Case Number: ITA 5964/DEL/2019
Appellant: Shree Krishna Jewellers, New Delhi
Respondent: ITO Ward-47(4), New Delhi
Assessment Year: 2007-08
Order Type: Final Tribunal Order
Date of Order: 2023-08-09
Pronounced On: 2023-08-09
Introduction:
This case involves Shree Krishna Jewellers, New Delhi, who filed an appeal against the addition of Rs. 63,00,167/- made by the Income Tax Officer (ITO) Ward-47(4), New Delhi. The addition was made on the grounds of alleged bogus purchases during the assessment year 2007-08. The appellant challenged the validity of the assessment order, contending that the addition was made without proper evidence and due process.
Background and Grounds of Appeal:
The appellant, Shree Krishna Jewellers, filed its income tax return for the assessment year 2007-08. However, the Assessing Officer (AO) reopened the assessment under Section 147 of the Income Tax Act, 1961, based on information received from the Investigation Wing of the Department. The information suggested that the appellant had made purchases from certain firms engaged in providing accommodation entries, which were deemed to be bogus purchases.
In the reassessment, the AO made an addition of Rs. 63,00,167/-, representing 90% of the total purchases made from these firms, amounting to Rs. 70,00,185/-. The AO treated these transactions as mere adjustment entries with no actual delivery of goods. The appellant contested the reassessment on several grounds:
Tribunal’s Analysis and Findings:
The Tribunal carefully examined the case, considering the submissions from the Departmental Representative and the records available. It was noted that the appellant did not appear before the Tribunal despite being served notice, and hence, the case was decided ex parte.
The Tribunal observed that the AO’s addition was based on information indicating that the appellant had made purchases from firms involved in providing accommodation entries. These firms, including M/s AVI Exports and M/s Vitrag Jewels, were identified by the Investigation Wing as entities used to launder money by creating false purchase entries. The AO relied on statements made by the proprietors of these firms to the Investigation Wing, which indicated that the firms had no physical stock and were merely conduits for paper transactions.
The Tribunal found that the appellant failed to produce credible evidence to contradict the findings of the AO. The appellant’s request for cross-examination was deemed impractical, as the suppliers were located far from the jurisdiction, and the law does not compel the authorities to summon individuals residing beyond a certain distance.
The Tribunal further noted that the appellant’s claim of having submitted confirmations from the suppliers was not sufficient to establish the genuineness of the transactions, given the overwhelming evidence of the suppliers’ involvement in bogus activities.
On the merits of the case, the Tribunal agreed with the AO’s assessment that the purchases were indeed bogus and that the addition made was justified. The Tribunal rejected the appellant’s contention that the addition was excessive, stating that the AO had already granted a 10% margin, recognizing that grey market goods are often transacted at prices below the market rate.
Conclusion:
The Tribunal upheld the order of the CIT(A) and dismissed the appeal filed by Shree Krishna Jewellers. The addition of Rs. 63,00,167/- to the appellant’s income for the assessment year 2007-08 was confirmed, and the appellant’s grounds of appeal were found to lack merit.
Final Judgment:
The appeal filed by Shree Krishna Jewellers is dismissed, and the addition of Rs. 63,00,167/- made by the ITO Ward-47(4), New Delhi, is upheld.
Order Pronounced: 9th August 2023
Judges: Dr. B.R.R. Kumar, Accountant Member, and Shri Yogesh Kumar U.S., Judicial Member
Reference: IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’: NEW DELHI
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