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Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI
Before: SHRI OM PRAKASH KANT & MS KAVITHA RAJAGOPAL
PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated 14/03/2022 passed by the National Faceless Appeal Centre (NFAC), Delhi [in short ‘the Learned First Appellate Authority or FAA’] raising following ground:
M/s Glitter Jewels 2 ITA No. 1366/M/2022
Whether on the facts and in the circumstances of the case and Whether on the facts and in the circumstances of the case and Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of the Ld. CIT (A) has erred in deleting the addition of Rs.4,64,25,022/ Rs.4,64,25,022/- being the difference between the amount of being the difference between the amount of purchase on 01.03.2013 as per the impounded material purchase on 01.03.2013 as per the impounded material purchase on 01.03.2013 as per the impounded material retrieved from email durinf survey and amount of purchase on retrieved from email durinf survey and amount of purchase on retrieved from email durinf survey and amount of purchase on 01.03.2013 as per the ledge 01.03.2013 as per the ledger account of creditors for r account of creditors for diamonds in the books of M/s. Glitter Jewels, that too when diamonds in the books of M/s. Glitter Jewels, that too when diamonds in the books of M/s. Glitter Jewels, that too when Shri. Amit Patel, partner in his statement recorded during Shri. Amit Patel, partner in his statement recorded during Shri. Amit Patel, partner in his statement recorded during survey proceedings also confirmed such purchases by clearly survey proceedings also confirmed such purchases by clearly survey proceedings also confirmed such purchases by clearly stating that due to business exigencies raw diamonds were stating that due to business exigencies raw diamon stating that due to business exigencies raw diamon purchased in cash from the parties mentioned in the annexure purchased in cash from the parties mentioned in the annexure purchased in cash from the parties mentioned in the annexure of impounded material. of impounded material. 2. At the outset the the outset the Ld. Department Representative Department Representative (DR) submitted that there was a delay of 13 days in filing the appeal. He submitted that there was a delay of 13 days in filing the appeal. He submitted that there was a delay of 13 days in filing the appeal. He submitted that due to ongoing Covid pandemic, delay happened in due to ongoing Covid pandemic, delay happened in due to ongoing Covid pandemic, delay happened in processing the filing of appeal. He prayed that in view of reasonable processing the filing of appeal. He prayed that in view of reasonable processing the filing of appeal. He prayed that in view of reasonable cause, delay might be condoned. The cause, delay might be condoned. The Ld. counsel of the assessee also of the assessee also did not object seriously. In view of reasonable cause for delay in did not object seriously. In view of reasonable cause for delay in did not object seriously. In view of reasonable cause for delay in filing the appeal, we admit the appeal for adjudication. filing the appeal, we admit the appeal for adjudication. filing the appeal, we admit the appeal for adjudication.
Briefly stated facts of the case are that the assessee filed return Briefly stated facts of the case are that the assessee file Briefly stated facts of the case are that the assessee file of income on 28/09/2013 declaring total income of of income on 28/09/2013 declaring total income of of income on 28/09/2013 declaring total income of ₹72,03,710/-.
M/s Glitter Jewels 3 ITA No. 1366/M/2022
Thereafter, a survey action under section 133 Thereafter, a survey action under section 133A of the Income A of the Income-tax Act, 1961 (in short in short ‘the Act’), was carried out on 10/12/2013, ), was carried out on 10/12/2013, wherein the assessee wherein the assessee accepted and offered additional income accepted and offered additional income for assessment year 2014 assessment year 2014-15 and assessment year 2013 15 and assessment year 2013-14 i.e. the assessment year under consideration. In respect of the assessment assessment year under consideration. In respect of the assessment assessment year under consideration. In respect of the assessment year under consideration, the assessee offered additional income on year under consideration, the assessee offered additional income on year under consideration, the assessee offered additional income on two counts. Firstly, the assessee the assessee admitted ₹53,29,220/ 220/- for expenses incurred on wedding of Mr incurred on wedding of Mr. Amit, partner, including purchase of Amit, partner, including purchase of jewelry etc., which were not reflected in books of , which were not reflected in books of accounts of the , which were not reflected in books of firm. Secondly, the assessee admitted discrepancies in creditors Secondly, the assessee admitted discrepancies in creditors Secondly, the assessee admitted discrepancies in creditors amount as on 14/03/2013. The pending creditors as appearing in amount as on 14/03/2013. The pending creditors as appearing in amount as on 14/03/2013. The pending creditors as appearing in material impounded during survey shown as on 14/03/2013 at material impounded during survey shown as on 14/03/2013 at material impounded during survey shown as on 14/03/2013 at ₹5,76,34,786/- whereas in the books of accounts outst whereas in the books of accounts outst whereas in the books of accounts outstanding creditors on said date were amounting to creditors on said date were amounting to ₹10,40,58,805/ 40,58,805/-. The assessee accepted this discrepancy this discrepancy as due to inflation of the inflation of the purchases and accordingly admitted purchases and accordingly admitted ₹4,64,25,022/ 25,022/- for taxation
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relevant to assessment year 2013 relevant to assessment year 2013-14. The assessee also deposit ssessee also deposited cheques for tax amount corresponding to the ax amount corresponding to the offer of undisclosed offer of undisclosed income accepted during the course of the survey proceeding. income accepted during the course of the survey proceeding. income accepted during the course of the survey proceeding. However in the return of income filed for the year under However in the return of income filed for the year under However in the return of income filed for the year under consideration, the assessee did not offer amounts accepted during consideration, the assessee did not offer amounts accepted during consideration, the assessee did not offer amounts accepted during the course of the survey for income. Therefore ourse of the survey for income. Therefore, the Assessing Officer the Assessing Officer after providing opportunity after providing opportunity of being heard to the assessee of being heard to the assessee made addition for the about addition for the about two amounts. The relevant finding of the amounts. The relevant finding of the Assessing Officer in respect of in respect of addition of ₹4,64, 4,64,25,022/- is reproduced as under: reproduced as under:
“6. In the above statement in question no. 26 it has been asked to In the above statement in question no. 26 it has been asked to In the above statement in question no. 26 it has been asked to Shri Amit V Patel that page no.6 to 7 of Annexure As 1 of the Shri Amit V Patel that page no.6 to 7 of Annexure As 1 of the Shri Amit V Patel that page no.6 to 7 of Annexure As 1 of the impounded material (which has Sheen retrieved from your email impounded material (which has Sheen retrieved from your email impounded material (which has Sheen retrieved from your email inbox) that an amount of inbox) that an amount of ₹5.76.34,783/- is appearing as pending ppearing as pending amount as on March 1 amount as on March 1st 2013, however, as per ledger account of 2013, however, as per ledger account of creditors for diamond in the books of M/s. Glitter Jewels obtained on creditors for diamond in the books of M/s. Glitter Jewels obtained on creditors for diamond in the books of M/s. Glitter Jewels obtained on March 14, 2013, the pending amount is March 14, 2013, the pending amount is ₹10,40,59,805/-. Please explain . Please explain the discrepancies to the tune of the discrepancies to the tune of Rs.4,64,25,022/-. Shri Amit V Patel in . Shri Amit V Patel in reply said that due to unavoidable business exigencies the raw reply said that due to unavoidable business exigencies the raw reply said that due to unavoidable business exigencies the raw diamond were procured / purchased from the parties mentioned in the diamond were procured / purchased from the parties mentioned in the diamond were procured / purchased from the parties mentioned in the
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annexure at page 6 of the impounded material in cash. However the annexure at page 6 of the impounded material in cash. However the annexure at page 6 of the impounded material in cash. However the bills for the same w bills for the same were obtained from the parties from whom regular ere obtained from the parties from whom regular purchases are made. The same may be seen in the annexure at page purchases are made. The same may be seen in the annexure at page purchases are made. The same may be seen in the annexure at page No.5 of the impounded material. No.5 of the impounded material. The discrepancy in the figure of these two annexure is on account of The discrepancy in the figure of these two annexure is on account of The discrepancy in the figure of these two annexure is on account of inflation of the purchases. In view of thi inflation of the purchases. In view of this and to buy the pace of mind I s and to buy the pace of mind I voluntarily offer the said difference amount of Rs.4,64,25.022/ voluntarily offer the said difference amount of Rs.4,64,25.022/ voluntarily offer the said difference amount of Rs.4,64,25.022/- for taxation for the F.Y. 2012 taxation for the F.Y. 2012-13 relevant to A.Y.2013-14. In view of the 14. In view of the above Rs.4.64,25,022/ above Rs.4.64,25,022/- added to the total income of the assessee. added to the total income of the assessee. Penalty proceeding Penalty proceedings us 271(1)(c) are separately initiated in this s us 271(1)(c) are separately initiated in this context for concealment of income. context for concealment of income.” 4. The Ld. CIT(A) upheld the disallowance of Ld. CIT(A) upheld the disallowance of ₹ ₹53,29,220/- for unexplained expenditure on wedding, however deleted the addition unexplained expenditure on wedding, however deleted the addition unexplained expenditure on wedding, however deleted the addition for discrepancy in trade creditors. for discrepancy in trade creditors. Aggrieved with the deletion, the with the deletion, the Revenue is before the is before the Tribunal by way of raising the grounds a by way of raising the grounds as reproduced above.
The Ld. DR refer referred to the copy of the statement of Sri Amit V to the copy of the statement of Sri Amit V Patel recorded during the course of the sur Patel recorded during the course of the survey and submitted that vey and submitted that addition-in-dispute was made not solely on the statement of the dispute was made not solely on the statement of the dispute was made not solely on the statement of the partner Shri Amit V patel but it was based on the documentary partner Shri Amit V patel but it was based on the documentary partner Shri Amit V patel but it was based on the documentary
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evidences impounded during the course of the survey. He submitted evidences impounded during the course of the survey. He submitted evidences impounded during the course of the survey. He submitted that as per page No. that as per page No. 6 & 7 of Annexure A-1 impounded from the 1 impounded from the premises, contains a printout of email downloaded from inbox of a printout of email downloaded from inbox of a printout of email downloaded from inbox of email account of the assessee, wherein it was found that email account of the assessee, wherein it was found that email account of the assessee, wherein it was found that creditors pending as on 14/03/2013 was amounting to pending as on 14/03/2013 was amounting to pending as on 14/03/2013 was amounting to ₹5,76,34,786/-. However on verification of the books of accounts outstanding However on verification of the books of accounts outstanding However on verification of the books of accounts outstanding creditors as on 01/ creditors as on 01/03/2013 was of ₹10,40,58,805/ 805/-. On being questioned, the partner Sh questioned, the partner Sh. Amit Patel replied that raw diamonds Amit Patel replied that raw diamonds were purchase in cash, were purchase in cash, however bills for the same obtained from the however bills for the same obtained from the regular purchase parties and in view of the discrepancy he regular purchase parties and in view of the discrepancy he regular purchase parties and in view of the discrepancy he voluntarily offered the voluntarily offered the difference amount of ₹4,64,25, 4,64,25,022/- for taxation. The Ld. DR submitted that before the Ld. CIT(A), the DR submitted that before the Ld. CIT(A), the DR submitted that before the Ld. CIT(A), the assessee submitted purchase registers, purchase ledgers and other assessee submitted purchase registers, purchase ledgers and other assessee submitted purchase registers, purchase ledgers and other details including purchase bills, which were in the nature of details including purchase bills, which were in the nature of details including purchase bills, which were in the nature of additional evidence but additional evidence but the Assessing Officer was not was not provided opportunity to comment upon opportunity to comment upon the same and this being violation of same and this being violation of
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principle of natural justice, the order of the Ld. CIT(A) might be set principle of natural justice, the order of the Ld. CIT(A) might be set principle of natural justice, the order of the Ld. CIT(A) might be set aside and the matter the matter might be restored back to the A be restored back to the Assessing Officer for deciding afresh in the light of documents filed by the assessee fresh in the light of documents filed by the assessee fresh in the light of documents filed by the assessee before the Ld. CIT(A) as additional evidence. before the Ld. CIT(A) as additional evidence.
The Ld. counsel of the assessee on the other and submitted that of the assessee on the other and submitted that Ld. CIT(A) has passed the order after considering the evidences and Ld. CIT(A) has passed the order after considering the evidences and Ld. CIT(A) has passed the order after considering the evidences and due verification of purchases recorded in books of accounts and f purchases recorded in books of accounts and f purchases recorded in books of accounts and therefore order of the Ld. CIT(A) might be upheld. therefore order of the Ld. CIT(A) might be upheld.
We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. dispute and perused the relevant material on record. dispute and perused the relevant material on record. In the course of survey, the partner Sh of survey, the partner Sh Amit Patel was questioned on the Amit Patel was questioned on the incriminating material found incriminating material found and impounded. The relevant part of impounded. The relevant part of his statement is reproduced as under: his statement is reproduced as under:
“Q26. Page no. 6 to 7 of Annexure A Page no. 6 to 7 of Annexure A-1 of the impounded material which 1 of the impounded material which has been retrived from your email inbox that an amount of Rs. has been retrived from your email inbox that an amount of Rs. has been retrived from your email inbox that an amount of Rs. 5,76,34786/- is appearing as pending amount as on March 14 of 2013 is appearing as pending amount as on March 14 of 2013 is appearing as pending amount as on March 14 of 2013 however as per ledger account of creditors for diamond in the b however as per ledger account of creditors for diamond in the b however as per ledger account of creditors for diamond in the books of
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M/s. Olitter Jewels obtained on 2013 the pending amount is Rs. M/s. Olitter Jewels obtained on 2013 the pending amount is Rs. M/s. Olitter Jewels obtained on 2013 the pending amount is Rs. 10,40,58,805/- - please explain the discrepancies to the tune of Rs. please explain the discrepancies to the tune of Rs. 4,64.26.0221-, Please also comment on the , Please also comment on the discrepancies viz discrepancies viz-a-viz the names appearing as creditors names appearing as creditors.
Ans. Due to unavoi Due to unavoidable business exigencies the raw diamond were dable business exigencies the raw diamond were procured/purchased from the parties mentioned in the annexure at procured/purchased from the parties mentioned in the annexure at procured/purchased from the parties mentioned in the annexure at page-6 of the impounded material in cash. However the bills for the 6 of the impounded material in cash. However the bills for the 6 of the impounded material in cash. However the bills for the same were obtained from the parties from whom regular purchases same were obtained from the parties from whom regular purchases same were obtained from the parties from whom regular purchases are made in the same may be seen in the annexure at page no. 5 of the the same may be seen in the annexure at page no. 5 of the the same may be seen in the annexure at page no. 5 of the impounded material. impounded material.
The discrepancies in the figure of these two annexures is on account of The discrepancies in the figure of these two annexures is on account of The discrepancies in the figure of these two annexures is on account of inflammation of the purchases. In view of this and to by the peace of inflammation of the purchases. In view of this and to by the peace of inflammation of the purchases. In view of this and to by the peace of mind voluntarily of the said differe mind voluntarily of the said difference amount of Rs. 4,64,25,022/ nce amount of Rs. 4,64,25,022/- for taxation for the financial year 2012 taxation for the financial year 2012-13 relevant to A.Y. 2013 13 relevant to A.Y. 2013-14.
Q28. From the explanation provided by you it is quite apparent that 28. From the explanation provided by you it is quite apparent that 28. From the explanation provided by you it is quite apparent that you are certifying the discrepancies. Once again you are requested to you are certifying the discrepancies. Once again you are requested to you are certifying the discrepancies. Once again you are requested to kindly go throug kindly go through the records and once again go through the stocks h the records and once again go through the stocks summary inventory of stock taken by the values unaccounted summary inventory of stock taken by the values unaccounted summary inventory of stock taken by the values unaccounted unexplained expenditure and check up with your accountant staff and unexplained expenditure and check up with your accountant staff and unexplained expenditure and check up with your accountant staff and then submit the explanation thereafter. then submit the explanation thereafter.
Ans. As suggested, I have gone through Ans. As suggested, I have gone through the best possible way to explain the best possible way to explain the stock and we have again and again rechecked everything. the stock and we have again and again rechecked everything. the stock and we have again and again rechecked everything. Whatever I have stated earlier is correct to the best of my knowledge. I Whatever I have stated earlier is correct to the best of my knowledge. I Whatever I have stated earlier is correct to the best of my knowledge. I am reiterating that notice to buy peace of mind and to cooperate with am reiterating that notice to buy peace of mind and to cooperate with am reiterating that notice to buy peace of mind and to cooperate with the department. I a the department. I as one of the partner of the firm voluntarily declare s one of the partner of the firm voluntarily declare the amount as stated above for taxation over and above the regular the amount as stated above for taxation over and above the regular the amount as stated above for taxation over and above the regular income/profit declared. income/profit declared.
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Q29. Are you I good state of mind? Are you offering this additional Q29. Are you I good state of mind? Are you offering this additional Q29. Are you I good state of mind? Are you offering this additional income voluntarily? voluntarily?
Ans. Yes, I am offering Yes, I am offering the additional income to the tune of rs the additional income to the tune of rs 2,50,01,328/- for A.Y 2014-15 and Rs 5,17,54,242/- 4,64,25,022 + 4,64,25,022 + 2014 over and above to the regular income of 53,29,220/- for A.Y 2013 for A.Y 2013-2014 over and above to the regular income of the business.
Q30. The above offering of additional income would result into 30. The above offering of additional income would result into 30. The above offering of additional income would result into additional tax burden on you. How you will pay? tional tax burden on you. How you will pay?
Ans. I am hereby submitting five Post dated cheques drawn on Ans. I am hereby submitting five Post dated cheques drawn on Ans. I am hereby submitting five Post dated cheques drawn on No 50111250000192 for Total of Rs. Syndicate Bank A/c. Syndicate Bank A/c. No 50111250000192 for Total of Rs. 2,30,00,000/- Which is approximation of tax out go of the above Which is approximation of tax out go of the above additional income and I state th additional income and I state that I shall take due care to Honour the at I shall take due care to Honour the same on the given date. same on the given date.
Do you wish to say anything else 027. Do you wish to say anything else
Ans. I have declared the above amount of Rs 7,67,55,570/ I have declared the above amount of Rs 7,67,55,570/ I have declared the above amount of Rs 7,67,55,570/- voluntarily to buy the peace of mind and to co to buy the peace of mind and to co-operate with the department. I operate with the department. I have also explained have also explained the source of such additional income. Hence the source of such additional income. Hence penalty proceedings should not be initiated in respect of this penalty proceedings should not be initiated in respect of this penalty proceedings should not be initiated in respect of this discrepancy.
The above statement has been recorded as stated by me, During the The above statement has been recorded as stated by me, During the The above statement has been recorded as stated by me, During the course of recording of the statement no threat, coercion undue course of recording of the statement no threat, coercion undue course of recording of the statement no threat, coercion undue influence is brought to bear on me and I have given this statement in nce is brought to bear on me and I have given this statement in nce is brought to bear on me and I have given this statement in the sound state of mind. the sound state of mind.”
M/s Glitter Jewels 10 ITA No. 1366/M/2022
7.1 Thus it is evident that difference in creditors was on account of evident that difference in creditors was on account of evident that difference in creditors was on account of claim of the assessee that some purchases claim of the assessee that some purchases were made in cash were made in cash whereas purchase bills of the same w whereas purchase bills of the same were obtained from regular ere obtained from regular suppliers. The difference amount of suppliers. The difference amount of ₹4,64,26,022/- along with name along with name of the parties was easily identifiable from the books of accounts of of the parties was easily identifiable from the books of accounts of of the parties was easily identifiable from the books of accounts of the assessee. But before the Ld. CIT(A) the assessee claim to have the assessee. But before the Ld. CIT(A) the assessee claim to have the assessee. But before the Ld. CIT(A) the assessee claim to have filed purchase ledger as pe filed purchase ledger as per books of accounts along with purchase r books of accounts along with purchase bills, which the Ld. CIT(A) has found in order and deleted the bills, which the Ld. CIT(A) has found in order and deleted the bills, which the Ld. CIT(A) has found in order and deleted the addition. The Ld. CIT(A) admitted those additional evidences addition. The Ld. CIT(A) admitted those additional evidences addition. The Ld. CIT(A) admitted those additional evidences without following due process of law provided in without following due process of law provided in without following due process of law provided in Rule 46A of Income-tax Rules, 1962. , 1962. The action of the Ld. CIT(A) is in violation of of the Ld. CIT(A) is in violation of the principle of natural justice. Therefore, in the interest of the principle of natural justice. Therefore, in the interest of the principle of natural justice. Therefore, in the interest of substantial justice and to provide opportunity to the Assessing substantial justice and to provide opportunity to the Assessing substantial justice and to provide opportunity to the Assessing Officer to examine the additional evidence Officer to examine the additional evidence which were filed before which were filed before the Ld. CIT(A), we feel it appropriate to set aside the order e feel it appropriate to set aside the order e feel it appropriate to set aside the order of the Ld. CIT(A) on the issue- -in-dispute and restore the matter back to the dispute and restore the matter back to the
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Assessing Officer for deciding a ssessing Officer for deciding afresh after examining the additional fresh after examining the additional evidence along with books of accounts and purchase vouchers/bi evidence along with books of accounts and purchase vouchers/bi evidence along with books of accounts and purchase vouchers/bills etc. or other documents which the assessee may like to file before or other documents which the assessee may like to file before or other documents which the assessee may like to file before the Assessing Officer in support of his claim. The Assessing Officer the Assessing Officer in support of his claim. The Assessing Officer the Assessing Officer in support of his claim. The Assessing Officer may also carry out any enquiry which deemed fit in the facts and may also carry out any enquiry which deemed fit in the facts and may also carry out any enquiry which deemed fit in the facts and circumstances for adjudication of the issue in dispute circumstances for adjudication of the issue in dispute circumstances for adjudication of the issue in dispute. It is needless to mention that the assessee shall be afforded adequate opportunity to mention that the assessee shall be afforded adequate opportunity to mention that the assessee shall be afforded adequate opportunity of being heard. The ground of the appeal of the of being heard. The ground of the appeal of the Revenue Revenue accordingly allowed for statistical purposes. allowed for statistical purposes.
In the result, the appeal of the In the result, the appeal of the Revenues allowed for statistical allowed for statistical purposes.
Order pronounced in the open Court in unced in the open Court in 27/09 /09/2022. Sd/- Sd/- - (KAVITHA RAJAGOPAL KAVITHA RAJAGOPAL) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 27/09/2022 Dragon Legal/Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant
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The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, BY ORDER, //True Copy// (Sr. Private Secretary) (Sr. Private Secretary) ITAT, Mumbai ITAT, Mumbai