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TMI Blog2020 (7) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee before me are as follows:- 2. That the Assessment Order is bad, illegal and void because the AO did not supply the copy of the information received by him from D.I. (Inv) based on which information, the assessment was re-opened. 3. For that in the facts circumstances of the case the ld. AO was unjustified in treating in purchase of goods from AVI Exports amounting to ₹ 105150/- as bogus purchase and unexplained expenditure, inspite of the fact that full details of the goods purchased, mode of payment of the same, Name, Address Telephone Number of the person through whom the goods were purchase, Visa-vis the details of sales of those goods and the details of closing stock. 3. Facts of the case as noted by the AO is that the assessee in this case trades in jewellery items. Information was received from the Director of Income Tax (Investigation) informing the AO that some accommodation entry operators in Mumbai were giving accommodation entries in lieu of commission through a maze of bogus purchase and sales in the name of companies managed by these operators to gems and jewellery merchants across the country. In this regard, M/s. Dhandhia Gems ( the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the diamonds from Surat to the assessee at Kolkata could not be substantiated and thereafter, the AO made the entire addition of ₹ 1,05,150/- as unexplained expenditure by the assessee. Aggrieved, the assessee preferred an appeal before the ld. CIT(A), who while dismissing the appeal noted that the proprietor of M/s. AVI Exports, Shri Rajendra Jain in whose case search seizure action was conducted has on oath admitted that he has floated several companies for giving accommodation entries in lieu of commission and assessee was a beneficiary of accommodation entry by way of non genuine purchase of diamonds of ₹ 1,05,150/- from M/s. AVI Exports during the relevant AY. According to the ld. CIT(A) the modus operandi employed by Shri Rajendra Jain, Shri Surendra Jain and Shri Sanjoy Chowdhury was that they had created many fictitious firms and entities through which bogus bills were issued against commission to the desiring parties like the assessee and when this fact came to the notice of the department during the search conducted in their premises, the statements of said persons were recorded u/s. 131 of the Act, wherein they have confessed that they had been operating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be eligible for deduction only when the source for such purchases are explained. In the instant case it is the case of the revenue that the assessee had issued account payee cheques to M/s Vitrag jewels (supplier 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 ShriRajendraJain. We also find that ShriRajendra 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 (lnv) who recorded the statement. ShriRajendraJain had also initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explain manner of receipt of above said items of purchases in the hands of the assessee. It is to submit that normally as a general business practice, brokers/dealers from sarrafa bazaar/jewellery market (mainly 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 1.4.2005 to 31.03.2007 indicating the quantity and value in opening balance, purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayments are not genuine or that the payments having been made by the assessee to the recipients have found their way back to the assessee some way or the other. Such being the case, we find that the authorities below were not justified in rejecting the claim 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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