COUNTS, I AM OF THE VIEW THAT ADDITION MADE BY THE AO IS UNSUSTAINABLE AND THE SA ME LIABLE TO BE DELETED. SAME ARE DIRECTED TO BE DELET ED FOR A.Y. 2009-10 TO 2014-15). 6.7 WITHOUT PREJUDICE TO THE ABOVE, I AM IN AGREEMENT WITH THE LEGAL CONTENTION THAT EVEN IF TH E DISALLOWANCE MADE BY THE AO IS ACCEPTED THEN IT WOU LD HAVE NO BEARING ON THE CASE OF THE APPELLANT AS THE ENTI RE EXERCISE WOULD BE REVENUE NEUTRAL. THE APPELLANT RELIANCE ON THE JUDGEMENT OF HON'BLE GUJARAT HC IN THE CASE OF SAJA NI JEWELS VS DCIT 143 DTR 263 (GUJ) IS TENABLE WHEREIN IT HAS BEEN HELD THAT WHOLE EXERCISE OF DISALLOWANCE BY TH E AO IS REVENUE NEUTRAL AND SINCE PURCHASE MADE ARE THROUGH CHEQUE PAYMENT THE SECTION 69C IS NOT ATTRACTED. TH E RELEVANT PARA OF HE JUDGEMENT ARE 10 TO 12 AND THE SAME ARE REPRODUCED (MENTIONED AT PAGE 24 OF THE LD. CIT(A) S ORDER).. CONSIDERING ALL THE ABOVE, I AM OF THE VIEW THAT EV EN IF 25% OF PURCHASES FROM CONCERNS ARE TREATED AS BOGUS IT HAS A REVENUE NEUTRAL EFFECT AND MAY BE TREATED AS SUCH . 6.8 THE ADDITION MADE BY THE AO ARE DIRECTED TO BE DELETED AS INDICATED ABOVE. THE GROUND RELATING TO BOGUS PURCHASES IS ALLOWED AS INDICATED. ITA NO. 716/JP/2018 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S.J.K. INTERNAT IONAL, JAIPUR 10 2.2.3 AFTER HAVING CONSIDERED THE COUNSEL OF BOTH T HE PARTIES AT LENGTH, WE FOUND THAT THE AO ON THE BASIS OF STATEMENT TREA TED THE PURCHASES MADE BY THE ASSESSEE AS BOGUS AND PROCEEDED TO MAKE THE ADDITION OF 25% OF SUCH PURCHASES AS BOGUS U/S 69C OF THE I.T. ACT, 1961. THE AO ALSO TAXED SUCH DISALLOWANCES U/S 115BBE OF THE ACT . IT IS AN ADMITTED FACT THAT FOR THE ASSESSMENT YEAR UNDER CONSIDERATI ON AS WELL AS FOR RTHE ASSESSMENT YEAR 2011-112, THE ASSESSMENT STOOD COM PLETED ON THE DATE OF SEARCH AS THE TIME PERIOD TO ISSUE THE NOTICE U/ S 142(2) OF THE ACT HAD ALSO EXPIRED. THEREFORE, THE YEAR UNDER CONSIDERATI ON AS WELL FOR THE ASSESSMENT YEAR 2011-12, THE ADDITION COULD ONLY B E MADE WITH REGARD TO INCRIMINATING SEIZED MATERIAL FOUND DURING THE C OURSE OF SEARCH. THUS ANY ADDITION MADE BY THE AO IN THE ASSESSMENT WITHO UT ANY REFERENCE TO INCRIMINATING SEIZED MATERIAL WAS CONSIDERED BY THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL LTD. VS ACIT , 88 DTR 1,WHEREIN THE HON'BLE HIGH COURT WAS OF THE VIEW THAT IN CASE OF COMPLETED ASSESSMENT, NO ADDITION CAN BE MADE IF NO INCRIMINATING SEIZED MATERIAL IS FOUND DURING THE COURSE OF SEARCH. THE LD. CIT(A) HAS ALS O CONSIDERED THE JUDGEMENT OF HON'BLE DELHI HIGH COURT IN THE CASE O F KABUL CHAWALA VS ITA NO. 716/JP/2018 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S.J.K. INTERNAT IONAL, JAIPUR 11 ACIT 380 ITR 573 AND OTHER RELATED JUDGEMENTS WHICH ARE SPECIFICALLY MENTIONED IN HIS ORDER AND HE HAD RIGHTLY CONCLUDED THAT THE ADDITION MADE BY THE AO WITHOUT ANY REFERENCE TO THE SEIZED MATERIAL IS NOT LEGALLY SUSTAINABLE. THUS THIS ISSUE WAS RIGHTLY DE CIDED BY THE LD. CIT(A) IN FAVOUR OF THE ASSESSEE. 2.2.4 IT IS AN ADMITTED FACT THAT THE REVENUE HAS N OT RAISED ANY GROUND IN ITS GROUND OF APPEAL THEREBY CHALLENGING THE SAID D ECISION OF LD. CIT(A) WHICH WAS RELATED IN RESPECT OF ASSESSMENT FRAMED U/S 143(3) R.W.S. 153A OF THE ACT. THUS THE FINDING SO RECORDED BY TH E LD. CIT(A) IS WELL REASONED AND JUDICIOUS. 2.2.5 EVEN OTHERWISE, THE AO HAD MADE ADDITION BY M ERELY RELYING ON THE STATEMENT OF ONE SHRI RAJENDRA JAIN WHICH CANNO T BE TERMED AS AN INCRIMINATING MATERIAL AS SAID STATEMENT SHOULD HAV E RELATED TO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OR STATEMENT MUST BE MADE RELATABLE TO MATERIAL BY SUBSEQUENT EN QUIRY/ INVESTIGATION. 2.2.6 AS FAR AS THE MERIT OF ADDITION MADE BY THE A O @ 25% OF ALLEGED BOGUS PURCHASES ARE CONCERNED, IN THIS RESPECT, THE LD. CIT(A) HAD PASSED WELL REASONED DETAILED ORDER IN PARA 6 TO 6.8. IN T HE PRESENT CASE, NO ITA NO. 716/JP/2018 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S.J.K. INTERNAT IONAL, JAIPUR 12 OPPORTUNITY TO CROSS EXAMINE SAID SHRI RAJENDRA JAI N WAS PROVIDED BY THE REVENUE AUTHORITIES. THUS IT WAS RIGHTLY HELD THAT NOT PROVIDING CROSS EXAMINATION TANTAMOUNT TO DENIAL OF NATURAL JUSTIC E AND DOES VITIATE THE ASSESSMENT. IN THIS RESPECT, WE ALSO RELY ON THE DE CISION OF HON'BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTR IES VS CCE (SUPRA) WHEREIN IT WAS CATEGORICALLY HELD THAT STATEMENT OF THE WITNESSES WITHOUT AN OPPORTUNITY TO CROSS EXAMINE CANNOT BE THE SOLE BASIS OF ASSESSMENT AS IT IS SERIOUS FLAW WHICH RENDERS THE ORDER A NULLIT Y. THE LD. CIT(A) HAS ALSO CONSIDERED THAT THE AO HIMSELF HAD RECORDED IN THE ASSESSMENT ORDER THAT LETTER WAS ISSUED TO CUSTOM AUTHORITIES SEZ-II , SITAPURA INDUSTRIAL AREA, JAIPUR TO VERIFY THE SAID PURCHASES AND THE A O HAS RECORDED A FINDING THAT SEZ AUTHORITIES HAVE CONFIRMED THAT SA ID PURCHASES ARE GENUINE AS DULY RECORDED IN THEIR RECORDS. THIS ITS ELF CAST A DOUBT ON AOS CONCLUSION THAT PURCHASES MADE BY THE ASSESSEE WERE BOGUS. MORE PARTICULARLY, WHEN IT IS CERTIFICATE FROM ANOTHER G OVT. AGENCY BY CERTIFYING THE GENUINENESS OF THE PURCHASES AND IT TILTS PREPONDERANCE OF PROBABILITY IN FAVOUR OF THE ASSESSEE. IT IS PERTIN ENT TO MENTION THAT THE LD. CIT(A) HAS EXPLICITLY DEALT WITH THE ISSUE AND DELE TED THE ADDITION MADE ITA NO. 716/JP/2018 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S.J.K. INTERNAT IONAL, JAIPUR 13 BY THE AO GIVING FULL JUSTIFICATION TO THE ISSUE IN QUESTION AND WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A ) ON THE ISSUE RAISED BY THE REVENUE IN GROUND NO. 1 AND 2. THUS BOTH THE GR OUNDS RAISED BY THE REVENUE ARE DISMISSED. 3.1 AS REGARDS THE APPEALS OF THE REVENUE FOR THE A SSESSMENT YEAR 2011-12 AND 2012-13 WHEREIN THE SIMILAR ISSUE WAS R AISED BY THE REVENUE AS UNDER:- A.Y. 2011-12- REVENUE 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE FACE, THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS . 2,73,47,135/- U/S 69C ON ACCOUNT OF BOGUS PURCHASES IGNORING THE FACT THAT ASSESSEE WAS INVOLVED IN TAKING THE ACCOMMODATION ENTRY FROM RAJ ENDRA JAIN AND BANWARI LAL JAIN GROUP. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE FACE, THE LD. CIT(A) WAS RIGHT IN ALLOWING THE DEDUCTION U/S 10AA/10A OF THE ACT IGNORING THE FACT THAT PROVISIONS OF SECTION 69 C OF THE ACT ARE APPLICABLE AND AS PER PROVISIONS OF SECTION 115BBE NO DEDUCTION IS ALLOWABLE TO THE ASSESSEE AS ASSESSEE PURCHASED THE MATERIAL FROM GREY MARKET IN CASH. A.Y. 2012-13- REVENUE 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE FACE, THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS . 3,23,21,845/- U/S 69C ON ACCOUNT OF BOGUS PURCHASES IGNORING THE FACT THAT ASSESSEE WAS INVOLVED IN TAKING THE ACCOMMODATION ENTRY FROM RAJ ENDRA JAIN AND BANWARI LAL JAIN GROUP. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE FACE, THE LD. CIT(A) WAS RIGHT IN ALLOWING THE DEDUCTION U/S 10AA/10A OF THE ACT IGNORING THE FACT THAT PROVISIONS OF SECTION 69 C OF THE ACT ARE ITA NO. 716/JP/2018 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S.J.K. INTERNAT IONAL, JAIPUR 14 APPLICABLE AND AS PER PROVISIONS OF SECTION 115BBE NO DEDUCTION IS ALLOWABLE TO THE ASSESSEE AS ASSESSEE PURCHASED THE MATERIAL FROM GREY MARKET IN CASH. 3.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS PERTINENT TO MENTION THA T THE ISSUES RAISED BY THE REVENUE IN THE ASSESSMENT YEAR 2011-12 AND 2012-13 ARE SIMILAR TO THE ISSUE OF ASSESSMENT YEAR 2010-11 WHEREIN THE GROUND S RAISED IN APPEAL OF THE REVENUE ARE DISMISSED TAKING INTO CONSIDERAT ION THE EXPLICIT AND REASONED ORDER OF THE LD. CIT(A). THUS THE DECISION TAKEN BY US IN THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2010- 11 SHALL APPLY MUTATIS MUTANDIS IN THE GROUNDS OF THE REVENUE FOR THE ASSESSMENT YEAR 2011-12 AND 2012-13. HENCE, THE GROUNDS RAISED (SUP RA) BY THE REVENUE ON THE ISSUE IN QUESTION IN THE ASSESSMENT YEAR 2 011-12 AND 2012-13 ARE DISMISSED. 4.1 NOW WE TAKE UP THE GROUNDS OF APPEAL NO. 2 OF THE REVENUE FOR THE ASSESSMENT YEAR 2012-12 WHEREIN THE AO DURING T HE COURSE OF ASSESSMENT PROCEEDING NOTED THAT THE ASSESSEE COLLE CTED EMPLOYEESS CONTRIBUTION TOWARDS PF AND ESIC BUT DID NOT PAID I T WITHIN THE DUE DATE PRESCRIBED BY RELEVANT LEGISLATION TO RS. 28650/- A ND 79510/- RESPECTIVELY. ITA NO. 716/JP/2018 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S.J.K. INTERNAT IONAL, JAIPUR 15 THE AO ASKED THE ASSESSEE TO STATE ITS CASE IN RES PECT OF PROVISIONS OF SECTION 36(1)(VA) OF THE I.T. ACT, 1961 FOR WHICH T HE ASSESSEE COULD NOT GIVE PROPER JUSTIFICATION TO THE ASSESSEE. THE AO T AKING THE RESORT OF HON'BLE GUJARAT HIGH COURT JUDGEMENT IN THE CASE OF CIT VS GUJARAT STATE ROAD TRANSPORT CORPORATION (ITA NO 637 OF 201 3 DATED 2601202913) MADE THE ADDITION OF RS. 32,868/- BY OB SERVATION AS UNDER:- THEREFORE, RS. 18160/- (I.E.28650 PLUS 79510/-) I S TREATED AS INCOME U/S 2(24(X) AND DEDUCTION U/S 26(1)(VA) IS DECLINED DAS THE AMOUNT HAD BEEN PAID AFTER THE DUE DATE AS PRESCRIBED IN THE RELEVANT LEGISLATION. 4.2 IN FIRST APPEAL, THE LD. CIT(A) HAS DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER:- 9. I HAVE GONE THROUGH THE ASSESSMENT ORDER AS WELL AS SUBMISSIONS MADE BY THE APPELLANT INCLUDING THE JUDICIAL CITATIONS GIVEN THEREIN AND FIND THAT AN A DDITION OF RS. 32,868/- FOR A.Y. 2012-13)OF EMPLOYEES CONTRIBU TION TO ESI/EMPLOYEES CONTRIBUTION TO PF/ESI HAVE BEEN MADE BY THE AO ON ACCOUNT OF DELAY IN DEPOSITION OF EMPLOYE ES CONTRIBUTION TOWARDS ESI AND PF U/S 36(1)(VA) R.W.S . 2(24)(X) OF THE ACT, AO HAS NOTED THAT PAYMENTS HAV E BEEN DEPOSITED AFTER FEW DAYS OF THE DUE DATE AND THEREF ORE, NO DEDUCTION COULD BE CLAIMED UNDER THE PROVISIONS. 9.2 THE APPELLANT HAS STATED THAT ALL THE PAYMENTS ON ACCOUNT OF ESI AND PF HAVE BEEN MADE BE FORE ITA NO. 716/JP/2018 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S.J.K. INTERNAT IONAL, JAIPUR 16 THE DUE DATE OF FILING OF RETURN OF INCOME AND THER EFORE, NO DISALLOWANCE COULD BE MADE ON THIS ACCOUNT. FURTHER , RELIANCE HAS BEEN PLACED ON THE DECISIONS OF HON'BL E RAJASTHAN HIGH COURT IN THE CAE OF CIT VS UDAIPUR DUGDH UTPADAK SAHAKARI SANGH LTD. (2013) 35 TAXMANN.COM 6 16 AND ALSO IN THE CASE OF CIT VS STATE BANK OF BIKANE R AND JAIPUR 265 CTR 471. IN VIEW OF THE ABOVE DECISIONS, I FIND THAT IT IS NOT DISPUTED THAT THE PAYMENTS ON ACCOUNT OF ESI AN D PF HAVE NOT BEEN DEPOSITED BY THE APPELLANT. 9.3 FURTHER, IN VIEW OF THE ABOVE JUDGEMENTS OF THE HON'BLE SUPREME COURT WHICH HAS BEEN SUBSEQU ENTLY FOLLOWED BY THE JURISDICTIONAL HIGH COURT, I FIND T HAT THERE IS NO JUSTIFICATION IN THE ACTION OF THE AO IN MAKING A DISALLOWANCE ON ACCOUNT OF DELAY IN DEPOSITON OF ES I & PF. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAE, T HESE PAYMENTS HAVE BEEN MADE BEFORE THE DUE DATE OF FILI NG OF RETURN AND THEREFORE, SUCH ADDITIONS ARE DIRECTED T O BE DELETED. APPELLANTS APPEAL ON THIS GROUND FOR A.Y. 2012-13 TO A.Y. 2014-15 IS ALLOWED. 4.3 DURING THE COURSE OF HEARING, THE LD. DR RELIED ON THE ORDER OF THE AO WHILE THE LD.AR OF THE ASSESSEE RELIED ON THE OR DER OF THE LD. CIT(A) 4.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOT IMPERATIVE TO REPEAT THE FACTS OF THE CASE CONCERNING THE ISSUE IN QUESTION AS THE LD. CIT(A) HAS DELETED THE ADDITION TAKING INTO CONSIDERATION THE DECISIONS OF HON'BLE JURISDICTIONAL HIGH ITA NO. 716/JP/2018 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S.J.K. INTERNAT IONAL, JAIPUR 17 COURTS. THE RELEVANT OBSERVATIONS OF THE HON'BLE JU RISDICTIONAL HIGH COURT IN THE ABOVE CASE ARE AS UNDER:- CIT VS. STATE BANK OF BIKANER & JAIPUR (2014) 363 I TR 70 (RAJ) (HC) :- WHERE PF AND/OR EPF, CPF, GPF, ETC., WAS PAID AFTER THE DUE DATE UNDER THE RESPECTIVE ACTS BUT BEFORE FILING OF RETU RN OF INCOME U/S 139(1), IT COULD NOT BE DISALLOWED U/S 43B OR U/S 36(1)(VA). CIT VS. JAIPUR VIDYUT VITRAN NIGAM LTD. (2014) 363 ITR 307 (RAJ.) (HC):- THE ASSESSEE CLAIMED PAYMENT OF GPF, CPF AND ESI U/ S 36(1)(VA) R.W.S. 43B OF THE IT ACT ON THE GROUND THAT THE SAM E WAS DEPOSITED ON OR BEFORE THE DUE DATE OF FURNISHING THE IT RETURN U/S 139. THE AO DISALLOWED THE PAYMENT ON THE GROUND THAT THOUGH THE AMOUNT WAS PA ID BY THE ASSESSEE, BUT WAS NOT PAID WITHIN THE DUE DATE AS GIVEN UNDER THE RESPECTIVE ACTS OF GPF, CPF AND ESI. IT WAS HELD THAT THE EMPLOYEES CONTRI BUTION TOWARDS GPF, CPF AND ESI DEPOSITED BY THE ASSESSEE ON OR BEFORE THE DUE DATE OF FILING THE RETURN U/S 139, THOUGH BEYOND THE DUE DATES AS GIVEN UNDER THE RESPECTIVE ACTS, CANNOT BE DISALLOWED U/S 43B OR 36(1)(VA). CIT VS. UDAIPUR DUGDH UTPADAK SAHAKARI SANGH LTD. ( 2014) 366 ITR 163 (RAJ.) (HC):- PAYMENT OF EMPLOYEES CONTRIBUTIONS TOWARDS PF AND ESI MADE BELATEDLY BUT WITHIN THE DUE DATE OF FILIN G THE RETURN, CANNOT BE DISALLOWED U/S 43B. IT IS ALSO PERTINENT TO MENTION THAT HON'BLE SUPREM E COURT HAS PASSED THE JUDGEMNET IN FAVOUR OF THE ASSESSEE ON THE ISSUE I N QUESTION. IN VIEW OF THE FACTS, CIRCUMSTANCES OF THE CASE AND THE JUDGEM ENTS (SUPRA), WE CONCUR WITH THE FINDINGS OF THE LD. CIT(A). THUS GR OUND NO. 2 OF THE REVENUE IS DISMISSED. ITA NO. 716/JP/2018 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S.J.K. INTERNAT IONAL, JAIPUR 18 5.0 IN THE RESULT, THE APPEALS FILED BY THE REVENUE IS DISMISSED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 03 /10/2019 . SD/- SD/- FOE FLAG ;KNO LANHI XKSLKBZ (VIKRAM SINGH YADAV) (SANDEEP GOSAIN) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 03 /10/2019. *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT, CENTRAL CIRCLE-2, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT-M/S. J.K. INTERNATIONAL, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 4. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR . 5. XKMZ QKBZY@ GUARD FILE {ITA NO. 716 TO 7181/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSTT. REGISTRAR ITA NO. 716/JP/2018 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S.J.K. INTERNAT IONAL, JAIPUR 19