TaxTMI 
TaxTMI 
2016 (9) TMI 1504
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.... The assessee company has two directors namely Mr. Paras Jain and Mr. Saurabh Garg. Assessee is mainly engaged in the import of diamonds and sales in local market to exporters who export the goods. The import of diamonds is done through custom authorities and banking channels in India. There has been a survey action u/ s 133A of the Income Tax Act, 1961 on the premises of the assessee company in the month of December, 2008 by the Investigation Wing of Mumbai. A statement of Mr. Paras Jain who was the main promoter and director of the company, was recorded wherein he has categorically stated the true business of the company. On perusal of the statement of Mr. Paras Jain, we found that he has never admitted that the company was engaged in accommodation business of purchase and sales of goods. The duties and responsibilities of both the directors are clearly demarcated and perform accordingly. Mr. Paras Jain looks after and is involved in the import, purchase and sales of diamonds from various foreign parties and local customers/suppliers for an on behalf of the company. Mr. Saurabh Garg used to look after the administration and accounting function of the company. Mr. Saurabh Garg was....
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....d he also confirmed that the statement given in the cases of M/s Basant Dia Jewels and M/s Mox diam. The said reply given by Shri Ramesh L Jain was endorsed by him in the statement recorded from him on 18.7.2008 and the same is extracted below:- "I have gone through the statement of Shri Basant D Jain recorded u/s 131 of the Income tax Act, 1961 dated 09-07-2008 duly endorsed by Shri Nitesh T Jain partner of M/s Mox Diam and I reaffirm that the modus operandi revealed and explained and discussed by Shri Basant D Jain and duly endorsed by me and Shri Nitesh T Jain, Partner of M/s Mox diam was the modus operandi adopted by us for providing accommodation bills to various interested parties in the market. I also state further that in terms of our letter dated 10/7/2008 we viz., Shri Basant D Jain and Shri Nitesh T Jain & myself individually confirmed the statement given in this regard on 09/07/2008 as being correct and true and we stand by it." Accordingly, the assessing officer entertained the view that the purchases and sales shown in the books of accounts of the assessee herein are non-existent and accordingly rejected the books of account. Accordingly the assessing officer es....
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....are not available in the given addresses. When the report given by the Deputy Director of Investigation was confronted with the assessee, it filed the ledger account copies duly confirmed by the concerned parties, copy of acknowledgement of return of income filed by them in order to establish the genuineness of the purchase and sales transactions. However, the AO chose to reject all these documents, but placed reliance on the statement recorded from Shri Basant Jain, which was originally confirmed by Shri Ramesh L Jain. Accordingly, the assessing officer rejected the book results and estimated the income @ 2% of sales value as stated earlier, even though the commission for accommodation bills was stated as 0.20% for imported diamonds and @ 0.05% on the locally sourced diamonds. 8. The Ld CIT(A) held that the documents relating to concerned parties furnished by the assessee are cooked up documents, since the DDI had reported that such parties did not exist at the given addresses. Accordingly he held that the assessing officer has rightly rejected those documents. He further held that the documents furnished by the assessee are exactly as per the modus operandi admitted during the ....
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.... (e) During the course of survey proceedings, the officials did not find any incriminating material and the assessing officer also, during the course of assessment proceedings, did not find any defect in the books of accounts maintained by the assessee. (f) the assessing officer did not bring any material on record to substantiate the averments made during the course of survey operations. (g) the duration of survey operations support the case of the assessee that he was constrained to give admission. Hence the subsequent retraction made within a period of one month should be given due weight, more particularly in view of the fact that the survey officials did not unearth any incriminating documents during the course of survey operations. 11. The assessing officer has also placed reliance on the report given by the DDIT (inv.), wherein he had stated that the customers/suppliers of the assessee were not available in the given addresses. When the report given by the DDIT was confronted with the assessee, it has furnished following documents to the assessing officer:- (a) Ledger account copies duly confirmed by the concerned parties. (b) Copies of income tax return file....
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....gly, we set aside the orders passed by the Ld CIT(A) and direct the assessing officer I.T.A. No.6992/M/2010, 8 7799/M/11 and 5640/M/2012 to delete the income estimated by him for all the three years under consideration and accept the book results declared by the assessee. 5. We have considered the rival contentions and carefully gone through the order of the tribunal in the case of Morewel Impex Pvt. Ltd. (supra) wherein facts are similar to the facts of the assessee's case. In the case of Sunshine Import & Exports Pvt. Ltd., we found that there has been a survey action u/s. 133A of the Income Tax Act, 1961 on the premises of the assessee company in the month of December, 2008 by the Investigation Wing of Mumbai. A statement of Mr. Paras Jain who was the main promoter and director of the company was recorded wherein he has categorically stated the true business of the company. On perusal of the statement of Mr. Paras Jain, you will observe that he has never admitted that the company was engaged in accommodation business of purchase and sales of goods. The company has two directors namely Mr. Paras Jain and Mr. Saurabh Garg. The duties and responsibilities of both the directors are....
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....der Khan Son (2012 25 taxmann.com 413) SC * Paul Mathews & Sons vs. CIT [2003] 129 taxmann 416 [Ker.] * DCIT vs. Premsons [2010] 130 TIJ 139 [Mum] 8. As per verdict of Hon'ble Supreme Court in the case of CIT Vs. S. Kahder Khan & sons, 300 ITR 157, Section 133A does not empower any IT Authority to examine any person on oath, hence, mere statement recorded during survey has no evidentiary value and any such addition cannot be made, without bringing on record corroborative materials. The Hon'ble Supreme Court further observed that this view is clearly supported by CBDT Circular dated 10th March, 2003. Accordingly it was held that no addition can be made merely on the basis of statement recorded during survey u/s.133A. Futhermore, any statement without any corroborative evidence cannot be used for making an addition especially when such statements are made during the survey proceedings. For this purpose, reliance can be made on the following judicial pronouncement. i. S Arjan Singh vs. CWT 175 ITR 91 [Delhi] In this case the assessee is having one property at Aurangzeb Road, New Delhi. The assessee had indicated some value in the Wealth Tax Return. The WTO referred the mat....
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....xcess stock during the course of survey had been reconciled. The AO relied upon the statement of one of the partners of the assessee given during the course of survey under s. 133A of the Act and concluded that the explanation/retraction by the assessee was an afterthought and had no element of truth. CIT (A) as well as ITAT had deleted the addition. Department had preferred an appeal in HC. HC Held that where the assessee has been able to explain the discrepancy in stock found during the survey, addition could not have been made by the AO solely on the basis of the statement made by the assessee during the course of survey. iii. Paul Mathews & Sons Vs. Commissioner Of Income Tax 263 ITR 101 Revision-Erroneous and prejudicial order-Assessment vis-a-vis disclosure during survey-Sec. 133A does not empower any ITO to examine any person on oath-Thus, the statement elicited during the survey operation has no evidentiary value-ITO did not accept the income declared by the assessee after the survey in a mechanical way, but applied his mind to various aspects of the matter before completing the assessment-Advances admittedly received by the assessee from two parties have been explained p....
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.... on assessee's statement-Tribunal deleted additions made by ClT(A)Held, assessee, in his explanation, had stated that remaining 2100 gms had been given to 3 AsarisOfficers had not verified whether gold was available with said Asaris nor chose to examine themStatement recorded during survey operation u/s 133A may be a relevant material, but in absence of further materials to substantiate same, such statement recorded u/s 133A can hardly be basis for assessment-During survey, 900gms gold was found in assessee's premises and statement of assessee was supported only to that extent-Statement of assessee in respect of remaining gold was not substantiated-In so far as unaccounted cash, assessee tried to explain by stating that he had sold a land and consideration was deposited in Bank and was withdrawn and during course of survey, Department came across said cash-Survey was on 29.10.2002 and withdrawal of money from Bank was a few days before search-Even though said amount was not disclosed in his books, assessee tried to explain sameSo far as addition of interest earned on unaccounted investment in money lending business was concerned, enhancement was based only on statement reco....
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....which the assessee is accountable to the students. The assessee all along has been in the bona fide belief that the surplus amount in her hands under the above account was in the nature of a trust fund refundable or returnable to the party. Reliance was placed very much by the lAC on the admission of the assessee that Rs. 22,000 was not refunded to the students. It is stated that she agreed to the said amount of Rs. 22,000 being treated as income. It is worthwhile to remember in this connection that during all the relevant years the assessee had taken the consistent stand that the deposits were returnable to the persons concerned after meeting the expenses, and the surplus, therefore, should not be assessed as income. During the year in question she happened to make the admission under a misconception of the attendant facts and circumstances. In spite of the admission it is incumbent on the Department of establish by relevant proof that the amount in question was income in the hands of the assessee. The admission was wrong and it was for the Department to prove positively on other material that there was concealment of income. Being a quasi-criminal proceeding, the burden is entire....
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....dition made on the basis of statement is not sustainable. 11. With regard to the nature of assessee's business, we found that the import of diamonds undergoes appraisal process by the appraisers appointed by the custom authorities. The officers appointed by Government of India verify physically each and every parcel of diamonds in order to ascertain the quality, quantity, rate, value and place of origin visa vis declared by the importers. All the transaction of purchase, sales, import was made through cross account payee cheques and not a single payment made to any party by way of cash. All the purchase and sales transactions are carried out with reputed parties of the diamond trade and all the payment received from debtors are through cross account payee cheques and all payment made to creditors are through cross account payee cheques. 12. Furthermore, the AO cannot allegedly consider the imports of goods as providing accommodation bill in the market when physical delivery of goods were confirmed by the other arm of government authorities i.e. custom authorities. We found that in the regulation of the Customs Act 1962, when the goods are imported in the country, the goods are c....
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....t copies of the daily stock Register. e. Confirmation from various sale parties. f. Details of interest received from various parties. g. Details of unsecured loan along with confirmation. These documents prove that the assessee is not engaged in the issuing the accommodation bills and acting as a dummy for importing diamonds bills. Thus, the contention of the ld. AO that the bills issued by the assessee are all accommodation bill is wrong. Just on the basis of the statement recorded he cannot come to the conclusion that the assessee has issued accommodation bills and reject the books of account of the assessee. 14. The assessee has also filed quantitative tally of purchase of import and sales. Also maintained proper books of accounts and filed all the details before the A.O. and the CIT(A). 15. So far as the ground taken for reopening is concerned, we do not find any merit, as reasonable belief was framed by the A.O. on the basis of the survey. Accordingly, we uphold the reopening of the assessment. 16. In view of the above discussion, and also following the judicial pronouncements in the case of Morewel Impex Pvt. Ltd. (supra) by the co-ordinate bench in its order dat....
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.... transaction, the burden shifts on to the revenue to prove that the transactions are of accommodation bills. However, the Ld. AO has no material in possession to prove that the transactions of the assessee are bogus. Such has been opined by the Ld. AO on the statement recoded u/s.131 of the Act which is retracted by the assessee and a strong suspicion that the assessee is engaged in issuing of accommodation bills. The fact that suspicion however strong cannot take place of the evidence. The parties with whom assessee's trade are income tax assessee's and duly files their returns. This itself proves that the purchase as well as sale parties do exist and moreover all the transactions done with them are settled through cross account payee cheques and the same transactions are appearing in their books of accounts. 21. In the nature of trade, the assessee is involved, diamonds are imported by the assessee from outside countries which passes through custom - frontiers. And before the physical possession of such diamonds is taken, the custom authorities check the quality of each diamond before the hand over to the concerned importer of his agent. 22. In this case also the asses....