ACIT, CIRCLE- 26(2), NEW DELHI vs. VISHAL CHAIN & JEWELLERY PVT. LTD., NEW DELHI

The appeal filed by the Revenue is directed against the order dated 22.04.2019 of the Ld. Commissioner of Income Tax (Appeals) – 34, New Delhi (“CIT(A)”) pertaining to Assessment Year (“AY”) 2006-07.

2. That on the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and on facts in deleting the additions of Rs.

ACIT vs. Vishal Chain & Jewellery Pvt. Ltd. 2 62,36,308/-, made by the AO by treating the purchases from Bengali Chain & Co. bogus without appreciating that in response to the summon u/s 131 Sh. Sumer Chand Verma, prop: M/s Bengali Chain Co., failed to appear despite getting adequate opportunities, thus, neither the identity was established nor the genuineness of transaction was established 3. That on the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and on facts in deleting the additions of Rs. 1,55,27,844/- made by the AO by treating these purchases from M/s Bajaji Chain & Co. and M.s Bengali Chain & Co. as bogus without appreciating that in response to the summon u/s 131 Sh. Muni Ram Verma, prop: Balaji Chain Co., failed to produce copy of original bills, ledger accounts, balance sheet etc., thus, in this case neither the creditworthiness nor the genuineness of transaction was established..

4. That on the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and on facts in holding that M/s Bajaji Chain & Co. submitted copy of sales bills, ledgers, bank statements etc. making the order perverse 5. That the order of the CIT(A) is perverse, erroneous and is not tenable on facts and in law.

are without prejudice to each other.”

3. The facts in brief are that the assessee company is engaged in the manufacturing and trading of gold jewellery, gold chains and resale of bullion i.e. fine gold. For AY 2006-07, the assessee filed its return on 23.11.2006 declaring income of Rs. 15,25,870/-. After initial processing of the return under section 143(1) of the Income Tax Act, 1961 (the “Act”), the case was selected for scrutiny and assessment was completed on total income of Rs. 2,35,40,300/- on 31.12.2008 under section 143(3) of the Act against which the appeal of the assessee filed before the Ld. CIT(A) was allowed. The Revenue challenged the order of the Ld. CIT(A) before the Tribunal. Vide order in dated 30.09.2011, the Tribunal set aside the order of the Ld. CIT(A) on the issue of purchases amounting to Rs. 2,17,64,152/- for decision afresh. Accordingly, the Ld. CIT(A) has decided the said issue afresh whereby he deleted the addition of Rs. 1,55,27,844/- and Rs. 62,36,308/- made by the Ld. AO by treating the purchases from M/s. Balaji Chain & Co. and M/s. Bengali Chain & Co.

ACIT vs. Vishal Chain & Jewellery Pvt. Ltd. 3 respectively as bogus recording the following observations and findings in para 10 of the appellate order:

10. I have considered the facts of the case, finding of the AO and submission of the appellant. The case is set aside with the specific direction from the Hon'ble ITAT to the file of the CIT(A) to provide opportunity to the AO as per Rule 46A, as the CIT(A) has admitted the additional evidences without providing opportunity to the AO. CIT(A) has provided opportunity to the AO as well as the appellant. The evidences which were furnished by the appellant during the appellate proceedings in respect of purchases from Bengali Chain & Co. and Balaji Chain & Co. were sent to the AO for his comments. AO has made detailed investigation by way of issuing notice and summon u/s 131 and both the parties have confirmed that appellant has made purchases from them and furnished necessary evidences in support of the transaction. The payments were made by the appellant to both the parties against the purchases and they have furnished copy of sale bills, PAN details, copy of bank accounts reflecting the transactions. Since both the parties have provided necessary details to the AO to establish the genuineness of the transaction and purchases are duly recorded in the books of account of the appellant, AO is not justified in making addition in respect of purchases made both the parties at Rs.2,17,64,152/- and addition made by the AO is hereby deleted.

6. We have considered the submission of the parties and perused the record. There is no substance in the argument of the Ld. DR that no ACIT vs. Vishal Chain & Jewellery Pvt. Ltd. 4 documents were produced for verification before the Ld. CIT(A). In fact certain details as enumerated in serial No. 14 and 16 of the assessee’s Paper Book filed before the Ld. CIT(A) in the first round were treated by the Tribunal to be additional evidence which the Ld. CIT(A) had admitted and relied upon without following the mandate of rule 46A of the Income Tax Rules, 1962 which prompted the Tribunal to set aside the matter for decision afresh after providing opportunity of hearing to the Ld. AO. Hence, the necessary documents etc. did exist in the file of the Ld. CIT(A) who in the second round called for the report from the Ld. AO vide his letter dated 14.08.2015 to which the Ld. AO responded vide his letter dated 27.02.2019. The details of remand report are given by the Ld. CIT(A) in para 8 of his appellate order.

ACIT vs. Vishal Chain & Jewellery Pvt. Ltd. 5 CIT(A) also recorded finding of fact with which we agree that proper and satisfactory answers to all questions were given and documents required in terms of notice dated 27.11.2018 were already produced by Shri Muni Ram Verma, Prop. of Balaji Chain & Co.