TaxTMI 
TaxTMI 
2025 (10) TMI 149
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....was filed by the assessee on 06.09.2017, declaring income at INR 17,75,840/-. The case of the assessee was taken up for scrutiny and after considering the submissions of the assessee, various additions were made on account of bogus sales, undisclosed cash, jewellery stock etc. The income was finally computed by the AO vide assessment order dated 19.12.2018 u/s. 143(3) of the Act at INR 1,36,66,409/-. 3. Against this order, assessee preferred an appeal before Ld. CIT(A), who after considering the submissions, vide impugned order dated 12.02.2024, partly allowed the appeal of the assessee. 4. Aggrieved by the order of Ld. CIT(A), assessee preferred appeal before the Tribunal by taking following grounds of appeal:- 1. "That Ld. AO and Hon'ble CIT(A) has erred in facts and circumstances by adding Rs. 50 Lacs on account of bogus sales which was received through banking channels just on the basis of statement of third person while the assessee as a vigilant shopkeeper, taken all necessary steps which are necessary to make the sales. As per the statement of Mr. Rahul Chaudhary he used to provide fake bills to provide accommodation entries taken from various parties on c....
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.... read with rule 46A of Income Tax Act." 5. Ground of appeal No. 1 raised by the assessee is with respect to the addition of INR 50 Lakhs made by treating sale to one M/s Shiva Trading Company against as bogus which was received on two occasions i.e. INR 14.00 Lakhs on 15.11.2016 and INR 36.00 Lakhs on 18.11.2016. 6. During the course of Investigation, Shri Rahul Choudhary in his statement recorded on oath had admitted that he controlled and managed M/s Shiva Trading Company instead of its proprietor namely Shri Pankaj Kumar and the firm was used to issue fake bills of expenses. 7. Before us, Ld. AR submits that the assessee has made sales to M/s Shiva trading Company in terms of bill dated 30.11.2016 issued for 1587.210 gram of bullion. Ld. AR further submits that sales so made are duly recorded in the books of accounts of the assessee and sale was made out of the stock available with the assessee. He submits that it was not the allegation of the Department that goods were sold without availability of stock. He further submits that such sales were delay declared in VAT return filed. Merely because, Shri Rahul Choudhary stated in his statement that the said party is control....
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....ccounts and accepted by the AO and trading results were not doubted. The assessee has duly paid CST/VAT on the said sales and necessary detailed were filed before the lower authorities. The sales have been made out of the stock available with the assessee and the availability of the stock was also not doubted by the AO. It is further seen that in the statement of Shri Rahul Choudhary, he has accepted that he had issued certain bills for commission however, it is clear that all the bills were issued on commission for providing accommodation entries. It is the claim of the assessee that once the purchases have been accepted and trading results is not doubted, no addition could be made towards sale by treating the same as bogus. It is an accepted fact that there were certain inquiries carried out with respect to the cash deposited in the bank accounts of M/s Shri Shiva Trading Company during the period of demonetization and during the examination, this fact is came to the surface that this firm was used for issuing bogus bills to various parties and to accommodate them for utilizing their unaccounted demonetized currency. The Revenue alleged that assessee has given its unaccounted SBN....
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....py of the same was provided to the appellant in interest of natural justice. In this case, addition was made by the AD on account of Rs. 50 lacs received from M/s. Shiva Trading Co. The assessee claims that the said credit is on account of normal sale of the business and the same has been entered in the books of accounts. On the other hand, the AO has reported that during the course of search on the premises of Shiva Trading Co., it was noticed that it is a bogus firm and only an entry provider. The AO further reported that the firm is not controlled by the proprietor i.e. Sh. Pankaj Kumar but is under control of Sh. Rahul Chaudhary whose premise was also covered under search. As per the assessment order, Sh. Rahul Chaudhary admitted in his statement that Shiva Trading Co. engaged in issuance of fake bills and the said work has been done by charging a commission of 1.5% to 2.5%. The said fact is clearly visible in the statement recorded of Sh. Rahul Chaudhary vide question no. 21 of his statement wherein, he has acknowledged that Shiva Trading Co. has issued bogus bills. Further, the AO mentioned that the cash amount of Rs. 4,18,15,000/- was deposited in the bank ....
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....s tax authorities had accepted books of account and VAT was paid on such cash sales." Also, in a case exactly similar to the case of the assessee, the Hon'ble High Court of Gujarat in the case of Priya Blue Industries (P.) Ltd. vs. Assistant Commissioner of Income-tax reported at [2021] 130 taxmann.com 492 (Gujarat) on the issue of reopening of case u/s 148 on accommodation entries has held as under: Section 68, read with sections 147 and 148, of the Income-tax Act, 1961 Cash credit (Accommodation entries) Assessment year 2012- 13 Pursuant to scrutiny assessment Assessing Officer sought to reopen assessment in case of assessee on count that assessee was beneficiary of accommodation entries from company 'H' Assessee challenged impugned notice mainly on ground that jurisdictional facts were not established. as assessee had received amount of Rs. 1.06 crores from 'H' against sales made to said party and such sales was duly credited to its books of account and hence, revenue could not have assumed jurisdiction and reopened assessment However, it was found that exercise of reopening had been made only after due inquiries and recording of statements ....
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....ion of the persons whose statements were recorded by the Department was not allowed to the appellant. It is not a compulsive requirement to allow cross-examination of the persons whose statements have been recorded against the assessee. The Hon'ble Supreme Court in the case of R. L. Traders vs. Income-tax Officer, Ward 47(1) reported at [2018] 100 taxmann.com 332 (SC) has held as under: "Where High Court upheld Tribunal's order rejecting assessee's application for rectification of order on ground that while making addition under section 68, assessee was not given an opportunity to cross examine person who allegedly gave accommodation entries, SLP filed against decision of High Court was to be dismissed" Further, the Ld. ITAT Bombay Bench E in the case of GTC Industries Ltd. vs. Assistant Commissioner of Income-tax reported at [1998] 65 ITD 380 (BOM), has held as under: -Whether right to cross-examine witness who made adverse report is an invariable attribute of requirement of dictum audi alteram partem Held, no- Whether where statements of witnesses were only secondary and of subordinate material used to buttress main matter connected....
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....rtunity of cross-examination, it has to be established that prejudice has been caused to the appellant by the procedure followed. See in this connection the observations of this Court in the case of Jankinath Sarangi v. State of Orissa. Hidayatullah, C.J., observed there at page 394 of the report "there is no doubt that if the principles of natural justice are violated and there is a gross case this Court would interfere by striking down the order of dismissal; but there are cases and cases. We have to look to what actual prejudice has been caused to a person by the supposed denial to him of a particular right." Judged by this principle, in the background of the facts and circumstances mentioned before, we are of the opinion that there has been no real prejudice caused by infraction of any particular rule of natural justice of which appellant before us complained in this case. See in this connection observations of this Court in the case of Union of India & Anr v. P.K Roy &Ors. where this Court reiterated that "the doctrine of natural justice cannot be imprisoned within the strait-jacket of a rigid formula and its application depends upon the nature of the jurisdiction conferred on....
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....050/- (-) INR 40,00,000/- (-) INR 2,05,306/-] as pertaining to M/s. J.S. Jewellers firm of the proprietorship of the son of the assessee, Shri Mayur Agarwal and in support of the same an affidavit of Shri Mayur Agarwal was also filed. It was the claim of the assessee that this cash was of M/s. J.S. Jewellers and once this fact is admitted by Shri Mayur Agarwal in his affidavit, no addition is required to be made. After considering the submissions and affidavit of Shri Mayur Agarwal, we find that the AO has disbelieved the affidavit solely for the reason that it was submitted that after few months of search, this fact was never disclosed. After considering the facts, we find force in the arguments of Ld.AR that assessee has already offered the excess cash of INR 40 Lakhs under PMGKY scheme and confirmatory affidavit of the son of the assessee who claimed the said cash as belong to him. Under these circumstances, we hereby direct the AO to delete the addition of INR 7,82,050/-. Ground of appeal No.2 filed by the assessee is accordingly, allowed. 15. Ground of appeal No.3 raised by the assessee of INR 1,38,000/- is with regard to the action of AO in treating the cash found as unexp....
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.... He further submits that assessee's son is doing jewellery business under the name and style of M/s. J.S. Jewellers and at the end of the day, he used to keep majority of stock in the locker at father's shop for safety purposes. As per ld. AR, AO has made no inquiry in the case of Shri Mayur Agarwal and made the addition by holding the excess stock as related to the assessee. He further submits that Shri Mayur Agarwal has filed an affidavit duly confirming these facts and his assessment was also completed by the same AO where this stock is assessed as claimed to be belonging to Shri Mayur Agarwal and thus, the necessary credit for the same should be given out of the total stock found with the assessee at the time of search. He, therefore, prayed for the deletion of the addition made. 20. On the other hand, Ld. Sr. DR for the Revenue submits that the AO has considered all the aspects and claims of the assessee and thereafter, held the stock found as excess as unexplained. He further submits that the assessee during the course of search has denied the fact of having stock of any other person at his business premises and based on such admission only of the assessee, claim that the ....
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.... quantity of 456.537 Gram found in excess with the assessee. Therefore, we uphold the addition to this extent. Ground of appeal No.4 raised by the assessee is accordingly, partly allowed. 23. Ground of appeal No.5 raised by the assessee is with respect to the addition of INR 82,000/- made on account of excess stock of silver ornaments found during the course of search. 24. Heard the contentions of both the parties and perused the material available on record. The total stock of silver and silver article was found at of 62144 Gram (net weight) as against which as per the books of accounts, the net weight of 58685.990 Gram was available in the books of accounts. Accordingly, AO has made the addition of differential stock of 3428 Gram as excess and unexplained. From the perusal of inventory sheet prepared at the time of search by the registered valuer, as reproduced at page 9 of the assessment order, Silver bullion of 14110 Gram was available with the assessee as on the date of search as against which silver bullion of 13,851.450 gms was available in the books of accounts. Besides this, silver article of 48004.000 Gram was physically available as against stock of 44834.50 Gram. ....
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....herein income of INR 25.00 Lakhs each was declared for AYs 2012-13 to 2015-16 totaling to Rs. 1.00 crores and INR 22,64,529/- was declared for year 2016-17. As per the certification in Form No.4, this amount is shown as an additional income declared. Further from the perusal of the form filed under PMGKY as available in page 235, it is seen that assessee has declared cash of INR 40 Lakhs out of which INR 10 Lakhs were deposited in FDR and tax was paid as per the scheme. The claim of the assessee is that these amounts were the immediate source of the amounts appearing in page 55 of Annexure LP-1. From the perusal of the entries contained in the said loose paper, we find that INR 1.50 Lakh was paid on 05.11.2014 for 15 months, INR 3 Lakhs paid on 05.01.2015 for 12 months, INR 1.50 Lakhs was paid on 10.09.2014 for 15 months, INR 9 Lakhs was paid on 25.06.2015 for 12 months and INR 60,000/- on 20.02.2015 for 12 months. The year under appeal before us is AY 2017-18 relevant to 2016-17 and from none of the entries appearing on the said page was falling under the previous year relevant to year under appeal therefore, the same cannot be treated as the loans given by the assessee during the....