16. As the VDIS 1997 certificate issued by the department is valid and subsisting, it is not open to the revenue to contend that there was no jewellery which could be sold by the assessee on 20/1/1999.It is not the case of the revenue that the assessee continues to be in possession of the said diamond jewellery even after the alleged sale effected on 20-1-1999 or that the said jewellery has been sold to third parties. In these circumstances, the decision of the Tribunal in accepting the claim of the assessee that the amount of Rs.10,35,562/ -represented the sale proceeds of the diamond jewellery declared under VDIS 1997 cannot be faulted.
17. The fact that the diamond jewellery claimed to have been sold by the assessee was not found with the purchaser (Dhananjay Diamonds)or his associates cannot be held against the assessee, because, admittedly, the said diamond jewellery declared under VDIS 1997 is also not found with the assessee after the sale is effected. If existence of the diamond jewellery with the assessee prior to the sale is evidenced by the VDIS,1997 certificate and on sale of the said jewellery the assessee has received the consideration which is duly accounted for, then the mere fact that the jewellery sold by the assessee is not found with the purchaser cannot be a ground to hold that the transaction was bogus and the consideration received by the assessee was the undisclosed income of the assessee.
18. Assuming the revenue is right in its contention that the sale did not involve actual delivery of diamond jewellery, then, unless it is established that the assessee had passed on his undisclosed income to Mr. Trivedi, it cannot be said that the amount received by the assessee from Mr. Trivedi represented the undisclosed income of the assessee. In the present case neither Mr. Trivedi in his statement recorded on 31-3-2000 had stated that the assessee had given the cash amount of Rs.10,35,562/ -nor in the re-assessment proceedings the A.O.has gathered any evidence to that effect. In fact, in the statement recorded on 31-3-2000,Mr. Trivedi had stated that he used to received cash through Mr. Sanjay Saxena. There is nothing on record to suggest that the assessee had given cash to Mr. Sanjay Saxena. The A.O. has not chosen to examine Mr. Sanjay Saxena to establish that cash was given by the assessee to Mr. Trivedi though Mr. Sanjay Saxena. Perusal of the re-assessment order shows that the A.O. has not made any efforts to link the cash received and deposited by Mr. Trivedi in his bank account was in fact paid by the assessee. In other words, the decision of the A.O. in discarding the sale and holding that the amount received by the assessee from Mr. Trivedi represented the undisclosed income of the assessee is based on conjectures and surmises and is not based on any independent evidence gathered prior to or during the course of reassessment proceedings. In these circumstances, in the absence of any cogent evidence brought on record, the decision of the Tribunal in holding that the A.O. has failed to establish the nexus between the cash amount deposited in the bank account of Mr. Trivedi is attributable to the cheque issued by Mr. Trivedi in favour of the assessee cannot be faulted. Consequently, the decision of the Tribunal in deleting the addition of Rs. 10,35,562/-cannot be faulted.