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TMI Blog2022 (11) TMI 1218X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of this, we do not find any infirmity in the order of the ld. CIT(A) Addition of unsecured loans and advances u/s 68 - CIT- A deleted the addition - HELD THAT:- We note that the ld. CIT(A) has given details of the documents furnished by the assessee in respect of each of the party and thereby has arrived at a conclusion that the assessee has duly established the identity and creditworthiness of the parties and genuineness of the transaction. Even the ld. CIT(A) has noted that subsequently the said loan has repaid by the assessee to the concerned parties. Since the CIT(A) has not only discussed in details the various evidences proving the identity, creditworthiness of the parties and genuineness of the transaction but also the fact that assessee has subsequently repaid the loan amount to the concerned parties and TDS was also deducted on the interest paid to the parties on such loan amount. In view of this, we do not find any reason to interfere with the order of the CIT(A) on the above issue also. This ground of the Revenue is also dismissed. Disallowance u/s 14A - Purpose of investment made - CIT- A deleted the addition - HELD THAT:- Investments were made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led its return of income showing total income of Rs.10,52,830/-. The return was processed u/s 143(1) of the Act. Thereafter, the Assessing Officer (in short the A.O ) was in receipt of information from DGIT(Inv.), Mumbai that the assessee company had received bogus entry in the form of purchases from three shell companies namely Sparsh Exports Pvt. Ltd., Moulimani Impex Pvt. Ltd and Vitrag Jewels. The Assessing Officer, therefore, reopened the assessment and passed the impugned assessment order assessing the income of the assessee at Rs.1,59,73,026/- after disallowing a sum of Rs.1,49,20,200/- as bogus purchases under the provisions of section 69C of the Act. 4. Being aggrieved by the said order of the Assessing Officer, the assessee preferred appeal before the ld. CIT(A). The ld. Counsel for the assessee before the CIT(A) submitted that the Assessing Officer had neither provided the assessee copy of information received from the DGIT(Inv.), Mumbai nor the copy of statement recorded on which reliance was placed by him and further that the Assessing Officer had not provided opportunity to the assessee to cross-examine the persons whose statement was recorded and relied upon by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee company and the sales have not been doubted. It was further pleaded that even legally, entire purchases cannot be treated as bogus. The assessee further relied upon the decision of the Coordinate Mumbai Bench of the Tribunal in the case of Ashwin Purshotam Bajaj vs. ITC (ITAT Mumbai) ITA. No. 4736/Mum/2014 that though the assessee could not produce the alleged bogus hawala suppliers, the entire purchases could not be added as undisclosed income. That the addition has to be restricted by estimating Gross Profit ratio on the purchases from the alleged accommodation entry providers. Further, assessee submitted the audited financial statements of the assessee company for the year ended 31.03.2007 alongwith Tax Audit Report for the year ended 31.03.2007 to show that the assessee company earned gross profit 5.98% on turnover. 5. The ld. CIT(A) considering the submissions of the assessee and after examination of the relevant evidences observed that the assessee had furnished the required documents to prove the genuineness of the purchases. The relevant part of the order of the CIT(A), for the sake of ready reference, is reproduced as under: During the cause of appellate pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jewels is also one of the disputed purchase of appellant company during year under Consideration, Hon ble Jurisdictional ITAT elaborately dealt in this order. 3. ITO ward-33(1), Kolkata vs Saraf Jewels Co. (ITA No. 1581/Kol/2016 and 4. Copy of order of CIT(A)_15, Kolkata in appeal No. 264/CIT(A)-15/18- 19/Cir-8(2)/R T/KOL passed on 01.10.2019 for the A.Y. 2009-10 in case of M/s. Shreejee Jewellers Pvt. Ltd. (Appellant) 5.2 I have perused the materials available on record and find that the appellant was maintaining proper books of accounts including all the details, stock register, bills and vouchers in respect of its Manufactured and traded goods, in respect of specific purchases made from M/s Sparsh Exports Pvt. Ltd., M/s. Mouli Mani Impex Pvt. Ltd. and Vitrag Jewels. (i.e. the disputed purchases), the appellant had furnished the date of purchase together with its quantity, rate and value. The payments were made through Banking Channel. 5.3 Further, it is also relevant to note that the Hon'ble Jurisdictional ITAT in the case of M/s. M.B. Jewellers sons vs. DCIT, Circle-44 Kolkata (ITA No. 1/Kol 2017). The Ld ITAT observed that We have heard the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 paged 91 to 95 of paper book) retracting the statement recorded by DDIT(Inv.). He also filed latter to DCIT Central Circle-4, Surat on 31.10.2014 explaining the entire facts of the case and the circumstances warranting him to file two affidavits (i. e. on 21.10.2013 and 09.01.2014 reiterating the same) (enclosed in pages 88 to 90 of paper book]. Hence, the version of the revenue that the assessee had received cash back in lieu of cheques issued to suppliers of diamonds, stands negated pursuant to the retraction of statement of Shri Rajendra Jain which is the only source of evidence available with the revenue and which had been heavily relied upon by the revenue. A statement once retracted cannot be treated as reliable source or an evidence to allege that the assessee had received cash back in lieu of cheques issued. It is observed that the tax audit report of the assessee clearly mentioned that the assessee is maintaining regular books of accounts including the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished the summary of diamonds movement for the period 1. 4. 2006 31.03.2007 indicating the quantity and value in opening balance purchases 53ies and closing balance (enclosed in page 53 of paper book) The appellant had also fled the purchase bills of M/S. Vitrag Jewels (enclosed in pages 68 lo 72 of the paper book) together with the ledger account of M/S. Vitrag Jewels as appearing in the books of the assessee firm for the period 1. 4.2006 to 31.3. 2007 and for the period 1. 4. 2007 to 31.3. 2008 wherein the payments were made to M/s. Vitrag Jewels by account payee cheques. Admittedly the payments were made to M/s Vitrag Jewels through account payee cheques on 22 2 2008 (Rs 10,00, 000/-) and on 27 03 2008 (Ps 5,57,470/-). Hence the primary allegation of the AO that the ITA No. 1/Ko/2017 M/s. M. B. Jewellers Sons A Yr 2007-08 assessee had received the cash back in lieu of account payee cheques issued from M/s Vitrag Jewels (based on the statement of Shri Rajendra Jain) and used the said cash for purchasing diamonds from unknown parties in the grey market. Gets defeated on this count also, in as much as the AO had accepted the fact that factum of purchases of diamonds indeed ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. A perusal of the above order reveals that the ld. CIT(A) has thoroughly examined the evidence on record and found that the assessee has produced all the relevant evidences including complete details and bills and vouchers and further that the books of accounts of the company have been duly audited and further that the assessee has been maintaining quantitative details of purchases and sale and opening and closing stock. Further, the corresponding sales have not been doubted by the Assessing Officer. He also categorically held that even it was not a case of purchase of diamonds from grey market to suppress the gross profit. The ld. DR could not point out any specific error in the order of the CIT(A) justifying our interference. We do not find any merit in the appeal of the Revenue and the same is accordingly dismissed. 7. ITA No.592/Kol/2021 for assessment year 2011-12 - The Revenue in this appeal has taken the following grounds of appeal: 1. That on the facts circumstances of the case and in law, the CIT(A) has erred in deleting the addition made u/s 69C of the Act, for Rs.1,49,89,050/- 2. That on the facts circumstances of the case and in law, the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07-08 assessee had received the cash back in lieu of account payee cheques issued from M/s Vitrag Jewels (based on the statement of Shri Rajendra Jain) and used the said cash for purchasing diamonds from unknown parties in the grey market. Gets defeated on this count also, in as much as the AO had accepted the fact that factum of purchases of diamonds indeed has been made by the assessee in the Asst Year 2007-08 (i.e. the year under appeal) and whereas the payments were made to Vitrag Jewels only in next Asst Year i.e. AY 2008-09. While this is so, it is highly impossible for M/s. Vitrag Jewels to first hand over the cash even without receiving the cheques from the assessee. Hence no cash could be available with the assessee to make purchase of diamonds from unknown parties in the gray market in Asst Year 2007-08. Hence, the allegation of the AO only leads to impossible situation. 5.4 As per the P/L account of the appellant company shows that it has domestic sale of Rs.39,63,45,312.78/- and export sale of Rs.24,91,075.00/- and has filed return of income of Rs.28,83,968/-. The appellant has maintained complete details of bills and vouchers. The books of account of the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he addition made on account of bogus purchase without appreciating the facts that the assessee failed to prove one or two conditions out of three principal criteria laid down by High courts and by Supreme Court in number of cases including in the case NRA Iron Steel Pvt Ltd, i.e. identity creditworthiness of the creditors and genuineness of the transactions. 3. That on the facts circumstances of the case and in law, the CIT(A) has erred by not following the principle of natural justice in respect of consideration of the retraction of statement u/s 132(4) of the act of Shri Rajendra Jain without giving an opportunity to the A0 of being heard, though statement of Shri Dharmichand Jain, Director of M/s Mazniprabha Impex Pvt. Ltd. and Shri Nitin Jogad Proprietor of M/s Nayan Gems are relevant apart from Shri Rajendra jain. 4. That on the facts circumstances of the case and in law, the CIT(A) has erred in allowing relief to the assessee company on account of bogus purchase when Directorate of Investigation found certain documents during the course of search operation u/s 132 of the act in the premises of related persons and found that the claim of genuine purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequently the said loan has repaid by the assessee to the concerned parties. The relevant part of the order of the CIT(A) is reproduced as under: In terms of section 68 appellant was required to establish the 3 ingredients i.e. identity, genuineness and creditworthiness. From the documents places on record, it appeared and all the unsecured loan creditors had furnished/given the following documents to the appellant which are filed before me. 1. Shiv Shambhu Vincom Pvt. Ltd. 1. Ledger Copy of Shreejee Jewellers Pvt. Ltd. in the books of Shiv Shambhu Vincom Pvt. Ltd. for the period 01/04/2011 to 31/03/2012 2. Copy of bank statement of M/s Shiv Shambhu Vincom Pvt. Ltd. reflecting the relevant transactions. 3. Certificate from Shiv Shambhu Vincom Pvt. Ltd. declaring the source of fund. 4. Copy of Certificate of Incorporation 5. Copy of PAN card 6. Acknowledgement of filing Income Tax Return of Shiv Shambhu Vincom Pvt. Ltd. for the A.Y. 2012-13. 7. Copy of Audited Financial Statements of the Shiv Shambhu Vincom Pvt. Ltd. for the A.Y. 2012-13. 8. Copy of order u/s 143(1) for the A.Y. 2014-15 of Shiv Shambhu Vincom Pvt. Ltd. evidencing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wellers Pvt. Ltd. in the books of Saraogi Vinimay Pvt. Ltd. for the period 01/04/2011 to 31/03/2012. 3) Certificate from Saraogi Vinimay Pvt. Ltd. reflecting the relevant transactions. 4) Copy of trade licence reflecting address proof of Saraogi Vinimay Pvt. Ltd. 5) Copy of PAN Card 6) Acknowledgement of filing income tax return of Saraogi Vinimay Pvt. Ltd. for the A.Y. 2012-13 7) Copy of Audited Financial Statements of the Saraogi Vinimay Pvt. Ltd. for the A.Y. 2012-13. 8) Ledger of Saraogi Vinimay Pvt. Ltd. in the books of M/s Shreejee Jewellers Pvt. Ltd. for the period 01/04/2011 to 31/03/2012. 9) Copy of bank statements of M/s Shreejee Jewellers Pvt. Ltd. reflecting the relevant transactions. 1. Nightingle Merchants Pvt. Ltd. a) Copy of Loan Confirmation. b) Ledger Copy of Shreejee Jewellers Pvt. Ltd. in the books of Nightingle Merchants Pvt. Ltd. for the period 01/04/2011 to 31/03/2012. c) Certificate from Nightingle Merchants Pvt. Ltd. declaring the source of fund. d) Copy of bank statement of M/s Nightingle Merchants Pvt. Ltd. reflecting the relevant transactions. e) Copy of Trade Licence reflecting address p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment is not relevant. I am of the considered view that the appellant proved the identify, genuineness and credit worthiness of all the loan creditors, and therefore on 3 touchstones incorporated in section 68 of the I. T. Act, the addition of Rs. 1,30,00,000/- and Rs.7,18,357/- (on account of interest paid to the unsecured loan creditors) were not justified. The additions are accordingly deleted and ground no. 2 and ground no.3 are allowed. 13. Since the ld. CIT(A) has not only discussed in details the various evidences proving the identity, creditworthiness of the parties and genuineness of the transaction but also the fact that assessee has subsequently repaid the loan amount to the concerned parties and TDS was also deducted on the interest paid to the parties on such loan amount. In view of this, we do not find any reason to interfere with the order of the CIT(A) on the above issue also. This ground of the Revenue is also dismissed. 14. Vide Ground No.4, the Revenue has agitated the action of CIT(A) in deleting the addition of Rs.2,42,83,488/-. At the outset, the ld. counsel for the assessee has submitted that the investments were made by the assessee not for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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