TMI Blog2023 (1) TMI 1004X X X X Extracts X X X X X X X X Extracts X X X X ..... s, phone numbers and PANs of the persons of all transactions which is clearly evident from Para No. 10.2 and 10.3 of the assessment-order. However, the only difference is such that out of 79 transactions, the persons of 43 transactions did not turn up and persons of 36 transactions only responded. It is highly probable that those persons have actually availed services of assessee for courier/transfer of money but when it comes to enquiry by income-tax department, they did not respond to avoid hassles of tax authorities. Be that as it may, the activity of assessee in all transactions is clearly manifest from the details of transactions retrieved/decoded from the mobile phones seized during search-proceeding, which is one single activity i.e. courier/transfer of money on behalf of clients with an objective to earn commission. Therefore, there is no reason to distinguish the two categories of transactions merely on the basis of responsive/non-responsive attitude of those persons. We feel that the taxation-authorities must assess the income of assessee in a proper and judicious manner so as to charge a proper amount of tax, neither a penny less nor a penny more. We also observe tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d this appeal on following grounds: (1) On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 8,25,03,772/-made by AO on account of unexplained Hawala Transactions. (2) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 16,91,736/-made by AO on account of estimated commission earned from Hawala Business. 2. Heard the learned Representatives of both sides and perused the case-records consisting of orders of lower authorities; a Written-Submission and Paper-Book filed by Ld. AR. 3. The assessee is an individual who is tagged as part of Tanya Jewellers Group of Gwalior. A search u/s 132 was conducted upon the group including the assessee on 19.02.2014 wherein several incriminating documents were found and seized which divulged that the assessee was engaged courier/transfer of money from one place/person to another place/person which was termed by revenue-authorities as Hawala business . The present assessment-year 2014-15 with which are concerned in this appeal was assessed u/s 143(3) wherein the total income of Rs. 3,23,50,410/- declared by assessee in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transactions of Rs. 7,04,89,360/-, remaining 43 persons who had done rest of the transactions of Rs. 8,25,03,772/- did not turn up or denied to have done transactions. Ld. AO also observed that the assessee had been receiving a commission of Rs. 100/- to Rs. 200/- per lac for effecting those hawala transactions. Thus, the Ld. AO made addition in two tranches, viz. (i) Unexplained transactions of Rs. 8,25,03,772/- i.e. the transactions where the persons had not turned up / denied to have made transactions, Ld. AO made a full addition of Rs. 8,25,03,772/- (ii) Explained transactions of Rs. 7,04,89,360/- i.e. the transactions where the persons had appeared and admitted to have made transactions, Ld. AO made an addition of Rs. 16,91,744/- by applying a commission-rate of Rs. 200/- per lac on 7,04,89,360/- which results in estimated commission-income of Rs. 1,40,978/- for 1 month and extrapolating the same for 12 months arrived at Rs. 16,91,744/-. Accordingly, the additions of Rs. 8,25,03,772/- and Rs. 16,91,744/- were made rejecting all submissions made by assessee during assessment-proceeding. 6. During first-appeal, the assessee made a detailed submission which the Ld. CIT(A) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 72/- [related to 43 persons] are dissimilar or different in any manner to the transactions admitted by 36 persons worth Rs. 7,04,89,360/-. It is also not the case that Ld AO was not having information/details about name and address of such 43 persons. In fact, Ld. AO has in para 10 of assessment order has unequivocally admitted as under:- 10 As discussed above during the search and seizure action, a total of 11 mobiles were seized. Out of these total of 11 mobiles, 3 mobiles were not functional. The data was retrieved in respect of 8 mobiles. Further analysis of this data showed that 79 different persons / concerns have made Hawala transactions through the assessee. The total amount sent through Hawala route in these transactions is Rs. 15,29,93,132/-. Based on the mobile numbers of senders and recipients, names and addresses of the persons were obtained using departmental data bases as well as taking help of mobile service providers. These persons were examined on oath. During their statements, a total of 35 persons admitted that they have sent money totalling to Rs. 7,04,89,360/- using the Hawala channel of the assessee. Rest of the persons either did not appear in respons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent business which includes Mobile 5M5 transaction, commission income, and other income. 50 further it is requested that setoff of this amount of Rs. 2,21,00,000/- should be given if any unwanted addition made by you in addition to return income ..... 1O.3 The explanation of the assessee has been considered. However, I am afraid that the same is not acceptable for the following reasons. i) The assessee has basically tried to explain that he has provided services for Hawala transactions to these persons and therefore, what can be taxed in his hands is merely the commission income and not the whole amount. However, he has not provided any evidence about providing services for Hawala transactions to these persons. ii) Although the assessee has claimed to provide postal address, mobile number and PAN, however, no admission from these persons about their using the Hawala network of the assessee has been submitted. The assessee has neither submitted any affidavit from these persons, nor has he even produced them for examination before the Assessing Officer. The details provided by the assessee at the fag end of the assessee do not serve any purpose as no meaningful en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing a document (in this case a diary), it is required to be considered in its entirety and it cannot be considered in part. It is also important to note that assesse has provided the necessary details viz the names, Mobile No, PAN and address of such 43 persons with whom 'hawala transaction' of Rs. 8,25,03,772/- was done vide letter dated 21.03.2016. Thus, the assessee has satisfactorily discharged his onus and Id A.O. was not justified in 'shifting the onus back' on appellant and that too on flimsy ground. Obliviously, it is not the onus of the appellant to explain the 'source' of third person and there can be no method by which he can obtain such information. Ld. AO has the powers and wherewithal's to enforce the compliance from such 43 errant persons but in no circumstance, assessee cannot be held guilty for such default. It is well known fact that due to fear of department or to avoid tax liability those persons must have chosen the easy way to altogether deny they transaction. For their denial or default, the appellant cannot be made to suffer the tax liability. Hon'ble Bombay High Court in the case of CIT Vs. M Shah, Prop. Shreni Trading co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come of the assessee. (b) The assessee has discharged his onus:- It is evident from the letter dated 21.03.2016 that appellant has provided complete/relevant details of name and address of persons with from the courier/hawala business was done by the assessee. Ld A.O. has reproduced the reply of the appellant in the assessment order (para 10.2 pg 10). I have summoned the case records and files containing statements/summons issued to those 43 persons by the Investigation Wing. Thus, it is proved beyond doubt that the identity of persons was proved by the assessee to whom the DDIT(Inv) also issued summons as well. In some cases, they have even explained the transactions (recorded in coded form) giving all the details. It seems that rather going after those persons, the officer misdirected himself and erred in treating the impugned amount as income of the appellant which is neither justified on facts nor in law. Ld A.R. has also contended that AO has made addition u/s 68 of the Act. However, it is seen that Id AO has not invoked this provision anywhere in the assessment order. Nevertherless, despite the fact that provision of sec 68 have not been invoked. Even otherwise, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be added as income of the assessee but addition could be made only to the extent of estimated profits embedded in sales for which net profit rate was adopted. This proposition finds support in the following case laws:- CIT vis Samir Synthetics Mill 326 ITR 410 (Guj); CIT vis gurbachan Singh J Juneja 302 ITR 63 (Guj); R R Carrying Corporation vis ACit 126 TTJ 240 (CTK); Cit vis Bholanath Poly Fab Pvt Ltd 355 ITR 290 (Guj); Sarawati Oil Traders vis CIT 231 CTR (Chhattisgarh) 165; I find considerable force in this argument and facts of record also support this proposition that in this case Ld AO erred in adding the entire amount of impugned transactions instead of adding commission income which the assessee could legitimately command from these clients for the services rendered by him. It is seen that Id A.O. has estimated the commission income @ Rs. 200 per one lakh rupees transferred by the appellant. By this way, the commission income which ought to have been worked out by AO should be Rs. 3,05,986/- per month (Rs. 200 for Rs. 15,29,93,132/-) instead of Rs. 1,40,978/- per month estimated by AO in the assessment order. Since the above commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made before lower authorities. 8. We have considered rival submissions of both sides and also perused the material held on record. Regarding first tranche of addition on account of unexplained-transactions of Rs. 8,25,03,772/-, the crux of assessee s submission is that those transactions are at par with the explained-transactions of Rs. 7,04,89,360/- in every respect and there is no difference whatsoever. Firstly, the revenue-authorities have loudly and unambiguously identified, found and understood (in Para No. 8.1 to 8.4 of the assessment-order) the nature of activity done by assessee which is just a courier/transfer of money for earning a commission of Rs. 100/- to Rs. 200/- per lac. This activity remains same in all transactions. Secondly, all transactions have been retrieved/decoded from the same set of evidences, namely the same mobile phones. Thirdly, the details of all transactions as retrieved/decoded, such as names/mobile numbers of senders/receivers, serial numbers of currency notes, amount of money transacted in code words like Kg , @ , P , Peti , etc. and in some cases the full amounts itself or in lacs or after omitting zeros, were exactly identical. Fourt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ragraph clearly reveal that all transactions were at par. Being so, we do not find any merit in the claim of revenue that the so-called unexplained transactions should be accorded a different treatment than the explained transactions . We observe that the Ld. CIT(A) has given a careful thought to the facts of case and validly held that the assessee must have earned only commission of Rs. 36,71,832/- on all transactions of Rs. 15,29,93,132/-. Having said so, Ld. CIT(A) was justified in applying a commission-rate of Rs. 200/- per lac on 8,25,03,772/- which results in estimated commission-income of Rs. 1,65,007/- for 1 month and extrapolating the same for 12 months arriving at commission of Rs. 19,80,088/- for the whole year. Finally, Ld. CIT(A) has rightly ordered the Ld. AO to assess commission-income of Rs. 19,80,088/- and thereby granted a relief of Rs. 8,05,23,676/- (Rs. 8,25,03,764/- minus Rs. 19,80,088/-) to the assessee. We do not find any infirmity in the action of Ld. CIT(A) and the same is hereby upheld. Therefore, Revenue s Ground No. 1 is devoid of merit. 9. Regarding second tranche of addition of Rs. 16,91,736/- on account of explained-transactions of Rs. 7,04,89 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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