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TMI Blog2017 (10) TMI 1205X X X X Extracts X X X X X X X X Extracts X X X X ..... films. Beside this, he was also Managing Director in two companies namely, M/s RAS Minerals Pvt. Ltd.; and RVM Impex Pvt. Ltd., which were engaged in the business of trading in Diamonds. A search and seizure action was conducted in the case of the assessee in the wake of information received from the Airport Intelligence Unit (AIU) of the Income-tax Department, when AIU authorities had intercepted one, Mr. Sunil Bhari at Terminal 1D of IGI Airport, New Delhi, who was found to be in possession of loose Diamonds claimed to be worth Rs. 19 crores. The relevant background and the facts in this regard as narrated in the assessment order read as under:- "A search and seizure operation was conducted in the case of Sh. Rajesh Kalra Managing Director of M/s RVM Impex Pvt. Ltd. and M/s RAS Minerals Pvt. Ltd. and Sh. Sunil Bhari at Terminal 1 D of the Indira Gandhi International Airport at Delhi on 19/10/2010. Initially in the morning of 19/10/2010, information was received from the reliable sources that a person is carrying huge quantity of diamonds through Indigo flight No. 6E179 to Mumbai. The team of inspectors intercepted the said person namely Sh. Sunil Kumar Bhari at the Airport. Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., which was doing the business from the said premises. The AIU Officers immediately summoned the assessee to the Airport and recorded his statement and consequently, a search and seizure action as mentioned above was carried out in the case of the assessee under section 132(1). Though in the invoice the value of diamonds mentioned was Rs. 19 crores, but the diamonds which were found from the possession was valued by the Departmental Valuation Officer (DVO) at Rs. 8,38,25,960/-. In the statement recorded under section 132(4), assessee was asked to provide documentary evidence in the form of any agreement with the supplier for import of diamonds or any other evidences to prove that assessee's employee had visited Hong Kong where he had met the person of the supplier company. In response, assessee submitted that there is no such written agreement with the supplier nor there was any correspondence. The assessee however stated that, since the goods were cleared only on the previous day late night, therefore, entries in the books of the importing companies were yet to be incorporated. The Investigation Officers, due to large variation in the price of the diamonds as valued by the DVO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as unaccounted and needs to be treated as unaccounted investment,. vi) No regular mode of procedures for import of loose diamonds were adopted by the assessee such as: (a) There should be a formal contract reduced to writing as to bind the two parties. Even though as per the Indian Contract Act, an oral contract can be entered into but to submit it as a proof for any future litigation it must be in the written form. (b) There should exist formal documents prior to contract which may demonstrate the terms of the contract on which the parties intend to enter into contract (c) Any overseas parties exporting to India would prefer a Bank Guarantee or a Letter of Credit to safeguard their interest. vii) Assessing Officer lastly observed that, as there existed a variation in the valuation as stated in the import bill and that done by the DVO, it is clear beyond doubt that there are two sets of diamonds, one that was imported against the import invoice and the other one that were being carried to Mumbai and the source of these diamonds were not declared either at the time of search or till the time of finalization of the assessment order and as such is deemed to be unexplained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfronted to the assessee was, whether the entries have been passed for import transaction in the books of account or not, but this also does not indicate that the books of account were not found at the said business premises. In any case, he held that imported diamonds had been duly cleared by the Customs authorities on the previous night and assessee did not had enough time to pass the entry in the books of account till succeeding day when the diamonds were intercepted and seized. He held that the said omission alone cannot be conclusive evidence that the transaction is not genuine. He further observed that even at Surat also, no statement has been recorded at the time of enquiry and the concerned officials had only enquired with the neighbors and not with the owners of the premises and the enquiry in Surat seems to have been done prior to execution of warrant and thereafter, no further enquiry has been made on subsequent date when assessee had submitted rent receipts of the premises and also VAT registration taken from the said address. 6. Regarding the genuineness of the transaction as well as import made by the companies, the ld. CIT (A) has dealt with this issue in paras 4.6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts, the ld. CIT(A) finally accepted assessee's contention and deleted such addition after observing and holding as under:- "4.18 Thus from the facts as mentioned in the assessment order and from the submissions of the AR, it is clear that, there is no dispute about the facts of the case as given in the assessment order and as submitted by the AR of the appellant. The only dispute is regarding the stand of the investigating officer and the assessing officer that the diamonds imported from Hong Kong and those found in the possession of Mr. Sunil Bhari were not one and the same. The reason for such dispute is the difference in the value of diamonds as valued by the departmental valuer and that as per the invoice. However, since the type of diamond, their physical quantity, weight etc completely tally (in respect of numerous diamonds in small packets), I do not consider that it is a case of Mr. Sunil Bhari carrying some other set of diamonds than what was imported against the invoices being carried by him. At the most it could be a case of over valuation of imports. 4.19 The facts disclosed/narrated by Mr. Sunil Bhari to the investigation officer at the time of interception ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds has taken place (at least of the one set, according to the AO) through the 'unusual'/ 'abnormal' procedures. 4.21 There are no evidences to suggest that the diamonds belonged to the Appellant and not to the said companies whose names appear on the invoices. The invoices and the Customs clearances clearly mention the names of the said two companies and not the name of the Appellant as importer/buyer. The diamonds as per the valuation report match in all respects with the number, weight, name etc excepting the value assigned to them. Both the companies have filed return of income with duly audited accounts for both the periods, namely prior to date of search and after the date of search. These books of accounts have been produced before the AO for verification. 4.22 Considering all the above factors, I am of the view that no case has been made out to hold that the seized diamonds belonged to the appellant and that the same represented his unaccounted investment. Therefore an addition of Rs. 8,38,25,960/- made in the hands of the appellant is hereby deleted." 9. Before us, the ld CIT (DR) after referring to the relevant observations made by the Assessing Officer in the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No 107. Copy of Panchnama in the case of Rajesh Kalra is at page No 103-108 of the PB No companies in the name of M/s RAS Minerals and RVM Impex found at Gujrat. No trace of business of these two concern at Regsitered office address of Delhi No entries were passed in the books of Companies d) Assessee filed copies of Rent Receipt of both companies. e) Assessee filed Copies of Import Export Code of RAS and RVM. f) Assessment under section 153C was framed in the cases of RAS and RVM and hence business is proved. g) Assessment under section 153C/ 143(3) was framed in the cases of RAS and RVM and no adverse observations in as much as incomplete books has been made by the AO Page No-197-208 of PB rent receipts of RAS and 209 to 220 of RVM. Page No-182-183 of RAS IEC code and Page No184-185 of RVM IEC Code. In these documents the Gujarat Address is mentioned. Copy of assessment order is at page no- 309-313 and 314- 318- Shri Rajesh Kalra in his statement failed to substantiate the genuineness of the transaction of Import of diamonds as no documentary evidence such as bank guarantee, Letter of credit, Copy of the Contract, Purchase order and any form of correspondence with Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 8,38,25,960/- can be treated as unexplained investment in the hands of the assessee or not. We have already discussed the entire facts and the background of the case as to how such diamonds were intercepted by AIU at IGI Airport, New Delhi which has been sought to be explained by the assessee before the authorities below as well as before us. To put it in succinctly, the person who was found in possession of said diamonds was also carrying with him two import invoices, one mentioning the name of the company as M/s RAS Minerals Pvt. Ltd.; and the other as RVM Impex Pvt. Ltd., who had imported the diamonds from Hong Kong companies and both these companies were having address of Surat. The Revenue's case has been that, firstly, the address mentioned in the invoice at Surat was found from the enquiry that no business was found at the given address and Delhi office has mentioned in ROC website that no address of the said companies was stated to have been found by the Income-tax team which was sent there; secondly, the assessee could not provide documentary evidence in the form of any agreement with the supplier of the diamonds and also the genuineness of the transaction of import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record. When the diamonds which were intercepted and found from the possession of the person was also found with the corresponding import invoices and documents relating to Customs clearance, then the preponderance of probability goes in favour of the assessee that these diamonds belong to the companies who have imported the diamonds duly supported by invoices found simultaneously. 12. So far as the difference in valuation done by the DVO as well as mentioned in the import invoices, the ld. CIT(A) has clearly recorded a finding that these diamonds are exactly similar and tally not only quantity-wise but also piece-wise, for which there is not rebuttal by the Department. This fact has also been highlighted by the ld. counsel for the assessee before us. Thus, from the material placed on record and the discussion as appearing in the impugned order, it is quite clear that the diamonds which were found in possession of the person belong to two companies of the assessee namely, M/s RAS Minerals Pvt. Ltd.; and RVM Impex Pvt. Ltd., who were not only into the business of trading of diamonds but also had imported the diamonds from a party in Hong Kong for which not only import invoice was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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