TMI Blog2011 (9) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... st the order passed by the tribunal dated 26th September, 2008 in ITA Nos. 5643/D/2004 and 5470/D/2004 preferred by Manoj Aggarwal and the Revenue for the assessment year 2001-02. In the order dated 26th September, 2008, the tribunal has remitted the matter to the Assessing Officer with a direction to comply with the findings/observations in the order of the Special Bench dated 25th July, 2008, which is impugned in ITA Nos. 904/2009 and 905/2009. In this manner, the three appeals are inter-connected. 2. The Revenue has raised the following questions of law in ITA Nos. 904/2009 and 905/2009:- a) Whether the I.T.A.T. was correct in law in deleting the addition of Rs.11,71,900/- on account of cash found during the course of search at various premises of the assessee? b) Whether the I.T.A.T. was correct in law in deleting the addition of Rs.18,10,079/- on account of commission income from the M/s. Bemco Jewellers Pvt. Ltd.? c) Whether the I.T.A.T. was correct in law in deleting the addition of interest charged U/S 158BFA(1) of the Income Tax Act, 1961? d) Whether the I.T.A.T. was correct in law in holding that transactions relating to sale/purchase of jewellery were genuine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, disputes that all the bank accounts contain entries which could be classified and regarded as accommodation entries). 6. The Assessing Officer held that the accommodation entries given by Manoj Aggarwal can be grouped into five main categories. (i) Entries of long term, short term and speculative profit and loss on sale and purchase of shares through and by Friends Portfolio Private Limited. (ii) Entries of gifts and loans through various bank accounts opened in his name and in the name of his friends, relatives and various HUFs. (iii) Entries of bogus sales made through Classic Textiles. (iv) Entries of bogus sales and trading in shares in the name of M/s NITS Softech Limited. (v) Entries of bogus sale and purchase of jewellery through M/s Bemco Jewellers Private Limited (BJPL, for short). 7. Regarding the first four categories, there is no dispute and as per the findings recorded by the tribunal, the entries are bogus and accommodation entries. About the quantum also, there is no dispute that the amount involved in the transactions is Rs.1,32,32,77,001/- and Rs.57,62,33,291/-. 8. The amounts represent accommodation entries in which money was transferred back to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of BJPL were admittedly in cash going into several crores of rupees but these have been accepted as genuine transactions relating to sale of jewellery without sufficient and adequate proof or even attempt to establish their genuineness on the part of the assessee Manoj Aggarwal. He submits that onus of proving the source of deposit in banks in cash primarily rests on the assessee Manoj Aggarwal who should have established and explained the said deposits and the transaction of sale and purchase. 13. Learned counsel for the Revenue has submitted that even if it is assumed that the burden to establish that an income is taxable is on the Revenue, it is immutable in the sense that onus can shift to the assessee when sufficient evidence, either direct or circumstantial, is disclosed by the Revenue. An adverse inference can be drawn against Manoj Aggarwal as he has failed to produce material which was in his exclusive possession. Shifting of onus in the course of proceedings is well recognized. 14. BJPL was incorporated on 24th December, 1998. Its registered office is located at 7/22 Ansari Road, Darya Ganj, Delhi. Manoj Aggarwal and his father B.C. Aggarwal have been Directors and sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar grounds was made in the hands of BJPL on protective basis. 18. The CIT (Appeals) had upheld the said findings. 19. It is pointed out that Manoj Aggarwal s statements were recorded under Section 131 on 3rd August, 2000 and 11th September, 2000 and he categorically admitted providing accommodation entries. It was urged that the tribunal has ignored these statements and not given due importance to the said admission by holding that Manoj Aggarwal did not specifically state that the jewellery business was sham and bogus and a camouflage for accommodation entries. He submits that a perverted view has been taken as Manoj Aggarwal had not averred in these statements that the jewellery business was genuine. Therefore, when Manoj Aggarwal admitted that he was in business of providing accommodation entries and once he did not state that jewellery business was genuine, the admission was clear and beyond doubt. He submits that the statement recorded on 14th December, 2000 was an after thought. Similarly he has questioned the reliance placed upon the statement made by Manoj Aggarwal on 8th January and 9th January, 2001. It is also pointed out that the statements given by father of Manoj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs.26,07,63,735/-. Manoj Aggarwal had claimed that the said flat belongs to one Vijay Aggarwal but he was not traceable and was never produced. Statement of Sudhir Shah, Builder, Developer and Administrator of the apartment building was wrongly ignored, even when Vijay Aggarwal was not produced. Learned counsel for the Revenue has specifically drawn our attention to paragraphs 71 and 72 of the impugned order which read as under:- 71. The Assessing Officer has raised doubts about the carrying of the gold bars to Ahmedabad from Delhi for being sold there. It may prima facie appear to be somewhat unusual for Manoj Aggarwal to carry the gold bars with him from Delhi to Ahmedabad and to bring the sales proceeds in cash from Ahmedabad to Delhi all by himself and by undertaking journeys by train. However, Bishan Chand Aggarwal in his statement dated August 16, 2002, has explained this by saying that most of the times the journey had to be undertaken at short notice and therefore, Manoj Aggarwal travelled by unreserved class. When asked to produce the tickets, he has stated that they were collected by the railway authorities while exiting the railway station and, therefore, could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2002, were regarding the transfer of cash, being sale proceeds, from Ahmedabad to Delhi. The Assessing Officer does not appear to have thought it unusual that Bemco did not have a bank account in Ahmedabad. He, therefore, asked Bishan Chand Aggarwal only to clarify how the cash was brought to Delhi and deposited in the bank account. The reply of Bishan Chand Aggarwal was that the sale proceeds were also carried by Manoj Aggarwal by train from Ahmedabad to Delhi and they were deposited in the bank accounts in Delhi within a week from the date of return from Ahmedabad. To a question as to why the sale proceeds were not deposited immediately and in totality after returning from Ahmedabad, he replied that the bank authorities were refusing to accept huge cash deposits at one time. What was sought to be highlighted before us by Mr. Kapila, the learned special counsel was that Bemco did not have a bank account in Ahmedabad though it had a sales office there and had effected huge sales of Rs. 27.93 lakhs (sic.) during one financial year, which was quite unusual. Having a bank account in Ahmedabad would have been certainly prudent and would have obviated the need to carry the cash from A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that personal accounts of the parties, including squared up accounts, are subject to reconciliation ; (b) no information regarding quantity of goods dealt with were given ; (c) most of the purchases are supported only by purchase invoices issued by Bemco without the signature of the seller and therefore no opinion about the genuineness thereof can be expressed ; (d) no documentary evidence is available for transfer of goods from Delhi to Ahmedabad and cash from Ahmedabad to Delhi. In the annexure to the audit report, the following opinions have, inter alia, been expressed : (a) the stock records were not made available and hence the auditors have relied on the certificate issued by the management to the effect that the stock valuation has been done on the basis of accounting policies ; and (b) the internal control measures, though adequate, can be further strengthened. So far as the documentary evidence for the transfer of goods and the cash is concerned, we have already held that there was nothing serious against the claim of the Bemco. As regards stock register or records which were not made available to the Assessing Officer or the auditor, Bishan Chand Agarwal has stated on Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and loss account were prepared by Bemco and they were also filed along with the returns of income. They were also audited by the statutory auditors who have con- firmed that in their opinion, proper books of account as required by law have been kept by the company so far as it appears from their examination of the books and that the profit and loss account and the balance-sheet are in agreement with the books of account. Having regard to the audit report, it seems to us that Bemco did maintain books of account at Delhi and Ahmedabad. However, as per the audit report, no basis was given for the stock valuation and the inventory records were not made available to the auditors with the result that they were unable to express any opinion on the correctness of the stock valuation which was certified by the management. Maintenance of books of account is one thing and the reliability of those books for purposes of income-tax assessment is another. The auditor s certificate does not say that the books of account are bogus or have been falsified. It only says that the stock valuation and the purchase invoices are not properly supported. We have already noted that the auditors have only re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir report for the year ended March 31, 2000 is dated July 24, 2000. In these reports, as already noted, they have opined that proper books of account as required by law have been kept so far as it appears from an examination of such books and that the profit and loss account and the balance-sheet are in agreement with the books of account. Nor can it be held that Bemco never maintained any books of account and that they were prepared subsequently for the purpose of assessment proceedings as has been held by the Assessing Officer. (emphasis supplied) 26. He has also drawn out attention to the audit report, relevant portion of which reads as under:- (ii) Non verification of quantitative information in respect of goods dealt in for goods purchased and sold and also their opening and closing balances in hand since the information and records were not provided to us. X X X X X X X (v) No documentary evidence was made available to us with regard to transfer of goods from Delhi to Ahmedabad Branch office and cash remittance from Ahmedabad Branch office to Delhi. The company is not maintaining any record for sale and disposal of scrap. 27. He submits that in spite of the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BJPL? 31. In addition to the aforesaid questions, we are inclined to frame two additional questions. (iii) Whether the tribunal is right in law in deleting the addition of Rs.11,71,900/- on account of cash found during the course of search? (iv) Whether the tribunal was correct in law in deleting the addition of interest charged under Section 158BFA(1) of the Income Tax Act, 1961? 32. With regard to question No. (iii), the CIT (Appeals) had proceeded on the basis that the cash found at the time of search belongs to BJPL. The tribunal, however, has held that the reasonable inference to be drawn was that cash belongs to others, who were utilizing Manoj Aggarwal in the accommodation entry business and, accordingly, Section 69A of the Act is not applicable. It is pointed out that the names and details of the said persons were not furnished and Section 69A has to be given full effect to and cannot be ignored. Similarly, with regard to waiver of interest, it is submitted that the same has been struck down on the ground that there had been delay in furnishing of seized documents but no particulars and details have been examined. 33. The appeals are accordingly admitted and the af ..... X X X X Extracts X X X X X X X X Extracts X X X X
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