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Prashant Aggarwal, Ram Chander Garg Versus ACIT, Central Circle-09 And ITO Ward-29 (1) , New Delhi And Vice-Versa

2017 (11) TMI 803 - ITAT DELHI

Addition of unexplained income from undisclosed sources - Held that:- Here in this case, as stated above, the addition has been made by the AO on the protective basis on the ground that entire deposits should be added in the hands of Shri Sanjay Kumar Garg. We find that the Tribunal in the case of Shri Sanjay Kumar Garg had applied 0.20% on total deposits appearing in all the bank accounts of all the bogus entities including that of the assessee also. Once in the case of Shri Sanjay Kumar Garg, .....

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he accommodation entry through his bank account for which he was also getting certain commission from Shri Sanjay Kumar Garg and since rate of commission for accommodation entry has been determined and estimated @ 0.20% in the case of Shri Sanjay Kumar Garg, then same rate of commission will be applied in the case of the assessee also and therefore we do not find any infirmity in the order of the Ld. CIT(A) while confirming the rate of commission of 0.20% on the total deposits and accordingly gr .....

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ssion of ₹ 15,07,884/-. Ground No. 2 of the revenue is dismissed. - No penalty u/s 271(1)(c) is leviable, because in the quantum proceedings, we have directed that the addition of cash deposits on protective basis cannot be added and only addition sustained is with regard to 0.20% by way of commission on such cash deposits in the hands of the both assessees. Accordingly, the revenue’s appeals are dismissed. - ITA Nos.: 590, 591, 592, 593/Del /2014, ITA Nos.: 886, 887, 888, 889/Del /201 .....

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8 for the assessment years 2004-05 and 2005-06; and separate appeals have been filed in relation to the penalty proceedings u/s 271(1)(c), against order dated 29.11.2013 for the assessment years 2004-05 and 2005-06. Since issues involved in all the appeals are common arising out of identical set of facts, therefore, same were heard together and are being disposed of by way of this consolidated order. 2. As a lead case, we are taking up the cross appeals in the case of Prashant Aggarwal for the a .....

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mmission of ₹ 6,03,153/- against the facts of ITAT Order passed in the case of Sanjay Kumar Garg - [2012] 134 ITD 0082 (Delhi) on which basis assessment is made. 3. Whereas the revenue in its appeal has raised the following grounds:- i. The Commissioner of Income Tax, (Appeals) has erred in law and on facts in deleting the addition of ₹ 5,56,85,000/- on account of unexplained income from undisclosed sources. ii. The Commissioner of Income Tax (Appeals) has erred in law and on facts i .....

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133A was conducted on 12.7.2004, in the case of Shri Sanjay Kumar Garg, wherein it was found by the Investigation Wing of the department that Shri Sanjay Kumar Garg through his various dummy entities and individuals was carrying out accommodation entry activities to various food grain merchant on mass scale. The modus-operandi which was unearthed was that, cash was received from food grain merchant which was deposited in the bank accounts of his bogus concerns and dubious individuals against whi .....

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in-law 3 Baba Kishore Enterprises Prem Prakash Garg Friend 4. *Yash Enterprises R.C. Garg Father 5. Shiv Shakti Harish Kumar Friend 6. *GRS & Co. Prashant Aggarwal Friend 7. Rahul Enterprises Sanjay Kumar Self 8. Rishabh & Co. Amit Jain Friend * Persons/ entities impugned herein these appeals. 5. In his statement recorded during the course of survey, Shri Sanjay Kumar Garg admitted that no genuine transactions of trading or actual purchase and sales were carried out through these entitie .....

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the financial year 2003-04. The details of which are appearing at pages 8 to 10 of the assessment order. The Ld. A.O. has added the entire deposits of ₹ 5,56,85,000/- on protective basis in the hands of the assessee and held that same shall be added on substantive basis in the hands of Shri Sanjay Kumar Garg. The relevant observation and conclusion of the AO is as under :- 7. In view of the information in the possession of the department in the form of statement of M/s. Sanjay Kumar Garg, .....

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treated as his unexplained income from undisclosed sources. However, in view of the fact that Shri Sanjay Kumar Garg, being the actual account operator in the back ground, this income shall be considered in his hands on substantive basis and on protective basis in the hands of the assessee. As assessee has failed to disclose this income of ₹ 5,56,85,0000/- for taxation, the same is treated as un explained income and as such there is sufficient reason to believe that assessee has concealed .....

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nal vide order dated 28.1.2010 has held that for the entire accommodation entry business carried out by Shri Sanjay Kumar Garg, a commission rate of 0.20% has been applied and therefore, on same line in the case of the assessee also similar rate of 0.20% should be applied on the total deposits of ₹ 5,56,85,000/- and thereupon worked out the income of the assessee at ₹ 1,11,370/-. The relevant observation and finding of the Ld. CIT (A) reads as under:- 7. I have considered the materia .....

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1, 1502, 3531 to 3534/Del/2009 had an occasion to adjudicate upon this issue for the Assessment year 2005-06 and in this order it was held as under :- We have heard both the parties and gone through the material available on record. During the course of survey operations, statement of the assessee was recorded wherein it has been categorically admitted that no purchase and sale activities are undertaken in the names of firms. The assessee was using the firms for the purpose of providing sale bil .....

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is purpose only. The Ld. CIT(A) has given a finding of fact that the assessee was engaged in the business of providing accommodation entries and, therefore, the amounts deposited in the account of dummy concerns was to be treated as total receipts on which commission was to be determined. Therefore, we are in agreement with the view of the Ld. CIT commission was to be determined. Therefore, we are in agreement with the view of the Ld. CIT (A) that only commission can be determined on the deposit .....

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Respectfully following the Hon ble ITAT order, I hold that only commission can be determined on the deposits made in the bank accounts of the appellant. There is no dispute that no commission would be charged on such dealings as the appellant would not have done it free or on charity basis without deriving any benefit for providing bogus entry. There is no clear standard rate of commission on such activities. Since the Hon ble ITAT, after a detailed discussion, has directed in the case of Sanja .....

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o be applied at same rate of 0.20% on such turnover and thereby reducing the addition to ₹ 6,03,153/- and gave relief of ₹ 9,04,731/-. Against the aforesaid finding of the Ld. CIT (A) both the parties are in appeal before us. 9. We have heard both the parties at length and also perused the relevant finding given in the impugned order as well as the material referred to before us. The revenue has challenged the deletion of addition of entire cash deposits made in the bank account of & .....

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deposits should be added in the hands of Shri Sanjay Kumar Garg. We find that the Tribunal in the case of Shri Sanjay Kumar Garg had applied 0.20% on total deposits appearing in all the bank accounts of all the bogus entities including that of the assessee also. Once in the case of Shri Sanjay Kumar Garg, where substantive addition was made by estimating the commission income from the accommodation entry @ 0.20%, then there is no basis for sustaining the protective addition of entire cash depos .....

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n applied, then no separate addition should be made in the hands of the assessee. However we are unable to appreciate such contention, because the assessee was provided the accommodation entry through his bank account for which he was also getting certain commission from Shri Sanjay Kumar Garg and since rate of commission for accommodation entry has been determined and estimated @ 0.20% in the case of Shri Sanjay Kumar Garg, then same rate of commission will be applied in the case of the assesse .....

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ts which is part of total turnover is to be taken @ 0.20%, then there is no requirement for making separate addition again on commission for giving accommodation entry. Accordingly, we delete the entire addition of commission of ₹ 15,07,884/-. Hence ground No, 3 of the assessee is treated as allowed, whereas ground No. 2 of the revenue is dismissed. 12. Exactly same additions have been made in the assessment year 2005-06 also and similar grounds have been raised in the cross appeals by bot .....

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of ₹ 60,94,327/- was added by the A.O. and Ld. CIT(A) had applied commission rate of 0.2%. Shri Ram Chander Garg was also part of the same entity of Shri Sanjay Kumar Garg and therefore, the Ld. CIT (A) following the same order of Shri Sanjay Kumar Garg has applied commission income 0.20% in the hands of this assessee also. Similarly, the A.O. has added separate commission income of ₹ 17,95,882/- on similar footing. Accordingly, in view of our finding given in the case of Shri Prash .....

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al and Shri Ram Chander Garg. The Ld. CIT(A) has directed the A.O. to levy the penalty of 0.20% sustained by him, against which assessee is in appeal; whereas the revenue has challenged the order of Ld. CIT(A) on the levy of penalty on the entire cash deposits made on protective basis and part of the commission deleted by the Ld. CIT(A). 15. So far as the revenue s appeal is concerned same in view of our finding given above are to be dismissed, as no penalty u/s 271(1)(c) is leviable, because in .....

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