Rakeshkumar Babulal Agarwal v. Principal Commissioner Of Income Tax (Central) Ahmedabad ==========================================================Appearance

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 1904 of 2022 ========================================================== RAKESHKUMAR BABULAL AGARWAL Versus PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) AHMEDABAD ==========================================================Appearance: MR FENIL H MEHTA(11663) for the Petitioner(s) No. 1MR MR BHATT SENIOR COUNSEL WITH MR KARAN SANGHANI,ADVOCATE FOR M R BHATT & CO.(5953) for the Respondent(s) No. 1,2,3,4========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALAand HONOURABLE MS. JUSTICE NISHA M. THAKORE Date : 07/03/2022 ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1By this writ application under Article 226 of the Constitution ofIndia, the writ applicant – an assessee has prayed for the followingreliefs: “(a) direct the respondent No.1 to accord the approval for release of theseized gold jewellary weighing 524.500 grams of the petitioner. (b) quash and set aside the seizure of the gold jewellary being stock-in-trade of business of the petitioner carried out by respondent No.4; (c) direct the respondent NO.4 to release the seized gold jewellary ofthe petitioner. (d) any other and further relief deemed just and proper by granted inthe interest of justice; (e) to provide for the cost of this petition.” 2The facts giving rise to this writ application may be summarized as under: 3It appears from the materials on record that the writ applicant isengaged in the business of Gold Jewellary. The writ applicant filed hisreturn of income for the A. Y. 2018-19 on 29[th] September 2018 declaringhis total income to the tune of Rs.16,41,430/-. 4It appears that search was carried out in the case of one ShriSureshkumar under Section 132 of the Income Tax Act (for short, “theAct”). It is the case of the Revenue that one M/s. Parv Kundan andDiamonds Private Limited, in its capacity as the consignor, dispatched apackage containing gold jewellary weighing 524.500 grams, through acourier which was to be received by the writ applicant as the consignee.The case of the writ applicant is that he had purchased the goldweighing 524.500 grams from M/s. Parv Kundan and Diamonds PrivateLimited. 5The assessment proceedings were carried out in the case of thewrit applicant under Section 153C of the Act. In the assessmentproceedings for the A. Y. 2018-19, the respondent No.3 added the seizedgold jewellary weighing 524.500 grams valued at Rs.12,26,333/- to thetotal income of the writ applicant treating the same as unaccountedinvestment vide the assessment order under Section 143(3) read withSection 153C of the Act dated 19[th] December 2019. 6The writ applicant is here before this Court with a prayer that thegold jewellary which came to be seized by the Revenue weighing524.500 grams should be released and handed over to him. 7We have heard Mr. Fenil H. Mehta, the learned counsel appearing for the writ applicant and Mr. M. R. Bhatt, the learned Senior Counselassisted by Mr. Karan Sanghani, the learned counsel appearing for theRevenue. 6The writ applicant is here before this Court with a prayer that thegold jewellary which came to be seized by the Revenue weighing524.500 grams should be released and handed over to him. 7We have heard Mr. Fenil H. Mehta, the learned counsel appearing for the writ applicant and Mr. M. R. Bhatt, the learned Senior Counselassisted by Mr. Karan Sanghani, the learned counsel appearing for theRevenue. 8We need to consider the principal argument of Mr. M. R. Bhatt,the learned Senior Counsel appearing for the Revenue that the writapplicant is not entitled to claim back the seized articles i.e. the goldjewellary because the writ applicant is the receiving party and theaddition made by the respondent No.3 was made on protective basis onaccount of the seizure of the jewellary. According to Mr. Bhatt, thesender party (consignor) is M/s. Parv Kundan and Diamonds PrivateLimited. Addition was made in the hands of M/s. Parv Kundan andDiamonds Private Limited on the basis of such jewellary seized weighing524.500 gms. resulting into the demand of Rs.34,99,560/- and penaltyunder Section 271AAC of the Act. To put it briefly and more succinctly,the argument canvassed on behalf of the Revenue is that the jewellarycannot be released as the addition was made on the basis of suchjewellary in the case of consignor i.e. M/s. Parv Kundan and DiamondsPrivate Limited and a demand of Rs.87.79 Lakh is outstanding. 9The aforesaid stance of the Revenue needs to be considered inlight of the order passed by the CIT(A) dated 25[th] February 2021. We arereferring to the order passed by the Assessing Officer in the case of thewrit applicant under Section 153C read with Section 143(3) of the Actwhich was challenged by the writ applicant in appeal before the CIT(A).We quote the relevant observations made by the CIT(A) while allowingthe appeal filed by the writ applicant as under: “12I have considered the facts, submissions remand report andrejoinder by the appellant. The AO has made the addition ofRs.12,26,333/- treating the gold and jewellary of net weight at 524.5 gms valued at Rs.12,26,333/- as unaccounted investment of theappellant. It has been noticed that Shri Suresh Kumar from M/s.JayMataji Air Service and Shri Jagdish Prasad from M/s.Bright Courierwere intercepted on 27.10.2017 at the Rajkot Airport during getting thedelivery of parcels came through Jet Airways flight from Hyderabad andDelhi. The AO found that these two persons failed to furnish the detailsof ownership of the parcels and produce the relevant documents toprove the genuineness of the contents of the parcels i.e gold/jewellery.In the statement recorded u/s. 132(4) both the persons have confirmedthat the items from the said parcels were to be delivered to the variouspersons at Rajkot. The said gold jewellery was related to the job work,purchases or repairing purposes. It was also noticed that both the abovecarriers were in whose possession said parcels were found and seizedwere not the real owners of the parcels and in the statement recordedthey have provided correct details of the sender and receiver parties ofsuch parcels. So proceedings u/s. 153A of IT Act were initiated in boththe cases and during the proceedings u/s.153A the satisfaction wasdrawn to initiate proceedings u/s.153C of IT Act in the case of assesseealso. 12.1 Subsequently in the proceedings an enquiry was also carried outfrom the sender party through commission issued to DDIT (Inv.), Delhiwhereby the sender party namely M/s. Parv Kundan & Diamonds Pvt.Ltd. has denied to having any transactions with the assessee. 12.1 Subsequently in the proceedings an enquiry was also carried outfrom the sender party through commission issued to DDIT (Inv.), Delhiwhereby the sender party namely M/s. Parv Kundan & Diamonds Pvt.Ltd. has denied to having any transactions with the assessee. 12.2 On perusal of the statements of the above person and documentssubmitted by the sender party the AO observed that party has probablyfailed to produce the form No.402/403 of GST for inter-state transfer ofgold on job work/sale. Therefore, the AO inferred that the above partyhave failed to establish the genuineness of transaction and documentssubmitted were nothing more than a futile effort based on afterthoughtfor colouring the unaccounted transactions vis-à-vis transfer ofunaccounted gold bullion. It was also observed by the AO that assesseehas failed to substantiate actual owner of the gold/consigner. 12.3 On the other side the appellant has purchased gold from the aboveparty vide bill No.PKD/GST/001 dated 26.10.2017 and payment madethrough banking channels. It was also submitted that the purchasesmade from the above party was duly accounted for in the books ofaccounts of the assessee. In support the appellant has also submittedthe following documents: a) Copy of invoice of M/s. Parv Kundan & Diamonds Pvt. Ltd. b) Copy of bank statement highlighting the payment made to M/s. ParvKundan & Diamonds Pvt. Ltd. c) Copy of purchase register fro the F.Y. 2017-18. d) Copy of audited financial statement for the F.Y. 2017-18. e) Copy of VAT Annual Return and GST Annual Return for the F.Y.2017-18. 12.4 Further, it was submitted that the purchases have been dulyaccounted for as per the bills received and the material reached throughthe courier and payments have also made through cheques. The stockwas entered in the books of accounts. Therefore, there was no reason tomake the addition. It was further pointed out that the provisions ofSection 69A are not applicable in the case of appellant. The transactionswere business transactions and duly accounted for in the books ofaccounts, therefore, the pre condition to apply section 69A that thoseare to be unaccounted transactions does not get satisfy. 12.5 Having considered the facts and submissions it was noticed thepurchases was recorded in the books of accounts of the assessee videGST bill dated 26.10.2017, so there was no case of any unaccountedpurchases by assessee, The above party in the statement recorded havedenied of any transactions with the assessee. This enquiry finding hasnot been confronted by the AO in the assessment proceedings.Moreover, the copy of the bill of the aforesaid party dated 26.10.2017referred above has been provided by the appellant to the AO. There wasno enquiry about the authenticity of the aforesaid GST bill and thepayments made by the appellant to the above party through bankingchannels. The AO has not given any comments on the GST bill and thepayments of purchases made by the assessee to the above party throughbanking channels for no reasons. The appellant has provided thenecessary documents in support which shows that appellant has dulyrecorded the purchases in the books of accounts. Thus there was noquestion of any unaccounted transactions which could be consideredfor addition. 12.6 Without prejudice to the above, even if for the sake of argumentsthe version of the aforesaid party denying the transactions with theappellant before DDIT (Inv.), Delhi is taken to be true, even though thesame will not have any adverse action in the case of appellant for thereason that in case the said purchases assumes to have been made fromthird party other than the above, still it has been recorded in the booksof accounts and payment has been made through banking channels.Thus, irrespective of the above version of the aforesaid party the saidpurchases in the hands of appellant would not be regarded asunaccounted as it has already been recorded in the books of accounts.For such purchases it is not the case of the AO that the purchases wasinflated or bogus one. Hence in that case also no disallowance waswarranted. 12.7 In view of the above discussion, the additions made by the AO isnot correct more so when the documentary evidences in respect of thetransactions were verifiable from the books of the appellant. Thus therewas no case made out by the AO about the unexplained investments inthe gold jewellery by the appellant. Thus, the protective addition madeby the AO does not survive and hence the same is deleted. The groundof appeal is allowed.” 10Thus, the CIT(A) recorded a finding that the writ applicant hereinhad purchased gold from M/s. Parv Kundan and Diamonds PrivateLimited vide the bill dated 26[th] October 2017 and had also madepayment through the banking channels. There is a finding of factrecorded by the CIT(A) which has attained finality as the Revenue notthought fit to challenge the order passed by the CIT(A) before theappellate Tribunal that the purchases were duly accounted in the booksof account of the assessee i.e. the writ applicant herein. The CIT(A)further recorded that even if the version of M/s. Parv Kundan andDiamonds Private Limited as regards the transaction with the writapplicant herein before the DDIT (Investigation), Delhi was to beaccepted as true, still it would not make any difference because thepurchase has been recorded in the books of account of the writ applicantand payment has been made by the writ applicant through bankingchannel. The CIT(A) came to the conclusion that the said purchasecannot be termed as unaccounted. 11In view of the aforesaid findings recorded by the CIT(A) and suchfindings having attained finality as the order of CIT(A) has not beenchallenged further by the Revenue before the appellate Tribunal, we areleft with no other option, but to accept the case put up by the writapplicant that he had purchased the gold in question from M/s. ParvKundan and Diamonds Private Limited and had also accounted for thesame in his books of account. In such circumstances, the Revenue cannot withhold the seized gold jewellary weighing 524.500 grams. It has got tobe released in favour of the writ applicant. 12In the result, this writ application succeeds and is hereby allowed.The respondent No.1 shall accord the approval for release of the seizedgold jewellary weighing 524.500 grams in favour of the writ applicant atthe earliest. Direct service is permitted. (J. B. PARDIWALA, J) CHANDRESH (NISHA M. THAKORE,J)