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2019 (5) TMI 428

..... ath u/s 132(4) - presumption of statement made u/s 132(4A) - retraction of statement - HELD THAT:- The assessee, in statement on oath u/s 132(4) during search proceedings, categorically admitted to be engaged in providing accommodation entries of varied nature through two name-sake entities without carrying out any actual business activity. The modes-operandi adopted by the assessee has elaborately been enumerated in the impugned order as well as in the statement given by the assessee. The incriminating material in the shape of Annexure A-1 to Annexure A-5 in respect to parallel accounts containing details of cash transactions etc. was found from the possession of the assessee which unequivocally corroborated the aforesaid statement. AR has submitted that the statement was retracted but it is noted that the statement has been retracted after lapse of more than 10 months without any supporting facts to demonstrate that the same was given under any coercion or threat. Presumption of Section 132(4A) stood against the assessee and complete onus to negate the same was on assessee which has remain undischarged. All these factors do not inspire us to accept the submissions of Ld. AR .....

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..... herefore, the credit of the same shall be granted to the assessee. The assessee, in its own return of income, has reflected salary from M/s Abhayaraj Gems Private Ltd. which also, for the same reasons, could not be termed as real income and therefore, the same would stand deleted from the income of the assessee. - I.T.A. No.298/Mum/2018, I.T.A. No.297/Mum/2018, I.T.A. No.296/Mum/2018 - 3-5-2019 - Shri Mahavir Singh, JM And Shri Manoj Kumar Aggarwal, AM For the Assessee : Shri Vimal Punmiya- Ld. AR For the Revenue : Shri Awungshi Gimson - Ld. CIT DR ORDER PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. Aforesaid appeals by assessee for Assessment Years [AY] 2012- 13 to 2014-15 contest common order of Ld. Commissioner of Income- Tax (Appeals)-47, Mumbai, [CIT(A)], Appeal Nos. CIT(A)-47/456-458/16- 17 dated 01/12/2017 on certain common grounds of appeal. Since common issues are involved, we proceed to dispose-off the same by way of this common order for the sake of convenience & brevity. ITA No. 298/Mum/2018, AY 2012-13 2. The grounds raised in AY 2012-13 read as under: - 1. On the facts and circumstances of the case and law the Ld. CIT (A) erred in confirming addition in hand o .....

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..... n 50% of Commission which company has incurred during the relevant previous year to run the business and restricting expenses up to 25% of Commission Income which is not fair and reasonable. 10. On the facts and circumstances of case and in law, Ld. Assessing officer erred in initiating proceeding u/s.274 r.w.s 271 (1) (c) of Income Tax Act 1961. 11. On the facts and circumstances of the case and law the Ld. CIT (A) erred in confirming interest under section 234A,234B and 234C of the Income Tax Act, 1961. 3.1 Brief facts as emanating from record for AY 2012-13 is that the assessee & its group concerns were subjected to search proceedings u/s 132(1) on 03/10/2013. Consequently, the assessment for impugned AY was framed u/s 153A read with Section 143(3) on 31/03/2016 wherein the assessee s income was assessed at ₹ 31.60 Lacs after certain addition of estimated undisclosed commission for ₹ 29.99 Lacs as against returned income of ₹ 1.61 Lacs filed by the assessee on 18/10/2013. 3.2 In response to notice u/s 153A dated 21/07/2015, the assessee filed return of income on 20/08/2015 at the same figure of ₹ 1.61 Lacs as it was originally filed. It transpired tha .....

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..... inference could be drawn against the assessee merely on the basis of retracted statements. 3.6 However, Ld. AO after careful consideration of incriminating material found during search proceedings, did not find any substance in all these submissions and came to a finding that the two entities were benami concerns of the assessee which was proved by overwhelming corroborative and circumstantial evidences gathered by the investigation wing during search proceedings. Reliance was placed, inter-alia, on the observation of Hon ble Apex Court rendered in Sumati Dayal Vs. CIT [214 ITR 801] to support these observations / conclusions. It was also observed that the retraction was made by the assessee after a lapse of nearly 10 months and too, without any valid basis and the same was merely an afterthought and tutored statement. The provisions of section 132(4A) raising rebuttable presumption against the assessee were also noted in the light of various binding judicial pronouncements. 3.7 Finally, at para 6 of the quantum assessment order, Ld. AO came to a conclusion that it was conclusively proved with overwhelming direct and corroborative evidences that the assessee was engaged in providi .....

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..... that all the transactions were carried out for the purpose of accommodation entries and therefore, the sale reflected by these two concerns should have also been considered to arrive at the estimation of unaccounted commission income earned by the assessee. In other words, it was observed that the assessee s income was to be enhanced to the extent of estimated unaccounted commission earned on sales reflected by the two entities. Although the assessee agitated the enhancement, however, Ld. CIT(A) estimated commission of .075% against the same. 4.4 The Ld. AO had estimated allowable expenditure against unaccounted commission @10%. However, relying upon the appellate orders in similar cases decided at Surat, the said rate was enhanced to 25% and accordingly, the relief to that extent was granted to the assessee. Aggrieved as aforesaid, the assessee is in further appeal before us. 5. The Ld. Authorized Representative for Assessee [AR], drawing our attention to the documents placed in the paper-book, submitted that the assessee was merely a director in one of the entities and derived income from salary from that entity. The estimated income earned by the two separate legal entities cou .....

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..... order as well as in the statement given by the assessee. The incriminating material in the shape of Annexure A-1 to Annexure A-5 in respect to parallel accounts containing details of cash transactions etc. was found from the possession of the assessee which unequivocally corroborated the aforesaid statement. The Ld. AR has submitted that the statement was retracted but it is noted that the statement has been retracted after lapse of more than 10 months without any supporting facts to demonstrate that the same was given under any coercion or threat. Therefore, the presumption of Section 132(4A) stood against the assessee and complete onus to negate the same was on assessee which has remain undischarged. All these factors do not inspire us to accept the submissions of Ld. AR that additions of the two entities were not justified in the hands of the assessee. Therefore, lower authorities, in our considered opinion, were quite right in making the impugned additions in the hands of the assessee, under the given circumstances. Accordingly, Ground Nos. 1, 2 & 6 of the appeal stands dismissed. 7.1 Now, the only question that survives for our consideration is the estimation of unaccounte .....

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..... @0.2% and commission on sales @0.05%. Ground Nos. 5, 7 & 8 stand partly allowed. 7.5 By way of ground no. 9, the assessee is aggrieved by the fact that the allowance for expenditure has been provided only to the extent of 25% whereas the same, considering the nature of activities being carried out by the assessee, was on the higher side. The Ld. CIT(A) has estimated the expenses as 25% of unaccounted commission. However, the perusal of material on record reveal that the assessee had employed four persons during the year to carry out various transactions. One of the entities was a corporate entity for which additional expenditure has to be incurred to maintain the corporate personality. Keeping in view the same, we enhance the same to 50% of unaccounted commission. Ground No. 9 stands partly allowed. 7.6 As a natural consequence, in the above circumstances, the income reflected by M/s Abhayaraj Gems Private Ltd. & the proprietor of M/s Rishabh Impex could not be termed as real income and therefore, the credit of the same shall be granted to the assessee. The assessee, in its own return of income, has reflected salary from M/s Abhayaraj Gems Private Ltd. which also, for the .....

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