SHRI SHADI LAL JAIN,JALANDHAR vs. INCOME TAX OFFICER WARD II (2), JALANDHAR
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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER
I.T.A. No. 59/Asr/2013 Assessment Year: 1998-99
Sh. Shadi Lal Jain C/o M/s Vs. ITO-II(2), Lasko Engg. Co. Bye Pass Jalandhar. Road, P.O. Lidhran Jalandhar. [PAN:-AAMPJ5770E] (Appellant) (Respondent)
Appellant by None (Written submission) Respondent by Sh.Yashender Garg, Sr. DR.
Date of Hearing 21.09.2023 06.10.2023 Date of Pronouncement
ORDER Per: Anikesh Banerjee, JM: The instant appeal of the assessee is directed against the order of the ld. Commissioner of Income (Appeals), Jalandhar, (in brevity ‘the CIT(A)’) order passed u/s 250(6) of the Income-tax Act, 1961 (in brevity the Act) for
assessment year 1998-99. The impugned order was emanated from the order of ld. ITO Ward-II(2), Jalandhar (in brevity the AO) order passed u/s 143(3) r.w.s. 263 of the Act.
I.T.A. No. 59/Asr/2013 2 Assessment Year: 1998-99
The assessee has taken the following grounds:
“1. That the order of Worthy CIT(A), Jalandhar dated 26.11.2012 is against the law & facts of the case.
That the Worthy CIT(A), Jalandhar has erred in law by upholding the order and confirming the addition of Rs.3.35,070/- made by the Ld. Assessing Officer on account of jewellery sold to M/s Bishan Chand Mukesh Kumar, without considering the facts of the case.
That assessee request to add or amend any ground of appeal before the appeal is finally heard and dispose off.”
When the appeal was called for hearing. But none was present on behalf
of the assessee. On perusal of the record, we see that the assessee placed a
written submission and request to take the matter on basis of the written
submission. Accordingly, we proceed to dispose of the matter on basis of
written submission of the assessee and the submission of the ld. DR.
Brief fact of the case is that the assessee declared theornaments in
Voluntary Disclosure Income Scheme (VDIS) and filed the return u/s 139(1).
The assessee sold the ornament to Bishan Dass Mukesh Kumar, Delhi for
consideration amount to Rs.3,28,500/- in the impugned assessment year. The ld.
AO taken this transaction as accommodation entry and the whole amount was
I.T.A. No. 59/Asr/2013 3 Assessment Year: 1998-99
added back with the commission of 2%. Accordingly, the total amount works out to Rs.3,35,070/- which was added back with the total income of the
assessee. Being aggrieved assessee filed an appeal before the ld. CIT(A). The
ld. CIT(A) upheld the order of the ld. AO. Being aggrieved assessee filed an
appeal before us.
The ld. DR vehemently argued and fully relied on the order of the
revenue authorities.
We heard the submission of the ld. DR, considered the order by the
revenue authorities and perused the documents available in the record. In the
written submission the assessee filed the details which was submitted before the
ld. AO in proceeding u/s 143(3) r.w.s. 263, related to affidavit of Sh. Bishan Chand Mukesh Kumar duly attested and confirming the purchase of jewellery
from the assessee and copy of sales tax assessment order of Sh. Bishan Chand
Mukesh Kumar, wherein said firm disclosed Gross Turnover (in short GT)
amount to Rs. 1,34,10,91,697/- and assessed sale tax amount to Rs.39,23,898/-.
The ld. AR for the assessee submitted that the assessee’s transaction was duly
declared in the VAT return and the confirmation of was made by the purchaser
during the time of assessment. The same submission was taken in the
proceeding u/s 263 r.w.s. 143(3) of the Act. The ld. AR for the assessee fully
relied on the order of the Coordinate Bench of ITAT Amritsar in the case of
I.T.A. No. 59/Asr/2013 4 Assessment Year: 1998-99
Smt. Anu Mehra, ITA No.511(Asr)/2009, Date of pronouncement- 18.01.2010,in which it was held as under:
”4. In 'Manoj Aggarwal v. DCIT', the Special Bench of the Tribunal decided the issue, as to whether the jewellery business of M/s Bemco Jewellers Pvt.Ltd. was or was not by way of providing accommodation entries, in favour of the assessee and against the revenue, by making the following observations:
In view of the foregoing discussion, it. appears to us that the evidence
collected by the revenue authorities is not sufficient to establish their
stand that the jewellery transactions carried on by Bemco Jewellers Pvt.
Ltd. were only paper transactions or bogus and that Manoj Aggarwal,
who was one of the director of the company at the relevant time, controlled and put through these transactions by accommodation entries
and earned commission income there from. We are aware that the entire
evidence has to be appreciated in a wholesome manner and even where
there is documentary evidence, the same can be overlooked if there are
surrounding circumstances to show that the claim of the assessee is
opposed to the normal course of human thinking and conduct or human
probabilities. This principle has been laid down by the Supreme Court in
two leading cases -CIT v. Durga Prasad More and Sumiti Dayal v. CIT.
Even applying this principle to the present case, we have felt some
I.T.A. No. 59/Asr/2013 5 Assessment Year: 1998-99
difficulty in rejecting the assessee's plea as opposed to the normal course of human conduct. The circumstances surrounding the case are also, in
our view, not strong enough to justify the rejection of the assessee's plea
as fantastic or outrageous. We have considered the background of Bishan
Chand Aggarwal and his son . Manoj Aggarwal to be of relevance to the
case. We have also considered to be of significance the admission of
Manoj Aggarwal that only the transactions in the shares are
accommodation entries and that Bemco's jewellery transactions are
genuine and we have also given our reasons as to why we consider it to
be so. We have also taken note of the fact that most of the questions put to
Manoj Aggarwal while recording several statements from him related to the share transactions put through Friends Portfolio Pvt. Ltd. and that
hardly any relevant question regarding the activities of Bemco was asked.
We have also considered it to be of some importance the fact that the
turnover shown in the share transactions, which were admitted to be
bogus, was about three & half times the purchases of Rs. 36.60 crores
shown by Bemco in its jewellery business. Added to these are the facts
that even in the seized material there was a letterhead of Bemco which
showed Jai Sidhi Apartments at Ahmedabad as the branch office of
Bemco which means that the claim of Bemco that it had a branch office at
I.T.A. No. 59/Asr/2013 6 Assessment Year: 1998-99
Ahmedabad where the gold bars were sold was right as also the sales-tax assessment order under the Gujarat Sales-tax Act where the assessee
declared Rs.24,07,30,000/- as total sales and exempted sales. There was
no evidence of any consequence which was unearthed during the search
to directly show that Bemco was carrying on only accommodation entry
business for jewellery. Sunil Kapoor who was projected as one of the
witnesses of the department to support their stand that Bemco's jewellery
business was bogus, has been found by us to have acted as sub-mediator
in the share accommodation entry business carried on by Manoj
Aggarwal through Friends Portfolio and he has also been paid
commission in that business. Bemco has been found to have had a shop or showroom in 1182, Kucha Mahajani and this has been confirmed by the
report of the sales-tax inspector as also by the rental receipt starting from
January 1998. Thus, the surrounding circumstances, apart from the direct
evidence in the case, do not contain anything which belies the claim of
Manoj Aggarwal that though his share transaction business was only an
accommodation entry business for commission, the jewellery business
carried on by Bemco has not been proved to be so.
For these reasons, we allow ground No. 3 in the appeal of Manoj
Aggarwal. Thus, his appeal in IT (SS) A. No. 404/DeI/2003 is partly
I.T.A. No. 59/Asr/2013 7 Assessment Year: 1998-99
allowed. The appeal of the department in IT (SS) A. No. 415/Del/2003 is dismissed.
IT(SS)A. No. 452/Del/2003 (BEMCO JEWELLERS PVT. LTD.)
This is an appeal by Bemco which is consequential to our decision in
the appeal of Manoj Aggarwal, as stated in paragraph 35 (supra). The
result will be that Bemco will be liable to be assessed substantively in
respect of the profits from the purchase and sale of jewellery in its regular
assessments which have already been completed. No separate addition
for commission from jewellery business will be made in the block
assessment on the footing that the jewellery business is only by way of
accommodation entries. The appeal of Bemco is thus allowed. No costs in all the appeals.
The learned counsel for the assessees further submitted that since from
the decision in 'Manoj Aggarwal of the ITAT, Special Bench, it is now
clear that M/s Bemco Jewellers Pvt. Ltd. was not providing
accommodating entries,but was doing real sale and purchase business of
jewellery, the jewellery in question sold by the assessees to M/s Bemco
Jewellers Pvt. Ltd. cannot be treated as bogus accommodation book
entries provided by M/s Bemco Jewellers Pvt. Ltd.and so, the impugned
I.T.A. No. 59/Asr/2013 8 Assessment Year: 1998-99
additions made by the AO and sustained by the CIT(A) on account of sale of jewellery to M/s Bemco Jewellers Pvt. Ltd. as undisclosed income of
assessees are liable to be deleted, as the case of sale of jewellery to M/s
Bishan Dass Mukesh Kumar is identical to that of sale of jewellery to M/s
Bemco Jewellers Pvt. Ltd.
The learned DR has stated taht the orders under appeal are not
sustainable; that it stands proved that the jewellers to whom the jewellery
was sold by the assessees, were under providing accommodation entries;
that the sale transactions of jewellery were out right bogus transactions;
and it stands established during the assessment proceedings under
section 158BD of the Act that M/s Bishan Dass Mukesh Kumar had not
done any real business of jewellery and had not been providing bogus
entries on commission basis. However, the learned DR has not been able
to controvert the submissions of the learned counsel for the assessees that
on identical facts and in identical circumstances, this very issue has been
decided by the Special Bench of the tribunal in the case of 'Manoj
AggarwaT in favour of the assessee and against the revenue.
On going through the facts of the instant cases of the assessees as well
as the facts of the case decided by the ITAT-Special Bench in the 'Manoj
Aggarwal, we find that the facts involved in both the cases are almost
I.T.A. No. 59/Asr/2013 9 Assessment Year: 1998-99
identical and the issue involved therein regarding the alleged bogus accommodation book entries provided by M/s Bemco Jewellers Pvt. Ltd.
and M/s Bishan Dass Mukesh Kumar is identical. Hence, the findings
recorded by the ITAT-Special Bench in 'Manoj Aggarwal, wherein the
Tribunal held that the business of sale and purchase of jewellery of M/s
Bemco Jewellers Pvt. Ltd. was genuine and they were not providing
bogus accommodation book entries to the parties, fully apply to the issue
involved in the instant cases of the assessees, because in the instant cases
also, teh tax authorities have held that there were no genuine sale of
jewellery by the assessee to M/s Bemco Jewellers Pvt. Ltd. and M/s
Bishan Dass Mukesh Kumar, respectivelyand the amount received on account of the bogus sale of jewellery was in fact accommodation entries
provided by the said concerns and was identical. A perusal of para 163 of
'Manoj Aggarwal' shows that the evidence regarding the sale to M/s
Bemco Jewellers Pvt. Ltd. is the same as that concerning M/s Bishan
Dass Mukesh Kumar. Hence, respectfully following the decision of the
ITAT-Special Bench in the 'Manoj Aggarwal', it is held that since M/s
Bemco Jewellers Pvt. Ltd. and M/s Bishan Dass Mukesh Kumar were
doing genuine jewellery business and were not providing any bogus
accommodation book entries for the sale of jewellery made to them, the
I.T.A. No. 59/Asr/2013 10 Assessment Year: 1998-99
impugned additions made by the Assessing Officer have rightly been deleted by the learned CIT(A) in the cases of all the assessees. The same
is the case in the matter of addition on account of commission. The orders
of the CIT(A) with regard to the impugned additions in the case of the
assessees on account of sale of jewellery to M/s Bemco Jewellers Pvt.
Ltd. and M/s Bishan Dass Mukesh Kumar and commission are,
accordingly, upheld.
As the issues involved in the present appeal are similar to the
issues considered by the Tribunal, in the case of ACIT, Range- 1,
Jalandhar, Vs. Sh. K.L.Sehgal, Jalandhar, in 1TA No. 415(Asr)/2006 and
others, vide order dated 11.09.2008, the findings given therein shall
equally applu, mutatis mutandis, to this appeal. Accordingly, the appeal
filed by the Revenue is dismissed.
In the result, the appeal filed by the department is dismissed in the
manner as indicated above."
6.1 Also, considering the order of the ITAT Amritsar Bench in the case of Smt. Anu Mehra (supra) that the jewellery was duly disassociated from their
change from accommodation entry. The assessee already declared this amount
in VDIS Scheme only the amount was collected by transferring this jewellery.
I.T.A. No. 59/Asr/2013 11 Assessment Year: 1998-99
Accordingly, we intervene in the order of the revenue authorities and set aside the impugned appeal order. Accordingly, the addition made by the ld. AO amount of Rs.3,35,070/- is quashed.
In the result, appeal of the assessee ITA No. 59/ASR/2013 is allowed.
Order pronounced in the open court on 06.10.2023 Sd/- Sd/-
(Dr. M. L. Meena) (ANIKESH BANERJEE) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order
