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M/s Morewel Impex Pvt. Ltd. Versus Income Tax officer, Ward 5 (2) (3) , Mumbai.

2015 (12) TMI 457 - ITAT MUMBAI

Rejection of books of account - estimation of income - rejection of documents furnished by assessee - Held that:- AO chose not to examine the documents furnished by assessee but chose to place full reliance on the report given by the DDIT. We are not able to appreciate the said action of the assessing officer. When the assessee was confronted with the report given by the DDIT, in our view, the assessee can at best controvert the same by filing the documents available with it. Further, when the a .....

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he assessee in order to establlish the genuineness of the parties. We notice that the Ld CIT(A) has also dismissed these documents by observing that they are cooked up documents by making general observations, i.e., without actually establishing that the above said documents were bogus in nature. It is not known as to how the copies of income tax returns could be considered to be a cooked up documents. Thus, we notice that the said observations made by the Ld CIT(A) are baseless, not supported b .....

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ified in rejecting the books of account and consequently, in our view, the book results should have been accepted. Accordingly, we are of the view that there is no justification or proper ground warranting the estimation of profits in the assessee’s hand in all the three years under consideration. - Decided in favour of assessee. - I.T.As. No.6992/Mum/2010, 7799/Mum/2011, 5640/Mum/2012 - Dated:- 14-10-2015 - SHRI JOGINDER SINGH (JM), AND B.R.BASKARAN (AM) For The Assessee : Shri Vimal Punamiya F .....

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ision of Ld CIT(A) in confirming the rejection of books of account and consequent estimation of income. 3. The facts relating to the issue cited above are stated in brief. The assessee is engaged in the business of trading in diamonds. The revenue carried out a survey operation u/s 133A of the Act on 07-07-2008 at the business premises of the assessee. The revenue also carried out survey operations in the hands of other concerns named M/s Basant Dia Jewels and M/s Mox diam. Consequent to survey .....

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ndi followed were confronted with one of the directors of the assessee company named Shri Ramesh L Jain and he also confirmed that the statement given in the cases of M/s Basant Dia Jewels and M/s Mox diam. The said reply given by Shri Ramesh L Jain was endorsed by him in the statement recorded from him on 18.7.2008 and the same is extracted below:- I have gone through the statement of Shri Basant D Jain recorded u/s 131 of the Income tax Act, 1961 dated 09-07-2008 duly endorsed by Shri Nitesh T .....

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rd on 09/07/2008 as being correct and true and we stand by it. Accordingly, the assessing officer entertained the view that the purchases and sales shown in the books of accounts of the assessee herein are non- existent and accordingly rejected the books of account. Accordingly the assessing officer estimated the commission income receivable on providing accommodation bills at 2% of the sales reported by the assessee for all the years under consideration. After allowing deduction of 20% towards .....

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they are done on behalf of others. The payments made and payments received by way of cheques are compensated by way of cash. In this process, they will get commission only @ 0.2% in respect of imported diamonds and @ 0,05% in respect of locally sourced diamonds. 5. It is pertinent to note that the survey officials did not unearth any incriminating material during the course of survey operations nor did they find any defects in the books of account. The director Shri Ramesh L Jain retracted from .....

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rn was not indulging in providing accommodation bills, but actually carrying on business transactions. 6. Subsequently, another statement was recorded from Shri Ramesh L Jain on 21-02-2009 during the course of assessment proceeding for AY 2007-08, wherein also he stood by the averments made in the affidavit. 7. The assessing officer, during the course of assessment proceedings, issued commission u/s 131(d) of the Act to the Asst. Director of Income tax (Inv.), Surat in order to verify the purcha .....

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all these documents, but placed reliance on the statement recorded from Shri Basant Jain, which was originally confirmed by Shri Ramesh L Jain. Accordingly, the assessing officer rejected the book results and estimated the income @ 2% of sales value as stated earlier, even though the commission for accommodation bills was stated as 0.20% for imported diamonds and @ 0.05% on the locally sourced diamonds. 8. The Ld CIT(A) held that the documents relating to concerned parties furnished by the asse .....

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% of the sales value. Aggrieved, the assessee has filed these appeals before us. 9. We have heard the parties and perused the record. A careful perusal of the record would show that the assessing officer has placed reliance on the statement given by Shri Basant Jain, proprietor of M/s Basant Dia Jewels, which was originally endorsed by the assessee. The AO has further placed reliance on the report given by the DDIT (Inv.) to the effect that the suppliers and customers of the assessee were not av .....

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am on 09-07-2008. Further, it was stated that he was forced to accept the nature of business carried on by the assessee as that of providing accommodation bills only. Hence, in our view, the assessing officer could not have placed reliance on the statement given by the director of the assessee for the following reasons:- (a) the survey officials are not entitled to record statement on oath during the course of survey operations u/s 133A of the Act. (see. DCIT Vs. Premsons (2009)(ITAT Mumbai) (b) .....

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equent to filing of affidavit, but the assessee has withstood by the averments made in the affidavit. The AO could not controvert submissions made in the affidavit as well as in the sworn statement. (e) During the course of survey proceedings, the officials did not find any incriminating material and the assessing officer also, during the course of assessment proceedings, did not find any defect in the books of accounts maintained by the assessee. (f) the assessing officer did not bring any mate .....

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the report given by the DDIT (inv.), wherein he had stated that the customers/suppliers of the assessee were not available in the given addresses. When the report given by the DDIT was confronted with the assessee, it has furnished following documents to the assessing officer:- (a) Ledger account copies duly confirmed by the concerned parties. (b) Copies of income tax return filed by them. However, we notice that the assessing officer chose not to examine those documents and he chose to place fu .....

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ce of those parties by issuing summons to them. We are unable to understand as to why the assessing officer could not carry out those kind of examination, when they are well within his powers. Hence, in our view, the assessing officer was not justified in ignoring the evidences furnished by the assessee in order to establlish the genuineness of the parties. We notice that the Ld CIT(A) has also dismissed these documents by observing that they are cooked up documents by making general observation .....

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