Income Tax Appellate Tribunal - Lucknow
M/S. Man Singh & Sons Jewellers P.Ltd.,, ... vs Department Of Income Tax on 23 June, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
LUCKNOW BENCH "A", LUCKNOW
BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER
AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER
ITA No.186/LKW/2012
Assessment Year:2001-02
DCIT-6 v. M/s Man Singh & Sons Jewellers Pvt. Ltd.
Kanpur 59/39, Birhana Road
Kanpur
TAN/PAN:AABCM2852Q
(Appellant) (Respondent)
Appellant by: Shri. Punit Kumar, D.R.
Respondent by: Shri. Rakesh Garg, Advocate
Date of hearing: 27 03 2015
Date of pronouncement: 23 06 2015
ORDER
PER SUNIL KUMAR YADAV:
This appeal is preferred by the Revenue against the order of the ld. CIT(A) on a solitary ground which is as under:-
"the ld. CIT(A) has erred in law and on facts by not appreciating the facts as categorically elaborated in the assessment order under section 143(3)/148 of the Income-tax Act, 1961 dated 31.3.2004 and consequently the value of the undisclosed diamonds amounting to Rs.21,30,372/- has been added to the assessee's income under section 69A of the Income-tax Act, 1961 (hereinafter called in short "the Act").
2. The brief facts borne out from the record are that information was received from the office of the ld. Commissioner of Income-tax-II, Kanpur alongwith copy of the letter of JDIT (Inv.) Unit-II, Kanpur and the annexure. Accordingly JDIT(lnv.) Unit-ll, Kanpur had conveyed that Shri :-2-:
Gopal Verrna, one of the Directors of the Company was in possession of four diamond rings which were sent to the prospective buyers, Shri. Manjeet Singh of M/s. Gyanvashnav Hotel, Swaroop Nagar, Kanpur through one Shri Bhupender Garg of Kanpur. It was further mentioned in the report that said diamond rings were retained unlawfully by said Shri Manjeet Singh and on account of this Shri Gopal Verma lodged an F.I.R. with S.P. (South), Kanpur and eventually the said diamonds were recovered on 07.07.2000 and were made case property in the case of State vs. Manjeet Singh and Others. It was further mentioned in the report that Shri Gopal Verma infact was in possession of undisclosed diamonds and on being involved in the aforesaid case, he tried to regularize the state of affairs in such a way that the whole transaction may look like the real one and the source of the diamond may be explained.
3. It was further explained that the said diamonds were originally purchased by one M/s. Om Enterprises Kolkatta from M/s. Ronak Gems Pvt. Ltd. Surat for consideration of Rs.16,27,200/- which were subsequently shown to have been sold to the assessee company. In the JDIT(lnv.) report, it has also been mentioned that a survey u/s. 133A of the Act was carried out in the case of said M/s. Om Enterprises, Kolkatta and statement of its partner Shri Om Prakash Dubey was recorded. During the course of survey, it was noticed that the entry in respect of the Diamonds was made in the books of accounts on 07.06.2000 and on the same day the said diamonds were sent to Kanpur to Assessee Company. The vouchers prepared by the assessee company revealed that the diamonds were sent to one Shri Sunil Karigar on 08.06.2000 for making the rings and that rings so prepared were received back on 10.06.2000. In the report it was also mentioned that the statement of Shri Sunil Karigar was recorded wherein he stated that Shri Gopal Verma one the Director of the company gave the size of four diamonds for making four rings in May, 2000 well before the :-3-:
said entries were made and vouchers prepared by the assessee company. In the report it was mentioned that there were clear contradiction between the facts as gathered during the course of survey u/s. 133A in the premises of M/s. Om Enterprises , Kolkatta to the effect that after purchasing the diamond from M/s. Ronak Gems Pvt. Ltd. and recording them in books of accounts on 07.06.2000 the same were sent to Kanpur on same date i.e. on 07.06.2000 and the fact revealed by Shri Sunil Karigar that Shri Gopal Verma, one of the Director of the assessee company gave the size of four diamonds for making four rings in the month of May, 2000. Accordingly, it was inferred in the report that when diamonds were sent by M/s. Om Enterprises on 07.06.2000 to the assessee company, how Shri Gopal Verma, Director of the assessee company could gave the size of four diamonds for making rings in May,2000. Under these circumstances it was observed that the entries made in the books of accounts of Om Enterprises, Kokatta and also the action of showing them transfer to Kanpur on the same day i.e. on 07.06.2000 was only an afterthought and meant to regularize the acquisition of the diamond by the assessee-company which have become necessary due to the fraudulently and unlawfully retention of these very diamonds by Shri Manjeet Singh of Gyanvashnav Hotel, Kanpur while actually assessee was in possession of these diamonds much before the date on which the entries of the same have been shown, as they were given for preparation of rings to Shri Sunil Karigar in the month of May, 2000 itself as deposed by him during the course of his examination u/s. 131 of the Act.
4. On the basis of this report, the Assessing Officer has made necessary enquiries and called explanation from the assessee. Though the assessee has explained the facts and circumstances duly supported by documentary evidence under which appellant was in possession of these diamond rings, but the same was not accepted by the Assessing Officer and he accordingly :-4-:
made an addition of Rs.21,30,372/- on substantive basis in the hands of Shri. Gopal Verma and on protective basis in the hands of the assessee under section 69A of the Act.
5. During the course of hearing, the ld. counsel for the assessee has invited our attention to the order of the Tribunal in the case of Income Tax Officer vs. Shri. Gopal Verma, Kanpur in I.T.A. No. 884/LUC/2006, in which the correctness of the explanations furnished by the assessee was examined and the Tribunal having accepted the explanations furnished by Shri. Gopal Verma, Director of the assessee-company has deleted the addition in his hands. The order of the Tribunal was passed on 31.3.2007 and nothing is available on record with regard to the final outcome of this order. Therefore, this order is binding upon the Tribunal in the case of the assessee, according to the ld. counsel for the assessee.
6. The ld. D.R., on the other hand, has contended that the Assessing Officer and the investigation team have demolished the explanations or stand taken by the assessee. The story projected by the assessee is false in the light of the statement of Sunil Karigar. According to Sunil Karigar, the diamonds were shown to him for preparation of ring in the month of May, 2000 even before receipt of actual diamonds as shown by the assessee. Therefore, the assessee was in possession of the diamonds and the Revenue has rightly made addition of the same and once the addition was deleted in the hands of Shri. Gopal Verma, the same should be made in the hands of the assessee on substantive basis.
7. Having carefully examined the orders of the lower authorities in the light of the rival submissions and the order of the Tribunal in the case of Income Tax Officer vs. Shri. Gopal Verma, Kanpur (supra), we find that the explanations furnished by the assessee in the instant case were examined by the Tribunal in the case of Shri. Gopal Verma, the Director of the assessee-company. Being convinced with the explanations of Shri. Gopal :-5-:
Verma, the Tribunal has deleted the addition made in his hands on substantive basis and there is no evidence on record suggesting that the order of the Tribunal was ever reversed. Therefore, no addition is called for in the hands of the assessee on the basis of same facts. For the sake of reference, we extract the findings of the Tribunal in the case of Income Tax Officer vs. Shri. Gopal Verma, Kanpur (supra) as under:-
"6.1 We find that before making additions u/s 69A of the I.T. Act, the explanation of the assessee was not accepted by the AO for the following reasons as mentioned at para 19 of the Assessment order:
(a) The case of the assessee was selected for scrutiny in view of CBDT's Instruction No.5/2001 in view of information received from DI Wing. It is not necessary to provide the copy of the same. In any case, a gist of the same was given to the assessee vide letter dated 10.02.2004.
(b) In his statement recorded on 11.07.2000, Shri Gopal Verma promised to produce documentary evidence regarding acquisition of diamonds in question on the next date. It goes to show that he was not in possession of any documentary evidence till 12.06.2000. It is only when the assessee find it difficult to get the diamonds rings back from Shri Manji Singh, reported the matter to Police and started hunting for the evidence.
(c)In this connection assertion made by Smt. Surinder Kaur mother of Shri Manjeet Singh as mentioned in para 7 above, is of much importance.
(d) The statement of Shri Sunil Karigar is of importance in the sense that the size of the diamonds were given to him in May, :-6-:
2000, accordingly the rings were prepared by him and the diamonds were fitted in same rings. The statement by Shri Sunil Karigar was given without any force, pressure and influence.
(e) No one has come forward to claim the right and ownership of the diamond rings before the Police and the court. The evidence regarding receipt of diamonds in question from M/s.
Om Enterprises Calcutta, is an afterthought and has been arranged to give a colourful device because the same must have been given to the assessee by Shri Hari Shankar Dubey on 07.06.2000 itself and also given to Smt. Surinder Kaur as desired by her.
(f) The purchase of diamonds by M/s. Om Enterprises from M/s. Raunak Gems (P) Ltd., Surat was recorded on 07.-6.2000 and the same has reached Kanpur on the same.
(g) Form No.31 has been got issued,
(h) There is no debit of traveling expenses from Calcutta to Kanpur by any mode in the accounts of M/s. Om Enterprises either under the head conveyance, motor car expenses & traveling. This journey from Calcutta to Kanpur & carriage as alleged is not proved.
(i) Whether exchange of diamonds through approval chalan could be "regarded as business transaction and is in accordance with the system of accounting.
(j) The proceedings u/s 132A and 132(3) are different from proceedings u/s 143(3) of IT Act, 1961 and cannot be challenged.
6.2 We find from the assessment order of M/s. Om Enterprise a copy of which is placed in paper book page 93 and 94, that this issue has also been discussed and it has been held therein by the AO after :-7-:
enquiry that the 4 diamonds were not sold but were sent for approval to Shri. Man Singh of Kanpur. We find that the AO in the Assessment order has held as under:
"The case was received on transfer from ITO, Wd. 38(3), Kolkata and it -was selected for scrutiny as per approval of CIT.III, Kolkata dt. 31.1.02. The reason for selection of this case is based on enquiry report received JD1T (Inv.), Unit-H, Kanpur. It is reported that M/s. Om Enterprises allegedly purchased four diamond rings on a consideration of Rs.16,27,000/- and sold it for Rs.21,30,372/-. The assessee filed return on 26.9.01 showing total income of Rs.61,571/-. Notice u/s 143(2) was duly served on the assessee and Mr. M. K. Goldah, AR appeared from time to time as well as explained the return. On going through the papers submitted by the AR it is ascertained that the alleged four diamond rings were duly purchased from Ronak Gems Pvt. Ltd. at the cost of Rs.16,27,200/-. Bills, vouchers, Stock List and mode of payments were duly submitted and produced in support of purchased.
It reveals on papers that the said diamond rinss were sent for approval to Sri Man Singh at Kanpur where it was stolen in Dacoity. There is no such evidence in support of sales. The ITI was directed to enquire about the case but no such information regarding sale is received from DDI(Inv.), Kolkata. Hence, it cannot be concluded that the alleged four diamond rings were sold after purchased. The books of accounts are produced and vouchers as well as bills are submitted/produced in support of expenses shown in P&L A/c. The ITI's report regarding sale and loan transaction is placed in filed. Total Income is computer as below:- :-8-:
Profit as per P & L A/c. ..... 61,571.00
Add : 10% Telephone expenses
For personal use 1,505.00
1/3 Motor Car expenses
For personal use 8,204.00
General exp. Not duly
Vouched 1,073,00 10,782.00
Total income Rs.72,353.00
Rounded off Rs.72,350.00
Assessed u/s 143 (3) as above. Issue D.N. Challan and copy of the order to the assesses firm."
6.3. We find that the Id.CIT(A) in his order from para 2.1 to 2.7 has made elaborate discussion and chronologically narrated the facts. The observations of the Id. CIT(A) is reproduced as under for the sake of clarity.
"2.7. I have considered the facts and circumstances of the case and the arguments of the Id. Representative of the appellant. The AO has mentioned that appellant was not in possession of any documentary evidence till 12.6.2000. The AO has come to this conclusion on the basis of assertion made by Smt. Surinder Kaur mother of Shri Manjeet Singh . The Id. Representative of the appellant has rightly stated that the statement of Smt. Manjeet Kaur has nothing to do with the case of the appellant because it was the statement before the CMM and not before the Income tax authorities. It is also clear from facts mentioned in the assessment order that there does not appear to be given any opportunity of cross examination of Smt. Kaur to the appellant. This matter was widely reported in newspapers and a criminal case was filed against Shri Manjeet Singh by the police. The assertion of Smt. Kaur has to be considered in the :-9-:
context in which such assertion was made. The assertion made by Smt. Kaur cannot be taken as an evidence in support of the fact that the appellant had no proof with regard to accounted acquisition of these diamonds rings. Without prejudice to the legality of admissibility of her assertion it may be also be observed that she had only stated when she wanted and accounted receipts with tax paid evidence then Shri Bhupinder Garg backed out. This does not mean that the appellant did not have proper evidence in respect of jewellery. Even if Smt. Surinder Kaur's assertion is accepted then this only indicate that Shri Bhopinder Garg was not having in his possession necessary evidence. It does not prove that the appellant did not have any evidence in his possession with regard to accounted acquisition of these rings. In fact the required evidence had been produced by the appellant before various authorities as well as before the Court of Third Additional Session Judge, Kanpur, in Criminal Revision, No.464 of 2000 is quite relevant. In this judgement, on page 3 it has been mentioned that Id. Counsel for the revisionist argued that in this case from perusal of the case diary it is proved fact that Gopal Verma proprietor of Man Singh & Sons, Birhana Road, Kanpur lodged FIR and moved the investigating authorities for coming into motion and on the basis of FIR Police came into action and in consequence above 4 diamond rings -were recovered by A.Satish Ganesh, Asstt, S.P. on 7.7.2000, From perusal of the recovery memo it was also a proved fact that the value of recovered articles in total was about Rs.12,48,000/- Shri Gopal Verma had stated in his application that these diamond rings which were recovered, were given by Bhupendra Garg on 12.6.2000 for approval and Bhupendra Garg had informed him that his brother was :-10-:
admitted in the hospital in injured condition and Bhpendra Garg also informed that all the four diamond rings were with Sardar Manjeet Singh and in this raspect he moved an application before S.P. South and case was registered in Cr. No.75/2000 and in support of their case, they have filed the approval issued voucher which were issued by Man Singh and Sons Jewellers (P) Ltd. and the above approval vouchers were dated 12.6.2000 which were given by Bhupendra Garg. All the particulars of the rings were given in the above voucher and Gopal Verma has also given papers which was Power of Attorney which is Annexure-B and this Power of Attorney had been given by M/s. Om Enterprise dealing in jewellery and precious stones etc. Annexure-F was approval voucher issued by Om Prakash Enterprises in favour of Man Singh & Sons Jewellers (P) Ltd. Anenxure-(G) was approval voucher of Man Singh & Sons issued in the name of Om Enterprises and there were other papers which were Annexures H.I.J. all these papers -were, pertaining to the diamond rings, which were recovered. All the particulars were given in that papers. So in view of all the above circumstances these rings be given in favour of Gopal Verma as he is entitled for the above. The Hon'ble Court have given its finding after appreciating the facts of the case and the submissions made before the Court, as under :
"...........Moreover all the papers which were filed by the applicant are on record which were issued by Om Enterprises Jewellers and Man Singh & Sons Jewellers and there is also a paper which has been filed is Special Power of Attorney issued by Om Enyerprises Jewellers. All the facts are before the Income Tax Officer so it cannot be said that there was no knowledge about the above papers :-11-:
to it. The inquiry has to be completed within a period of 90 days. They have submitted the report but what is result of the inquiry is not on record. Moreover in this case it is also a fact that income tax department has already submitted report before the Magistrate which has been dismissed by a common order and the Income Tax Department has not moved any revision application against, that order, so it is a proved fact that the order has become final against the Income Tax Department. As I have already stated above, that Sri Gopal Verma has filed papers and from perusal of the papers it reveals that Gopal Verma is an Income Tax payee and he had filed the papers of Om Enterprises from where he had taken four diamond rings for approval and the other papers are also there which are on record and no other person has claimed about the property in dispute. The I.O. has also submitted his report that the above articles may be given in supurdigi of the applicant".
It may be appreciated that the relevant evidence had been produced even before Third Session Judge -who was pleased to order for release of these articles in supurdigi of the applicant.
2.2 Photocopy of the power of attorney given by M/s Om Enterprises has also been filed before me. The contents of this power of attorney are reproduced below:
"I Om Prakash Dubey, age about 37 years son of Sri Hari Shanker Dubey partner of Ms Om Enterprises of 4 Benstalla Lane, 2nd floor, Calcutta-700007, do hereby solemnly affirm and declare that :
:-12-:
1. I am carrying on the business in jewellery items, precious and semi-precious stones under the trade name of M/s. Om Enterprises, 4 Banstalla Lane, 2nd floor, Calcutta-700007.
2. My trade concern M/s. Om Enterprises is duly registered with the commercial lax officer under the Bengal Finance Sales Tax Act, 1941 as per registration no.JK 5727a and Central Sales Tax No.3297A(JK)/C.
3. We are regular assessee of Income tax department, having PAN 13(5)/0-547 assessed under the jurisdiction of Calcutta.
4. We have given 4 pcs. Of diamond as per following details to M/s. Man Singh & Sons Jewellers Pvt. Ltd.
59/39, Birhana Road, Kanpur vide approval challan no.349 dt. 7.6.2000.
Item No. - item Weight
1. Cut & Polish Diamond 2.00 ct.
2. Cut & Polish Diamond 3.70 ct,
3. Cut & Polish Diamond 2.82 ct.
4. Cut & Polish Diamond 4.16 ct.
5. These diamonds are our property. The approval challan clearly stipulate that "the articles hereby given are expressly parted only for inspections, ownership ' of the goods is retained. As this is not the case of sale provision of sale of goods act do not apply. Non return entails Criminal prosecution. Notwithstanding any excuse :-13-:
being hereafter preferred. Goods taken for inspection must be returned on our demand. "
6.These diamonds are our assets in business and our stock in trade. The purchase of diamond is duly entered in the books of accounts is open for verification.
The contents for para no. 1 to 6 are true and correct to the best of my knowledge, belief and records. Nothing materials have been concealed. So help me God. "
From this affidavit it is clear that M/s. Om Enterprises had accepted the ownership of said diamonds. These diamonds were property of M/s, Om Enterprises.
A survey was also conducted u/s 133A of the IT Act, 1961 at the office of M/s. Om Enterprises 4, Banstalla Lane, 2nd floor, Calcutta-7. A report of DDIT (Inv.), Unit-II(2), Calcutta submitted vide letter No. DDIT (Inv.)/Unit-II(2)/Cal/2000-01/946 dated 4.8.2000 is available on record. In this report DDIT (Inv.) has submitted as under :
"As per the directive a survey u./s 133A of the IT Act, 1961 was carried out in the office of the above, mentioned concern on 26.7.2000. Books of accounts found there have been inventorised. Sri Prem Prakash Dubey, brother of Sri Om Prakash Dubey was present on the day of survey. From the scrutiny of books of account it appears that M/s. Om Enterprises has been doing business with M/s. Mansingh & Sons Jewellers (P) Ltd. of Kanpur, Computerised copy of sundry debtors list has been obtained which is enclosed for :-14-:
further verification. The assessee has stated that the diamonds in question was bought by them from M/s. Ronak Gems Pvt. Ltd. 301, River View Apartment, 3rd floor, near Ambika Niketan, Athwa Lines, Surat. The copy of the bill dated 5.6.2000 is also enclosed which may be got verified.
The DDIT(Inv.), Unit-II(2), Calcutta had enclosed photocopy of stock ledger which showed entries of purchases made from M./s. Ronak Gems, Pvt. Ltd. The DDIT had also enclosed statement of Shri Om Prakash Dubey recorded on 2.8.2000 on oath. He had stated that he was a partner of in M/s. Om Enterprises, 4, Banstala Lane, Calcutta. In response to query no.3 he had stated that main buyers outside Calcutta were (1) M/s. Mansingh & Sons Jewellers (P) Ltd., Kanpur (ii) B.N.Majumdar of Guwahati and some other concerns also, the names of whom he could not remember exactly. He had also stated that he knew Shri Gopal Verma and his brother Raju of this company for the last 3-4 years. He was asked whether any transactions with M/s. Mansingh & Sons Jewellers (P) Ltd. was made in the current financial year. He replied that Jhey had done some transactions through the firm M/s. OM Enterprses during the current financial year. The ledger copy of sundry debtors was produced for reference. He had also stated that they had given 4 pieces of diamond to them (M/s. Mansingh & Sons Jewellers (P) Ltd.) for approval but the transactions was yet to be settled. He had given the details of these diamonds. The total purchase value of these diamonds was Rs.16 lakh approximately. Nut he had quoted Rs.17.5 lakhs to them for these transactions. He was asked whether he had any evidence of delivery of the above items to :-15-:
them and also to tell as to who had delivered the items and when he replied that they had given the items by way of approval challand no.349 dt.
7.6.2000. It was delivered to Shri Gopal by his father Shri Hari Shankar Dubey on 7.6.2000 at their office 59/69, Birhana Road, Kanpur. He also informed tht in this trade the business was done with trust and faith and with known persons only. He had also stated that diamonds were loose diamonds and not settled in jewellery. He was asked to give details regarding purchases of these items. It was replied that the diamonds were purchased from m/s. Ronak Gems (P) Ltd., 301, River View Apartment, 3rd floor, Near Ambica Niketan, Athwa Lines, Surat. He stated that he had personally brought these items from Shri Yogin of that company on 5th of June 2000. the exact purchase value was Rs. 16,27,200.00. He was asked to clarify that from the copy of bill of M/s. Ronak Gems Pvt. Ltd. dated 5.3.2000 it appeared that goods were received on 7.6.2000 but Shri Om Prakash Dubey had stated that he had received the goods on 5.6.2000. He replied that he came back to Calcutta with the goods from Bombay on 6h evening with the goods and the goods were entered in their stock register on 7.6.2000. Again on the same day he took them to Lucknow and handed it to his father who in turn handed over it to Shri Gopal of M/s. Mansingh & Sons Jewellers at Kanpur. He had also stated that the diamonds were given to M/s.
Mansingh & Sons Jewellers and it was for them to sell either the loose diamonds or after setting them in ornaments. He also stated that 4 diamond pieces were entered in there stock book and were still shown in their stock. He had further stated that the :-16-:
party i.e. M/s. Mansingh & Sons Jewellers (P) Ltd. was known to them and never betrayed them in the past. In the trade they acted on good faith and trust and hence did not have any security or advance. He had also mentioned that M/s. Mansingh & Sons Jewellers (P) Ltd. had informed that they had faced some problem with one of their party to whom the diamonds were given for approval. He also clarified that the transaction with M/s. Mansingh & Sons Jewellers (P) Ltd. were entirely by cheque or bank draft only. The Statement of Shri Prem Prakash Dubey was recorded u/s 132A on 20.7.2000 at M/s. Om Enterprises, 4, Banstalla Lane, 2nd floor, Calcutta. He was asked that from the approval challan book as found inventorised as OE/11 it appeared that many of the pages were missing according to SI. No.326 and 331 the pages 327 to 330 were missing. It was replied that these challans were given to the party for approval only and whenever the buyer approved it, sale was affected by cash memo or bill. In case of rejection, the goods were received back alongwith the approval challan. In both the cases, the original as well as copy of the approval challan was destroyed. He was asked to explain as to why he resorted to such practice instead of keeping the copy. It was replied that this practice was being followed since beginning and also this was normal practice of this trade. He was required to give the turnover of the firm and the names and addresses of the main customers. He replied that the turnover of the firm was approx. Rs.45 lakh and the main customers were as under:
P. C. Chandra & Sons Pvt. Ltd.
Raskla & Brothers :-17-:
Paras Jewellers Modern Guinea House Pvt. Ltd.
Mansingh & Sons Jewellers (P) Ltd., Kanpur.
B.N.Majitmdar (Karimganj, Assam).
He was asked whether any record were kept for sending any items before sale and also receiving goods before actual purchase. He replied that purchase was made personally by partners and will bills only. Sometimes goods were sent for approval but no record/evidence was kept for parting such goods other than the approval challan copy. He also mentioned that the goods were given to known and regular parties only. He also informed that in some cases advance was taken against such delivery and as cited the challan no. 349 of M/s. Mansingh & Sons Jewellers Pvt. Ltd. they had received Rs.3 lakh as advance against this challan. He also clarified that this particular deal was done by his brother Shri O. P. Dubey.
2.3. Inquiry was also made by the ACIT, Range-6, Kanpur. Shri D.P.Agnihotr, ITI was deputed to make on the spot inquiry. The ITI submitted his report to the ACIT06, Kanpur vide letter dated 3.2.2004. In his report he has stated that he had visited the premises no.4, Banstolla Lane, Calcutta on 30.1.2004 at 12.30 PM where Shri Shib Narain Pal, manager of the firm M/s. Om Enterprises and Shri Tarak Nath Mishra employee were available.
Shri O.P. Dubey was not available at the business premises. It was informed that Shri O.P. Dubey had gone to his home town Dbadlapur, Distt. Jaunpur in the month of Decembe, 2003. His younger brother Shri S.P. Dubey, IRS came to the business premises and told that his brother Shri O.P. Dubey was out of station. The ITI has mentioned in his report that he had talked to the AC, Circle-6 and narrated these facts. A telephonic discussion was also held between the ACIT, Circle-6 and Shri S.P. Dubey. The ITI has further reported that after seeking directions from ACIT, :-18-:
Circle-6 he took the statement of Shri Shib Narain Pal. In this statement Shri Shib Narain Pal had confirmed the transactions between M/s. Om Enterprises and M/s. Mansingh & Sons Jewellers (P) Ltd., Kampur. He stated that the diamonds were taken by Shri Om prakash Dubey from Calcutta to Benares and his father Shri Harishankar Dubey had carried the diamonds from Banaras to Kanpur. This reply was given in response to query no. 12. He also stated that traveling bills and traveling ledger copy were being produced as evidence. Photocopy of the traveling bills was also produced of Shri Om Prakash Dubey submitted by him to M/s. Om Enterprises in respect of tour to Surat & Calcutta Banaras from 3.6.2000 to 8.6.2000 (both days inclusive).
2.4. The Id. Representative of the appellant has also produced photocopy of the assessment order passed in the case of M/s. Om Enterprises for the assessment year 2001-02. I have gone through this assessment order. It is mentioned in the assessment order (hat the reasons for selection of this case for scrutiny was based on inquiry report received from JD1T (Inv.), Unit-II, Kanpur. The AO in this assessment order has given findings as under :
"On going through the papers submitted by the AR it is ascertained that the alleged 4 diamond rings were duly purchased from Raunak Gems (P) Ltd at the cost ofRs.16,27,000/- Bills, vouchers, stock list and mode of payment were duly submitted and produced in support of purchased. It reveals the said diamonds rings were sent for approval to Shri Mansingh & Sons Jewellers (P) Ltd., Kanpur where it was stolen in Dacoity. There is no such evidence in support of sales. The ITI was directed to inquire about the case but no such information regarding sale is received from JDIT (Inv.), Calcutta. Hence it cannot be concluded that the alleged 4 diamond rings were sold after purchase. "
2.5. From the facts of the case as discussed above it is clear that the appellant had established its case regarding the diamonds having :-19-:
been received from M./s. Om Enterprises. So far as the statement of Shri Sunil Karigar is concerned the Id. Representative of the appellant has rightly pointed out that at no stage he had stated that he had seen the 4 diamonds under reference. It is also established that he himself had not fitted the 4 diamonds under reference into the rings. He had only made gold rings but did not fit the 4 diamonds under reference. He was not witness to the 4 diamonds under reference. The recovery of 4 diamonds fitted into gold rings was made by police from Manjeet Singh and it was only seen by the police. Shri Manjeet Singh, Shri Gopal Verma. Such items remained in secrecy and in strict custody of police under supervision of Court. Shri Suneel Karigar had not seen the items recovered by the police. It is, therefore clear that he was not a witness of the items recovered by police. He had been made a witness for something for which he could not be a witness. It has been argued that legally the statement given by Shri Suneel Kumar was not admissible as evidence. Even otherwise he had never stated that he had seen the diamonds at any point of time, He was only asked to prepare gold rings. For showing the diamonds to the customers U was convenient, safe and presentable to show these diamonds fitted into rings. There was need of average rings and no particular design and size was required for the purpose. After approval it was for the customers to order for rings of his particular size design and choice. It has been argued that it was totally incorrect to assume the existence of diamonds merely on the basis of placing of order for preparation of rings. There were no diamonds in May, 2000.
2. 6. It has also been rightly argued that as per the statement of Shri Sunil Karigar he knew Shri Gopal Verma as person of M/s.Mansingh & Sons Jewellers (P) Lid. Shri Gopal Verma in his personal capacity had nothing to do with the diamonds.
"2. 7. Under the facts and circumstances of the case I am of the view that the addition to the income of the appellant in respect of 4 gold diamonds was not justified. There is no evidence that the :-20-:
appellant had made any investment in purchase of these diamonds. The diamonds were property of M/s. Om Enterprises and these findings have been given in the assessment of M/s. Om Enterprises. ShriGopal Verma had nothing go do with these diamonds in his individual capacity. He was holding these diamonds in the capacity of the Director of M/s Mansingh & Sons Jewellers (P) Ltd. It was the onus of M/s Mansingh & Sons Jwellers (P) Ltd. to explain the source of acquisition of diamonds. The nature of possession in his hand was holding the company property in trust, thus legally no addition can be made in the hands of Shri. Gopal Verma. In the present case even on the basis of facts no addition was justified to be made in the case of Shri Gopal Verma because the source of acquisition of diamonds was clearly explained and same was verified by conducting survey at M/s Om Enterprises as well as by making inquiry by deputing ITI to Calcutta and also by making inquiries by the Assessing Officer from M/s. Om Enterprises. The addition made by the AO of Rs.21,30,372/- in the hands of the appellant cannot be sustained and is directed to be deleted."
8. Since nothing is placed before us to take a contrary view in this appeal, we decide the issue in favour of the assessee following the order of the Tribunal in the case of Shri. Gopal Verma. Accordingly, the order of the ld. CIT(A), who has rightly adjudicated the issue in the light of the findings of the Tribunal in the case of Shri. Gopal Verma, is hereby confirmed.
9. In the result, appeal of the Revenue stands dismissed.
Order was pronounced in the open court on the date mentioned on the captioned page.
Sd/ S Sd/-
[A. K. GARODIA] [SUNIL KUMAR YADAV]
ACCOUNTANT MEMBER JUDICIAL MEMBER
DATED:23rd June, 2015
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JJ:1606
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT(A)
4. CIT
5. DR
Assistant Registrar