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Income Tax Appellate Tribunal, DELHI BENCHES “D” : DELHI
Before: SHRI BHAVNESH SAINI & SHRI T.S. KAPOOR
Shri Ashwani Kumar, CA For Assessee : Shri Deepesh Jain, C.A. And Ms. Meenal Goyal, C.A. For Revenue : Smt. Naina Soin Kapil, Sr. DR Date of Hearing : 06.08.2019 Date of Pronouncement : 08.08.2019 ORDER PER BHAVNESH SAINI, J.M.
This Order shall dispose of all the above appeals filed by the same assessee.
We have heard both the parties and perused the material on record. The appeals are decided as under.
ITA.No.3521/Del./2010 – A.Y. 2007-2008 :
This appeal by assessee has been directed against the Order of the Ld. CIT(A)-XIX, New Delhi, Dated 07.06.2010, for the A.Y. 2007-2008, challenging the addition of Rs.17,45,000/- on account of bogus purchases.
The facts of the case are that assessee company filed return of income declaring income of Rs.2,46,437/-. During the year under consideration the assessee company carried out the business of trading of Gold and Diamond
3 ITA.Nos.3521/Del./2010, 2819/Del./2014 And 6055/Del./2012 M/s. VCORP Mercantile Private Limited, New Delhi.
Jewellery, silver items, saree and other items. Information from the Jaipur Investigation Wing was received that certain persons were issuing bogus bills and were charging 0.5% commission on the same. Shri Anil Kumar Lalwani, of Johari Bazar, Jaipur has stated on oath before the Investigation Wing Jaipur, that he was doing billing business and only bill is given to the person and no delivery of goods is made and bills are issued from the concerns M/s Jodhpur Gems, Stone Impex, Vaishali Gems, Pooja Jewelles, Touch Stones and M/s Mahavir Gems. The amount of the bill was taken by cheque and after withdrawing the amount, cash was returned to the party after charging commission. During the course of assessment proceedings, it was found the assessee had shown purchases of Rs.4,20,000/- from M/s Jodhpur Gems and Rs.13,25,000/- from Mahaveer Gems. The A.O. asked the assessee to explain why the purchases from the above two firms, amounting to Rs.22,00,016/-, which have been looked after by Shri Anil Kumar Lalwani, should not be treated as bogus in view of the investigation results of the Jaipur Investigation Wing.
4 ITA.Nos.3521/Del./2010, 2819/Del./2014 And 6055/Del./2012 M/s. VCORP Mercantile Private Limited, New Delhi.
The assessee submitted that it has purchased certain gold and diamond jewellery during the year from these parties and duly accounted for the same in its books of accounts after taking the physical delivery thereof. Since the assesee’s jewellery shop is in Noida, the aforesaid jewellery items have been purchased after declaring the same on prescribed declaration forms issued by the UP Trade Tax Department. Copies of the same were produced on record. All the payments of purchases are made through cheques which have also been debited in the bank account of the assessee. Copies of bank statement are filed. It was submitted that all transactions of purchases are carried out through documentary evidences, therefore actual purchases have been made. Therefore, there is no unaccounted purchases. The A.O. however, in view of the report of Jaipur Investigation Wing considered the entire purchases made by assessee from his unaccounted money/undisclosed source and made the addition of Rs.22,00,016/-.
The assessee challenged the addition before the Ld. CIT(A) and same submissions were reiterated. It was 5 ITA.Nos.3521/Del./2010, 2819/Del./2014 And 6055/Del./2012 M/s. VCORP Mercantile Private Limited, New Delhi.
also submitted that A.O. has drawn adverse inference on the basis of ex-parte statements of the sellers, when the entire transaction stands corroborated by independent material. The assessee conducted all the transactions through banking channel and through sales tax. The declaration form U.P. Trade Tax Rules were also filed. It was submitted that the statement used against the assessee have not been supplied to the assessee and no opportunity have been given to explain the same. All ex-parte material collected should have been made available to assessee before drawing an inference against the assessee. The assessee should have been given an opportunity to rebut the same. The Ld. CIT(A), however, did not accept the contention of assessee based on information provided by Investigation Wing, Jaipur. However, the Ld. CIT(A) noted that assessee has debited purchases of Rs.17,45,000/- only in the books of account, therefore, addition was restricted to Rs.17,45,000/- only. Appeal of assessee was partly allowed.
Learned Counsel for the Assessee reiterated the submissions made before the authorities below. He has 6 ITA.Nos.3521/Del./2010, 2819/Del./2014 And 6055/Del./2012 M/s. VCORP Mercantile Private Limited, New Delhi.
referred to PB 17 to 67 which are copies of the relevant purchase bills along with copies of the declaration forms issued by U.P. Trade Tax Department, copies of the bank statements and copies of the statement showing month-wise / bill-wise quantitative details of purchases and sales and closing stock of diamond and gold jewellery. He has submitted that the statement of Shri Anil Kumar Lalwani was not confronted to assessee and no opportunity have been given to cross-examine the same. No adverse material was supplied to assessee, therefore, such evidences cannot be used in evidence against the assessee. He has submitted that in the absence of any independent corroboration to the ex-parte material, no addition could be made. Since all the transactions have been disclosed to the Trade Tax Authorities, therefore, no addition could be made against the assessee. In support of the same, he has relied upon certain decisions, copies of which are filed in the paper book. In the alternate contention, he has submitted that at the most profit element embedded in the alleged purchases
7 ITA.Nos.3521/Del./2010, 2819/Del./2014 And 6055/Del./2012 M/s. VCORP Mercantile Private Limited, New Delhi. should have only be added, therefore, entire addition is liable to be deleted.
On the other hand, Ld. D.R. relied upon the Order of the A.O. and submitted that since copy of the statement of Shri Anil Kumar Lalwani and material collected by Jaipur Investigation Wing have not been supplied to the assessee, therefore, matter may be remanded to the A.O. for fresh consideration.
We have considered the rival submissions and do not find any justification to sustain the addition against the assessee. The A.O. relied upon information provided by Jaipur Investigation Wing against the assessee which contained the material collected by Jaipur Investigation Wing and statement recorded of Shri Anil Kumar Lalwani. In the entire assessment order A.O. has nowhere mentioned if the material collected by Jaipur Investigation Wing or statement recorded of Shri Anil Kumar Lalwani was provided to the assessee for the rebuttal on behalf of the assessee. No right of cross-examination have been given to assessee to cross-examine the statement of Shri Anil Kumar
8 ITA.Nos.3521/Del./2010, 2819/Del./2014 And 6055/Del./2012 M/s. VCORP Mercantile Private Limited, New Delhi.
Lalwani. It, therefore, appears that material collected by Jaipur Investigation Wing have not been confronted to the assessee and further statement of Shri Anil Kumar Lalwani was not provided to the assessee and no right of cross- examination have been given to the assessee to cross- examine his statement. The assessee raised same plea before the Ld. CIT(A), but, no findings have been given by the Ld. CIT(A) in this regard as well. It is well settled Law that when adverse material collected against the assessee in the absence of assessee and not been confronted to assessee and no right of rebuttal have been given to such material, such material cannot be used against the assessee. We rely upon Judgment of Hon’ble Supreme Court in the case of Kishan Chand Chelaram 125 ITR 713 (SC). Since statement of Shri Anil Kumar Lalwani was recorded by Investigation Wing, Jaipur was also not provided to the assessee and no cross-examination have been allowed to his statement on behalf of assessee, therefore, such statement can also be not read in evidence against the assessee. We rely upon Judgment of the Hon’’ble Supreme Court in the case of 9 ITA.Nos.3521/Del./2010, 2819/Del./2014 And 6055/Del./2012 M/s. VCORP Mercantile Private Limited, New Delhi.
Andaman Timber Industries [2015] 281 CTR 214 (SC). There is no other adverse material against the assessee on record, therefore, there were no justification to sustain any addition against the assessee. It may also be noted here that Investigation Wing has provided information to the A.O. that assessee made purchases from above two parties of Rs.22,00,016/-, however, the actual purchases made by the assessee are of Rs.17,45,000/- only. This fact is mentioned in the assessment order itself and Ld. CIT(A) also allowed the relief to the assessee to that extent. Therefore, the information provided by the Jaipur Investigation Wing was also doubtful. In such circumstances, the right to rebut to such adverse material should have been provided to assessee for explanation of assessee. These facts are sufficient to hold that the material collected by Jaipur Investigation Wing cannot be used in evidence against the assessee. Further the assessee produced copies of the purchase bills, U.P. Trade Tax Department and bank statements to prove that purchases are made from these parties through purchase bills and through banking
10 ITA.Nos.3521/Del./2010, 2819/Del./2014 And 6055/Del./2012 M/s. VCORP Mercantile Private Limited, New Delhi. channel. All items of purchases have been declared to U.P. Trade Tax Department and in the declaration even the weight of the items have been mentioned. The A.O. did not make any investigation on the same and without any investigation disbelieved the documentary evidences produced on record. These facts are sufficient to prove the explanation of assessee that assessee made genuine purchases and such fact of purchase have also been mentioned in the quantitative details of the closing stock. All the details are filed in the paper book from pages 17 to 67. Considering these facts, we are of the view that there was no justification to consider the purchases made by the assessee to be bogus purchases. We, accordingly, set aside the Orders of the authorities below and delete the addition of Rs.17,45,000/-. Ground of appeal of assessee allowed.
In the result, ITA.No.3521/Del./2010 of the assessee allowed.
11 ITA.Nos.3521/Del./2010, 2819/Del./2014 And 6055/Del./2012 M/s. VCORP Mercantile Private Limited, New Delhi.
ITA.No.2819/Del./2014 – A.Y. 2007-2008 :
This appeal by assessee has been directed against the Order of the Ld. CIT(A)-XIX, New Delhi, Dated 14.03.2014, for the A.Y. 2007-2008, challenging the levy of penalty under section 271(1)(c) of the I.T. Act, 1961.
Since the addition on account of bogus purchases have been deleted in ITA.No.3521/Del./2010 which is the basis for levy of the penalty under section 271(1)(c) of the I.T. Act, we are of the view that no penalty is leviable against the assessee. In view of this, we set aside the Orders of the authorities below and cancel the penalty.
In the result, ITA.No.2819/Del./2014 of the Assessee is allowed.
ITA.No.6055/Del./2012 – A.Y. 2008-2009 :
This appeal by assessee has been directed against the Order of the Ld. CIT(A)-XIX, New Delhi, Dated 08.10.2012, for the A.Y. 2008-2009.
12 ITA.Nos.3521/Del./2010, 2819/Del./2014 And 6055/Del./2012 M/s. VCORP Mercantile Private Limited, New Delhi.
In this appeal assessee challenged the reopening of the assessment as well as addition of Rs.29,73,027/- on account of bogus purchases from M/s. Pooja Jewellers, Stone Impex, and Touch Stones. The A.O. on the basis of the information received from Investigation Wing, Jaipur reopened the assessment and made the addition on account of bogus purchases. The Ld. CIT(A) following the order for the A.Y. 2007-2008 confirmed the reopening of the assessment and addition on merit.
Following the reasons for the decision for the A.Y. 2007-2008 (supra), we set aside the Orders of the authorities below and delete the addition on merit of Rs.29,73,027/-. Appeal of assessee on merit is, therefore, allowed.
15.1. Since appeal of assessee has been allowed on merit, therefore, issue of reopening of the assessment under section 147 of the I.T. Act, 1961 is left with academic discussion only.
13 ITA.Nos.3521/Del./2010, 2819/Del./2014 And 6055/Del./2012 M/s. VCORP Mercantile Private Limited, New Delhi.
In the result, ITA.No.6055/Del./2012 of the Assessee is allowed.
To sum-up, all the appeals of the Assessee are allowed.
Order pronounced in the open Court.