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TMI Blog2018 (3) TMI 1525X X X X Extracts X X X X X X X X Extracts X X X X ..... l/2017 - - - Dated:- 28-3-2018 - Shri M.Balaganesh, AM And Shri S.S.Viswanethra Ravi, JM For The Appellant : Shri S.M. Surana, Adv. Shri Sunil Surana, FCA For The Respondent : Shri S. Dasgupta, Addl. CIT (DR) ORDER Per M.Balaganesh, AM 1. This appeal by the assessee arises out of the order of the Learned Commissioner of Income Tax(Appeals)-13, Kolkata [in short the ld CIT(A)] in Appeal No.81/CIT(A)- 13/Kol/Cir-44/2015-16 dated 09.09.2016 against the order passed by the DCIT, Circle- 44, Kolkata [ in short the ld AO] under section 147/143(3) of the Income Tax Act, 1961 (in short the Act ) dated 20.03.2015 for the Assessment Year 2007-08. 2. The only issue to be decided on merits of the case is as to whether the ld CITA was justified in confirming the addition of ₹ 15,57,470/- as bogus purchases and treating the same as income in the facts and circumstances of the case. 3. The brief facts of this issue is that the assessee is a partnership firm carrying on jewellery business. The return of income for the Asst Year 2007-08 was filed by the assessee firm on 14.11.2007 declaring total income of ₹ 1,03,45,446/- which was subsequently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve taken the accommodation entry from M/s Vitrag Jewels but in actual purchased the diamond for ₹ 15,57,470/- from some unknown parties whom payments have been made from unexplained cash. Accordingly, please explain as to why this unexplained cash of ₹ 15,57,470/- should not be added to your income as income from undisclosed sources. 4. The assessee produced the books of accounts, bills, vouchers, stock registers, bank statements together with various details and explanations that were called for before the ld AO. In response to the show cause notice, the assessee stated that it had purchased trading goods from the above party for use in its business against proper bills nad challans for valued consideration and such goods were further sold by it at profit in the normal course of the business. It was further stated that the payments to Vitraj Jewels were settled by the assessee through account payee cheques. 5. The ld AO observed as under:- 3.2. The contention of the assessee has been examined along with the material put on record. It is worth to mention here that a search seizure action u/s 132 of the I.T. Act, 1961 was conducted on a group of concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been made from unexplained cash. So far as payments through cheques to M/s Vitrag Jewels by the assessee are concerned, the same have been settled in cash as per the statements of these persons. Therefore, this amount of ₹ 15,57,470/-- is treated as income from undisclosed sources of the assessee for the year under consideration which has been used for purchase of diamonds in cash from some unknown parties. Therefore, addition of ₹ 15,57,470/-is made to the income of the assessee. I am satisfied that the assessee has filed inaccurate particulars of his income and has concealed the income to the extent of ₹ 15,57,470/-, penalty proceedings u/s 271(1)(c ) of the Income Tax Act, 1961 are initiated separately. [ Addition : ₹ 15,57,470/-] 6. The ld CITA upheld the action of the ld AO. Aggrieved, the assessee is in appeal before us on the following grounds:- 1. For that the order of the Ld. CIT(A) in confirming the proceedings initiated u/s 147 which was bad in law. 2. For that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of ₹ 15,57,470/- as bogus purchase and treating the purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plier of diamonds to assessee) and had received cash in return from them and the said cash is utilized by the assessee for purchase of diamonds from unknown parties in the grey market. We find that there is absolutely no evidence that is brought on record to prove that the assessee had indeed received cash back from Vitraj Jewels in lieu of cheque issued to them or from any other party except making a wild allegation to that effect and by placing reliance on the statement of Shri Rajendra Jain. We also find that Shri Rajendra Jain had subsequently retracted his statement by way of an affidavit deposing before the Notary Public on 9.1.2014 (enclosed in pages 96 to 100 of paper book). He had also explained the circumstances under which the original statements had been recorded and effectively stated that the same was recorded under coercion and the statement recorded therein were as per the desire and will of the DDIT (Inv) who recorded the statement. Shri Rajendra Jain had also initially filed an affidavit on 21.10.2013 (enclosed in pages 91 to 95 of paper book) retracting the statement recorded by DDIT (Inv) . He also filed a letter to DCIT, Central Circle -4, Surat on 31.10.2014 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly from Surat and Mumbai), visit a prospective buyer s business place and display various items of diamonds and precious/semi-precious stones and the buyer makes the final selection and bills are subsequently raised by the seller directly. Naturally we had also been purchasing diamonds, precious and semi-precious stones from outside dealers in the above manner. Furthermore, at time partners, their close family members or family friends also visit the sellers place partners. Sometimes, orders are also placed over phone and goods are sent through trusted and regular couriers. As a normal business practice, goods are regularly received in the above stated manner. However, at the moment it is not possible to exactly recollect how the above consignments were received because of long time gap. 7.2. We find that the assessee had furnished the summary of diamonds movement for the period 1.4.2006 to 31.3.2007 indicating the quantity and value in opening balance, purhcases, sales and closing balance (enclosed in page 53 of paper book). We find that the assessee had also filed the purchase bills of M/s Vitraj Jewels (enclosed in pages 68 to 72 of the paper book) together with the ledge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of the assessee for payment of commission. Since all the ingredients necessary for genuine business transaction exist in this case, we do not find any merit in the addition made by the AO and in the action of the Ld. CIT(A) in confirming the same. In reversing their orders, and respectfully following the decision of the Hon ble Calcutta High Court in the case of Masther Plant (India) Ltd., (supra) and the case of the Tribunal, Mumbai Bench (Third Member) discussed herein above, we allow the appeal of the assessee. Heard Mr. Das, learned advocate appearing for the appellant revenue and Mr. J.P. Khaitan, learned senior advocate appearing for the respondent assessee. Before us the revenue could not demonstrate either the money was not paid or the money was paid and routed back to the assessee. In the circumstances interference with the order of the Tribunal is not warranted. No question arise for adjudication. The application and the appeal are dismissed. 7.4. We also find that similar issue had been addressed by this tribunal in respect of purchases made from M/s Vitrag Jewels in connection with the statement of Shri Rajendra Jain in the case of Manoj Begani vs ACIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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