DY. COMMISSIONER OF INCOME TAX, RAIPUR V. NARAD SAHU, RAIPUR

ITA 105/RPR/2024

AI Insights

The case involves multiple appeals and cross objections related to the income tax assessments of Narad Sahu, proprietor of M/s Tirupati Trading Company, for the assessment years 2008-09 to 2012-13. The primary issues revolved around the additions made by the Assessing Officer under sections 44AF and 40A(3) of the Income Tax Act, which were contested by both the revenue and the assessee. The Assessing Officer had treated the entire deposits in the assessee's bank account as turnover and presumed a net profit of 5%, along with additional cash withdrawals being treated as inadmissible expenses under section 40A(3). The CIT(A) reduced the estimated profit to 1% and deleted the addition under section 40A(3), findings which were upheld by the Tribunal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 299009 (ITAT-RAIPUR)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-10-2024
• Assessment Year: 2008-2009
• Appeal Filed On: 22-03-2024
• Other Referred Cases: Aryadeep Developers Pvt. Ltd. Vs ITO (898/Ahd/2017)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.L.ANURAGI; PRIYANKA PATEL
• Assessee Lawyers: NARAD KUMAR SAHU; ASSESSEE
• Keywords: Condonation of delay; Set aside; Additional evidence; Corroborative evidences; Ignorance of law; Accommodation entries; Bogus
• Section: 148; 144; 142(1); 131; 133(6); 40A(3)

Judgement Text

"आयकर अपीलीय अिधकरण, रायपुर Ɋायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR ŵी रिवश सूद, Ɋाियक सद˟ एवं ŵी अŜण खोड़िपया, लेखा सद˟ क े समƗ । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM (ITA Nos. 105, 180, 181 & 182/RPR/2024) Dy. Commissioner of Income Tax, Aayakar Bhawan, Civil Lines, Raipur, C.G. V s Narad Sahu, Gudhiyari, Raipur PAN: BDZPS0772E Cross Objection Nos. 07, 08, 09 & 10/RPR/2024 Narad Sahu, Gudhiyari, Raipur V s Dy. Commissioner of Income Tax, Aayakar Bhawan, Civil Lines, Raipur, C.G. PAN: BDZSP0772E (अपीलाथȸ /Applicant) : (Ĥ×यथȸ / Respondent) िनधा[ǐरती कȧ ओर से /Assessee by : Shri Narad Kumar Sahu, Assessee राजèव कȧ ओर से /Revenue by : Shri S. L. Anuragi, CIT-DR & Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 24.10.2024 घोषणा कȧ तारȣख/Date of Pronouncement : 28.10.2024 आदेश / O R D E R Per Bench: The details of captioned appeals of the revenue and cross objections filed by the assessee against the order of Commissioner of Income Tax (Appeals), NFAC, Delhi, [in short “Ld. CIT(A)”] for respective assessment years are as under: 2 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) Sr. No. ITA Nos. CO Nos. AY Impugned Orders of Ld. CIT(A), NFAC, Delhi u/s 250 of the IT Act dated Subject orders of Ld. AO’s u/s 148 / 144 dated 1 105/RPR/2024 07/RPR/2024 2008-09 30.01.2024 29.03.2016 2 180/RPR/2024 08/RPR/2024 2009-10 30.01.2024 16.12.2016 3 181/RPR/2024 09/RPR/2024 2010-11 30.01.2024 29.12.2017 4 182/RPR/2024 10/RPR/2024 2012-13 30.01.2024 30.11.2019 2. Since all the aforesaid appeals pertains to a single assessee namely, Mr. Narad Kumar Sahu, having common facts, circumstances and interconnected issues, apart from quantum of additions in the respective assessment orders. Therefore, all the aforesaid appeals are taken up for adjudication together through this common order. 3. ITA 105/RPR/2024 of the revenue is taken up as the lead case, in which our observations and decision, shall apply mutatis mutandis in all the remaining matters. 4. The grounds of appeal filed by the revenue in ITA No. 105, 180, 181, & 182/RPR/2024 are extracted hereunder: 3 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) Grounds of appeal in ITA No. 105/RPR/2024 1. \"Whether on the facts and in the circumstance of the case, the Id. CIT(A)/NFAC was justified in restricting the estimation to 1% of Rs. 25,17,66,684/- which comes to Rs. 25,17,666/-instead of 5% (Rs. 1,25,88,334/-) as estimated by AO?\" 2. \"Whether on the facts and in the circumstance of the case, the Id. CIT(A) was justified in deleting the addition of Rs. 24,99,17,887/- made by the AO by applying the provisions of Section 40A(3) of the Act.?\" 3. \"Whether on the facts and in the circumstances of the case and in law, the Id. CIT(A) was justified in accepting the submissions of the assessee and thereby ignoring the facts brought on the record by the AO?\" 4. Any other ground which may be adduced at the time of hearing. Grounds of appeal in ITA No. 180/RPR/2024 1. \"Whether on the facts and in the circumstance of the case, the Id. CIT(A) was justified in directing to restrict the addition to Rs. 35,54,396/- only (Being 1% of total deposits of RS. 35,54,39,634/-) and thereby allowing a relief of Rs. 142,17,585/-?” 2. Any other ground which may be adduced at the time of hearing. Grounds of appeal in ITA No. 181/RPR/2024 1. \"Whether on the facts and in the circumstance of the case, the Id. CIT(A) was justified in directing the addition to Rs. 11,45,832/- only (Being 1% of total deposits of RS. 11,45,83,237/-) and thereby allowing a relief of Rs. 45,83,330/- ?” 2. Any other ground which may be adduced at the time of hearing. 4 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) Grounds of appeal in ITA No. 182/RPR/2024 1. \"Whether on the facts and in the circumstance of the case, the Id. CIT(A) was justified in directing the addition to Rs. 18,18,064/- only (Being 1% of total deposits of RS. 18,18,064/-) and thereby allowing a relief of Rs. 72,72,260/-?” 2. Any other ground which may be adduced at the time of hearing. 5. The grounds of Cross Objections of the assessee in CO No. 07, 08, 09, 10/RPR/2024 are extracted as under: Grounds of cross objection in CO No. 07/RPR/2024 1. \"In the facts and circumstances of the case the Id. CIT(Appeals) erred in estimating brokerage income of Rs. 25,17,666 being 1% of gross amount instead of returned brokerage income of Rs. 97,800. The rate applied by Id. CIT (Appeals) is highly excessive hence addition is also not justified.\" 2. \"In the facts and circumstances of the case, the Id. CIT(Appeals) deleted the addition of Rs. 24,99,17,887 made by the A.O. invoking Sec. 40A(3) of the Income Tax Act holding that entire amount withdrawn from bank account as inadmissible expenses. Hence the Id. CIT(Appeals) was justified in deleting the addition 3. The cross objector reserves the right to add, amend or alter any of the grounds of cross objection. Grounds of cross objection in CO No. 08/RPR/2024 1. \"In the facts and circumstances of the case the Id. CIT(Appeals) erred in estimating brokerage income of Rs. 35,54,396 being 1% of gross amount instead of returned brokerage income of Rs. 1,98,000. The rate applied by Id. CIT (Appeals) is highly excessive hence addition is also not justified.\" 5 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 2. The cross objector reserves the right to add, amend or alter any of the grounds of cross objection. Grounds of cross objection in CO No. 09/RPR/2024 1. \"In the facts and circumstances of the case the Id. CIT(Appeals) erred in estimating brokerage income of Rs. 11,45,832 being 1% of gross amount instead of returned brokerage income of Rs. 2,32,000. The rate applied by Id. CIT (Appeals) is highly excessive hence addition is also not justified.\" 2. The cross objector reserves the right to add, amend or alter any of the grounds of cross objection. Grounds of cross objection in CO No. 10/RPR/2024 1. \"In the facts and circumstances of the case the Id. CIT(Appeals) erred in estimating brokerage income of Rs. 18,18,064 being 1% of gross amount instead of returned brokerage income of Rs. 75,000. The rate applied by Id. CIT (Appeals) is highly excessive hence addition is also not justified.\" 2. The cross objector reserves the right to add, amend or alter any of the grounds of cross objection. 6. At the threshold, it is informed by the registry that ITA No. 180, 181, 182/RPR/2024 of the revenue are barred by limitation, involving a delay in filing of the appeal for 28, 27 & 27 days respectively. To this effect, affidavits for condonation of delay along with applications, expressing reasons on account of which the delay was occasioned are submitted. In consideration 6 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) to such requests by the revenue, considering the reasons elaborated therein, we find it appropriate to allow for condonation of delay and to take up the appeals for our consideration. 7. The brief facts of the case are that the assessee is an individual, proprietor of M/s Tirupati Trading company. In the case of assessee, on the basis of information received from the Deputy Director of Investigation-1, Raipur, wherein, the assessee herein in his statement has stated that he has not done any business from the aforesaid firm. It is also asserted by the assessee that his bank account was used for providing bogus sales bills by some other persons. It is noticed by the department that there were total deposits of Rs. 30,60,73,790/- in the bank account of the appellant. Based on such information, proceedings u/s 148 of the I T Act were initiated on the assessee. Necessary approval from the PCIT-1, Raipur are obtained. Statutory notices u/s 148 and 142(1) of the Act were issued. However, the assessee remains non-compliant towards the proceedings initiated against him and notices served at various occasions. Finally, assessment in the present case was completed on the basis of best judgment assessment as per the provisions of section 144 of the Act. 7 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 7.1 During the assessment proceedings, Ld. AO obtained information from the bank invoking the provisions of section 133(6) and have gathered that there were deposits amounting to Rs. 25.18 Crores and withdrawals of Rs. 24.99 Crores from the bank account of the assessee. Through the aforesaid information available with the Assessing Officer dehors any explanation or submission by the assessee, the gross deposits in the bank account of the assessee to the tune of Rs. 25,17,66,684/- was treated as turnover of the assessee and 5% of such turnover was presumed as Net Profit of the assessee, following the provisions of section 44AF of the Act. Ld. AO also observed that all the withdrawal from the assessee’s account in cash were for more than Rs. 20,000/- each, therefore, he invoked provisions of section 40A(3) and have made an addition of Rs. 24,99,17,887/-. Aggregating the aforesaid additions, the taxable income of the assessee was determined at Rs. 26,25,06,221/-. 8. Aggrieved with the aforesaid additions, assessee preferred an appeal before the Ld. CIT(A), however, during the appellate proceedings, when the matter was fixed for hearing, assessee remains missing / nonresponsive. On this issue, the Ld. CIT(A) has specifically dedicated a para regarding the conduct and nonresponsive behavior of the assessee 8 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) towards the appellate proceedings before him, in this context, the observations of the Ld. CIT(A) dismissing the appeal of assessee on account of non-prosecution, reads as under: 4. During the course of appellate proceedings following notices were issued to the appellant which were delivered on the appellant through its registered e-mail ID. However, the appellant failed to respond to all the notices. Sr. No. Date of notice Due date for compliance 1 01.11.2022 Enablement of communication 2 13.01.2023 20.01.2023 3 17.01.2023 27.01.2023 4 16.02.2023 03.03.2023 5 25.04.2023 1 1.05.2023 6 03.09.2023 18.09.2023 7 02.11.2023 17.11.2023 8 01.01.2024 16.01.2024 5. During the course of Appellate proceedings, adequate opportunities were given to submit the reply with supporting evidences in relation to the grounds of appeal raised in Form No. 35. However, the appellant 9 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) failed to comply with all the aforesaid notices and also failed to avail the opportunities given to substantiate his claim in the grounds of appeal with supporting documentary evidences. The appellant has not filed any adjournment application till date. The behaviour act of the appellant shows that the appellant is not interested in pursuing the appeal filed by him. 6. In view of these facts, I have no alternative but to dismiss the appeal of the appellant for non-prosecution as it cannot be kept pending adjudication for indefinite period. This view is supported by the following judicial pronouncements: - l. Estate of late Tukojirao HolKar vsONV223 R480 (MP) 2. CIT vs Multiplan India Ltd., 38 ITD 320 (bel) 3. CIT vs B. N. Bhattachargee & another 118 ITR 461. 7. Further, the Hon'ble Bomba High Court in the case of M/S. Chemipol Vs. Union of India & Ors., in Central Excise Appeal No. 62 of 2009 vide Judgment dated 17.09.2009, while considering the judgment of Hon’ble Supreme Court in CIT vs. S. Cheniappa Mudaliar, AIR 1969 SC 1068, Sunderalal Mannalal vs. Nandramdas Dwarakadas, AIR 1958 and others judgments observed as follows: “ We cannot altogether lost sight of the Rule that every court or tribunal has an inherent power to dismiss a proceeding for non- prosecution when the petition/Appellant before it does not wish to prosecute the proceedings. In such situation, unless the statue clearly requires the court or tribunal to hear the 10 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) Appeal/proceeding and decide it on merits, it can dismiss the Appeal/proceeding for”. 8. The Delhi Bench of ITAT in CIT vs. M/S. Multiplan India Pvt. Ltd (1991) 38 ITD 320 (Del), has held that in a similar circumstance, the Appeal may be dismissed as un-admitted. In fact, the Hon'ble Apex Court in CIT vs. B. N. Bhattachargee & ANR (1979) 10 CTR 0354 (1979) 118 ITR 0461 has held that the words 'preferred an Appeal' in section 245M means more than formally filling it but effectively pursuing it. 9. In view of the above judicial pronouncements coupled with the fact that the Appellant has not pursued the appeal, I am left with no option but to but dismiss the appeal. Accordingly, the appeal is dismissed for non- prosecution. 8.1 After dismissing the appeal of the assessee on account of non- prosecution with the aforesaid observations, Ld. CIT(A) continued to decide the issues on merits, wherein the issues qua the additions were deliberated at length, wherein observations of the Ld. CIT(A) qua each ground of appeal assailed before him are as under: 10. Though, the appeal is dismissed on account of non-prosecution by the appellant, the merits of the case has also been examined. 11. Grounds no. 1 is against the addition of Rs. 1,25,88,334/- which is 5% of total bank deposits of Rs. 25,17,66,684/- which has been considered as the 11 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) turnover of the appellant by the AO. The contentions of the appellant are as under - i. Actual trade had not taken place in the concerns of the appellant viz. M/S. Tirupati Trading Company. ii. Bank accounts of the appellant's concern were used for the purpose of issuing bogus sale bills. iii. The amounts deposited were subsequently withdrawn through self- signed cheques of the appellant and encashed by others. They were not at all used for the payments against purchases as no actual business activity carried out in his business concern. iv. Cheque deposits in his bank accounts were not his actual sales. v. The appellant Was getting brokerage @ 50 paise per quintal and he had shown the brokerage earned for such transactions in his original returns of income. vi. The appellant had already confessed before the DDIT (Inv.)-l, Raipur on 29.09.2014 and statement given before the AO on 02.12.2016 that he is not actually connected with the financial transaction, only his name was used. vii. The financial conditions of the appellant were not at all adequate to carry out the business and he never benefitted to the extent of additions made. viii. The appellant entered into above mentioned transaction due to lack of knowledge, ignorance of law and was also not aware of the consequences of such transaction. 12 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 11.1 I have duly considered the facts of the case and material on record. Currently, the appellant is in appeal against the four-assessment order for the A. Ys. i.e. 2008-09, 2009-10, 2010-11 and 2012-13. The appellant has failed to comply with the notices issued during the appellate proceedings, however, the appellant has provided reply for some years. Considering the material for the other years which is relevant for all the years as the additions were made on the same issue for all the A. Y., the appeal is being adjudicated hereinbelow. 11.2 The appellant has claimed that he was tempted by Mr. Nitin Khandelwal and Mr. Salabh Khandelwal for some minuscule income and they used his name and identity to open business concerns in his name. The Bank accounts were also opened for the business concerns in the-name of the appellant. The appellant signed all the required documents. No actual business was carried out in the business concerns opened in the name of the appellant. Mr. Nitin Khandelwal and Mr. Salabh Khandelwal has carried out business of bogus billing in the concerns opened in the name of the appellant. The amounts received by the by cheque were deposited in the bank accounts of the appellant's business concerns. Thereafter, the amounts were withdrawn by self-signed cheques signed by the appellant himself and given to the persons who encashed them. In the entire transactions, the appellant was getting brokerage of 50 paise per quintal. 11.3 It has been claimed that FIR has been filed against Mr. Nitin Khandelwal and Mr. Salabh Khandelwal with the police department for bogus sale billing 13 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) in the appellant's concerns and misuse of appellant's bank accounts. However, the copy of FIR has not been provided. 11.4 Commercial Tax Registration certificate has been cancelled by the commercial Tax Authority on 02.08.2014 wherein it has been specifically mentioned that- “ LFky lR;kiu Áfrosnu vuqlkj O;olk; dk lapkyu O;olk; ÁkjaHk fnukad ls ugha gksuk ik;k x;k] O;olk;h dk O;olk; iw.kZr% cksxl ,oa lafnX/k Árhr gksrk gS vr% iath;u Áek.k i= tkjh fnukad 19-04-2006 ls fujLr fd;k tkrk gSA” meaning that on spot enquiries, it has been found that the no business was carried out by the businessman from the date of registration, the business of the appellant was completely bogus and ambiguous and therefore the registration certificate is cancelled from the date of registration i.e. 19.04.2006. 11.5 The cancellation of Commercial Tax Registration certificate from the date of registration is clear evidence showing the claim of the appellant that no actual business activities were carried out in the business concerns in his name is correct. It is apparent that entire business was used for providing accommodation entries and in the result, the appellant was getting brokerage. The appellant failed to file the return of income for the current year i.e. 2008- 09. Aggregate deposits in the bank accounts of the appellant were Rs. 25,17,66,684/-. The appellant has not provided detailed informations regarding goods and quantity involved in the transactions of Rs. 25,17,66,684/-. The appellant has contended to have received brokerage @50 paise per quintal, 14 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) however no documentary has been provided to this effect. The details such as goods involved in the transactions, quantity of goods involved in the transactions, quality wise rate for the goods involved in the transactions etc. has neither been provided before the assessing officer nor in the present appellate proceedings. No documentary evidence regarding the arrangement between the appellant and against Mr. Nitin Khandelwal & Mr. Salabh Khandelwal has been provided. Therefore, the contentions of the appellant that he received brokerage @50 paise per quintal cannot be accepted the absence of concrete evidence. It is the fact that the appellant himself provided all kind of help and documents to Mr. Nitin Khandelwal and Mr. Salabh Khandelwal to open the business concerns and bank accounts in his name. He has also provided self-signed cheques for the withdrawals of amounts from the bank accounts. He only came forward with the contentions as above after his case was enquired into by the investigation wing and thereafter assessed by the income tax department. The miniscule brokerage contended to have been received by him cannot be a truth in the given facts and circumstances of the case. It is crystal clear that the business of providing bogus bills is carried out only to convert black money of the beneficiaries into white. In such a transaction brokerage can be anything if not documented. The brokerage charged by the bogus bill provider may be within the range of 1% to 10%. Even if it is assumed that Mr. Nitin Khandelwal & Mr. Salabh Khandelwal has charged brokerage @5% of the transacted amount, the appellant’s contention of getting brokerage of 50 paise per quintal is totally out of the context. As such, in a case wherein the appellant is engaged in the business of accommodation entries only commission to be added on estimate basis which finds support from the decision of the Hon’ble ITAT, Ahmedabad in the case of 15 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) Aryadeep Developers Pvt. Ltd. Vs ITO (898/Ahd/2017) wherein it has been held as under: 7. We have heard both the sides and perused the material on record. During the course of assessment, the assessing officer observed on the basis of information received in respect of PACL Ltd. from the DDIT Investigation, Gurgaon that PACL Ltd. had claimed fictitious land development expenditure and the assessee M/s. Aryadeep Developers Pvt. Ltd. has received Rs. 1,02,04,082/- as land development charges from PACL Ltd. In the light of the information received pertaining to fictitious claim of expenditure by the PACL, the assessing officer has called the corresponding detail/document from the assessee to verify the genuineness of land development charges received by the assessee from PACL Ltd. along with the details and documents in respect of sub-contract made by the assessee with different sub- contractors for carrying out the development work. On verification of the details, the assessing officer has noticed that assessee has failed to furnish the complete details of location of land, area of land, survey no. of the land, name of the village where the land development work was taken place to prove the genuineness of the land development expenses paid by the assessee to sub-contractors. The assessing officer has issued notices u/s. 133(6) to all the sub-contractors. During the course of assessment, no sub-contractor has made compliance with the notices issued u/s. 133(6) of the Act by the assessing officer. On the alternative the assessee has failed to produce the sub-contractors along with documentary evidences for examination before the assessing officer. Consequently, the assessing officer has treated the development expenses of R /- claimed as paid to sub-contractors as bogus expenses and added to the total income of the assessee. During the course of appellate proceedings before Id. CIT(A), the assessee has furnished additional evidences i.e. copies of confirmation account with IT returns of the said five sub-contractors, copies of bills for cost of services etc. The Id. CIT(A) has admitted the additional evidences on the ground of not providing adequate opportunity to the assessee. The assessing officer has examined the subcontractors during the course of remand proceedings by issuing of summon u/s. 131 (1) of the Act. In response to the summons issued to Shri Rishi S. Dolakia, one of the contractor has attended and his statement was recorded u/s. 131 (1) of the Act. 'In contractor had admitted that he has not done any land development work for the assessee M/s Aryadeep Development Pvt. Ltd. He has further stated that he has further stated that he has just provided accommodation entries for which he has received commission from the assessee. The other four sub- contractors had filed their affidavits and admitted that they have not carried out any land development work for the assessee. They have stated that they have only provided accommodation entries. They have stated that the payment received by cheque from the assessee was returned back to the assessee in cash after deducting their commission for providing accommodation entries. During the course of appellate proceedings before the Id. CIT(A). the assessee has also made alternative plea that the entire contract receipt was not chargeable in the hand of the assessee but only the reasonable commission income should be estimated. However, the ld. CIT(A) has sustained the action of the assessing officer of treating the who e amount of payment made to sub-contractors regarding land development amount of Rs. as 16 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) bogus and added to the total income of the assessee. Id. CIT(A) has also rejected the alternative plea of the assessee to estimate the reasonable commission income. We have also gone through the judicial pronouncements referred by the ld. Counsel during the course of appellate proceedings before us as referred above in this order. It is noticed that in case of Raheel Infratech Ltd. Vs. DCIT supra, the Coordinate Bench of the ITAT, Calcutta on similar fact of making payment to a number of parties including PACL Ltd. It was held that no work was done by the assessee or the sub- contractor and the Hon’ble ITAT has sustained the decision of ld. CIT(A) in estimating income @5% of the book entry after reducing the income already disclosed by the assessee. In the case of ITO vs. Shri Maheshbhai Tulsibhai Patel supra referred by the ld. Counsel, the Co-ordinate Bench of Surat in respect of accommodation entries obtained from fictitious contract receipt has sustained the finding of ld. CIT(A) in estimation of commission @2% of total accommodation entries. After considering the facts, judicial findings as referred above, we consider that Id. CIT(A) is unjustified in treating the entire contract receipt of Rs. 94,48,000/- as a taxable income of the assessee without disproving the material fact that assessee was indulged in facilitating accommodation entries. The assessee has not carried out any development work for the PACL Ltd. and provided accommodation entries to PACL Ltd. and on similar basis accommodation entries were provided by the subcontractor to the assessee. The assessee has failed to furnish the description of the land and other details where the land development work was carried out and the subcontractors have also admitted in their statements and the affidavits, they have only provided accommodation entries. In the light of the above facts and finding that assessee have not executed any work except providing accommodation entries, we consider that looking to the meager income shown by the assessee it will be reasonable to estimate the commission income earned by the assessee @ 4% of Rs. 1,02,04,082/- to the amount of Rs. 4,08,165/-. Therefore, the appeal of the assessee is partly allowed. The remaining grounds of appeal no. 1.2 to 2.2 not contested by the Id. Counsel stands dismissed. Looking into the facts and circumstances of the case in totality, the AO's stand of treating the entire deposits in bank account to be sales / turnover of the appellant and taxing the same @5% cannot be sustained, however, it would not be out of place to consider the brokerage received by the appellant @1% of the total amount of bogus bills provided with is the aggregate amount deposited in the bank accounts of the appellant. Therefore, brokerage received by the appellant is estimated at Rs. 25,17,666/- (1% of 25,17,66,684). Accordingly, the addition made by the AO of Rs. 1,25,88,334/- [@5% of Rs. 17 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 25,17,66,684/-] is restricted to Rs. 25,17,666/-, Accordingly, ground no. 1 is partly allowed. 12. Ground No. 2 is against the addition of Rs. 24,99,17,887/- u/s 40A(3) of the Act. As discussed while adjudicating round no. 1 that the appellant has not carried out any business activity and his business concerns were used for providing bogus sale bills, the question of making payment for purchases of goods in violation of provisions of 40A(3) of the Act does not arise Therefore, the addition of Rs. 24,99,17,887/- u/s 40A(3) of the Act is not sustainable and hence deleted. Accordingly, ground no. 2 is deleted. 13. In ground no. 3, the appellant has contended that the AO erred in making the addition on the basis of his inference that the entire amount deposited in bank A/Cs was sales and entire mount withdrawn from bank A/Cs was purchases/ expenses for invoking the provisions u/s 44AF & 40A(3). The Ld. AO overlooked the fact that the appellant has shown the brokerage earned for such transactions in his original I.T. return. The issues relating to additions relating to sections 44AF and 40A(3) of the Act has been adjudicated in ground nos. 1 and 2 respectively in the earlier paras. Regarding the other contention of the appellant that the AO overlooked the fact that the appellant had shown the brokerage earned for such transactions in his original l. T. return is not found to be correct as the AO has recorded his findings that the appellant failed to file his return of income. The appellant has not provided the copy of return of income. However, the AO is directed to verify the contention of the appellant and if it is found that the appellant has filed his return of income, he is directed to allow the benefit of 18 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) returned income to the appellant. Accordingly, ground no. 3 is disposed off with this direction. 9. As per the aforesaid order of the Ld. CIT(A), addition on account of presumptive profit u/s 44AF for Rs. 1,25,88,334/- (5% of 25,17,66,684/-) made by the Ld. AO has been recharacterized as brokerage received by the assessee and was scaled down to Rs.25,17,66,684/-(1% of 25,17,66,684/-), treating the entire deposits in the account of assessee as receipts on account of his services of providing bogus bills. Also, the addition u/s 40A(3) for Rs. 44,99,17,887/- was vacated by the Ld. CIT(A) considering that the assessee has not carried out any business activity, therefore, the question of making payments for purchase of goods in violation of provisions of section 40A(3) does not arise. As substantial relief was granted by the Ld. CIT(A) to the assessee, which is not acceptable to the department, therefore, the present appeal with the grievances, assailed in the grounds of appeal are filed before us. 10. At the outset, it was the submission by Departmental Representative (i.e., Ld. Sr. DR) that Ld. AO has correctly estimated the profits of the assessee as the assessee was failed to furnish return of income and have 19 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) huge income through the turnover as per deposits in his bank accounts. It was the submission that Ld. CIT(A), NFAC was not justified in reducing the addition and recharacterizing the income of the assessee. It is the submission that Ld. CIT(A) fails to appreciate the facts of the case appropriately and was not justified in treating the turnover of the assessee as receipts towards the bogus bills issued by him and the assessee has only received commission of 1% on such bogus bills. It is further submitted that the Ld. CIT(A) was not justified in deleting the addition of Rs. 24,99,14,887/- made by Ld. AO by applying the section 40A(3). With such submission, it was the prayer that the order of Ld. CIT(A) was not justified, therefore, the same is liable to be set aside and the additions made by the Ld. AO deserves to be restored. 11. Before us, assessee himself was present during the appellate proceedings, however, he was unable to substantiate any contention or to make any argument contrary to the observations of Ld. CIT(A), however, he submitted that the transactions in his bank account are conducted by Mr. Nitin Khandelwal & Mr. Salabh Khandelwal. He stated that his name was only used to open the bank account and proprietorship firm in the name of Tirupati Trading Company. The assessee was only provided with certain 20 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) meagre income for facilitating the aforesaid persons, therefore, he has not received any commission from all the aforesaid transactions. A written submission of assesses is also furnished dated 08.07.2024, the same is extracted hereunder in support of the contentions of the assessee: 21 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 22 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 23 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 24 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 25 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 26 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 27 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 28 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 29 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 30 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 31 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 32 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 33 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 34 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 35 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 36 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 12. We have considered the rival submissions, perused the material available on record and the case laws relied upon by the parties. From the facts in the present case, as per information received from DDIT Investigation, Raipur which is discernible from the records, we find that the assessee, Shri Narad Kumar Sahu, Proprietor of M/s Tirupati Trading Company has submitted that he has not done any business in the name of his firm, his bank account was used for providing bogus sales bills. It was the claim of appellant that he had received brokerage of Rs. 50 Paisa per quintal only, however in absence of any concrete documentary evidence such claim of the assessee was rejected by the revenue authorities. Ld. CIT(A) had exhaustively deliberated upon the issue and have observed that the assessee was involved in the activities of providing bogus sales bills, he 37 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) further observed that for providing of such services, there would be certain income to the assessee in the form of brokerage. The appellant’s contention that he is getting brokerage of 50 paisa per quintal was not found believable by the Ld. CIT(A), therefore, a fair estimation of 1% as brokerage received on the total amount of bogus bills was adopted by the Ld. CIT(A) and rightly so, as the involvement of the assessee in issuance of bogus bills and receipt of brokerage cannot be doubted. The conviction of Ld. CIT(A) was based on his reliance on the order of ITAT, Ahmedabad in the case of Aryadeep Developers Pvt. Ltd. Vs. ITO (898/Ahd/2017), wherein under similar facts and circumstances a view have been taken, adopting the same analogy from the order in the case of Aryadeep Developers Pvt. Ltd.(supra), considering the facts and circumstances of the present case, Ld. CIT(A) had arrived at a conclusion that it would be reasonable to consider that the brokerage received by the appellant would be 1% of the Bogus Sales Bills profit and amounts deposited in the bank account of the appellant. We also coincide with the observations of the Ld. CIT(A), that the reasonable of 1% brokerage in the present case as against 4% in the case of Aryadeep Developers Pvt. Ltd. (surpa) is justifiable looking to the involvement of other persons i.e., Mr. Nitin and Salabh Khandelwal, who as per assessee 38 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) are the prime operators in the bogus billing activity. Also, the observation of Ld. CIT(A) that the nature of business in which the assessee is engaged the commission is added on estimated basis is a convincing observation in the present case. In the admitted facts of the present case, that the assessee is an accommodation entry provider, though it was his claim that he was oblivion of the fact that his income and his bank account were used by Mr. Nitin and Salabh Khandelwal, for which he also had filed FIR with the police department against these 2 persons. However, was unable to furnish any copy of FIR before Ld. CIT(A), so before us. Therefore, we are unable to subscribe to and to accept the contention of the assessee in toto, however, findings of Ld. CIT(A) are found to be reasonable, rational and acceptable. 12.1 We, therefore, in absence of any further substantial explanations/ facts/ clarifications / decisions contrary to the findings of Ld. CIT(A), from either of the parties, are of the considered view that the Ld. CIT(A) has rightly adjudicated the issue and there was no reason to interfere with the same qua the addition of Rs. 1,25,88,334/- on account of estimation of profit @5% as per provisions of section 44AF, which was reduced at Rs. 25,17,666/- at by recharacterizing the income of assessee as brokerage @1% of the gross deposits for providing the accommodation / bogus bills. 39 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 12.2 We, thus, in terms of aforesaid discussions, concur with and approve the view adopted by the Ld. CIT(A), accordingly, there is no reason to interfere with the same. 12.3 Resultantly, Ground No. 1 of the appeal of department stands dismissed. 13. Apropos, addition u/s 40A(B) of the Act, the same is also not sustainable as the income of the assessee was held as income from brokerage received from his activities of issuance of bogus bills, therefore, the question of making payment for purchase of making goods in violation of provisions of section 40A(3) is out of question. Under such circumstances, we concur with the findings of Ld. CIT(A) on this issue also and uphold his finding in deleting the addition of Rs. 24,99,17,887/- made u/s 40A(3) of the Act. 13.1 Resultantly, Ground no. 2 of the department’s appeal challenging the justification in deleting the addition u/s 40A(3) is rendered as rejected in terms of our aforesaid observations. 40 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) 14. Ground No. 3 & 4 of department’s appeal are general and academic in nature, have no advancement of any further information or arguments, thus, rendered as infructuous, consequently stands dismissed. 15. Considering the aforesaid facts and circumstances of the present case, we uphold the order of Ld. CIT(A), therefore the grounds of appeal raised by the revenue in its appeal are dismissed, resulting thereby the appeal in ITA No. 105/RPR/2024 of revenue stands dismissed. 16. Adverting to the CO No. 07/RPR/2024 of the assessee arising out of ITA No. 105/RPR/2024 of the revenue for the AY 2008-09, wherein the first issue raised by the assessee is to accept the return income shown by him instead of 1% of gross amount as brokerage income by the Ld. CIT(A). And, the second ground of appeal to support the deletion of addition under the provisions of section 40A(3) by the Ld. CIT(A), are covered by our deliberations and decision while deciding the revenue’s appeal No. 105/RPR/2024 in terms of our observations in the foregoing paras, accordingly, our decision in the said appeal of the revenue shall mutatis mutandis apply on grounds of appeal raised in CO No. 07/RPR/2024 by the 41 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) assessee, consequently, no separate adjudication of the grounds of appeal of the assessee CO is called for. Resultantly, the CO no. 07/RPR/2024 of the assessee is dismissed. 17. Having similar facts and circumstances and identical grounds of appeal in the other 3 appeals of the revenue, i.e., ITA No. 180, 181, 182/RPR/2024 for the AY 2009-10, 2010-11 & 2012-13 and also in the COs of assessee in CO No. 08, 09 & 10/RPR/2024, therefore, are covered by our decision in ITA No. 105/RPR/2024 of the revenue and CO No. 07 of the assessee for the AY 2008-09, accordingly, all these appeals of the revenue and COs of the assessee are disposed of in terms of our observations therein. 18. In combined result, ITA Nos. 105, 180, 181 & 182/RPR/2024 of the revenue and CO Nos. 07, 08, 09 & 10/RPR/2024 are dismissed, in terms of the observations as articulated hereinabove. 42 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) Order pronounced in the open court on 28/10/2024. Sd/- (RAVISH SOOD) Sd/- (ARUN KHODPIA) Ɋाियक सद˟ / JUDICIAL MEMBER लेखा सद˟ / ACCOUNTANT MEMBER रायपुर/Raipur; िदनांक Dated 28/10/2024 Vaibhav Shrivastav आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : आदेशानुसार/ BY ORDER, (Senior Private Secretary) आयकर अपीलीय अिधकरण, रायपुर/ITAT, Raipur 1. अपीलाथŎ / The Appellant- 2. ŮȑथŎ / The Respondent- 3. आयकर आयुƅ(अपील) / The CIT(A), 4. The Pr. CIT, Raipur (C.G.) 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 6. गाडŊ फाईल / Guard file. // स×याǒपत Ĥित True copy // 43 ITA Nos. 105, 180, 181 & 182/RPR/2024 (DCIT-Raipur) CO Nos. 07, 08, 09 & 10/RPR/2024 (Narad Sahu) Date 1 Draft dictated on 24.10.2024 Sr.PS/PS 2 Draft placed before author 25.10.2024 Sr.PS/PS 3 Draft proposed and placed before the second Member .10.2024 JM/AM 4 Draft discussed/approved by second Member .10.2024 AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on .10.2024 Sr.PS/PS 7 Date of uploading of order .10.2024 Sr.PS/PS 8 File sent to Bench Clerk .10.2024 Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of dispatch of order "