Smt. Kusum Bhura Vs. ITO (ITAT Kolkata)
In the present case investments of jewellery is duly reflected in the books of accounts of the assesses. Therefore there is no scope of applying the provision of section 69 of the Act. Apart from the above source of funds is evidenced by the payments from disclosed bank accounts. Therefore the source of investments is also properly and satisfactorily explained by the assesses. In the circumstances, I am of the view that the additions made by the AO and confirmed by CIT(A) cannot be sustained and the same is directed to be deleted.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
These are appeals by two Assessees against two orders both dated 19.07.2017 of C.I.T.(A)-10, Kolkata relating to A.Y.2010-11.
2. The facts of the case are that Smt. Kusum Bhura purchased jewellery worth Rs. 4,53,354/- from Minal Gems, Mumbai. The assessee Shri Shrenik Bhura also purchased jewellery worth Rs. 8,07,620/- from Minal Gems, Mumbai. As far as Smt. Kusum Bhura is concerned she had paid Minal Gems through a cheque which was duly en cashed by Minal Gems. Copy of the bank statement of Bank of Baroda of A/c No. 003202000004111 evidencing encashment of cheque by Minal Gems on 20.11.2009 was filed by the assessee. The invoice of Mial Gems dated 09.09.2009 was also filed by the assessee. The assessee in the course of assessment proceedings also filed confirmation from Minal Gems that they have sold polished diamond to the assessee. In the case of Shrenik Bhura similar invoice and bank statement evidencing payment to Minal Gems was also placed on record. By the assessee.
3. It appears that there was information received by the AO of both the aforesaid assesses from D.I.T. (Investigation)-II, Mumbai. The information received was that there was a search and seizure operation conducted in the case of Bhawarlal Jain Group of cases on 03.10.2013. Consequent to the said search and investigation conducted, it came to light that Bhawarlal Jain group was providing bogus/accommodation entries to several persons and entities and these entries were bogus entries. Minal Gems is one of the entities belonging to Bhawarlal Jain Group of cases. Since the assessee claimed to have made purchases from Minal Gems, the assessments in the case of both the assesses were reopened u/s 147 of the Income Tax Act, 1961 (Act.).
4. In the assessments concluded, the AO after making reference to all the evidences filed by the assessee to prove the source of funds as well as evidence of payments and came to the conclusion that the purchases in question were not genuine. Ultimately the AO made an addition in the case of Smt. Kusum Bhura by making the following observations :
“ However, since the assessee in the balance sheet has shown increase in jewelry by Rs. 4,53,354/- there is no evidence on record to doubt that she didn’t make any purchase in the FY-2009-10 except making cheque entry. In fact, she made the purchase from some other party in earlier year but has not furnished the details of the same. Accordingly, expenditure of ~ 4,53 354/- incurred towards purchase of diamonds shown as jewellery in the Balance Sheet is considered as unexplained investment u/s 69 of the Act and deemed to be the income of the assessee for the financial year 2009-10.”
5. In the case of Shri Shrenik Bhura the AO made an addition by observing as follows :-
“ In view of the above facts and circumstances, , the purchase shown to have been. made from M/s. Minal Gems cannot be considered genuine. However, since the assessee, in the balance sheet has declared Investment in diamonds at Rs. 8,07,620/-there is no evidence on record to doubt that he didn’t make any purchase. In fact, he made the purchase from some other party but has not furnished the details of the same.
Accordingly, investment of Rs. 8,07,620/- Incurred towards purchase of diamonds shown as investment in the Balance Sheet is considered as being made from unexplained source and deemed to be the income of the assessee for the financial year 2009-10. [ Addition: Rs. 8,07,620/-“
6. On appeal by the assessee the CIT(A) confirmed the orders of the AO. Hence these appeals by the assesses before the Tribunal.
7. I have heard the submissions of the ld. Counsel for the assessee and the ld. DR. The ld. Counsel for the assesee pointed out that the jewellery in question has been purchased by the assesee which was confirmed by Minal Gems and the payment has been made by cheques to Minal Gems. More important it was pointed out that the investments has been shown in the books of accounts and the source had been duly explained as from the disclosed bank accounts of the assessee. It was submitted that in the circumstances the addition made u/s 69 of the Act cannot be sustained. The ld. DR relied on the orders of CIT(A).
8. I have given a very careful consideration to the rival submissions. It is an undisputed position that addition in case of both the assesses have bee made u/s 69 of the Act. Section 69 of the Act reads as follows :-
“ 69. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year.”
9. In the present case investments of jewellery is duly reflected in the books of accounts of the assesses. Therefore there is no scope of applying the provision of section 69 of the Act. Apart from the above source of funds is evidenced by the payments from disclosed bank accounts. Therefore the source of investments is also properly and satisfactorily explained by the assesses. In the circumstances, I am of the view that the additions made by the AO and confirmed by CIT(A) cannot be sustained and the same is directed to be deleted.
10. In the result both the appeals by the assesses are allowed.
Order pronounced in the Court on 03.01.2018.