AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 1318
X X X X Extracts X X X X
X X X X Extracts X X X X
....de by ld. CIT(A) ignoring the explanation submitted by the Assessee-appellant before the search team at the time of search on 20.5.2009 as well as explained before the ld. AO as well as before the authorities? ii) Whether the ld. ITAT was justified under law while sustaining the aforesaid enhanced addition made by ld. CIT(A) at Rs. 14,14,80,498/- on account of so called unaccounted stocks based on its suspicion and surmises and without having any evidence in support of the enhanced addition? iii) Whether the ld. ITAT was justified under law while sustaining the aforesaid addition of Rs. 14,14,80,498/- made by ld. CIT(A) by comparing the statement dated 30.4.2009 submitted by assessee-appellant to State Bank of Indore and the actual stock found while the books of accounts were rejected u/s 145(3) by the ld. AO and confirmed by the ld. CIT(A) as well as the ld. ITAT, Jaipur? Appeal No.148/2018 i) Whether the ld. ITAT was justified under law while confirming the addition of Rs. 4,23,56,186/- made by ld. CIT(A) ignoring the explanation submitted by the assessee-appellant before the search team at the time of search on 20.5.2009 as well as explained before the ld. CIT(A)? ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....750984 2 M/s. Vijay Gems Vijay 7379967 3 M/s R.H. Jewellers Vijay 11947561 4 M/s. Unique Jewellery Palace Vijay 7874702 5 M/s. Ridhi SidhiGems & Jewels Vijay 8361659 6 M/s. Saloni Exports Vijay 5712692 7 M/s. Subh Laxmi Gems Vijay 6175128 8 M/s. Jodhpur Gems Lalwani 7908345 9 M/s. Vaishali Gems Lalwani 5390000 10 M/s. Anil Exports Lalwani 1700000 11 M/s. Mahaveer Gems & Jewels Lalwani 1520000 Total 71721038 F.Y. 2007-08 S.N. Name & Concern from which bogus purchase bill obtained Group Amount 1 M/s Anshu Gems Vijay 5619040 2 M/s. Vijay Gems Vijay 3426257 3 M/s. R.H. Jewellers Vijay 3706216 4 M/s. Unique Jewellery Palace Vijay 1891587 5 M/s. Ridhi Sidhi Gems & Jewels Vijay 386623 6 M/s. Saloni Exports Vijay 3081796 7 M/s. Subh Laxmi Gems Vijay 2621980 8 M/s. Vaishali Gems Lalwani 648280 Total 21381779 6. He also taken us to the finding recorded by AO which reads as under:- 10. Answering Q.No.15, Sh. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....void ab initio. 2.2 The departmental valuers were allowed access to business premises of the assessee without subjecting themselves to verification at the time of entry and at the same time there were not subject to frisking at the time when they have left the business premises. 2.3 We would like to know on what basis the valuation exercise has been done by these valuers. Prima facie it appears that these valuers have inserted the stock values as per their convenience. The valuation so made by them is biased, faulty and before you rely on any of these figures we would request you to provide us an opportunity to cross examine each one of them. 2.4 As submitted earlier, the assessee-company is dealing in more than 100 types of precious, semi precious stones, gold ornaments and metals and within each category of stones there are more than 500 types of qualities that are to be looked into. There are thousands of packets of stones (stones kept in packets). These valuers have without adhering to the norms of valuation, have mixed the lots of stones and valued the stones. Each category of stone may have valuation ranging from Rs. 1 per cent to more than Rs. 1.00....
X X X X Extracts X X X X
X X X X Extracts X X X X
....income is being declared from year to year. Nothing is there which is outside the books of accounts. 4. With reference to your observation with regards to submission of trading account for bogus transactions and real and genuine transactions we wish to reiterate as was submitted before the ADIT, Jaipur II; that you are kindly requested to first clarify to us as to what is meant by the term Bogus Bills, according to use a bill is a bill. 4.1 A business man during the course of his business purchase the goods locally or from foreign parties mainly on credit. All such parties are income tax assessee (PAN is allotted by the income tax Department) and Sales tax assessee (TIN is allotted by the Sales tax Department). As a businessman we are supposed to know the products we are buying, the terms for which the goods are sold and also do a reasonable check on the parties who are supplying the products. Our checks are based on PAN issued by the income tax department and TIN issued by the Sales tax Department. We do not have the infrastructure nor have the power to investigate the parties who are supplying us the goods. What else are we supposed to gather from the parties? T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....anctity in the eyes of law and is illegal and deserves to be ignored. Copy of affidavit duly notarized by Sh. Raghu Dutt Tiwari on 19.6.2009 and submitted before the District Magistrate and copy of which is already with the income tax Department is enclosed herewith which will clarify our submission." 19.1 Vide letter dt. 9.8.2011, the A/R further submitted his arguments as under:- Without prejudice to what has been submitted earlier and without admitting what has been stated earlier with reference to the purchase made by the assessee as well as sales made by the assessee over the years, we further submit that the employees or/and other persons clearly have stated in their statements that purchases or/and sales in the following units are genuine, fool proof, verifiable and not tainted: . Jewellery Unit. . Nizami Unit. . Mumbai Division Thus, as far as these units are concerned they have to be treated to have been properly accounted for are genuine, not tainted, are fool proof and all purchases/sales in these units deserve to be accepted as such and no addition is required to be made as far as these units are concerned. For other units also, we ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reatened, he and other employees were manhandled and that whatever has been stated in the so called statements were not given by him, were written by the authorized officers on their own and without reading or writing he was asked to sign on the dotted lines at odd hours in the late night. Similar has been the Affidavit of Sh. Raghu Dutt Tiwari also. We have already placed on record the Affidavits of both these persons alongwith our letter of August 5, 2011. We strongly rely on these. On the face of it, these are after the alleged statements if any and therefore whatever has been stated on oath by them has to be accepted rather than what they had stated earlier under threat, coercion or pressurizing tactics. It is in the light of these facts that we again request you to provide right to cross examine of the persons who say otherwise/adversely other than, what is apparent on record. One may be a Director or an employee but if coercive measures are used one may not withstand atrocities committed by the officers & can write whatever one wishes & sign on the dotted lines. It is on record that pressurizing tacks were used employees were manhandled, were not permitted to eat properly, me....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by way of showing bogus purchases, debtors and turnover. This fact is conclusively proof of incorrectness of books of accounts and trading results of the company. 7. Thereafter, the CIT(A) has reproduced the finding recorded by the AO which we have already discussed. 8. He also taken us to the submissions made by the appellant before the CIT(A) in para no.5.2 which reads as under:- 5.2 The AR of the appellant has contended as under:- The additions made by the Learned Assessing officer in the trading account are assailed as under- 1. Business of the assessee- The assessee is a company and engaged in the business of manufacturing and trading of gem stones. The company has separate main four units working at different locations in Jaipur besides other branches at Mumbai and other places in various parts of India. Separate books of accounts are maintained for these units. The four units working at Jaipur are named as Gem Unit, Silver Star Unit, Jewellery Division and Nazami Division. Complete books of accounts have been maintained during the course of business. The assessee is maintaining all the books of accounts including cash book, bank books journal book, Ledger ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Officer. This is quoted in para 7 on page 2 of the assessment order. The assessee could increase his turnover in the process of alleged bogus purchase vouchers and bogus sale vouchers. Therefore the entire exercise of the Learned Assessing Officer which suggests that assessee earned in the aforesaid process of bogus vouchers. The Learned Assessing Officer has not conducted any post search inquiries which may also support the finding of the Learned Assessing Officer of earning higher profits by the assessee by way of obtaining bogus purchase vouchers and issuing bogus sale vouchers. Thus there was no justification of the Learned Assessing Officer for taking u/s 153 in the case and subsequently completing the assessment by making addition of Rs. 1,02,92,954/-. 4. Sunjay Oil Case Industries vs. CIT 10 DTR 153 (Guj.) case is not applicableThe Learned Assessing Officer has referred the aforesaid case law on page no.36 of the assessment order. It is submitted that the ratio of this case has not been found applicable in the case of the assessee in Assessment Year 2006-07 wherein addition was made by disallowing 25% of the bogus purchases to the tune of Rs. 5.40 crores. In the first....
X X X X Extracts X X X X
X X X X Extracts X X X X
....this the trading addition made by the Learned Assessing Officer deserves to be knocked down. The following table reflects the trading results of the assessee in Assessment Year 200607 to 2010-11. A.Y. Turnover Gross Profit G.P. Rate Remarks 2006-07 546642847 40452067 7.40% 8.5% applied by the Learned CIT(A) 2007-08 687479941 58148440 8.45% 2008-09 977758373 94661850 9.68% 2009-10 1030627271 140129208 13.59% 2010-11 154038479 15893587 10.31% The persual of the aforesaid table reveals that the result shown in Assessment Year 2010-11 is better in comparison to earlier years. The GP rate disclosed is better in comparison to that upheld by the ld. CIT(A) in A.Y. 2006-07 of 8.5%. No addition is Decision of ITAT in assesses's own case in assessment year 2005-06 to 200-10. The Hon'ble ITAT in ITA No.245/JP/2013 to 249/JP/2013 has deleted the entire addition made under the similar facts and circumstances therefore the issue of the appeal is squarly covered in favour of the assessee. 9. He contended that tribunal has committed serious error in not appreciatin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eged unaccounted sales in respect of the aforesaid appellate order. The applicant made an application under s. 256(1) for referring the aforesaid two questions said to be arising out of Tribunal's order. 3. Having perused the assessment order made by the AO, the order made by the CIT(A) and the Tribunal, we are satisfied that the Tribunal was justified in rejecting the application under s. 256(1). It cannot be a matter of an argument that the amount of sales by itself cannot represent the income of the assessee who has not disclosed the sales. The sales only represented the price received by the seller of the goods for the acquisition of which it has already incurred the cost. It is the realisation of excess over the cost incurred that only forms part of the profit included in the consideration of sales. Therefore, unless there is a finding to the effect that investment by way of incurring cost in acquiring goods which have been sold have been made by the assessee and that has also not been disclosed. In the absence of such finding of fact the question whether entire sum of undisclosed sale proceeds can be treated income of the relevant assessment year answers by itself in n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pinion, the tribunal while considering the matter has not committed any error in confirming the order of both the authorities by holding as under:- 19. We have heard the rival contentions and perused the material available on record. The ld. CIT(A) noted that during the course of search conducted at the premises of the assessee company, a number of incriminating documents were found pertaining to unaccounted sales, purchases and expenses of the business. It was further noted by the ld. CIT(A) that the assessee has admitted in the course of statement recorded during the course of search that total sales of all the units during FY 2008-09 was around Rs. 107 crores and the declared turnover was only around Rs. 10.36 crores. Further, ld. CIT(A) refers to the order of the AO and stated that the appellant has suppressed the turnover of the business substantially as may be seen from para 22 of the assessment order. It was further noted by the ld. CIT(A) that AO has accordingly rejected the book results declared by the appellant. It was further noted from the order of the AO that books of accounts were found to be not complete on the date of search and as per the stock statement as on 3....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the documents found and seized during the course of search. In the statement recorded during the course of search, the director of the assessee company has admitted that during the FY 200809, total sales are of Rs. 107/- crores as against recorded sales of Rs. 10.36 crores in its books of accounts and the fact that the said amount of Rs. 107/- crores has been brought to tax during the FY 2008-09 relevant to assessment year 2009-10. For the year under consideration, the quantification of undisclosed turnover has been determined by comparing the value of the physical stock as on the date of search i.e, 20.05.2009 and as per the stock statement submitted by the assessee with the State Bank of Indore on 30.04.2009. Given that the books of accounts were not complete as on the date of search, exact stock as per books on the date of search could not be worked out neither in terms of value nor quantitative tally. In post search proceedings and during the assessment and appellate proceedings as well, the assessee has failed to reconcile the same and offer any satisfactory explanation. Regarding valuation of such stock at the time of search, the AO has held that "the valuation was done by t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h 2010 which includes the period starting 30.04.2009 and ending 20.5.2009, the assessee has disclosed a turnover of Rs. 15,40,38,479. Accordingly, the assessee shall be eligible for credit of disclosed turnover for the period starting 30.04.2009 and ending 20.5.2009 which comes to Rs. 88,62,487 by evenly distributing the declared turnover over a period of 12 months. Accordingly, the undisclosed turnover in the hands of the assessee company comes to Rs. 14,14,80,498 (Rs 15,03,42,985 less 88,62,487). 15. In our considered opinion, the tribunal while considering the matter has rightly observed that either the bills are mainpulated so as to increase stock or the sales has been reduced. 16. In that view of the matter, the view taken by the authorities is just and proper. Therefore, no substantial question of law arises. 17. Hence, the appeals stand dismissed. ============= Document 1 पà¥à¤°à¤¶à¥à¤¨ 15 आपने बताया कि Bogus Bills के माधà¥à¤¯à¤® से आपकी फरà¥à¤®à¥‹à¤‚ का Turnover à¤à¤....
X X X X Extracts X X X X
X X X X Extracts X X X X
....‡à¤¸ Unit में लगà¤à¤— 95% sales Bogus है। 4. Silver Star इस Unit की Sales के बारे में मà¥à¤à¥‡ कोई जानकारी नहीं है तथा इसके विषय में आपको पूरà¥à¤£ जानकारी शà¥à¤°à¥€ महेश खणà¥à¤¡à¥‡à¤²à¤µà¤¾à¤² à¤à¤µà¤‚ शà¥à¤°à¥€ पवन खणà¥à¤¡à¥‡à¤²à¤µà¤¾à¤² दे सकते है । Sales 5. Mumbai Sales Office sales है। इस Unit में à¤à¥€ 100% actual Turnov पà¥à¤°à¤¶à¥à¤¨ 16 जैसा कि आपके दà¥à¤µà¤¾à¤°à¤¾ पूछे गये पà¥à....
X X X X Extracts X X X X
X X X X Extracts X X X X
....¤¯à¤¾à¤°, नि- जयपà¥à¤° 6. शà¥à¤°à¥€ पारस जैन, नि- जयते 7. शà¥à¤°à¥€ अनिल ललवानी, नि-जयपà¥à¤° पà¥à¤°à¤¶à¥à¤¨ 19 कृपया बतायें कि आपकी कमà¥à¤ªà¤¨à¥€ के ऊपर वरà¥à¤£à¤¿à¤¤ Bogus Purchase à¤à¤µà¤‚ sales इतà¥à¤¯à¤¾à¤¦à¤¿ कारà¥à¤¯à¥‹à¤‚ को करने का निरà¥à¤£à¤¯ किसके दà¥à¤µà¤¾à¤°à¤¾ किया गया ? उतà¥à¤¤à¤° : यह सà¤à¥€ निरà¥à¤£à¤¯ हमारी कमà¥à¤ªà¤¨à¥€ के chairmen Managing Director शà¥à¤°à¥€ शि....
X X X X Extracts X X X X
X X X X Extracts X X X X
....े मà¥à¤²à¤¾à¤•à¤¾à¤¤ होती है, कौन यह बात / मà¥à¤²à¤¾à¤•à¤¾à¤¤ करता है कृपया विसà¥à¤¤à¤¾à¤° से यह सारी पà¥à¤°à¤•à¥à¤°à¤¿à¤¯à¤¾ बतायें । उतà¥à¤¤à¤° : इस विषय में मैं यह बताना चाहता हूठकि कà¥à¤› तो हमारे Regular broker है जैसे कि शà¥à¤°à¥€ सà¥à¤à¤¾à¤· जैन, जयपà¥à¤°, शà¥à¤°à¥€ पारस जैन मà¥à¤®à¥à¤¬à¤ˆ, शà¥à¤°à¥€ अनà¥à¤ª कालानी जयपà¥à¤° जिनसà¥....