TaxTMI 
TaxTMI 
TaxTMI 
2018 (3) TMI 1525
X X X X Extracts X X X X
X X X X Extracts X X X X
....sst Year 2007-08 was filed by the assessee firm on 14.11.2007 declaring total income of Rs. 1,03,45,446/- which was subsequently revised on 12.6.2008 disclosing total income of Rs. 1,05,40,396/-. The assessment was completed u/s 143(1) of the Act. Later an information was received to the office of ACIT, Circle 39, Kolkata from the office of DGIT (Inv.), Mumbai vide his office letter dated 14.3.2014, in which it was stated that the assessee has alleged bogus purchase of jewellery of Rs. 15,57,470/- from M/s Vitraj Jewels and of Rs. 5,90,885/- from M/s AVI Exports. After recording reasons for reopening of the case for reassessment, notice u/s 148 of the Act was issued on 30.3.2014 and served on the assessee on 31.3.2014. In response to this notice, the assessee vide its letter dated 28.4.2014 stated that the return of income filed on 12.6.2008 for the Asst Year 2007- 08 may be treated as as the return in compliance to the notice u/s 148 of the Act and requested this office to provide them the reasons for reassessing the income which were duly provided to the assessee. The assessee raised the objections on the reasons for issue of notice u/s 148 of the Act which was duly disposed off ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... & seizure action u/s 132 of the I.T. Act, 1961 was conducted on a group of concerns including M/s Vitrag Jewels controlled and managed by Shri Rajendra S Jain, Shri Dharmichand Jain & Shri Sanjay Choudhury on 03.10.2013. Accordingly, the statements of these persons were recorded on oath during the course of search u/s 132 of the I.T. Act. In the statements Shri Rajendra Jain & Shri Surendra Jain, the key persons of this group, admitted that all the concerns controlled and managed by them were not doing any real trading in diamonds but indulged in paper transaction only. Shri Rajendra Jain in his statement had categorically mentioned that "concerns purchasing diamonds in cash from grey market and taking bogus purchase bills to regularize the purchase in books, are the concerns that require bogus purchase bill for diamonds, however, their concerns have bogus stock of diamond in their books of accounts which are shown to be purchased from foreign concerns. The diamonds shown to be purchased/imported from foreign concerns are shown to be sold to these concerns who take purchase bills from their concerns without actual delivery of diamonds. The payments made through cheques or RTGS by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s bogus purchase and treating the purchases of goods as income of the appellant whereas the appellant purchased trading goods for consideration, such goods were subsequently sold for profits and revenue received upon such sales was duly considered as income of the appellant and therefore the Ld. CIT(A) should have deleted the addition of Rs. 15,57,470/-. 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not appreciating the fact of the case and thereby confirming the addition made by the IT. 4. For that the interest charged u/s 234B(1) is not accordance with law. 5. For that on the facts and in the circumstances of the case the order of the Ld. CIT(A) be modified and the assessee be given the relief prayed for. 6. For that the assessee craves leave to add, alter or amend any ground before or at the time of hearing. 7. We have heard the rival submissions and perused the materials available on record including the paper book filed by the assessee comprising of pages 1 to 100. We find that the assessee was maintaining proper books of accounts including all the details, stock registers, bills nad vouchers in respect of its traded goods. Al....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rat on 31.10.2014 explaining the entire facts of the case and the circumstances warranting him to file two affidavits (i.e on 21.10.2013 and 9.1.2014 reiterating the same) [enclosed in pages 88 to 90 of paper book]. Hence the version of the revenue that the assessee had received cash back in lieu of cheques issued to suppliers of diamonds, stands negated pursuant to the retraction of statement of Shri Rajendra Jain which is the only source of evidence available with the revenue and which has been heavily relied upon by the revenue. A statement once retracted cannot be treated as a reliable source or an evidence to allege that the assessee had received cash back in lieu of cheques issued. 7.1. We find that the tax audit report of the assessee clearly mentioned that the assessee is maintaining regular books of accounts including the day to day stock register and quantity and quality details of stock from which purchase, consumption and sale of stock was also proved. We find that in response to the query raised by the ld AO regarding the purchases made from M/s Vitraj Jewels and AVI Exports, the assessee furnished the bills containing the name, address as well as the sales tax number....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the ledger account of M/s Vitrag Jewels as appearing in the books of the assessee firm for the period 1.4.2006 to 31.3.2007 and for the period 1.4.2007 to 31.3.2008 wherein the payments were made to M/s Vitrag Jewels by account payee cheques. Admittedly the payments were made to M/s Vitrag Jewels through account payee cheques on 22.2.2008 (Rs 10,00,000/-) and on 27.3.2008 (Rs 5,57,470/-). Hence the primary allegation of the ld AO that the assessee had received the cash back in lieu of account payee cheques issued from M/s Vitrag Jewels ( based on the statement of Shri Rajendra Jain) and used the said cash for purchasing diamonds from unknown parties in the grey market, gets defeated on this count also, in as much as, the ld AO had accepted the fact that factum of purchases of diamonds indeed has been made by the assessee in the Asst Year 2007-08 (i.e the year under appeal) and whereas the payments were made to Vitrag Jewels only in next Asst Year i.e AY 2008-09. While this is so, it is highly impossible for M/s Vitrag Jewels to first hand over the cash even without receiving the cheques from the assessee. Hence no cash could be available with the assessee to make purchase of diamo....