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TMI Blog2015 (7) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany. It was the onus of M/s Mansingh & Sons Jwellers (P) Ltd. to explain the source of acquisition of diamonds. The nature of possession in his hand was holding the company property in trust, thus legally no addition can be made in the hands of Shri. Gopal Verma. In the present case even on the basis of facts no addition was justified to be made in the case of Shri Gopal Verma because the source of acquisition of diamonds was clearly explained and same was verified by conducting survey at M/s Om Enterprises as well as by making inquiry by deputing ITI to Calcutta and also by making inquiries by the Assessing Officer from M/s. Om Enterprises. The addition made by the AO of ₹ 21,30,372/- in the hands of the appellant cannot be sustained and is directed to be deleted. - Decided against revenue. - ITA No.186/LKW/2012 - - - Dated:- 23-6-2015 - Shri Sunil Kumar Yadav and Shri. A. K. Garodia, JJ. For the Petitioner : Shri. Punit Kumar, D.R. For the Respondent : Shri. Rakesh Garg, Advocate ORDER PER SUNIL KUMAR YADAV: This appeal is preferred by the Revenue against the order of the ld. CIT(A) on a solitary ground which is as under:- the ld. CIT(A) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 for making the rings and that rings so prepared were received back on 10.06.2000. In the report it was also mentioned that the statement of Shri Sunil Karigar was recorded wherein he stated that Shri Gopal Verma one the Director of the company gave the size of four diamonds for making four rings in May, 2000 well before the said entries were made and vouchers prepared by the assessee company. In the report it was mentioned that there were clear contradiction between the facts as gathered during the course of survey u/s. 133A in the premises of M/s. Om Enterprises , Kolkatta to the effect that after purchasing the diamond from M/s. Ronak Gems Pvt. Ltd. and recording them in books of accounts on 07.06.2000 the same were sent to Kanpur on same date i.e. on 07.06.2000 and the fact revealed by Shri Sunil Karigar that Shri Gopal Verma, one of the Director of the assessee company gave the size of four diamonds for making four rings in the month of May, 2000. Accordingly, it was inferred in the report that when diamonds were sent by M/s. Om Enterprises on 07.06.2000 to the assessee company, how Shri Gopal Verma, Director of the assessee company could gave the size of four diamonds for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the month of May, 2000 even before receipt of actual diamonds as shown by the assessee. Therefore, the assessee was in possession of the diamonds and the Revenue has rightly made addition of the same and once the addition was deleted in the hands of Shri. Gopal Verma, the same should be made in the hands of the assessee on substantive basis. 7. Having carefully examined the orders of the lower authorities in the light of the rival submissions and the order of the Tribunal in the case of Income Tax Officer vs. Shri. Gopal Verma, Kanpur (supra), we find that the explanations furnished by the assessee in the instant case were examined by the Tribunal in the case of Shri. Gopal Verma, the Director of the assessee-company. Being convinced with the explanations of Shri. Gopal Verma, the Tribunal has deleted the addition made in his hands on substantive basis and there is no evidence on record suggesting that the order of the Tribunal was ever reversed. Therefore, no addition is called for in the hands of the assessee on the basis of same facts. For the sake of reference, we extract the findings of the Tribunal in the case of Income Tax Officer vs. Shri. Gopal Verma, Kanpur (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness transaction and is in accordance with the system of accounting. (j) The proceedings u/s 132A and 132(3) are different from proceedings u/s 143(3) of IT Act, 1961 and cannot be challenged. 6.2 We find from the assessment order of M/s. Om Enterprise a copy of which is placed in paper book page 93 and 94, that this issue has also been discussed and it has been held therein by the AO after enquiry that the 4 diamonds were not sold but were sent for approval to Shri. Man Singh of Kanpur. We find that the AO in the Assessment order has held as under: The case was received on transfer from ITO, Wd. 38(3), Kolkata and it -was selected for scrutiny as per approval of CIT.III, Kolkata dt. 31.1.02. The reason for selection of this case is based on enquiry report received JD1T (Inv.), Unit-H, Kanpur. It is reported that M/s. Om Enterprises allegedly purchased four diamond rings on a consideration of ₹ 16,27,000/- and sold it for ₹ 21,30,372/-. The assessee filed return on 26.9.01 showing total income of ₹ 61,571/-. Notice u/s 143(2) was duly served on the assessee and Mr. M. K. Goldah, AR appeared from time to time as well as explained the return. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentative of the appellant has rightly stated that the statement of Smt. Manjeet Kaur has nothing to do with the case of the appellant because it was the statement before the CMM and not before the Income tax authorities. It is also clear from facts mentioned in the assessment order that there does not appear to be given any opportunity of cross examination of Smt. Kaur to the appellant. This matter was widely reported in newspapers and a criminal case was filed against Shri Manjeet Singh by the police. The assertion of Smt. Kaur has to be considered in the context in which such assertion was made. The assertion made by Smt. Kaur cannot be taken as an evidence in support of the fact that the appellant had no proof with regard to accounted acquisition of these diamonds rings. Without prejudice to the legality of admissibility of her assertion it may be also be observed that she had only stated when she wanted and accounted receipts with tax paid evidence then Shri Bhupinder Garg backed out. This does not mean that the appellant did not have proper evidence in respect of jewellery. Even if Smt. Surinder Kaur's assertion is accepted then this only indicate that Shri Bhopinder Garg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Verma as he is entitled for the above. The Hon'ble Court have given its finding after appreciating the facts of the case and the submissions made before the Court, as under : ...........Moreover all the papers which were filed by the applicant are on record which were issued by Om Enterprises Jewellers and Man Singh Sons Jewellers and there is also a paper which has been filed is Special Power of Attorney issued by Om Enyerprises Jewellers. All the facts are before the Income Tax Officer so it cannot be said that there was no knowledge about the above papers to it. The inquiry has to be completed within a period of 90 days. They have submitted the report but what is result of the inquiry is not on record. Moreover in this case it is also a fact that income tax department has already submitted report before the Magistrate which has been dismissed by a common order and the Income Tax Department has not moved any revision application against, that order, so it is a proved fact that the order has become final against the Income Tax Department. As I have already stated above, that Sri Gopal Verma has filed papers and from perusal of the papers it reveals that Gopal Verma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... secution. Notwithstanding any excuse being hereafter preferred. Goods taken for inspection must be returned on our demand. 6.These diamonds are our assets in business and our stock in trade. The purchase of diamond is duly entered in the books of accounts is open for verification. The contents for para no. 1 to 6 are true and correct to the best of my knowledge, belief and records. Nothing materials have been concealed. So help me God. From this affidavit it is clear that M/s. Om Enterprises had accepted the ownership of said diamonds. These diamonds were property of M/s, Om Enterprises. A survey was also conducted u/s 133A of the IT Act, 1961 at the office of M/s. Om Enterprises 4, Banstalla Lane, 2nd floor, Calcutta-7. A report of DDIT (Inv.), Unit-II(2), Calcutta submitted vide letter No. DDIT (Inv.)/Unit-II(2)/Cal/2000-01/946 dated 4.8.2000 is available on record. In this report DDIT (Inv.) has submitted as under : As per the directive a survey u./s 133A of the IT Act, 1961 was carried out in the office of the above, mentioned concern on 26.7.2000. Books of accounts found there have been inventorised. Sri Prem Prakash Dubey, brother of Sri Om ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at diamonds were loose diamonds and not settled in jewellery. He was asked to give details regarding purchases of these items. It was replied that the diamonds were purchased from m/s. Ronak Gems (P) Ltd., 301, River View Apartment, 3rd floor, Near Ambica Niketan, Athwa Lines, Surat. He stated that he had personally brought these items from Shri Yogin of that company on 5th of June 2000. the exact purchase value was ₹ 16,27,200.00. He was asked to clarify that from the copy of bill of M/s. Ronak Gems Pvt. Ltd. dated 5.3.2000 it appeared that goods were received on 7.6.2000 but Shri Om Prakash Dubey had stated that he had received the goods on 5.6.2000. He replied that he came back to Calcutta with the goods from Bombay on 6h evening with the goods and the goods were entered in their stock register on 7.6.2000. Again on the same day he took them to Lucknow and handed it to his father who in turn handed over it to Shri Gopal of M/s. Mansingh Sons Jewellers at Kanpur. He had also stated that the diamonds were given to M/s. Mansingh Sons Jewellers and it was for them to sell either the loose diamonds or after setting them in ornaments. He also stated that 4 diamond pieces wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as cited the challan no. 349 of M/s. Mansingh Sons Jewellers Pvt. Ltd. they had received ₹ 3 lakh as advance against this challan. He also clarified that this particular deal was done by his brother Shri O. P. Dubey. 2.3. Inquiry was also made by the ACIT, Range-6, Kanpur. Shri D.P.Agnihotr, ITI was deputed to make on the spot inquiry. The ITI submitted his report to the ACIT06, Kanpur vide letter dated 3.2.2004. In his report he has stated that he had visited the premises no.4, Banstolla Lane, Calcutta on 30.1.2004 at 12.30 PM where Shri Shib Narain Pal, manager of the firm M/s. Om Enterprises and Shri Tarak Nath Mishra employee were available. Shri O.P. Dubey was not available at the business premises. It was informed that Shri O.P. Dubey had gone to his home town Dbadlapur, Distt. Jaunpur in the month of Decembe, 2003. His younger brother Shri S.P. Dubey, IRS came to the business premises and told that his brother Shri O.P. Dubey was out of station. The ITI has mentioned in his report that he had talked to the AC, Circle-6 and narrated these facts. A telephonic discussion was also held between the ACIT, Circle-6 and Shri S.P. Dubey. The ITI has further reported th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rings. He had only made gold rings but did not fit the 4 diamonds under reference. He was not witness to the 4 diamonds under reference. The recovery of 4 diamonds fitted into gold rings was made by police from Manjeet Singh and it was only seen by the police. Shri Manjeet Singh, Shri Gopal Verma. Such items remained in secrecy and in strict custody of police under supervision of Court. Shri Suneel Karigar had not seen the items recovered by the police. It is, therefore clear that he was not a witness of the items recovered by police. He had been made a witness for something for which he could not be a witness. It has been argued that legally the statement given by Shri Suneel Kumar was not admissible as evidence. Even otherwise he had never stated that he had seen the diamonds at any point of time, He was only asked to prepare gold rings. For showing the diamonds to the customers U was convenient, safe and presentable to show these diamonds fitted into rings. There was need of average rings and no particular design and size was required for the purpose. After approval it was for the customers to order for rings of his particular size design and choice. It has been argued that it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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