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TMI Blog2012 (9) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... re, it is observed that the AO relied on the incomplete and ambiguous report submitted by ADIT(Inv), Surat and his findings that the assessee failed to substantiate the creditworthiness and genuineness of said purchasers cannot be sustained as the AO did not properly appreciate the evidence relevant to this fact. Accordingly, addition is deleted – Decided in favor of assessee. - I.T.A.No.452/Del/2009 - - - Dated:- 20-7-2012 - SHRI SHAMIM YAHYA, AND SHRI CHANDRA MOHAN GARG, JJ. Appellant by: Shri Subhash Gupta Respondent by : Shri S. Mohanty O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER This appeal has been preferred by the assessee against the order of CIT(A)-XXV, New Delhi dated 2.1.2009 by which he confirmed the additions made by the AO on account of undisclosed sources/unexplained cash credit. The grounds of appeal read as under:- 1. The ld. CIT(A-XXV ) has erred in disallowing appeal addition of Rs.5,04,605/- on the facts and circumstances of the case and has not appreciated the facts, evidences, submissions made by the appellant in correct perspective. 2. On the facts and circumstances of the case, the ld. CIT(A) had erred to confirm the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t (Rs) Total Value (Rs) Valuation As on 1. 1 Diamond necklace made in white metal, settled with tapers and round diamond 56.500 2,825 gm 42.35 1,05,875 1,08,700 1/4/87 2. 1 Diamond necklace ear ring, 1 pair ear ring in white metal 79.000 3,950 gm 40.90 90,000 93,950 Clearly, the diamonds declared under VDIS were embedded in the necklace, earrings etc. and were not loose diamonds. But, the purported purchase invoices of Kamal Gems and D M Corporation refer to loose diamonds contained in packets. Thus, the packets of diamonds claimed to be sold to Kamal Gems and D M Corporation are not explained by the items mentioned the valuation report filed under CDIS. Under these circumstances, the source of the packet of cut and polished diamonds remain unexplained. 5.2.2 Also, there is another tell tale sign in the purchase invoices of Kamal Gems and DM Corporation that indicates the sham nature of transactions the absence of description of the diamonds purported to have been sold by the appellant. Diamond is valued depending upon its size, colour and luster. Hence, mention of thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipal with the findings as reproduced below:- 5.1 With regard to the sale transaction with Bishan Chand Mukesh Kumar, it will be relevant to examine the cases referred by the appellant. 5.1.1 The cases of Tejinder Singh HUF and Bishan Chand Mukesh Kumar were decided by the Hon ble ITAT along with the case of Manoj Aggarwal and Bemco (2008) 113 ITD 377(Del)(SB), in their consolidated order dated 25.7.08. Revenue s appeal in the case of the block assessment of Bishan Chand Mukesh Kumar was dismissed as the assessment made u/s 158BC read with section 158BD was held to be bad in law. The merits of the case, including the issue relating to the genuineness of the transactions of purchase and sale of jewellery were not examined. However, while disposing the case of Tejinder Singh HUF, the Hon ble ITAT observed that the issues involved were similar to those in the case of Manoj Aggarwal and Bemco. The Hon ble Tribunal accordingly gave the following finding. .following our conclusion drawn in the case of Bemco/Manoj Aggarwal, we hold that the transaction relating to sale of jewellery in the case of the present assessee i.e. Tejinder Singh, HUF is genuine . This decision was appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espectively were sold by the assessee and ld. CIT(A) was not justified in holding the said sale as bogus because the assessee had already declared sold diamond jewellery in VIDS-97 scheme and had paid required tax to the Department. 10. On bare perusal of paper book issued by the assessee, we observe that on page no. 23, the assessee obtained a Report of valuation of jewellery dated 15.12.97 from M/s Sampat Kumar Saraft, Delhi wherein the valuer had mentioned weight of diamonds to 42.35 carat and 40.90 carat for item no. 1 2. On page no. 20 and 21, we see purchase bills issued by Kamal Gems and D. M. Corporation wherein the weight of sold diamonds were found by the said purchasers to the tune of 40.90 carat and 42.35 carat, similar to the valuation report (Page 23 of the paper Book). Therefore, we have no reason to disbelieve or discard this evidence. Furthermore, the AO did not bring any material on record to show that the assessee has returned back the sale proceed or any part of it to the said purchasers in any manner, which he received from alleged purchasers through cheque and Demand Draft. 11. The AR also placed his reliance on the judgement of B Bench of ITAT Mumba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, during the course of survey that the transactions of sale and purchase of jewellery were fictitious and when he was examined u/s 131 of the Act, he retracted from above statement and stated that the purchase was true and properly accounted in the books of accounts. In these circumstances also, the ITAT Third Member Bench held that addition cannot be made because it is not the business of seller of diamonds to investigate and ensure the truthfulness of the purchaser. The assessee is duty bound to prove only this fact that he was owing jewellery and he sold it by transferring it physically and by receiving its sale proceed through well-accepted means i.e. cheque or demand draft. 15. As stated hereinbefore, in the case in hand, the said purchasers confirmed the transaction of sale and they never made any statement before any authority retracting their confirmation. 16. The ld. DR has drawn our attention towards the assessment order para 10 and submitted that in respect of any sale of jewellery to M/s D.M. Corporation and M/s Kamal Gems, it is not sufficient on the part of assessee, showing that all payments were received through cheques and Demand Drafts, in absence of credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ADIT(Inv), Surat does not specifically state that in the year 1998, M/s D.M. Corporation and M/s Kamal Gems were not conducting their business and instead of that somebody else or some other firm/person or entity were in possession of said premises. The AR finally submitted that in absence of a specific report, this inference cannot be drawn that the said purchasers and their business were not in existence at the time of sale of diamonds in the month of March, 1998. 18. We have carefully considered the rival arguments of both the parties on this point and on bare reading of the report of ADIT(Inv), Surat dated 17.3.2010, we observe that at the address 102, Super Diamond Apartment, Saiyedpura, Surat, M/s Shreya Investment, Prop. Riten D. Mehta was doing the business of Share Trading since September 2004 and prior to this period, Sri P.P. Thakkar, income tax practitioner was using that premises as his office but there is no specific fact showing that in the month of March 1998, there was no business in the name of M/s Kamal Gems in that premises in the month of March 1998. In the same manner, we further observe that as per second part of said report, the premises at 25, Ambika So ..... X X X X Extracts X X X X X X X X Extracts X X X X
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