TMI Blog2016 (10) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter afresh and the assessee shall provide all the requisite details in terms of names and address and other requisite particulars of the depositors as well as of the beneficiaries, the assessee has to explain the nature and source of the transactions in terms of deposits and establish the necessary linkage between the deposits and the subsequent withdrawals to various individual beneficiaries. The ld CIT(A) shall call for the records maintained by the Investigation Wing in respect of the survey proceedings and confront the same to the assessee to provide her a suitable opportunity. - ITA No. 942,943,944 & 945/JP/15, ITA No. 932, 933, 934 & 935/JP/15, ITA No. 940 & 941/JP/15 - - - Dated:- 20-10-2016 - Kul Bharat (Judicial Member) And Vikram Singh Yadav (Accountant Member) For the Assessee : Nikilesh Kataria (CA) For the Revenue : R. S. Dagur (Addl.CIT) ORDER Vikram Singh Yadav (Accountant Member) All these appeals have been filed by the Revenue against the order of ld CIT(A) where the facts and circumstances of the case and the grounds of appeal are common. The same were heard together and disposed off by this consolidated order. As submitted and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the form of cash deposits below the threshold limit were taking place in the bank accounts maintained by the assessee in different Branches of Kishangarh. Thereafter the case of the assessee was centralised from ITO, Ward, Kishangarh to ACIT Central Circle, Ajmer pursuant to CIT, Ajmer s order No. CIT/AJM/2010-11/652 dated 10.06.2011. The assessee had filed her original return of income on 29.10.2012 declaring total income at ₹ 2,48,790. A notice u/s 148 of the IT Act was thereafter issued on 18.03.2013. In compliance, the assessee stated that return of income filed earlier on 29.10.2012 may be treated as return in response to notice u/s 148 of the Act, and has also asked reasons for reopening the assessment. The reasons recorded were forwarded to her and after receiving her objections, the same were disposed off and thereafter, the AO proceeded with the issuance of notice u/s 143(2) of the Act and, after considering the submission of the assessee, given his findings as under: The assessee has claimed to have earned income from commission. As mentioned herein above, in this case a survey action u/s 133A was carried out by Investigation Wing. During the course of sur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of commission. As has been admitted by the assessee during the course of survey u/s. 133A, the assessee is also prima facie found engaged in providing facility of bringing cash payment of the marble traders by allowing them to use her bank accounts. Also this is in conformity with the prevailing market practice in this business in this region. On perusal of balance sheet filed by the assessee alongwith the return of income, it is surprising that no bank account has been disclosed whereas the assessee is maintaining following bank accounts:- S.No. Bank A/c No. Turnover 1. 8312 1010 0000 30 (Syndicate) Rs.25,000/- 2. 0288 0001 0022 7846 (PNB) Rs.4,14,18,146/- 3. 0288 0001 0003 9366 (PNB) Rs.6,48,62,444/- 4. 0288 0021 0004 0441 (PNB) Rs.3,03,48,253/- 5. 0288 0021 0004 2689 (PNB) Rs.88,90,988/- 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as beneficiaries to whom payments were made, the assessee s claim could be accepted that she was just a broker earning commission. In absence of these basic details, it is not proved that she was providing facility of bringing unrecorded sales proceeds of any sellers through her bank accounts. In the situation, there is no other option except to hold that the deposits in bank accounts are nothing but assessee s own trading receipts/sale proceeds and withdrawals were for the corresponding purchases and expenses. In light of these facts, it is established that assessee was engaged in the business of marble trading and the deposits in bank accounts on different dates represent the sale proceeds. Thereafter, the AO proceeded with the estimation of income considering the nature of business as marble trading and a show-cause was issued dated 3.3.2014 asking the assessee to show-cause why the gross profit on undisclosed turnover amounting to ₹ 11,37,60,458 for the AY 2009-10 should not be added to the total income. And thereafter, he proceeded to apply prevailing rate of gross profit of trading business of marble in and around Kishangarh area considering the amount of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffice letter dated 12.03.2015 has not approve the proposal u/s 148 for reopening the cases of Shri PrakashChand Vijayvargiya and Shri Manoj Kumar Agarwal. (6.3) The appellant relied on the decision of the Hon ble Apex court in the case of Sun Engineering reported at 198 ITR 297(SC) for proposition that only the reasons recorded are to be considered. With all due respect to the decision, if some other concealed income is noticed during the proceeding for the re-assessment, there is no bar to take cognizance of the same. However, the finding to that effect must be clinching. (6.3.1) In the instant case the proceedings starts with taxation of commission income in the transactions facilitated by the appellant for the marble traders of Kishan Garh, the entire reassessment proceeding did not turn out with even iota of evidence for the theory canvassed by the AO that the appellant was in fact marble trader and GP at the prevalent rate on the transactions facilitated by the appellant should be taxed. The basis for coming out with this theory is nothing but an excuse namely, when AO told to produce the actual beneficiaries at the fag end of the reassessment proceedings, the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the action of the AO in estimating GP on the same transactions facilitated by the appellant for marble traders of Kishangarh can neither be approved in toto nor be sustained in any alternative way as it militate against existing evidences and the findings on record. Rather, under the facts and circumstances of facilitators, entry providers, the right approach is to tax only commission income as it was done in cases of Shri Prakash Chand Vijayvargiya and Shri Manoj Kumar Agarwal AY 2009-10 mentioned in para 6.2 above with a small refinement discussed as follows. (6.5) From the perusal of most of the survey reports and statements recorded of facilitators of Madanganj, Kishangarh, predominant view could be formed that these facilitators were given about ₹ 300 per Rs. Lac or we can say alternately 0.3 paise per ₹ 100/-. The rate of commission ₹ 300 per Rs. Lac or we can say alternatively 0.3 paise per ₹ 100/- seems to be reasonable considering their limited role of allowing cash deposit in the bank account of facilitator and withdrawal of cash by beneficiaries without any dependence of beneficiary on them in future for follow-up record keeping, verifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commission receipts. It even stated the names of parties from whom the commission have been received. In response to question no. 23, the assessee has clearly denied any kind of trading in marbles. The statement along with other corroborative evidences is a vital proof that no trading in marble took place. (1.1.2) The ld AR further submitted that there was no Iota of evidence of trading in marble during the course of Survey. It is pertinent to note that during the entire survey proceedings, no paper/documents/note book etc. were found with regard to any sort of trading in marble. Though several questions were asked with regard to the material found during the course of survey, question no. 19 is very much relevant, in which the assessee given explanation on the loose slips etc. so found: From the statement, it would be seen that the assessee has duly explained each and every loose paper and entries in the notebook found during the course of survey. The explanation and entries clearly indicated that the assessee was only acting as facility provider and it only received commission from the parties. Not a single rupee was deposited or withdrawn from the bank account on its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may also submit that had the assessee involved in trading, at least some record like quantitative details, weighing details, transportation details, quality details of marble traded, expenses which might have been incurred with regard to trading like salary, staff welfare, conveyance etc. would have found. But there is absolutely nothing on record and the department, neither in the course of survey proceedings nor in entire assessment proceedings which ran for more than two years, could find any evidence supporting its allegation obviously because no trading was done by the assessee. (1.1.6) The ld AR further submitted that there was no infrastructure for trading in marble. It is submitted that there was no business premises or godown with the assessee so has to carry out any sort of marble trading. Even in the remand proceedings the ld AO itself has stated the following. Smt. Kusum Devi Vijayvargiya a) Assessee is not registered with sale tax department and not filed sale tax return. b) Assessee is not registered with central excise and not filed excise return. c) Assessee has not shown debtors and no creditors. d) Assessee has no purchases or sales account. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the ld.AO to ld.CIT (A) on dt.07-08-2015 which is placed at PB 1-2. At para 3 ,it is stated by the ld. AO that the permission to reopen the case for AY 2009-10 has been denied. Thus it is clear that even the higher authority in the department had a view that commission income was rightly assessed by the then ld AO and there was absolutely no need to reopen the case to assess the income while applying GP rate. Therefore the ld CIT (A) was fully justified in assessing the commission income instead of applying GP rate. (1.2). The ld AO itself Have Agreed of Prevalent Practices of Facility Provider: it is important to note that the ld AO itself has mentioned at more than one place in the assessment order of such activities of providing bank account facilities to deposit and withdraw the cash by various persons like assessee. At page no. 4 para 2 of the assessment order the ld AO itself has conceded the fact of earning commission while acting as facility provider. Even in para 3 of the same page the ld. AO accepted that the assessee was prima facie engaged in providing facility to use his bank account for cash transactions. We are reproducing herewith the relevant extract of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in later paras). In fact, similar situation was there in the entire assessment proceedings and therefore, the change of stand was without any logical basis or incremental evidence on record. Therefore, the ld. AO was totally incorrect and unjustified in its approach and as such the conclusion reached by the ld. AO was without any valid basis. (1.2.2). No Ways and Means with the Assessee to Produce the Beneficiaries: The ld AO denied the submission of the assessee only on the ground that it could not produce the beneficiaries or give confirmation from them. In this regard we may submit that what the ld AO was expecting from the assessee was beyond the possibility of fulfilment. The modus operendi itself suggest that the assessee has no control over the beneficiary and the assessee merely was acting as facilitator. After handing over the amount almost same day of deposit there remained no balance with the assessee and therefore it could not have any control on such beneficiaries. Even further there was no other sort of business relationship which could have made any confirmation from such parties possible. Therefore it is very much unreasonable on the part of the ld AO to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the beneficiaries (1.2.6) Case Laws: In Sanjay Kumar Garg vs. ACIT 144 TTJ 77, 134 ITD 82 (Del) it was held that only the commission income could be charged on the turnover made in the bank account and the entire bank deposit could not be considered for making of additions. The fact in the present case is also similar to a great extent. (1.2.7) Commission Rightly Assessed @Rs.225/- per Lac by the ld. CIT(A): In the instant case, survey was carried out at various unrelated parties at the same time. It would be clear from the statement of the assessee that the assessee was earning commission to the tune of ₹ 150/- to ₹ 300/- per lac. It is pertinent to note that similar statements have been given by several other parties in the course of survey. The ld. CIT(A) has taken the commission at the higher end of such range i.e. @Rs.300/-. Thus the same was taken on the basis of prevalent practices as well as the statement of the assessee. (1.2.8) Expenses @25% out of Commission Rightly Allowed by the ld. CIT(A): It is also submitted that the assessee has also to incur certain expenses like conveyance, telephone, stationary, light, bank charges etc. for follow up, veri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assistance of her husband to whom she has authorised and not by the marble traders. Here it is also relevant to note that the AO has also stated in his order about the said market practice in the business of marble trading where there is large scale under invoicing and under billing of sales. The ld. AO has stated that generally, for obtaining sale consideration of actual transaction from the buyers located outside the hometown or throughout India, the traders obtain part amount through cheques and for balance amount, they have been using their confidants (facility providers). The confidents are having multiple bank accounts either in their name or in the names of their family members or concern/forms. Their bank account numbers are intimated to the buyers who deposit the balance amount which is actually on-money, in the bank account of the confidants. The buyers deposit amount below ₹ 50,000/- to avoid mentioning PAN on pay-in-slips. After receipt of amount in bank account, the confidants i.e, facility providers withdraw the amount of onmoney and hand over to the beneficiaries i.e. sellers. The AO has therefore, given his prima facie finding that the assessee is found p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the assessee was the owner. Sec. 110 of the Evidence Act is material in this respect and the High Court relied on the same which stipulates that when the question is whether any person is owner of any-thing of which he is shown to be in possession, the onus of proving that he is not the owner is on the person who affirms that he is not the owner. In other words, it follows from the well-settled principle of law that normally, unless the contrary is established, title always follows possession. In the facts of this case, indubitably, possession of the wristwatches was found with the petitioner. The petitioner did not adduce any evidence, far less discharge the onus of proving that the wrist-watches in question did not belong to the petitioner. Hence, the High Court held, and in our opinion rightly, that the value of the wrist-watches is the income of the assessee. In this connection, reference may be made to the views expressed by Justice Tulzapurkar, as his Lordship then was, of the Bombay High Court in the case of J.S. Parkar vs. V.B. Palekar (1974) 94 ITR 616 (Bom) : TC42R.1775, where, on a difference of opinion between Justice Deshpande and Justice Mukhi, Justice Tulzapur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee could have submitted the said information/data to the AO during the course of assessment proceedings. There is nothing on record to suggest that the assessee was not having access to the said information or was prevented by sufficient cause from sharing these information with the AO. It is not the plea of the assessee all these documents were seized during the course of survey and she was not having access to all these documents which were admittedly maintained by her while transacting through her bank accounts. In our view it is for the assessee in whose bank accounts the money has been found deposited to explain the nature and source of such deposits and it is in respect of every such transaction, the assessee has to provide the necessary explanation to the AO. Similarly, the claim of the asseseee that the money was withdrawn and given to the various beneficiaries has to be explained for each of the transactions and the necessary linkage/nexus has to be established by the assessee. The same is in conformity with the proposition of law laid down by the Hon ble Rajasthan High Court in the case of R.S. Rathore 212 ITR 350 (Raj.). In that case, even though the decision w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the investments were satisfactorily explained. The Tribunal itself was not in a position to feel satisfied with regard to the explanation submitted and observed that some of the investments were not genuine. It was not justified on the part of the Tribunal in such a case to uphold the order of the CIT(A). While explaining the various credits and investments, it may be possible that the assessee may be successful in explaining some of them, but that does not by itself mean that the entire investments have to be considered as explained. Even lapse of time or inability of the assessee would not make the unexplained investment an explained one. It is each and individual entry on which the mind has to be applied by the taxing authority when an explanation is offered by the assessee. If no explanation has been offered in respect of a particular entry, the taxing authority will be justified in coming to the conclusion that the said investment is unexplained. It is not the totality of the credit entries which are to be allowed or to be disallowed. This work has to be done on the basis of the explanation offered for different entries and if the explanation of the assessee is acceptable on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank accounts maintained by the assessee, the details in respect of which has been obtained by the AO by issuing notices calling for the information from the various banks. It seems to us that the reason for inaction on the part of the AO is account of AO not having necessary records of survey maintained by the Investigation Wing. There thus seems to be a clear lack of co-ordination between the Investigation wing and the Assessing Officer handling the assessment. We do not see a justifiable reason especially where the case of the assessee alongwith other similar assesses were centralized before a single assessing authority, why the survey records cannot be shared with the said authority so that the efforts initiated through survey can lead to a logical conclusion by arriving at the appropriate assessment in the hands of right persons. The fact is that huge cash has been found deposited in the bank accounts maintained by the assessee and it is the assessee s plea that money does not belong to her and it belongs to some other beneficiaries. The money therefore belongs to someone who should be brought to tax as per law where the plea of the asssessee is accepted. 2.11 Now looking at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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