1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. INCOME TAX APPEAL NO.733 OF 2009 The Commissioner of Income Tax-25. ....Appellant. Vs. Shailesh M.Shah. ...Respondent. ..... Mr.N.A. Kazi for the Appellant. Mr.V.S.Hadade for the Respondent. ..... CORAM : DR. D.Y.CHANDRACHUD & J.P. DEVADHAR, JJ. 18th January, 2010. P.C.: The appeal was admitted on the following substantial questions of law : “1. Whether, on the facts and in the circumstances of the case and law, the ITAT, Mumbai was justified in deleting the additions of Rs.51,11,147/- made on account of alleged unaccounted income from the sale of jewellery declared under VDIS97. Despite the facts that the assessee has failed to produce evidence of purchase of diamond & jewellery and possession of the same at the time of disclosure made under VDIS97? -2. Whether, on the facts and in the circumstances of the case and in law, the ITAT was justified in not appreciating the facts of the bogus firms established to have been floated by Shri Kamal Kumar Johari and Shri Hari Om Sharma for giving ‘accommodation entries’ on commission basis for fictitious sale of one existent 2 diamonds and gold jewellery and further ignoring this sham nature of transaction involved in this case? -3. Whether, on the facts and in the circumstances of the case and in law, the ITAT was justified in ignoring the special bench decision of the ITAT, Delhi in the case of Manoj Agarwal vs. Deputy CIT Central Cir.3, New Delhi reported in 113 ITR 377 in the case of Uttamchand Jain and further justify that the factual scrutiny and investigation of the application made by the assessee under VDIS97 are beyond the jurisdiction of A.O.?” Counsel appearing on behalf of the Revenue has placed on the record, an order passed by a Division Bench of this Court on 2nd September 2009 in CIT vs. Madhu Ashokkumar Motwani, Income Tax Appeal 1400 of 2009 and connected appeals. The Division Bench while dismissing the appeals, observed as follows : “These appeals are directed against the order of the Tribunal, whereby the Tribunal relying upon its decision in the case of Mini Exports and/or Kartik Exports owned by Kamal Kumar Johri and Hari Om Sharma and/or Galaxy Exports held that so long as the VDIS Certificate issued under the VDIS, 1997 is holding the field, it is not open for any of the authorities created under the Act, to go behind the certificate and canvass a contention contrary to the certificate issued under the VDIS. We had an occasion to consider similar question in Income Tax Appeal No.634 of 2009 (CIT vs. Uttamchand Jain) decided on 2-7-2009, wherein we have concurred with the said view of the tribunal.” 3 The Tribunal, in the present case, has held that the additions were based in consequence of the search action against the Johri and Sharma Groups who are alleged to have floated bogus firms. The Tribunal has noted that in the case of the Johri and Sharma Groups, the Tribunal has held that no addition could be made on account of undisclosed income. In the present case, since the additions were based on the additions made in the case of the Johri and Sharma Groups, which are deleted, and as that was the only foundation for the assessment in question, the CIT (Appeals) was found to have rightly deleted the additions made by the Assessing Officer. The view, which has been taken by the Tribunal, is consistent with the law laid down by this Court in CIT vs. Uttamchand Jain, 182 Taxman 243, wherein it has been held that as long as the VDIS certificate issued held the field, it is not open to any of the authorities under the Income Tax Act, 1961 to canvass a contention contrary to the certificate. In the circumstances, following the earlier judgments of this Court in the case of Uttamchand Jain (supra) and Madhu Ashokkumar Motwani (supra), the questions of law which have been formulated would have to be answered against the revenue. The appeal is 4 accordingly dismissed. There shall be no order as to costs. ( Dr.D.Y.Chandrachud, J.) ( J.P.Devadhar, J.)