TaxTMI 
TaxTMI 
2012 (9) TMI 230
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....he case as per the assessee are that the assessee declared jewellery valued at Rs.2,82,587 and Rs.1,00,000 cash under section 68(2) of voluntary disclosure of Income Tax Scheme, 1997 on 9.1.1998 and paid Rs.1,14,776/- as income tax. In the year under consideration, the assessee sold one diamond necklace made in white metal settled with tapers and round diamond to M/s D.M. Corporation and one necklace ear ring, one pair ear ring in white metal to M/s Kamal Gems total sale proceed received Rs. 5,04,605 and the assessee also sold jewellery (as declared under VDIS) amounting to Rs.5,68,000 to M/s Bisan Chand Mukesh Kumar. The AO issued show cause notice to the assessee and after considering the submissions, details and documents, the AO added above amounts to the income of the assessee u/s 68 of the Act as income from undisclosed sources and he finalized the assessment with a finding that merely sum received through cheque or DD is not a guarantee of creditworthiness of the purchaser of jewellery. 3. The aggrieved asessee invoked the CIT(A). He partly allowed the appeal regarding jewelery sold to M/s Bishan Chand Mukesh Kumar but on the other hand, he confirmed the addition of Rs.5,....
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.... of carats mentioned in the purported purchase invoices apparently match with the number of carats mentioned in the valuation report filed with the VDIS, but the items mentioned in these two papers are completely different - the packets of cut and polished diamonds can never be said to be the same as diamond necklaces and ear rings etc. in white metal. For this reason too, therefore, the addition of Rs.5,04,605 made by the AO is confirmed. Payment of Rs.5,04,605 received by the appellant through the banking channel merely refers to the mode of payment made by B Kamal Gems and D M Corporation, but the source of the items transacted remains unexplained. 5.2.3 In view of the above, the addition of Rs.5,04,605 is confirmed." 4. The Assessing Officer relied on the judgment of Hon'ble Kerala High Court in the case of ITO Vs Diza Holdings Pvt. Ltd. Reported as 170 Taxman 539 (Kerala) wherein it was held that receipt of payment through cheque is not enough. The assessee should satisfactorily explain the nature and source of the amount credited in the books of accounts. 5. The assessee's representative (for short the AR) submitted that while the ld. CIT(A) deleted the addition made....
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....the findings made in the case of Bishan Chand Mukesh Kumar. No specific cogent evidence has been brought on record in the case of the appellant. The facts of this case appear to be similar to that of Rattan Mahipal and Lilawati Mahipal. Accordingly, the decision of the Hon'ble ITAT in the case of Rattan Mahipal and Lilawati Mahipal is followed and the additions of Rs.5,68,000 and Rs.2,840 are deleted." 7. The ld. DR supported the order of CIT(A) in this regard and also submitted that the orders of ITAT are binding on the authorities below, therefore, the ld. CIT(A) rightly followed the judgment of ITAT Delhi Bench in the cases of Shri Ratan Mahipal and Mrs. Lilawati Mahipal and deleted the additions pertaining to sale of jewellery to M/s Bishan Chand Mukesh Kumar. 8. The AR placed his reliance on the judgement of Hon'ble Gujarat High Court in the case of CIT vs M.K. Bros. reported as 163 ITR 249(Gujarat) wherein it was held that on the basis of subsequent statements by the sellers in sales tax assessment proceedings, they had issued bogus vouchers, although payments for such purchases cannot be assessed as income from undisclosed sources in the hands of the purchaser, especia....
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....a, the Accountant Member held that the Revenue unearthed the trick played to accommodate the VDIS declaration. Therefore, the addition deserves to be confirmed. The matter was referred to the Third Member who settled the controversy with a final finding that addition cannot be sustained and approved the findings of the Judicial Member. 12. In view of above, we observe that to prove this fact that the sale as said by the assessee is bogus or fictitious, it is necessary to establish the fact that the assessee-appellant does not possess any jewellery to enter into sale transaction. Admittedly, the assessee had made declaration under VDIS 1997 to the effect that the appellant is the owner of such jewellery, unless and until such VDIS 1997 certificate issued by the Revenue Authorities is withdrawn or cancelled by the competent authority. Therefore, we are of the firm view that the AO cannot take a different view on existence of jewellery as declared by the assessee VDIS 1997 scheme. 13. Ld. DR did not dispute the VDIS 1997 declaration made by the assessee and we also note that the AO had not contradicted the VDIS 1997 declaration with suitable and sustainable evidence. When the as....
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.... relevant para is being reproduced below for ready reference:- "(i) Kamal Gems, 102, Super Diamond Apartment, Saiyedpura, Surat: As per inspector's report it is noticed that there is no concern in the name and style of Kamal Gems is working at the above premises. Presently, a concern in the name of M/s Shreya Investment, Prop. Riten D. Mehta is doing the business of Share Trading since September, 2004. Prior to this period, Sri P.P. Thakkar, Income Tax Practitioner was running office. Shri Riten D.Mehta has submitted a letter dated 28.2.2006 (letter enclosed). (ii) D.M. Corporation, 25, Ambica Society, Katargram, Surat: As per report of the Inspector, it is gathered that there are two Ambica Society, Part-I is the residence of Shri Mohanbhai R. Siddhpura. Similarly, the premise at 25, Ambica Society, Part-II is the residence of Shri Karsanbhai Veljibhai. It is confirmed from local inquiries that there is no such office in the name and style of D.M. Corporation in the past." Ld. DR further submitted that in view of above report, show cause notice was issued to the assessee and in response to the said notice, the assessee filed a reply on 17.5.2006 and subsequently nei....