TaxTMI 
TaxTMI 
2024 (8) TMI 876
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....m M/s. Krishna Diam as non - genuine. 2.2 While doing so, the NFAC failed to appreciate that: (a) There was no material whatsoever with A.O to show that Appellant had actually incurred any expenditure on purchases outside his books of account; (b) The purchases were made in regular/normal course of his business; (c) Proper quantitative details of purchases were maintained by the Appellant; (d) Confirmation of M/s. Krishna Diam confirming the purchases made from them was also furnished by the Appellant to A.O.; (e) Copy of income tax return filed by M/s. Krishna Diam for the A.Y. 2011-10 was filed before the A.O. (f) The amounts have been paid to the purchasers through account payee cheques through proper banking channel. (g) The sales out of alleged non genuine purchases from M/s. Krishna Diam were accepted by the A.O. 2.3 It is submitted that in the facts and the circumstances of the case, and in law, no such addition under section 69 C of the Act was called for. 2.4 without prejudice to the above, and in alternative it is submitted that the addition of entire purchase of Rs. 66, 30,039/- was....
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.... Ans. Sir my business in all the three concern namely M/s. Karishma Diamond Pvt. Ltd., M/s. Krishna Diam, and proprietor in M/s. Mihir Diamond is of trading in rough and polished diamond. Q.16 Please state the approximate quantity and value of stock as on date? Ans As on date the quantity and value of stock is NIL. Q.37 please state how and where the goods (diamonds) are received? Ans. Sir it is received in my office 5B/1108 A1167/68B Santok Diamond Office No.204.2nd Floor, Somnath Mahadev Ni Sheri, Gajar Falia, Hari Pura, and Surat by my employees. Q.38 Please provide the names, contact number and addresses of your employees who are responsible for taking the delivery of diamonds which are imported by you and also delivery which is taken locally? Ans. Sir I have few employees working for me, I cannot provide these details. Q.39. Please provide the documents like delivery challan, transportation slip, air cargo import insurance papers and any other supporting for goods free documents please give me some time to produce the same. Ans. Sir I cannot provide these documents please give me some time to produ....
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....es place. Sir, I hereby on my own declare that I am running these paper based companies with no real business activities at all. Q.53 Please state the modus operandi in detail of the 5 concerns which are controlled by you? Ans. Various brokers of the diamond market approach me regularly and they give direction from time to time to import diamonds in my books of A/c. Once the diamonds are received they are taken away by these brokers at whose direction these imports were made. For doing these activities, I get a commission. As a result of above, stock of diamonds is reflected in my books without any physical stock being there. Thereafter, at a certain commission I issue bogus sale bills of such diamonds which are appearing in my books as stock in the names of other interested parties/concerns, which is again arranged by these brokers. For this, I get commission. I also give bogus sale bills when there is no stock available in my books. by arranging bogus purchase bills from the local market from various concerns through various brokers. For this type of transaction, I get profit of differential commission received and paid by me. Also, in case some person ....
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....ctual business of any kind. You had also accepted in the said statement that all the bills issued for sales are nothing but bogus bills issued to interested parties and that all loans and advances to interested parties is nothing but "accommodation entries" given against cash. Please confirm the same. Ans. Yes sir I confirm that whatever that has been recorded in my statement u/s. 131(1A) of the I.T. Act, 1961 on 06/10/2013 is true in all respect and I again confirm that the business in all my concerns namely M/s. Karishma Diamond Pvt. Parshwanath Gems Pvt Ltd., M/s. Krishna Diam, and xxxxxxx all paper concerns with no actual business of any kind. Also, all the xxxxxxx are nothing but bogus bills issued to interested xxxxxx and advances to interested parties are nothing but xxxxxxx given against cash. THE ABOVE STATEMENT IS TRUE AND CORRECT TO THE BEST OF MY KNOWLEDGE AND BELIEF. THE ABOVE STATEMENT HAS BEEN GIVEN BY ME VOLUNTARILY, WITHOUT ANY THREAT, COERCION OR UNDUE INFLUENCE. I HAVE READ THE ABOVE STATEMENT AND I CONFIRM THAT IT HAS BEEN RECORDED CORRECTLY. Sd/- Sd/- Vibhor Badoni ....
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.... search, all the registered offices, business premises and residential premises of various dummy directors, partners and proprietors including that of Gautam Jain, Rajesh Gautam Jain and Manish Bhanwarlal Jain were covered. At none of these premises, any stock of diamond was found. Any concern which is in genuine business of diamond trade, at a given point of time would at least have some stock of diamond available. However, the fact that none of the 70 concerns had any stock of diamond as on 03/10/2013 i.e. the day when search commenced raises a suspicion with regard to genuineness of business activity of these 70 concerns. b) Books of accounts not maintained at the respective registered offices: The registered offices and residential premises of the said 70 concerns and the dummy directors, partners and proprietors along with the residential premise of Gautam Jain, Rajesh Gautam Jain and Manish Bhanwarlal Jain in Surat and Surat were covered during the Search action. However, the team of the Income Tax Authorities did not find any books of accounts of the said 70 benami concerns at any of the premises. c) Books found at a secret undisclosed back office:- During ....
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.... these concerns (i) Their concerns are engaged in merely paper transactions. (ii) In the name of their numerous concerns, they import rough and cut & 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 Customs, without recording sales in the books of account. (iii) Sales bill issued to diamond processing houses and traders against book stock by the benami Importer. (iv) These concerns issue sale 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. (v) Payments are made by cheque against bogus purchases. (vi) They also provide accommodation entries of unsecured loans against cash. 5.15 Findings of the search action on Gautam Jain & Others: * The Directors/proprietors of all these concerns admitted on oath that the concerns are nothing but paper companies with no genuine business. * It....
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.... from M/s Krishna Diam, being Gautam Jain concern, should not be treated as non-genuine purchases and added to the total income of the assessee. 4. Considering the above statement of entry provider (which is a well known fact and person in all the circles) and a consistent view of all the coordinate benches and even the Hon'ble Apex Court and Jurisdictional High Court in the following cases as under: * M/s Kachwala Gems vs. JCIT (2006) 206 CTR (SC). * [2019] 103 taxmann.com 459 (Bombay) Principal Commissioner of Income-tax-17 v. Mohommad Haji Adam & Co. Section 69C of the Income-tax Act, 1961 - Unexplained expenditure (Bogus purchases) - Assessee was a trader of fabrics - In course of assessment, Assessing Officer noted that certain purchases made by assessee were bogus - He thus added said amount to assessee's taxable income - Tribunal noted that there was no discrepancy between purchases shown by assessee and sales declared - Accordingly, Tribunal restricted addition limited to extent of bringing gross profit rate on purchases at same rate as applied in other genuine purchases - Whether, on facts, no substantial question of law arose from Tribuna....