INCOME TAX OFFICER-25(3)(4), MUMBAI vs. S.R.JEWELS, MUMBAI

In this appeal, the Revenue has challenged the deletion of addition made of ` 49,21,400 under section 68 of the Income Tax Act, 1961 (for short “the Act”).

Brief facts are, on the basis of incriminating material found during the search and seizure operation conducted under section 132 of the Act in case of Bhawarlal Jain Group it was found that the assessee is one of the beneficiaries of accommodation entries provided by a Bhawarlal Jain Group concern, M/s Impex Gems. On the basis of such information, assessment in case of the assessee was re–opened under section 147 of the Act. During the assessment proceedings, on the basis of information available on record, the Assessing Officer found that the assessee has obtained accommodation entry of loans from M/s. Impex Gem amounting to ` 49,21,400. He further found that M/s. Impex Gem was a benami concern of M/s. Bhawarlal Jain. Alleging that the assessee was unable to prove the source of accommodation entry of ` 41,29,400, he added it to the income of the assessee. The assessee challenged the addition before the first appellate authority.

The learned Commissioner (Appeals) after considering the submissions of the assessee that the amount in question represents value of polished diamonds purchased by the assessee, proceeded to treat it as bogus purchase. However, he was of the view that only the profit element embedded in such purchases has to be brought to tax. Thereafter, referring to the benign assessment procedure (BAP)

When the appeal was called for hearing, no one was present for the assessee. Even, there is no request for adjournment of appeal. In view of the aforesaid, we proceed to dispose off the appeal ex–parte qua the assessee after hearing the learned Departmental Representative.

Heard the learned Departmental Representative and perused the material on record. She submitted that while the Assessing Officer on the basis of information available on record has observed that the assessee has availed accommodation entry of loans amounting to ` 49,21,400, the learned Commissioner (Appeals) on the basis of submissions made by the assessee has treated it as bogus purchases of diamond. She submitted that the fact of purchase of unpolished diamond was not raised before the Assessing Officer. Therefore, she submitted, the matter may be restored to the Assessing Officer for fresh adjudication. On perusal of the facts on record, it is seen that the Assessing Officer on the basis of information available on record has recorded a finding that the assessee has availed accommodation entries by way of loan from M/s. Impex Gems amounting to ` 49,21,400. Whereas, the learned Commissioner (Appeals) on the basis

In the result, Revenue’s appeal is allowed for statistical purposes. Order pronounced in the open Court on 25th May 2018