TMI Blog2021 (12) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... erence, CIT(A) held that when the actual business is importing for others and in the books credit in the name of exporters (other beneficiary), the exchange rate difference is not payable by the assessee and rejected the ground raised by the assessee. Assessee basically made two fold submissions that no incriminating material/ evidence was recovered during the course of search and that the assessee retracted from his statement recorded by the search party and the assessee was doing real business and not engaged in providing accommodation entry. We find that during the search action more than sufficient incriminating evidence was found, which is also supported with the corroborative evidence found in the form of e-mails and other evidence in the form of books of account recovered from the pen drive, which itself is incriminating evidence against the assessee. Assessee in his retraction statement has not explained the material evidence found in the form of e-mail, from his e-mail account, his background history as to how he entered in the this particular business of providing entry, which he himself disclosed during the search action that he learnt all this business module of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doing genuine business, thus, keeping in view of volume of transactions in his bank account, the income of assessee would be estimated many fold comparative to the commission income added by the AO. Thus, the alternative ground of appeal is also rejected. - IT(SS)A No. 294 to 299/AHD/2017, ITA No.1577/AHD/2017 - - - Dated:- 26-11-2021 - Shri Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Assessee : Shri Rasesh Shah with Himanshu Gandhi, CAs (AR) For the Revenue : Shri Reetesh Mishra CIT-DR ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. This set of seven appeals, all by assessee are directed against the common order of learned Commissioner of Income Tax Appeals- 4 [ld. CIT(A)], dated 21st March 2017 for assessment year (AY) 2008- 09 to 2014-15. In all appeals, the assessee has raised certain common grounds of appeal; facts in all appeal are common in all assessment years, except variation of additions on account of commission income. Therefore, with the consent of parties all appeals were clubbed, heard and are decided by consolidated order to avoid the conflicting decision. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regular business activity. 6. Without prejudice to Ground No.3,4 and 5, The learned Commissioner of Income Tax (appeal) has erred in law and in facts not accepting the claim of the appellant that statement recorded u/s 132(4) in search action ought to be read in totality in respect of income from alleged commission that has already been included in sales transaction disclosed in audited accounts as admitted by the appellant, hence no further addition ought to be confirmed on account of alleged commission in the impugned assessment order. 7. The learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in confirming the rejection of books of accounts of the appellant without appreciating the fact and law in proper perspective and without finding any defects in the books of account and overlooking the evidences furnished in the assessment as well appellant proceeding. 8. The learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in confirming the disallowance of expenses including foreign exchange fluctuation loss on account of import/export business of the appellant as claimed in the return of income. 9. The appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p is providing accommodation entry in the form of sales, purchase of diamonds and entry of unsecured loans. The assessee also disclosed his back history, as to how he came in such hawala transaction business, which he has learnt from his ex-employer. The assessee also disclosed the modus operandi for providing accommodation entry with regard to import and export of rough and polished diamonds. The assessee admitted that not a single piece of diamond was found during the search action at his residence and business premises, the assessee further reaffirm the fact that they are merely lending names of their various business concerns to real importers of diamond who takes the actual delivery of diamonds. The assessee also provided details of various bank accounts of different firms and companies managed by them. During recording the statement of assessee, he was confronted with various e-mails extracted from his computer network. The assessee admitted that he gets the commission on value of import at the rate of 0.2% from the real importer who route the transaction through his paper concern. Besides this, whenever any entry of unsecured loan is provided, the assessee received commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to explain the modus operandi of his business. the assessee explained by way of pictorial graph his entire modus operandi, which is extracted below; 6. The AO on the basis of modus-operandi disclosed by the assessee and the various other incriminating material gathered during the search action and on the basis of statement of Rajendra Jain and his associates held that all the business concerns of the assessee were merely doing paper transaction, instead of carrying any real business, those concern were doing of maintaining books of accounts and do not carry any actual or physical business of diamonds, the actual importers of rough diamonds approach these concern to import their diamonds through this group and on receipt of consignment, the real importer get the delivery of diamonds after clearance from CHA. The books of stock of rough diamonds have been converted by this group to cut and polished diamonds through commission companies or through name landing concern issues bill of rough diamonds to local purchasers and show purchase of polished diamonds from them. And on receipt of such cut and polished diamonds they issue bills to various parties on their demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... glish language, the AO noted that assessee furnished all submissions in English language, therefore, the allegation is not tenable. The assessee has not brought any proof of threat or coercion to the notice of higher authority after the search action. The retraction is filed only on 31.10.2014 i.e. after one year of recording of the statement. No such retraction was filed before the Investigation Wing or initial chance available with the assessee. The assessee got the attestation of Notary Public on 21.10.2013 and kept it with him and filed only on 31.10.2014. The AO further noted that during the search on business premises as well as residential premises and survey on their employee all they have admitted that they were working for the assessee. Not a single piece of diamond was found from any of the business or residential premises of the assessee. On confronting such fact that the assessee and his employee, they stated that they do not do any real purchase, sale of diamonds and explained the modus-operandi of their business. The AO noted that in the submission, the assessee claimed that due to safety reasons, staff was not kept at business premises, was not accepted as such no e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 136/- Deduction of expenses of 25% is given for paper transactions related cost as the such 6,13,534/- Income Assessed 18,40,602/- Addition of assessed income on protective basis from Anoop Y Jain (Prop. AdiImpex) 5,91,948/- Addition of assessed income on protective basis from Sun Diam 6,47,166/- Addition of assessed income on protective basis from Sparsh Exports Pvt Ltd 25,14,399/- Addition of assessed income on protective basis from MoulimaniImpexPvt Ltd 26,12,449/- Additionof assessed income on protective basis from Sachin R Pareek (Prop. Arihant Export) 4,85,395/- Total Income Assessed 86,91,959/- 8. Aggrieved by the substantive as well as protective addition, the assessee filed appeal before the ld.CIT(A). Befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g material is not sustainable. On merit the assessee submitted that he was doing the real business. In alternative claim the assessee claimed that he has already included the commission income in his business income disclosed in his audited accounts. 9. The ld CIT(A) after considering the submissions of the assessee upheld the search action by taking view that it cannot be challenged in the appeal before him. The ld CIT(A) also rejected the grounds of appeal, which relates to the ground that the addition made by A.O. is not based on the incriminating material. The addition on account of commission income for providing accommodation entry was also upheld. However, the assessee was allowed relief on account of additions on protective basis. The ld CIT(A) while granting relief on the additions of protective additions held that the other assessee who are assessed on substantive basis are not asserting that the impugned income belongs to the assessee ( Rajinder Jain). Further aggrieved, by the order of ld CIT(A), the assessee has filed present appeal before this Tribunal, by raising the grounds of appeal, which is extracted in para-1(supra). 10. We have heard the submissions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT Vs Allied Perfumes Pvt Ltd ( 124 taxmann.com 358 Delhi HC), PCIT Vs Meeta Gutgutia ( 82 taxmann.com 287 (Delhi HC), PCIT Vs Saumya Construction ( 81 taxmann.com 292 Guj HC), CIT Vs Raman bhai patel ( (96CCH 0495 Guj HC), Chetnaben J Shah Vs ITO ( 79 taxmann 328 Guj HC), PCIT Vs Star PVG Export (112 taxmann. Com163 Kar HC) CIT Vs Continental Warehousing Corporation Ltd ( 58 taxmann.com 78 Bom) CIT Vs Kabul Chawla ( 92 CCH 210 Delhi HC) DCIT Vs Sourabh Naval Kishore Garg (ITA No.4130/Mum/2017), Rajinder P Jain Vs DCIT (ITA No. 296 to 298/ Mum/2018, Manoj Begani Vs ACIT ( ITA No. 932,933,935 936/Kol/2017), M B Jewellwrs sons (ITA No. 1/Kol/2017). 11. On the other hand the Ld. CIT-DR for the revenue supported the order of the Ld. CIT(A). The ld CIT-DR for the revenue submits that during search action sufficient incriminating evidence was unearthed. The statement of assessee and his associates were recorded under section 132(4). The assessee in his statement disclosed the modus operandi of the operation of accommodation entry. During the search action the assessee confessed in his statement recorded under oath that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have gone through the orders of the lower authorities. We have also perused all the documents placed on record by the assessee. We have also deliberated on the various case laws relied by the ld. AR for the assessee. We find that in Ground No. 1, the assessee has challenged the validity of search action carried out under section 132 and upholding the action of A.O. in making assessment under section 144 rws 153A, however, during the submissions no specific submissions was made, therefore, the corresponding ground No.1 of appeal is treated as not pressed and dismissed as such. 13. Now adverting to the Ground No. 2 to 5 which relates to the additions of commission income that such additions are not based on incriminating evidence. A search action was carried out by the revenue at the assessee group on 03.10.2013, during the search action the statement of Rajinder Jain, Dharmi Chand Jain and Sanjay Chowdhary was recorded. Consequent on the search action and evidences gathered during search and post search action, notice under section 153A was served on the assessee to file return of income. The assessee filed return in response to the said notice, but no additional income was off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n @0.20% of bill amount of import and commission @ 0.50% on loan transactions. The AO worked out the total disallowance of ₹ 24,54,136/- as a commission income and after granting deduction of expenses @ 25% on such addition made addition of ₹ 18,40,602/- in the following way; Sales Amount Rate of commission, Commission income Total turnover 2,43,23,94,646/- Total Import 86,88,19,534/- Total turn over (Excluding import group turnover) 1,47,37,83,599/- @0.02% 2,94,757/- Import made 89,88,19,534/- @0.20% 17,37,639/- Loan outstanding at year end 8,43,48,087/- @0.50% 4,21,740/- Total commission income earned 24,54,136/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, Sachin Pareek and Surendra Jain in their statement and identification of actual beneficiary of import and delivery of diamonds by actual beneficiary and e-mail found to actual beneficiary, the ld CIT(A) concluded that assessee and his group was providing accommodation entry. The ld CIT(A) further concluded that once the business as per books is proved fictitious and bogus, the action of AO in rejecting the books is obvious. On the ground/ grievance of the assessee on additions of commission and allowance of 25% expenses the ld CIT(A) concluded that the addition made by AO is on lower side comparative to the addition in case of Bhanwar Lal Jain, who was also providing similar accommodation entry with similar modus operandi. The ld CIT(A) further held that once books are rejected, the profit is to be estimated on the basis of commission rates and net profit is to be determined. On the grievance of assessee of exchange rate difference, the ld CIT(A) held that when the actual business is importing for others and in the books credit in the name of exporters (other beneficiary), the exchange rate difference is not payable by the assessee and rejected the ground raised by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee entered into hedging contract with the Banker, the evidence found in the form of e-mail and other evidences show the facts otherwise. Therefore, the submissions made by the assessee do not inspire confidence. None of the case laws relied by the ld AR for the assessee is helpful to the assessee as there was sufficient incriminating material seized during the search action on the assessee on the basis of which it is clearly proved that the assessee is in the business of entry provider. Therefore, we do not find any merit in the grounds No. 2 to 5 raised by the assessee, which we dismissed. 17. Ground No. 6 relates to alternative and without prejudice ground that the alleged commissions has already included by the assessee in his sales transaction. Considering the facts that the lower authority have categorically held that the assessee was not doing any genuine business transactions and was engaged in providing accommodation entry, books of the assessee was rejected and only very meager rate of commission income was added to the total income of the assessee, which we have already affirmed. If for the sake of assuming it is considered that the assessee was doing genuine ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
