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TMI Blog2012 (5) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... re no bogus sales of jewellery to M/s Zaveri Diamonds (appellant). Copies of the Retraction letters being as per Annexure A-9. Hence adverse finding of the ITAT on this count is perverse and needs intervention by this Hon'be Court in view of various judgments on the issue of Retraction? (ii) That whether ITAT was justified in not considering the request by the appellant for supplying various documents in the form of confirmation, affidavit, valuation report and the source of acquisition of the impugned jewellery as declared by various customers before the concerned CIT under the VDIS scheme so as to give its comments on the same as these formed important evidence of sale to the appellant by the customers and in other words purchases by the appellant which declarations of these customers of the appellant having been accepted by the Income Tax Department, so that the department cannot adopt double standards to the same transaction, i.e. by accepting sale to the appellant by the customers but on the other hand not accepting the purchases by the appellant, which is against the established principles of law as even held by Hon'ble Punjab and Haryana High Court wherein it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income for the assessment year 1998-99 on 30.10.1998 declaring total income of Rs. 1,11,500/- which was processed under Section 143(1) of the Act. A notice under Section 148 of the Act was issued to the assessee on 18.3.2002. During assessment proceedings, the Assessing Officer confronted Shri Manoj Kumar with the statements of S/Shri Sanjeev Jain, Sanjeev Goel, Shyam Lal and Prem Chand who had stated that actually no sale of jewellery was made by them to the assessee and only bills were issued by the assessee against commission. Later on these persons retracted from their statements. The Assessing Officer made the assessment at an income of Rs. 32,55,735/- by holding that the assessee is not engaged in the business of sale and purchase of diamond jewellery and only bills were issued after getting two-three percent commission. Copy of the order dated 28.3.2003 is at Annexure A-1. The appellant filed an appeal before the Commissioner of Income Tax (Appeals) [in short "the CIT(A)"] against the said order which was partly allowed vide order dated 6.1.2004, Annexure A-2. Aggrieved by the order passed by the CIT(A), the revenue filed an appeal before the ITAT which was allowed vide o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 32,55,735/-. 6. In addition to the above factors and those referred to in the assessment order, the assessing authority noticed that during investigations four persons, namely, (i) Sanjay Jain S/o Sh. Sham Lal r/o 297, Major Sham Singh Road, Ludhiana; (ii) Sanjeev Goel S/o Sh. Brij Mohan r/o Ohri Chowk, Batala, District Gurdaspur (statement recorded on 9.11.2000); (iii) Shri Sham Lal S/o Shri Hem Raj r/o Grain Market, Mandi Nihal Singh Wala, District Moga (statement recorded on 6.11.2000); and (iv) Shri Prem Chand S/o Shri Miri Ram r/o Dashmesh Colony, near Shishu Bharat School, Sunam, District Sangrur had admitted that they have not sold any jewellery to the firm M/s Zaveri Diamonds and they had received cheques and deposited in the bank account and had paid 2 to 3% commission. However, in response to letter dated 28.1.2003 summons were issued and S/Shri Prem Chand, Sham Lal and Sanjeev Goel appeared and in their statements again recorded had resiled from their earlier statements made in the year 2000. Even Shri Amarjeet Singh S/o Shri Harbol Singh resiled from his earlier statement. A perusal of the assessment order shows that the assessing authority had noticed several fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o particulars of such employee other than the fact that he was aged about 30 years were stated by Shri Manoj Kumar. He has stated that the employee namely Shri Guru Prasad used to go with him to help him in sales. It has also been stated that the said employee never went to the bank alone but used to accompany him sometimes for helping in carrying and counting currency notes. It was stated that the help in which the business was carried out, was taken on rent in February, 1998. It was also stated that no fittings were installed in the shop but only whitewash was got done. Further, the furniture purchased for carrying on the business included one table, one half size almirah and two chairs. It has been stated that no counter or safe was purchased in the shop. Also, no glass work was done. So far as the modus operandi to carry on the business it was stated that purchases were made directly from the customers and no agent or broker was involved in the purchases. It was stated that the payments to the sellers of jewellery have been made through cheques and most of the times, the cheques were issued immediately and in some cases, the cheques were payable after two-three days. It was fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the jewellery was old jewellery, there was no requirement of any display also. 27. Thereafter another statement was recorded by the Assessing Officer in the course of assessment proceedings on 27th March 2003 wherein Shri Manoj Kumar stated that diamond jewellery was purchased on the basis of weight which was engraved in the jewellery and is valued on the basis of quality of diamonds studded therein. It was also stated that the quality is checked through an instrument called I-glass. The ......checked its colour, cuts and spots and cracks, if any. It was stated that on the basis of experience and looking to the size of diamond, the assessee was able to judge the value. Regarding the value and weight of the material in which diamond is studded it was stated that there were two types of studded material; i.e. diamond sets in gold and other is studded in white metal. So far as the white metal, it was stated that the same is valueless because this is made of inferior metal quality. As regards diamond studded in gold jewellery, the weight of the product is taken on the weighment scale (Dharamkanata). Out of total weight, the diamond weight engraved on the gold or the white metal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sales so declared by the assessee of Rs.16.28 crores, since are not supported by any evidence, the same are acceptable. 29. Moreover we find that the entire transactions of purchase and sale of jewellery, as claimed by the assesasee have been carried out in a peculiar manner and abnormal circumstances, which to our mind, irrefutably leads to a conclusion that there is no business per se of the assesasee of purchase and sale of jewellery. It is firstly seen in this regard that assessee firm did not even have the necessary infrastructure to carry on the business of purchase and sale of diamond jewellery. One of the most essential infrastructure, as has also been admitted by the assessee, in the course of business of purchase and sales of jewellery, is Dharmkanta, on the basis of which, the jewellery is purchased and sold. It may be stated here that total weight of the jewellery purchased and sold by the assesasee is substantial as reflected in quantitative details on page 7 of the paper book and the total value of business carried out is in excess of Rs.16 crores. It is nowhere stated that assessee has any Dharamkanta which could have enabled it to carry on such business and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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