AI Drafter 
TaxTMI 
TaxTMI 
2024 (5) TMI 1476
X X X X Extracts X X X X
X X X X Extracts X X X X
....sident, ITAT has appointed me as a Third Member for deciding the questions of difference amongst both the Hon'ble Members. 4. I have heard the ld. Representatives and perused the record carefully. Before adverting to the questions of difference referred for opinion, I deem it appropriate to bear in mind the basic facts necessary for adjudication of the controversy involved in both the appeals. Therefore, I take note of the brief facts. ITA No. 226/ASR/2017 5. In this appeal, the assessee has taken six grounds of appeal, out of which under Grounds No. 1 to 3, the assessee has challenged the reopening of assessment by issuance of a notice under section 148. However, during the course of hearing, ld. Counsel for the assessee has withdrawn this fold of grievances and did not press these three grounds. Out of the remaining three grounds, Ground No. 6 is a general ground of the appeal, which does not call for recording of any finding. This lead me to confine only two issues, which read as under:- Ground No. 4:- "That the CIT(A) was not justified in upholding the addition of Rs. 86,76,315/- on account of alleged bogus purchases and he completely ignored the subm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nfronted the assessee as to why its purchases be not treated as bogus. In response to the query of ld. Assessing Officer, the assessee filed detailed written submission. I will revert those submissions while dealing with the argument raised by the ld. Counsel for the assessee. The ld. Assessing Officer has briefly noted the reply of the assessee in paragraphs no. 6.4 & 6.5 of the impugned assessment order and thereafter rejected such submissions by recording the following finding:- "6.4. The reply submitted by assesses is carefully considered and following observations are made:- (a) Sh Bhanwar Lal Jain has categorically accepted that he deals in providing bogus bills. (b) Sh Bhanwar Lal Jain has accepted that M/s Daksh Diamonds and M/s Jewel Diamonds are controlled and managed by him. (c) Assessee has made purchases from M/s Daksh Diamonds and M/s Jewel Diamonds. (d) Sh. Bhanwar Lal Jain has nowhere made any exclusion vis a vis M/S Gujranwala Jewelers in his statement. Therefore it is clear that he provided bogus sale bills to M/S Gujranwala Jewelers too. (e) While examining books of account it was noticed that there were no de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng disallowance of purchases deserves to be made in the hands of assessee or not. In this regard, the assessee has taken remaining four grounds of appeal, which read as under:- Ground No. 3:- That the CIT'(A) failed to appreciate that notice issued by the AO u/s 133(b) was beyond the powers of the AO since no assessment proceedings were pending at the time of issue of notice. Ground No. 4:- That the CIT(A) was not justified in upholding the addition of Rs. 8217465/- on account of alleged bogus purchases and he completely ignored the submissions of the appellant. That the CIT(A) failed to appreciate that no trading additions could have been made by the AO without pointing out any defect in the audited books of accounts and without rejection of the same. Ground No. 5:- That CIT(A) failed to appreciate that addition has been made on the basis of statement of Mr. Sanjay Choudhary and despite the request of the assessee he was not produced by the AO for cross examination. Hence the action of AO and CIT(A) are against the natural justice. Ground No. 6:- That without prejudice to grounds raised above both AO & CIT....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ird Member. I take note of both the set of these questions referred to me for adjudication. 13. The questions framed by Hon'ble Accountant Member read as under:- Reference under section 2 55 (4) of the Income Tax Act, 1961 In re: Gujaranwala Jewellers & Ors. v. Asst. CIT (ITA Nos. 226 & 586/ASR/2017) A difference of opinion has arisen between the Members constituting the Bench which heard the captioned appeal, passing their separate orders u/s. 254(1) of the Income Tax Act, 1961 ('the Act ' hereinafter), Accordingly, in terms of section 255 (4), a reference is being hereby made to the Hon'ble President, Income Tax Appellate Tribunal , for referring the matter for resolution of the said difference to a Id. third Member, articulated by the following points of difference: emanating from the respective orders by the said Members: 1. Whether the disallowance of the impugned expenditure justified in the facts and circumstances of the respective cases, or has the assessee/s proved the relevant purchases, so as not to warrant any disal lowance of the expenditure claimed in its respect? 2(a) Whether the entries in the stock register prove the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and similar issues, in order to maintain the judicial discipline, in view of the judgment passed by the Apex Court in the case of 5.1. Rooplal & Ors. Vs. Lt. Governor through Chief Secretary Delhi & Ors. (Appeal Civil) 5363-64 of 1997 Date of Judgment 14/12/1999 {1999 SUPP (5) SCR 310}), because the Co-ordinate Benches in various cases as referred in composite order of these appeals under consideration, specifically Amritsar Bench in DCIT vs. Sunil Kumar {ITA No.563, 564, 564, 567, 343, 571, 572, 573, 574 and 232/Asr/2016 decided on 30.03.2017] has decided the similar and identical issue which was mainly relied upon by the assessee for its cases, however the Hon'ble A.M has taken the contrary view. (ii) Whether the additions made by the Assessing Officer and affirmed by the Ld. CIT(A) are not liable to be deleted in view of the facts and circumstances of the cases. (iii) 'Whether, as per dictum of Apex Court in the case of Andaman Timber Industry vs. CCE (Civil Appeal No. 4228 of 2006 dated 02/09/2015, the additions are not liable to be deleted in the instant cases, wherein the assessee was not granted any opportunity to cross examine the third party on th....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 50 of Paper Book. (ii) Copy of account of M/s .Nazar Irnpex (P) Ltd. wherein the bills issue by turn nave been credited and the details of payments made through cheques (RTGs) are also reflected at Page no. 35 of Paper Book. (iii) Copy of purchase bills issued by Nazar Impex (P)Ltd. are appended on page no. 19 & 20 of the Paper Book. The PAN, VAT, TIN Mo. CST No. of Nazar Impex is mentioned in their invoices. (iv) Copy of the Stock Register of Diamonds from 01.04.2012 to 31 03.2013 is appended on page no. 36 & 37 of Paper Book wherein the purchases have been entered into the receipt side of the Stock Register. (v) Copy of letter dated 22.01.2016 written by the assesses requesting the AO to ' provide the statement of Sanjay Choudhry at page no. 54 of Paper Book .and copy of letter of ACIT dated 02.02.2016 enclosing the statement of Sanjay Choudhry at page no. 55 to 70 of Paper Book. (vi) Copy of letter of assessee dated 11.02.2016 requesting the AO to summon Sanjay Choudhry for cross examination of his statement at page no. 71 to 72 of Paper Book. (vii) Copy of letter dated 08.03.2016 of ACIT fixing the date of cross examin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as been set aside by the Bench because of the above stated reasons. Thus the entire addition of bogus purchase made by the AO amounting to Rs. 8201493/- has been deleted by the Hon'ble Bench. In view of the same it us respectfully prayed that the addition made by the AO and sustained by CIT(A) amounting to Rs. 8217465/- be deleted and appeal of the assessee be allowed following the decision of Sunil Kumar Prop. Sumi Jewellers Amritsar. Further the assessee finds the strength from the case of Videocon Inds. Ltd. Vs DCIT (2017) 186 TTJ (Mum) 353 at page 359 and the judgment of ACIT Vs. Mahesh K. Shah (2017) 184 TTJ (Mum) 702. (copies enclosed). Hence It is prayed that appeal of the assessee may be allowed". 16. In support of his contention, he relied upon the following judgments, whose copies are placed on the record:- (i) DCIT -vs.-Sunil Kumar Prop. Sunil Jewellers [ITA No. 563, 564, 565, 567 & 343 (ASR) 2016]; (ii) CIT -vs.- M/s. Odean Builders Pvt. Ltd. (SC) Civil Appeal No. 9604-9605 of 2018]; (iii) 405 ITR ST 3; (iv) ACG Arts and Properties Pvt. Ltd. -vs.- DCIT [171 ITD (Mumbai)184]; (v) Fancy Wear -vs.- ITO [167 ITD (Mumb....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d would suggest that the assessee is engaged in the business of trading of gold and diamond jewellery, platinum jewellery/silver ornaments/articles and bullion etc. It has been maintaining its proper books of account. The accounts were duly audited. The assessee has filed its return of income on the strength of those accounts. When the ld. Assessing Officer has confronted the assessee for explaining its position with regard to certain purchases made from M/s. Daksh Diamonds and M/s. Jewel Diamonds in A.Y. 2007-08 and M/s. Nazar Impex (P) Ltd. in A.Y. 2013-14. The assessee has submitted copy of the audited balance-sheet, Profit & Loss A/c. along with auditor's report, the complete stock tally of the ornaments. It has also filed copy of the stock register exhibiting opening stock, purchase, sales and closing stock. The assessee thereafter filed purchase bills issued by M/s. Daksh Diamonds, M/s. Jewel Diamonds and M/s. Nazar Impex (P) Ltd. in the respective years. The assessee has made the payments to its suppliers through banking channel. The seller of the diamonds was having PAN, VAT, TIN and CST no. Those details were submitted by the assessee to the ld. Assessing Officer during th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n) exhibiting the fact that certain concerns of Bhanwar Lal Jain (Mumbai) and Shri Rajendra Sohan Lal Jain were engaged in providing accommodation entries to various beneficiaries. The list of all those companies/firms are mentioned in that report. According to the ld. Assessing Officer, the assessee has made purchases from three concerns mentioned in the list, i.e. (i) M/s. Daksh Diamonds Purchases of Rs. 36,13,365/- A.Y. 2007-08 (ii) M/s. jewel Diamonds Purchases of Rs. 50,62,350/- A.Y. 2007-08 (iii) M/s. Nazar Impex (P) Ltd. Purchases of Rs. 82,17,465/- A.Y. 2013-14 In the second set of evidence is the material submitted by the assesese before the ld. Assessing Officer. This set contains audited accounts of the assessee, stock register, purchase register, details of payments of purchases through banking channel, details of suppliers/sellers, namely PAN, VAT, TIN, CST nos. 22. The assessee has produced quantitative details, which were verifiable and also tallied. For example, if 100 kgs. of raw material is being purchased, then sales also represent those 100 kgs. or unsold items are reflected in the closing stock. 23. The short questio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, confirmed copy of accounts and the fact of payment through cheques, & VAT Registration of the sellers & their Income Tax Return. In view of the above discussion in totality, the purchases made by the appellant from M/s Padmesh Realtors Pvt. Ltd. is found to be acceptable and the consequent disallowance resulting in addition to income made for Rs. 19,39,60,866/-, is directed to be deleted." The ITAT by its judgment dated 16th May, 2014 relied on the self same reasoning and dismissed the appeal of the revenue. Likewise, the High Court by the impugned judgment dated 5th July, 2017, affirmed the judgments of the CIT and ITAT as concurrent factual findings, which have not been shown to be perverse and, therefore, dismissed the appeal stating that no substantial question of law arises from the impugned order of the ITAT." In these circumstances, the Review Petitions are dismissed. J. (R.R Nariman) J. (Indu Malhotra) New Delhi; August 21, 2019 24. A perusal of the above decision would reveal that Hon'ble Supreme Court has concurred with the judgment of Hon'ble High Court and order of the ITAT on the ground that disallowance based on th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l 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. 7. 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 the price which is mentioned in the price list itself could be the subject matter of cross- examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what 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 r....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... & Ors. Vs. Lt. Governor through Chief Secretary Delhi & Ors. (Appeal Civil) 5363-64 of 1997 Date of Judgment 14/12/1999 {1999 SUPP (5) SCR 310}), because the Co-ordinate Benches in various cases as referred in composite order of these appeals under consideration, specifically Amritsar Bench in DCIT vs. Sunil Kumar {ITA No.563, 564, 564, 567, 343, 571, 572, 573, 574 and 232/Asr/2016 decided on 30.03.2017] has decided the similar and identical issue which was mainly relied upon by the assessee for its cases, however the Hon'ble A.M has taken the contrary view". A copy of this decision has been placed on the record and I have perused it. But to my mind, this decision contemplates that as and when interpretation of any statute is required, then, the Benches should have adopted a consistent approach and should not ignore the decision of the Coordinate Bench. In the present case, the decision is based on purely factual aspect and a slightest variation in the facts would change the results. For example- had the assessee not made payments through account payee cheque of its purchases, there must be different ramification. It is very difficult to find out exact facts of similar natu....