TMI Blog2009 (6) TMI 656X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 to 2002-03, no contention was raised before us by the learned Authorised Representative, even though specific ground has been raised challenging the validity of the initiation of proceedings under s. 147 of the IT Act - The case of the appellant squarely falls in Expln. 2 to s. 147 of the Act which provides that where no return of income is furnished even though the assessee has taxable income, such case would be a case of deemed escapement of income - Held that: proceedings initiated by the AO under s. 147 of the IT Act for the various asst. yrs. 1998-99 to 2002-03 is valid and there was no error in the order of the CIT(A) upholding the same whether on the facts and the circumstances of the case it can be held that the appellant was during the relevant year engaged in jewellery business or not - IT Department has conducted enquiry from various sellers of the jewellery and based on the same the learned Authorised Representative for the appellant vehemently contended that every seller had confirmed having sold jewellery to M/s Vishnu Jewellers, the proprietary concern of the appellant - On a careful perusal of the statement of Shri Vijay Gupta, we note that the said person in hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the year did not correlate with the return of income. Therefore, the AO had reasons to believe that income had escaped assessment. During the asst. yr. 2000-01, the AO found that the assessee had filed his return on 31st March, 2003 declaring income of ₹ 23,311 which did not tally with the huge cash deposits in bank account No. 7674 with the Punjab National Bank. Katra Jaimal Singh, Amritsar. Therefore, the AO had reasons to believe that income had escaped assessment. For the asst. yr. 2001-02 on the same reasons the AO issued notice under s. 148. Similarly, for another assessment years, on the same grounds, the AO reopened the assessments. 3. The assessee has contested the action of reopening the assessments in dispute by stating that the said action was illegal and there was no reason to believe that the income had escaped assessment. After hearing the assessee. the AO completed the assessments and rejected the claim of the assessee vide orders passed under s. 143(3) r/w s. 147 on 1st March, 2005, 23rd March, 2005, 23rd March, 2005, 23rd March, 2005 and 23rd March, 2005 respectively for the above-mentioned years. Aggrieved by the aforesaid orders passed by the AO, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , an application filed by the assessee for admission of the additional evidence under r. 29 of the ITAT Rules, 1963 and application filed by the Revenue for admission of additional evidence under r. 29 of the ITAT Rules, 1963, the Bench vide its order dt. 27th May, 2009 allowed the applications filed by the assessee for admission of the additional ground of appeal, an application filed by the Revenue for admission of the additional evidence but the Bench had dismissed the application of the assessee for admission of the additional evidence in its detailed order dt. 27th May, 2009. 8. The Bench had also directed the Registry to fix these appeals for regular hearing before the Bench on 4th June, 2009 for argument in the main appeal and directed the Registry to inform the parties. In response to the same, the learned counsel for the assessee and the learned Departmental Representative appeared on 4th June, 2009 and argued the matter in dispute. On the date of hearing, the learned counsel for the assessee narrated from the facts of the case and draw our attention towards pp. 4 to 7 of the paper book No. 1 filed by the assessee and stated that the assessee has filed his return for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings for the asst. yr. 1996-97 were filed by the Asstt. CIT, Circle IV, Amritsar, vide her order dt. 31st March, 2004. He further drew our attention towards page Nos. 262 to 264 and stated that the assessee has filed return of income from his jewellery business for the asst. yr. 1997-98. After issuing notice under s. 147/148 on the same ground mentioned at page No. 267 and later on, the Asstt. CIT dropped the reassessment proceedings vide her order dt. 3rd March, 2005 as per p. 271 of the paper book filed by the assessee. He stated that the AO reopened the assessment of the assessee for the asst. yrs. 1996-97 and 1997-98 on the same reasons and later on dropped for the assessment year in dispute i.e., 1997-98. The assessee filed return of income on 31st Oct., 1998 declaring income of ₹ 73,180 from business of sale and purchase of gold jewellery. The said return was filed along with the audit report under s. 44AB of the IT Act, 1961 (hereinafter called Act ). This return was initially processed under s. 143(1) of the Act at the returned income but subsequently, the proceedings were initiated under s. 147 vide notice dt. 25th Sept., 2003 issued to the assessee under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Registration No. 16054919, Ward No. VIII, District Amritsar-I in the name of M/s Vishnu Jewellers, Anand Market, 26, Patel Chowk, Amritsar, showing the nature of business of the assessee as manufacturing and resale of jewellery. He stated that this certificate is valid from 29th Dec., 1997 until cancelled. The learned counsel for the assessee stated that the assessee has been registered under the Central Sales-tax (Registration Turnover) Rules, 1957 with the Notified Authority, Amritsar-I to prove this. He drew our attention towards page No. 16 and the certificate dt. 16th Jan., 1998 issued by the Notified Authority, Amritsar-I which is valid upto 29th Dec., 1997 or until cancelled. He stated that the assessee has filed an application on 2nd Nov., 1998 to the manager, SBI, Amritsar for issue of certificate as Bullion Registered Dealer, which has been certified by Shri S.B. Khanna, advocate, certifying that M/s Vishnu Jewellers, Anand Market, Patel Chowk, Amritsar is valid and the firm is doing the genuine business and requesting to the bank manager for issuance of the registration number against the sale of bullion as per pp. 18 to 26 of the paper book No. 1 filed by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business. The statement of the assessee dt. 13th Dec., 2002 has been reproduced by the AO in his impugned order for the asst. yr. 1998-99 on pp. 3 to 5. Second statement recorded on 6th Jan., 2003 placed at pp. 218 to 221 of the Departmental paper book, the assessee reiterated and reconfirmed that he was engaged in the jewellery business. The learned counsel drew our attention towards question Nos. 1 and 2. He further stated that in the statement dt. 16th Sept., 2003 recorded by the AO, the assessee also reiterated being engaged in the jewellery business as per reference pp. 177 to 178 of the paper book question Nos. 3 and 6. Mr. Jain further stated that in the statement dt. 11th Nov., 2003 which continued on 17th to 20th Nov., 2003, placed at pp. 178 to 189 of the paper book, the assessee again repeatedly confirmed in response to various questions put to him by the AO that he was engaged in the jewellery business as per question Nos. 3, 12 and 13, etc. As regards to the various statements of the assessee were recorded on 15th Jan., 2004, 13th Aug., 2004, 16th Sept., 2004, 30th Sept., 2004 and 31st Dec., 2004, he stated that in all these statements, the assessee repeatedly confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressure on the assessee, still the relatives of the assessee confirmed the fact that the assessee was engaged in jewellery business. Immediately on the very next date of discharge from the hospital, the assessee was summoned on 16th Jan., 2003 by the Dy. Director of IT (Inv.) and the statements of the assessee were recorded on two consecutive days i.e., 16th Jan., 2003 and 17th Jan., 2003 which clearly established that substantial pressure was exerted on the assessee and on the date of the recording of the statements on 16th Jan., 2003 and 17th Jan., 2003, the assessee was not at all in a proper frame of mind and the same were recorded under threat and coercion. He further stated that the statement recorded by the Dy. Director of IT (Inv.) is written by him by hand and statement dt. 17th Jan., 2003 is a typed statement and at p. 243 of the Department's paper book. On these statements, the assessee was forced to sign. The learned counsel for the assessee also drew our attention to page Nos. 338 339 of the paper book and stated that the assessee filed affidavit dt. 14th Feb., 2003 before the AO on 6th Aug., 2003 wherein the assessee reiterated that he was forced to give statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T); (9) Rajesh Jain vs. Dy. CIT (2006) 100 TTJ (Del) 929; (10) First Global Stockbroking (P) Ltd. vs. Asstt. CIT (2008) 115 TTJ (Mumbai) 173 : (2008) 4 DTR (Mumbai)(Trib) 172; (11) Pransukhlal Sons Jewellers vs. Asstt. CIT (2008) 116 TTJ (Mumbai) 197 : (2008) 7 DTR (Mumbai)(Trib) 72; (12) Mrs. Catherine Thomas vs. Dy. CIT (2008) 116 TTJ (Coch) 797 : (2008) 7 DTR (Coch)(Trib) 520 : (2008) 111 ITD 132 (Coch); (13) Asstt. CIT vs. Mrs. Sushiladevi S. Agarwal (1994) 49 TTJ (Ahd) 663 : (1994) 50 ITD 524 (Ahd); (14) Dineshchandra J. Dina vs. ITO (2000) 112 Taxman 107 (Ahd)(Mag), (15) Jagmohan Singh Arora vs. Dy. CIT (2006) 101 TTJ (Mumbai) 682. 13. Apart from the aforesaid arguments advanced by the learned counsel for the assessee, he further submitted that even otherwise the statements recorded by the Dy. Director of IT (Inv.) on 16th Jan., 2003 and 17th Jan., 2003 were not valid statements since the Dy. Director of IT (Inv.) had no authority to record the statements and consequently the statements so recorded must be excluded from consideration. He drew our attention towards s. 131(1) of the IT Act and stated that powers can be exercised only if any proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. Director of IT (Inv.); Shri Ashok Kumar, dt. 6th Jan., 2003, recorded before the Dy. Director of IT (Inv.); Shri Seth, dt. 6th Jan., 2003. recorded before the Dy. Director of IT (Inv.); Shri Vajinder Singh, dt. 17th Jan., 2003, recorded before the Dy. Director of IT (Inv.); Shri Rakesh Kumar, dt. 22th Jan., 2003, recorded before the Dy. Director of IT (Inv.) and Shri Ashwani Kumar, dt. 24th Jan., 2003/3rd Feb., 2003, recorded before the Dy. Director of IT (Inv.) and Shri Chamel Singh, dt. 30th Dec., 2003, recorded before the AO; Shri Raj Kumar, dt. 30th Dec., 2003, recorded before the AO; Shri Hakumat Rai, dt. 6th Feb., 2004, recorded before the AO; S/Shri Yudhvir and Sushil Kumar Sareen, dt. 5th Jan., 2004/16th Jan., 2004 and dt. 29th Dec., 2003/16th Jan., 2004, recorded before the AO; Shri Yudhvir, dt. 4th March, 2005, recorded before the AO; statement of part-time accountant dt. 6th Feb., 2004, recorded before the AO and Shri Jasbir Singh, dt. 3rd March, 2004, recorded before the AO. 15. He further stated that the AO recorded the statements of various persons, some of which were neither made available to the assessee nor the assessee was allowed their cross-examination and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment has not been able to establish that the assessee was not engaged in providing accommodation entries. The learned counsel for the assessee also drew our attention towards the observations of the Tribunal regarding contradictory statements given before the IT authorities and the Tribunal held that the statements cannot be relied upon in the absence of strong evidence. He drew our attention towards paras 71 and 72 and 77 to 82. He also submitted that the allegations levelled by the AO are totally false and baseless and contrary to the decision of the Special Bench and he relied on the following decisions: (1) CIT vs. Inder V. Nankanim [IT Appeal No. 128 of 2009 (Bombay High Court); (2) Rajiv S. Arora vs. ITO (Mumbai Tribunal); (3) Harish Kumar vs. Dy. CIT (2003) 80 TTJ (Hyd) 174 : (2003) 85 ITD 366 (Hyd). Lastly, Mr. Rohit Jain, chartered accountant, the Authorised Representative of the assessee finally concluded his arguments that keeping in view the arguments advanced by him and the ratio of the decision of the Special Bench, the appeals of the assessee may be allowed by cancelling the impugned orders. 17. The learned CIT-Departmental Representative, Shri D. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartmental Representative further submitted that the adjoining premises in the sales-tax registration certificate were mentioned as Nos. 25 and 27, which even contradicts the claim of the assessee that he was occupying shop No. 3. Inviting our attention to the surety bond given for seeking sales-tax registration, it was further contended that the surety bond was also witnessed by one Shri Sanjeev, whose address is the same as that of M/s Umat Associates. 20. The Departmental Representative also relied upon the statements of Shri Jatinder Anand, Shri Vikram Seth and Shri Ashok Kumar recorded on 6th Jan., 2003 by Dy. Director of IT (Inv.) to contend that the appellant had no shop and the claim of the appellant to the contrary is not correct. As regards the subsequent statements of the three persons recorded by the AO, it was submitted that the subsequent statements were coached statements given at the behest of Shri Umat. 21. On the basis of the aforesaid, it was contended that the entire accommodation entry activities were actually carried out on the behest of Shri V.K. Umat of Umat Associates and that the returns were filed merely to create paper records to give an impre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed in the assessee's paper book contained description of jewellery sold which is so sweeping that their genuineness is in doubt. Inviting our attention to one bill showing diamond solitaire of 17 carats valued at ₹ 9,05,629, it was contended that the said diamond would be worth several crores and nobody would sell it below that price. He further relied upon the assessment order passed in the case of M/s Vinod Jewellers and submitted that the AO, in that case assessed commission income on the accommodation entry taken from M/s Vishnu Jewellers. Further inviting our attention to the assessment order passed in the case of M/s Hukum Chand Sushil Chand, it was submitted that the said assessee had filed an application under s. 144A before Addl. CIT wherein they claimed that they should only be taxed on the commission earned while routing accommodation entry through the appellant. It was farther submitted that the said stand of the assessee therein was subsequently accepted by the CIT(A), though the AO, in that case did not agree with such contention of the assessee. The CIT(A), in that case, it was submitted gave finding that the appellant, M/s Vishnu Jewellers, was providi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to the higher authorities, which has not been done. As regards retraction of the statement by the assessee, it was submitted that the retraction must be genuine and bona fide. The decision of the Hon'ble Supreme Court in the case of Vinod Solanki, relied upon by the Authorised Representative was held to be not applicable. Reliance was, on the other hand, placed on the decision of Surjit Singh Chhabra 135 Taxation 711 wherein it was held that the confession made before the customs officials even though retracted is admission and binds the petitioner. 27. The Departmental Representative further relied upon the statements dt. 6th Jan., 2003, 10th Jan., 2003, 14th Jan., 2003, 29th Jan., 2003 and 30th Jan., 2003 of Shri Satish Kapoor of M/s Hukum Chand Sushi! Chand. It was submitted that in his statement, dt. 6th Jan., 2003, Shri Satish Kapoor confirmed having met the appellant through Shri Kapil Aggarwal, chartered accountant, which was contradictory to his own statement recorded by the AO of Mr. Vinod Jewellers before whom Shri Kapoor stated of knowing the appellant at an early age being neighbour and he further denied that the appellant worked at his shop. In his subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was further contended that Shri Hakumat Rai and Shri Vijay Gupta, who claims to have filled cheques and cash vouchers, etc., friend/part-time accountant respectively of the appellant cannot be accepted. According to the Departmental Representative, the claim that the appellant used to give details of the jewellery purchased/sold by writing the same on a piece of paper cannot be accepted since if the appellant was noting the said details on the paper himself. the question of requiring services of Shri Vijay Gupta, the part-time accountant, does not arise. 30. The Departmental Representative also relied upon assessment being completed in case of one Shri Raj Kumar, proprietor of M/s Nayyar Jewellers, which was filed as additional evidence before us and admitted vide our separate order dt. 27th May, 2009, who also claims to have taken the same shop on rent as is being claimed by the appellant. It was submitted that the said person was also giving accommodation entry and the modus operandi of the said person was similar to the one employed by the appellant. 31. As regards statement of various other persons being relied upon by the appellant, the Departmental Representative subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he asst. yr. 1999-2000. It was further submitted that the details of bullion trade were not given to the AO and were not also provided to the CIT(A). It was submitted by the Departmental Representative that the contention of the appellant of having shown the bills of bullion trade and also having given the details thereof to the CIT(A) is factually incorrect and therefore, objected to the consideration of the same at this stage as against the same being heavily relied upon by the Authorised Representative of the appellant. 32.1 Lastly, Shri D.P. Sharma, CIT, the learned Departmental Representative, strongly opposed the contentions raised by the learned counsel for the assessee on the identical facts and the circumstances of the present case with the similarities of the case of Manoj Aggarwal vs. Dy. CIT. No doubt, the learned Departmental Representative filed written submissions of 50 pages in which he has dealt with each and every arguments advanced by the learned counsel for the assessee on the basis of documentary evidence filed by him. We have discussed the same in the aforesaid paras. The learned Departmental Representative strongly distinguished the case of assessee with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were mentioned in the application form for the sake of convenience, which is quite usual. 34. As regards the so-called inconsistency in mentioning the premises number in the sales-tax registration form, it was submitted by the Authorised Representative that since the shop of the appellant was located in premises No. 26, Anand Market, Amritsar, adjoining buildings were rightly mentioned as 25 and 27, which has been wrongly inferred to be the shop number by the Departmental Representative. As regards correct sale not having been reported before the sales-tax authorities. It was submitted that since the appellant was unable to recover sales-tax on cash sales being made to various jewellers, the appellant was unable to pay the same to the sales-tax authorities. It was submitted that it is a hard reality in the jewellery business that most of the jewellers are not ready to pay the purchase consideration by way of cheque and are not ready to pay sales-tax on the jewellery purchased. Since the margin of profit being earned by the appellant was too low, it was not possible for the appellant to bear the burden of sales-tax and accordingly, the appellant was forced by the circumstances t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the AO totally misconstrued the transactions and levelled false and baseless allegation of appellant merely giving entry to the said parties. It was further contended that had the aforesaid been a case of providing accommodation entry, as is alleged by the Revenue, the amount received would not have tallied with the amount paid as some element of commission would have been there. 36. As regards the statements of the appellant dt. 16th Jan., 2003 and 17 Jan., 2003 being recorded in the presence of Shri Rajan Kumar, chartered accountant, the counsel of the appellant, as claimed by the Departmental Representative, it was submitted that Shri Rajan Kumar was never the counsel of the appellant and the assertion of the Department to the contrary is not factually correct. On various statements of Shri Satish Kapoor being referred to by the Departmental Representative, it was submitted that all the statements clearly support the claim of the appellant that the appellant was engaged in jewellery business. As regards his statements dt. 29th Jan., 2003 and 30th Jan., 2003, it was submitted that the said statements do not relate to the appellant but relates to M/s Bemco Jewelle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was submitted that such allegation is totally baseless and incorrect. Our attention was invited to the registration granted by the SBI and also various bills of purchase of bullion placed in the paper book which clearly shows that all the bills have been issued in the name of the appellant. As regards the allegation of the Revenue that balance of SBI account does not find any mention in the balance sheet as on 31st March, 1999, it was submitted that the said bank account was not operated by the appellant after the financial year 1998-99 and since there was a marginal balance of just ₹ 2,979 only and there were no further operations in the said account, the appellant adjusted the balance from the capital account of the appellant. Based on these submissions it was contented that the entire transactions of bullion trade is duly recorded in the books of accounts and the return for the asst. yr. 1999-2000. 39. As regards duplicate bill books being found from the premises of Umat Associates, it was submitted that copy of the bill book as found and filed by the Department was duplicate bill book which was got reprinted since the original bill books were lost earlier. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f law and, therefore, must be excluded from consideration. Lastly, it was also contended that most of the statements either support the case of the assessee and/or if such statements are read along with the statements recorded by the AO during the assessment proceedings, all the persons have confirmed that the appellant was engaged in jewellery business. Emphatic reliance was placed on the decision of the Special Bench Tribunal in the case of Bishan Chand Mukesh Kumar. 42. We have carefully gone through the assessment order the voluminous records produced before us and have considered the elaborate rival submissions by both the parties. Our findings on the various issues arising in the present appeal are as under. 43. The first issue raised by the appellant in the present appeal is regarding the validity of the proceedings initiated by the AO under s. 147 of the IT Act. From the records, it is noticed that reassessment proceedings under s. 147 were initiated for the asst, yr. 1998-99 vide notice dt. 25th Sept., 2003 issued under s. 148. Reasons recorded by the AO for reopening the assessment, placed at p. 284 of the assessee's paper book, is reproduced hereunder: Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnover of the assessee, then this does not collate with the income of ₹ 73,180, as has been declared by the assessee for asst. yr. 1998-99. By adopting a modest rate of commission/profit rate of 1 per cent, the net profit of the assessee's business should be to the tune of ₹ 6,75,151 for the period relevant to asst. yr. 1998-99. I have therefore, reasons to believe that income chargeable to tax to the extent of ₹ 6,75,151 has escaped assessment for asst. yr. 1998-99 and hence action under s. 147 is warranted. Necessary approval for issue of notice under s. 148 of the IT Act, 1961 for asst. yr. 1997-98 has been obtained from the Addl. CIT, Range-IV, Amritsar vide his office letter No. 2967, dt. 24th Sept., 2003, under s. 151(2) of the IT Act, 1961. 44. On the basis of the aforesaid, the AO initiated the reassessment proceedings for the asst. yr. 1998-99. Before us, the learned counsel for the appellant submitted that the aforesaid reasons recorded by the AO are nothing more than merely reasons to suspect. It was submitted the allegation in the reasons recorded that the appellant had not declared PNB account No. 7674 is factually incorrect in as much a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bank account observed that the return filed by the appellant was too low as compared to substantial transactions appearing in the bank account of the appellant. In these circumstances, the AO rightly came to a prima facie belief of escapement of income in the hands of the appellant. 47. The Hon'ble Supreme Court, in the case of Rajesh Jhaveri Stock Brokers (P) Ltd. relied upon by the Revenue has clearly held that at the stage of reopening of the assessment under s. 147 of the IT Act, the AO is only required to come to a prima facie opinion of escapement of income. The relevant observations of the Court are reproduced hereunder: Sec. 147 authorizes and permits the AO to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word 'reason' in the phrase 'reason to believe' would mean cause or justification. If the AO has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the AO should have finally ascertained the fact by legal ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entical reasons as recorded for the asst. yr. 1998-99. Since no valid return was filed by the assessee for the said three assessment years, the AO was well within his powers to initiate proceedings under s. 147 of the IT Act. The case of the appellant squarely falls in Expln. 2 to s. 147 of the Act which provides that where no return of income is furnished even though the assessee has taxable income, such case would be a case of deemed escapement of income. That apart, for the reasons given by us for the asst. yr. 1998-99 while upholding the initiation for the year would equally apply for these assessment years as well. 50. Based upon the aforesaid, we are of the considered view that proceedings initiated by the AO under s. 147 of the IT Act for the various asst. yrs. 1998-99 to 2002-03 is valid and there was no error in the order of the CIT(A) upholding the same. Accordingly, identical grounds of appeal Nos. 1, 2 and 4 for the asst. yrs. 1998-99 to 2002-03 raising, identical issues of validity of initiation of reassessment proceedings under s. 147 of the IT Act stands dismissed. 51. On merits, vide grounds of appeal Nos. 3 and 5 to 11 for all the abovementioned years, the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the asst. yr. 1996-97 placed at pp. 4 to 7 of the paper book, the appellant had declared turnover of ₹ 82,541 and also job work receipts of ₹ 79,516. Similarly for the asst. yr. 1997-98, the appellant had shown turnover of ₹ 1,97,892 and job work charges of ₹ 84,750. Both the returns were accepted initially vide intimation passed under s. 143(1) of the IT Act. Subsequently, for the asst. yr. 1996697 as well as [or the asst. yr. 1997-98, the AO initiated proceedings under s. 147/148 of the IT Act vide separate notices dt. 25th Sept., 2003. In the reasons recorded for the asst. yr. 1996-97, which have been reproduced by us in the earlier part of our order, the AO observed that the assessee is running jewellery business. However, he proceeded to record reasons for initiating proceedings under s. 147 of the IT Act. On the objections being filed by the assessee, the AO dropped the proceedings for the asst. yr. 1996-97 vide order dt. 31st March, 2004 passed under s. 143(3) r/w s. 147/148 of the IT Act. Similarly, on the objections being filed by the appellant against reopening of assessment in the asst. yr. 1997-98, the AO dropped the proceedings vide order dt. 3r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving been received unserved and/or claimed to have not been served on the assessee by the Department. The assessee has placed on record copies of the some of the notices and intimations at pp. 340 to 350 of the paper book, which clearly shows that various notices, intimations. etc., were issued by the IT Department have actually been received at the said shop of the appellant. Though the Departmental Representative in his submissions argued that such notices might have been received by Rishi Grover personally, but the correspondences placed on record do indicate that such correspondences were actually served on the assessee. In these factual circumstances, we fail to appreciate as to how the Department could allege that the appellant never took the shop on rent and the rent deed was merely entered into by the appellant and/or on his behalf by someone else merely to give the appellant's business a colour of genuine business activity. These facts, on the contrary, clearly prove that the appellant had actually taken shop on rent and had even filed his returns of income for various years from the said premises. 56. The next important aspect noticed is the registration with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellery. That being so, we fail to appreciate as to how when the appellant is accepted to be engaged in jewellery business by the Sales-tax Department, an altogether different view could be taken by the IT authorities. There is substantial merit in the contentions of the Authorised Representative of the appellant that the firm of the appellant having been registered with the sales-tax authorities clearly proves that the appellant was actually engaged in jewellery business and was not merely a name lender and/or engaged in providing accommodation entries. We may also mention here that we are aware of the fact that the appellant, in the returns filed before sales-tax authorities had declared marginal turnover in the financial year 1997-98 and nil turnover in all the subsequent financial years, which has been relied upon by the learned Departmental Representative. At the same time, there appears to be merit in the contention of the learned counsel for the assessee that the appellant was primarily into the business of purchase of old jewellery, which, in turn, was sold to various jewellers in the jewellers market. Since, the jewellers were not ready to pay the consideration by way of ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f M/s Vinod Jewellers and Shri Satish Kapoor of M/s Hukum Chand Sushil Chand recorded by the AO of M/s Vinod Jewellers, it was submitted by the Departmental Representative that the said assessee had accepted having routed accommodation entries through the appellant. Our attention was also invited to the application filed in the case of M/s Hukum Chand Sushil Chand and M/s Kapoor Jewellery House under s. 144A of the IT Act before the Addl. CIT wherein the said assessee's had allegedly accepted having routed the accommodation entry through the appellant. On a careful perusal of the said documents, we, however, noticed that none of the three jewellers have, in their respective assessments, accepted to have routed and/or taken any accommodation entry from the appellant. On the contrary, the statements of Shri Satish Kapoor and Shri Vinod Kumar reproduced in the assessment order of M/s Vinod Jewellers shows that the appellant was actually engaged in the jewellery business. 59. Before referring to the statements of Shri Vinod Kumar and Shri Satish Kapoor as reproduced in the assessment order of M/s Vinod Jewellers for the asst. yr. 1998-99 and also the application filed by the oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61. The aforesaid statements of Shri Satish Kapoor recorded from time to time clearly prove the fact that Shri Satish Kapoor has repeatedly confirmed having business transactions with the appellant, M/s Vishnu Jewellers. It is also important to note at this stage that the fact that Shri Satish Kapoor, partner of M/s Hukum Chand Sushil Chand, Amritsar, was actually engaged in jewellery business is an undisputed fact since the fact of the said firm being engaged in jewellery business is not being disputed in the assessment made in the case of the said firm, which has been placed in the Department's paper book. In the said case, the AO has merely doubted the transactions entered into by the said concern with M/s Vishnu Jewellers, the proprietary concern of the appellant. Therefore, the important fact that emerges is that M/s Hukum Chand Sushil Chand is undisputedly engaged in jewellery business and further that Shri Satish Kapoor, partner of the said concern has repeatedly confirmed in his various statements that he had sold diamond jewellery to the appellant from time to time. 62. Now coming the so-called admission of the said concern in their application filed under s. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 2,970 only. 4. Similarly, during asst. yr. 2000-01, jewellery of two persons of Arora family of ₹ 5,53,676 was given to M/s Vishnu Jewellers for ₹ 5,57,750 earning profit of ₹ 4,074 only. The cheques received from M/s Vishnu Jewellers were cleared in our bank account first and only against those clearings the cheques were paid to Aroras which got cleared against the cheques of M/s Vishnu Jewellers. 63. Similarly on perusal of application dt. 21st March, 2006 filed under s. 144A of the Act by M/s Kapoor Jewellery House, another family concern of M/s Satish Kapoor, placed at pp. 391-392 of the Department's paper book we note that the said firm also maintains the position of having sold diamond jewellery to M/s Vishnu Jewellers, the proprietary concern of the appellant. We, thus, fail to appreciate the contention of the learned Departmental Representative that the said concerns have in their application under s. 144A to the Addl. CIT accepted having routed their accommodation entry through the appellant, as we find no mention of the same in the copies of the application placed before us. 64. Now coming to the transactions with the third firm, i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om M/s Vinod Jewellers through M/s Hukum Chand Sushil Chand. We fail to appreciate the contention of the Departmental Representative that the statement of Shri Vinod Kumar of M/s Vinod Jewellers proves that the appellant was providing accommodation entry. On the contrary, we notice that M/s Vinod Jewellers also maintained that the said concern sold diamond jewellery through M/s Hukum Chand Sushil Chand to the proprietary concern of the appellant. 65. The aforesaid facts relating to the purchase of diamond jewellery from three registered jewellery dealers, viz., M/s Vinod Jewellers, M/s Hukum Chand Sushil Chand and M/s Kapoor Jewellery House, who were undisputedly engaged in the jewellery business and confirmed having transactions of sale of jewellery to M/s Vishnu Jewellers, the proprietary concern of the appellant. clearly supports the fact that the appellant was actually engaged in the jewellery business. The reliance placed by the Departmental Representative on the findings given in the assessment order of the three cases cannot be of any help since the said findings are subject-matter of further appeal and have not been accepted by the said assessees. On the contrary, as not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njay Grover, my brother, is a Government servant with Industries Department in Amritsar as clerk. He is married and having two small children. Q. 2 You have said that you are not working anywhere. Please tell since when you are unemployed. Or have you not worked anywhere. Ans. Presently I am unemployed since the last two years. Before that I was doing a jewellary business. The business was carried out in the name and style of M/s Vishnu Jewellers. This business was started in April, 1996 and was discontinued in the beginning of year 2001. After that I am not doing anything. Q. 3 Please tell what was the set up of Vishnu Jewellers, i.e., where was the office, what was the staff and who were your customers and suppliers. Ans. The shop of M/s Vishnu Jewellers was at Patel Chowk, Anand Building, Amritsar. The staff included two persons whose names are Chamel Singh and Mr. Bittu. ......... Q. 11 Please tell about the nature of your business. And what knowledge do you have of jewellery business. Ans. My nature of business was purchase of old jewellery and ornaments which I used to purchase from the sellers after getting it valued from brokers in the jewellery market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne room only. Q. 14 How many employees were there? Ans. There were two employees namely, Bittu and Chamel Singh. They used to receive and give jewellery items to and from Karigars and brokers. Statement dt. 15 Jan., 2004- Q. 1 Please identify yourself. Ans. I am Rishi Grover. S/o (Late) Shri Tilak Raj Grover, R/o 199, New Pawan Nagar, Amritsar. Q. 2 Please state the exact address of your shop, M/s Vishnu Jewellers. Ans. The address of shop is No. 3, Anand Market, Opp. Allahabad Bank, Zamindar Haveli, Patel Chowk, Amritsar. Q. 3 Please state when this shop was taken on rent and from whom? Ans. This shop taken on rent on 1st Nov., 1997 from Shri Jatinder Anand, S/o D.L. Anand, R/o 116, Shakti Nagar, Amritsar. I used to pay ₹ 1,000 per month to Shri Jatinder Anand. 69. From the aforesaid statements of the assessee recorded from time to time, we notice that apart from his two statements dt. 16th Jan., 2003 and 17th Jan., 2003 recorded by the Dy. Director of IT (Inv.), in all the other statements, the assessee has repeatedly confirmed having been engaged in the jewellery business. That apart, we further note that statements of mother of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercion. Some of the circumstances, which have been brought to our notice by the learned Authorised Representative for the assessee are as under: - On 6th Jan., 2003, after recording of the second statement of the appellant by the Dy. Director of IT (Inv.), Amritsar, the appellant was paraded in the Patel Chowk Bazar, Amritsar, in the presence of various shopkeepers due to which the appellant felt very humiliated and insulted; - Due to intense pressure of the Investigation Wing, the appellant started feeling acute chest pain on 6th Jan., 2003 and had to be hospitalized on 7th Jan., 2003; - The appellant continued to remain in the hospital from 7th Jan., 2003 to 15th Jan., 2003 and the appellant was discharged from the hospital on 15th Jan., 2003. - During the period when the appellant was in hospital, the investigation authorities recorded the statements of the brother and mother of the appellant on 10th Jan., 2003 in order to exert pressure on the appellant. - It may be pertinent to mention here that though pressure was exerted on the relatives of the appellant on the aforesaid date, still the relatives of the appellant confirmed the fact that the appellant was engag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars 1997-98 to 2001-02 relevant to asst. yr. 1998-99 to 2002-03 have been impounded by Dy. Director of IT (Inv.), Amritsar. 5. On 6th Jan., 2003 my statement was recorded by Dy. Director of IT (Inv.), Amritsar, and after that 1 was paraded in the Patel Chowk Bazar, Amritsar, in the presence of shopkeepers of Dy. Director of IT (Inv.), Amritsar, and his Inspectors and I felt humiliated and insulted. 6. Due to the pressure of Investigation Wing, Amritsar, I started feeling acute chest pain and was admitted in the hospital on 7th Jan., 2003. At Medical Wing-I, Guru Nanak Dev Hospital in the ward of Dr. Amrik Singh Multani, I was not left in peace even in the hospital and the officers of Investigation Wing visited the hospital many times and even recorded the statements of doctors and nurses. I was discharged from the said hospital on 15th Jan., 2003. 7. I was again called on 16th Jan., 2003 and was forced to sign another statement to the effect that my said business of M/s Vishnu Jewellers of sale and purchase and labour of jewellery was bogus and it never existed. This statement was recorded under the threat of further harassment. My brother Shri Sanjay Grover who is in Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracted statement and that once a statement is retracted, it losses its evidentiary value. 76. We may, in this regard, just refer to the recent decision of the Supreme Court in the ease of Vinod Solanki relied upon by the learned Authorised Representative, a copy whereof is placed at pp. 418A-418H of the assessee's paper book. In that case, the Hon'ble Supreme Court observed as under: 22. It is a trite law that evidences brought on record by way of confession which stood retracted must be substantially corroborated by other independent and cogent evidences, which would lend adequate assurance to the Court that it may seek to rely thereupon. We are not oblivious of some decisions of this Court wherein reliance has been placed for supporting such contention but we must also notice that in some of the cases retracted confession has been used as a piece of corroborative evidence and not as the evidence on the basis whereof alone a judgment of conviction and sentence has been recorded. ......... 26. Yet again in Romesh Chandra Mehta vs. State of West Bengal (1969) 2 SCR 461 although this Court held that any statement made under ss. 107 and 108 of the Customs Act by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench of the Madras High Court in Roshan Beevi vs. Jt. Secretary to the Government of Tamil Nadu, Public Deptt. etc. (1983) Mad LW (Crl.) 289 : (1984) 15 ELT 289 : AIR 1984 NOC 103, to which one of us (S. Ratnavel Pandian, J.) was a party. 78. The ratio that emerges from the aforesaid decisions is that once a statement is retracted, the contents stated in the retracted statement must be substantially corroborated by other independent and cogent evidence. Various other authorities relied upon by the learned Authorised Representative for the assessee have also consistently held that a retracted statement cannot be relied upon for making any addition and must be corroborated by independent evidence for the purposes of making assessments. 79. As regards the decision of the Hon'ble Supreme Court in the case of Surjit Singh Chabbra relied upon by the learned Departmental Representative, we are of the considered view that the said decision does not lay down the proposition that even a retracted submission can be independently used for making any addition in the hands of the assessee. In the said decision, the Supreme Court merely held that statement recorded by the customs off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tary statements of the assessee. Further, since such statements have subsequently been retracted and the assessee in his various statements before the AO has confirmed being engaged in jewellary business, which are at variance with his so-called confessional statements, the said confessional statements could not be the basis for holding that the appellant was not actually engaged in the jewellery business. 81. Apart from the aforesaid, substantial arguments were made by the learned Authorised Representative for the assessee challenging the authority of the Dy. Director of IT (Inv.) to record various statements, including the aforesaid two statements of the assessee recorded on 16th Jan., 2003 and 17th Jan., 2003. It was contended that under sub-s. (1) of s. 131 of the IT Act, statement can be recorded by the IT authorities mentioned therein, that too only if some proceeding is pending against the assessee on the date of the recording of the statement. It was further submitted that Dy. Director of IT (Inv.) can record the statement of any person only under sub-s. (1A) of s. 131 for the purposes of conducting any pre-search enquiries before he takes action under s. 132 of the IT A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e concealed, by any person or class of persons, within his jurisdiction, then, for the purposes of making any enquiry or investigation relating thereto, it shall be competent for him to exercise the powers conferred under sub-s. (1) on the IT authorities referred to in that sub-section, notwithstanding that no proceedings with respect to such person or class of persons are pending before him or any other IT authority. 83. On perusal of the aforesaid, it is clear that prior to taking action under s. 132 of the IT Act (i.e., search on any person), the Director General or Director or Jt. Director or Asstt. Director or Dy. Director or the authorised officer referred to in sub-s. (1) of s. 132 of the IT Act are empowered to exercise the powers conferred under sub-s. (1) of s. 131 of the IT Act, which includes the power to record statement of any person. However, no such power is conferred on the authorities mentioned in sub-s. (1A) of s. 131 to exercise powers under s. (1) thereto unless such powers are exercised for carrying out any investigation or enquiry, unless the said enquiry or investigation is in connection with any action taken or contemplated to be taken under s. 132 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction, as conferred under sub-s. (1) of s. 131 on the authorities mentioned under sub-s. (1A) for proceeding against such person or class of persons for making enquiry or investigation relating to concealed income provided he has reason to suspect. Thus, the power under s. 131(1A) cannot be said to be an independent power in itself but is the power for the purpose of making enquiry and investigation relating to any income which has been concealed or is likely to be concealed by any person or class of persons, equipping him with the powers regarding discovery, production of evidence, etc., as provided under sub-s. (1) of s. 131 of the Act. The expression 'before he, i.e., authorised officer, takes action under cls. (i) to (v) of s. 132(1) of the Act' is material and relevant, that is the power regarding discovery, production, etc., as provided under sub-s. (1) of s. 131 can be exercised by the authorised officer before exercise of the power of search and seizure in cls. (i) to (v) of s. 132(1) of the Act. In fact, it is in the process of search and seizure if concealment of the income by some or other person or group of persons is found. The power under sub-s. (1A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are of the considered view, that statements recorded by Dy. Director of IT (Inv.) were invalid statements and could not have been relied upon by the AO for framing the assessment. Even otherwise, we have noticed hereinabove that statements of the assessee recorded on 16th Jan., 2003 and 17th Jan., 2003 were not the voluntary statements and were subsequently retracted at the earliest possible opportunity by the assessee. For all these reasons, we are of the view that it was not open to the AO to rely upon the said confessional statements of the assessee to come to the conclusion that the assessee was not engaged in the genuine jewellery business. 88. Now coming to the other evidences relied upon by the AO, we may firstly discuss hereinbelow the various statements relied upon by the AO in the assessment order: (a) Statement of one Shri Harjinder Singh recorded on 6th Jan., 2003 by the Dy. Director of IT (Inv.), the new owner of the premises taken on rent has been relied upon by the AO to observe that. he did not know the assessee, Shri Rishi Grover and/or his proprietary concern, M/s Vishnu Jewellers. The learned Authorised Representative for the assessee contended that S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Departmental Representative that such statement was a coached statement. That apart, as noticed above, Shri Jatinder Anand even in his earlier statement recorded by the Dy. Director of IT (Inv.), which though was an invalid statement in the eyes of law, and also in the subsequent statement recorded by the AO, stated that he had given shop on rent to the assessee. The said statements support the contention of the assessee about taking the premises on rent for carrying on jewellary business. (c) Statements of Shri Vikas Seth recorded on 6th Jan., 2003, Shri Ashwani Kumar recorded on 24th Jan., 2003 and 3rd Feb., 2003, Shri Vijay Verma recorded on 27th Jan., 2003 and Mr. Vajinder Singh recorded on 17th Jan., 2003 by the Dy. Director of IT (Inv.) have also been referred to by the AO. Firstly, we note that statements of all these persons (except Mr. Vajinder Singh) were subsequently recorded by the AO on various dates wherein all the said persons supported the case of the assessee. The AO has primarily relied upon the statements of the said persons recorded by the Dy. Director of IT (Inv.) to disagree with the claim of the assessee of having carried on jewellery bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the person behind the business of giving accommodation entries. The learned Authorised Representative for the assessee, on the other hand, relied upon the statement of Shri Hakumat Rai to contend that his statement supports the case of the assessee. On perusal of the statement of Shri Hakumat Rai placed at pp. 304-306 of the Department's paper book, we notice that Shri Hukumat Rai confirmed that the assessee was engaged in jewellery business and that he used to assist. Shri Rishi Grover the assessee and his employees in filling the deposit vouchers. The entire statement of Shri Hakumat Rai supports the case of the appellant rather than supporting the case of the Revenue. In his statement Shri Hakumat Rai also clarified having joined M/s Umat Associates from April/May, 1999 to January, 2002. We fail to appreciate as to how his joining M/s Umat Associates can lead to the conclusion that Mr. V.K. Umat of Umat Associates was behind the business of giving accommodation entry run by the assessee. On the contrary, statement of Shri Hakumat Rai proves that the assessee was engaged in the jewellery business and he used to assist the assessee and his employees while he used to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Departmental Representative that if the appellant could write the details on the piece of paper, he could have very well written such details on cheques/bills, etc. as well. On a careful perusal of the statement of Shri Vijay Gupta, we note that the said person in his statement stated that he worked with Umat Associates from April, 2000 to February/March, 2002 and also stated names of various other concerns with whom he has worked as part-time accountant. He also stated that he used to fill cheques/deposit vouchers and bills for M/s Vishnu Jewellers. That being so, we fail to appreciate as to how the mere fact that Shri Vijay Gupta, who worked as part-time accountant with the assessee, and subsequently worked with M/s Umat Associates, support the case of the Revenue. The contention of the learned Departmental Representative that the services of Shri Vijay Gupta were not required when the assessee himself used to write the details on a piece of paper is, in our view, totally irrelevant. (h) Statements of Shri Yudhvir and Shri Sushil Kumar Sareen, the two brokers, were recorded by the AO in January, 2004 and have been referred to the assessment order for the asst. yr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the aforesaid discussion/analysis of the statements of various persons referred in the assessment order, it is noticed that none of the statements lead to the conclusion that the assessee was providing accommodation entries and was not engaged in the jewellery business. 90. Now coming to the other facts relied upon in the assessment order and the contentions of the Departmental Representative, apart from the aforesaid, statements of various persons, the AO, in his order has also referred to one transaction of four persons related to M/s Baba Naga Rice General Mills as an instance for holding that the appellant was actually providing accommodation entries. On perusal of the records and after considering the rival submission, we notice that statement of one Shri Vinod Chadha of M/s Baba Naga Rice General Mills is placed at pp. 314 to 317 of the Department's paper book. In response to question No. 18 at p. 317, it is noticed that Shri Vinod Chadha confirmed that after selling the jewellery initially to M/s Vishnu Jewellers, due to some family dispute the jewellery was taken back and the payment received by way of cheque was returned to the assessee, Shri Rishi Grover. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iates. 92. The learned Departmental Representative further relied upon the assessment order passed in the case of one Shri Raj Kumar of Nayyar Jewellers to contend that the modus operandi of the said assessee was similar to the modus operandi adopted by the appellant and both the assessees, i.e., the appellant as well as Shri Raj Kumar, were engaged in providing accommodation entries. We fail to appreciate such contention of the learned Departmental Representative. Merely because some other person is held by the Revenue authorities to be engaged in providing accommodation entries, which fact is also disputed by the said assessee in further appeals preferred by him, we fail to appreciate at to how the said fact could lead to conclusion that the appellant was also similarly engaged in providing accommodation entries. 93. Coming to the duplicate bill books being found from the premises of Shri V.K. Umat during the course of survey conducted by the Department on 23rd Feb., 2006, we notice that during such period the assessee's appeal was pending before CIT(A) and the CIT(A) had directed the appellant to file certain further details. In these circumstances, the mere fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the genuine business of purchase and sale of jewellery. 96. Though in the foregoing discussion we have come to a finding that the appellant was engaged in jewellery business and the contention of the AO that the appellant was merely providing accommodation entries to be unacceptable, we may also deal with the contention regarding bullion trade claimed to be have been carried out by the appellant during the financial year 1998-99 on which substantial arguments were addressed by both the sides. 97. The learned Authorised Representative for the appellant submitted that during the financial year 1998-99, the appellant purchased bullion from SBI, a nationalized bank, which was subsequently sold in the jewellers market. It was the contention of the Authorised Representative that the entire turnover in respect of bullion trade stands included in the turnover of ₹ 8.54 crores declared in the return of income filed for the asst. yr. 1999-2000. It was further contended that in the assessment order for the asst. yr. 1999-2000, the AO has not doubted the same and has accepted the fact that the appellant did carry on bullion trade. Copies of the registration application filed with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cally given the finding that in the absence of a formal application for consideration of additional evidences, the documents produced by the assessee could not be admitted and adjudicated upon, which also supports the case of the assessee that the said documents were very much available in the record of the learned CIT(A). 99. Despite the aforesaid order being passed by us and served on both the parties, the learned Departmental Representative still contested the findings that the letter along with documents relating to bullion trade were available in the file of the CIT(A). It was further contended by the Departmental Representative that in case the additional ground of the appellant is allowed, the matter should be restored to the file of the CIT(A) for decision on merit after considering the said additional documents. In further submissions filed before us, the learned Departmental Representative reiterated his main contention that the bullion trade was subsequently, incorporated by the appellant in the books of accounts and did not find included in the books originally impounded in January, 2003 by Dy. Director of IT. 100. We have carefully considered the aforesaid submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lion trade were not furnished even before CIT(A). 102. On merits of the aforesaid documents, on perusal of the bills placed at pp. 18 to 26 of the assessee's paper book we find that the bills have been issued by the SBI in the name of M/s Vishnu Jewellers. The address of the shop is also mentioned in the bills so issued. Further, in most of the bills there is an endorsement/Signature of Shri Rishi Grover, the appellant, for receiving delivery of the bullion from the bank. The sales-tax registration number and the details of payment made by cheques issued from SBI bank account also finds mention in the bills issued by the bank. The bills so placed before us thus, clearly go to support the claim of the assessee of having carried out bullion trade during the financial year 1998-99. 103. In view of the aforesaid, we are of the considered view that there are substantial evidences available on record to establish the fact that the appellant was actually engaged in jewellery business and was not providing accommodation entries as has been alleged by the Revenue authorities. 104. Keeping in view the afore said findings/discussion, we are of the considered opinion that their is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and conduct or human probabilities. This principle has been laid down by the Supreme Court in two leading cases CIT vs. Durga Prasad More 1973 CTR (SC) 500 : (1971) 82 ITR 540 (SC) and Sumati Dayal vs. C1T (1995) 125 CTR (SC) 124 : (1995) 214 ITR 801 (SC). Even applying this principle to the present case, we have felt some difficulty in rejecting the assessee's plea as opposed to the normal course of human conduct. The circumstances surrounding the case are also, in bur view, not strong enough to justify the rejection of the assessee's plea as fantastic or outrageous. We have considered the background of Bishan Chand Aggarwal and his son Manoj Aggarwal to be of relevance to the case. We have also considered to be of significance the admission of Manoj Aggarwal that only the transactions in the shares arc accommodation entries and that Bemco's jewellery transactions are genuine and we have also given our reasons as to why we consider it to be so. We have also taken note of the fact that most of the questions put to Manoj Aggarwal while recording several statements from him related to the share transactions put through Friends Portfolio (P) Ltd. and that hardly any releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... separate addition for commission from jewellery business will be made in the block assessment on the footing that the jewellery business is only by way of accommodation entries. The appeal of Bemco is thus allowed. No costs in all the appeals. 106. As regards the business of Bishan Chand Mukesh Kumar, the Tribunal observed as under: 166. After hearing the arguments of the learned representatives of all the sides in these cases, we felt that it would be appropriate to consider and decide the appeals filed in the case of M/s Bishan Chand Mukesh Kumar and Shri Manoj Aggarwal/Bemco Jewellers first as the issue relating to genuineness of the transactions of purchase and sale of jewellery in the said cases have 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 Chand Mukesh Kumar have already been disposed of by us in the foregoing portion of this order wherein the assessment made under s. 158BC r/w s. 158BD has been held to be bad in law on the grounds and for the reasons set out therein. Consequently, the said assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to purchase and sale of jewellery were held to be bogus by the Department alleging that such transactions were entered into in order to give accommodation entries on commission basis. This allegation was based on the similar type and nature of evidence collected by the Department and the modus operandi allegedly followed by Bemco/Manoj Aggarwal was the same as alleged to be followed by M/s Bishan Chand Mukesh Kumar while giving accommodation entries in the form of bogus sales entries of jewellery. The case sought to be made out by the Department about the alleged bogus purchase and sale of jewellery transactions on the basis of similar nature of evidence has been examined by us in detail and on 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 (P) 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 huma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also after carefully considering the various facts and evidences placed before us, which have been elaborately dealt by us hereinabove, we are of the considered view that the Revenue authorities have not been able to establish that the appellant was merely engaged in providing accommodation entries. On the contrary, the evidences placed before us supports the case of the assessee that the assessee, Shri Rishi Grover was actually carrying on jewellery business under its proprietary concern, M/s Vishnu Jewellers, during the relevant years. 107.1 Since we have admitted the additional ground relating to the non-adjudication of additional evidence filed by the assessee before the learned CIT(A), keeping in view the aforesaid evidence, we direct the AO to compute the income of the assessee for each assessment year on total sales turnover as per net profit rate of respective assessment years declared by the assessee in his return of income. 108. In the light of the aforesaid discussion, the questions framed by us for our consideration are answered as under: (1) On the facts and circumstances of the case and based on the evidences placed before us, we hold that the appellant car ..... X X X X Extracts X X X X X X X X Extracts X X X X
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