TaxTMI 
TaxTMI 
2011 (9) TMI 131
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.... Manoj Aggarwal and the Revenue for the assessment year 2001-02. In the order dated 26th September, 2008, the tribunal has remitted the matter to the Assessing Officer with a direction to comply with the findings/observations in the order of the Special Bench dated 25th July, 2008, which is impugned in ITA Nos. 904/2009 and 905/2009. In this manner, the three appeals are inter-connected. 2. The Revenue has raised the following questions of law in ITA Nos. 904/2009 and 905/2009:- "a) Whether the I.T.A.T. was correct in law in deleting the addition of Rs.11,71,900/- on account of cash found during the course of search at various premises of the assessee? b) Whether the I.T.A.T. was correct in law in deleting the addition of Rs.18,10,079/- on account of commission income from the M/s. Bemco Jewellers Pvt. Ltd.? c) Whether the I.T.A.T. was correct in law in deleting the addition of interest charged U/S 158BFA(1) of the Income Tax Act, 1961? d) Whether the I.T.A.T. was correct in law in holding that transactions relating to sale/purchase of jewellery were genuine and the assessee was not carrying out accommodation entry business in respect of these transactions? e) Whether the I.T....
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....The Assessing Officer held that the accommodation entries given by Manoj Aggarwal can be grouped into five main categories. (i) Entries of long term, short term and speculative profit and loss on sale and purchase of shares through and by Friends Portfolio Private Limited. (ii) Entries of gifts and loans through various bank accounts opened in his name and in the name of his friends, relatives and various HUFs. (iii) Entries of bogus sales made through Classic Textiles. (iv) Entries of bogus sales and trading in shares in the name of M/s NITS Softech Limited. (v) Entries of bogus sale and purchase of jewellery through M/s Bemco Jewellers Private Limited (BJPL, for short). 7. Regarding the first four categories, there is no dispute and as per the findings recorded by the tribunal, the entries are bogus and accommodation entries. About the quantum also, there is no dispute that the amount involved in the transactions is Rs.1,32,32,77,001/- and Rs.57,62,33,291/-. 8. The amounts represent accommodation entries in which money was transferred back to the persons either by cheque or by cash as per requirement. The entries also relate to the so-called share transactions, which were ....
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.... of jewellery without sufficient and adequate proof or even attempt to establish their genuineness on the part of the assessee Manoj Aggarwal. He submits that onus of proving the source of deposit in banks in cash primarily rests on the assessee Manoj Aggarwal who should have established and explained the said deposits and the transaction of sale and purchase. 13. Learned counsel for the Revenue has submitted that even if it is assumed that the burden to establish that an income is taxable is on the Revenue, it is immutable in the sense that onus can shift to the assessee when sufficient evidence, either direct or circumstantial, is disclosed by the Revenue. An adverse inference can be drawn against Manoj Aggarwal as he has failed to produce material which was in his exclusive possession. Shifting of onus in the course of proceedings is well recognized. 14. BJPL was incorporated on 24th December, 1998. Its registered office is located at 7/22 Ansari Road, Darya Ganj, Delhi. Manoj Aggarwal and his father B.C. Aggarwal have been Directors and shareholders since its incorporation. The total paid up capital of BJPL is Rs.3,000/- which is equally divided amongst the two shareholders. ....
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....nored these statements and not given due importance to the said admission by holding that Manoj Aggarwal did not specifically state that the jewellery business was sham and bogus and a camouflage for accommodation entries. He submits that a perverted view has been taken as Manoj Aggarwal had not averred in these statements that the jewellery business was genuine. Therefore, when Manoj Aggarwal admitted that he was in business of providing accommodation entries and once he did not state that jewellery business was genuine, the admission was clear and beyond doubt. He submits that the statement recorded on 14th December, 2000 was an after thought. Similarly he has questioned the reliance placed upon the statement made by Manoj Aggarwal on 8th January and 9th January, 2001. It is also pointed out that the statements given by father of Manoj Aggarwal, B. C. Aggarwal referred to in the assessment order have been ignored. 20. Learned counsel for the Revenue has submitted that the tribunal has relied upon letter dated 22nd August, 2000, in which Manoj Aggarwal had admitted that the total transactions relating to accommodation entries were Rs. 100 crores approximately and, therefore, the ....
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....our attention to paragraphs 71 and 72 of the impugned order which read as under:- "71. The Assessing Officer has raised doubts about the carrying of the gold bars to Ahmedabad from Delhi for being sold there. It may prima facie appear to be somewhat unusual for Manoj Aggarwal to carry the gold bars with him from Delhi to Ahmedabad and to bring the sales proceeds in cash from Ahmedabad to Delhi all by himself and by undertaking journeys by train. However, Bishan Chand Aggarwal in his statement dated August 16, 2002, has explained this by saying that most of the times the journey had to be undertaken at short notice and therefore, Manoj Aggarwal travelled by unreserved class. When asked to produce the tickets, he has stated that they were collected by the railway authorities while exiting the railway station and, therefore, could not be produced. This practice which is pre- valent in the railway station is well-known and cannot be contradicted. So far as the journeys are concerned it does appear somewhat unusual that gold bars of such high value were carried in person by Manoj Aggarwal from Delhi to Ahmedabad and the cash was also brought by him by train from Ahmedabad to Delhi but....
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....hand Aggarwal was that the sale proceeds were also carried by Manoj Aggarwal by train from Ahmedabad to Delhi and they were deposited in the bank accounts in Delhi within a week from the date of return from Ahmedabad. To a question as to why the sale proceeds were not deposited immediately and in totality after returning from Ahmedabad, he replied that the bank authorities were refusing to accept huge cash deposits at one time. What was sought to be highlighted before us by Mr. Kapila, the learned special counsel was that Bemco did not have a bank account in Ahmedabad though it had a sales office there and had effected huge sales of Rs. 27.93 lakhs (sic.) during one financial year, which was quite unusual. Having a bank account in Ahmedabad would have been certainly prudent and would have obviated the need to carry the cash from Ahmedabad to Delhi, which was a risky affair, and it does appear to us unusual that there was no bank account in Ahmedabad but for that reason alone the other evidence on record cannot be ignored. There is evidence to show that the assessee effected sales in Ahmedabad as is clear from the sales tax assessment order passed under the Gujarat Sales tax Act, th....
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....ed ; (d) no documentary evidence is available for transfer of goods from Delhi to Ahmedabad and cash from Ahmedabad to Delhi. In the annexure to the audit report, the following opinions have, inter alia, been expressed : (a) the stock records were not made available and hence the auditors have relied on the certificate issued by the management to the effect that the stock valuation has been done on the basis of accounting policies ; and (b) the internal control measures, though adequate, can be further strengthened. So far as the documentary evidence for the transfer of goods and the cash is concerned, we have already held that there was nothing serious against the claim of the Bemco. As regards stock register or records which were not made available to the Assessing Officer or the auditor, Bishan Chand Agarwal has stated on August 19, 2002, that they were ready but due to shortage of time the auditors may not have checked them. This is not acceptable. If they were ready, there was no reason why the auditors would not have checked them. Further, at least before the Assessing Officer the same could have been produced. The same position holds good in the case of inventory records als....
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....nd the balance-sheet are in agreement with the books of account. Having regard to the audit report, it seems to us that Bemco did maintain books of account at Delhi and Ahmedabad. However, as per the audit report, no basis was given for the stock valuation and the inventory records were not made available to the auditors with the result that they were unable to express any opinion on the correctness of the stock valuation which was certified by the management. Maintenance of books of account is one thing and the reliability of those books for purposes of income-tax assessment is another. The auditor's certificate does not say that the books of account are bogus or have been falsified. It only says that the stock valuation and the purchase invoices are not properly supported. We have already noted that the auditors have only refrained from expressing any opinion about the genuineness of the stock valuation and the purchase invoices ; they have not said that there was no stock or that the valuation as certified by the management was contrary to the principles of accounting or known methods of valuation of stock or that the purchase invoices were not authentic or genuine. These have t....
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.... that Bemco never maintained any books of account and that they were prepared subsequently for the purpose of assessment proceedings as has been held by the Assessing Officer. (emphasis supplied) 26. He has also drawn out attention to the audit report, relevant portion of which reads as under:- "(ii) Non verification of quantitative information in respect of goods dealt in for goods purchased and sold and also their opening and closing balances in hand since the information and records were not provided to us. X X X X X X X (v) No documentary evidence was made available to us with regard to transfer of goods from Delhi to Ahmedabad Branch office and cash remittance from Ahmedabad Branch office to Delhi. The company is not maintaining any record for sale and disposal of scrap." 27. He submits that in spite of the aforesaid position, it was held that the books of account of BJPL reflect genuine transactions. 28. Similarly, Sunil Kapoor had made statements before DDIT, Amritsar on 3rd December, 2001 and 23rd July, 2002 in which he had accepted that some assessesees from Amritsar had shown bogus sale of jewellery to BJPL. The tribunal has relied upon the retraction by....