TaxTMI 
TaxTMI 
2024 (9) TMI 1935
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.... Pvt Ltd. dated 14/01/2017. In connection with the impugned search, a survey proceeding under section 133A of the Act was carried out on "the Nirav Modi jewellery Store" at Kala Ghoda, Fort, Mumbai. During the survey, a digital data being excel sheet "4 Sold jewellery Details of Costing & Selling File 1-April-2016 to 31 March-2017" was found from the laptop in possession of employee of said jewellery Store namely Shri Saurabh Jitendra Shah who was entrusted with job of maintenance of day-to-day stock lying with store and stock movements details along with maintenance of regular books of accounts of stores. The excel sheet in which sales were recorded contains various information such as salesperson through whom sales was effected, date of sale, customer name, product description, weight, cost of product, sale price, mode of receipt such as cheque/RTGS, credit/debit card, cash A/c and "cash". In connection with impugned excel sheet statement of Shri Saurabh Jitendra Shah in the course of survey proceeding dated 15th January 2017 was recorded under section 131 of the Act. In the statement Shri Jitendra explained that that the impugned sheet represents the detail of ....
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....Shri Saurabh Jitendra Shah. Hence the entries made therein are true. 5. The AO also found that the assessee has also purchased jewellery amounting to Rs. 28 lakhs in the year under consideration and jewelleryRs. 30,36,000/- in subsequent year i.e. A.Y. 2017-18 through banking channel, which evidence that the assessee was a regular customer of the impugned jewellery Store. 6. The AO also observed in the assessment order that the assessee was given an opportunity of cross examination of the employees viz. Shri Saurabh J Shah vide letter dated 07/05/2019 and 22/05/2019 and the same was not availed by the assessee. Besides the above, the AO also referred to the statement of Smt. Reshma Varma, who also acknowledged having made sales through unaccounted cash to various parties. Accordingly, the AO treated the purchase of jewellery as per the excel sheet amounting to Rs.5.73 crores as unexplained income of the assessee u/s 69A of the Act and added to the total income of the assessee. 7. Aggrieved, assessee preferred an appeal to the ld. CIT(A). 8. The assessee before the ld. CIT(A) submitted that the proceedings u/s 147 of the Act were initiated merely based on the excel....
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....t of search & survey u/s 132 & 133A of the Act at the premises of Jewellery store, wherein the name of the assessee was very much appearing for the purchase of jewellery in cash worth of Rs. 5.73 crores, which was not reflected in the balance sheet of the assessee. The excel sheet was also supported by the statement of employees of the search party. It was onus upon the assessee to explain the source of cash used for the purpose of purchase of jewellery based on the documentary evidence, but the same has not been explained. Therefore, the AO has rightly made the addition to the total income of the assessee. 11. Regarding the opportunity of cross examination, the ld. CIT(A) observed that the addition in the hands of the assessee was not merely based on the statement of 3rd parties, but it was based on the material being excel data recovered as a result of search, therefore, it was not mandatory to provide the opportunity of cross examination of the person whose statements were recorded. Without prejudice to the above, the ld. CIT(A) has also observed that the AO has given categorical finding that the assessee was offered the opportunity of cross examination during the assessment ....
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....unt of unaccounted purchase of jewellery was not appearing in the balance sheet. This fact is very much evident from the reasons recorded placed on page 10 of the paper book. Accordingly, we note that the AO has not merely acted upon the information received from the investigation wing but also has reconciled the same with the balance sheet of the assessee, which suggests the due application of mind by the AO on his part. Thus, in our considered view it cannot be said that the reopening was done merely based on the information received from the investigation wing. Further, it is important to note that at the time of initiation of proceedings u/s 147 of the Act, the AO has to draw prime facie believe that the income of the assessee has escaped assessment, and he is not expected to dig out the absolute facts about the escapement of income. In this regard we also draw support and guidance from the judgment of the Hon'ble Gujarat High Court in the case of Amar Jewellers Ltd vs. ACIT reported in 444 ITR 148, where in it was held as under: 18. Having regard to the materials on record it cannot be said that there is a total non-application of mind on the part of the Assessi....
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....p, which is the search party, has not recorded any satisfaction that the material found during the search belongs to or pertains to the present assessee. As such, the investigation wing has directly conveyed information to the AO of the assessee about the jewellery purchased by the assessee in cash. Thus, on the basis of the above fact the requirement for initiating the proceedings under the provisions of sec. 153C of the Act, has not been complied with. Accordingly, we are of the view that the AO rightly proceeded to initiate reopening assessment u/s 147 of the Act in the given facts and circumstances. In holding so we draw support and guidance from the judgment of The Hon'ble Madras High Court in the case of Saloni Prakash Kumar vs. ITO reported in 155 taxmann.com 432 wherein it was held as under: 20. Section 153C of the IT Act is only an enabling provision to issue a notice notwithstanding anything contained in sections 139, 147, 148 etc of the IT Act. However, it does not preclude the Department from issuing notice for reopening the assessment under Section 148A(b) of the IT Act for the purpose of section 148 of the IT Act to complete the assessment under section....
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....out conducting necessary inquiry and bringing clinching material merely placed heavy reliance on the material found from third party and their statement. As such the revenue authority lost sight to the fact that search proceeding under section 132 of the Act was also carried at the assessee family dated 27-06-2016 even before the search/survey carried at the impugned jewellery store dated 14-1-2017 and nothing incriminating was found in relation to the investment made in jewellaries by the assessee and her family as alleged by the Revenue. If assessee has made such unaccounted investment in jewellery as alleged by the revenue authority, then there should have been found something during the search carried out at the assessee's family. 19.2 Likewise, in the present case, the AO has referred the statement recorded by the employees viz. Shri Saurabh J Shah and Smt. Reshmi verma after ignoring the statement furnished by the assessee herself u/s 131 of the Act that she has not purchased any jewellery as discussed above. In this connection, firstly we note that those employees nowhere specifically taken the name of the assessee as purchaser of Jewellery in cash as such the....
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....Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 8. 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 Notice. 9. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal. No costs." 19.3 It is also important to note that the excel sheet relied by the revenue for making the impugned addition pertains to the period beginning from April 2016 to 31 March 2017 whereas the revenue has made the addition on account of unexplained purchases in the hands of the assessee in the FY 2014-15 corresponding to assessment year 2015 16. This fact can be verified from the statement given by Shri Saurabh Jithender Shah in response to question No. 14 and 19 which are extracted as under: "Q.14 During the course of survey proceedings, your laptop was subject to verification and it was found that there is an excel file name "4-Sold Jeweller....