The ITO, Ward-2(4),, Ahmedabad v. Shri Ashish Surendra Jain, Ahmedabad

ITA 2780/AHD/2008 | 1998-1999
Pronouncement Date: 20-01-2011 | Result: Dismissed

Appeal Details

RSA Number 278020514 RSA 2008
Assessee PAN AAEPJ8322B
Bench Ahmedabad
Appeal Number ITA 2780/AHD/2008
Duration Of Justice 2 year(s) 5 month(s) 15 day(s)
Appellant The ITO, Ward-2(4),, Ahmedabad
Respondent Shri Ashish Surendra Jain, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 20-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 20-01-2011
Date Of Final Hearing 20-01-2011
Next Hearing Date 20-01-2011
Assessment Year 1998-1999
Appeal Filed On 05-08-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HON' BLE SHRI N.S. SAINI A.M. ) I.T.A. NO. 2780/AHD./2008 ASSESSMENT YEAR : 1998-1999 INCOME TAX OFFICER WARD-2(4) -VS.- SHRI ASHISH SURENDRA JAIN AHMEDABAD AHMEDABAD (PAN : AAEPJ 8322 B) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJAY RAI SR. D.R. RESPONDENT BY : SHRI KEDAR LADDHA A.R. O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER DATED 22.05.2008 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VII AHMEDABAD DELETING THE ADDITION OF RS.32 47 288/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDISCL OSED INCOME FOR THE ASSESSMENT YEAR 1998- 99. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S AN INDIVIDUAL. FOR THE ASSESSMENT YEAR UNDER APPEAL HE FILED THE RETURN OF INCOME DECLARI NG TOTAL INCOME OF RS.1 83 437/-. THE ASSESSING OFFICER FRAMED THE ASSESSMENT UNDER SECTI ON 143(3) ON 22.03.2005 WHEREIN HE MADE THE ADDITION OF RS.32 47 288/-. THE REASONING GIVEN BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FOR MAKING THIS ADDITION ARE THAT THE ASSESSEE HAS DECLARED DIAMONDS AND GOLD JEWELLERY UNDER THE VOLUNTARY DISCLOSURE OF INCOME SCHEME (IN SHORT VDIS) WHICH WERE NOT INEXISTENCE AND SUBSEQUENTLY SOLD IT FOR RS.32 47 288/- WHICH IS NOTHING ELSE BUT TO MISUSE OF THE SCHEME OF VDIS 1997. 3. ON APPEAL IN THE IMPUGNED ORDER THE LEARNED COM MISSIONER OF INCOME TAX(APPEALS) DELETED THE AFORESAID ADDITION FOR THE DETAILED REA SONS GIVEN IN PARA 5 TO 5.4 OF THE IMPUGNED ORDER WHICH READS AS UNDER :- 5. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELL ANT AND THE FININGS OF THE AO IN THE ASSESSMENT ORDER. IT MAY BE SEEN THAT THE APPEL LANT APPEARS TO HAVE DECLARED GOLD ORNAMENTS AND JEWELLERY WORTH RS.10 81 758/- U NDER VOLUNTARY DISCLOSURE OF INCOME SCHEME (VDIS). THE SAID JEWELLERY ITEMS AR E .STATED TO HAVE BEEN SOLD FOR RS.32 47 288/- TO DIFFERENT PARTIES. MOST OF THE PA RTIES TO WHOM THESE ORNAMENTS WERE SOLD ARE FROM AHMEDABAD AND ONE PARTY VIZ. M/ S GALAXY EXPORTS IS FROM 2 ITA NO. 2780-AHD-2008 MUMBAI. IT APPEARS THE APPELLANT HAS SOLD DIAMONDS WORTH OF RS.1 71 200/- TO M/S. GALAXY EXPORTS. 5.1. THERE WAS A SEARCH IN CASE OF GALAXY EXPORTS MUMBAI AND OTHER CONCERNS AND THESE MUMBAI BASED JEWELLERY SHOPS WERE SUSPECT ED TO HAVE BEEN ISSUED ACCOMMODATION SALE BILLS TO VARIOUS PARTIES AND THE SAME WERE TAKEN FOR INVESTIGATION. SINCE THE APPELLANT ALSO HAPPENED TO HAVE SOLD CERTAIN DIAMONDS TO GALAXY EXPORTS MUMBAI THE APPELLANT WAS SUSPECT ED TO HAVE NOD RECEIVED ONLY ACCOMMODATION BILLS AND THEREBY THE AO IS OF THE VI EW THAT THE ENTIRE DECLARATION MODE UNDER VDIS IS BOGUS. THEREFORE THE ENTIRE SAL E PROCEEDS OF RS.32 47 288/- HAVE BEEN TREATED AS FABRICATED TRANSACTIONS AND AD DED THE SAME AS INCOME FROM UNDISCLOSED SOURCES. 5.2. IT IS FURTHER SEEN THAT THE LOCAL TRANSACTIONS SEEM TO HAVE BEEN VERIFIED BY THE AO AND FOUND NO ADVERSE EVIDENCES TO TREAT THE SALE S OF ORNAMENTS DONE BY APPELLANT AS BOGUS. HOWEVER THE AO HAS TREATED.IHE ENTIRE SALE TRANSACTIONS OF GOLD AND JEWELLERY ORNAMENTS OF THE APPELLANT WHICH ARE SLATED TO HAVE BEEN DECLARED UNDER VDIS AS NOT A REAL DISCLOSURE RELYING UPON TH E ALLEGED FINDINGS IN CASE OF GALAXY EXPORTS. IT IS FURTHER SEEN THAT THE GALAXY EXPORTS MUMBAI IS AN EXISTING CONCERN WHO HOVE ISSUED THE CERTIFICATE FOR HAVING HAD BUSINESS TRANSACTIONS WITH THE APPELLANT FOR WHICH THERE APPEARS TO BE NO ADVE RSE EVIDENCE ESTABLISHED. AS IT CAN BE SEEN FROM THE WRITTEN SUBMISSIONS MADE BY TH E APPELLANT THAT THE APPELLANT HAD MADE A DISCLOSURE UNDER VDIS WHICH ARE SUPPORT ED BY THE VALUATION CERTIFICATE OF A REGISTERED VALUER AND WERE ALSO ACCEPTED BY TH E CIT CONCERNED THE CIT HAD ALSO ISSUED THE RELEVANT CERTIFICATE ACCEPTING THE DECLARATION OF GOLD AND JEWELLERY. THEREFORE FROM -THE BASIC FACTS OF THE DECLARATION MADE UNDER VDIS IT CANNOT BE SAID THAT THE APPELLANT WOULD HAVE MADE A BOGUS DEC LARATION UNDER VDIS AND LATER ON HE WOULD HAVE HAD A BOGUS SALE OF GOLD AND JEWEL LERY. IT APPEARS THAT ONLY BECAUSE THERE WAS SEARCH IN CASE OF GALAXY EXPORTS MUMBAI WITH WHOM THE APPELLANT ALSO HAD TWO TRANSACTIONS WORTH RS.L 71 2 00/- WHEREIN THE APPELLANT STATED TO HAVE SOLD DIAMONDS IT CANNOT BE SAID THAT THE A PPELLANT HAD INDULGED IN FICTITIOUS OR NON-EXISTING DISCLOSURE UNDER VDIS. FURTHER IT I S SEEN THAT THE LOCAL SOLES MADE BY THE APPELLANT ARE ALL EXPLAINED WITH THE RESPECT IVE JEWELLERY SHOPS AND THERE IS NO IRREGULARITY AS SUCH NOTICED BY THE AO. THEREFORE IT APPEARS TO ME THAT TREATING THE DISCLOSURE MAD UNDER VDIS AS NON-EXISTING IS NOT CO RRECT. 5.3. IT IS FURTHER BROUGHT TO MY NOTICE THAT CONSEQ UENT TO SEARCH IN CASE AT M/S GALAXY EXPORTS INCOME-TAX PROCEEDINGS HAVE BEEN TA KEN PLACE AND THE SAID PROCEEDINGS WERE CHALLENGED IN APPEAL AND THE APPEL LANT M/S GALAXY EXPORTS HAD A FAVOURABLE DECISION FROM THE I.T.A.T. J BENCH MUMBAI. THEREFORE THE ADDITIONS MADE BY THE AO TREATING THE ENTIRE SALE PROCEEDS OF RS.32 47 288/- PRESUMING THAT THE APPELLANT HAD MADE ONLY BOGUS DECLARATION IN VD IS CANNOT BE ACCEPTED. THE APPELLANT HAD MADE A DECLARATION UNDER VDIS AND THA T HOVE BEEN ACCEPTED BY THE DEPARTMENT AND AS PER THE GUIDELINES OF THE CBDT AN D SUCH DECLARATION MADE CANNOT BE SUSPECTED AND NO PROBING COULD BE DONE SI NCE THEY HAVE BEEN DECLARED AND ACCEPTED BY THE DEPARTMENT BASED ON THE REGIS TERED VALUER'S REPORT AND OTHER NECESSARY VERIFICATION. HOWEVER AS IT COULD BE SEE N THAT THE TRANSACTIONS WITH GALAXY EXPORTS MUMBAI ALSO RECONFIRMED BY THEM AND THE APPELLANT SEEMS TO HAVE 3 ITA NO. 2780-AHD-2008 RECEIVED SALE PROCEEDS FOR WHICH THE D.D. WAS DRAWN AND BROUGHT TO AHMEDABAD AND DEPOSITED IN THE APPELLANT'S ACCOUNT. THEREFO RE THE TRANSACTIONS AS SUCH DONE BETWEEN THE APPELLANT AND GALAXY EXPORTS CANNOT B E SUSPECTED ONLY BECAUSE THE APPELLANT COULD NOT SHOW ANY EVIDENCE FOR HAVING CARRIED THE SAID DIAMONDS FROM AHMEDABAD TO MUMBAI BYWAY OF CERTIFICATE OF INSURAN CE. THE APPELLANT'S ARGUMENT WAS. THAT FOR SECURITY REASON THEY HAD TO CARRY THE DIAMONDS IN MOST CONFIDENTIAL MANNER TO MUMBAI AND BROUGHT THE SALES PROCEEDS BY TAKING D.D. WHICH HAS BEEN DEPOSITED IN THE APPELLANT'S ACCOUNT . THEREFORE IT APPEARS TO ME THAT ONLY BECAUSE THERE WAS NO EVIDENCE FURNISHED B Y THE APPELLANT TOR HAVING CARRIED THE DIAMONDS TO MUMBAI IT CANNOT BE SUSPEC TED THAT THE TRANSACTIONS WITH THE GALAXY EXPORTS AS NOT CORRECT. 5.4. FROM THE FACTS OF THE CASE IT IS SEEN THAT TH E AO HAS REJECTED THE ENTIRE SALES TRANSACTIONS BY THE APPELLANT BASED ON THE INFORMAT ION RECEIVED WITH REGARD TO THE SEARCH AND SEIZURE OPERATION IN CASE OF GALAXY EXPO RTS AND OTHERS WHO APPEARED TO HAVE ALLEGEDLY ENTERTAINED SUCH ACCOMMODATION ENTRI ES IN CASE OF VDIS. HOWEVER IN APPELLANT'S CASE THERE IS NO CONCLUSIVE PROOF THAT THE APPELLANT HAS CARRIED ON BOGUS TRANSACTIONS INDICATING THE ACCOMMODATI ON TRANSACTIONS FOR TAKING ADVANTAGE OF VDIS. THE AO HAS ALSO NOT ESTABLISHED THAT THE TRANSACTIONS TAKEN PLACE IN CASE OF OTHER PARTIES ARE HAVING ANY BOGUS TRANSACTIONS. THEREFORE CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IT APPEARS TO ME THAT THE APPELLANT HAS SOLD THE GOLD JEWELLERY WHICH WERE DI SCLOSED IN THE VOLUNTARY DISCLOSURE OF INCOME.. SCHEME (VDIS) SINCE THE VD IS DECLARATION HAD BEEN ACCEPTED BY THE DEPARTMENT AND NOTHING IS ESTABLIS HED AGAINST THE APPELLANT THAT THE SALES MADE BY HIM ARE NOT OUT OF THE DISCLOSURE MADE UNDER VDIS SCHEME THEREFORE I AM OF THE VIEW THAT THE ADDITIONS MADE BY THE AO BASED ON ONLY SOME SUSPICION CANNOT BE SUSTAINED. THE ADDITIONS OF RS .32 47 288/- MADE BY THE AO THEREFORE DELETED.' 4. AT THE TIME OF HEARING BEFORE US ON BEHALF OF R EVENUE SHRI SANJAY RAI LD. SR. D.R. APPEARED AND RELYING ON THE REASONING GIVEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER CONTENDED THAT THE ADDITION WAS RIGHTLY MADE AND TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN DELETING THE SAME. 5. ON THE OTHER HAND SHRI KEDAR LADDHA LD. COUNSE L APPEARING ON BEHALF OF THE ASSESSEE VEHEMENTLY SUPPORTED THE ORDER OF LEARNED COMMISSIO NER OF INCOME TAX (APPEALS). THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE SOLD DIAMONDS AMOUNTING TO RS.1 71 200/- ONLY TO M/S. GALAXY EXPORTS OUT OF THE TOTAL SALES PROCEEDS OF RS.32 47 288/-. REMAINING SALE PROCEEDS WERE VERIFIED BY ASSESSING OFFICER BY SUMM ONS TO PARTIES VERIFYING THEIR BOOKS CLEARANCE CERTIFICATE FROM BANK AND VERIFYING RECOR DS AT BANK AND DOCUMENTS. THE LD. COUNSEL 4 ITA NO. 2780-AHD-2008 SUBMITTED THAT THE ASSESSING OFFICER HAD MADE THE A DDITION TOTALLY ON THE BASIS OF FACT FOUNDED OR ASSUMED DURING SEARCH AND INVESTIGATION AT M/S. GAL AXY EXPORTS ITS ASSOCIATES AND COUNTER PARTY AT PUNE. THE ASSESSING OFFICER HAD NOT MADE ANY IND EPENDENT INQUIRY TO FIND THE TRUTH. HE ALSO POINTED OUT THAT THE ADDITION MADE BY THE ASSESSING OFFICER WAS BASED ON FALSE INFORMATION UNTRUE FACT WRONG ASSUMPTION BASELESS PRESUMPTION AND MERELY SUSPICION WHICH WAS CLEARED BY THE ITAT BOMBAY THEREFORE THE ADDITION WAS RI GHTLY DELETED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). HE FURTHER SUBMITTED THAT THE ASSESSEE HAS FURNISHED THE SATISFACTORY EXPLANATION REGARDING PHYSICAL MOVEMENT OF DIAMOND FROM AHMEDABAD TO BOMBAY. FINALLY LD. COUNSEL OF THE ASSESSEE RELIED ON THE DECISION OF I TAT THIRD MEMBER BENCH MUMBAI IN THE CASE OF UTTAMCHAND P. JAIN VS.- ITO WARD-21(3)(2) MUMBAI REPORTED IN [2006[ 103 ITD 1 (MUMBAI)(T.M.). IN THIS JUDGMENT ALSO IT WAS HELD THAT DIAMONDS WERE DECLARED BY THE ASSESSEE UNDER VDIS THEY WERE SOLD UNDER SALE BILLS TO D WHO WAS IDENTIFIED PERSON AND HAD CONFIRMED TRANSACTIONS SOURCE OF PAYMENT WAS BANK ACCOUNT OF PURCHASER AND THERE WAS NO MATERIAL ON RECORD TO SHOW THAT SOURCE OF THAT MONEY WAS ASSESS EE IT COULD BE SAID THAT SOURCE OF AMOUNT FOUND CREDITED IN ASSESSEES BOOKS STOOD EXPLAINED AND THEREFORE IT COULD NOT BE SAID TO BE INCOME OF ASSESSEE IN ANY CIRCUMSTANCES UNDER SEC TION 68 OF THE INCOME TAX ACT 1961. HE SUBMITTED THAT THE RATIO OF THE DECISION OF ITAT T HIRD MEMBER BENCH MUMBAI IN THE CASE OF UTTAMCHAND P. JAIN (SUPRA) IS SQUARELY APPLICABLE T O THE FACTS OF ASSESSEES CASE THEREFORE THE VIEW TAKEN BY THE LEARNED COMMISSIONER OF INCOME TA X(APPEALS) BE UPHELD. 6. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT THE ASSESSMENT OF THE ASSESSEE WAS REOPENED IN CONNECTION WITH SEARCH AND INVESTIGATION TO ONE OF THE PARTIES M/S. GALAXY EXPORT MUMBAI. THE ASSESSEE HAD SOLD DIAMONDS OF RS.1 71 200/- TO M/S. GALAXY EXPOR T OUT OF THE TOTAL SALE PROCEEDS OF RS.32 47 288/-. THE REMAINING SALE PROCEEDS WERE VE RIFIED BY THE ASSESSING OFFICER BY SUMMONS TO PARTIES VERIFYING THEIR BOOKS CLEARANCE CERTIF ICATE FROM BANK AND VERIFYING RECORDS AT BANK AND DOCUMENTS SUBMITTED BY THE ASSESSEE. THE RATIO OF DECISION OF THE ITAT THIRD MEMBER BENCH MUMBAI IN THE CASE OF UTTAMCHAND P. JAIN (SU PRA) IS SQUARELY APPLICABLE TO THE FACTS OF ASSESSEES CASE. TO SUM UP PRIMA FACIE IT APPEARS THAT THE ASSESSING OFFICER MADE THE ADDITION OF RS.32 47 288/- ON DOUBTS AND SUSPICION AND THE L EARNED COMMISSIONER OF INCOME 5 ITA NO. 2780-AHD-2008 TAX(APPEALS) HAS GIVEN COGENT REASON FOR DELETING T HE SAME. WE THEREFORE INCLINE TO UPHOLD THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEAL S). 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 20.01.20 11 SD/- SD/- (N.S. SAINI) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20 / 01 / 2011 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A.) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGI STRAR ITAT AHMEDABAD LAHA/SR.P.S.