TaxTMI 
TaxTMI 
2019 (4) TMI 1112
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....ssued. In response thereto, the assessee filed its return of income on 18.5.2016 declaring NIL income for the AY 2011-12 and the AR of the assessee attended the assessment proceedings from time to time and filed necessary details. Shri Rajendra Jain, Shri Sanjay Choudhary and Shri Dharminchand Jain are some of the entry providers operating in Mumbai, indulged in providing accommodations entries in the nature of bogus sales and unsecured loans. The main allegation against the above mentioned groups were as under:- i) Their concerns are engaged in merely paper transaction. ii) In the name of their numerous concerns, they import rough and cut and polished diamonds for the other clients who do not want to show import in their own books. The physical delivery of the diamonds so imported is immediately handed over to these actual importers after clearance of the consignment by CHA. iii) These concerns issue bills/ give accommodation entries for a commission to various parties who normally purchase diamonds in cash from undisclosed parties and need bills to show purchases against sales in their account. iv) They provide accommodation entries of unsecure....
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....year 2010-11 relevant AY 2011-12 from the following concerns : S.No. Name of the party Amount 1. M/s Arihant Exports Rs.4,80,001/- 2. M/s Kriya Impex Pvt. Ltd. Rs. 2,67,430/- 2.3 M/s Kriya Impex Pvt. Ltd. vide his letter dated 15.07.2016 and M/s Arihant Exports dated 15.07.2016 have denied any transaction during the FY 2010-11 from the assessee company. In their letters "both" dated 15.07.2016 it was stated that "our company have not done any transaction from aforesaid company. The replies dated 15.07.2016 of these both parties are ditto in the language and also the font shapes and sizes. It is difficult to imagine and comprehend how two entities with different Directors and Partners submit such IDENTICAL letters with same font shapes/sizes/language unless there is a tacit and clandestine understanding amongst such operators. Further the assessee vide his letter dated 02.11.2016 has stated that Shri Rajender Jain had retracted from his earlier statement in respect of bogus purchases. In response to that the AO vide his letter dated 28.11.2016 has written a letter to the DCIT Central Circle4, Surat regarding Sh. Rajendra Jain retraction of statement mad....
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....etraction to be successful in the eyes of law the deponent has to show as to how earlier recorded statements do not state the true facts or that there was coercion, inducement or threat while recording his earlier statements. Retraction was filed by the assessee on 31.10.2014 before AO after one year of search/statement recorded. The assessee has not filed any retraction before Investigation wing. The assessee has another chance to retract from his earlier statement on 05.12.2013 during the P.O. operation. Instead of denial of his earlier statement he has confirmed it. The assessee has submitted that he retracted the statement recorded on 05.10.2013 through an affidavit before notary on 21.10.2013 and also retracted the statement taken on 05.12.2015 though an affidavit before notary on 09.01.2014 which was kept with him and filed it before the AO on 31.10.2014. The assessee by non filing the affidavit before Investigation wing stopped any further investigation and not given time to investigation wing to collect the evidence against retraction. The Hon'ble Supreme Court held that in absence of proper verification affidavit cannot be admitted in evidence (A.K.K. Nambiar v/s Un....
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....rchase transactions with the parties - M/s Arihant Exports and M/s AVI Exports but not with the other two i.e. M/s Kriya Impex Pvt. Ltd and M/s Karnawat Impex Pvt. Ltd has also given their submission in response to notice u/s 133(6) of the I.T. Act. However, AO observed that what has to be understood in these kind of clandestine bogus purchases is that there is a tacit understanding between the parties concerned and try their level best to ensure that all papers are manipulated to give a picture that these transactions look like "real and genuine business transactions". AO further observed that it is in fact all fake transactions and such activities pertaining to evade tax should be looked and examined to ensure that the curtain that blocks the activities from being exposed should be brought down and such transactions are made duly accounted in the books of accounts. It was further observed by the AO that ho can such transaction which are claimed as genuine by this party be genuine when the party from whom they obtained the bills/vouchers etc have duly confessed that no genuine and actual purchases happen through statements given under oath during the search and post search proceed....
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....ssessee to present is contention and the appellant has no where mentioned in its submission that the AO was ever asked to provide opportunity to it to cross examine the persons whose statements were recorded, which was wrong. He further submitted that at page no. 8 of the impugned order of the Ld. CIT(A), the Ld. CIT(A) has reproduced the submission of the assessee that "the present appeal is against the additions under section 68 on assessment completed u/s. 148 of Rs. 747,431/- simply based on the report of investigation without ....."doing cross examination of any one.....". In view of above, he submitted that the addition in dispute was made and confirmed merely on the basis of the statement made by Sh. Rajendra Jain on the back of the assessee and without giving any opportunity to cross examine him, which is not sustainable in the eyes of law. Therefore, he submitted that the issue argued vide ground no. 5 is squarely covered by the decision of the ITAT, SMC, Delhi Bench wherein the Tribunal vide its order dated 06.11.2018 passed in ITA No. 3510/Del/2018 (AY 2014-15) in the case of Smt. Jyoti Gupta vs. ITO has allowed the appeal of the assessee on exactly similar facts and cir....
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....spute was made and confirmed merely on the basis of the statement made by Sh. Rajendra Jain on the back of the assessee and without giving any opportunity to cross examine him, which is not sustainable in the eyes of law. I also notice from the copy of Company master Data from MCA that the date of incorporation of the assessee company is 25.08.2010. It is also noted from the assessee's reply dated 5.8.2016 and 23.12.2016 stating therein that assessee company had not purchased goods from M/s Arihant Exports and Kriyalimpex Pvt. Ltd. and no business activity was conducted during the period from 25.8.2010 (Date of incorporation of the assessee company) to 31.3.2011. It is also noted that Sh. Rajendra S. Jain has filed an affidavit 09.4.2014 by reconfirming his affidavit for retraction of statement. I further note that M/s Kriya Impex Pvt. Ltd. and M/s Arihant Exports vide their letter dated 15.7.2016 have confirmed that their companies have not done any transaction from the assessee during financial years 2010-11-2012. 5.1 Keeping in view of the aforesaid discussions, I am of the considered view that assessee has considerable cogency that addition was made on the basis of statement....
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....er passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at....