TMI Blog2017 (10) TMI 1205X X X X Extracts X X X X X X X X Extracts X X X X ..... g as have been incorporated by the ld. CIT (A) after appreciating the entire facts and material on record. Accordingly, the order of the ld. CIT (A) is confirmed and the grounds raised by the Revenue are dismissed. - I.T.A. No.6675/DEL/2013 - - - Dated:- 25-10-2017 - SHRI G. D. AGRAWAL, PRESIDENT AND SHRI AMIT SHUKLA, JUDICIAL MEMBER For The Applicant : Shri Vijay Varma, CIT (DR) For The Respondent : Shri P.C. Yadav, Advocate ORDER PER AMIT SHUKLA, J.M.: The aforesaid appeal has been filed by the Revenue against impugned order dated 14/10/2013, passed by the ld. CIT (Appeals)-XXXI, New Delhi for the quantum of assessment passed u/s. 143(3) of the Income Tax Act, 1961 for assessment year 2011-12. The only ground raised by the Revenue reads as under:- On the facts and circumstances of the case, the ld. CIT(A) has erred in law in deleting the addition of ₹ 8,38,25,960/- made by the Assessing Officer on account of unexplained unaccounted investment of the assessee. 2. The brief facts and the background of the case are that the assessee is an individual and through his proprietorship concern, M/s Rayana Graphic Machinery, he was doing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Road, Girgaun, Mumbai and on the instruction of his employer, he got in touch with the assessee over phone and stated that he had collected the said diamonds from assessee s employee/man as informed to him by the assessee that he was on his way to Mumbai. The two invoices of purchases/ import found from his possession were of M/s RAS Minerals Pvt. Ltd. and RVM Impex Pvt. Ltd. who were the importers of these diamonds and both these companies address were mentioned in the invoices. Since the address of these two companies (as reflected in the import invoice) showed the address of Surat, therefore, the AIU Officers immediately got enquiries conducted at Surat through DDIT (Investigation-1), Surat, who informed that no business could be found functioning at the address mentioned in the invoices. Thereafter, the AIU Officers searched ROC website from where it was gathered that these two companies have their registered office/ address at New Delhi. Immediately a team of Income-tax officials conducted enquiries at those premises in Delhi and reported that no address of the said company was found registered at that premises. However, they found that the premises belonged to the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) No business premise could be found functioning at 808, Parth Apartments, Opposite Big Bazar, Surat Dumas Road, Surat in the case of M/s RAS Minerals (P) Ltd. and S/122, Someshwar Enclave, Udhna Magdalla Road, Surat, M/s RVM impex (P) Ltd., as reported in the report of DDIT (Inv.)- I, Surat. iii) Sh. Rajesh Kalra could not throw any light on the genuineness of the entire gamut of affairs _ in his statements recorded u/s 131 and 132 nor could he produce any documentary evidence viz., travel of Sh. Charan Singh to Hong Kong. Any business correspondence with M/s Ever Million Gold Ltd., any transfer entry of the diamonds to M/s Deep Gems. iv) The non-recording of the receipt of diamonds in the books of account of M/s RAS Minerals (P) Ltd. and M/s RVM Impex (P) Ltd. reflects that the trade in diamond is not in the nature of stock-in-trade and is merely an investment opportunity to make a windfall in the bullion marked. v) Admissions by Sh. Mahendra Javeri and Sh. Dinesh Bhuva that they do not maintain any books of accounts' nor do they file any return of income coupled with the facts that they trade entirely in cash and the sale proceeds of this transactions was to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been simply brushed aside by the Assessing Officer in a very summary manner. He observed that the Assessing Officer has not mentioned clearly as to how he has held that assessee could not substantiate or explain the transaction of import and the source of acquisition of diamonds. He has not even mentioned as to why such detailed explanations given by the assessee are not acceptable. He held that the observations of the Investigation Officers were not conclusive so far as genuineness of the transaction is concerned, as the Assessing Officer himself was required to consider all the submissions and explanations as well as the evidences which were filed before him. Ld. CIT(A) further held that there is no concrete evidence to show that no books of account could be found at the registered office premises of the two companies and there is no actual report or document showing light on what exactly was done by the Income-tax team who had visited the registered office premises of the two companies. After incorporating the relevant question and answer of the statement recorded, he observed that even in the statement recorded under section 132(4) of the assessee, no question was asked on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entries in the books of account. 8. Regarding the doubt of the Assessing Officer that there are two set of diamonds; one which has been imported against the import invoice and the other which has been valued by the DVO, the ld. CIT(A) has dealt with this issue from para 4.11 to 4.21 of the appellate order. In this regard, the ld. CIT(A) has categorically noted that there are no evidences that there are two set of diamonds or any material has been brought on record to show that other set of diamonds, which have been mentioned in the import invoice, was sold in the market or were hidden somewhere else. The valuation of diamond at ₹ 8.38 crores in place of ₹ 19 crores cannot be the evidence to come to the conclusion that these are two different set of diamonds. He also dealt with the comparative chart as submitted by the assessee to show that there is no actual variation which is occurring in respect of valuation made by the DVO and the description of diamonds as shown in the invoices. On reconciliation of such chart, the ld. CIT (A) has given a finding that there is exact match between different kinds of diamonds and average pieces of quantity in carats, etc. He has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r sale. He further explained that one of his employees namely Sh. Charan Singh had visited Hong Kong and finalized the detail according to which Sh. Patel of M/s Ever Million Gold Ltd. Hong Kong, exported diamonds to the said two companies belonging to the appellant on 90days-credit. In the enquiries conducted at Mumbai, it has been confirmed by the accountant of M/s Deep Gems that its proprietor sells loose diamonds in the local market through different brokers and receives a margin of 2% as his income. 4.20 Thus, the facts narrated by the carrier of diamonds and the appellant do not vary at all. The AO and the investigating officer suspected the transaction on the ground of absence of LC or any correspondence (being an International Trade of such high magnitude) between the supplier and the importers and that Deep Gems sells the diamonds in cash. These un-usual procedures or the absence of normal procedure can at the best be some leads for further investigation or enquiry. However, these un-usual procedures or absence of normal procedure of import, themselves, cannot establish that the diamonds being carried by Mr. Bhari were not imported against the invoices. In fact, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, the ld. counsel for the assessee, Shri P.C. Yadav after explaining the entire facts and background of the case, submitted that each and every observation which has been made by the Assessing Officer, had been successfully rebutted by the assessee which has been duly appreciated by the ld. CIT (A) in his detailed order and in support, he also gave specific reference to the documents and evidences which have been enclosed in the paper book before us. In sum and substance, in order to rebut various findings of the Assessing Officer, he has summarised his arguments by way of following Observations made by AO Rebuttal appreciated by the CIT(A) Relevant Page No of PB depicting supporting evidence Sh Sunil Bhari could not furnish satisfactory reply and could not furnish the details of the person who has given him the diamond a) Sh Sunil Bhari Satisfactorily explained the value of Diamonds to the tune of ₹ 19 Crore. Question number 4 reply b) Bills of entry which were issued by custom clearance authorities were handed over to search team c) Details of Rajesh K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This fact has been disclosed by Sh Kalra while recording his statement under section 132 of the Act. AO accepted this factual position the cases of RAS and RVM k) Regarding the correspondence between the Hong Kong party and assessee explained that employee of M/s RAS namely Charan Singh visited Hong Kong for business correspondence Statement of Rajesh Kalra u/s 132 is at page No.138-142. Details of trip undertaken by Sh Charan Singh in connection with Hong Kong deal is at page No.72 of PB. The relation was developed on faith and trust Page No. 74 the PB + Earlier business transactions Page No 152 of paper book shows that RAS has purchased Diamonds of ₹ 10.32 Crore from RAS on or before 13.09.2010, i.e. prior to the date of search. Therefore allegations of the AO that assessee has failed to do the business in conservative methods is incorrect. SA Builder 288 ITR 1. Revenue cannot sit in the Arm chair of an assessee. Similarly page No. 156 of the PB would show that M/s RVM has purchased diamonds of ₹ 21.13 Lakhs from Hong Kong party. Further assessee seeks to rely on the submission made before the AO vide letter dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer has either brushed aside these evidences/explanations in a summary manner or has not taken into cognizance. On a perusal of the ld. CIT (A) s order as well as the case made out by the Assessing Officer, we are at the outset unable to appreciate the stand of the Revenue for the reason that on the one hand, it is saying that the diamonds which were found from the possession of the said person are different from the ones which are mentioned in the import invoice and at the same time the Department is questioning the transaction of import itself. When a person in whose possession diamonds have been found was also found with the import invoices of the said diamonds which were imported one day earlier and also got customs clearance on the late evening of the previous day, then non-posting of such entries in the books of account obviously cannot be the reason for doubting the genuineness of the import. As appreciated by the ld. CIT (A), if the diamonds which were imported one day prior and had got the customs clearance at late evening on 18/10/2010, then probable factors would be that either these diamonds have been sold immediately on the next day morning or some other consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the turnover but also the trading of diamonds have been accepted. The copy of the assessment orders passed u/s 153C in the case of both the companies have been placed in the paper book on which our attention was drawn. Whence in the wake of same search, simultaneous proceedings have been initiated under section 153C in the name of these two companies to examine the genuineness of the transactions of the diamonds including the purchases made vide same invoices which were found from the possession of the person carrying the diamond have been accepted, then it cannot be held that these two companies were not doing genuine business or it should be treated as undisclosed investment in the hands of the assessee. Thus, the entire diamonds found from the possession of the person cannot be assessed as undisclosed investments in the hands of the assessee. This factum of assessment order in the case of two companies passed u/s 153C clearly vitiates the stand of the Revenue and clinches the issue in favour of the assessee. Thus, we do not find any reason to sustain the addition on account of diamonds intercepted and found from the possession of the person at the Airport in the hands of the ass ..... 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