- (1.) This appeal has been preferred by the Revenue under Section 260A of the IT Act, 1961 (for short "the Act") against the order dt. 25th July, 2008 of the Tribunal, Special Bench, Delhi in ITA No. 163/Asr/2003 reported as Tejinder Singh v. Dy. CIT,2008 117 TTJ 145 for the asst. yr. 1998-99 proposing to raise following substantial questions of law: (i) Whether on the facts and in the circumstances of the case, the order of the Special Bench of Tribunal, New Delhi is ex facie perverse in that it ignores all the evidences and facts brought on record demonstrating the Hawala nature of the impugned transactions, while holding that these evidences were not sufficient to doubt the bona fides of the said transactions? (ii) Whether on the facts and in the circumstances of the case, the order of the Special Bench of Tribunal, New Delhi has erred in deciding the case of the Respondent on the basis of the factual findings in the case of M/s Bemco Jewellers (P) Ltd./Manoj Aggarwal whereas they were entirely different? (iii) Whether the Special Bench of Tribunal, New Delhi has erred in holding that M/s Bishan Chand Mukesh Kumar was a genuine trader of jewellery because facts of this firm were similar to the case of M/s Bemco Jewellers/Manoj Aggarwal, even though Shri Manoj Aggarwal was found to be a Hawala operator by the Special Bench, Tribunal, Delhi? (iv) Whether the Special Bench of Tribunal, New Delhi has committed an ex facie perversity in holding that no useful purpose will be fulfilled in allowing the AO to examine the additional evidence in the form of material collected during the course of assessment proceedings of M/s Bishan Chand Mukesh Kumar, even while the Special Bench of Tribunal, New Delhi had held that: ...and the issue about the genuineness of the transactions of purchase and sale of jewellery by M/s Bishan Chand Mukesh Kumar including the purchase of jewellery from the Assessee has not been considered and decided by us on merits. (v) Whether the Special Bench of Tribunal, New Delhi has erred in relying upon the sales-tax assessment orders filed at page Nos. 138 and 139 of the Appellant's paper book without giving an opportunity to the AO to verify the same without giving any reasons for the same rendering the order perverse and non-speaking? (vi) Whether on the facts and in the circumstances of the case, the Special Bench of Tribunal, New Delhi was right in ignoring the glaring errors and gaping holes pointed out by Appellant Revenue Department in the evidence led by the Assessee in cases such as when the jewellery was valued at Delhi as per business practices of M/s Bishan Chand Mukesh Kumar, then how was it possible that cheque of exact amount was issued at Amritsar at the time of purchase of jewellery. This argument is not disposed of in the final order issue, thus rendering it non-speaking and perverse? (vii) Whether on the facts and in the circumstances of the case, the Special Bench of Tribunal, New Delhi was justified in accepting the genuineness of the jewellery transactions of the Respondent, when the Respondent's conduct conflicted with the test of 'normal human conduct' principle laid down by the Hon'ble Supreme Court in the cases of CIT v. Durga Prasad More, 1971 82 ITR 540 and Sumati Dayal v. CIT, 1995 214 ITR 801? (viii) Whether the Special Bench of Tribunal, New Delhi has committed a gross perversity in sweepingly ignoring all the facts and evidences of the Appellant Revenue Department whilst accepting every far-fetched argument of the Respondent? (ix) Whether the learned Tribunal grossly erred in law by applying two different yardsticks and standards by requiring the Appellant Revenue Department to pass test of cross-examination of all witnesses and at the same time being satisfied by all the Respondent's averments at face value, thus forcing the Revenue to prove its case beyond all reasonable doubt? (x) Whether the learned Special Bench of Tribunal, New Delhi was justified in giving no finding regarding the genuineness of sale of the jewellery by the Respondent to M/s Bishan Chand Mukesh Kumar?
(2.) The Assessee is HUF engaged in the business of fabrics. In its return for the assessment year in question, the Assessee claimed long-term capital loss on account of sale of jewellery. The said jewellery was disclosed under Voluntary Disclosure of Income Scheme, 1997 (for short "VDIS") valued at Rs. 7,88,131 as on 1st April, 1987. Indexed cost was higher than the price at which the same was claimed to be sold on 2nd Feb., 1998 and 18th Feb., 1998. The AO doubted the genuineness of the transactions and held the sale proceeds to be unaccounted funds of the Assessee. The CIT(A) upheld the additions. On further appeal, the Tribunal reversed the view taken by the AO and the CIT(A) mainly on the ground that in the decision rendered in the case of M/s Bemco/Manoj Aggarwal Jewellers ("Bemco") which was held applicable to M/s Bishan Chand Mukesh Kumar ("BCMK") to whom the jewellery was sold by the Assessee, additions were set aside. Findings recorded on the issue by the AO, the CIT(A) and the Tribunal are as under: Finding recorded by the AO This office frames its inference on the basis of material on record and comes to the conclusion that the alleged sale of jewellery is bogus and is in fact the introduction of the unaccounted money of the Assessee through the garb of sale of jewellery disclosed by the Assessee under VDIS. The conclusion is based on the following factors: (a) The Assessee has submitted that the jewellery was very old and had sentimental value. However, the same has been immediately sold after the date of receipt of VDIS certificate from the office of worthy CIT, Amritsar. (b) The Assessee submits that M/s Bishan Chand Mukesh Kumar jeweller was introduced to him through his relatives at Delhi. However, he was unable to identify the relatives. (c) The Assessee has further submitted that the representative of the jeweller came to Amritsar to take delivery of the jewellery worth approximately Rs. 14 lakhs without any receipt or without receiving the payment for the same is also not believable. (d) Confirmation has been received by this office while the party is not traceable at the address as given by the Assessee. It is then strange as to why the letters sent by this office were not received back. In case they were duly received and replied, then why were they not traceable on enquiry of Inspector of DDI office. Also non-co-operation of the jeweller with the office to whom commission was issued by this office also gives credence to the conclusion being drawn by this office. (e) The jewellery sold inter alia includes diamond jewellery sold worth Rs. 3.67,868 whose value as on 1st April, 1987 had been shown at Rs. 77,170. Thus, the increase has been shown at 4.77 times. However, as per the date of the gem and jewellery export promotion council this increase in rates of diamond jewellery has not been so sharp. Thus considering all the above factors, it is clear that the sale of jewellery as disclosed by the Assessee is bogus and has been used only to introduce his own unaccounted income into the regular books. Thus, the Assessee has not explained to the satisfaction of the office the introduction of credit of Rs. 16,80,475 in his regular books and is thus added to the income of the Assessee under Section 68 of the IT Act. Accordingly, the loss of Rs. 1,82,891 as claimed by the Assessee is also disallowed and the capital gain on sale of MEP units at Rs. 1,227 is separately brought to tax. Findings recorded by the CIT(A) 7.1 I have considered the Appellant's contentions in the background of facts on appellate record and the reasons given by the AO in the assessment order and his remand report, as mentioned above. The issue to be decided here is as to on whom the onus lies to prove the genuineness of sales and whether the party on whom the onus lies has been able to discharge such onus in a complete manner so that it can be said that the onus has shifted on the other side to disprove the same. In the present case, the Appellant's counsel has filed confirmation of sales purportedly from M/s Bishan Chand Mukesh Kumar, Saraf, Delhi which bears date much prior to the calling of information by the AO in this case. This raises serious doubts about the genuineness of confirmation because in the normal circumstances confirmation is sought from the party only when it is required by the other party during the course of assessment or other proceedings. In the present case, it appears that this confirmation was obtained by the Appellant much before the date of query raised by the AO which indicates a prior planning and premeditated approach. This raises serious doubts about the genuineness of the confirmation filed and in my opinion, this confirmation could not be said to be sufficient to discharge the onus of proving the sale of jewellery in the context of the following facts: (i) Though the Appellant claimed jewellery to be very old and having sentimental value, the Appellant had promptly sold this very jewelleiy immediately after the date of receipt of VDIS certificate. (ii) Jewellery was sold to unknown party of Delhi i.e., M/s Bishan Chand Mukesh Kumar claimed to have been introduced through a relative of the Appellant to whom the Appellant was not able to identify. (iii) The Appellant handed over jewellery worth Rs. 14 lacs to this unknown jeweller of Delhi without any receipt or without receiving any payment on the delivery of the jewellery. (iv) Although confirmation has been received by the AO, but the party is not traceable at the address given on the confirmation. (v) All the letters sent by the AO through registered post/speed post have not been received back undelivered. (vi) The said party i.e., M/s Bishan Chand Mukesh Kumar, Delhi is stated to be not traceable as per the report of the Inspector, referred to above. Hence, it is clear that the onus which lies on the Appellant to prove genuineness of sale of jewellery cannot be said to have been discharged. Report of the Inspector of the Investigation Wing, Delhi dt. 16th Jan., 2002 along with letter of the Addl. Director of IT (Inv.) Unit-I(2), Delhi are reproduced hereunder for ready reference: Per letter No. Addl Director of IT (Inv.) Unit-I/2001 02/1081, dt. 22nd Jan.. 2002 sent by Shri K.L. Anand, Addl Director of IT (Inv.) Unit 1(2), New Delhi to Shri B.B. Vig, ITO, Ward IV(4), Amritsar. 2. After receipt of your letter, another summons under Section 131 was issued to the party, namely M/s Bishan Chand Mukesh Kumar and the same could not be served at the given address. Copy of Inspector's report in this regard is enclosed. It is also brought to your notice that action under Section 132(1) was carried out by the Investigation Unit-I this Directorate on 3rd Aug., 2000 in the case of Shri Manoj Kumar and others. One of the associates covered under Section 132(1) was the same M/s Bishan Chand Mukesh Kumar. This group has since been centralized with Shri Ram Mohan Singh, Chief Director of IT, Central Circle-3, Mayur Bhawan (Room No. 724, Connaught Circus), New Delhi.
(3.) I am directed to request you to please contact Shri Ram Mohan Singh, Dy. CIT holding jurisdiction M/s Bishan Chand Mukesh Kumar for conducting necessary enquiries in the case.' Per Inspector Shri Praduman Singh, ITI, Unit-I, New Delhi's report in the case of M/s Bishan Chand Mukesh Kumar dt. 16th Jan., 2002. As directed, I visited the premises No. 1166/202, Kucha Mahajani, Chandni Chowk, Delhi on 14th Jan., 2002 to serve the summons on the abovesaid party. The premises is on the 2nd floor and there is no sign board of M/s Bishan Chand Mukesh Kumar at this premises. Local enquiry made revealed that this party is not functioning from this place. Efforts are being made to locate the present address of the party. The report received from the Dy. Director of IT (Inv.) dt. 25th Oct., 2002 throws further light on the authenticity of the confirmation letters filed in this case. Content of the letter dt. 25th Oct., 2002 is reproduced hereunder for ready reference: Per letter No. DSDIT (Inv.) Unit-II(2)/2002/2003/21 dt. 25th Oct, 2002 sent to this office by Shri S.S. Jain, Dy. Director of IT (Inv.), UnitII(4), New Delhi. Kindly refer to your letter No. 205/2002-03-671 dt. 23rd Aug., 2002 on the subject noted above. After going through the appraisal report the required information is submitted as under: As per the information it was found that Shri Manoj Aggarwal and others had been in the business of selling bogus accommodation book entries of various types for consideration of commission and that he had no real business. He had been operating from different premises in Delhi. As a consequence of information, search was conducted under Section 132 of IT Act, 1961 on 3rd Aug., 2000 at the office premises and at the residential premises of Shri Manoj Aggarwal, as well as at the premises of one of the mediators Shri Kamlesh Kumar Gupta, and one of the beneficiaries Shri Girish Mittal. Survey operations under Section 133A of the IT Act, 1961 were also carried out on 3rd Aug., 2000 at B-19, Swasathya Vihar, Delhi i.e., the premises of Shri Manoj Aggarwal. It revealed that he had various bank accounts in different banks which had been opened and operated by him and his associates to facilitate his business of selling bogus accommodation book entries. As per page Nos. 4-7 of the appraisal report there are 51 bank accounts in different names including the names of Bishan Chand Mukesh Kumar as given below. Majority of these accounts have been used in his widespread operations of providing bogus accommodation book entries: JUDGEMENT_1116_TLP&H0_2011_1.html;