M/S K'S JEWELLERY & CO., MUMBAI V. ACIT 24 (2), MUMBAI

ITA 7509/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0715 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2007-2008
• Appeal Filed On: 06-12-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GURBINDER SINGH LD
• Assessee Lawyers: DEEPAK PAREKH LD ARS
• Keywords: Bogus purchase; Principle of natural justice; Opportunity of cross examination; Third party statement; Deemed export; Reassessment proceedings
• Section: 143(3); 13; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE HONBLE SHRI AMARJIT SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) 1. ./ I.T.A. NO.7509/MUM/2019 ( / ASSESSMENT YEAR : 2007-08) & 2. ./ I.T.A. NO.7510/MUM/2019 ( / ASSESSMENT YEAR : 2008-09) & 3. ./ I.T.A. NO.7511/MUM/2019 ( / ASSESSMENT YEAR : 2009-10) & 4. ./ I.T.A. NO.7512/MUM/2019 ( / ASSESSMENT YEAR : 2010-11) M/S KS JEWELLERY & CO. 221-A, ADARSH INDUSTRIAL ESTATE SAHAR ROAD, CHAKALA, ANDHERI, MUMBAI-400 099. / VS. ACIT - 24(2 ), 6 TH FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI-400 012 12 ./ ./PAN/GIR NO. AADFK-2394-Q ( #24 /APPELLANT ) : ( 5624 / RESPONDENT ) ASSESSEE BY : SHRI SUCHEK ANCHALIYA & SHRI DEEPAK PAREKH LD. ARS R EVENUE BY : SHRI GURBINDER SINGH LD. DR / DATE OF HEARING : 07/07/2021 / DATE OF PRONOUNCEMENT : 07/07/2021 / O R D E R PER BENCH 1.1 AFORESAID APPEALS BY ASSESSEE FOR ASSESSMENT YE ARS (AY) 2007- 08 TO 2010-11 CONTEST COMMON ORDER DATED 30/10/2019 PASSED BY 2 LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-36, MU MBAI [CIT(A)] IN THE MATTER OF ASSESSMENT FRAMED BY LD. ASSESSING OF FICER (AO) U/S 143(3) R.W.S. 147 OF THE ACT. THE FACTS AS WELL AS ISSUES ARE IDENTICAL AND IT IS ADMITTED POSITION THAT ADJUDICATION IN ANY ON E YEAR SHALL APPLY WITH FULL FORCE TO OTHER YEARS ALSO. 1.2 THE GROUND RAISED BY THE ASSESSEE IN AY 2007-08 READ AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THAT THE ASSUMPTION OF JUR ISDICTION BY THE LEARNED ASSESSING OFFICER AS BAD IN LAW AS THE CONDITIONS LAID DOWN U NDER THE ACT FOR INITIATING REASSESSMENT PROCEEDING U/S 147 OF THE ACT WERE NOT FULFILLED. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT HOLDING THAT THE LEARNED ASSESSING OFF ICER ERRED IN NOT PROVIDING AN OPPORTUNITY TO CROSS EXAMINE TO THE APPELLANT WHILE RELYING ON A THIRD PARTY STATEMENT AS THE SAME WAS ALSO IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY LD. A.O. O F RS.4,17,27,832/-, BY TREATING GENUINE LOCAL PURCHASES/ DEEMED IMPORTS AS ACCOMMOD ATION ENTRY. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN NOT ACKNOWLEDGING THE FACT THAT THE APPELL ANT FIRM IS A 100% EXPORT ORIENTED UNIT (EOU) AND ANY PURCHASES/ DEEMED IMPORTS MADE F ROM LOCAL SUPPLIERS ARE CONSIDERED TO BE DEEMED EXPORTS FOR SUCH SUPPLIER A ND IS SUBJECT TO MANDATORILY FOLLOW A STRICT PROCEDURE FOR PROCUREMENT OF CONSIG NMENT IN ACCORDANCE WITH THE PROCEDURE LAID DOWN BY THE CUSTOMS/SEZ AUTHORITIES. 1.3 THE LD. AR ADVANCED ARGUMENT ASSAILING THE ADDI TIONS MADE / CONFIRMED BY LOWER AUTHORITIES WHEREAS LD. DR PLEAD ED FOR DISMISSAL OF THE APPEALS. WE HAVE CAREFULLY HEARD THE RIVAL SUBM ISSIONS AND PERUSED RELEVANT MATERIAL ON RECORD INCLUDING DOCUMENTS AS PLACED IN THE PAPER BOOK. OUR ADJUDICATION TO THE APPEAL WOULD BE AS GI VEN IN SUCCEEDING PARAGRAPHS. ASSESSMENT PROCEEDINGS 2.1 THE MATERIAL FACTS ARE THAT THE ASSESSEE BEING RESIDENT FIRM IS STATED TO BE ENGAGED IN MANUFACTURING & EXPORT OF J EWELLERY. AN ASSESSMENT WAS FRAMED FOR THE YEAR U/S 143(3) R.W.S . 147 OF THE ACT ON 11/02/2015. THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE WAS 3 SCRUTINIZED U/S 143(3) ON 18/12/2009 ACCEPTING THE RETURNED INCOME OF RS.26.62 LACS. HOWEVER, PURSUANT TO SEARCH OPERATIO NS BY DGIT(INV), MUMBAI IN THE CASE OF SHRI RAJENDRA JAIN GROUP, SHR I SANJAY CHOUDHARY GROUP AND SHRI DHARMINCHAND GROUP ON 03/10/2013, IT WAS ALLEGED THAT THE ASSESSEE OBTAINED BOGUS PURCHASE BILLS FROM AN ENTITY NAMELY M/S SUN DIAM. ACCORDINGLY, THE CASE WAS REOPENED AS PER DUE PROCESS OF LAW VIDE NOTICE U/S 148 DATED 25/03/2014 AND THE AS SESSEE WAS DIRECTED TO SUBSTANTIATE THE PURCHASE TRANSACTIONS. IN SUPPO RT OF PURCHASES, THE ASSESSEE FILED COMPUTATION OF INCOME, AUDIT REPORT, LEDGER EXTRACTS OF M/S SUN DIAM AND COPY OF PURCHASE BILLS. THE ASSESS EE ALSO FILED NOTARIZED AFFIDAVIT OF SHRI RAJENDRA JAIN (PARTNER OF M/S SUN DIAM) CONFIRMING THE PURCHASE TRANSACTIONS WITH THE ASSES SEE. 2.2 HOWEVER, GOING BY THE STATEMENTS MADE BY THE PA RTIES BEFORE INVESTIGATION WING DURING SEARCH OPERATIONS, THE EX PLANATION FURNISHED BY THE ASSESSEE WAS NOT TO BE ACCEPTED IN TERMS OF DEC ISION OF HONBLE DELHI HIGH COURT IN CIT V/S INDEPENDENT MEDIA (P) LTD. (210 TAXMAN 14). FINALLY, THESE PURCHASES WERE DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE. APPELLATE PROCEEDINGS 3.1 DURING APPELLATE PROCEEDINGS, THE ASSESSEE ASSA ILED THE ACTION OF LD. AO BY WAY OF ELABORATE WRITTEN SUBMISSIONS. THE ASSESSEE ALSO CHALLENGED THE VALIDITY OF REASSESSMENT PROCEEDINGS . IT WAS SUBMITTED THAT THE ASSESSEE WAS 100% EXPORT ORIENTED UNIT (EO U) REGISTERED WITH THE DEVELOPMENT COMMISSIONER, SEEPZ - SEZ, MUMBAI S INCE APRIL 2004. SINCE ITS INCEPTION, THE ASSESSEE FIRM WAS EN GAGED AS MANUFACTURER EXPORTER OF GOLD JEWELLERY STUDDED WIT H DIAMONDS & PRECIOUS STONES. THE LICENSES / PERMISSIONS GRANTED BY APPROPRIATE 4 AUTHORITIES WERE ALSO FURNISHED IN SUPPORT OF THE S AME. AS PER THE TERMS OF LICENSE, THE ASSESSEE WAS MANDATORILY OBLIGED TO FOLLOW STRICT NORMS, RULES AND COMPLIANCES AS SET OUT BY THE GOVERNMENT OF INDIA - MINISTRY OF COMMERCE DURING CONDUCT OF ITS BUSINESS. 3.2 IT WAS SUBMITTED THAT ASSESSEE BEING AN 100% EO U, ALL PURCHASES OF CUT & POLISHED DIAMONDS MADE FROM LOCAL PARTIES HAVE TO BE IN THE NATURE OF DEEMED IMPORTS ONLY FOR WHICH STRICT PROC EDURES WAS REQUIRED TO BE FOLLOWED VIZ. A) THE PROPOSED REQUIRED QUANTITY OF CUT & POLISHED DIAMOND WAS TO BE INTIMATED TO SUPERINTENDENT OF CUSTOMS AL ONG WITH THE PROFORMA INVOICE OF THE SUPPLIER PARTY SHOWING THER EIN THE COMPLETE DETAILS OF QUALITY, QUANTITY AND VALUE. AGAINST THI S INTIMATION, THE SUPERINTENDENT OF CUSTOMS WOULD ISSUE, UNDER HIS ST AMP AND SEAL, A 'CERTIFICATE OF PROCUREMENT' ONLY ON THE BASIS OF WHICH THE PURCHASES / PROCUREMENT COULD BE MADE BY THE ASSESS EE. B) HAVING COMPLIED WITH AND COMPLETED THE ABOVE FO RMALITY, THE SUPPLIER WOULD TAKE THE CONSIGNMENT OF DIAMONDS ALO NG WITH ITS INVOICE TO THE DEPUTY COMMISSIONER OF CUSTOMS AT DP CC (DIAMOND PLAZA CLEARING CENTRE) AT DR. D. B. MARG, MUMBAI - 400 004 FOR COMPLETE VERIFICATION AND APPRAISAL OF QUAL ITY, QUANTITY AND VALUE OF THE CONSIGNMENT. C) THE SALE MADE BY SUPPLIER LOCALLY TO ASSESSEE W AS NOT TO BE CONSIDERED AS LOCAL SALE BUT A DEEMED EXPORT FOR WH ICH IT WAS OBLIGATORY FOR SUPPLIER TO GET ITSELF REGISTERED W ITH JCCI & E (JOINT CHIEF CONTROLLER OF IMPORTS AND EXPORTS) WHO WOULD ALLOT ALL SUCH PARTIES THE IMPORTER - EXPORTER CODE NUMBER (IEC). 5 D) AFTER THE CUSTOMS AUTHORITIES HAVE INSPECTED, VE RIFIED AND APPRAISED THE CONSIGNMENT, THEY WOULD TAKE DELIVERY / POSSESSION OF THE GOODS FROM THE SUPPLIERS AND SEAL THE CONSIG NMENT AND RETAIN IT WITH THEM. SIMULTANEOUSLY, THE INVOICE WO ULD ALSO BE STAMPED AND ENDORSED BY THE CUSTOM AUTHORITIES, THE ENTRY OF WHICH WOULD ALSO BE MADE IN THE CUSTOMS REGISTER. E) ONE COPY OF THIS CUSTOMS STAMPED AND ENDORSED I NVOICE IS THEN HANDED OVER TO THE ASSESSEE BY THE SUPPLIER WH ICH IS REQUIRED TO BE GIVEN / HANDED OVER TO THE JURISDICTIONAL PRE VENTIVE OFFICER FOR THE PURPOSE OF TAKING DELIVERY OF THE GOODS. F) SUBSEQUENTLY, ONE PERSON FROM ASSESSEES OFFICE WOULD ACCOMPANY THE PREVENTIVE OFFICER TO GO TO DEPUTY CO MMISSIONER OF CUSTOMS AT DPCC (DIAMOND PLAZA CLEARING CENTRE) TO TAKE THE DELIVERY OF THE SEALED CONSIGNMENT OF DIAMONDS AGAI NST THE PROCUREMENT CERTIFICATE AND THE CUSTOMS STAMPED-CUM -ENDORSED INVOICE. PERTINENTLY, THE DELIVERY OF THE GOODS / C ONSIGNMENT IS ONLY AND ONLY GIVEN TO THE PREVENTIVE OFFICER IN CHARGE. G) THE PREVENTIVE OFFICER AFTER HAVING TAKEN THE DELIVERY/POSSESSION OF THE CONSIGNMENT FROM THE CUS TOMS AUTHORITIES, WOULD THEN MAKE AN ENTRY IN HIS REGIST ER AND ISSUE / HAND OVER TO ASSESSEE THE POSSESSION OF THE GOODS I N ASSESSEES FACTORY PREMISES ONLY. H) ALL SUCH DEEMED IMPORTS MADE BY ASSESSEE HAS TO BE THEN FULLY AND COMPLETELY ACCOUNTED FOR IN TERMS OF ITS CONSUMPTION / END USE IN THE MANUFACTURING OF JEWELLERY WHICH IS EXPO RTED. IN OTHER WORDS, AT THE TIME OF EXPORT OF A PARTICULAR CONSIG NMENT OF JEWELLERY, THE QUANTITY AND THE QUALITY OF THE DIAMONDS HAS TO BE CO-RELATED 6 AND ACCOUNTED FOR WITH THE CUSTOM AUTHORITIES AS TO FROM WHICH DEEMED IMPORT THE SAID DIAMONDS HAVE BEEN USED/CONS UMED. THE CUSTOM OFFICER AFTER SATISFYING HIMSELF FULLY WOULD ENDORSE UNDER HIS SEAL AND SIGNATURE ASSESSEES RESPECTIVE EXPORT INV OICE(S) AND ALSO ON THE END USE CERTIFICATE SHOWING THE COMPLETE DET AILS THEREIN, ONLY AFTER WHICH THE GOODS WOULD BE ELIGIBLE FOR EX PORT TO OVERSEAS BUYERS. IT WAS THUS SUBMITTED THAT THE ASSESSEE PURCHASED N INE CONSIGNMENTS OF DIAMONDS FROM M/S SUN DIAM DURING THE YEAR BY FOLLO WING THE ABOVE STRICT NORMS, PROCEDURES AND RULES WHICH WERE TO BE FOLLOWED BY ANY 100% EOU. THE INVOICE-WISE DETAILS SHOWING QUANTITY AS WELL AS VALUE WERE ALSO FURNISHED. THE COPIES OF INVOICES ALONG W ITH RESPECTIVE CERTIFICATE OF PROCUREMENT AND MOVEMENT OF GOODS DU LY ENDORSED BY CUSTOM AUTHORITIES / PREVENTIVE OFFICER WERE FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL DURING APPELLATE PRO CEEDINGS. THUS, THE ASSESSEE CLAIMED THAT ALL THESE DOCUMENTS COMPLETEL Y ESTABLISH AND PROVE THE DESCRIPTION, QUANTITY, QUALITY AND MOVEME NT-CUM-DELIVERY OF GOODS PURCHASED FROM M/S SUN DIAM. THE DETAILS OF P AYMENT MADE THROUGH BANKING CHANNELS WERE ALSO FURNISHED ALONG WITH BANK STATEMENTS OF THE ASSESSEE. THE COPIES OF END-USE C ERTIFICATES DULY ENDORSED AND CERTIFIED BY THE CUSTOM AUTHORITIES / PREVENTIVE OFFICER SHOWING COMPLETE DETAILS OF CONSUMPTION OF CUT AND POLISHED DIAMONDS IN MANUFACTURE AND EXPORT VIS--VIS PURCHASES MADE FROM M/S SUN DIAM WAS ALSO ENCLOSED. THE CONFIRMED ACCOUNT STATEMENT ALONG WITH COPY OF INCOME TAX RETURN OF M/S SUN DIAM WAS ALSO FURNISHE D. LASTLY, THE NOTARIZED AFFIDAVIT EXECUTED BY SHRI RAJENDRA JAIN AS PARTNER OF M/S SUN DIAM, CONFIRMING THE AFORESAID TRANSACTIONS WITH TH E ASSESSEE WAS ALSO 7 PLACED ON RECORD. FINALLY, IT WAS SUBMITTED THAT TH E ALLEGATION OF LD. AO DOUBTING THE PURCHASE TRANSACTIONS STOOD COMPLETELY NEGATED. THE ASSESSEE ALSO SUBMITTED THAT IT OUGHT TO HAVE BEEN GRANTED AN OPPORTUNITY TO CROSS-EXAMINE THE PARTY. RELIANCE WA S PLACED ON SEVERAL FAVORABLE DECISIONS OF TRIBUNAL RENDERED UNDER SIMI LAR FACTUAL MATRIX. THE SAME HAS ALREADY BEEN ELABORATED IN THE IMPUGNE D ORDER. 4.1 THE LD. CIT(A) NOTED THAT THE ASSESSEE WAS A MA NUFACTURER AND NOT A TRADER AND THEREFORE ONE-TO-ONE CORRELATION O F THE PURCHASES WAS NOT POSSIBLE. THE ASSESSEE DID NOT ELABORATE THE MA NUFACTURING PROCESS AND DID NOT MENTION ANYTHING ABOUT THE SALE OF THE FINISHED PRODUCT. THE REJECTION OF BOOKS WAS NOT MANDATORY SINCE ONLY THE PURCHASES WERE DISALLOWED IN VIEW OF THE FACT THAT THE SAME WERE F OUND TO BE MADE WITH A VIEW TO REDUCE THE PROFITS. 4,2 SO FAR AS THE ELABORATE PROCEDURE STATED TO BE FOLLOWED BY THE ASSESSEE FOR PURCHASE AS WELL AS FOR CONSUMPTION OF MATERIAL WAS CONCERNED, IT WAS OBSERVED BY LD. CIT(A) THAT THE A SSESSEE HAD SUBMITTED INVOICES ALONG WITH CERTIFICATE FOR PROCU REMENT AND MOVEMENT OF GOODS DULY ENDORSED BY THE CUSTOM AUTHORITIES AN D THE PREVENTIVE OFFICER WHICH INDICATE THAT THESE WERE CERTIFICATES FOR PROCUREMENT AND MOVEMENT OF IMPORTED GOODS / EXCISABLE GOODS WITHOU T PAYMENT OF DUTY. THE CERTIFICATE MENTIONS VARIOUS POINTS INCLUDING D ETAILS OF GOODS TOGETHER WITH THEIR DESCRIPTION WHICH MAY BE CLEARE D AT NIL RATE OF DUTY. HOWEVER, AN IMPORTANT FACT WAS THAT IN ALL THE CERT IFICATES, THE BOND WAS FOR RS.46.01 LACS IRRESPECTIVE OF THE QUALITY AND T OTAL VALUE OF PURCHASE AMOUNT. THUS, IT WAS ONLY A CERTIFICATE WHICH TOGET HER WITH THE BILLS WAS TO ENSURE THAT THE PURCHASES BY THE ASSESSEE COULD BE MADE FROM A PARTICULAR PARTY AS REGARDS THE ITEMS MENTIONED IN THE INVOICE AND THE 8 SUPERINTENDENT OF CUSTOMS GIVES A CERTIFICATE TO TH AT EFFECT BUT IT NOWHERE SAYS THAT THE GOODS HAVE ULTIMATELY BEEN PU RCHASED BY THE ASSESSEE. IT IS WITH THE HELP OF THE FURTHER PROCES S AND THE PAPERS AND DOCUMENTS TO THAT EFFECT THAT THE ASSESSEE WOULD HA VE BEEN IN A POSITION TO SHOW THAT THE PURCHASES HAVE ACTUALLY BEEN MADE. HAVING NOT DONE SO, THE ASSESSEE DID NOT SATISFACTORILY SUBSTANTIAT E THE PURCHASES. FURTHER, IN CASE OF TRADER, ONE-TO-ONE CORRELATION WOULD BE EVIDENT BUT IN CASE OF A MANUFACTURER, THE CHAIN OF EVENTS AFTER P URCHASES FOR MANUFACTURING LEADING TO THE FINAL PRODUCT WHICH IS ULTIMATELY SOLD NEEDS TO BE EXPLAINED AND THE APPELLANT HAS GROSSLY ERRED IN NOT DOING SO IN THE PRESENT CASE. THUS, THIS WAS NOT A CASE OF HAVING M ADE THE PURCHASES FROM GREY MARKET AND REGULARIZING THE SAME BY OBTAI NING BILLS OF PURCHASES RATHER IT WAS A CASE WHERE THE PURCHASES WERE MADE ONLY TO REDUCE THE PROFITS. 4.3 IN THE BACKGROUND OF ALL THESE OBSERVATIONS, TH E ACTION OF LD. AO WAS UPHELD AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. OUR FINDINGS AND ADJUDICATION 5. WE FIND THAT THE ASSESSEE FIRM IS ENGAGED AS MAN UFACTURER EXPORTER OF DIAMOND / STONE STUDDED JEWELLERY. THE ASSESSEE IS A 100% EXPORT ORIENTED UNIT (EOU) SITUATED IN A SEZ. AS PE R THE EXTANT RULES / REGULATIONS, ALL THE LOCAL PURCHASES MADE BY THE AS SESSEE WOULD BE DEEMED IMPORTS. ALL SUCH PURCHASES TO BE MADE BY TH E ASSESSEE HAVE TO FOLLOW STRICT PROCEDURE AS LAID DOWN IN SEZ RULE S AND REGULATIONS. THIS PROCEDURE HAS ELABORATELY BEEN GIVEN BY THE ASSESSE E IN ITS SUBMISSIONS DURING APPELLATE PROCEEDINGS. THE SAME HAS ALSO BEEN NOTED BY US IN PRECEDING PARA 3.2. UPON PERUSAL OF THE SAME, IT COULD BE SEEN THAT THE ASSESSEE COULD NOT PURCHASE THE MATER IAL DIRECTLY FROM THE 9 LOCAL VENDOR RATHER THE PURCHASES HAD TO FOLLOWING SPECIFIC PROCEDURE AS PER THE RULES. WE FIND THAT THE ASSESSEE HAS PURCHA SED LOOSE DIAMONDS FROM M/S SUN DIAM WHICH HAS BEEN USED IN MAKING THE JEWELLERY. THE PROPOSED QUANTITY OF CUT & POLISHED DIAMONDS AS REQ UIRED BY THE ASSESSEE WOULD FIRST BE INTIMATED TO SUPERINTENDENT OF CUSTOMS ALONG WITH THE PROFORMA INVOICE OF THE SUPPLIER PARTY SHO WING THEREIN THE COMPLETE DETAILS OF QUALITY, QUANTITY AND VALUE. AG AINST THIS INTIMATION, THE SUPERINTENDENT OF CUSTOMS WOULD ISSUE A CERTIFI CATE OF PROCUREMENT AND MOVEMENT OF IMPORTED GOODS / EXCISABLE GOOD WIT HOUT PAYMENT OF DUTY. A COPY OF THE SAME IS ON RECORD. UPON PERUSAL OF THE SAME (PAGE 85 OF THE PAPER-BOOK), IT COULD BE GATHERED THAT TH IS CERTIFICATE IS ISSUED FOR PARTICULAR INVOICE NUMBER DETAILING THEREIN THE DESCRIPTION OF GOODS AS WELL AS QUANTITY OF THE GOODS PROPOSED TO BE PURCHA SED BY THE ASSESSEE. FOR THE SAID PURPOSE, THE ASSESSEE HAS EXECUTED PRE SCRIBED BOND OF RS.46.01 LACS AS SURETY WHICH IS MENTIONED ON ALL S UCH CERTIFICATES. A COPY OF THIS CERTIFICATE IS FORWARDED TO DEPUTY COM MISSIONER OF CUSTOMS. THEREAFTER, THE SUPPLIER WOULD TAKE THE CONSIGNMENT ALONG WITH RELATED INVOICE TO THE SAID AUTHORITY FOR COMPLETE VERIFICA TION AND APPRAISAL OF QUALITY, QUANTITY AND VALUE OF THE CONSIGNMENT. THE SAMPLE COPY OF INVOICE AS RAISED BY THE SUPPLIER (PLACED ON PAGE N O.86 OF THE PAPER- BOOK) WOULD REVEAL THAT THAT THE INVOICE CONTAINS C OMPLETE DESCRIPTION OF VARIOUS VARIETIES OF DIAMOND ALONG WITH THEIR RESPE CTIVE RATES ETC. THE INVOICE ALSO CONTAINS IEC NUMBER OF THE SUPPLIER, V AT / CST REGISTRATION AS WELL AS INCOME TAX PERMANENT ACCOUNT NUMBER OF T HE SUPPLIER. THE INVOICE ALSO BEARS THE REQUISITE DECLARATIONS AS RE QUIRED AS PER EXTANT RULES AND REGULATIONS. THEREAFTER, THE CONSIGNMENT IS DELIVERED BY THE SUPPLIER TO THE CUSTOM AUTHORITIES WHO WOULD INSPEC T, VERIFY AND APPRAISE 10 THE CONSIGNMENT AND WOULD STAMP AND SEAL THE CONSIG NMENT. SIMULTANEOUSLY, THE INVOICE WOULD ALSO BE STAMPED A ND ENDORSED BY THE CUSTOM AUTHORITIES, THE ENTRY OF WHICH WOULD ALSO B E MADE IN THE CUSTOMS REGISTER. ONE COPY OF THIS STAMPED INVOICE WOULD BE HANDED OVER BY SUPPLIER TO THE ASSESSEE, ON THE BASIS OF W HICH THE DELIVERY OF GOODS WOULD BE GIVEN TO ASSESSEE BY THE PREVENTIVE OFFICER IN THE OFFICE OF DEPUTY COMMISSIONER OF CUSTOMS AT DPCC (DIAMOND PLAZA CLEARING CENTRE). THE DELIVERY OF SEALED CONSIGNMENT WOULD B E TAKEN AGAINST THE PROCUREMENT CERTIFICATE AS WELL AS STAMPED-CUM-ENDO RSED INVOICE. PERTINENTLY, THE DELIVERY OF THE GOODS / CONSIGNMEN T IS ONLY AND ONLY GIVEN TO THE PREVENTIVE OFFICER IN CHARGE WHO WOULD MAKE AN ENTRY IN HIS REGISTER AND DELIVER THE POSSESSION OF THE GOODS IN ASSESSEES FACTORY PREMISES ONLY. ALL SUCH DEEMED IMPORTS MADE BY ASSE SSEE HAS TO BE THEN FULLY AND COMPLETELY ACCOUNTED FOR IN TERMS OF ITS CONSUMPTION / END-USE IN THE MANUFACTURING OF JEWELLERY WHICH IS EXPORTED BY THE ASSESSEE. IN OTHER WORDS, AT THE TIME OF EXPORT OF A PARTICULAR CONSIGNMENT OF JEWELLERY, THE QUANTITY AND THE QUAL ITY OF THE DIAMONDS HAS TO BE CO-RELATED AND ACCOUNTED FOR WITH THE CUS TOM AUTHORITIES AS TO FROM WHICH LOT OF DEEMED IMPORT THE SAID DIAMONDS H AVE BEEN USED/CONSUMED. THE CUSTOM OFFICER AFTER SATISFYING HIMSELF FULLY WOULD ENDORSE UNDER HIS SEAL AND SIGNATURE ASSESSEES RES PECTIVE EXPORT INVOICE(S) AND ALSO ON THE END-USE CERTIFICATE SHOW ING THE COMPLETE DETAILS THEREIN, ONLY AFTER WHICH THE GOODS WOULD B E ELIGIBLE FOR EXPORT TO OVERSEAS BUYERS. THE PERUSAL OF SAMPLE COPY OF END- USE CERTIFICATE (PAGE 84 OF PAPER-BOOK) WOULD REVEAL THAT THIS WOUL D CONTAIN IMPORT QUANTITY OF CUT & POLISHED DIAMONDS, EXPORT INVOICE NUMBER & DATE, SHIPPING BILL NUMBER & DATE AND WOULD CERTIFY THAT THE GOODS HAVE BEEN 11 FULLY UTILIZED IN THE MANUFACTURE OF STUDDED JEWELL ERY AND ALSO THE FACT THAT SAID MANUFACTURED GOODS HAVE ULTIMATELY BEEN E XPORTED BY THE ASSESSEE. SIMILAR DOCUMENTS HAVE BEEN PLACED ON REC ORD FOR ALL THE CONSIGNMENT PROCURED BY THE ASSESSEE FROM M/S SUN D IAM. 6. UPON PERUSAL OF ALL THESE FACTS AS WELL DOCUMENT S, IT COULD VERY WELL BE SAID THAT THE PURCHASES MADE BY THE ASSESSEE WAS TO UNDERGO STRICT RULES & REGULATIONS AS WELL AS VERIFICATION BY CUST OMS AUTHORITIES. NOT ONLY THIS, THE UTILIZATION OF THE SAME WHILE EXPORT ING THE GOODS WAS ALSO TO BE DEMONSTRATED BY THE ASSESSEE. THERE IS COMPLE TE ONE-TO-ONE CO- RELATION OF THE PURCHASES VIS--VIS DIAMONDS UTILIZ ED IN EXPORTS MADE BY THE ASSESSEE. THE DOCUMENTARY EVIDENCES AS FURNISHE D BY THE ASSESSEE AS ELABORATED BY US IN PARA-5 DULY SUPPORT THE SAID PROPOSITIONS. 7. PROCEEDING FURTHER, WE FIND THAT THE ASSESSEE HA S ALSO PLACED IN RECORD INCOME TAX RETURN COPY OF M/S SUN DIAM ALONG WITH ACCOUNT CONFIRMATION. THE PAYMENT TO THE SUPPLIERS IS THROU GH BANKING CHANNELS WHICH IS EVIDENCED FROM ASSESSEES BANK STATEMENTS ON RECORD. ALL THE PURCHASE MADE FROM M/S SUN DIAM ARE SUPPORTED BY TH E PURCHASE INVOICES AND THE PURCHASES MADE FROM THE SAID SUPPL IER HAVE UNDERGONE VERIFICATION / INSPECTION BY CUSTOM AUTHORITIES. TH E ASSESSEE HAS ALSO PLACED ON RECORD AFFIDAVIT OF SHRI RAJENDRA JAIN AS PARTNER OF M/S SUN DIAM CONFIRMING THE SUPPLY OF MATERIAL TO THE ASSES SEE AS WELL AS RECEIPT OF PAYMENT THROUGH BANKING CHANNELS. THE TRANSACTIO NS HAVE BEEN AFFIRMED TO BE GENUINE TRANSACTIONS. FURTHER, THE A SSESSEES BOOKS OF ACCOUNTS HAVE DULY BEEN AUDITED AS PER INCOME TAX R ULES AND THERE ARE NO ADVERSE REMARKS BY THE TAX AUDITOR WITH RESPECT TO PURCHASES, UTILIZATION OF RAW MATERIAL, SALE OR CLOSING STOCK. UPON PERUSAL OF THE TAX AUDIT REPORT, IT COULD BE GATHERED THAT THE ASSESSE E HAS MAINTAINED 12 COMPLETE QUANTITATIVE DETAILS OF RAW MATERIALS, WOR K-IN-PROGRESS AS WELL AS FINISHED GOODS SOLD BY IT. UPON PERUSAL OF FINAN CIAL STATEMENTS, IT COULD BE OBSERVED THAT THE ASSESSEE HAS REFLECTED N ET PROFIT RATE OF AROUND 6% IN THIS YEAR AS AGAINST NET PROFIT RATE O F 5.85% IN IMMEDIATELY PRECEDING YEAR. 8. IN THE LIGHT OF ABOVE FACTS AND CIRCUMSTANCES, W E ARE OF THE CONSIDERED OPINION THAT THE ONUS CASTED UPON ASSESS EE TO SUBSTANTIATE THE PURCHASES WAS DULY DISCHARGED AND THE ONUS WAS ON REVENUE TO DISLODGE THE ASSESSEES SUBMISSIONS AS WELL AS DOCU MENTARY EVIDENCES. HOWEVER, THE WHOLE BASIS OF ADDITION IS STATEMENT M ADE BY THE TAINTED GROUP DURING SEARCH OPERATIONS. THE OPPORTUNITY TO CROSS-EXAMINE THE SAME HAS NEVER BEEN PROVIDED TO THE ASSESSEE. IT CO ULD BE CONCLUDED THAT THE ADDITIONS ARE MADE MERELY ON THE BASIS OF ALLEGATIONS WITHOUT THERE BEING ANY COGENT MATERIAL IN THE ARMORY OF TH E REVENUE. THEREFORE, CONSIDERING THE FACTS OF THE CASE, WE ARE INCLINED TO DELETE THE IMPUGNED ADDITIONS AS MADE BY LD.AO AND AS CONFIRMED BY LD. CIT(A) IN THE IMPUGNED ORDER. WE ORDER SO. THE LD. AO IS DIRECTED TO RE-COMPUTE ASSESSEES INCOME, IN TERMS OF THIS ORDER. GROUND N OS. 2 TO 4 STANDS ALLOWED. 9. THE LD. AR HAS ASSAILED THE REASSESSMENT PROCEED INGS ON THE GROUND THAT ORIGINAL RETURN WAS SCRUTINIZED U/S 143 (3) AND THE CASE WAS REOPENED BEYOND FOUR YEARS. HOWEVER, THERE IS NO AL LEGATION BY LD. AO IN THE RECORDED REASONS TO THE FACT THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE DURING SCRUTINY ASSESSMENT. WE DO N OT CONCUR WITH THE SAME SINCE ASSESSMENT WAS FRAMED U/S 143(3) ON 18/1 2/2009 WHEREAS SEARCH ACTION ON TAINTED GROUP TOOK PLACE ON 03/10/ 2013 WHICH IS A SUBSEQUENT EVENT. THE LD. AO WAS CLINCHED WITH TANG IBLE MATERIAL 13 ARISING OUT OF A SUBSEQUENT EVENT. THIS MATERIAL ES TABLISHED POSSIBLE ESCAPEMENT OF INCOME IN THE HANDS OF THE ASSESSEE. THEREFORE, NOTHING MORE WAS REQUIRED AT THIS STAGE TO REOPEN THE CASE OF THE ASSESSEE. GROUND NO.1 STANDS DISMISSED. 10. IN THE RESULT, THE APPEAL STANDS PARTLY ALLOWED . ITA NO.7510/MUM/2019, AY 2008-09 11. THE ASSESSEE HAS SIMILARLY BEEN ASSESSED IN AY 2008-09 U/S 143(3) R.W.S. 147 ON 19/01/2016 WHEREIN PURCHASES M ADE FROM TWO SUPPLIERS HAVE BEEN DISALLOWED. THE APPELLATE ORDER IS COMMON ORDER FOR ALL THE YEARS AGAINST WHICH THE ASSESSEE IS IN FURT HER APPEAL BEFORE US WITH IDENTICAL GROUNDS OF APPEAL. FACTS BEING PARI- MATERIA THE SAME, OUR FINDINGS AS WELL AS ADJUDICATION AS FOR AY 2007-08 SHALL, MUTATIS- MUTANDIS, APPLY TO THIS YEAR AS WELL. IN OTHER WORDS, THE APP EAL STANDS PARTLY ALLOWED IN SIMILAR FASHION. ITA NO.7511/MUM/2019, AY 2009-10 12. THE ASSESSEE HAS SIMILARLY BEEN ASSESSED IN AY 2009-10 U/S 143(3) R.W.S. 147 ON 21/12/2016 WHEREIN PURCHASES M ADE FROM TWO SUPPLIERS HAVE BEEN DISALLOWED. THE APPELLATE ORDER IS COMMON ORDER FOR ALL THE YEARS AGAINST WHICH THE ASSESSEE IS IN FURT HER APPEAL BEFORE US WITH IDENTICAL GROUNDS OF APPEAL. FACTS BEING PARI- MATERIA THE SAME, OUR FINDINGS AS WELL AS ADJUDICATION AS FOR AY 2007-08 SHALL, MUTATIS- MUTANDIS, APPLY TO THIS YEAR AS WELL. IN OTHER WORDS, THE APP EAL STANDS PARTLY ALLOWED IN SIMILAR FASHION. ITA NO.7512/MUM/2019, AY 2010-11 13. THE ASSESSEE HAS SIMILARLY BEEN ASSESSED IN AY 2010-11 U/S 143(3) R.W.S. 147 ON 23/03/2015 WHEREIN PURCHASES M ADE FROM TWO SUPPLIERS HAVE BEEN DISALLOWED. THE APPELLATE ORDER IS COMMON ORDER FOR 14 ALL THE YEARS AGAINST WHICH THE ASSESSEE IS IN FURT HER APPEAL BEFORE US WITH IDENTICAL GROUNDS OF APPEAL. FACTS BEING PARI- MATERIA THE SAME, OUR FINDINGS AS WELL AS ADJUDICATION AS FOR AY 2007-08 SHALL, MUTATIS- MUTANDIS, APPLY TO THIS YEAR AS WELL. IN OTHER WORDS, THE APP EAL STANDS PARTLY ALLOWED IN SIMILAR FASHION. CONCLUSION 14. ALL THE APPEALS STAND PARTLY ALLOWED IN TERMS O F OUR ABOVE ORDER. ORDER PRONOUNCED ON 07 TH JULY, 2021. SD/- SD/- (AMARJIT SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 07/07/2021 SR.PS, JAISY VARGHESE !'! / COPY OF THE ORDER FORWARDED TO : 1. #24 / THE APPELLANT 2. 5624 / THE RESPONDENT 3. ''< ( # ) / THE CIT(A) 4. ''< / CIT CONCERNED 5. 5? , '#? , / DR, ITAT, MUMBAI 6. @AB / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.