Atul Kumar Bansal, New Delhi V. DCIT, New Delhi

ITA 2290/DEL/2012

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3750 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-05-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 14-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: AJAY KUMAR MATTA
• Keywords: Corroborative evidences; Accommodation entries
• Section: 153A; 69; 144; 68

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI H. S. SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 2290/DEL/2012 (ASSESSMENT YEAR: 2004 - 05 ) ATUL KUMAR BANSAL, C/O. MATTA & ASSOCIATES, JD - 21 - C, PITAMPURA, NEW DELHI PAN:AKBPB8917C VS. DCIT, CIRCLE - 17(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY KUMAR MATTA, CA REVENUE BY: MS. APARNA KARAN, CIT DR DATE OF HEARING 15/11/ 2017 DATE OF PRONOUNCEMENT 0 7 / 0 2 / 2018 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - XI, NEW DELHI DATED 14.02.2012 FOR THE ASSESSMENT YEAR 2004 - 05. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE LD CIT(A) - XI HAS GROSSLY ERRED BY NOT ONLY SUSTAINING THE ADDITIONS MADE U/S 69A OF IT ACT, 1961 BY THE ASSESSING OFFICER BUT ALSO ENHANCING THE SAME BY ACCEPTING THE METHOD OF CALCULATION ADOPTED BY HER. 2. THAT THE LD CIT(A) - XI HAS FURTHER ERRED BY NOT ALLOWING THE OPPORTUNITY BEFORE MAKING THE ENHANCEMENT IN INCOME IN TERMS OF SECTION 69 OF THE INCOME TAX ACT, 1961. 3. THE ASSESSEE HAS DURING THE COURSE OF HEARING H AS REVISED GROUNDS OF APPEAL ( NOW 5 IN NUMBERS) WHEREIN ASSESSEE HAS CHALLENGED THE ADDITION UNDER SECTION 69A OF RS. 5383060/ WITH RESPECT TO THE CONCERNS WHICH HAVE NOT BEEN USED BY THE ASSESSEE FOR THE PURPOSE OF PROVIDING ACCOMMODATION ENTRY TO THE BENEFICIARIES. A FURTHER GROUND IS ALSO THAT WITH RESPECT TO TWO CONCERNS THE BALANCE LYING IN THE BANK ACCOUNT WHICH IS PART OF THE ADDITION UNDER SECTION 69A OF THE ACT HAVE ALSO BEEN CONSIDERED FOR WORKING OUT THE COMMISSION INCOME. PAGE | 2 4. SEARCH WAS CONDUCTED ON 30/1/2004 IN THE PREMISES OF M/S VI SHAL IRON WORKS PRIVATE LIMITED WHICH IS MANAGED BY THE ASSESSEE ALONG WITH ONE ANOTHER PERSON MR DEEPAK KHANDELWAL AS DIRECTORS. IT WAS REVEALED THAT ASSESSEE AND ANOTHER PERSON CONDUCT THE BUSINESS IN THE NAME OF THIS COMPANY AND OTHER FICTITIOUS CONCE RNS BY DEPOSITING CASH IN THOSE BANK ACCOUNTS. DEPOSISTS IN IN THE BANK ACCOUNT OF THOSE CONCERNS ARE CONSIDERED FOR CALCULATION OF COMMISSION IN THE HANDS OF ASSESSEE ON SUBSTANTIVE BASIS AND ALL THE CONCERNS ON PROTECTIVE BASIS. FURTHER THE ADDIT IONS WERE MADE IN THE HANDS OF THE ASSESSEE UNDER SECTION 60 9A OF THE INCOME TAX ACT WITH RESPECT TO THE BANK BALANCES IN THOSE ACCOUNTS. CONSEQUENTLY ASSESSMENT UNDER SECTION 153C READ WITH SECTION 153A AND SECTION 144 OF THE INCOME TAX ACT WAS PASSED DO WN 29/3/2006 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 1 961 2817/ . IN THE ASSESSMENT ORDER THE TOTAL TRANSACTIONS WERE CONSIDERED AT RS. 6 54222956/ AND TOTAL COMMISSION AT THE RATE OF 1.5% OF RS. 9 81334 4/ WAS ESTIMATED AND A SUM OF RS. 1 2 2500/ WAS REDUCED THEREFROM AND NET COMMISSION WAS ADDED OF RS. 9 690844/ . FURTHER A SUM OF UNEXPLAINED INCOME UNDER SECTION 69A OF RS. 9 867973/ WAS ALSO ADDED. 5. ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT (A) AGAINST THE ORDER OF THE LD. ASSESSING OFF ICER. THE LD. CIT (A) AS PER ORDER DATED 29/2/2008 HELD THAT NET INCOME OF THE APPELLANT MAY BE WORKED OUT AT 0.9% OF THE TURNOVER AS AGAINST RATE OF 1.5% ADOPTED BY THE LD. ASSESSING OFFICER. WITH RESPECT TO THE ADDITION OF RS. 9 867973/ HE HELD THAT SIN CE THE APPELLANT HAS NOT BEEN ABLE TO OFFER PROPER EXPLANATION WITH SUPPORTING EVIDENCE, THE CASH FOUND IN POSSESSION OF THE APPELLANT IS TO BE TREATED AS INCOME AS PER DEEMING PROVISIONS OF SECTION 69A. HOWEVER HE FURTHER GRANTED DEDUCTION OF THE INCOME O F COMMISSION ESTIMATED IN EARLIER YEARS AS THE INCOME AVAILABLE FOR THE PURPOSE OF MAKING INVESTMENT IN THOSE CASH AND GRANTED TELESCOPING OF THE INCOME FOR EARLIER YEARS AGAINST THE CASH FOUND. 6. THE ASSESSEE AND REVENUE AGGRIEVED WITH THE ORDER OF THE LD. ASSESSING OFFICER PREFERRED APPEAL BEFORE THE COORDINATE BENCH AND AS PER ORDER DATED 28 TH /8/2009 THE MATTER WAS SET ASIDE TO THE FILE OF THE LD. PAGE | 3 ASSESSING OFFICER WITH A DIRECTION CONTAINED IN PARA NO. 9 OF THE ORDER OF THE REVENUE AND ASSESSEE WAS TO THE OF THE LD. ASSESSING OFFICER IS THESAME IN ACCORDANCE WITH LAW CONSIDERING THE MATERIAL AND EXPLANATION WHICH MAY BE SUBMITTED BY THE ASSESSEE IN ASSESSMENT OF THE RELATED ENTITY SH. DEEPAK KHANDELWAL. 7. CONSEQUENTLY ON 31/10/2010 THE LD. ASSESSING OFFICER PASSED ORDER UNDER SECTION 15A OF THE INCOME TAX ACT READ WITH SECTION 254 OF THE ACT WHERE IN THE NET COMMISSION INCOME OF THE ASSESSEE WAS DETERMINED AT RS. 1017163/ AND ADDITION UNDER SECTION 69A OF THE INCOME TAX ACT WAS DETERMINED AT RS. 3414233/ . CONSEQUENTLY THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED AT RS. 4485396/ . THE LD. ASSESSING OFFICER DETERMINE THE RATE OF THE COMMISSIONER 0.50 % OF THE AMOUNT OF DEPOSITS IN VARIOUS BANK ACCOUNTS. WITH RESPECT TO THE ADDITION UNDER SECTION 69A OF THE I NCOME TAX ACT THE LD. ASSESSING OFFICER CONSIDERED A SUM OF RS. 9 867972/ WHICH IS FOUND AND SEIZED FROM THE OFFICE PREMISES OF THE ASSESSEE AND GRANTED DEDUCTION THEREFROM OF THE SUM AVAILABLE IS EARNING FOR SEVERAL YEARS OF RS. 6 928097/ AND THEREAFTER REDUCTION ON ACCOUNT OF HOUSEHOLD WITHDRAWAL OF RS. 4 74358/ WAS CONSIDERED AND THE BALANCE CREDIT OF RS. 6 453739/ WAS GIVEN TO THE ASSESSEE. CONSEQUENTLY THE NET SURPLUS OF RS. 3 414233/ WAS ADDED TO THE INCOME OF THE ASSESSEE FOR THE YEAR. 8. THE ASSES SEE AGGRIEVED WITH THE ORDER OF THE LD. AO PREFERRED AN APPEAL BEFORE THE LD. CIT (A) WHO AS PER ORDER DATED 14/2/2012 DECIDED THE ISSUE. REGARDING TAXABILITY OF THE COMMISSION INCOME C REDUCED RATE FROM 0.5% TO 0.35% AND CONSEQUENTLY UPHELD THE COMMISSION INCOME ONLY TO THE EXTENT OF RS. 7 12014/ . WITH RESPECT TO THE ADDITION UNDER SECTION 69A IT WAS HELD THAT THE LD. ASSESSING OFFICER HAS ADOPTED A FAIR METHOD OF CALCULATION THEREFORE IT WAS DIRECTED TO THE LD. AO TO REWORK THE ADDITION. CONSEQUENTLY THE LD. ASSESSING OFFICER WIDE ORDER UNDER SECTION 250/254/153A OF THE INCOME TAX ACT WERE DOWN THE ABOVE ADDITION UNDER SECTION 69A OF THE INCOME TAX ACT OF RS. 5 383060/ . THEREFORE ASSESSEE WAS AGGRIEVED WITH THE ORDER PREFERRED APPEAL BEFORE US. PAGE | 4 9. THE LD. A UTHORISED REPRESENTATIVE SUBMITTED THAT THE APPELLANT IS ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRY FOR BILLING IN THE AMOUNTS IS BELOW TO THE PERSONS WHOM BILLING WAS DONE . H E SUBMITTED THAT THE APPELLANT EARNS COMMISSION INCOME ONLY IN OTHE R WORDS ACCORDING TO HIM THE AMOUNTS IN THE BANK ACCOUNTS OF OTHER CONCERNS CANNOT BE TREATED AS THE PART OF THE INCOME OF THE APPELLANT. IT WAS FURTHER STATED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE SPECIAL BE NCH IN CASE OF MANOJ AGARWAL 117 TTJ 1 4 5 WHEREIN IT HAS BEEN HELD THAT AS THE ASSESSEE HAS BEEN ADMITTEDLY CARRYING ON ACCOMMODATION BUSINESS IN RESPECT OF SHARES AND IN SUCH BUSINESS MUST BE DEALING WITH CASH BELONGING TO OTHERS, BECAUSE IN ACCOMMODATIO N BUSINESS THERE WAS NO NEED FOR ANY CASH. IT WOULD THEREFORE BE A REASONABLE INFERENCE TO HOLD THE CASH SEIZED BELONG TO THE OTHERS WHO WERE UTILISING THE ASSESSEE SERVICES IN ACCOMMODATION ENTRY BUSINESS. HE SUBMITTED THAT SIMILARLY AS THE ASSESSEE IS HELD TO BE THE PERSON WHO IS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES THE ADDITION IS NOT REQUIRED TO BE MADE IN THE HANDS OF THE ASSESSEE. HE THEREFORE SUBMITTED THAT THAT ADDITION UNDER SECTION 69A CANNOT BE MADE. HE FURTHER STATED THAT IN CASE OF TWO CONCERNS THEY ARE NOT MENTIONED IN THE LIST THEREFORE THE ASSESSEE CANNOT BE HELD TO BE THE BENEFICIAL OWNER OF THESE CONCERNS. THEREFORE RESPECTIVE BANK BALANCE OF THESE PARTIES IS RS. 3 664912/ AND 472354/ AND THEREFORE THE AMOUNT BELONGING TO THESE CONCERNS MAY BE EXCLUDED FROM THE OVERALL ADDITIONS. HE FURTHER STATED THAT WITH RESPECT TO THE 3 ENTITIES NAMELY VARUN TRADE CENTER, SRI HANUMAN SALES CORPORATION THE ABOVE ADDITION AND WITH RESPECT TO THE BALANCES IN THE BANK ACCOUNT THE COMMISSION INCOME HAS ALSO BEEN ADDED ON THESE ACCOUNTS. 10. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY CONTESTED THE ARGUMENT OF THE LD. AUTHORISED PREVENTATIVE AND SUBMITTED THAT IF THE ASSESSEE IS IN A RECENT THE ASSESSEE SHOULD HAVE GIVEN IN THE NAME OF THOSE PERSONS GIVEN IN THE CASH AND WHICH WERE DEPOSITED INTO BANK ACCOUNT OF THE CONCERNS. EVEN AFTER TWO ROUNDS OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE DID NOT GIVE ANY NAME OF THE PERSONS WHO HAVE GIVEN MONEY TO PAGE | 5 THE ASSESSEE AND WHICH WAS DEPOSITED BY THE ASSESSEE IN THE BANK ACCOUNT OF THOSE CONCERNS. IN ABSENCE OF SUCH DETAILS AVAILABLE IT CANNOT BE SAID THAT ASSESSEE HAS BORRO WED MONEY FROM SOMEBODY ELSE. MERELY BECAUSE AN ASSESSEE IS AN ACCOMMODATION ENTRY PROVIDER CANNOT TAKE SHELTER UNDER THAT EXCUSE AMOUNT OF THE MONEY LYING AT HIS DISPOSAL IN THE BANK ACCOUNT OF FEE VARIOUS CONCERNS HE IS USING FOR THE PURPOSES OF HIS BUSI NESS. HE FURTHER SUBMITTED THAT THAT WHEN LD. ASSESSING OFFICER HAS ACCEPTED THE USE INCOME OF THE ASSESSEE OF RS. 68 LACS WHICH IS ON THE BASIS OF ESTIMATION OF THE COMMISSION INCOME. HE FURTHER SUBMITTED THAT CERTAIN ACCOMMODATION ENTRIES MAY BE HIGH COM MISSION INCOME IS CHARGED CERTAIN ACCOMMODATION ENTRIES WILL BE MORE AMALGAMATION INCOME IS CHARGED THEREFORE THE ABOVE SUM FOUND IN THE BANK ACCOUNT OF THESE CONCERNS IN FACT BELONGING TO THE ASSESSEE ONLY THIS ASSESSMENT HAS BEEN MADE ONLY ON ESTIMATE BA SIS. HE FURTHER SUBMITTED THAT HONBLE DELHI HIGH COURT IN CASE OF D. K. GARG 84 TAXMAN.COM 257 HAS HELD THAT ADDITION CAN BE MADE UNDER SECTION 68 ALSO IN THE HANDS OF ACCOMMODATION ENTRY PROVIDERS. HE THEREFORE SUBMITTED THAT DECISION OF THE SPECIAL BENC H CITED BY THE LD. AUTHORISED REPRESENTATIVE DO NOT APPLY TO THE FACTS OF THE CASE. HE THEREFORE SUBMITTED THAT THAT ORDER OF THE LOWER AUTHORITIES MAY BE SUSTAINED. 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND ORDERS OF THE LOWER AUTHORITIES. ADM ITTEDLY THE ASSESSEE IS AN ENTRY OPERATOR WHO USED TO OPERATE MANY COMPANIES BANK ACCOUNT BY DEPOSITING CASH IN THOSE BANK ACCOUNTS AND ISSUING CHEQUES FOR ACCOMMODATION ENTRY TO THE VARIOUS BENEFICIARIES. THE INCOME OF THE ASSESSEE OUT OF THAT BUSINESS I S ALSO ASSESSED TO TAX. SUCH INCOME TAXED IN THE HANDS OF THE ASSESSEE HAS NOT BEEN CHALLENGED BY THE ASSESSEE BEFORE US. THEREFORE IT IS ESTABLISHED FACT THAT ASSESSEE IS AN ENTRY OPERATOR WHO USES MANY CONCERNS FOR ISSUING CHEQUES TO THE VARIOUS BENEFICI ARIES. ACCORDING TO THE REVISED GROUNDS THE ASSESSEE IS CONTESTING THAT APPELLANT IS NOT THE BENEFICIAL OWNER OF THE CONCERNS NAMELY KRISHNA MACHINE TOOLS AND NAVNEET TRADING CO FROM WHOM A SUM OF RS. 4 137266/ WAS SEIZED DURING THE COURSE OF SEARCH IN TH E BANK ACCOUNT. THE CONTENTION OF THE ASSESSEE DESERVES TO PAGE | 6 BE REJECTED BECAUSE OF THE SIMPLE REASON THAT IN THE STATEMENT OF THE ASSESSEE IN QUESTION NO. 12 ASSESSEE WAS ASKED TO EXPLAIN ABOUT THE KRISHNA MACHINE TOOLS WHICH WAS HAVING THE SAME ADDRESS. TH E ASSESSEE EXPLAINED THAT M/S KRISHNA MACHINE TOOLS WAS PROVIDED 1 ADDRESS AND THEREFORE THE ASSESSEE HAS PROVIDED THE SAME ADDRESS BELONGS TO THE ASSESSEES ADDRESS IN NEW DELHI. THE ASSESSEE WAS FURTHER THE DETAILS OF THE RESIDENTIAL ADDRESS OF THE PROPR IETOR OF THAT FORM WHICH ASSESSEE FAILED TO EXPLAIN HOWEVER THE MOBILE NUMBER WAS ALSO GIVEN. SIMILARLY IS THE DETAIL OF M/S NAVNEET TRADING CO. AS PER THE CHART SUBMITTED BY THE ASSESSEE THE AMOUNT OF RS. 3 664912/ WAS BELONGING TO M/S KRISHNA MACHINE TO OLS IN CA 110 762 OBC ACCOUNT AND RS. 472354/ OF NAVNEET TRADING CO IN CA 110240 OBC. IT IS THE CLAIM OF THE ASSESSEE THAT THESE 2 ACCOUNTS ARE NOT BEEN USED BY THE ASSESSEE FOR THE PURPOSE OF PROVIDING ACCOMMODATION ENTRIES. IN VIEW OF THIS WE SET ASI DE THIS ISSUE TO THE FILE OF THE LD. ASSESSING OFFICER WITH A DIRECTION TO THE ASSESSEE TO SATISFY THE LD. ASSESSING OFFICER THAT ASSESSEE IS NOT USING THE ABOVE CONCERNS FOR THE PURPOSE OF PROVIDING ACCOMMODATION ENTRIES BY THESE 2 PARTIES. ASSESSEE IS AL SO FURTHER DIRECTED TO PRODUCE BEFORE THE ASSESSING OFFICER THE REAL OWNERS OF THESE TWO ACCOUNTS, AS ASSESSEE KNOWS THEM, AND AND WHETHER SUCH BANK ACCOUNT BALANCES SHOWN IN THE REGULAR BOOKS OF ACCOUNT OR NOT OF THOSE CONCERNS. THE ASSESSEE THE LD. AO SH ALL ALSO EXAMINE THE DETAILS SO PRODUCED AND THEREAFTER IF HE IS SATISFIED ON EXAMINATION OF SUCH BANK ACCOUNTS, OWNERS OF THESE 2 CONCERNS AND ALSO THE NATURE OF OPERATIONS WHICH JUSTIFIES THE EXISTENCE OF SUCH A BALANCE COMMENSURATE IN WITH THEIR RETURN OF INCOME WITH THE BOOKS OF ACCOUNTS OF THOSE CONCERNS THEN SUCH ADDITION IS REQUIRED TO BE DELETED. 12. FURTHER WITH RESPECT TO THE COMMISSION INCOME IF THE AMOUNT OF BANK BALANCES OF VARUN TRADE CENTER AND SH. HANUMAN SALES CORPORATION WHICH ARE PART OF BANK BALANCES SEIZED ALSO CONSIDERED FOR WORKING OUT THE COMMISSION INCOME THEN SUCH BALANCES SHOULD BE EXCLUDED AS NATURALLY THE ASSESSEE HAS NOT EARNED ANY COMMISSION INCOME ON SUCH OUTSTANDING BALANCES LYING IN THE BANK ACCOUNT OF THESE 2 CONCERNS. THEREFOR E THE ASSESSEE IS DIRECTED TO SHOW THE ASSESSING OFFICER THAT ON PAGE | 7 SUCH BALANCES ALSO THE COMMISSION INCOME HAS BEEN COMPUTED. THE LD. ASSESSING OFFICER MAY VERIFY THE SAME AND IF IT IS FOUND TO HIS SATISFACTION THAT SUCH SUM HAS ALSO BEEN INCLUDED FOR WORKI NG OUT TURNOVER , THEN IT SHOULD BE EXCLUDED. THEREFORE ACCORDINGLY THE ISSUE OF WORKING OUT OF THE TURNOVER IS ALSO SET ASIDE TO THE FILE OF THE LD. ASSESSING OFFICER. 13. CONSEQUENTLY THE GROUND NO. 1 - 3 AS PER THE REVISED GROUNDS RAISED BY THE ASSESSEE IS S ET ASIDE TO THE FILE OF THE LD. ASSESSING OFFICER FOR REWORKING THE ADDITION UNDER SECTION 69A OF THE INCOME TAX ACT. AND SIMILARLY THE GROUND NO. 4 IS ALSO SET ASIDE TO THE FILE OF THE LD. ASSESSING OFFICER FOR REWORKING THE COMMISSION INCOME OF THE ASSES SEE EXCLUDING THE AMOUNT OF BALANCE OUTSTANDING IN BANK ACCOUNT OF 2 CONCERNS ON WHICH THE COMMISSION INCOME NATURALLY HAS NOT BEEN EARNED. 14. THE GROUND NO. 5 OF THE APPEAL OF THE ASSESSEES ACADEMIC IN NATURE AND THEREFORE SAME IS DISMISSED. 15. ACCORDINGLY APP EAL OF THE ASSESSEE IS ALLOWED WITH ABOVE DIRECTION FOR WORKING OUT ADDITION UNDER SECTION 69A AS WELL AS COMMISSION INCOME OF THE ASSESSEE . ORDER PRONOUNCED IN THE OPEN COURT ON 0 7 / 0 2 / 2018 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 7 / 02 / 2018 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI