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Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI
Before: SH. H.S. SIDHU & SH. O.P. KANT
ORDER PER O.P. KANT, A.M.: This appeal by the Revenue is directed against the order dated 7th November, 2006 of learned Commissioner of Income Tax (Appeals)-XXV, New Delhi, raising the following grounds of appeal: i. On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) has erred in deleting the addition amounting to Rs. 41,15,607/- made on account of accommodation entry provided by M/s. Bishan Chand Mukesh Kumar in whose case it was clearly established that this firm has not done any purchase and sale of jewellery but issued cheques in lieu of cash given by the assessee.
2 AY: 1998-99 ii. Any other ground that the appellant would raise during the course of appeal for amending, deleting, modifying or adding any other ground of appeal
2. The reassessment in this case was completed under Section 147 r.w.s. 143(3) of the Income-tax Act, 1961 (for short “the Act”) on 24th March, 2006 on the basis of information received from the Deputy Commissioner of Income Tax, Central Circle-III, New Delhi, that the assessee is a beneficiary of accommodation entries provided by M/s. Bishan Chand Mukesh Kumar in the garb of bogus transaction of sale of jewellery. The Assessing Officer issued a notice under Section 148 of the Act on 24th March, 2005. The Assessing Officer observed that a search and seizure action under Section 132 of the Act was carried out on 3rd August, 2000 at the premises of Sh. Manoj Aggarwal, Sh. Bishan Chand Aggarwal and their business associates and it was held in their block assessment proceedings that they had no real business but were only providing accommodation entries in the garb of purchase and sale of jewellery. The Assessing Officer, relying on the block assessment order in the case of M/s. Bishan Chand Mukesh Kumar, held that the sale of jewellery shown by the assessee to M/s. Bishan Chand Mukesh Kumar is bogus and considered the entire sale proceeds of Rs. 40,95,131/- along with commission @ 0.50%, amounting to Rs. 20,476/- (total addition of Rs. 41,15,607/-) as income from undisclosed source being the amount paid and obtained an accommodation entry on the alleged sale of jewellery. Aggrieved, the assessee filed an 3 AY: 1998-99 appeal before the learned Commissioner of Income Tax (Appeals) challenging the jurisdiction in reopening the assessment as well as the addition made on merit.
The learned Commissioner of Income Tax (Appeals) held the reassessment proceedings as valid, however, deleted the addition made by the Assessing Officer. Aggrieved, the Revenue is in appeal raising the grounds, as reproduced above.
The learned Sr. Departmental Representative, relying on the order of the Assessing Officer, submitted that in the assessment order of M/s. Bishan Chand Mukesh Kumar, it was clearly held that it was engaged in providing accommodation entries against certain commission amount of the assessee and the assessee was one of the beneficiaries of the said firm and, therefore, the addition made by the Assessing Officer might be sustained.
Earlier on 30.12.2015, the case was adjourned to 02.05.2016 on the written request of Revenue and both the parties were informed. On 02.05.2016, again on the written request of learned Sr. Departmental Representative, the case was adjourned to 10.08.2016, on which date, none was present on behalf of the assessee, and notice was issued to the assessee for the next date of hearing. Despite this, none turned up on behalf of the assessee. Thus, the appeal heard ex-parte qua the assessee.
We have heard the submissions of learned Sr. Departmental Representative and perused material on record. The learned Commissioner of Income Tax (Appeals) has held 4 AY: 1998-99 that the existence of the jewellery was proved from the VDIS, 1997 declaration and the assessee has claimed the sale of the same jewellery, which got tallied with the purchase bills issued by the buyer. He further held that the Assessing Officer has not provided any opportunity to the assessee to explain the material facts on which the Assessing Officer made the addition. Accordingly, he deleted the addition. The relevant findings of the learned Commissioner of Income Tax (Appeals) are reproduced as under: “9. The submissions of the appellant and facts of the case has been considered very carefully. I have also perused the decisions cited above in support of the appellant’s contention. One fact clearly emanating from the whole issue is that, the A.O. has based his arguments purely on the basis of the letter of DCIT, Central Circle-3, and the Block asstt. Order u/s.158 BD in the case of M/s. Bishan Chand Mukesh Kumar. He has extensively quoted from the above in his support of reaching such conclusion. The above information may be a sufficient ground to initiate re-asstt. proceedings of a case, but to make an addition the A.O. has to establish the fact of fraudulent nature of such sale of jewellery. Purely on surmises and conjectures no transaction can be held as bogus unless the same is proved on the basis of sound reasoning and evidence. When the assessee has furnished all necessary proof in his support, it is all the more necessary to rebut such evidence with cogent and credible evidence. In the instant case to prove the sale is bogus, it is necessary to establish the fact that the assessee does not possess any jewellery to enter into sale transaction. It is an admitted fact that the assessee had made declaration under VDIS 1997 and the concerned CIT has issued a valid certificate u/s.68(2) of VDIS, 1997 to the effect that the assessee is owner of such jewellery. Unless and until such certificate is withdrawn or cancelled by competent authority, the A.O. cannot take a different view on the existence of jewellery. The A.O. has not 5 AY: 1998-99 contradicted the VDIS declaration with suitable evidence. Once the existence of jewellery is proved, the next course of action before the A.O. is to prove that the said jewellery is still existing with the assessee even after the impugned sale. No concrete evidence is forthcoming on this issue to suggest that the assessee is still owning the jewellery in question. On the other hand the assessee has shown that the jewellery declared under VDIS, 1997 has been physically transferred to the buyer and tallied with the items in the purchase bills issued by the buyer and proceeds have been received through banking channel. The buyer has confirmed the transaction and denied that he ever made any statement before any authority about bogus nature of purchases/sales. The buyer is assessed to IT and ST Acts. The A.O. could not point out any discrepancy in the evidences relied by the assessee nor bought out any credible evidence to contradict the contention of the assessee. Even if A.O. has some material to reject the assessee’s contention, he should provide an opportunity to the assessee to seek his explanation on such material. Such material does not carry any evidential value in the absence of opportunity to the assessee. Any assessment framed on the basis of such material does not stand in the eye of law. In view of the above facts and circumstances as well as legal decisions relied on by the assessee, the addition made in the assessment order cannot sustain as per law and accordingly the same is directed to be deleted.”
We find that in the case of Income Tax Officer Vs. Smt. Sunit Garg, in ITA No. 3988/Del/2006, pronounced on 28th April, 2007, identical ground of appeal was raised by the Revenue in respect of accommodation entry from M/s. Bishan Chand Mukesh Kumar, which is as follows: “(i) The learned CIT(A) erred in law and on the facts and in the circumstances of the case, by deleting the addition of Rs. 39,61,408/- made on account of accommodation entry provided by M/s. Bishan Chand Mukesh Kumar in whose case it was clearly established that 6 AY: 1998-99 this firm has not done any purchase and sale of jewellery but issued cheques in lieu of cash given by the assessee. (ii)………………………………..”
8. The Tribunal in the aforesaid case deleted the addition with the following observations: “8. We have heard the rival submissions and perused the material available on record. We are inclined to agree with the submissions of learned counsel for the assessee that the issue involved in this case is squarely covered by the earlier decision of the Tribunal relied upon by the assessee. The earlier decision of the Tribunal also relate to the same search proceedings. Learned CIT(A) has rightly concluded that no specific fact has been brought on record to show that the assessee has entered into sham transaction with M/s. Bishan Chand Mukesh Kumar. Respectfully following the earlier order of the Tribunal, we are not inclined to interfere with the order of the learned CIT (A).”
Further, in the case of Commissioner of Income Tax Vs. Mohan Lal Agarwal, reported in [2013] 35 taxmann.com 258 (Ald.), the Hon’ble High Court of Allahabad has found the sale of jewellery declared in VDIS to M/s. Bishan Chand Mukesh Kumar as genuine with the following observations: “8. The submission is wholly misconceived. The respondent assessee had submitted sufficient material and evidence to show that he was in possession of the requisite jewellery as the same was declared under the Voluntary Disclosure of Income Scheme, 1997, which was also accepted and tax was paid. Further, Sri Bishan Chand, partner of M/s. Bishan Chand Mukesh Kumar was examined on oath by the Assessing Officer and Sri Bishan Chand had categorically stated that he had purchased the jewellery in question from the respondent assessee and had made the payment through bank draft. Assessment under the Delhi Sales Tax Act had also been made on the turnover and 7 AY: 1998-99 further, all the purchases and sales have been accepted by the Assessing Authority under the Income Tax Act while completing the assessment for the instant year under Section 143 (3) of the Act.”
Respectfully, following the above decisions of the Hon’ble High Court of Allahabad and the Tribunal, we uphold the findings of the learned Commissioner of Income Tax (Appeals) on the issue in dispute. Accordingly, ground no. 1 of appeal is dismissed. 11. Ground no. 2 is general in nature, therefore, not required to adjudicate upon. 12. In the result, the appeal of the Revenue is dismissed. The decision is pronounced in the open court on 19th August, 2016.