M/S. OLIVE OVERSEAS PVT. LTD., Mumbai V. DCIT, CC-1(1), MUMBAI

ITA 1408/MUM/2023

AI Insights

M/s. Olive Overseas Pvt. Ltd. appealed against the order of the Commissioner of Income Tax (Appeals), which upheld the AO's decision of rejecting the books of accounts and treating all business activities as accommodation entries. The AO had estimated additions based on alleged commission income from loans, advances, purchases, and sales. The Tribunal examined whether the protective addition in the assessee's hands was sustainable, given that a substantive addition had already been made in the case of Shri Praveen Kumar Jain, who was linked to the assessee's operations. The Tribunal concluded that the protective addition was not sustainable as it was based on conjecture and there was no specific provision in the Income Tax Act for such an addition.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301356 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-07-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 25-04-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B. LAXMI KANTH
• Keywords: Search and seizure; Accommodation entries
• Section: 145; 132; 143(3); 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “SMC”, MUMBAI SHRI KULDIP SINGH, JUDICIAL MEMBER ITA No. 1408/M/2023 Assessment Year: 2014-15 M/s. Olive Overseas Pvt. Ltd., Office No.27, Kamla BMC Market, Padma Nagar Raod, Chikuwadi, Borivali(W), Mumbai- 400 092 PAN: AACCR4512K Vs. DCIT, Central Circle 1(1), Room No. 903, 9 th Floor, Pratishtha Bhavan [Old CGO Building (Annexe)], M.K.Road, Mumbai-400 020 (Appellant) (Respondent) Present for: Assessee by : Shri. Vimal Punmiya, A.R. Revenue by : Shri. B. Laxmi Kanth, D.R. Date of Hearing : 12 . 07 . 2023 Date of Pronouncement : 30 . 08 . 2023 O R D E R Per : Kuldip Singh, Judicial Member: The appellant, M/s. Olive Overseas Pvt. Ltd. (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 08.02.2023 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment year 2014-15 on the grounds inter-alia that :- “ 1. The learned Commissioner of income Tax (Appeal) has erred in not allowing the appellant company's appeal for disapproving the learned Assessing officer's view of rejecting the Books of Accounts and Income ITA No. 1408/M/2023 M/s. Olive Overseas Pvt. Ltd. 2 of appellant by invoking the provision of section 145 (3) of the income tax Act, 196. 2. The learned Commissioner of Income Tax (Appeal) has again erred in upholding the action of learned assessing officer of treating all the business activities as accommodation entry without appreciating the submission / documentary evidence provided to prove the genuineness of all the transaction of Income, Expenses, Business Losses, Capital Gain / Loss, purchase, sales, loans and advances and Investments etc submitted by appellant company. 3. The Learned Commissioner of Income Tax (Appeal) has again erred in upholding the addition made by the learned Dy. Commissioner of Income Tax by estimating addition at the rate of alleged commission income at 0.20% p.m. for Loans & Advances and 20 paise for Purchase & sales (Trading Activities) during the captioned year. 4. The Learned Commissioner of Income Tax (Appeal) has again erred in upholding the proposition of the learned assessing officer and treatment of the alleged unaccounted commission income is confirmed on "Protective Basis. 5. The appellant craves to add, amend or alter the grounds of appeal at the time of or before the hearing of appeal. ” 2. Briefly stated facts necessary for consideration and adjudication of the issues at hand are : the assessee company claimed to be in the business of trading in diamond and other commodities, investment in shares and money lending. On the basis of search and seizure operation carried out under section 132 of the Income Tax Act, 1961 (for short ‘the Act’) in case of Shri Praveen Kumar Jain on 01.10.2013. The case of the assessee was subjected to manual scrutiny under compulsory category. The assessee filed return of income for the year under consideration declaring total income of Rs.31,30,811/-. Necessary notices were issued and in response thereto the assessee was duly represented through his authorized representative, furnished requisite details. The Assessing Officer (AO) noticed that Shri Praveen Kumar Jain through a network of a number of companies including the assessee ITA No. 1408/M/2023 M/s. Olive Overseas Pvt. Ltd. 3 company was involved in the business of providing accommodation entries in the garb of providing unsecured loans, share capital or issuing bogus bills of purchase and sales. Statement of assessee was recorded. During the assessment proceedings the assessee filed the details of transactions of providing accommodation entries by different modes explained in the table below: S.No. Particulars of Entry provided Amount (in Rs.) Rate of Commission Commission Income 1 Loans & advances 7,58,01,516 0.20% per month[2,4% per year] 18,19,236 2 Sales 53,65,15,146 20 paise per Rs.100. [0.2%] 10,73,030 3 Purchases 48,12,06,447 20 paise per Rs.100. [0.2%] 9,62,414 Total 38,54,680 3. From the details given it is noticed that the assessee was given accommodation entries by way of different modes as share application money, share capital, unsecured loans, bogus bills of purchase and sales on which net profit is worked out as shown in the last column of the table which is to the tune of Rs.38,54,680/-. Expenses incurred if any by the assessee for the aforesaid brokerage income is also not allowed. Assessee’s return of income to the tune of Rs.31,30,810/- is assessed as assessee’s net income for the year under consideration under the head from other sources. 4. However, the AO proceeded to hold that the assessee company is also one of the concerns operated and controlled by Shri Praveen Kumar Jain as has been admitted by him in his statement recorded during the search and seizure operation and under these circumstances the income earned on turnover done through this concern has been included as income in the individual ITA No. 1408/M/2023 M/s. Olive Overseas Pvt. Ltd. 4 case of Shri Praveen Kumar Jain and the same is assessed in assessee’s case on “protective basis” and thereby framed the assessment under section 153C read with section 143(3) of the Act. 5. The assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has confirmed the addition by dismissing the appeal. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) the assessee has come up before the Tribunal by way of filing present appeal. 6. I have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto. 7. Undisputedly assessee’s case for the year under consideration was subjected to manual scrutiny under compulsory category on the basis of search and seizure operation carried out under section 132 of the Act in case of Shri Praveen Kumar Jain on 01.10.2013. It is also not in dispute that the addition of Rs.38,54,680/- under the head “income from other sources” has already been made in the hands of Shri Praveen Kumar Jain on “substantive basis”. It is also not in dispute that now the addition in the hands of the assessee has been made only on “protective basis”. 8. In the backdrop of the aforesaid circumstances the sole question arises for determination in this case is: “As to whether “protective addition” made in the hands of the assessee qua the addition already made on “substantive ITA No. 1408/M/2023 M/s. Olive Overseas Pvt. Ltd. 5 basis” in the hands of Shri Praveen Kumar Jain is sustainable”? 9. I am of the considered view that the entire assessment order passed by the AO is based upon the conjecture and surmises and there is not an iota of evidence to fasten the liability of the assessee qua the addition in question made on “protective basis” particularly when substantive addition has already been made in the hands of Shri Praveen Kumar Jain. Even otherwise there is no provision in the income tax statute as to making “protective addition” which is a self devised addition made on the basis of conjecture and surmises. 10. In view of the matter when “substantive addition” qua the accommodation entries in question in this case has already been made in the hands of Shri Praveen Kumar Jain addition made in the hands of the assessee on “protective basis” is not sustainable in the eyes of law, hence ordered to be deleted. 11. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 30.08.2023. Sd/- (KULDIP SINGH) JUDICIAL MEMBER Mumbai, Dated: 30.08.2023. * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench ITA No. 1408/M/2023 M/s. Olive Overseas Pvt. Ltd. 6 //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.