TMI Blog2020 (1) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes. - ITA No. 3050 & 3051/Del./2012 (Asstt. Year: 2006-07 & 2007-08) - - - Dated:- 16-12-2019 - Sh. Bhavnesh Saini, Judicial Member And Dr. B. R. R. Kumar, Accountant Member Assessee by: Sh. K. Sampath, Adv. And Sh. V. Raja Kumar, Adv. Revenue by: Ms. Nidhi Srivastava, CIT DR ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeals have been filed by the assessee against the orders of the ld. CIT(Appeals)-XXXII, New Delhi dated 24.02.2012 and 02.03.2012 pertaining to assessment years 2006-07 and 2007-08 respectively. 2. Following grounds have been raised by the assessed: Grounds of appeal for AY 2006-07: The on the facts and in the circumstances and in the law the authorities below erred in : 1. Determining taxable income of ₹ 16,01,569/- as against the returned income of ₹ 13,56,553/-; 2. Passing order u/s 143(3) r.w.s. 153A of the Income Tax Act, 1961 relying on the estimates and not on the basis of seized material; 3. In applying provisions of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reproduced hereunder: The facts of the case as emanating from the assessment order dated 29.12.2008 in 2001-02 assessment year passed u/s 143(3) r.w.s 153A of the Act it is seen are identical in all the remaining years except for the difference in amounts. Accordingly the facts from the order of 2001-02 assessment year are being extracted for ready-reference:- A search seizure action was conducted on 12-12-2006 at business and residential premises of Shri. S.K. Gupta alongwith various concerns in which he and his family members were interested. Similarly action u/s 132 of IT Act, 1961 was conducted in the case of various companies owned or controlled by him and also in the case of different individuals connected with the said companies. This is one of such cases covered under search seizure action. Consequent to search action the case was centralized with this office and as such notice u/s 153A of IT Act 1961 was issued to the assessee on 25-2-2008. 1.1.Background of the case . While conducting discreet inquiries, the investigation wing gathered that Shri S.K.Gupta a Chartered Account by profession, is running various companies from a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various professional services, annual maintenance services, upgradation services, customer care, retainership, sponsorship etc. and accordingly bills/invoices have been issued in the names of these companies including the appellant but in fact no such actual services have been rendered by them to the respective beneficiaries. (ii). Shri. S.K. Gupta did not possess the necessary infrastructure or the required man power to render such variety of services through these companies. (iii). These companies were merely issuing accommodation bills for various expenditure to various entities for the sake of tax evasion. Such biils and invoices were found and seized from the premises covered u/s 132 of the Act. (iv). No other evidence was found during search indicating any such actual services rendered by the appellant or other companies as claimed. (v). Shri S.K. Gupta in various statements recorded on different dates between December, 2006 to December, 2008 both before the officers of Investigation Wing and in post search inquiries and before the Assessing Officer, admitted in detail his modus operandi of providing accommodation bills through the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tablish the genuine credentials of the assessee as a genuine software design development and other IT related services provider to the genuine customers. Even the big corporates like Reliance Industries Ltd, NIIT, HCL Group, FIITJEE. Mothersons Sumi Innovative Design Ltd, ASL Insurance Brokers Pvt Ltd, Accord Insurance, Allianze Securities. Link Engineer Ltd, Pashupati Fabrics et.c, who themselves are having their own infrastructures for IT related requirements, have approached the assessee as well as its other related group companies for getting accommodation .bills. But surprisingly none of them had any corroborative evidence other than the sate bills or in some cases a general agreement, without any supporting evidences of software development. Even assessee had no supporting documents of purchase or outsourcing, where from it could issue sale bills to these corporates or other desirous companies/concerns. (i) The assessee has failed to correlate its surrender income in different assessment years, with the actual deficiencies of the business relevant to accommodation entry business on account of providing accommodation sale bills, expenses bills in the form of job w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of section 145(3) of the Act even though books of account were never produced before the authority and no material defects were pointed out therein; 4. In estimating undisclosed income of sum of ₹ 47,151/- based figure appearing in balance sheet despite the fact that such books of account were never relied upon; 5. Error in making assessment without understanding the facts of the case. 8. As brought out earlier the ld. AR at the time of hearing has chosen to confine his arguments to the limited plea that the expenditure incurred by the assessee for earning the income by way of providing accommodation entries may be allowed for which purposes the issue may be restored to the AO. A perusal in the decision in Konichiva Builders Ltd. shows that facts have been appreciated in the following manner:- 4. The assessee in this case belongs to a group of about 33 cases of various companies operated and controlled by one Sh. S K Gupta Chartered Accountant by profession, from his office premises of Trump and Gates situated at H-108, 2nd floor, New Asiatic Building, Connaught Place, New Delhi and also from the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition by way of a estimate of income at the 2%. It is further seen that considering the arguments advanced on behalf of the assessee which are found recorded in the following para 10. The issue has been remitted to the AO in para 11 by way of speaking direction. These specific paras are extracted from the order of the Co-ordinate Bench relied upon by the assessee:- 8. Heard both the parties. On this issue, we find that it is established that assessee was engaged in the business of providing bogus accommodation entry. Hence, the income in this regard has to be estimated. In this regard, the addition has been made by the AO on the basis of statements given by the Director, S.K. Gupta. In this regard, it is relevant to quote the precise question and answers thereof given by Sh. SK Gupta:- Q.(2) Please state categorically the percentage commission charged by you for providing accommodation sale bills, accommodation purchase / expenses bills and investment and loan entries through your various group companies. Ans. The average commission earned by various group companies in providing different type of accommod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between 0.25% to 0.50%. This argument it is seen was not accepted. The claim for allowability of estimating the expenses it is seen was not canvassed before the SMC Bench. Accordingly the said order in the circumstances had no occasion to consider the plea. In the facts before us, Ld. AR has drawn specific attention to Question No.-2 which has been extracted in the case of Konichiva Builders Ltd. also in para 8 of their order which is also considered at page 18 of the Assessment order in the year under consideration. In view of the above there being no change in facts and circumstances of these cases respectfully following the order of the Tribunal in Konichiva Builders Ltd. the issue of allowability of expenses in similar lines is restored to the AO herein also requiring the assessee to prove its claim with cogent material the limited plea of the assessee is accepted. 8. Regarding the issue of addition of ₹ 25 lakhs in the hands of the assessee on protective basis, we find that the addition has been confirmed by the Ld. CIT(A) on the grounds that no evidence has been produced to prove that substantive assessment has been made in the hands of M/s Reliance In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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