Rajendra Jayantilal Gandhi, Bhavnagar V. The Dy. Commissioner of Income Tax, Central Circle-2(3), Ahmedabad

ITA 1758/AHD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8324 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 30-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: S N DIVATIA
• Keywords: Search and seizure; Accommodation entries
• Section: 143(3); 131; 148

Judgement Text

, SMC/C IN THE INCOME TAX APPELLATE TRIBUNAL SMC/C BENCH, AHMEDABAD BEFORESHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO S . 1755 TO 1758 /AHD/20 1 6 / ASSESSMENT YEAR: 2009 - 10 TO 2012 - 13 RAJENDRA JAYANTILAL GANDHI, PROP. MEHTA STEEL DEPOT, PLOT NO.2156/B, NEETA PARK, HILL DRIVE, BHAVNAGAR - 364002 PAN : AARPG 3608 B VS. DCIT, CENTRAL CIRCLE 2(3), AHMEDABAD [ / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI S.N. DIVATIA, AR REVENUE BY : SHRI V.K. SINGH, SR. DR / DA TE OF HEARING : 0 5 / 10 /201 7 / DATE OF PRONOUNCEMENT: 09 / 10 /201 7 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER: THESE FOUR APPEALS OF THE ASSESSEE FOR AYS 2009 - 10 TO 2012 - 13 ARE DIRECTED AGAINST THE COMMON ORDER OF THE CIT(A) - 12 , AHMEDABAD DATED 28 .0 3 .201 6 , ARISING OUT OF SEPARATE ORDERS PASSED BY THE D CIT, CENTRAL CIRCLE - 2(3), AHMEDABAD OF EVEN DATE I.E. 07.07.2014 UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). AS THE ISSUE RAISED IN ALL THESE APPEALS IS COMMON AND RELATING TO SAME ASSESSEE, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE HAS TAKEN EIGHT GROUNDS OF APPEAL IN THE RESPECTIVE YEAR; BUT HIS GRIEVANCE REVO LVES AROUND A SINGLE ISSUE WHICH IS COMMON IN ALL THE YEARS. ITA NOS. 1755 TO 1758/AHD/ 2016 RAJENDRA JAYANTILAL GANDHI VS. DCIT AY : 2009 - 10 TO 2012 - 13 - 2 3. THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.3,49,536/ - , RS.4,52,348/ - , RS. 3,04,914/ - AND RS.1,92,746/ - FOR ASSESSMENT YEARS 2009 - 10 TO 201 2 - 13 RESPECTIVELY BY SUSTAINING GROSS PROFIT ADDITION @ 0.5% OF THE ALLEGED UNACCOUNTED CASH SALES. 3. WE TAKE - UP ITA NO.1755/AHD/2016 FOR AY 2009 - 010 AS THE LEAD CASE. THE BRIEF FACTS OF THE CASE , AS CULLED OUT FROM THE RECORD FOR ASSESSMENT YEAR 2009 - 10, ARE THAT THE ASSESSEE IS AN INDIVIDUAL, DERIVING INCOME FROM BUSINESS OF TRADING IN IRON AND STEEL PRODUCTS AS A PROPRIETOR OF M/S. MEHTA STEEL DEPOT. HE FILED HIS RETURN OF INCOME OF AY 2009 - 10 ON 22.09.2009 DECLARING TOTAL INCOME AT RS.8,17,170/ - . SUBSEQUENTLY, THE ASSESSMENT WAS FINALIZED UNDER SECTION 143(3) OF THE ACT ON 24.08.2011 DETERMINING TOTAL INCOME AT RS.8,29,864/ - . THEREAFTER, DURING THE SEARCH PROCEEDINGS, IN THE CAS E OF JAYESH STEEL GROUP, IT WAS FOUND BY THE ASSESSING OFFICER THAT SOME OF THE CONCERNS OF JAYESH STEEL GROUP HAVE RECEIVED ACCOMMODATION ENTRIES FROM THE ASSESSEE IN THE FORM OF BOGUS BILLS. CONSIDERING THIS ASPECT OF THE CASE, THE ASSESSING OFFICER WAS OF THE OPINION THAT CERTAIN INCOME HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. HE ACCORDINGLY REOPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT ON 31.03.2014, WHICH WAS OBJECTED BY THE ASSESSEE VIDE HIS LETTER DATED 21.04.2014. HOWEVER, ASSESSING OFFICER FINALLY CONCLUDED, AFTER CONSIDERING ASSESSEE S STATEMENT RECO RDED ON OATH U/S 131 OF THE ACT THAT ASSESSEE USED TO ISSUE BOGUS SALES BILLS TO JAYESH STEEL GROUP TO COVER UP THE UNA CCOUNTED CASH SALES MADE DURING THE YEAR AND THAT THE ASSESSEE HAS RECEIVED COMMISSION @ 0.5% OF THE SALES TO JAYESH STEEL GROUP AND SUCH INCOME RECEIVED BY WAY OF COMMISSION HAS NOT BEEN INCLUDED IN HIS BOOKS OF ACCOUNTS. HE ACCORDINGLY MADE AN ADDITION OF RS.3,49,536/ - TOWARDS UNDISCLOSED COMMISSION BEING 0.5% OF THE BOGUS SALES TO JAYESH GROUP AS WELL AS GROSS PROFIT ADDITION @ 2% OF THE ALLEGED UNACCOUNTED CASH SALES OF RS.6,99,07,317/ - , I.E. RS.13,44,371/ - FO R THE ASSESSMENT YEAR 2009 - 10. ITA NOS. 1755 TO 1758/AHD/ 2016 RAJENDRA JAYANTILAL GANDHI VS. DCIT AY : 2009 - 10 TO 2012 - 13 - 3 4. FOR SIMILAR REASONS AND FACTS AS STATED ABOVE, THE ASSESSING OFFICER MADE THE RESPECTIVE ADDITIONS FOR OTHER ASSESSMENT YEARS ALSO AS UNDER: - . AY COMMISSION @ 0.5% GP ADDITION @ 2% 2010 - 11 4,52,348 17,39,801 2011 - 12 3,04,914 11,72,748 2012 - 13 1,92,746 7,34,271 5. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION. HOWEVER, LD. CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, PARTLY SUSTAINED THE GP ADDITION @ 0.5% OF THE ALLEGED UNACCOUNTED CASH SALES; HOWEVER, CONFIRMED THE ADDITION AS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED COMMISSION @ 0.5% OF THE SALES MADE TO JAYESH GROUP, BY FOLLOWING OBSERVATIONS: - AY 2009 - 10 5. WITH REGARD TO ADDITION OF RS.13,44,371/ - AT 2% OF SALES TO JAYESH GROUP , AFTER CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES AND THE RELEVANT COPIES OF ACCOUNTS OF GP RATES DISCLOSED THEREIN, I AM OF THE CONSIDERED OPINION THAT SOME RELIEF IS DUE TO THE APPELLANT. THIS IS FOR THE REASON THAT THE AO HAS CONTRADICTED HIMSELF IN MAKING ADDITION THAT HE HAS MADE INASMUCH AS WHILE ON ONE HAND, HE CONSIDERS THE BILLS ISSUED TO JAYESH GROUP AS BOGUS, ON THE OTHER HAND, HE BRINGS TO TAX ADDITIONAL GROSS PROFIT @ 2% ON SUCH BOGUS SALES MADE TO JAYESH GROUP. MOREOVER, ONCE THE AO HAS RELIED ON THE STATEMENT OF THE APPELLANT TO BRING THE COMMISSION AT 0.5% ON THE AMOUNT OF BOGUS BILLS ISSUED TO JAYESH GROUP, HE COULD NOT HAVE DISBELIEVED PART OF IT WHICH CLEARLY AN D CATEGORICALLY MENTIONS THAT THE BOGUS BILLS TO JAYESH GROUP ARE IN FACT CASH SALES EFFECTED TO OTHER PARTIES. THUS, I AM IN COMPLETE AGREEMENT WITH THE LD. AR THAT THE GP AT THE AVERAGE OF 2%, BEING THE GP RATE ALREADY DISCLOSED HAS NO VALIDITY IN LAW AN D CANNOT BE SUSTAINED ON THE BASIS OF EVIDENCES AVAILABLE ON RECORD. HOWEVER, WHEN THE APPELLANT HIMSELF HAS STATED THAT THE CASH SALES TO THIRD AND UNRECORDED PARTIES HAVE IN FACT BEEN MADE, THE GP DISCLOSED BY THE AUDITED BOOKS RESULTS, HAS NO CREDIBILI TY VIS - - VIS THE BOGUS BILLS TO THE EXTENT OF RS.6,99,07,317/ - ISSUED TO JAYESH GROUP AND CORRESPONDING CASH SALES MADE TO UNRECORDED THIRD PARTIES. THUS, I AM OF THE CONSIDERED OPINION THAT SOME ADDITIONAL ESTIMATED GROSS PROFIT WITH REGARD TO SUCH UNREC ORDED (SUBSTITUTED) CASH SALES IS EARNED BY THE APPELLANT. I AM THEREFORE OF THE OPIN I ON THAT IF ITA NOS. 1755 TO 1758/AHD/ 2016 RAJENDRA JAYANTILAL GANDHI VS. DCIT AY : 2009 - 10 TO 2012 - 13 - 4 ADDITIONAL GP @ 0.5% WITH REGARD TO SUBSTITUTED CASH SALES/BOGUS BILLS TO JAYESH GROUP, AS AGAINST THE DISCLOSED NORMAL GP IS BROUGHT TO TAX, THE SAME WOULD BE FAIR AND REASONABLE IN THE CIRCUMSTNACES. ACCORDINGLY, IN PLACE OF ADDITION ON ACCOUNT OF GP MADE BY THE LD. AO, THE FOLLOWING ADDITION IS UPHELD, GRANTING RELIEF OF BALANCE AMOUNT AS UNDER: - AY ADDI TION MADE BY THE AO ADDITION SUSTAINED RELIEF GRANTED 2009 - 10 13,44,371 3,49,536 9,94,835 2010 - 11 17,39,801 4,52,348 12,87,453 2011 - 12 11,72,748 3,04,914 8,67,834 2012 - 13 7,34,271 1,92746 5,41,525 6. THUS, THE GROUNDS CONTAINED IN GROUP NO.3.1 AND 3.2 ARE PARTLY ALLOWED. 7. WITH REGARD TO GROUND NO.4.1 ASSAILING THE ADDITION OF ALLEGED COMMISSION @0.5% OF THE SALES MADE TO JAYESH GROUP, THE LD. DR HAS SUBMITTED THAT THE GP ON SUCH SALES EVIDENCED BY ENTRIES OF SALES MADE TO JAYESH GROUP IN THE AUDITED BOOKS OF ACCOUNTS HAS AL READY BEEN OFFERED FOR TAX AND THEREFORE, THE FURTHER ADDITION OF 0.5% AS COMMISSION AMOUNTS TO DOUBLE TAXATION AND THE SAME NEEDS TO BE DELETED. THE AO HAS, AFTER DISCUSSING THE ISSUE IN PARA 10 OF THE ORDER, RELIED ON THE STATEMENT OF THE APPELLANT ON O ATH RECORDED U/S 133A(3)(III) FOR MAKING THE ADDITION. AFTER CONSIDERING THE FACTS ON RECORD, I FIND NO MERIT IN THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT. THE APPELLANT IS ADMITTEDLY ENGAGED INTO AN ACTIVITY OF ISSUANCE OF BOGUS BILLS. ADMITTEDLY , THE APPELLANT HAS EARNED COMMISSION OF 0.5%. ADMITTEDLY, THE SALES REPRESENTED BY BILLS ISSUED TO JAYESH GROUP WERE MADE IN FACT IN CASH TO OTHER AND UNRECORDED PARTIES. THUS, OBVIOUSLY THE APPELLANT WAS NOT ENGAGED IN CHARITY WHILE ISSUING BOGUS BILLS TO JAYESH GROUP AND EARNING OF 0.5% HAS BEEN ADMITTED BY APPELLANT HIMSELF. IN VIEW OF THIS, I FIND NO REASON TO INTERFERE WITH THE ADDITION MADE BY THE AO AND THEREFORE, THE ADDITION MADE FOR THE FOLLOWING YEARS MADE AT 0.5% TO JAYESH GROUP IS HEREBY CO NFIRMED. IN THE RESULT, THE RELATED GROUND NO.4.1 IS DISMISSED. AY ADDITION CONFIRMED 2009 - 10 3,49,536 2010 - 11 4,52,348 2011 - 12 3,04,914 2012 - 13 1,92,746 6. FURTHER AGGRIEVED, THE ASSES SEE IS NOW IN APPEAL BEFORE US AGAINST THE IMPUGNED ADDITIONS OF SUSTAINING GP ADDITION OF 0.5% ON UNACCOUNTED CASH SALES. ITA NOS. 1755 TO 1758/AHD/ 2016 RAJENDRA JAYANTILAL GANDHI VS. DCIT AY : 2009 - 10 TO 2012 - 13 - 5 7. LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE SUBMISSIONS AS WERE MADE BEFORE THE LD. CIT(A). LEA RNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 8 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. IT IS PERTINENT TO NOTE THAT DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS IN THE CASE OF JAYESH STEEL GROUP , THE ASSESSING OFFICER FOUND SOME ACCOMMODATION ENTRIES IN THE FORM OF BOGUS BILLS FROM THE ASSESSEE, WHICH LED THE ASSESSING OFFICER TO FORM AN OPINION THAT CERTAIN INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMEN T. WE FIND THAT IN THE STATEMENT RECORDED UNDER SECTION 131 OF THE ACT, ESPECIALLY IN QUESTION NO.5, THE ASSESSEE HAS STATED AS UNDER: - Q5 WHAT IS THE MODUS - OPERANDI OF THIS ENTIRE BUSINESS OF ACCOMMODATION ENTRY? ANR. SIR, I AM A DEALER OF INDIAN S TEEL CORP. LTD. IN MY BUSINESS, OFTEN THERE IS SALE IN CASH. MANY PERSONS TAKE THE MATERIAL WITHOUT THE BILLS AND TO FOR THE BUSINESS EXPEDIENCY, I HAVE TO SELL THE MATERIAL IN CASH. NO BILLS ARE ISSUED THERE. WHEN JAYESH GROUP ASKS FOR BOGUS BILLS, THE N I AM IN A POSITION TO GIVE THESE BOGUS BILLS TO THE JAYSH GROUP. THUS, IT IS CLEAR THAT THAT THE ASSESSEE HAS MADE UNACCOUNTED CASH SALES , APART FROM RECEIVING COMMISSION OF 0.5% ON ACCOMMODATION BILLS SINCE HE HIMSELF HA D ACCEPTED THAT ACCOMMODATION ENTRIES WERE PROVIDED BY HIM TO JAYESH STEEL GROUP IN HIS STATEMENT RECORDED UNDER SECTION 133A(3)(III) OF THE ACT ON 16.11.2011 . MOREOVER, THE ASSESSEE HIMSELF HAS ACCEPTED THE EARNING OF COMMISSION OF 0.5% OF THE SALES MADE TO JAYESH GROUP. CONSIDERING THIS ASPECT OF THE CASE, THE ASSESSING OFFICER MADE AN ADDITION OF GP OF 2% ON SUCH BOGUS BILLS AS WELL AS UNDISCLOSED COMMISSION BEING 0.5% OF THE BOGUS SALES TO JAYESH GROUP . HOWEVER, WE OBSERVE THAT LD. CIT(A) HAS RIGHTLY RESTRICTED THE ADDITION ON ACCOUNT OF GP @ 0.5% ON SALES TO JAYESH GROUP CONSIDERING THE FACT THAT THE BOGUS BILLS ISSUED TO JAYESH GROUP WERE IN FACT CASH SALES EFFECTED TO OTHER ITA NOS. 1755 TO 1758/AHD/ 2016 RAJENDRA JAYANTILAL GANDHI VS. DCIT AY : 2009 - 10 TO 2012 - 13 - 6 PARTIES WHO HAD NOT DEMANDED THE CASH MEMO , WHICH PROVES THAT BOOK RESULTS A RE NOT RELIABLE AND THEREFORE RIGHTLY REJECTED BY THE LEARNED ASSESSING OFFICER. 9. WE, THEREFORE, DO NOT FIND ANY ERROR IN THE FINDINGS OF THE LD. CIT(A) IN RESTRICTING THE GP ADDITION @ 0.5% WITH REGARD TO UNACCOUNTED CASH SALES AS AGAINST THE ADDITION OF 2% NORMAL GP MADE BY THE ASSESSING OFFICER, OVER AND ABOVE THE 0.5% COMMISSION INCOME ON ALLEGED BOGUS SALES. 10 . IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 9 TH OCTOBER 2017 AT AHMEDABAD. SD/ - SD/ - ( S.S. GODARA ) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER AHMEDABAD ; DATED , 09 / 10 / 20 1 7 * BT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ) ( / THE CIT(A) - 5. , , /DR,ITAT, AHMEDABAD, 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT.REGISTRAR) ITAT, AHMEDABAD