Darshanam Life Space Pvt. Ltd, Vadodara V. The DCIT, Circle-1(1)(1), Vadoadara

ITA 2061/AHD/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 1862 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 04-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ITA NO AHD
• Assessee Lawyers: ASSESSMENT YEAR ASST CIT CIRC
• Keywords: Bogus purchase; Opportunity of cross examination; Accommodation entries
• Section: 143(3); 133A; 13; 22

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER 1. ./ I.T.A. NO.2040/AHD/2018 BY REVENUE 2. ./ I.T.A. NO.2061/AHD/2018 BY ASSESSEE ( / ASSESSMENT YEAR : 2012-13) 1. THE ASST.CIT CIRCFLE-1(1)(1) VADODARA 390 007 2. DARSHANAM LIFE SPACE PVT.LTD. VADODARA-390023 / VS. 1. DARSHANAM LIFE SPACE PVT.LTD., 3 RD FLOOR PLATINUM COMPLEX OPP. GANGA JAMNA HOSPITAL SUBHANPUR,VADODRA-390023 2. THE DY.CIT CIRCLE-1(1)(1), VADODARA ./ ./ PAN/GIR NO. : AADCD 2030 M ( / APPELLANTS ) .. ( / RESPONDENTS ) REVENUE BY : SHRI VINOD TANWANI, CIT-DR ASSESSEE BY : SHRI MUKUND BAKSHI AR / DATE OF HEARING 11/02/2021 !' / DATE OF PRONOUNCEMENT 08/03/2021 / O R D E R PER SHRI AMARJIT SINGH - AM: THE CAPTIONED APPEALS HAVE BEEN FILED AT THE INSTAN CE OF THE REVENUE AND ASSESSEE RESPECTIVELY AGAINST THE APPEL LATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-1, AHMEDABAD [CIT(A) IN SHORT] DATED 30/07/2018 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) R.W.S.147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') DATED 29/12/2016 RELEVANT TO ASSESSMENT YEAR (AY) 2012-13. ITA NO.2040/AHD/2018 (BY REVENUE) AND ITA NO.2061/AHD/2018 (BY ASSESSEE) ACIT VS. DARSHANAM LIFE SPACE P.LTD. ASST.YEAR: 2012-13 2 2. SINCE THE ISSUES ARE INTER-CONNECTED, BOTH T HE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLID ATED ORDER FOR THE SAKE OF CONVENIENCE. 3. FIRST, WE TAKE UP THE REVENUES APPEAL, I.E. ITA NO.2040/AHD/2018 FOR AY 2012-13. THE REVENUE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.3,86,04,360/- WHICH WAS MADE ON ACCOUNT OF ESTIMATION OF ACCOMMODATION ENTRIES AT R S.25,73,62,400/- AND THEREAFTER RESTRICTING THE ADDITION TO 15% OF SUCH ESTIMATE AMOUNTING TO RS.3,86,04,360/-, WITHOUT APPRECIATING THE FINDINGS THAT THE ASSESSEE HAS ACCEPTED TO HAVE MAKE PAYMENT OF RS.6,43,406/- TO MR. RAMI AND MR.RAMI HAS ALSO ACCEPTED PAYMENT FOR ACCOMMODATION ENTRIES FROM VARIOUS PARTIES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) FAILED TO APPRECIATE THAT THE DECISION OF THE AO IS BASED ON BINDING DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF M/S.VI JAY PROTIEN LTD. VS. CIT 58 TAXMANN.COM 344 [2015] AS WELL AS THE DECISIONS OF HONBLE JURISDICTIONAL ITAT IN THE CASES OF PAVANKUMAR M.SA NGHVI V. ITO WARD- 5(1), BARODA AND IN THE CASE OF ACIT, CIRCLE-4, SUR AT VS. SUNDAY EXPORTS LTD. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE-COM PANY HAS FILED ITS RETURN OF INCOME ON 30/09/2012 DECLARING TOTAL INCOME AT RS.3 ,96,91,870/-. ASSESSMENT U/S.143(3) OF THE ACT WAS FINALIZED ON 2 4/03/2015 AND TOTAL INCOME WAS DETERMINED ON RS.55,61,49,800/- WHICH WA S REDUCED TO RS.4,54,35,860/- AFTER GIVING APPEAL EFFECT. SUBSE QUENTLY, THE ASSESSING OFFICER HAS RECEIVED INFORMATION FROM ACIT, CENTRAL CIRCLE-2(4), AHMEDABAD WHO HAS ASSESSED THE CASE OF SHRI JAYMESH RAMI, DIRECTOR OF AAYURSHI INFRAPROJECTS PVT.LTD. U/S.153A REGARDING PROVIDING OF ITA NO.2040/AHD/2018 (BY REVENUE) AND ITA NO.2061/AHD/2018 (BY ASSESSEE) ACIT VS. DARSHANAM LIFE SPACE P.LTD. ASST.YEAR: 2012-13 3 ACCOMMODATION ENTRIES. THE AFFIDAVIT OF SHRI JAYES H RAMI WAS ALSO RECEIVED BY THE ASSESSING OFFICER, WHEREIN HE HAD A DMITTED THAT HE WAS ENGAGED IN THE BUSINESS OF ENTRY PROVIDING ON CHARG ING OF COMMISSION AT RS.0.25 TO 0.35 PER 100 RUPEES. THE ASSESSING OFFI CER OBSERVED THAT THE ASSESSEE HAS PAID A SUM OF RS.6,43,406/- TO SHRI JA YMESH RAMI DURING THE YEAR UNDER CONSIDERATION. THEREFORE, THE ASSESSING OFFICER HAS REOPENED THE CASE AFTER RECORDING REASON U/S.148 OF THE ACT ON 18/06/2015. A NOTICE U/S.143(2) OF THE ACT WAS ISSUED ON 13/06/2006. DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS ISSUED SHOW-CAUSE NOTICE DATED 26/09/2016 TO THE ASSESSEE BRIEFLY STA TING THAT SHRI JAYMESH RAMI HAS RECEIVED COMMISSION OF RS.6,43,406/- FROM THE ASSESSEE- COMPANY. IT WAS FURTHER POINTED OUT THAT THE ASSES SEE HAD SHOWN THIS AMOUNT IN THE NAME OF M/S.RAMI BROTHERS IN WHOSE BA NK ACCOUNT THIS AMOUNT WAS CREDITED, WHILE PAN OF SHRI JAYMESH RAMI WAS MENTIONED ALONG WITH THE NAME OF M/S.RAMI BROTHERS. IN THE S HOW-CAUSE NOTICE, THE ASSESSING OFFICER HAS COMPUTED AN AMOUNT OF RS.25,7 3,62,400/- (6,43,406*100/0.25) BEING INFLATED EXPENDITURE AND ASKED THE ASSESSEE BY THE SAME SHOULD NOT BE ADDED TO ITS TOTAL INCOME. IN RESPONSE TO THE SHOW- CAUSE NOTICE, THE ASSESSEE HAS EXPLAINED VIDE LETTE R DATED 04/10/2016 THAT IT HAS NOT ENTERED INTO ANY TRANSACTION WITH M/S.AAYUR SHI INFRAPROJECTS PVT.LTD AS PER ITS BOOKS OF ACCOUNTS WHICH WERE PRO DUCED FOR VERIFICATION. IT WAS ALSO SUBMITTED THAT ASSESSEE-COMPANY HAS ACT UALLY AVAILED THE SERVICES OF SITE LEVELING/SOIL FILLING FROM M/S.RAM I BROTHERS DURING THE FINANCIAL YEAR 2010-11 AND ALSO ENCLOSED THE COPY O F INVOICE. THE ASSESSEE HAS ALSO EXPLAINED THAT FOR AVAILING THESE SERVICES, IT HAS MADE ITA NO.2040/AHD/2018 (BY REVENUE) AND ITA NO.2061/AHD/2018 (BY ASSESSEE) ACIT VS. DARSHANAM LIFE SPACE P.LTD. ASST.YEAR: 2012-13 4 PAYMENT OF RS.6,43,406/- DURING THE YEAR UNDER CONS IDERATION. IT IS FURTHER EXPLAINED THAT ASSESSEE-COMPANY WAS NOT AWARE OF AN Y BUSINESS OF PROVIDING ACCOMMODATION ENTRIES BY SHRI RAMI. 4.1. THE ASSESSEE HAS ALSO REQUESTED THE ASSESSING OFFIC ER TO FURNISH THE FOLLOWING PARTICULARS. 1) THE DETAILS OF ENTRIES ALLEGED TO HAVE BEEN PROVIDE D. 2) THE COPY OF STATEMENT RECORDED BY THE AUTHORITIES C ONCERNING THE ASSESSEE. 3) COPY OF AFFIDAVIT. 4) ANY OTHER COMMUNICATION MADE IN THIS REGARD. HOWEVER, VIDE LETTER DATED 14/10/2016, THE ASSESS ING OFFICER HAS SUPPLIED ONLY THE FOLLOWING DOCUMENTS. 1) THE COPY OF STATEMENT OF SHRI.JAYMESH R.RAMI 2) THE COPY OF AFFIDAVIT OF SHRI JAYMESH R.RAMI. HOWEVER, THE ASSESSEE WAS ALLOWED TO MAKE INSPECTIO N OF THE RECORD RECEIVED FROM ACIT, CENTRAL CIRCLE-2(4), AHMEDABAD. THEREAFTER, THE ASSESSEE HAS MADE SUBMISSION OF 28/10/2016 STATING THAT IT HAS NOT ENTERED ANY TRANSACTION OF OBTAINING ACCOMMODATION ENTRIES AS ALLEGED ON THE BASIS OF THE STATEMENT OF SHRI JAYMESH RAMI FURNISHED TO THE ASSESSEE VIDE LETTER DATED 14/10/2016. IT WAS ALSO EXPLAINED THAT IN TH E AFFIDAVIT SHRI JAYMESH RAMI HAS STATED OF PROVIDING ACCOMMODATION ENTRIES TO SEVERAL PARTIES BUT IN THE LIST OF PARTIES NAME OF THE ASSESSEE WAS NOT REFLECTED. EVEN IN THE ITA NO.2040/AHD/2018 (BY REVENUE) AND ITA NO.2061/AHD/2018 (BY ASSESSEE) ACIT VS. DARSHANAM LIFE SPACE P.LTD. ASST.YEAR: 2012-13 5 AFFIDAVIT ALSO, NOTHING WAS MENTIONED ABOUT TRANSAC TION WITH THE ASSESSEE- COMPANY. HOWEVER, THE ASSESSEE-COMPANY HAD TRANSAC TION AMOUNTING TO RS.6,43,406/- WITH M/S.RAMI BROTHERS IN THE FY 2010 -11 AND THAT TRANSACTION HAD NOTHING TO DO WITH SHRI JAYMESH RAM I. HOWEVER, THE ASSESSING OFFICER HAS NOT AGREED WITH THE EXPLANATI ON AND OBJECTION MADE BY THE ASSESSEE-COMPANY. THE ASSESSING OFFICER ST ATED THAT ASSESSEE HAS ACCEPTED THE FACT THAT IT HAS PAID AN AMOUNT OF RS. 6,43,406/- TO SHRI JAYMESH RAMI AND SHRI RAMI HAS ACCEPTED THAT HE HAS RECEIVED SOME AMOUNTS FROM VARIOUS PARTIES FOR PROVIDING OF ACCOM MODATION ENTRIES AND DETAILS PROVIDED BY SHRI JAYMESH RAMI INCLUDED THE DETAILS IN RESPECT OF THE ASSESSEE. THEREFORE, ASSESSING OFFICER WAS OF THE VIEW THAT SHRI JAYMESH RAMI HAS PROVIDED ACCOMMODATION ENTRIES TO THE ASSESSEE. CONSEQUENTLY, THE ASSESSING OFFICER HAS HELD THAT 1 5% OF THE TOTAL AMOUNT OF ACCOMMODATION ENTRIES COMPUTED BY THE ASSESSING OFFICER TO BE DISALLOWED. THEREFORE, ASSESSING OFFICER HAS COMPU TED AT 15% OF THE TOTAL ACCOMMODATION ENTRIES OF RS.25,73,62,400/- TO THE A MOUNT OF RS.3,86,04,360/- AND ADDED TO THE TOTAL INCOME OF T HE ASSESSEE. 5. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE TH E LD.CIT(A) AGAINST THE ORDER OF THE ASSESSING OFFICER IN MAKING ADDITION O F RS.3,86,04,360/-. 6. THE LD.CIT(A) HAS RESTRICTED THE ADDITION TO THE EXTENT OF RS.7,91,406/- ONLY AND THE RELEVANT PORTION OF THE ORDER OF THE LD.CIT(A) IS REPRODUCED HEREUNDER: ITA NO.2040/AHD/2018 (BY REVENUE) AND ITA NO.2061/AHD/2018 (BY ASSESSEE) ACIT VS. DARSHANAM LIFE SPACE P.LTD. ASST.YEAR: 2012-13 6 '4.2. GROUND NO.1 AND 2 ORIGINALLY RAISED IN THE APPEAL MEMO ARE PERTAINING TO ESTIMATION OF VALUE OF ACCOMMODATION ENTRIES AT RS.25,73,62,400/- AND THEN 15% DISALLOWANCE THEREOF RESULTING INTO ADDITION OF RS.3,86,04,360/-. AS IS EVIDENT FROM THE STATEMENT OF SHRI JAYMESHBHAI R RA MI RECORDED BY THE ACIT, CENTRAL CIRCLE-2(4), AHMEDABAD ON 20.03.2015 DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IN THE CASE OF M/S. AAYURSHI INFRAPROJECTS PVT. LTD., HE WAS DIRECTOR IN 5 COMPANIES FOR MONTHLY INCOME OF R S.5,000/- TO RS.6,000/- AS MENTIONED BELOW: SR NO. NAME OF THE COMPANY ADDRESS 1 M/S. KRUTARTH PROJECTS PVT.LTD. 35-252, VANDAN APARTMENT ANKUR ROAD, NARANPURA, AHMEDABAD 2 M/S.ALTON INFRASTRUCTURE PVT.LTD. 2515, SADUMATA NI POLE, SHAHPUR, AHMEDABAD 380 001 3 M/S.DISHARTH INFRAPROJECTS PVT.LTD. 2646-3, GAMAL A NI POLE, NR. HAKIM NI KHADKI, SHAHPUR AHMEDABAD 380 001 4 M/S AAYURSHI INFRAPROJECTS PVT.LTD. 35-252, VANDA N APARTMENT, ANKUR ROAD, NARANPURA, AHMEDABAD 5 M/S.KALGI MARKETING PVT.LTD. D-5, KIRAN NAGAR, GOVT.QUARTERS, O/S. SHAHPUR, AHMEDABAD 380 001 FURTHER, SHRI JAYMESH R RAMI IN RESPONSE TO QUESTIO N NO.9, HAD GIVEN THE LIST OF ENTITIES TO WHOM ACCOMMODATION ENTRIES WERE PROV IDED WHICH ARE AS UNDER: I. M/S. KESAR BUILDCON PVT. LTD. II. M/S. INFINITY COMPTRADE PVT. LTD. III. M/S. ENTIRE CERAMICS IV. M/S. SAMPATI SECURITIES V. M/S. PRIME COMMODITIES VI. JOLLY ANUREET KAUR VII. M/S. PROFILE BIOCHEMICAL PVT. LTD. ITA NO.2040/AHD/2018 (BY REVENUE) AND ITA NO.2061/AHD/2018 (BY ASSESSEE) ACIT VS. DARSHANAM LIFE SPACE P.LTD. ASST.YEAR: 2012-13 7 VIII.M/S. B.B. TRADELINK PVT. LTD. IX. M/S. RISHABH PROBUILD PVT. LTD. X. M/S. SANSKRUTI MEGASTRUCTURE PVT. LTD. : HE HAS ALSO SUBMITTED AFFIDAVIT DATED 11.03.2015, C ONTENTS OF WHICH ARE REPRODUCED AS UNDER: 'I THE UNDERSIGNED JAYMESH R RAMI, HINDU, ADULT, PR ESENT COMMUNICATION ADDRESS AT 35/252, VANDAN APARTMENT N R. ANKUR CROSS ROAD, HARANPURA, AHMEDABAD-380013 DO HEREBY SOLEMNL Y AFFIRM ON OATH THAT I WAS INVOLVED IN THE BUSINESS AS WELL AS ENGAGED IN PROVIDING ACCOMMODATIVE ENTRIES DURING FY 2010-11, FY 2011-12 AND FY 2012- 13 RELEVANT TO AY 2011-12, AY2012-13 AND AY 2013-14 . SEPARATE SUBMISSION WITH REGARD TO PAPERS/DOCUMENTS/ACCOUNTS WAS GIVEN ON 09- 03-2015 ALONG WITH THE SUBMISSION. IN THIS BUSINESS OF ENTRY PROVIDER, RATE OF COMMISS ION IS RANGING FROM 0.25 PAISA TO 0.35 PAISA PER 100 RUPEES AND OUT OF THAT MINIMUM EXPENSES INCURRED IS ABOUT 0.05 PAISA TO 0.10 PAISA AND NET INCOME RECEIVED FROM THIS BUSINESS WAS ABOUT 0.30 PAISA. FURTHER IT IS STATED THAT I WAS A PARTY IN THE DOCU MENT BLOCK NO.222 TP. SCHEME NO.4 FINAL PLOT NO. 40 AT VILLAGE KUDASAN, G ANDHINAGAR, WHICH WAS EXECUTED ON 22-07-2010 VIDE REGISTRATION DEED N O. 13990 DATED 22- 07-2010. AS PER THE DOCUMENT THERE IS MENTION OF RE CEIPT OF RS.10 LACS BUT IN FACT IT WAS PART OF PROVIDING ACCOMMODATIVE ARRANGEMENT FOR THIS DOCUMENT FOR WHICH I RECEIVED ON ONLY 10,000/- (RUP EES TEN THOUSAND ONLY). THUS, I AM STATING ON OATH WHICH MAY BE CONS IDERED AT THE TIME OF WORKING OUT OF MY INCOME AS ENTRY PROVIDER. THIS AFFIDAVIT I GIVEN TO ASSESS ME ON THE PRINCIPA L OF REAL INCOME EARNED. WHAT EVER STATED ABOVE IS TO TRUE THE BEST OF MY KN OWLEDGE AND BELIEF.' FROM THE ABOVE FACTS, IT IS CLEAR THAT SHRI JAYMESH BHAI R RAMI HAS NOT MENTIONED THE NAME' OF THE APPELLANT ANYWHERE FOR P ROVIDING ACCOMMODATION ENTRIES. THE APPELLANT HAS PROVIDED A LIST OF MAJOR PURCHASES TO THE TUNE OF RS.21,62,78,302/- TO THE AO DURING THE COURSE OF TH E ASSESSMENT PROCEEDINGS, ITA NO.2040/AHD/2018 (BY REVENUE) AND ITA NO.2061/AHD/2018 (BY ASSESSEE) ACIT VS. DARSHANAM LIFE SPACE P.LTD. ASST.YEAR: 2012-13 8 BUT, NONE OF THE PARTIES THEREIN WAS SAME AS MENTIO NED BY SHRI JAYMESHBHAI R RAMI. ALL THE PURCHASES AS PER THIS LIST PLACED AT PAGES 22 TO 24 OF THE PAPER BOOK ARE FROM THE PARTIES STATIONED IN VADODARA. TH E AO IN HIS ASSESSMENT ORDER HAS ALSO NOT IDENTIFIED OR POINTED OUT EVEN A SINGL E ITEM OF PURCHASE MADE FROM THE 5 COMPANIES THROUGH WHICH SHRI JAYMES H R RAMI CLAIMED TO HAVE BEEN PROVIDING ACCOMMODATION ENTRIES. IN VIEW OF THE ABOVE FACTS, THE LD. AR HAS OBJECTED TO THE ADDITIONS MADE. 4.2.1. AS REGARDS THE PAYMENT OF RS.6,43,406/- BY T HE APPELLANT, THE APPELLANT HAS FILED A COPY OF BILL ISSUED BY M/S. RAMI BROTHE RS (LABOUR CONTRACTORS) FOR RS.7,91,406/- BEING THE LABOUR CHARGES FOR SOIL FIL LING AT SITE WITH JCB AND CLAIMED THAT THE PAYMENT WAS MADE BY ACCOUNT PAYEE CHEQUE FOR THIS WORK. THE AO HAS NOT ESTABLISHED BY ANY CROSS VERIFICATION TH AT THE BILL RAISED FOR SOIL FILLING AT THE CONSTRUCTION SITE OF THE APPELLANT W AS BOGUS. NOWHERE IN THE STATEMENT OR AFFIDAVIT, SHRI JAYMESHBHAI R RAMI HAS STATED THAT THE AMOUNT OF RS.6,43,406/- RECEIVED FROM THE APPELLANT WAS F OR COMMISSION. UNDER THESE CIRCUMSTANCES, THE ACTION OF THE AO IN EXTRAPOLATIN G THE AMOUNT OF ACCOMMODATION ENTRIES BY CONSIDERING RS.6,43,406/- AS COMMISSION @ 0.25% IS WITHOUT ANY BASIS AND UNSUSTAINABLE IN LAW. AT T HE COST OF REPETITION, IT IS WORTHWHILE TO MENTION HERE AGAIN THAT THE AO COULD NOT FIND EVEN A SINGLE INSTANCE OF PURCHASE FROM THE ENTITIES RUN BY SHRI JAYMESH R RAMI EXCEPT FOR AN ENTRY OF RS.7,91,406/-. THE LD. AR HAS HEAVILY ARGUED THAT EVEN A SURVEY U/ S 133A WAS CARRIED OUT IN THE CASE OF THE APPELLANT O N 10.12.2014 AND NO EVIDENCE OF BOGUS PURCHASE/ACCOMMODATION ENTRIES WA S FOUND. ON THE BASIS OF SURVEY ACTION, ASSESSMENT U/S 143(3) IN THE YEAR UN DER CONSIDERATION WAS COMPLETED ON 24.03.2015/27.03.2015. A PERUSAL OF TH E ASSESSMENT ORDER REVEALS THAT THERE WAS NO IOTA OF EVIDENCE REGARDING ACCOM MODATION ENTRIES AND BOGUS PURCHASES. 4.2.2. THE LD. AR HAS ALSO POINTED OUT THAT THE AO HAD ALLOWED HIM INSPECTION OF DOCUMENTS RECEIVED FROM ACIT, CENTRAL CIRCLE-2(4 ), AHMEDABAD, ON 21.10.2016 AND THERE IS NO ADVERSE MATERIAL AGAINST THE APPELLANT EXCEPT FOR AN ENTRY OF RS.6,43,406/- AT SR. NO. 39 OF THE CHART CONTAINING NAMES OF 69 PERSONS. IN ORDER TO VERIFY THE CONTENTIONS OF THE LD. AR, I HAVE OBTAINED COMPLETE REPORT OF ACIT, CENTRAL CIRCLE-2(4), AHMED ABAD DATED 08.06.2015 WHICH WAS THE BASIS FOR RE-OPENING AND ADDITIONS MA DE. AS A MATTER OF FACT, ON THE BASIS OF ENTRIES FOUND CREDITED IN THE BANK ACC OUNTS OF SHRI JAYMESH R RAMI, WITH AXIS BANK, DHANLAXMI BANK & YES BANK, A LIST O F ACCOMMODATION ENTRIES HAD BEEN PREPARED.THIS LIST CONTAINS NAME AND ADDRE SS OF PARTIES TO WHOM ITA NO.2040/AHD/2018 (BY REVENUE) AND ITA NO.2061/AHD/2018 (BY ASSESSEE) ACIT VS. DARSHANAM LIFE SPACE P.LTD. ASST.YEAR: 2012-13 9 ACCOMMODATION ENTRIES HAVE BEEN PROVIDED AND NAME OF THE APPELLANT IS APPEARING ONLY ONCE AT SR.NO.39 FOR RS.6,43,406/- O N 30.07.2011. FURTHER, ON THE BASIS OF THESE ACCOMMODATION ENTRIES, THE ACIT, CENTRAL CIRCLE-2(4), AHMEDABAD HAS COMPLETED ASSESSMENT U/S 143(3)/153A IN THE CASE OF SHRI JAYMESHKUMAR R RAMI FOR AY 2012-13 & AY 2013-14 VID E ORDERS DATED 30.03.2015. IN THOSE ORDERS, THE SUMMARY OF ACCOMMO DATION ENTRIES HAS BEEN MENTIONED AS UNDER: AY CREDIT ENTRIES (RS.) DEBIT ENTRIES (RS.) 2010-11 27,50,000/- 27,45,000/- 2011-12 46,77,329/- 46,77,400/- 2012-13 4,99,89,448/- 4,99,91,893/- 2013-14 1,38,58,608/- 1,38,70,064/- ON THE .BASIS OF ABOVE, THE AO IN THE CASE OF MR. R AMI HAS ASSESSED NET INCOME AT 1% OF ACCOMMODATION ENTRIES AS COMMISSION EARNED AND ACCORDINGLY, MADE ADDITIONS OF RS.4,99,919/- IN AY 2012-13 (I.E. 1% O F RS.4,99,91,893/-) AND ' RS.1,38,701/- IN AY 2013-14 (I.E. 1% OF RS.1,38,70, 064/-). THE AO HAD CONSIDERED THE DEBIT ENTRIES INSTEAD OF CREDIT ENTR IES BECAUSE OF ONE BEING HIGHER OF TWO. THEREFORE, FROM THE ABOVE, IT IS CRY STAL CLEAR THAT THE AO IN THE CASE OF ENTRY PROVIDER HAD CONSIDERED THAT AMOUNT C REDITED IN HIS BANK ACCOUNTS AS VALUE OF ACCOMMODATION ENTRIES INCLUDING ONE PER TAINING TO THE APPELLANT AND NOT AS COMMISSION. ACCORDINGLY, ENTRY OF RS.6,4 3,406/- PERTAINING TO APPELLANT BEING PART OF TOTAL ENTRIES OF 4,99,89,448/- HAS TO BE ALSO TREATED AS ACCOMMODATION ENTRY ONLY INSTEAD OF COMMISSION PAYM ENT. 4.2.3. UNDISPUTEDLY, THE AO HAS NEITHER MADE ANY IN DEPENDENT ENQUIRY FROM THE SUPPLIERS NOR ALLOWED CROSS EXAMINATION OF THE THIR D PARTY THOUGH SPECIFICALLY DEMANDED AND ACCORDINGLY, THE APPELLANT SUBMITTED T HAT THE ADDITIONS BASED ON HYPOTHESIS, CONJECTURES AND SUSPICION ARE LIABLE TO BE DELETED. IT IS ALSO SAID THAT ADDITION BASED ON THE STATEMENT OF THIRD PARTY WITHOUT AFFORDING OPPORTUNITY OF CROSS EXAMINATION ARE ALSO LIABLE TO BE DELETED. IN SUPPORT OF THESE CONTENTIONS, THE LD. AR HAS RELIED UPON VARIO US DECISIONS AS MENTIONED IN THE WRITTEN SUBMISSION. IN THE CASE OF DHAKESHWARI COTTON MILLS LTD. (1954) 26 ITA NO.2040/AHD/2018 (BY REVENUE) AND ITA NO.2061/AHD/2018 (BY ASSESSEE) ACIT VS. DARSHANAM LIFE SPACE P.LTD. ASST.YEAR: 2012-13 10 ITR 775 (SC), IT HAS BEEN HELD THAT THOUGH ITO IS NOT FETTERED BY TECHNICAL RULES OF EVIDENCE AND PLEADINGS AND HE IS ENTITLED TO ACT ON MATERIAL WHICH MAY NOT BE ACCEPTED AS EVIDENCE ON ACCOUNT OF LAW, BUT IN MAKING ASSESSMENT, HE IS NOT ENTITLED TO MAKE A PURE GUESS AND PASS ASSESSMENT O RDER WITHOUT REFERENCE TO ANY EVIDENCE OR ANY MATERIAL AT ALL. THIS DECISION HAS BEEN FOLLOWED IN VARIOUS CASES AND HENCE STILL HOLDS GOOD. THE RATIO LAID BY THE HON'BLE SUPREME COURT, THUS FAVOURABLY SUPPORTS THE CASE OF THE APPELLANT. ; 4.2.4. IN VIEW OF THE ABOVE FACTUAL AND LEGAL POSIT ION, THUS, IT EMERGES THAT THE AO HAS ESTIMATED VALUE OF ACCOMMODATION ENTRIES DEV OID OF ANY DOCUMENTARY EVIDENCES OR MATERIAL AND HENCE, THE SAME CANNOT BE SUSTAINED. CONSEQUENTLY, THE ADDITION MADE ON THIS ACCOUNT BY DISALLOWING 15 % OF SUCH ESTIMATED ACCOMMODATION ENTRIES AGAIN ON ADHOC BASIS ALSO DES ERVES TO BE DELETED. ACCORDINGLY, THE ADDITION MADE BY THE AO HAVING NO LEGS TO STAND IS DIRECTED TO BE DELETED. HOWEVER, UNDOUBTEDLY, THE APPELLANT HAS MADE A PAYMENT OF RS.6,43,406/- IN RESPECT OF PURCHASE OF SERVICES OF SOIL FILLING FROM SHRI JAYMESH R RAMI AMOUNTING TO RS.7,91,406/- WHICH CERTAINLY S HOULD BE TREATED AS ACCOMMODATION ENTRY. ACCORDINGLY, THE AO IS DIRECTE D TO MAKE THE DISALLOWANCE OF RS.7,91,406/- ONLY. THUS, APPELLANT SUCCEEDS PAR TLY IN RESPECT OF BOTH THE GROUNDS OF APPEAL. 5. IN RESULT, THE APPEAL IS PARTLY ALLOWED. 7. DURING THE COURSE OF HEARING BEFORE US, THE LD. DR HAS SUPPORTED THE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND, THE LD.COUNSEL FOR THE ASSESSEE HAS FILED PAPER-BOOK COMPRISING DETAILS OF DOCUMENT FILED BEFORE THE ASSESSING OFFICER AND CIT(A). DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND APPELLATE PROCEEDINGS, THE LD.COUNS EL FOR THE ASSESSEE HAS CONTENDED THAT AS PER THE COPY OF INVOICE OF RS.7,9 1,406/- PLACED IN THE PAPER-BOOK PERTAINING TO LABOUR CHARGES OF RS.7,91, 406/- ISSUED IN FAVOUR OF M/S.RAMI BROTHERS AS LABOUR CONTRACTORS, IT IS C LEAR THAT ASSESSEE HAS NOT AVAILED ANY ACCOMMODATION ENTRY FROM SHRI JAYMESH R AMI. THE LD.COUNSEL FOR THE ASSESSEE HAS ALSO REFERRED THE O THER DOCUMENTS PLACED IN ITA NO.2040/AHD/2018 (BY REVENUE) AND ITA NO.2061/AHD/2018 (BY ASSESSEE) ACIT VS. DARSHANAM LIFE SPACE P.LTD. ASST.YEAR: 2012-13 11 THE PAPER-BOOK, I.E. CONFIRMATION OF ACCOUNT AND DE TAILS OF PURCHASES MADE DURING THE YEAR BY THE ASSESSEE-COMPANY. THE LD.COU NSEL FOR THE ASSESSEE HAS ALSO SUPPORTED THE ORDER OF THE LD.CIT(A). 8. HEARD BOTH THE SIDES AND PERUSED THE MATERI AL AVAILABLE ON RECORD. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT IN THE CASE OF THE ASSESSEE ON THE B ASIS OF INFORMATION RECEIVED FROM ACIT, CENTRAL CIR-2(4), AHMEDABAD WHO ASSESSED THE CASE OF SHRI JAYMESH RAMI, DIRECTOR OF AAYURSHI INFRAPRO JECTS PVT.LTD. U/S.153A OF THE ACT IN PROVIDING OF ACCOMMODATION E NTRIES. THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HAS POINTED OUT THAT ASSESSEE HAS PAID A SUM OF RS.6,43 ,406/- TO M/S.RAMI BROTHERS WHILE PAN OF SHRI JAYMESH RAMI WAS MENTION ED ALONG WITH THE NAME OF M/S.RAMI BROTHERS. THE ASSESSING OFFICER H AS RECEIVED INFORMATION THAT SHRI JAYMESH RAMI, DIRECTOR OF AAY URSHI INFRAPROJECTS PVT.LTD. WAS ENGAGED IN PROVIDING OF ACCOMMODATION ENTRIES. THE ASSESSING OFFICER HAS ALSO RECEIVED AFFIDAVIT OF SH RI JAYMESH RAMI, WHEREIN HE ADMITTED THAT HE WAS ENGAGED IN THE BUSI NESS OF ENTRY PROVIDING ON CHARGING OF COMMISSION @ 0.25 TO 0.35 PER 100 RUPEES. ON THE BASIS OF THESE INFORMATION, THE ASSESSING OFFIC ER HAS TREATED THE AMOUNT OF RS.6,43,406/- AS COMMISSION PAID BY THE A SSESSEE-COMPANY TO SHRI JAYMESH RAMI FOR OBTAINING ACCOMMODATION ENTRI ES. THE ASSESSING OFFICER HAS TREATED THE COMMISSION RATE @ 0.25 PER 100 RUPEES AND WORKED OUT ACCOMMODATION ENTRIES TO THE AMOUNT OF RS.25,73 ,62,400/- (6,43,406*100/0.25). THE ASSESSEE-COMPANY HAS SUBM ITTED THAT IT HAS ITA NO.2040/AHD/2018 (BY REVENUE) AND ITA NO.2061/AHD/2018 (BY ASSESSEE) ACIT VS. DARSHANAM LIFE SPACE P.LTD. ASST.YEAR: 2012-13 12 NEVER HAD ANY BUSINESS WITH THE COMPANIES NAMED BY SHRI RAMI AS IN HIS STATEMENT SHRI JAYMESH RAMI HAS STATED THAT HE WAS DIRECTOR OF THE FIVE COMPANIES WHICH WERE ENGAGED IN THE BUSINESS OF PRO VIDING ENTRY AND THE ASSESSEE HAS NOT ANY TRANSACTION WITH THOSE COMPANI ES. THE LIST OF THOSE FIVE COMPANIES DISCUSSED IN THE ORDER OF THE CIT(A) ARE AS UNDER:- SR NO. NAME OF THE COMPANY ADDRESS 1 M/S. KRUTARTH PROJECTS PVT.LTD. 35-252, VANDAN AP ARTMENT ANKUR ROAD, NARANPURA, AHMEDABAD 2 M/S.ALTON INFRASTRUCTURE PVT.LTD. 2515, SADUMATA NI POLE, SHAHPUR, AHMEDABAD 380 001 3 M/S.DISHARTH INFRAPROJECTS PVT.LTD. 2646-3, GAMAL A NI POLE, NR. HAKIM NI KHADKI, SHAHPUR AHMEDABAD 380 001 4 M/S AAYURSHI INFRAPROJECTS PVT.LTD. 35-252, VANDA N APARTMENT, ANKUR ROAD, NARANPURA, AHMEDABAD 5 M/S.KALGI MARKETING PVT.LTD. D-5, KIRAN NAGAR, GOVT.QUARTERS, O/S. SHAHPUR, AHMEDABAD 380 001 8.1. FURTHER, WE HAVE NOTICED IN THE DETAILED FINDI NG GIVEN BY THE LD.CIT(A) THAT SHRI JAYMESH R.RAMI HAD ALSO GIVEN T HE LIST OF ENTITIES TO WHOM HE HAS PROVIDED ACCOMMODATION ENTRIES AND NOTI CED THAT HE HAS NOT MENTIONED THE NAME OF THE ASSESSEE-COMPANY ANYWHERE FOR PROVIDING ACCOMMODATION ENTRIES. DURING THE COURSE OF ASSESS MENT PROCEEDINGS, ASSESSEE HAS ALSO PROVIDED THE LIST OF PARTIES FROM WHOM IT HAS MADE MAJOR PURCHASES TO THE AMOUNT OF RS.21,62,78,302/- DURING THE YEAR UNDER ITA NO.2040/AHD/2018 (BY REVENUE) AND ITA NO.2061/AHD/2018 (BY ASSESSEE) ACIT VS. DARSHANAM LIFE SPACE P.LTD. ASST.YEAR: 2012-13 13 CONSIDERATION AND NONE OF THE PARTY CONTAINED IN TH E LIST WHICH WAS MENTIONED BY SHRI JAYMESH RAMI AS ACCOMMODATION PRO VIDED ENTITIES. IN RESPECT OF PAYMENT OF RS.6,43,406/-, THE ASSESSE E HAS FILED A COPY OF BILL ISSUED BY M/S.RAMI BROTHERS (LABOUR CONTRACTOR S) OF RS.7,91,406/- BEING THE LABOUR CHARGES FROM SOIL FILLING AT SITE AND THE PAYMENT WAS MADE BY A/C. PAYEE CHEQUE FOR THIS WORK. IT IS NOTICE D THAT THE LD.CIT(A) HAS CORRECTLY MENTIONED IN HIS FINDING THAT ASSESSING O FFICER HAS NOT ESTABLISHED BY ANY CROSS-VERIFICATION THAT THE AFOR ESAID BILL WAS BOGUS. THE ASSESSING OFFICER HAS COMPUTED THE ACCOMMODATIO N ENTRIES AMOUNT AT THE RATE OF 0.25% ON HYPOTHETICAL MANNER WITHOUT AN Y BASIS AND RELEVANT EVIDENCES. IN HIS FINDING, THE LD.CIT(A) HAS HELD THAT ACIT CENTRAL CIRCLE-2(4) AHMEDABAD IN THE CASE OF SHRI JAYMESHKU MAR R.RAMI HAS ASSESSED NET INCOME AT 1% OF ACCOMMODATION ENTRIES AS COMMISSION EARNED AND MADE ADDITION OF RS.4,99,919/- (1% OF RS .4,99,91,893). THE LD.CIT(A) HAS FURTHER HELD THAT ASSESSING OFFICER I N THE CASE OF ENTRY PROVIDER HAD CONSIDERED THAT AMOUNT CREDITED IN HI S BANK ACCOUNT AS VALUE OF ACCOMMODATION ENTRIES INCLUDING ONE PERTAINING T O THE ASSESSEE OF RS.6,43,406/-. THE LD.CIT(A) IS ALSO JUSTIFIED IN STATING THAT ASSESSING OFFICER HAS NEITHER MADE ANY INDEPENDENT ENQUIRY FR OM THE SUPPLIERS NOR ALLOWED ANY CROSS-EXAMINATION OF THE THIRD PARTY TH OUGH SPECIFICALLY DEMANDED BY THE ASSESSEE-COMPANY AND MADE THE ADDIT IONS BASED ON HYPOTHESIS, CONJECTURES AND SUSPICION. 8.2. IN THE LIGHT OF THE ABOVE FACTS AND CONSIDERIN G THE DETAILED FINDING OF THE LD.CIT(A), WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF THE ITA NO.2040/AHD/2018 (BY REVENUE) AND ITA NO.2061/AHD/2018 (BY ASSESSEE) ACIT VS. DARSHANAM LIFE SPACE P.LTD. ASST.YEAR: 2012-13 14 LD.CIT(A), THEREFORE BOTH THE GROUNDS OF APPEAL OF THE REVENUE STAND DISMISSED. 9. NOW WE TAKE UP THE ASSESSEES APPEAL IN ITA NO.2 061/AHD/2012 FOR AY 2012-13. 10. IN THIS APPEAL, THE ASSESSEE HAS LISTED TH E SOLITARY GROUND OF APPEAL IN DISALLOWING THE EXPENDITURE OF RS.7,91,406/- STA TING THAT THE DISALLOWANCE WAS ERRONEOUS IN FACTS AND LAW AS NO S UCH EXPENDITURE WAS CLAIMED DURING THE YEAR UNDER CONSIDERATION. 11. WITHOUT REITERATING THE FACTS AS ELABORATED WHI LE ADJUDICATING THE APPEAL OF THE REVENUE, I.E. ITA NO.2040/AHD/2018 FO R AY 2012-13 (SUPRA), IT IS NOTICED THAT LD.CIT(A) HAS RESTRICTE D THE ADDITION TO THE EXTENT OF RS.7,91,406/- ON THE BASIS OF INVOICE PLA CED ON RECORD IN RESPECT OF LABOUR CHARGES FOR SOIL FILLING FROM M/S.RAMI BR OTHERS. HOWEVER, ON PERUSAL OF THE BILL, IT IS NOTICED THAT THIS BILL W AS RAISED ON 07/03/2011 PERTAINING TO FY 2010-11 WHICH CLEARLY DEMONSTRATES THAT THIS EXPENDITURE WAS NOT CLAIMED DURING THE YEAR UNDER CONSIDERATION . HOWEVER, IT IS NOTICED THAT IN HIS FINDING THE LD.CIT(A) HAS CONCL UDED THAT AO OF THE CENTRAL CIRCLE-2(4), AHMEDABAD HAS CONSIDERED THE A MOUNT CREDITED IN THE BANK ACCOUNT OF SHRI RAMI AS VALUE OF ACCOMMODATION ENTRIES. SINCE IN THE CASE OF THE ASSESSEE THE PAYMENT OF RS.6,43,406 /- WAS CONSIDERED AS ACCOMMODATION ENTRIES AND IT IS NOTICED THAT ASSESS EE HAS NOT RECONCILED THIS PAYMENT WITH OUTSTANDING AMOUNT OF RS.7,91,406 /- AS PER INVOICE RAISED FOR LABOUR CHARGES, THEREFORE WE RESTRICT TH E DISALLOWANCE TO THE ITA NO.2040/AHD/2018 (BY REVENUE) AND ITA NO.2061/AHD/2018 (BY ASSESSEE) ACIT VS. DARSHANAM LIFE SPACE P.LTD. ASST.YEAR: 2012-13 15 EXTENT OF RS.6,43,406/-. THUS, THIS GROUND OF APP EAL OF THE ASSESSEE IS PARTLY ALLOWED. 12. IN THE COMBINED RESULT, APPEAL OF THE REVENU E IS DISMISSED, WHEREAS THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 08 / 03/2021 SD/- SD/- ( MAHAVIR PRASAD ) (AMAR JIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 08/ 03 /2021 %.. , .&../ T.C. NAIR, SR. PS !'#' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. '() * / CONCERNED CIT 4. * ( ) / THE CIT(A)-1, AHMEDABAD 5. -./ &&() , ()' , ' / DR, ITAT, AHMEDABAD 6. /23 4 / GUARD FILE. / BY ORDER, - & //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 4.3.21 (DICTATION-PAD 27 - PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 4.3.21/5.3.21 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 8.3.21 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8.3.21 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER