TaxTMI 
TaxTMI 
2019 (6) TMI 1643
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....as reopened under section 148 of the I.T. Act, 1961. The main issue Involved in this case is that Shri Rajendra Jain, Shri Sanjay Choudhary and Shri Dharminchand Jain are some of the entry providers operating in Mumbai, indulging in providing accommodations entries in the nature of bogus sales and unsecured loans and that assessee company is a party to the transaction which was evident from evidences and statements recorded on oaths during the search conducted on 03.10.2012. The Main allegation against the above mentioned groups were that their concerns are engaged in mere paper transaction, in the name of their numerous concerns, they import rough and cut and polished diamond for the other clients who do not want to show import in their books. The physical delivery of the diamonds so imported is immediately handed over to these actual importers after clearance of the consignment by CHA. 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 and they provide accommodation entries of unsecured loans against cash. The A.O, ....
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....ecorded. The assessee filed objection before A.O. The assessee filed list of purchases, copies of which are filed at page Nos. 19 to 24 of the PB giving their complete names, address and PAN number. Copies of the invoices from Arihant Exports and AVI Exports are filed at Pages 56 and 59 of the PB. PB-60 to 67 are the replies filed by both the parties under section 133(6) of the I.T. Act, 1961, along with affidavit in which they have confirmed to have made sales to the assessee. PB-68 is affidavit of Shri Rajendra Jain in which he has retracted from the statement made during the course of search which was prior to recording of the reasons for reopening of the assessment. He has submitted that an identical issue was considered by ITAT, Delhi SMC-Bench in the case of the same assessee for the A.Y. 2011-2012 and similar addition have been deleted. The Order of the Tribunal is reproduced as under : "IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: 'SMC', NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER ITA No. 2821/Del/2018 Assessment Year: 2011-12 BHATIA DIAMONDS PVT. LTD. 2919, BANK STREET, KAROL BAGH, NEW DELHI-55 (PAN: AAECB2825C) Vs. ITO, WARD 4(4), NEW DEL....
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....erated by them, are engaged in providing accommodation entries in the nature of bogus unsecured loans and bogus sales / purchases. During the course of search and seizure action statement of Sh. Rajendra Jain and Sh. Surendra Jain were recorded on oath wherein they admitted that the concerned controlled an managed them are not doing any real trading in diamonds but indulged in paper transactions only and Shri Rajendra Jain also stated that if any concerns require bogus purchases bill for diamonds; however, our concerns have bogus stock of diamonds in out books of accounts, which are shown to be purchase / imported from foreign concerns. Therefore, the diamonds shown to be purchased / imported from foreign concerns by us are against shown to be sold to the independent concerns. These concerns take purchase bills from our concerns without actual delivery of diamonds. Further, payment made through cheques or RTGS, the cash components is generally settled by the key persons controlling the concerns, directly or indirectly by taking services of Angadia. Shri Rajendra Jain also submitted that there are some independent parties in the market which are in requirement of unsecured loans aga....
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....ntral Circle- 4 , Surat send a copy of assessment order in the case of M/s Kriya Impex Pvt. Ltd for AY 2012-13 u/s 144 r.w.s 153C of I.T.Act. dated 29.01.2016. In the said assessment order, the AO mentioned that during the course of search action in the case of Rajendra Jain Group, it is revealed that this group of companies has indulged as the groups in giving accommodation entries. The seizure made at place of Rajendra Jain, C-805, Oberoi Splendor Building, JVL Road, Andheri (E), Mumbai comprises of back up of Computer, Mobile arid Two Pen drives which contains details of group companies including details belong to M/s Kriya Impex Pvt. Ltd. Looking at the nature of the transactions, the seized material carry a clear implication over the income of the assessee. Shri Rajendra Jain and Shri Surendra Jain in their statements recorded on oath during the search proceedings, have categorically admitted that they were operating the business of providing accommodation entries through various companies. M/s Kriya Impex Pvt. Ltd. is one of the companies in which Rajendra Jain has done accommodation entries. As per the statement of Sh. Rajendra Jain dated 03.10.2013 during the search and sei....
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....een created in the form of bank entries and books of account to claim that business have been conducted. Auditor has verified the bills and vouchers; not the goods. The assessee claimed that his business activities are duly acknowledge by the other Govt. Authorities like customs department, sales tax department is not reliable. Regarding Customs Department, as explained by assessee himself diamonds were handed over to real beneficiaries after the clearance from customs officials. Other Government authorities has not done any physical verification as the I.T. Department has done. Issuance of sales tax/VAT registration, payment of trade tax (in certain cases) are done by State Authorities. There is no evidence brought before the department whether any spot verification or any physical verification is carried out by such authorities, on other hand proceedings u/s 132, collection of evidence and information's during the course of such proceedings as well as corroborative verification with parties, transactions undertaken by this assessee prove that no real business was being carried out by this assessee. Such findings of the department is past the event of any verification of issua....
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....ra S Jain from Surat. The details of how the AO rejected the retraction statement and made addition u/s 144/153C of I.T. Act in his case has been already been mentioned above. AO noted that When the main person Sh. Rajendra S. Jain involved in this whole episode is not able to attend and substantiate his claim by way of evidence and submission before his AO, then how is it possible that M/s Bhatia Diamonds Pvt. Ltd. has made claims of the genuineness of the sale/purchases. In view of above discussions, the AO made the following additions in the hands of M/s Bhatia Diamonds Pvt. Ltd for this AY 2013- 14. AO further observed that therefore, the creditworthiness and genuineness of these transactions amount to Rs. 7,47,431/- has not been proved by the assessee : 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/- Hence, he added back the amount Rs. 7,47,431/- to the income of the assessee as unexplained cash credits u/s. 68 of the I.T. Act vide order dated 30.12.2016 passed u/s. 143(3)/147 of the Act by assessing the income of the assessee on the same amount. Against the above addition, as....
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....which he has attached the copy of Company Master Data from MCA; copy of balance sheet for AY 2011-12; copy of bank statement for AY 2011-12; copy of income tax return form and computation for AY 2011-12; copy of reasons recorded by the AO; letter of objections filed during the assessment proceedings; copy of retraction affidavit given by Sh. Rajendra Jain and copy of replied u/s. 133(6) by M/s Arihand Exports and M/s Kriya Impex. 4. Ld. DR relied upon the orders of the authorities below. 5. I have heard both the parties and perused the records, especially the assessment order as well as impugned order and the Paper Book filed by the assessee containing pages 1-23 in which he has attached the copy of Company Master Data from MCA; copy of balance sheet for AY 2011- 12; copy of bank statement for AY 2011-12; copy of income tax return form and computation for AY 2011-12; copy of reasons recorded by the AO; letter of objections filed during the assessment proceedings; copy of retraction affidavit given by Sh. Rajendra Jain and copy of replied u/s. 133(6) by M/s Arihand Exports and M/s Kriya Impex. I find that assessee has raised ground no. 3 which is at page no. 2 of t....
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....id not adjudicate the same, which is against the settled law. I note that exactly on the similar facts and circumstances the ITAT, SMC, Delhi Bench 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 wherein, the SMC Bench has considered the statement of Vikrant Kayan and has held that since the impugned addition was made on the statement of Sh. Vikrant Kayan without providing any opportunity to the assessee to cross examine the same, which is in violation of principle of natural justice and against the law laid down by the Hon'ble Supreme Court of India in the case of Andaman Timber vs. CIT decided in Civil Appeal No. 4228 of 2006. For the sake of convenience, I am reproducing the relevant portion of the ITAT, SMC, Delhi Bench 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 as under:- "13. Merely on the strength of statement of third party i.e. Shri Vik rant Kayan cannot justify the impugned additions. Moreso, when specific request was made by the assessee for allowing cross examination was denied by the Assessing Officer. The first appella....
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....t could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal." 14. Considering the facts of the case in totality, I do not find any merit in the impugned additions. The findings of the CIT(A) are accordingly set aside. The Assessing Officer is directed to allow the claim of exemption u/s 10(38) of the Act." 6. Keeping in view of the facts and circumstances of the present case and respectfully following the order of the Tribunal, SMC Bench, Delhi in the cas....