TMI Blog2020 (5) TMI 550X X X X Extracts X X X X X X X X Extracts X X X X ..... antive addition has been made in any other hand, then there cannot be any protective addition. The Delhi Bench of the Tribunal in the case of Sh. Anuj Kumar [ 2018 (6) TMI 1700 - ITAT DELHI] and Fussi Financial Services Private Limited [ 2017 (6) TMI 1164 - ITAT DELHI] has held that when AO has not made any addition on substantive basis there cannot be any protective addition. It has been held that there may be substantive assessment without there being a protective assessment.There cannot be any protective assessment or addition without any substantive assessment or addition. Since in the instant case the AO has not made any substantive assessment or addition in any other hand, therefore, the protective addition made in the hands of the assessee being not in accordance with law has to be deleted. We accordingly set aside the order of the CIT(A) and direct the AO to delete the addition made by him on protective basis without making any addition on substantive basis. Unaccounted purchases - HELD THAT:- AO in the instant case, on the basis of documents seized marked as Annexure-A-1 containing 80 pages which were impounded during the course of survey noted that the said note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s/ firms who had given the accommodation entries and the name of the beneficiaries and thereafter issued summons to some of the parties on test check basis who had been provided accommodation entries. On being confronted by the AO it was claimed by the assessee that he was getting commission of 0.01% which amounts to ₹ 10,000/- per ₹ 1 crore of accommodation entry. On the basis of the search operation and post search enquiries and survey u/s. 133 A in the premises of Rishav Trading Company and details of bank account of Sh. Manoj Kumar Jain in the name of his proprietorship firm M/s. Rishav Trading Company, the AO concluded that the assessee was involved in the business of entry providing. He, therefore, issued notice u/s. 153 C for the A.Y. 2005-06 to 2010-11 on 18.09.2012 and notice u/s. 142 (1) for A.Y. 2011-12 on 18.09.2012. The assessee objected to the issue of notice u/s. 153 C of the IT Act on the ground that only survey u/s.133 A was conducted on 12.10.2010 in the assessee s case and objected to the validity of notice u/s. 153C. The AO held that the case of the assessee has been selected u/s.153 C because a search was conducted in the case of A.K. Traders on 11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r duly registered with the Trade Tax Authorities and had verified the transactions from record of the Appellant and therefore, the impugned assessment order as passed on the same lines as has been done in other Assessees Shri Pankaj Sharma, Shri Ajay Sharma and others. From this angle also, the impugned assessment order being illegal, deserves to be cancelled/annulled. 4. That without prejudice to the above grounds, the authorities below had no justification to make an addition of JRSZ3J56/L265/- representing bank credits on protective basis in the absence of such 'additions having been made in the hands of others on substantive basis and without giving proper and adequate opportunity of being heard coupled with the fact that the facts stated and the submissions made had not been considered properly. Therefore, the addition deserves to be deleted. 5. That without prejudice to Ground No 4 above, there was no justification to apply net profit rate of 3% on the bank credits aggregating at ₹ 23,56,61,265/- thereby making an addition of ₹ 70,69^B38A-wilhout disproving the transaction recorded in the account books of the Appellant and therefore, this addition al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO on 18.09.2012 and the impugned assessment year i.e. A.Y. 2011-12 falls within the period of six years. Since the AO in the instant case has not passed the order u/s. 153 C as no notice u/s. 153C was issued, therefore, the order passed by the AO u/s. 143 (3) is not legally valid. For the above proposition he relied on the following decisions placed in the paper book :- 1. Recent Apex court decision in Singhad Technical Society (order dated 29.08.2017 ) 397 ITR 344 2. Hon ble Delhi high Court decision in case of Fast Booking (I) Pvt. Ltd., order dated 02.09.2015 (ITA No.334/2015) (378 ITR 693) 3. Hon ble Delhih high Court decision in the case of Silver Line, order dated 04.11.2015 (ITA Nol.578/2015) (383 ITR 455) 4. Hon ble Punjab and Haryana High Court decision in case of M/s. VMT Spinning Co. Ltd., order dated 16.09.2016 (ITA No.445/2015) (389 ITR 326) 5. Hon ble Gujarat high Court in case of Jolly Fantasy World Ltd. 373 ITR 530 6. Hon ble Delhi ITAT in case of Pavitra Realcon Pvt; Ltd. ITA No.3185/Del./2015 (A.Y. 2011-12) (refer para 15 to 22 ) 7. Hon ble Delhi ITAT in case of Satkar Roadlines Pvt. Ltd. ITA No.3305/Del/2014 Assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds are concerned the Ld. Counsel for the assessee did not press grounds of appeal No.1,2,3,7,8 and 9 for which the Ld. DR has no objection. Accordingly the above grounds are dismissed as not pressed. 13. So far as the ground No.4 and 5 are concerned these relate to the order of the CIT(A) in confirming the addition of ₹ 23,56,61,265/- made by the AO on protective basis and the addition of ₹ 70,69,838/- being commission @ 3% on the bank credit of ₹ 23,56,61,265/-. 14. So far as the commission @ 3% is concerned the Ld. Counsel for the assessee relying on a series of decisions placed in the paper book submitted that in the case of entry operators such commission has been estimated @ .15% to .5%. Referring to the decision of the Delhi Bench of the Tribunal in the case of Sh. Sanjay Vs. ACIT made vide ITA No.162 to 168/Del/2010 order dated 30.04.2013 he submitted that the Tribunal while adjudicating the penalty appeal has mentioned that vide order dated 12.11.2008 the commission @ 0.5% on the value of bogus accommodation entries was added in the hands of the assessee. Referring to the decision of the Mumbai Bench of the Tribunal in the case of Ramesh Kumar Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Ld. DR on the other hand heavily relied on the order of the Ld. CIT(A) so far as the addition of ₹ 23,56,61,265/- is concerned she submitted that the assessee was unable to give the full details regarding the source of such deposits and name of the persons who had given the money and, therefore, the AO was fully justified in making the addition on protective basis which has been rightly upheld by the CIT(A). So far as the adoption of rate of 3% commission is concerned, she submitted that the same is reasonable and therefore, the same should be upheld. She accordingly submitted that the order of the CIT(A) on these two additions should be upheld. 17. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO on the basis of the deposits in the bank statement of the assessee for the year under consideration noted that an amount of ₹ 23,56,61,265/- has been given to various persons as accommodation entry and since the assessee could not explain the source of such deposits in the bank accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustaining the addition of ₹ 26,54,591/- for alleged unaccounted purchases. 20. Facts of the case, in brief, are that during the course of survey at the office premises of the assessee, a document marked annexure A-1 containing 80 pages was impounded which contained details of sales of ₹ 6,97,54,767/- during the months of July to October 2010 pertaining to 38 parties. The AO treated these transactions as unaccounted sales and applied the GP rate of 1.42% which is the rate disclosed for the A.Y. 2010-11. The AO thereafter extrapolated the sales and applying GP @ 1.42 % on the turnover of ₹ 64,70,28,619/-estimated the GP at ₹ 90,44,509/-. He also computed the unaccounted capital involved in the unexplained turnover @ 2,11,99,403/- on the basis of total capital ₹ 5177590/-. 20.1 In appeal the Ld. CIT(A) sustained an amount of ₹ 26,54,591/- and deleted the balance addition by observing as under :- To address the issue it would be appropriate to examine the statement of Sh. Akhlak Ahmaad recorded during the course of survey. In his statement Sh. Akhlak Ahmad has depoted that i) He is an employee of Bharat Steel Rolling Mill, Meerut Roa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that this is not turnover of the appellant. 13. In the result, the appeal is partly allowed for statistical purposes. 21. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal. 22. We have heard the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO in the instant case, on the basis of documents seized marked as Annexure-A-1 containing 80 pages which were impounded during the course of survey noted that the said note sheet contains unexplained purchase of ₹ 26,54,591/- and accordingly made addition of the same which has been upheld by the CIT(A). The addition made by the AO on account of business income from outside books of account and unexplained initial investment has been deleted by the CIT(A) and the revenue is not in appeal before us and, therefore, we are not concerned with the same. 22.1 So far as the addition of ₹ 26,54,591/- on account of unaccounted purchases is concerned in our opinion only the profit element in such unaccounted purchase should be ..... 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