2018 (5) TMI 1991 - AT - Income Tax

Tribunal orders reassessment of sale transactions, directs verification of jewellery purchase/sale, Revenue appeals allowed

The Tribunal remitted the case to the Assessing Officer for re-examination of the genuineness of the sale transactions, following directions from similar ... Genuineness of transaction of sale of jewellery - Remand for verification of facts and evidence - Onus of proof to establish genuineness of sale - Admissibility and evidentiary value of affidavit - Weight of VDIS certificate as proof of existence but not of genuineness of sale - Requirement to summon purchaser and examine purchaser's books and Sales Tax recordsGenuineness of transaction of sale of jewellery - Onus of proof to establish genuineness of sale - Weight of VDIS certificate as proof of existence but not of genuineness of sale - Admissibility and evidentiary value of affidavit - Requirement to summon purchaser and examine purchaser's books and Sales Tax records - Remand to the Assessing Officer to verify whether the alleged sale of jewellery by the assessee to M/s Bishan Chand Mukesh Kumar/Bemco Jewellers was genuine. - HELD THAT: - The Tribunal noted the Hon'ble High Court's direction to examine each case independently and return a specific finding on the genuineness of the alleged sales. While declarations under VDIS establish possession/existence of jewellery, they do not, by themselves, establish the genuineness of the sale or corresponding bank credits. An affidavit by the purchaser is a self serving statement and requires corroboration. The onus to prove that credited sums represent proceeds of genuine sale lies on the assessee. Coordinate-bench precedents and factual review indicated deficiencies in the record for a conclusive finding at the Tribunal stage: absence of verification whether the purchaser included these purchases in its books or Sales Tax returns, and lack of direct confrontation or production of the purchaser and his books before the AO. Consequently the Tribunal directed that the Assessing Officer should verify the actual purchase/sale transaction and stock entries from the purchaser's books and relevant Sales Tax records, and, if necessary, summon the purchaser for examination, affording the assessee a reasonable opportunity of being heard, before deciding the issue on merits. [Paras 19]Matter remitted to the file of the Assessing Officer for fresh verification and decision on the genuineness of the sale of jewellery; appeal allowed for statistical purposes.Genuineness of transaction of sale of jewellery - Remand for verification of facts and evidence - Onus of proof to establish genuineness of sale - Requirement to summon purchaser and examine purchaser's books and Sales Tax records - Remand of the legal heir's case (late Sh. Nagarmal Bansal represented by Sh. Anil Kumar Bansal) to the Assessing Officer for deciding genuineness of the sale of jewellery. - HELD THAT: - The facts in the legal heir's appeal were held identical to those in the assessee's appeal and, following the Tribunal's approach and the High Court's directions, the question whether the sale was genuine could not be finally decided at the Tribunal stage. The Tribunal directed remand so that the Assessing Officer may examine the purchaser's books, Sales Tax records and, if necessary, summon the purchaser to verify whether the purchases from the assessee were recorded and genuine, giving the legal heir/assessee adequate opportunity to be heard. [Paras 20]Matter remitted to the Assessing Officer for verification and decision on the genuineness of the sale of jewellery in accordance with directions given in the companion appeal; appeal allowed for statistical purposes.Final Conclusion: Both revenue appeals are allowed for statistical purposes by remitting the respective matters to the Assessing Officer for fresh verification and decision on whether the alleged sales of jewellery to M/s Bishan Chand Mukesh Kumar/Bemco Jewellers were genuine, with directions to examine purchaser's books and Sales Tax records, summon the purchaser if necessary, and to afford the assessee a reasonable opportunity of being heard. Issues Involved:1. Genuineness of the transaction of sale of jewellery by the assessee to M/s Bishan Chand Mukesh Kumar/Bemco Jewellers.2. Validity of reassessment proceedings initiated under section 148 of the Income-tax Act, 1961.3. Adequacy of evidence provided by the assessee to substantiate the sale of jewellery.4. Compliance with principles of natural justice by the Assessing Officer.5. Impact of Voluntary Disclosure Income Scheme (VDIS) declarations on the genuineness of the transactions.Detailed Analysis:1. Genuineness of the Transaction of Sale of Jewellery:The primary issue was to determine whether the sale of jewellery by the assessee to M/s Bishan Chand Mukesh Kumar/Bemco Jewellers was genuine. The Tribunal noted that the Hon’ble High Court had directed it to independently examine each case and return a specific finding on the genuineness of the transactions. The Tribunal observed that the declaration of jewellery under the VDIS scheme might establish possession but does not explain the genuineness of the sale and corresponding credit in the bank account. The affidavit provided by Sh. Bishan Chand was considered a self-serving document and required corroboration with other documentary evidence. The Tribunal emphasized that the onus was on the assessee to establish the genuineness of the sale by producing Sh. Bishan Chand along with documentary evidence before the Assessing Officer.2. Validity of Reassessment Proceedings:The reassessment proceedings were initiated based on information obtained during a search operation, which indicated that the transactions were bogus. The Ld. CIT(A) upheld the validity of the reassessment proceedings but deleted the addition made by the Assessing Officer. The Tribunal, however, noted that in similar cases, the matter was remitted to the Assessing Officer for further verification. The Tribunal directed the Assessing Officer to re-examine the genuineness of the sale transactions, following the directions given in the case of Gunvir Kumar Jain.3. Adequacy of Evidence Provided by the Assessee:The Tribunal found that the evidence provided by the assessee, including the affidavit of Sh. Bishan Chand and the VDIS certificate, was not sufficient to establish the genuineness of the sale. The Tribunal noted that the details of purchases and sales shown by M/s Bishan Chand Mukesh Kumar in the sales tax returns were not conclusive evidence of the sale. The Tribunal directed the assessee to produce Sh. Bishan Chand along with relevant documentary evidence before the Assessing Officer.4. Compliance with Principles of Natural Justice:The Tribunal observed that the Assessing Officer had not provided the assessee with an opportunity to rebut the materials relied upon for making the addition. The Tribunal emphasized the need for the Assessing Officer to summon the alleged purchaser for verification of the actual purchase/sale transaction of the jewellery. The Tribunal directed the Assessing Officer to conduct a thorough examination, including summoning the purchaser and verifying records from the Sales Tax Authorities.5. Impact of VDIS Declarations:The Tribunal acknowledged that the jewellery was declared under the VDIS scheme, which provided immunity for the income disclosed. However, the Tribunal noted that the declaration under VDIS did not automatically validate the genuineness of the subsequent sale transactions. The Tribunal emphasized the need for independent verification of the sale transactions, as directed by the Hon’ble High Court.Conclusion:The Tribunal remitted the matter to the Assessing Officer for re-examination of the genuineness of the sale transactions, following the directions given in similar cases. The Tribunal directed the Assessing Officer to verify the actual purchase/sale transaction of the jewellery from the books of accounts of the purchaser, records of the Sales Tax Authorities, and by summoning the purchaser for examination. The appeals of the Revenue were allowed for statistical purposes, and the matter was to be decided afresh by the Assessing Officer with adequate opportunity for the assessee to be heard.