TMI Blog2011 (2) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... a, Senior Standing Counsel with Mr. Sukant Gupta, Advocate for the appellant. Ms. Radhika Suri, Advocate for the respondent. ADARSH KUMAR GOEL, J (Oral) . 1. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (for short the Act) against the order dated 25.7.2008 of the Income Tax Appellate Tribunal, Special Bench, Delhi in I.T.A. No.163/ASR/2003 for the assessment year 1998-99 proposing to raise following substantial questions of law:- i) Whether on the facts and in the circumstances of the case, the order of the Special Bench of ITAT, New Delhi is ex-facie perverse in that it ignores all the evidences and facts brought on record demonstrating the Hawala nature of the impugned transactions, while holding that these evidences were not sufficient to doubt the bona-fides of the said transactions? ii) Whether on the facts and in the circumstances of the case, the order of the Special Bench of ITAT, New Delhi has erred in deciding the case of the respondent on the basis of the factual findings in the case of M/s Bemco Jewellers P. Ltd./Manoj Aggarwal whereas they were entirely different? iii) Whether the Special Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argument of the respondent? ix) Whether the ld. ITAT grossly erred in law by applying two different yardsticks and standards by requiring the appellant Revenue Dept. to pass test of cross examination of all witnesses and at the same time being satisfied by all the respondent's averments at face value, thus forcing the revenue to prove its case beyond all reasonable doubt? x) Whether the ld. Special Bench of ITAT, New Delhi was justified in giving no finding regarding the genuineness of sale of the jewellery by the respondent to M/s Bishan Chand Mukesh Kumar? 2. The assessee is HUF engaged in the business of fabrics. In its return for the assessment year in question, the assessee claimed long term capital loss on account of sale of jewellery. The said jewellery was disclosed under Voluntary Disclosure of Income Scheme, 1997 (for short VDIS ) valued at ₹ 7,88,131/- as on 1.4.1987. Indexed cost was higher than the price at which the same was claimed to be sold on 2.2.1998 and 18.2.1998. The assessing officer doubted the genuineness of the transactions and held the sale proceeds to be unaccounted funds of the assessee. The CIT(A) upheld the additions. On further appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been used only to introduce his own unaccounted income into the regular books. Thus, the assessee has not explained to the satisfaction of the office the introduction of credit of Rs.1680475/- in his regular books and is thus added to the income of the assessee u/s 68 of the Income-tax Act. Accordingly, the loss of Rs.182891/- as claimed by the assessee is also disallowed and the capital gain on sale of MEP units at Rs.1227/- is separately brought to tax. Finding recorded by the CIT(A) 7.1 I have considered the appellant's contentions in the background of facts on appellate record and the reasons given by the assessing officer in the assessment order and his remand report, as mentioned above. The issue to be decided here is as to on whom the onus lies to prove the genuineness of sales and whether the party on whom the onus lies has been able to discharge such onus in a complete manner so that it can be said that the onus has shifted on the other side to disprove the same. In the present case, the appellant's counsel has filed confirmation of sales purportedly from M/s Bishan Chand Mukesh Kumar, Saraf, Delhi which bears date much prior to the calling of information by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is enclosed. It is also brought to your notice that action u/s 132(1) was carried out by the Investigation Unit-I this Directorate on 3.8.2000 in the case of Shri Manoj Kumar and others. One of the associates covered u/s 132(1) was the same M/s Bishan Chand Mukesh Kumar. This group has since been centralized with Shri Ram Mohan Singh, CDIT, Central Circle-3, Mayur Bhawan (Room NO.724, Connaught Circus, New Delhi. 3. I am directed to request you to please contact Shri Ram Mohan Singh, DCIT holding jurisdiction M/s Bishan Chand Mukesh Kumar for conducting necessary enquiries in the case Per Inspector Sh.Praduman Singh, ITI, Unit-I, New Delhi's report in trhe case of M/s Bishan Chand Mukesh Kumar dated 16.1.2002. As directed, I visited the premises No.1166/202, Kucha Mahajani, Chandni Chowk, Delhi on 14.1.2002 to serve the summon on the above said party. The premises is on the 2 and there is no sign board of M/s Bishan Chand Mukesh Kumar at this premises. Local enquiry made revealed that this party is not functioning from this place. Efforts are being made to locate the present address of the party. The report received from the DDIT(Investigation) dated 25.10.2002 throws f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... East Baldev Park, Delhi -do- 6832 25. Bishan Chand Bishan Chand Mukesh Kumar Mukesh Kumar 1166/202, Shankar Market Kacha Mahajani, Chandani chowk Delhi -do- 5637 42. -do- -do- 5637 The case was centralized with Central Circle-III in the charge of CIT, Central-II, New Delhi and the seized record along with the appraisal report was sent to the Assessing Officer, Central Circle III on 17.9.2001. In view of the above, any further information in this regard may kindly be asked for the Assessing Officer who was suggested to ascertain the volume and nature of transactions in the above said bank accounts before arriving at the correct income of the assessee . Perusal of the said letter shows that the partners of the concern M/s Bishan Chand Mukesh Kumar are known to he involved in the business of selling bogus accommodation book entries of various types for consideration of commission and they had no real business. On the basis of such information, search has been conducted u/s. 132 at the office premises and residential premises of the partners of the concern, M/s Bishan Chand Mukesh Kumar. Investigation Wing ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been investigated in detail and the decision thereon will have a direct bearing on the ultimate fate of the case of the assessee i.e.Tejinder Singh, HUF. Accordingly, the appeals filed in the case of M/s Bishan ChandMukesh Kumar have already been disposed of by us in the foregoing portion of this order wherein the assessment made under section 158BC read with section 158BD has been held to be bad in law on the grounds and for the reasons set out thereon. Consequently, the said assessment made in the case of M/s Bishan Chand Mukesh Kumar has been quashed by us holding the same to be invalid and keeping in view this decision on the preliminary legal issues, we have refrained ourselves from considering and deciding the other issues involved in the said case on merits including the issue relating to genuineness of the transactions of purchase and sale of jewellery. Assuming the possibility of such an eventuality and keeping in view that the material collected during the course of assessment proceedings in the case of M/s Bishan Chand Mukesh Kumar , which has already been filed and admitted as additional evidence in the case of Tejinder Singh, HUF, can still be utilized, Shri S.D.K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such examination, we have held that the evidence collected by the revenue authorities was not sufficient to establish their stand that the jewellery transactions carried on by Bemco Jewellers Pvt. Ltd. were only paper transactions or bogus and the same were put through by accommodation entries in order to earn commission income therefrom. We have found it difficult to reject the assessee's plea about the genuineness of the jewellery transactions as opposed to the normal course of human conduct even applying the principles laid down by the Hon'ble Supreme Court in the cases of Durga Prasad More (supra) and Sumati Dayal (supra). We have also found that the circumstances surrounding the case were not strong enough to hold the claim of the assessee about genuineness of the jewellery transactions as totally unbelievable or outrageous. We have also found that no evidence of any consequence was unearthed during the course of search to directly show that the jewellery business was bogus and that it was only accommodation entry business. On the other hand, the evidence brought on record by the assessee especially the evidence in the form of sales tax assessment order wherein the transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the assessee. The issue of genuineness of the transaction of sale by the assessee and correctness of the finding recorded by the assessing officer and the CIT(A) were required to be gone into by the Tribunal before setting aside the addition. Reasons given by the assessing officer and CIT(A) are required to be dealt with. The documents produced for the first time such as sales tax assessment order in the case of BCMK, required the matter being remanded to consider the circumstances such as whether the jewellery allegedly sold was not the same as had been declared under the VDIS, as held by the CIT(A). 5. Learned counsel for the assessee fairly stated that the finding that order in the case of Bemco could be automatically applied to the BCMK and to the assessee without considering the merits of the case of the assessee could not be justified. She, however, submitted that the assessee has furnished sufficient explanation in support of genuineness of its claim, as noticed in the impugned order. She also relied upon the judgment of Hon'ble Supreme Court in Commissioner of Income-Tax, Orissa Vs. Orissa Corporation P. Ltd. [1986] 159 ITR 78 to contend that it was for the revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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