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2021 (3) TMI 1340 - ITAT MUMBAIAddition u/s 69C - additions made on account of purchase from M/s. Artview Gems Private Limited holding its as "accommodation entry." - Appellant had purchased cut and polished diamonds from the aforesaid party in normal course of its business - HELD THAT:- In the present case, the assessee being in the business of manufacturing of jewellery required cut and polished diamonds as an essential material. The assessee purchased the diamonds from various entities as is evident from extracts of stock register of the assessee forming part of the paper book - AO doubting the existence of only one entity, i.e. M/s. Artview Gems Pvt. Ltd., held that the purchase of cut and polished diamonds by the assessee to be a bogus transaction and added the entire expenditure pertaining to the said transaction, under section 69C. In order to decide the issue arising in this appeal, it is relevant to analyze the provisions of section 69C. Thus, as per the provisions of section 69C of the Act, in case the assessee fails to explain the source of expenditure or part thereof to the satisfaction of the AO, such expenditure shall be considered as unexplained expenditure and be deemed to be income of the assessee. The documents of loans sanctioned by Merrill Lynch Wealth Management to the assessee are placed at Pages–41 & 45 of the paper book. From the aforesaid factual details forming part of the paper book, which have also not been denied by the learned DR, it is evident that sufficient funds were available with the assessee for making the payment to M/s. Artview Gems Pvt. Ltd. for the purchase of diamonds. Thus, we are of the view that provisions of section 69C of the Act are not applicable to the facts of the present case. Further regarding the apprehension / allegation of the AO that M/s. Artview Gems Pvt. Ltd., is not a genuine entity, the AO neither discussed nor denied the submission dated 24th November 2017, filed by the entity before the AO at Mumbai, wherein the return of income for the assessment year 2015–16 of the said entity, copy of ledger account of the assessee as well as PAN details of the entity were furnished. It is evident that the AO also has not denied the existence of said entity during the assessment year under consideration. Another basis of the AO to disallow the expenditure that caratage, clarity and colour were not mentioned in the invoice raised by M/s. Artview Gems Pvt. Ltd. also appears to be mere presumption, as the AO has not referred to any document of third-party having mention of such factors in transaction of purchase of diamonds. In view of the above findings, we find no reason to sustain the addition made by the AO and confirmed by the CIT(A), and least under section 69C of the Act. Accordingly, the grounds raised by the assessee are allowed.
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