Income Tax Appellate Tribunal - Mumbai
Ito 19(1)(3), Mumbai vs Department Of Income Tax on 8 July, 2013
ITA no. 5217 & 5218/Mum/2011
Rachna Jindal & Vivek Jindal
IN THE INCOME TAX APPELLATE TRIBUNAL
"F" Bench, Mumbai
Before Shri Rajendra Singh, Accountant Member and
Dr. STM Pavalan Judicial Member
ITA No. 5217/Mum/2011
Assessment year 1999-2000
Rachna Jindal Income Tax Officer - 19(1)(3)
23/31 HIG Complex, Mumbai
Bandra Reclamation
Bandra (W)
Mumbai - 400 050
PAN:- AAQPS1543H
Appellant Respondent
ITA No. 5218/Mum/2011
Assessment year 1999-2000
Vivek Jindal Income Tax Officer - 19(1)(3)
Flat No. 301, Kamleshwar CHS, Mumbai
Tagore Road, Opp- Laxmi Narayan
Temple, Santacruz (W)
Mumbai - 400054
PAN:- ABEPG1114D
Appellant Respondent
Date of Hearing: 8/7/2013
Date of Pronouncement: 17/7/2013
Department By. Shri Deepak Tarlashawala
Assessee by: Shri Baban D Patil
ORDER
Per Rajendra Singh, AM
These appeals by the assessees are directed against the different orders of CIT (A) both dated 25.4.2011 for the assessment year 1999- 2000. The dispute raised in both the appeals are identical and, therefore, these are being disposed of by a single consolidated order for the sake of Page 1 of 5 ITA no. 5217 & 5218/Mum/2011 Rachna Jindal & Vivek Jindal convenience. The identical disputes raised are regarding addition u/s 68 of the IT Act on account of sale of diamond which has been treated as accomodation entry and consequential additon of commission at the rate of 8%.
2. Facts in brief are that both the assessees had sold diamonds which had been declared by them under Voluntary Disclosure Income Scheme (VDIS 97) on 4.6.1998 for total consideration of Rs 4,43,380/- in each case. Both the assessees had sold diamonds to M/s Kartik Exports. The partners of M/s Kartik Exports were Mr. Kamal Kumar Johari (HUF), Mr. Hariom Sharma and Ms. Neelam Sharma (wife of Mr. Hariom Sharma). A search and seizure operation had been undertaken on 14.3.2000, as a result of which block assessment had been made in case of Sharma and Johari Group in which the AO gave the finding that Mr. Kamal Kumar Johari and Mr. Hariom Sharma floated a number of concerns wherein their close relatives or acquaintances or confidants were made the partners or proprietors or shareholders. Later on, non existant diamonds declared under (VDIS 1997) by a large number of persons were shown to have been purchased by the bogus concerns floated by Sharma and Johari Group. All these diamonds were shown to have been purchased by four concerns. After detailed examination and considering the facts and circumstances of the case, the AO in that case came to the conclusion that sale receipt shown by the assessees were bogus and the amount received by the assessees on the sale of diamonds declared under VDIS was nothing but an accomodation entry. The AO following the finding in those cases added the sum of Rs. 4,43,380/- being amount received as sale receipts as income of the assessee u/s 68 of the IT Act in both the cases. Since the transaction was treated as accomodation entry, the AO also made addition at the rate of 8% i.e. 35,740/- as commission payment for obtaining accomodaton entry which was unexplained expenditure. In Page 2 of 5 ITA no. 5217 & 5218/Mum/2011 Rachna Jindal & Vivek Jindal appeal CIT(A) confirmed the orders of AO, aggrieved by which both the assessees are in appeal before Tribunal.
3. Before us, learned AR for the assessee submitted that based on the search & seizure conducted in case of Sharma and Johari Group, the department had made additions in several cases treating the sale of diamonds declared under VDIS as bogus accomodation entry. The additions made in all these cases including the case of Mr. Kamal Kumar Johari, M/s Kartik Exports had been considered by the Tribunal in the consolidated order dated 31.01.2005 in ITA 51/Mum/2003 and other appeals in which the Tribunal did not accept the findings of authorities below that sale of diamonds declared under VDIS were bogus and thus the additions made were deleted. The case of the present assessees were identical as they had also made sales to M/s Kartik Exports, Mumbai. It was also submitted that one such case in which the Tribunal had deleted the addition i.e. the case of Kaushik P. Jhaveri had also come up for consideration before the Hon'ble High Court of Bombay in Income Tax Appeal no. 1777 of 2009 in which the High Court in the order dated 3.8.2009 held that finding recorded by the Tribunal that sale of diamonds declared under VDIS was a genuine sale was a finding of fact based on appreciation of evidence. Therefore, the appeal filed by the Department was rejected by the High Court. Reference was also made to the decision of Mumbai bench of Tribunal in case of Judeline Lydia Dsouza in ITA no. 3043/Mum/2009 in which the Tribunal observed that similar case treating the sale of diamond declared under VDIS as bogus had come up before different benches of Tribunal, in which the transactions have been found to be genuine. The Tribunal also referred to the judgment of Hon'ble High Court of Bombay in case of CIT Vs. Kaushik P. Jhaveri in Income Tax Appeal no. 1777 of 2009 in which the appeal filed by the revenue had been dismissed. The Tribunal accordinlgy treated the transaction genuine. It was thus argued that the case of the assessee was covered by the Page 3 of 5 ITA no. 5217 & 5218/Mum/2011 Rachna Jindal & Vivek Jindal various decisions/judgments cited above and, therefore, the addtion made should be deleted. Learned DR on the other hand placed reliance on the orders of authorities below.
4. We have perused the records and considered the rival contentions carefully. The dispute raised in these two appeals is regarding addition made u/s 68 of the IT Act on account of sale of diamonds treating the same as not genuine. Consequential addition at the rate of 8% of sale receipt has also been treated as commission payment for obtaining accomodation entry which was unexplained. Both the assessees had sold diamonds to M/s Kartik Exports. The additions had been made on the basis of findings of assessing authorities in search proceedings initiated in case of Sharma and Johari Group, which were alleged to have floated several bogus concerns who had purchased the diamonds declared under VDI S a nd so l d t o va r io u s o th e r p a r tie s. I t ha d bee n h e ld by the authorities that diamonds were not existant and sales were not genuine. However finding given by the Revenue had not been upheld by the Tribunal in consolidated order dated 31.1.2005(Supra) passed by the Tribunal covering several such cases including the case of M/s Kartik Exports and Mr. Kamal Kumar Johari and others in which the Tribunal had not accepted the claim of the revenue authorities that the said transactions were not genuine. The Tribunal noted that all the transactions were duly recorded in the books of accounts and returns of income had been duly filed within the due date. The several parties whomsoever were summoned by the AO u/s 131 had all confirmed the sale of diamonds by them. The addition had been made only on the basis of suspicions and presumptions. The Tribunal observed that suspicion however strongcannot take place of proof. The Tribunal, therefore, did not accept the finding that the sales were bogus. Further, in one such case i.e. Kaushik P. Jhaveri in which similar addition made on account of sale of diamond declared under VDIs had been deleted by the Tribunal, the order Page 4 of 5 ITA no. 5217 & 5218/Mum/2011 Rachna Jindal & Vivek Jindal of Tribunal has been upheld by the Hon'ble High Court of Bombay in ITA no. 1777 of 2009 vide order dated 3.8.2009 in which it has been held that the finding of Tribunal that the transactions were genuine was a finding of fact based on appreciation of evidence. The Mumbai bench of Tribunal in case of Judeline Lydia Dsouza in ITA no. 3043/Mum/2009 after referring to several decisions of Tribunal on the subject and after considering the Judgment of Hon'ble High Court of Bombay in case of Kaushik P. Jhaveri (Supra) deleted the addition. The facts of the case of the assessees under reference are identical. We therefore, respectively following aforementioned decisions set aside the order of CIT(A) and delete the additions made.
5. In the result both the appeals are allowed.
Order pronounced in the open court today i.e 17 -7-2013
Sd/- Sd/-
(Dr. STM Pavalan ) (Rajendra Singh)
Judicial Member Accountant Member
SKS Sr. P.S, Mumbai dated 17.7.2013
Copy to:
1. The Appellant
2. The Respondent
3. The concerned CIT(A)
4. The concerned CIT
5. The DR, "F" Bench, ITAT, Mumbai
By Order
Assistant Registrar
Income Tax Appellate Tribunal,
Mumbai Benches, MUMBAI
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