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TMI Blog2023 (1) TMI 967X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order. Addition so made by the AO and upheld by the ld. CIT(A) is hereby directed to be deleted. Ground of appeal no. 4 of assessee's appeal is thus allowed - ITA Nos. 1178 & 1179/CHD/2019 - - - Dated:- 11-1-2023 - SMT. DIVA SINGH , JUDICIAL MEMBER And SHRI VIKRAM SINGH YADAV , ACCOUNTANT MEMBER For the Assessee : Shri Tej Mohan Singh , Advocate For the Revenue : Dr. Ranjeet Kaur, JCIT , Sr. DR ORDER Per Vikram Singh Yadav, AM These are two appeals filed by the assessee against the order of ld. CIT(A)-3, Gurgaon dated 07.06.2019 and 05.06.2019 pertaining to assessment year 2010-11 and 2013-14 respectively. Since common issues are involved, both these appeals were heard together and are being disposed of by this consolidated order. 2. With the consent of both the parties, the case of the assessee in ITA No. 1178/CHD/2019 is taken as lead case wherein the grounds of appeal taken by the assessee read as under: 1. That the Ld. Commissioner of Income Tax(Appeals) has erred in law in upholding the reopening the assessment by issuance of notice u/s. 148 in as much as there has been no escapement of income and order passed is illegal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock amounting to Rs. 2,28,86,399/-. Subsequently, the assessee challenged the addition before the ld. CIT(A) Gurgaon and the whole of the additions of Rs. 2,30,58,074/- was deleted by the ld. CIT(A). Thereafter, on 30.03.2015, the assessee received a notice u/s. 148 from the office of DCIT and in the reasons so recorded as supplied to the assessee, it was revealed that search seizure action was carried out on concerns controlled and managed by Mr. Rajender Sohan Lal Jain, Mr. Sanjay Chaudhary and Mr. Dharam Chand Jain on 3.10.2013 wherein the Investigation Wing found that these concerns/persons were providing accommodation entries and the assessee was one of the beneficiary of such accommodation entry amounting to Rs. 10,46,600/- from M/s. Kriya Impex Pvt. Ltd. In response to the said notice, the assessee filed its return on 30.06.2015. It was submitted that the assessee raised objections to re-opening of the case merely on the basis of borrowed belief and information received from the Investigation Wing, Mumbai. The assessee submitted copy of bill of M/s. Kriya Impex Pvt. Ltd. as well as copy of the bank statement as an evidence of purchase of cut and polished diamonds and pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position as laid down by the Hon'ble Supreme Court in the case of Andaman Timber Industries Vs CCE (Civil Appeal no 4228 of 2006 dated 02/09/2015) that where any assessment is made on the basis of statement of Third Party without providing an opportunity to cross examine, then in such cases, the assessment is liable to be quashed. It was further submitted that once the assessee has given explanation during reassessment proceedings and complete evidence of transaction has been given, then it is for the Department to prove that whatever is stated, is not real. It was submitted that there is no such finding in the re-assessment order where the documents and submissions made and the evidence given by the assessee were found to be false. Regarding the finding of the AO that the assessee made the payment after three months to the suppliers whereas diamond trade is a cash trade unless and until the buyer has routine dealings with the seller, it was submitted that the AO failed to appreciate that the assessee has issued two post-dated cheques bearing No. 098742 and 098743 dated 14.07.2009 and 28.07.2009 for Rs. 5,14,600/- and Rs. 5 lacs respectively. It was submitted that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read with 143(3) vide order dated 20.10.2011 and the relief granted by the ld. CIT(A), the Revenue is in appeal before the Tribunal and the matter has still not attained finality. It was further submitted that the case of the assessee was re-opened based on information that the assessee was one of the beneficiaries of transactions arranged by Shri Rajender Jain who had indulged in providing accommodation entries in form of bogus sale bills. It was submitted that it is not a case where the AO has not considered the entries in the books of account of the assessee, however, the issue is regarding the genuineness of these entries so recorded in the books of account. Thereafter referring to the statement of Shri Rajender Jain and the modus-operandi followed by him and the related entities, it was submitted that the AO has gone ahead and has rightly held that the purchases to the extent of Rs. 10,14,600/- were bogus purchases which have resulted in under-statement of profit and accordingly, the same was brought to tax in the hands of the assessee. It was submitted that the name of the assessee was found in the books of M/s. Kriya Impex Pvt. Ltd. wherein Shri Rajender Jain was the Direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by Mr. Rajat Chadha on behalf of M/s. Kriya Impex Pvt. Ltd. at Chandigarh. Further, the assessee has submitted copy of the Purchase Register for the period 1.04.2009 to 30.04.2009 wherein these purchases were duly recorded in the books of account vide voucher number 10031 dated 16.04.2009 and copy of the Stock Register for the period 15.04.2009 to 16.04.2009 showing physical receipts of diamonds and recording thereof as part of inventory in the books of accounts. Further, copy of the bank statement for the period 1.07.2009 to 31.07.2009 has been submitted evidencing the payment towards these purchases to M/s. Kriya Impex through cheques bearing No. 098742 and 098743 dated 14.07.2009 and 28.07.2009 for Rs. 5,14,600/- and Rs. 5 lacs respectively. We therefore find that the assessee has duly explained and substantiated the nature and source of purchase of these diamonds as duly recorded in the books of accounts and shown as part of its closing stock as on the close of the financial year and has thus duly discharged the initial onus cast on it. 8. Now, coming to the reasoning adopted by the Assessing officer, as also reiterated by the ld. DR during the course of hearing, we fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upheld the findings of the AO and has not addressed the said contention raised before him. Such an action on part of the AO and ld. CIT(A) cannot be sustained in eyes of law. In this regard, useful reference can be drawn to the decision of Hon'ble Supreme Court in case of Andaman Timber Industries (supra) and following the same, the decision of the Coordinate Delhi Benches in case of Bhatia Diamonds Pvt. ltd (supra) wherein the relevant findings read as under: 5.1 Keeping in view of the aforesaid discussions, I am of the considered view that assessee has considerable cogency that addition was made on the basis of statement of Sh. Rajendra Jain, but the assessee was not granted the opportunity to cross examine Sh. Rajendra Jain which ground was also raised before the Ld. CIT(A), who did not adjudicate the same, which is against the settled law. I note that exactly on the similar facts and circumstances the ITAT, SMC, Delhi Bench vide its order dated 06.11.2018 passed in ITA No. 3510/Del/2018 (AY 2014-15) in the case of Smt. Jyoti Gupta vs. ITO wherein, the SMC Bench has considered the statement of Vikrant Kayan and has held that since the impugned addition was made on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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