Appeal Details
Counselvise Citation
[2018] 121 COUNSELVISE.COM (IT) 7231 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 year(s) 3 month(s) 16 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
04-05-2018
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
Not Allotted
Assessment Year
2003-2004
Appeal Filed On
18-01-2016
Judgement Text
, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NOS.281 TO 287/MUM/2016 ASSESSMENT YEARS: 2001-02 TO 2007-08 SHRI DILIP C. SHAH, 401, SPENTA TOWERS, 55/57, FORGETT STREET, GOWALIA TANK, MUMBAI-400036 / VS. DCIT, CENTRAL CIRCLE-11, MUMBAI ( ! ' /ASSESSEE) ( # / REVENUE) P.A. NO.AADCG1613M ! ' / ASSESSEE BY SHRI GAURAV KABRA # / REVENUE BY SHRI ABHIJIT PATANKAR CIT-DR $ #% & ' ' / DATE OF HEARING : 04/05/2018 & ' ' / DATE OF PRONOUNCEMENT 16/05/2018 ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THIS BUNCH OF SEVEN APPEALS IS BY THE ASSESSEE AGAINST THE IMPUGNED ORDERS ALL DATED 23/04/2014 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI, CONFIRMING T HE LEVY OF PENALTY OF RS.81,89,43,187/- (AY- 2006-07), RS.1,11,42,68,085/- (AY- 2007-08), RS.88,35,33,782/ - (AY- 2005-06) RS.53,20,18,982/- (AY-2004-05), RS.18,88,62,740/- (AY-2003-04) AND RS.14,01,92,601/ - (AY- 2002-03) RESPECTIVELY. IMPOSED U/S 271(1)(C) O F THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING, AT THE OUTSET, THE LD. CIT-DR, ABHIJIT PATANKAR, CONTENDED THAT THE TRIBUNAL HAS U PHELD THE QUANTUM ADDITION IN THE CASE OF THE PRESENT ASS ESSEE FOR WHICH OUR ATTENTION WAS INVITED TO PAGE-24 OF T HE ORDER OF THE TRIBUNAL ALONG WITH PAGES-8 & 9 OF THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL ). IT WAS PLEADED THAT AT LEAST THE PENALTY TO THE EXTENT OF FIGURES OF SA LES MAY BE CONFIRMED. IT WAS PLEADED THAT THE ASSESSEE WAS IND ULGED IN HAWALA ACTIVITIES. RELIANCE WAS PLACED UPON THE DECISION IN 327 ITR 510 (DEL.). ON THE OTHER HAND, THE LD. C OUNSEL ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 3 FOR THE ASSESSEE, SHRI GAURAV KABRA, CONTENDED THAT NO PENALTY CAN BE UPHELD WHERE PROTECTIVE ADDITION HAS BEEN MADE, FOR WHICH RELIANCE WAS PLACED UPON THE DECISI ON FROM HON'BLE GUJARAT HIGH COURT (2014) BHAILAL MANI LAL PATEL VS CIT 49 TAXMAN.COM 539(GUJ.). IT WAS PLEADE D THAT IN THE CASE OF VARUN INDUSTRIES, THE DEPARTMENT HAS ACCEPTED THAT THE TRANSACTION IS GENUINE. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE AD VERTING FURTHER AND IN VIEW OF THE SUBMISSIONS FROM BOTH SI DES, IT IS OUR BOUNDED DUTY TO EXAMINE THE ORDER OF THE TRIBUN AL ON QUANTUM ADDITION (ITA NO.5739 TO 5745/MUM/2012) FOR ASSESSMENT YEARS 2001-02 TO 2007-08, ORDER DATED 25/09/2017. THESE BUNCH OF APPEALS FILED BY TWO DIFFERENT ASSE SSEES ARE DIRECTED AGAINST TWO COMMON ORDERS PASSED BY TH E CIT(A)- 37, MUMBAI DATED 24.07.2012 FOR THE ASSESSMENT YEAR S 2001-02 TO 2007-08. SINCE, THE FACTS ARE IDENTICAL AND ISSU ES ARE COMMON, THESE APPEALS WERE CLUBBED, HEARD TOGETHER AND DISP OSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE, SHRI DILIP SHAH ARE AS FOLLOWS: 1. ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WELL A S IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTI ON OF LEARNED ASSESSING OFFICER IN PASSING A CONSOLIDATED ORDER FOR ALL SEVEN ASSESSMENT YEARS FROM 2001-02 TO 2007-08, IGNORING ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 4 THE STATUTORY PROVISIONS AND REQUIREMENT. 2. ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WELL A S IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTI ON OF LEARNED ASSESSING OFFICER IN LAW AND ON FACTS FOR N OT PASSING SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SEVEN ASSESSMENT YEARS FROM 2001-02 TO 2007-08, IGNORING THE STATUTORY PROVISIONS AND REQUIREMENT. 3. ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WELL A S IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTI ON OF LEARNED ASSESSING OFFICER IN LAW AND ON FACTS IN IN FERRING AND HOLDING THAT THE APPELLANT WAS INDULGED IN THE BUSI NESS OF ISSUANCE OF BOGUS BILLS. 4. ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WELL A S IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTI ON OF LEARNED ASSESSING OFFICER IN MAKING AN ADDITION OF RS.35,46,36,038/- ON ACCOUNT OF ALLEGED SALES ON PR OTECTIVE BASIS, WITHOUT CONSIDERING THE FACTS AND CIRCUMSTAN CES OF THE CASE. 5. ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WELL A S IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTI ON OF LEARNED ASSESSING OFFICER IN INFERRING AND HOLDING THAT THE APPELLANT EARNED COMMISSION @ 2% ON ACCOUNT OF SERV ICES RENDERED BY HIM, IGNORING THE PREVAILING COMMISSION RATE IN THE STEEL MARKET RANGING BETWEEN 0.02% - 0.05%, ESPECIALLY HAVING REGARD TO THE FACT THAT THE APPEL LANT IS A REGISTERED BROKER IN THE MARKET. 6. ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WELL A S IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTI ON OF LEARNED ASSESSING OFFICER IN MAKING AN ADDITION OF RS.70,92,721/- TO THE INCOME OF THE APPELLANT, BEIN G COMMISSION EARNED @ 2% ON THE BOGUS SALES BILLS ISS UED DURING THE YEAR TO VARIOUS PARTIES. 7. ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WELL A S IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTI ON OF LEARNED ASSESSING OFFICER IN HOLDING THAT THE CASH DEPOSITS IN THE BANK ACCOUNTS OF THE PERSONS OTHER THAN ASSESSE E (THIRD ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 5 PARTIES) AS UNDISCLOSED INCOME OF THE APPELLANT. 8. ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WELL A S IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTI ON OF LEARNED ASSESSING OFFICER IN MAKING AN ADDITION OF RS.7,01,650/- TO THE INCOME OF THE APPELLANT ON THE BASIS OF THE CASH DEPOSITS IN THE VARIOUS BANK ACCOUNTS OF T HE PERSONS OTHER THAN ASSESSEE (THIRD PARTIES), IGNORING THE F ACT THAT THE APPELLANT WAS MERELY A COMMISSION AGENT OF THOSE PE RSONS. 9. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ALTER OR D ELETE THE SAID GROUND OF APPEAL. 2. BRIEF FACTS OF THE CASE EXTRACTED FROM ITA NO. 5739/MUM/2012 IN THE CASE OF SHRI DILIP C. SHAH FOR THE ASSESSMENT YEAR 2001-02 ARE THAT SEARCH AND SEIZURE U/S 132 OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT IN THE CAS E OF SHRI DILIP C. SHAH AND SHRI ATUL SANGHVI ON 05.02.2007. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION INCRIMINATING MATER IALS WERE FOUND WHICH REVEALED THAT THE ASSESSEE ALONG WITH S HRI ATUL SHANGHVI INVOLVED IN PROVIDING ACCOMMODATION ENTRIE S TO VARIOUS BENEFICIARIES. THE INCRIMINATING DOCUMENTS FOUND FURTHER REVEALED THAT THE ASSESSEE HAS OPERATED MORE THAN 1 00 BANK ACCOUNTS IN VARIOUS NAMES AND ALSO TAMPERED DOCUMEN TS LIKE PAN CARD AND OTHER EVIDENCE IN SUPPORT OF ADDRESS P ROOF TO OPEN AND OPERATE BANK ACCOUNTS IN THE NAME OF VARIOUS PE RSONS. EARLIER A SURVEY ACTION WAS CARRIED OUT AT THE OFFICE PREMI SES AT 78/80, MOTOR GARAGE BLDG. MOTA COMPOUND, GAUSHALA, C.P. TA NK, MUMBAI-4. DURING THE COURSE OF SURVEY KEYS OF THREE BANK LOCKERS WERE FOUND IN THE POSSESSION OF THE ASSESSE E AND SHRI ATUL A. SANGHVI. ACCORDINGLY, A WARRANT BY U/S. 1 32 WAS EXECUTED AND TOTAL CASH OF RS.47.30 LACKS ALONG WI TH SOME INCRIMINATING DOCUMENTS WERE FOUND. DURING THE COUR SE OF SEARCH U/S 132, STATEMENT U/S 132(4) OF THE INCOME TAX ACT WAS RECORDED FROM THE ASSESSEE AND CONFRONTED THE INCRIMINATING MATERIALS FOUND LIKE BANK ACCOUNT, AND SIGNED CHEQUE BOOKS AN D ALSO BILL BOOKS OF VARIOUS CONCERNS. THE ASSESSEE WHILE RECOR DING STATEMENT U/S 132(4) ADMITTED THAT HE ALONG WITH AT UL SANGHVI ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 6 WERE ENGAGED IN THE BUSINESS OF COMMISSION AGENTS I N STEEL MARKET ARRANGING BUSINESS BETWEEN THE SELLERS OF GO ODS AND BUYERS OF GOODS FOR WHICH THEY CHARGED COMMISSION R ANGING BETWEEN 0.02% TO 0.05%. THE ASSESSEE FURTHER ADMITT ED THAT HE AND SHRI ATUL SANGHVI OPERATED THIS BUSINESS JOINTL Y, HOWEVER THERE IS NO WRITTEN AGREEMENT ENTERED INTO BETWEEN THEM. THE ASSESSEE FURTHER SUBMITTED THAT HE IS A REPUTED COM MISSION AGENT IN THE MARKET AND THE PROSPECTIVE SELLERS OF GOODS APPROACH HIM AT HIS OFFICE WITH VARIOUS OFFER TO SELL THEIR GOOD S. HE IDENTIFIES THE BUYER FOR THE GOODS FOR WHICH HE TAKES NECESSAR Y PRECAUTIONS TO PROTECT THE BUSINESS ACCORDINGLY COLLECTS VARIOU S INFORMATION FROM THE BUYERS AS WELL AS SELLERS IN THE FORM OF R ATION CARD, PAN CARD, VAT REGISTRATION PAPERS, BANK ACCOUNT DETAILS , AS ALSO THE CHEQUE BOOKS AS WELL AS LETTER HEADS, BILLS, VOUCHE RS ETC OF SUCH PERSONS. IT IS ONLY AFTER SUBMITTING THE DOCUMENTS AS MENTIONED, HE ENTERTAINED THE PARTIES. THIS IS THE REASON WHY DURING THE SEARCH PROCEEDINGS, THE DEPARTMENT CAME ACROSS WITH THESE DOCUMENTS IN THE PREMISES. THE ASSESSEE FURTHER SUB MITTED THAT THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH WAS BELONGING TO THE VARIOUS SUPPLIERS OF GOODS WHO KEPT THE DOCU MENTS IN HIS POSSESSION TO FACILITATE THE TRANSACTION EXPEDITIOU SLY. THEREFORE, THESE DOCUMENTS CANNOT BE CONSIDERED AS HIS DOCUMEN TS TO HOLD THAT HE FLOATED DUMMY CONCERNS IN THE NAME OF FICTI TIOUS/EXISTING PERSONS SO AS TO ISSUE BOGUS BILLS. 3. CONSEQUENT TO SEARCH PROCEEDINGS NOTICE U/S. 153A O F THE INCOME TAX ACT 1961, WAS ISSUED DIRECTING THE ASSES SEE TO FILE THE RETURN OF INCOME FOR THE SIX ASSESSMENT YEARS IMMED IATELY PRECEDING THE ASSESSMENT YEARS IN WHICH THE SEARCH TOOK PLACE. IN RESPONSE TO NOTICE, THE ASSESSEE HAS FILED RETURNS OF INCOME FOR THE ASSESSMENT YEARS 2001-02 TO 2007-08 ON 15.02.20 08. THE CASE HAS BEEN SELECTED FOR SCRUTINY AND ACCORDINGLY NOTICE U/S 143(2) AND 142(1) ALONG WITH DETAILED QUESTIONNAIRE WERE ISSUED TO THE ASSESSEE. IN RESPONSE TO THE NOTICES AUTHORI ZED REPRESENTATIVE FOR THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED VARIOUS DETAILS, AS CALLED FOR. ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 7 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A .O NOTICED THAT THE ASSESSEE IS OPERATING MORE THAN 100 BANK A CCOUNTS IN VARIOUS ENTITIES NAME IN DIFFERENT BANK ACCOUNTS AN D THE TOTAL SUM FOUND CREDITED IN THESE BANK ACCOUNTS WAS WORKED OU T AT RS.21,22,27,57,495/-. THE A.O FURTHER OBSERVED THAT THE ASSESSEE HAD ISSUED SALES BILLS IN THE NAME OF 51 ENTITIES F OR AN AMOUNT OF RS.8,59,99,06,373/-. THE A.O HAS SUMMARISED THE DET AILS OF COMPANIES/FIRMS OPERATED BY THE ASSESSEE ALONG WITH SHRI ATUL SANGHVI AND THE NAMES OF PERSONS OF CONCERNS ARE LI STED IN THE ASSESSMENT ORDER DATED 31.12.2008 AT PARAGRAPH 5.1 . SIMILARLY, THE A.O HAS LISTED THE TOTAL SALES BILLS ISSUED BY THE ASSESSEE IN THE NAME OF VARIOUS CONCERNS AT PARAGRAPH 5.2 OF AS SESSMENT ORDER DATED 31.12.2008. THE A.O ALSO LISTED THE NAM ES OF COMPANIES/FIRMS AND CORRESPONDING BANK ACCOUNTS OPE RATED IN VARIOUS BANKS AT PARAGRAPH 5.3 OF HIS ORDER DATED 3 1.12.2008. AS PER THE INFORMATION GATHERED DURING THE COURSE OF S EARCH COUPLED WITH FURTHER INQUIRIES CONDUCTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O CAME TO THE CONCLUSION THAT TH E ASSESSEE ALONG WITH SHRI ATUL SANGHVI IS INVOLVED IN PROVIDI NG ACCOMMODATION ENTRIES OF BOGUS PURCHASE BILLS TO VA RIOUS ENTITIES. THE INFORMATION GATHERED DURING THE COURS E OF SEARCH AND ASSESSMENT PROCEEDINGS REVEALED THAT THE ASSESS EE HAS ISSUED SALE BILLS WORTH RS.856,64,49,533/- IN THE NAME OF M/S VARUN INDUSTRIES LTD. 13, SANKESHWAR DARSHAN, A.G. PAWAR CROSS LANE, BYCULLA/MUMBAI. THE TOTAL SALE BILLS ISSUED FROM VA RIOUS CONCERNS NAME TO M/S VARUN INDUSTRIES PVT. LTD., WE RE SEIZED AT THE TIME OF SEARCH ARE MARKED AS ANNEXURE A1 TO ANN EXURE A19 WHICH ARE REFLECTED IN THE ASSESSMENT ORDER AT PARA GRAPH 5.1. 5. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E A.O CALLED UPON THE ASSESSEE TO EXPLAIN CREDITS FOUND I N THE BANK ACCOUNT AND SALES BILLS ISSUED TO M/S VARUN INDUSTR IES LTD. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE SUBMITT ED THAT HE IS A REGISTERED COMMISSION AGENT IN THE STEEL MARKET. HE ALONG WITH SHRI ATUL SANGHVI ARE ENGAGED IN THE BUSINESS OF CO MMISSION AGENT FACILITATING SALE AND PURCHASE BETWEEN THE PE RSONS MANUFACTURING STEEL GOODS AND PERSONS BUYING STEEL GOODS. THE ASSESSEE FURTHER SUBMITTED THAT HE CHARGED COMMISSI ON RANGING ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 8 FROM 0.05% TO 0.15% DEPENDING UPON THE SIZE OF THE BUSINESS FOR WHICH HE COLLECTED VARIOUS DETAILS FROM THE PROSPEC TIVE SELLERS OF GOODS INCLUDING THEIR PAN CARD, SALES BILLS, BANK A CCOUNT DETAILS, ADDRESS PROOF ETC. THE ASSESSEE FURTHER SUBMITTED T HAT THE BANK ACCOUNT FOUND DURING THE COURSE OF SEARCH AND SALE BILLS FOUND IN VARIOUS NAMES DO NOT BELONG TO HIM, BUT THE SAME WE RE BELONGING TO THE ENTITIES MANUFACTURING GOODS WHICH ARE KEPT IN OUR IN CUSTODY FOR EASY FACILITATION OF BUSINESS, T HEREFORE, THE SAME CANNOT BE CONSTRUED AS DUMMY ENTITIES FLOATED BY ME FOR FACILITATING ISSUE OF BOGUS BILLS. 6. THE A.O, AFTER CONSIDERING THE SUBMISSIONS OF THE A SSESSEE AND ALSO TAKING INTO ACCOUNT THE SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH, CAME TO THE CONCLUSION THAT THE A SSESSEE ALONG WITH SHRI ATUL SANGHVI WAS ENGAGED IN THE ACTIVITY OF PROVIDING ACCOMMODATION ENTRIES OF BOGUS PURCHASE BILLS TO VA RIOUS BENEFICIARIES. THE A.O FURTHER OBSERVED THAT THE MODUS OPERANDI OF THE ASSESSEE IS THAT HE OPENS BANK ACCOUNTS IN V ARIOUS FICTITIOUS / EXISTING PERSONS NAME BY FABRICATING ADDRESS PROO F AND PAN CARD, WHICH IS EVIDENT FROM THE FACT THAT HE HAS OP ENED BANK ACCOUNTS IN ONE PERSONS NAME IN DIFFERENT BANK ACC OUNTS BY FIXING HIS PHOTOGRAPH ON THE FABRICATD ADDRESS PRO OF AND PAN NO. THE A.O FURTHER OBSERVED THAT THE STATEMENT REC ORDED DURING THE COURSE OF SEARCH FROM ONE MR. YASHWANT PANDYA W HO CLAIMED TO BE THE ACCOUNTANT OF THE ASSESSEE INDICA TES THAT THE ASSESSEE IS ISSUING SALES BILLS IN VARIOUS NAMES. S HRI YASHWANT PANDYA ACCOUNTANT OF THE ASSESSEE WHO HAS CLEARLY S TATED IN HIS STATEMENT THAT HE HAD UNDER INSTRUCTION FROM SHRI A TUL SANGHVI AND SHRI DILIP C. SHAH, BILLS IN RESPECT OF THE VAR IOUS COMPANIES WERE PREPARED IN THE OFFICE OF THE ASSESSEE. THE B ILLS WERE PREPARED IN THE NAME OF VARIOUS CONCERNS WHOSE BLAN K CHEQUES WERE FOUND DURING THE COURSE OF SEARCH. THE A.O FUR THER RELIED UPON THE STATEMENT OF SHRI PRADIP M JABALIA WHO HAD GIVEN HIS ADDRESS FOR CORRESPONDENCE FOR SOME OF THE BANK ACC OUNTS OPERATED BY SHRI ATUL SANGHVI AND SHRI DILIP C. SHA H. IN THE STATEMENT HE HAS CONFIRMED THAT THE LETTERS FROM TH E BANK WERE COLLECTED BY SHRI ATUL AND DILIP SANGHVI. THE SUM A ND SUBSTANCE OF THE STATEMENT GIVEN BY THE SHRI PRADIP M JABALIA IS THAT SHRI ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 9 ATUL SANGHVI AND SHRI DILIP SANGHVI FLOATED VARIOUS DUMMY CONCERNS AT THE ADDRESS OF SHRI PRADIP M JABALIA. T HE A.O ALSO RELIED UPON THE STATEMENT OF SHRI VINOD KUMAR UTTAM LAL SHAH WHO IS THE PERSON RESPONSIBLE FOR INTRODUCING THE A CCOUNT IN THE NAME OF SHRI SANDEEP P. SHAH IN BANK OF MAHARASHTRA , JHAVERY BAZAR BRANCH. SHRI VINOD KUMAR SHAH HAS STATED THAT HE HAS SEEN SHRI DILIP SHAH ONLY ONES IN HIS LIFE. SHRI SANDEE P P. SHAH CAME TO HIS OFFICE WITH ACCOUNT OPENING FORM. HE DID NOT KNOW WHO HE WAS, BUT SHRI ATUL SANGHVI WHO WAS RELATIVE STATED THAT HE KNOWS SHRI SANDEEP P. SHAH VERY WELL AND WAS FROM HIS VIL LAGE. THE A.O FURTHER GATHERED INFORMATION WHICH REVEALED THA T THE PHOTO APPEARING IN THE ACCOUNT OPENING FORM OF SHRI SANDE EP P SHAH IS APPEARING IN THREE DIFFERENT ACCOUNTS IN THE THREE DIFFERENT NAMES AND ALL THE CHEQUES BOOKS FOUND IN THE POSSESSION S HRI ATUL SANGHVI AND DILIP SHAH. THE A.O FURTHER REFERRED TO THE STATEMENT RECORDED FROM SHRI N. V. NEELAKANTAN WHO IS THE PERSON RESPONSIBLE FOR OPENING ACCOUNTS OF CONCERNS RUN BY SHRI ATUL SANGHVI AND P. SHAH ON THE NATIONAL COOPERATIV E BANK, FORT BRANCH. IN QUESTION NO. 3 HE HAS STATED THAT THE DUO SHRI ATUL SANGHVI AND SHRI DILIP SHAH APPROACHED THE BAN K FOR OPENING ACCOUNT OF THE CONCERN IN THEIR GROUP. FURT HER IT HAS BEEN STATED THAT THE PERSON IN WHOSE NAME ACCOUNTS WERE OPENED NEVER CAME FORWARD TO OPERATE THE ACCOUNT WHICH WAS IN FA CT DONE BY SHRI ATUL SANGHVI AND SHRI DILIP SHAH. THE A.O FURT HER NOTED THAT EVEN THE SUMMONS ISSUED TO ALL THESE ADDRESSES WHERE RETURNED UNSERVED; HOWEVER THE LETTER SENT BY THE D RI WERE RECEIVED AND HAD BEEN FOUND IN THE POSSESSION OF TH E ASSESSEE INDICATING THAT THESE TWO PERSONS ARE MANAGING THE AFFAIRS OF ALL THE COMPANIES WHOSE LETTERHEADS AND BANK ACCOUNTS H AVE BEEN FOUND FROM THE ASSESSEES POSSESSION. 7. FROM THE ABOVE INQUIRIES AND EVIDENCES GATHERED DUR ING THE SEARCH AND POST SEARCH ENQUIRIES, THE A.O CAME TO T HE CONCLUSION THAT SHRI ATUL SANGHVI AND SHRI DILIP SHAH WHERE TH E PERSONS, WHO HAD OPERATED 100 BANK ACCOUNTS IN DIFFERENT ENT ITIES NAME TO FACILITATE THE ISSUE OF BOGUS BILLS TO VARIOUS BENE FICIARIES. THE A.O FURTHER OBSERVED THAT THE SEIZED DOCUMENTS FOUN D DURING THE COURSE OF THE SEARCH UNDOUBTEDLY PROVED THAT THE DU O WERE ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 10 INVOLVED IN PROVIDING ACCOMMODATION ENTRIES OF BOGU S PURCHASE BILLS IN THE NAME OF DUMMY CONCERNS. THE A.O FURTHE R OBSERVED THAT THE DUO HAVE FABRICATED DOCUMENTS LIKE PAN CAR D, SIGNATURE ETC, TO OPEN BANK ACCOUNTS IN THE NAME OF DIFFERENT PERSONS WHO HAD NOTHING TO DO WITH THOSE TRANSACTIONS. THE ASS ESSEE AND SHRI A. SANGHVI HAVE OPERATED BANK ACCOUNTS IN DIFFERENT PERSONS NAMES, HOWEVER THE REAL TRANSACTIONS HAVE BEEN CARR IED OUT BY THE ASSESSEE ALONG WITH SHRI ATUL SANGHVI. ALL THESE SE QUENCE OF EVENTS AND EVIDENCES CLEARLY INDICATES THAT THE ASS ESSEE IS ENGAGED IN THE ACTIVITY OF PROVIDING ACCOMMODATION ENTRIES THEREFORE, HE OPINED THAT THE TOTAL SUM FOUND CREDI TED IN THESE BANK ACCOUNTS IS THE GROSS TURNOVER OF THE ASSESSEE FROM THE ACTIVITY OF ISSUING BOGUS BILLS. THE A.O HAS CONCLU DED ASSESSMENT IN THE FOLLOWING MANNER:- (I) COMMISSION ON BOGUS BILLING :- THE A.O HAS WORKED OUT COMMISSION ON BOGUS BILLING ISSUED IN THE NAME OF DIFFERENT ENTITIES TO THE TUNE OF RS.85 6,64,69,533/- AT THE RATE OF 2% ON TOTAL BILL AMOUNT AND DIVIDED FOR A PERIOD OF 7 YEARS FROM ASSESSMENT YEAR 2001-02 TO 2007-08 AND ADDED 50% ON TOTAL COMMISSION IN THE HANDS OF THE ASSESSE E AND 50% IN THE HANDS OF SHRI ATUL SANGHVI. (II) ADDITIONS TOWARDS BANK CREDIT:- DURING THE YEARS THERE ARE BANK CREDITS TO THE TUNE OF RS. RS.21,22,27,57,495/. THE A.O HAS TAKEN TOTAL BANK CREDITS AND REDUCED THE VALUE OF BOGUS SALES BILL ISSUED TO M/S VARUN INDUSTRIES LTD. AND OTHERS TO THE EXTENT OF RS.856, 64,49,533/- AND THE BALANCE AMOUNT OF RS.1388.09 CRORES BANK CR EDITS HAS BEEN TREATED AS UNEXPLAINED CREDITS FOR THE ASSESSM ENT YEAR 2001-02 TO 2007-08 AND MADE ADDITIONS ON PROTECTIVE BASIS. (III) THE A.O ALSO ESTIMATED COMMISSION @2% ON TOTA L UNEXPLAINED BANK CREDIT AND ADDED 50% IN THE HANDS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2001-02 TO 2007-08 AND REMAINING 50% IN THE HANDS OF THE SHRI ATUL SANGHVI . (IV) UNEXPLAINED CASH DEPOSIT IN BANK ACCOUNTS :- THE A.O MADE ADDITIONS OF RS.17,73,36,779/-TOWARDS UNEXPLAINED CASH DEPOSITS IN BANK ACCOUNTS FOR THE ASSESSMENT ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 11 YEAR 2001-02 TO 2007-08 AND ADDED 50% IN THE HANDS OF THE ASSESSEE AND REMAINING IN THE HANDS OF SHRI DILIP S HAH. (V)ADDITIONS TOWARDS CASH FOUND DURING THE COURSE O F SEARCH: DURING THE COURSE OF SEARCH CASH AMOUNTING TO RS.47 ,30,000/- HAS BEEN FOUND AND SEIZED. THE ASSESSEE HAS ADMITTE D THAT THE AMOUNT FOUND SEIZED AND DURING THE COURSE OF SEARCH REPRESENTING HIS UNEXPLAINED BUSINESS INCOME. IN TH IS FACT, THE SUM OF RS.47,30,000/- HAS BEEN TREATED AS UNEXPLAIN ED INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08 AND ADDED 50% IN THE NAME OF THE ASSESSEE AND REMAINING 50% H AS BEEN ADDED IN THE HANDS OF THE SHRI DILIP SANGHVI. 8. AGGRIEVED BY THE ASSESSMENT ORDER THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE CIT(A). WHEN THE APPEALS FILED BY THE ASSESSEE WERE PENDING BEFORE THE CIT(A) FOR ADJUDIC ATION, THE CIT [CENTRAL CIRCLE(1)], MUMBAI HAD ISSUED A SHOW C AUSE NOTICE U/S 263 OF THE ACT, AND ON THE GROUND THAT THE ASSE SSMENT ORDER PASSED BY THE A.O U/S 143(3) R.W.S. 153A WAS ERRONE OUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE , AS THE A.O HAS NOT CONSIDERED THE ISSUE OF BOGUS SALES BILLS ISSUE D IN THE NAME OF M/S VARUN INDUSTRIES LTD. AND ALSO UNEXPLAINED CRED ITS FOUND IN THE BANK ACCOUNTS OPERATED BY THE ASSESSEE. THE CIT MUMBAI, AFTER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE, SET ASIDE THE ORDER PASSED BY THE A.O U/S 153A R.W.S. 143(3) AND DIRECTED THE A.O TO REDO ASSESSMENT WITH THE FOLLOWING DIRECTION S: 4.2.1 THE TOTAL AMOUNT INCLUDED IN THE BILLS RAISE D IN THE NAME OF M/S. VARUN INDUSTRIES LIMITED SHOULD BE ASSESSED PROTECTIVELY IN THE HANDS OF THE ASSESSEE TO THE EXTENT OF HIS SHARE IN THE BUSINESS , TO SAFE GUARD THE INTEREST OF THE REVENUE. THE COMMISSION INCOME ON THE SAID TRANSACTIONS SHOULD BE ASSESSED PROPORTIONATELY ON SUBSTANTIVE BASIS IN THE HANDS OF THE ASSESSEE, AS ALREADY DONE IN THE O RIGINAL ASSESSMENT. 4.2.2 REGARDING THE DEPOSITS AGGREGATING TO ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 12 RS.1.388.09 CRORES IN THE ASSESSMENT YEARS COMPRISED IN THE BLOCK PERIOD FOR WHICH THE ASSESSE E HAS NOT BEEN ABLE TO FURNISH PROPER EXPLANATION, TH IS AMOUNT SHOULD BE TAXED IN THE HANDS OF THE ASSESSEE PROPORTIONATELY TO THE EXTENT OF HIS SHARE IN THE BUSINESS ON SUBSTANTIVE BASIS AS HIS OWN UNEXPLAINED OR UNACCOUNTED INCOME. 4.2.3 ASSESSEE SHOULD BE ALLOWED OPPORTUNITY TO PRO VE THAT THE DEPOSITS ARE ACCOUNTED FOR OR/ARE NO THE ASSESSEE'S OWN INCOME BUT INCOME OF SOME OTHER PERS ON, BY SUBMITTING PROOF OF IDENTITY OF SUCH OTHER PERSO N, CREDITWORTHINESS OF SUCH PERSON, BUSINESS OPERATION CARRIED OUT AND THAT THE TRANSACTION IS GENUINELY C ARRIED OUT BY SUCH OTHER PERSON, IN WHICH. CASE, THE SAID AMOUNT OR AMOUNTS WOULD BE REDUCED FROM THE AGGREGA TE AMOUNT OF UNEXPLAINED BANK DEPOSITS AND TAXED ONLY ON PROTECTIVE BASIS IN THE RESPECTIVE YEAR OR YEARS. T HE REMAINING AMOUNT THAT REMAINS UNEXPLAINED, WOULD BE TAXED IN THE RESPECTIVE YEARS IN THE HANDS OF THE ASSESSEE PROPORTIONATELY, ON SUBSTANTIVE BASIS AS MENTIONED IN THE FOREGOING PARA. 9. THE CIT, [CENTRAL CIRCLE(1)] IN HIS ORDER U/S 263 D ATED 29.03.2011, DIRECTED THE A.O TO MAKE ADDITIONS TOWA RDS SALES BILLS RAISED IN THE NAME OF M/S VARUN INDUSTRIES LT D. ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE TO TH E EXTENT OF HIS SHARE OF BUSINESS TO SAFEGUARD THE INTEREST OF THE REVENUE AND THAT THE COMMISSION INCOME ON THE SAID TRANSACTIONS SHOU LD BE ADDED PROPORTIONATELY ON SUBSTANTIVE BASIS IN THE HANDS O F THE ASSESSEE AS ALREADY DONE IN THE ORIGINAL ASSESSMENT ORDER. REGARDING CASH DEPOSITS AGGREGATING TO RS.1388.09 CRORE IN THE ASS ESSMENT YEARS COMPRISED IN THE PERIOD FOR WHICH THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH PROPER EXPLANATION, THE SAME SHOULD BE T AXED IN THE HANDS OF THE ASSESSEE PROPORTIONATELY TO THE EXTENT OF HIS SHARE IN THE BUSINESS ON SUBSTANTIVE BASIS AS HIS OWN UNEXPL AINED AND UNACCOUNTED INCOME. THE CIT(A) FURTHER DIRECTED THE A.O TO ALLOW OPPORTUNITY TO THE ASSESSEE TO PROVE THAT THE DEPOSITS ARE ACCOUNTED FOR AND DECLARED AS THE ASSESSEES OWN INC OME OR INCOME OF SOME OTHER PERSONS BY SUBMITTING PROOF OF IDENTITY OF ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 13 SUCH OTHER PERSONS, CREDITWORTHINESS OF THE SUCH PE RSONS, BUSINESS OPERATION CARRIED OUT AND THAT THE TRANSAC TION IS GENUINELY CARRIED OUT BY SUCH OTHER PERSON. IN THE CASE THE SAID AMOUNTS EXPLAINED, THE SAME WOULD BE ARE AMOUNTS WO ULD BE REDUCED FROM THE AGGREGATE AMOUNT OF UNEXPLAINED BA NK DEPOSITS AND TAXED ON PROTECTIVE BASIS IN RESPECTIVE YEAR OR YEARS. 10. THE ASSESSEE HAS CHALLENGED 263 ORDERS PASSED BY TH E CIT, FOR ALL THE ASSESSMENT YEARS BEFORE THE ITAT. THE ITAT MUMBAI A BENCH IN IT(SS)A NO. 30/MUM/2011 FOR THE ASSESSMENT YEARS 2001-02 TO 2007-08 UPHELD THE REVI SION ORDER PASSED BY THE CIT(A) AND DISMISSED APPEALS FILED BY THE ASSESSEE. THE RELEVANT PORTION OF THE ORDER OF THE ITAT, IS REPRODUCED AS UNDER:- 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE AO HAD GIVEN A CA TEGORICAL FINDING THAT THE TOTAL CREDIT IN THE ASSESSEE'S VARIOUS BAN K ACCOUNTS WAS AMOUNTING TO RS.2122,27,57,495/OUT OF THIS A SUM OF RS.856,64,49,533/- HAD BEEN TREATED AS BOGUS SALES FOR WHICH SALES BILLS WERE FOUND AND WERE DULY IMPOUNDED. HOW EVER, THE REMAINING SUM OF RS.1388,09,01,411/- HAD REMAINED U NEXPLAINED IN SPITE OF VARIOUS OPPORTUNITIES GIVEN TO THE ASSE SSEE. THE AO HAD TREATED THE SAME AS UNEXPLAINED INCOME OF THE A.SSE SSEE AND DECIDED TO BRING IT INTO TAX IN VARIOUS ASSESSMENT YEARS. H E ALSO WORKED OUT THE ADDITIONS FOR DIFFERENT ASSESSMENT YEARS. HOWEV ER, HE MADE THE SAID ADDITIONS ON PROTECTIVE BASIS OBSERVING THAT T HE ASSESSEE HAD NOT BEEN ABLE TO ESTABLISH THE SOURCE OF THESE CRED ITS. HE, HOWEVER, MADE THE ADDITION OF 2% OF THE SAID AMOUN T AS COMMISSION INCOME OF THE ASSESSEE ON SUBSTANTIVE BA SIS A PERUSAL OF THE ABOVE FINDINGS ITSELF REVEALS THAT THE ORDER OF THE AO WAS ERRONEOUS. IN THE ABSENCE OF ANY EVIDENCE, ON THE F ILE-IS TO SOURCE OF THE CREDITS OF THE AMOUNT IN QUESTION IN THE VARIOU S BANK ACCOUNTS OF THE ASSESSEE, THE AO HAD TREATED THE SAID AMOUNT AS UNEXPLAINED INCOME OF THE ASSESSEE. ONCE THE AO HAD TREATED SO, THE AO WAS REQUIRED TO MAKE THE ADDITION OF THIS AMOUNT ON SUB STANTIVE BASIS. EVEN WITHOUT MAKING THE ADDITION OF THE AMOU NT IN QUESTION ON ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 14 SUBSTANTIVE BASIS IN ANY OTHER PERSONS' ACCOUNT, TH E AO COULD NOT HAVE MADE THE ADDITION OF THE AMOUNT ON PROTECTIVE BASIS IN THE ASSESSEE'S ACCOUNT. FROM THE ABOVE FACTS, THE LD.CI T WAS JUSTIFIED IN HOLDING THAT THE ORDER OF THE AO WAS NOT ONLY ERRON EOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT WHILE INVOKING PROVISIONS OF SECTION 263 OF THE ACT AND THEREBY REVISING THE ORDER OF TH E AO. THE SAME IS THEREFORE, UPHELD. 11. IN THE MEANTIME, THE APPEAL FILED BY THE ASSESSEE A GAINST THE ORDER PASSED BY THE A.O U/S 143(3) R.W.S. 153A HAS BEEN DISMISSED BY THE CIT(A). THE ASSESSEE CARRIED THE M ATTER IN FURTHER APPEAL BEFORE THE ITAT. THE ITAT MUMBAI A BENCH IN ITA NO. 4721 TO 4726/MUM/2011 FOR ASSESSMENT YEAR 2 001-02 TO 2007-08 HAD DISMISSED THE APPEALS FILED BY THE ASSE SSEE BY OBSERVING AS UNDER:- 3.WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERI AL ON RECORD. 3.1 THE PRIMARY AND RELEVANT FACTS, WHICH ARE THE S AME AS IN THE CASE OF DILIP SHAH V. A 'IT (SUPRA), WITH RE FERENCE TO WHICH THE ID. AR ARGUES THE INSTANT CASE, ARE NOT I N DISPUTE. AS WOULD BE APPARENT FROM THE OPERATIVE PART OF THE SAID ORDER, REPRODUCED HEREINABOVE, THE TRIBUNAL DECIDED IN THE MANNER IT DID ON THE PREMISE THAT PENDING A DECISIO N ON THE MERITS OF THE REVISION ORDER CANCELLING THE ASSESSM ENTS, CONSIDERING THE ASSESSEE'S APPEALS THEREAGAINST AS NOT MAINTAINABLE, AS HELD BY THE FIRST APPELLATE AUTHOR ITY, WOULD OPERATE TO THE PREJUDICE THE ASSESSEE IF IT W ERE TO SUCCEED IN ITS CHALLENGE TO THE REVISION ORDER INAS MUCH AS THE ASSESSMENTS, SINCE CANCELLED, WOULD STAND TO BE RESTORED, WHILE THE ASSESSEE'S ACTION IN APPEALING THERE AGAINST ON MERITS WOULD STAND BARRED BY TIME. WE AR E IN FULL AGREEMENT WITH THE SAID PREMISES, WHICH CAN BE SAID TO REPRESENT THE RATIO DECENDI OF THE SAID DECISION. T HE PROPER COURSE UNDER THE CIRCUMSTANCES WOULD BE TO PREVENT SUCH A PREJUDICE WERE SUCH AN EVENTUALITY TO ARISE IN FUTU RE. HOWEVER, THAT MAY NOT NECESSARILY IMPLY A REQUIREME NT TO DECIDE THE ASSESSEE'S APPEALS ON MERITS BY THE FIRS T ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 15 APPELLATE AUTHORITY, NEED OR OCCASION FOR WHICH WOU LD ARISE ONLY WHERE THE ASSESSEE'S IMPUGNED ASSESSMENT /S, SINCE SET ASIDE, STAND RESTORED BY ACCEPTING HIS CH ALLENGE TO THE REVISION ORDER, AND WHICH IS NOT CERTAIN, SO THAT IT MAY NEVER ARISE, RESULTING IN HIS DECISION ON MERIT S BECOMING FUTILE OR UNFRUCTUOUS. RESERVING THE ASSES SEE'S STATUTORY RIGHT TO CONTEST ITS ASSESSMENT/S UNDER T HE APPELLATE PROCEDURE, WHICH IS WHAT WE UNDERSTAND, A S ALSO AFORE-STATED, TO HE THE ALSO INTENT AND PURPORT OF THE TRIBUNAL'S ORDER IN DI/IP SHAH V. ACIT (SUPRA), WOU LD IN OUR VIEW PRESENT A REASONABLE AND EQUITABLE COURSE UNDE R THE CIRCUMSTANCES. 3.2 THE ABOVE COURSE, BESIDES BEING IN CONFORMITY W ITH THAT BY THE TRIBUNAL IN THE CITED CASE, I.E., IN PR INCIPLE, WOULD ALSO BE IN CONSONANCE WITH LAW INASMUCH AS TH E ASSESSMENTS IMPUGNED IN THE INSTANT APPEALS STAND S INCE SET ASIDE BY THE REVISION ORDER, WHICH HOLDS AS ON DATE, SO THAT THE ACTION OF THE ID. CIT(A) IN DISMISSING THE SAME AS NOT MAINTAINABLE CANNOT BE FAULTED WITH. THE EXCLUS ION OF THE JURISDICTION OF THE ADMINISTRATIVE COMMISSIONER QUA AN ASSESSMENT, IT NEEDS TO BE BORNE IN MIND, IS ONLY W HERE THE SAME STANDS MODIFIED IN APPEAL, SO THAT IT STANDS M ERGED WITH THE APPELLATE ORDER, AND THEN, AGAIN, ONLY TO THAT EXTENT (REFER EXPLANATION (C) TO S. 263(1)). NO APP ELLATE ORDER HAD ADMITTEDLY BEEN PASSED BY 13/1/2011, I.E. , ON WHICH DATE THE REVISIONARY AUTHORITY ISSUED THE SHO W CAUSE TO THE ASSESSEE IN THE INSTANT CASE. 3.3 UNDER THE CIRCUMSTANCES, WE ONLY CONSIDER IT FI T AND PROPER TO DISMISS THE INSTANT BY THE ASSESSEE, SUBJECT TO THE CONDITION THAT IN CASE THE APPELLANT, WHO HAS ADMITTEDLY ALSO CHALLENGED THE SECTION 263 ORDERS/S BEFORE THE TRIBUNAL, IS SUCCESSFUL IN HIS CHALLENGE, SO THAT T HE IMPUGNED ASSESSMENT/S STANDS RESTORED/REVIVED, HE SHALL BE A T LIBERTY TO PURSUE HIS APPEAL/S BEFORE THE FIRST APPELLATE AUTH ORITY, AND WHO SHALL, IN THAT CASE, DECIDE THE SAME ON MERITS, I.E., IN ACCORDANCE WITH LAW, AND AFTER AFFORDING PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. THAT IS, TH E ASSESSEE'S APPEALS BEFORE THE FIRST APPELLATE AUTHORITY CONTES TING ITS SAID ASSESSMENTS WOULD ALSO STAND CONSEQUENTIALLY R EVIVED ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 16 WHERE THE ASSESSEE INTENDS TO PROSECUTE THE SAME. F URTHER, THE SAME HAVING BEEN FILED BEFORE THE FIRST APPELLATE A UTHORITY IN THE FIRST INSTANCE IN TIME, NO QUESTION OR ISSUE WI TH REGARD TO THE SAME BEING DELAYED, WOULD, IN THAT CASE, ENSUE OR ARISE. SUBJECT TO THE FOREGOING WE CONFIRM THE IMPUGNED OR DER. 12. IN PURSUANCE OF THE ORDER OF THE CIT U/S 263 OF THE ACT, THE A.O ISSUED NOTICE U/S 143(2) CALLING FOR VARIOUS DE TAILS FROM THE ASSESSEE. IN RESPONSE TO SHOW CAUSE NOTICE, THE AS SESSEES AUTHORIZED REPRESENTATIVE APPEARED AND SUBMITTED TH E DETAILS, AS CALLED FOR. THE ASSESSEE MORE OR LESS REITERATED IT S SUBMISSIONS MADE BEFORE THE A.O AT THE TIME OF ORIGINAL ASSESSM ENT U/S 143(3) R.W.S. 153A OF THE ACT. THE ASSESSEE ALSO FILED CO NFIRMATION FROM CERTAIN PERSONS STATING THAT SOME OF THE CONCERNS B ANK ACCOUNTS CONSIDERED AS DUMMY CONCERNS OPERATED BY THE ASSESS EE IN HIS OWN NAME ARE IN FACT OPERATED AND CONTROLLED BY THEM AN D THE BANK ACCOUNTS WERE CONSIDERED IN THEIR INCOME-TAX RETURN S FILED FOR THE RESPECTIVE ASSESSMENT YEARS. THE ASSESSEE ALSO FILE D COPIES OF I.T. RETURNS OF FEW PERSONS AND CLAIMED THAT THOSE ASSES SEES HAVE CONSIDERED THE BANK ACCOUNTS IN THEIR INCOME TAX RE TURNS FOR THE RESPECTIVE ASSESSMENT YEARS. 13. THE A.O, AFTER CONSIDERING THE EXPLANATION OF THE A SSESSEE, OBSERVED THAT THE ASSESSEE HAS NOT DISCHARGED HIS O NUS OF PROVING THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF A NY OF THESE TRANSACTIONS PERTAINING TO SUM TOTAL FOUND CREDITED IN THE BANK ACCOUNTS OPERATED IN VARIOUS ENTITIES NAME OF RS.13 88.09 CRORES. THOUGH THE ASSESSEE HAS SIMPLY RELIED ON THE STAND THAT SOME PARTIES WERE PRODUCED DURING THE ORIGINAL ASSESSMEN T PROCEEDINGS OR THAT CERTAIN ANNUAL ACCOUNT AND COPIES OF I.T. R ETURNS HAVE BEEN SUBMITTED IN SOME CASES, IT HOWEVER DOES NOT DISCHA RGE THE ONUS OF PROVING THE CREDITS FOUND IN THE BANK ACCOUNTS. THE A.O FURTHER OBSERVED THAT THE ASSESSEE HAS MERELY MADE HIS SUBM ISSIONS WHICH WERE MADE EVEN AT THE TIME OF ORIGINAL ASSESSMENT P ROCEEDINGS AND HAVE BEEN REJECTED THERE ITSELF WITHOUT ANY FURTHER CORROBORATIVE EVIDENCE TO EXPLAIN THE CREDITS FOUND IN THE BANK A CCOUNTS. THE A.O FURTHER OBSERVED THAT THE PURPOSE OF THE PRESENT PR OCEEDINGS IS MERELY TO MAKE FRESH ASSESSMENT ONLY WITH RESPECT T O THE DEPOSIT IN ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 17 THE BANK ACCOUNTS AND HENCE, THE ASSESSEE IS HAVING AN OBLIGATION TO DISCHARGE HIS ONUS BY FURNISHING IDENTITY, GENUINEN ESS, AND CREDITWORTHINESS OF THE TRANSACTIONS. SINCE, THE AS SESSEE HAS FAILED TO FILE ANY EVIDENCE TO EXPLAIN THE CREDITS FOUND I N THE BANK ACCOUNTS, THE AO COMPLETED THE ASSESSMENT BY TREATI NG 50% OF TOTAL UNEXPLAINED BANK CREDITS OF RS.1388.09 CRORES AND D IVIDED IT AMONGST THE ASSESSMENT YEARS 2001-02 TO 2007-08, AS PER THE ACTUAL CREDITS FOUND IN THE RESPECTIVE YEARS AND ADDED IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED CASH DEPOSIT U/S 68 OF THE ACT. 14. IN SO FAR AS SALE BILLS ISSUED IN THE NAME OF M/S V ARUN INDUSTRIES LTD. AMOUNTING TO RS. 856,64,49,533/- TH E A.O ADDED TOTAL AMOUNT OF SALES BILLS ISSUED IN THE NAME OF M /S VARUN INDUSTRIES LTD AS UNEXPLAINED INCOME OF THE ASSESSE E ON PROTECTIVE BASIS. FURTHER 50% OF THE COMMISSION INCOME @2% OF TOTAL SALES BILLS ISSUED IN THE NAME OF M/S VARUN INDUSTRIES LT D HAS BEEN ADDED IN THE HANDS OF THE ASSESSEE. INSOFAR AS COMMISSIO N ON TOTAL BANK CREDITS, THE A.O HAS ADDED 2% COMMISSION AND TOTAL BANK CREDITS OF RS.1388.09 CRORE AND DIVIDED EQUALLY AMONG THE ASSE SSEE AND SHRI ATUL SANGHVI AND SPREAD IT OVER THE ASSESSMENT YEAR 2001-02 TO 2007-08 ON THE BASIS OF UNEXPLAINED BANK CREDITS FO UND FOR THE RESPECTIVE ASSESSMENT YEARS. HOWEVER, FURTHER OBSER VED THAT IN CASE THE ASSESSEE IS TO BE GRANTED RELIEF IN THE APPELLA TE STAGES ON THE UNEXPLAINED BANK CREDITS, THE ASSESSEE WOULD STILL HAVE TO BE TREATED AS BOGUS BILL PROVIDER AND INCOME AT 2% OF THE SAID BANK DEPOSITS NEED TO BE TREATED AS EARNED FOR PROVIDING AND FACI LITATING THE SAID BILLS, WOULD SURVIVE. THE OTHER ADDITIONS MADE IN T HE COURSE OF REGULAR ASSESSMENT REMAIN UNTOUCHED IN TOTO AND ADD ED UNDER SAME HEADS OF INCOME. 15. AGGRIEVED BY THE ASSESSMENT ORDERS, THE ASSESSEE HA S PREFERRED APPEALS BEFORE THE CIT(A). BEFORE THE CIT (A), THE ASSESSEE HAS TAKEN A LEGAL PLEA BY RAISING THE GROU ND CHALLENGING THE COMMON ORDER PASSED BY THE A.O FOR THE ASSESSMENT Y EARS 2001-02 TO 2007-08, BY STATING THAT THE ASSESSING OFFICER W AS ERRED IN PASSING A CONSOLIDATE ASSESSMENT ORDER FOR ALL SEVEN ASSESS MENT YEARS, IGNORING THE STATUTORY PROVISIONS AND THE REQUIREME NT THEREOF. THE ASSESSEE ALSO CHALLENGED EACH AND EVERY ADDITIONS M ADE BY THE A.O. ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 18 THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS AND CONT ENDED THAT THE A.O WAS ERRED IN TREATING HIM AS HAWALA OPERATOR IN VOLVED IN PROVIDING ACCOMMODATION ENTRIES IGNORING ALL THE EV IDENCES FILED BY HIM TO PROVE THAT HE IS REGISTERED COMMISSION AGENT IN THE MARKET INVOLVED IN THE BUSINESS TO FACILITATE SALES AND PU RCHASE OF VARIOUS ENTITIES BY SELLING GOODS. THE ASSESSEE ALSO CHALLE NGED ADDITIONS MADE BY THE A.O TOWARDS TOTAL SUM FOUND CREDITED IN THE BANK ACCOUNTS OF VARIOUS INDIVIDUALS. THE ASSESSEE SUBMI TTED THAT THE BANK ACCOUNTS FOUND AND SEIZED DURING THE COURSE OF SEARCH ARE IN FACT BELONG TO ENTITIES MANUFACTURING GOODS WHICH A RE KEPT IN HIS CUSTODY FOR EASY FACILITATIONS AND BUSINESS THEREFO RE, THE SAME CANNOT BE CONSIDERED AS HIS OWN DOCUMENTS USED FOR ISSUING BOGUS BILLS. THE ASSESSEE FURTHER SUBMITTED THAT INSOFAR AS ESTIMATION OF COMMISSION OF TOTAL SALES BILLS IN THE NAME OF M/S VARUN INDUSTRIES LTD AND OTHERS AND ALSO ADDITIONS MADE TOWARDS TOTA L SALES BILLS ON PROTECTIVE BASIS, ONCE HE WAS TREATED AS BOGUS BILL S PROVIDER, AND COMMISSION INCOME IS ESTIMATED ON TOTAL SALES, ADDI TIONS CANNOT BE MADE TOWARDS TOTAL SALES BILLS ON PROTECTIVE BASIS WHEN SUBSTANTIAL ADDITIONS HAS BEEN MADE IN THE HANDS OF PERSONS REC EIVING THE BILLS. THE ASSESSEE FURTHER SUBMITTED THAT A SUBSTANTIAL A DDITION HAS BEEN MADE TOWARDS TOTAL VALUE OF SALE BILLS FOUND IN THE NAME OF M/S VARUN INDUSTRIES LTD; HENCE, AND PROTECTIVE ADDITIO N MADE IN ITS HANDS, SHOULD BE DELETED. AS REGARDS ADDITION MADE TOWARDS BANK CREDITS, THE ASSESSEE SUBMITTED THAT THE BANK ACCOU NTS FOUND DURING THE COURSE OF SEARCH ARE, IN FACT, BELONG TO SOME O THER PERSONS AND FURTHER, THEY HAVE CATEGORICALLY ADMITTED BEFORE TH E A.O BY FILING CONFIRMATION LETTER AND THEIR I.T. RETURNS, THEREFO RE THE A.O WAS ERRED IN TREATING TOTAL SUM FOUND CREDITED IN THE B ANK ACCOUNT AS HIS UNEXPLAINED INCOME. 16. THE CIT(A) AFTER CONSIDERING THE ASSESSEES SUBMISS IONS AND ALSO TAKING INTO ACCOUNT THE FACTS OF THE CASE HAS OBSERVED THAT THERE IS NO MERIT IN THE LEGAL GROUND RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF ASSESSMENTS, AS THOUGH THE A.O HAS PASSED A CONSOLIDATE ORDER, THE ORDER PASSED BY THE A.O IS NOTICEABLY SEPARATE INSOFAR AS THE ADDITIONS / COM PUTATION OF TOTAL INCOME ARE CONCERNED. THE CIT(A) REFERRING TO THE P ERSONS OF SECTION 292B OF THE ACT, OBSERVED THAT NO ASSESSMEN T MADE IN ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 19 PURSUANCE OF ANY OF THE PROVISIONS I.T. ACT, SHALL BE INVALID OR SHALL BE DEEMED TO BE INVALID MERELY BECAUSE ON ANY MISTA KE, DEFECT OR OMISSION IN SUCH ASSESSMENT, IF THE SAID ASSESSMENT IN SUBSTANCE AND IN EFFECT IS IN CONFORMITY WITH OR ACCORDING T O THE INTENT AND PURPOSE OF THE INCOME-TAX ACT. ADMITTEDLY, THE LD A.O HAD ISSUED SEPARATE NOTICE U/S 153A FOR ALL THE YEARS AND IT W AS ONLY FOR THE SAKE OF BREVITY AND CONSOLIDATION OF THE FACT THAT ONE SINGLE ORDER WAS PASSED, THOUGH MANIFESTLY ADDITIONS FOR ALL THE ASSESSMENT YEARS HAVE BEEN MADE SEPARATELY AND COMPUTATION OF INCOME FOR EACH YEAR HAS BEEN DONE SEPARATELY. THEREFORE, THERE IS NO DOUBT THAT THE INTENT AND PURPOSE OF PASSING OF SUCH AN ORDER IS, IN SUBSTANCE AND EFFECT, IN CONFORMITY WITH THE INTENT OF THE I.T. A CT AND SQUARELY COVERED U/S 292B OF THE I.T. ACT, EVEN IF A HYPER T ECHNICAL PLEA HAS ARISEN THAT THERE SHOULD BE A SEPARATE ORDER FOR EA CH YEAR ON INDIVIDUAL SHEETS OF PAPER. ACCORDINGLY THE LEGAL G ROUND RAISED BY THE ASSESSEE HAS BEEN DISMISSED. 17. INSOFAR AS OTHER GROUND OF APPEAL CHALLENGING ADDIT IONS MADE BY THE A.O TOWARDS SALES BILLS RAISED IN THE N AME OF M/S VARUN INDUSTRIES LTD. AND ESTIMATION OF COMMISSION ON SALES BILLS, ADDITIONS TOWARDS UNEXPLAINED BANK CREDITS, THE CIT (A) FOR THE DETAILED REASONS RECORDED IN THIS ORDER DATED 24-07 -2012OBSERVED AS UNDER:- 2.6.1 VIDE GROUND NO.3 THE APPELLANT HAS RAISED AN ISSUE REGARDING AN INFERENCE DRAWN BY THE LD. A.O. THAT HE INDULGED IN THE BUSINESS OF ISSUANCE OF BOGUS BILLS. FROM THE FACTS OF THE CASE , IT IS APPARENT THAT APPELLANT WAS FOUND IN POSSESSI ON OF SEVERAL BANK ACCOUNTS AND OTHER RELATED DOCUMENTS O F FICTITIOUS PERSONS AND A LARGE NUMBER OF SALE BILLS ISSUED TO VARIOUS CONCERNS INCLUDING THOSE OF M/S.VARUN IND. LTD. WERE FOUND ALONGWITH A NUMBER OF CHEQUE BOOKS AND BANK LIPS. EVIDENCE WAS ALSO FOUND OF TAMPERING OF DOCUMENTS SUCH AS PAN CARDS B Y SUBSTITUTION OF NAMES AND PHOTOGRAPHS. IN ONE OF SUCH CASE, SAME PERSON'S PHOTO WAS USED IN THREE DIFFERENT BANK ACCOUNTS IN THREE DIFFERENT NAMES. T HUS, IT CANNOT BE SAID THAT APPELLANT WAS NOT INDULGED I N THE ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 20 BUSINESS OF ISSUANCE OF BOQUS BILLS. BY MAKING A MERE AVERMENT THAT HE WAS NOT INVOLVED IN SUCH ACTIVITY IN SPITE OF A HOST OF SUCH EVIDENCE FOUND IN HIS POSSESSION WOULD NOT CUT MUCH ICE AND CANNOT LEAD TO AN INFERENCE WHICH THE APPELLANT WAN TS THE REVENUE AUTHORITIES TO HOLD. IN VIEW OF THE ABO VE FACTS THERE IS NOT EVEN OF IOTA OF TRUTH IN THE PLE ADINGS MADE BY THE APPELLANT AND HENCE GROUND NO 3 IS DISMISSED. 2.7.1 GROUND NO.4 RELATES TO MAKING OF PROTECTIVE A SSESSMENT OF PS.35,46,36,038/- ON ACCOUNT OF SALES MADE TO M/ S. VARUN INDS. LTD. THE ONLY PLEA WHICH HAS BEEN MADE BY THE APPELLANT IS THAT BECAUSE A SUBSTANTIVE ADDITION HA S BEEN MADE IN THE HANDS OF M/S. VARUN IND. LTD., THE PROT ECTIVE ASSESSMENT IN THE HANDS OF THE APPELLANT, WOULD NOT SURVIVE. IT IS TRUE THAT A SUBSTANTIVE ADDITION HAS NOW BEEN MA DE IN THE HANDS M/S VARUN IND. LTD., BUT AS LONG AS THE ISSUE HAS NOT ATTAINED FINALITY, ON FACTS AND IN LAW, IT CANN OT BE SAID THAT THE PROTECTIVE ASSESSMENT IN THE HANDS OF THE APPELLANT IS WRONG BECAUSE THE VERY BASIS OF MAKING A PROTECTIVE ASSESSMENT IS TO PROTECT THE INTEREST OF REVENUE WHICH EVEN THE APPELLANT HAS NOT DENIED. ONLY IF TH E SUBSTANTIVE ADDITION MADE IN THE HANDS OF M/S. VARU N IND. LTD. SURVIVES ALL POSSIBLE ROUNDS OF LITIGATION AND ATTA INS A FINALITY, WOULD THE APPELLANT BE DOCUMENTS RELIEVED OF ITS LIABILITY. IT IS A STATED POSITION THAT- DOCUMENTS RELATING TO VARIOUS BOGUS BANK ACCOUNTS AND DUMMY ACCOUNTS ALONGWITH PA N CARDS AND OTHER DOCUMENTS WERE SEIZED FROM THE APPE LLANTS PREMISES SUGGESTING THAT HE WAS ENGAGED IN A SCAM O F MAMMOTH PROPORTION IN THE STEEL MARKET AND THEREFOR E, 1 DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. A .O. IN MAKINQ A PROTECTIVE ASSESSMENT IN THE HANDS OF APPE LLANT'S HANDS. HENCE, FOR THE PURPOSE OF DECIDING THIS APPE AL, ADDITION MADE BY THE LD. A.O. IS CONFIRMED. NEVERTHELESS, THE APPELLANT SHALL BE ENTITLED TO A RELIEF IF THE SUBSTANTIVE ADDITION MADE IN THE HAND S OF M/S.VARUN INDS. LTD. IS CONFIRMED AFTER ALL ROUNDS OF LITIGATION. 2.8.1 GROUND NOS. 5 & 6 RELATE TO ADDITION ON ACCOU NT OF COMMISSION 2% ON BOGUS SALES MADE. DURING THE COURS E OF SEARCH, IT WAS FOUND THAT THE APPELLANT WAS IN ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 21 POSSESSION OF SIGNED CHEQUE BOOKS AND OTHER RELATED DOCUMENTS SUCH AS PAN CARD ETC. OF VARIOUS ENTITIES AND WHEN HE WAS ASKED TO PRODUCE THE PERSONS, THE APPEL LANT WAS UNABLE TO PRODUCE THEM. ALTHOUGH, THE APPELLANT IS STATED TO HAVE FILED CERTAIN CONFIRMATIONS, THE LD. A.O. WAS NOT SATISFIED WITH THE SAME AND HE INFORME D THE APPELLANT TO PRODUCE THE PARTIES FOR VERIFICATI ON OF THEIR EXISTENCE AS WELL AS FOR CARRYING ON OF BUSIN ESS RELATING TO THE SALE BILLS FOUND FROM THE APPELLANT'S POSSESSIO N. AS PER THE ORIGINAL ASSESSMENT ORDER FRAMED BY THE LD. AC. AND WHICH APPEARS AS AN ATTACHMENT TO THE IMPUGNED ASSESSMENT ORDER PENDING ADJUDICATION BEFORE ME, LD. A.O. HAS POINTED OUT THAT NONE OF TH E PARTIES EXCEPT ONE HAD FILED HIS/ITS RETURN OF INCO ME AND THEREFORE NOTHING TURNS ON THE FACT THAT SOME OF TH E PARTIES WERE PRODUCED BEFORE HIM DURING THE COURSE OF ORIGINAL ASSESSMENT. LD. A.O. HAS FURTHER POINTED O UT THAT THE PARTIES HAD NOT BEEN ABLE TO ESTABLISH WITH ANY DOC UMENTARY EVIDENCE REGARDING DELIVERY OF MANUFACTURED GOODS T O DIFFERENT PARTIES AND NO BOOKS OF ACCOUNTS WERE PRODUCED BEFORE HIM FOR VERIFICATION. ACCORDING TO THE LD. A.O., ENTRIES IN VARIOUS BOOKS OF ACCOUNTS REMAINED UNEXPLAINED AND THEREFORE APPELLANT'S VERSION THAT THE VARIOUS ENTITIES/PERSONS WERE CARRYING OUT GENUINE BUSINESS ACTIVITIES REMAINED UNSUBSTANTIATED. 2.8.2 THE SAME FACTS HAVE BEEN REITERATED BY THE L D. A.O. DURING THE ASSESSMENT FRAMED WHICH HAS BEEN APPEALED AGAIN ST BEFORE ME. 2.8.3 THE LD. A.R. IN HIS SUBMISSION HAS DEALT WITH GROUND NOS. 5 TO 8 TOGETHER, AS ACCORDING TO HIM, T HE SOME ARE INTERLINKED. ACCORDING TO HIM, THE APPELLA NT IS .A COMMISSION AGENT IN THE METAL MARKET WHERE TH E RATE OF COMMISSION IS NOT FIXED AND VARIES BETWEEN 0.02% TO 0.05 %. HOWEVER, THERE IS NO WRITTEN AGREEMENT ENTERED INTO BETWEEN COMMISSION AGENT AND THE CLIENTS. EVEN IN THE GROUNDS OF APPEAL, THE ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 22 APPELLANT HAS MENTIONED THAT THE PREVAILING COMMISSION RATE IN THE STEEL MARKET RANGES BETWEEN 0.02% TO 0.05%. THUS, THERE IS NO DENYING THE FACT THAT THE APPELLANT EARNS COMMISSION AND THE SERVICE S RENDERED BY HIM. IT IS ALSO A MATTER OF FACT THAT DURING THE COURSE OF SEARCH, THE APPELLANT WAS FOUN D IN THE POSSESSION OF SIGNED BLANK CHEQUES, SALE BIL LS ISSUED BY VARIOUS DUMMY COMPANIES WHICH WENT ON TO PROVE THAT THE APPELLANT WAS ENGAGED IN ISSUING BOGUS BILLS AND THEREFORE IT IS OBVIOUS THAT THE NORMAL RATE OF COMMISSION WOULD NOT BE CHARGED BY HIM TO THE PERSPECTIVE BILL SEEKERS. THE PERSONS US ING THESE BILLS WOULD BE SAVING SUBSTANTIAL AMOUNT OF TAX BY CLAIMING BOGUS DEDUCTION. THEY WOULD BE HAPPY TO PART WITH A T LEAST 2%, AN ESTIMATION WHICH CANNOT BE STATED TO B E OUT OF SYNC WITH THE BENEFIT EARNED BY THE BILL SEEKERS . THEREFORE, AS FAR AS COMMISSION OF 2% ESTIMATED BY THE LD. A.O. IS CONCERNED NOT FIND ANY FAULT WITH THE SAME AND ACCORDINGLY GROUND NOS. 5&6 ARE CONFIRMED. 2.9.1 AS REGARDS GROUND NOS.7 & 8 THEY ARE IN RESPECT OF ADDITIONS MADE ON ACCOUNT OF CASH DEPOSI TS IN THE BANK ACCOUNT OF THE PERSONS OTHER THAN THE APPELLANT WHICH WERE FOUND FROM THE POSSESSION OF T HE APPELLANT DURING THE COURSE OF SEARCH ALONG WITH SIGNED BANK CHEQUES, SALE BILLS, PAN CARDS ETC. AND WHICH REMAINED UNEXPLAINED BY THE APPELLANT DESPITE GIVIN G SUBSTANTIAL OPPORTUNITIES. LD.A.0., ON THE BASIS OF DIRECTIONS ISSUED TO HIM U/S.263 HAS FRAMED DENOVO ASSESSMENT AND IN DOING SO HE PROVIDED ADEQUATE OPPORTUNITIES TO THE APPELLANT FOR SUBMITTING PROOF OF IDENTITY, CREDITWORTHINESS OF SUCH PERSONS AND THE BUSINESS OPERATIONS CLAIMED TO HAVE BEEN CARRIED OU T BY THEM ALONGWITH GENUINENESS OF THE SAME. DURING THE YEARS UNDER APPEAL, THE BANK CREDITS TOTAL TO RS.13,88,09,01,41 1/-, THE SOURCE OF WHICH WAS TO BE EXPLAINED BY THE APPE LLANT ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 23 ALONGWITH NECESSARY DOCUMENTS. THE APPELLANT SUBMIT TED BEFORE THE LD. A.O THAT THESE CREDITS WERE FOUND IN THE BANK ACCOUNT OF PERSONS OTHER THAN THE APPELLANT AN D HENCE THE CREDITS APPEARING IN THOSE ACCOUNTS COULD NOT BE ATTRIBUTED TO THE APPELLANT'S BUSINESS OR PROFESSION. HE FURTHER ASSERTED BEFORE THE LD. A.O. THAT THE APPELLANT WORKED AS AGENTS FOR PURCHASES IN RESPECT OF SOME OF THEIR SELLER PRINCIPALS AND IN ORDER TO FACILITATE THE TRANSACTIONS FOR SUCH PRINCIPALS, ESPECIALLY PURCHA SE TRANSACTIONS WHERE PROMPT AND IN TIME PAYMENTS WERE OF UTMOST SIGNIFICANCE, SIGNED CHEQUE BOOKS DULY SIGNED BY THIRD PARTIES WERE KEPT WITH THE APPELLANT IN CONFIDENCE. IN VIEW OF THE ABOVE FACTS , IT WAS PLEADED THAT THE BANK ACCOUNTS FOUND DURING THE COURSE OF SEARCH AT THE APPELLANT'S PREMISES WE RE NOT BENAMI ACCOUNTS AND THE SIGNED CHEQUE BOOKS WERE KEPT ONLY TO FACILITATE SMOOTH TRADE. 2.9.2 LD. A.O. WAS NOT SATISFIED WITH THE SUBMISSIONS MADE AND FOR THE FOLLOWING REASONS HE MADE THE ADDITION IN THE VARIOUS ASSESSMENT YEARS PERTAINING TO THE SEARCH: '1. THE ASSESSEE HAS NOT DISCHARGED HIS ONUS OF PRO VING THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF ANY O F THESE TRANSACTIONS PERTAINING TO RS.1388. 09 CRORES. 1. ASSESSEE REPRESENTATIVE HAS SIMPLY RE//ED ON THE FACT THAT SOME PARTIES WERE PRODUCED DURING THE ORI GINAL ASSESSMENT PROCEEDINGS OR THAT CERTAIN AUDITED ANNU AL ACCOUNTS AND COP/ES OF IT RETURNS HAVE BEEN SUBMITT ED IN SOME CASES. THIS TOO HOWEVER, DOES NOT DISCHARGE HI S ONUS. 2. HAS MERELY MADE HIS SUBMISSIONS WHICH WERE MADE EVEN AT THE TIME OF THE ORIGINAL ASSESSMENT PROCEEDINGS AND HAVE BEEN REJECTED THERE ITSELF. ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 24 3. THE PURPOSE OF THE PRESENT PROCEEDINGS IS MERELY TO MAKE FRESH ASSESSMENT ONLY WITH RESPECT T O THE DEPOSITS IN THE BANK ACCOUNTS AND IT IS BEYOND BY JURISDICTION TO COMMENT OR DELVE ON THE OTHER ISSUE S WHICH HAVE ALREADY ACHIEVED FINALITY SO FAR AS THIS OFFIC E IS CONCERNED. 4. THE DELHI HIGH COURT IN THE CASE OF CTT VS. OASIS H OSPITAL PVT. LTD. (REPORTED IN ITATONLIN.ORG ) HAS WHILE DECIDING ON AN ISSUE OF ADDITION U/S. 68 OF THE I T ACT HAS CAT EGORICALLY HELD THAT S. 68 PROVIDES THAT IF THE ASSESSEE IS NOTABLE TO GIVE SATISFACTORY EXPLANATION AS TO THE NATURE AND SOURC E' OF A SUM FOUND CREIA TED IN HIS BOOKS, THE SUM MAY BE TR EATED AS THE UNDISCLOSED INCOME' OF THE ASSESSEE. THE INITIA L BURDEN IS ON THE ASSESSEE TO EXPLAIN THE SOURCE' OF THE CREDI T AND TO DO SO, THE ASSESSEE IS REQUIRED TO PROVE (A) IDENTI TY OF THE SHAREHOLDER; (B) GENUINENESS OF TRANSACTION; AND (C ) CREDIT WORTHINESS OF SHAREHOLDER...' 5. ONCE IT HAS BEEN PROVEN THAT THE ASSESSEE IS INDULGING IN PROVIDING BOGUS BILK AND MORE SO HE HA S NOT DISCHARGED HIS ONUS OF NEITHER PROVING THE IDENTITY , GENUINENESS AND CREDITWORTHINESS OF THESE TRANSACTIONS NOR DISCLOSED THE NAMES OF THE BENEFICIARIES HIS CONDUCT, HE IS NOT PROVIDING THE DETAILS OF THE PERSONS IN WHOSE HANDS THE TRANSACTIONS MAY BE EXAMINED OR ADDED SUBSTANTIVELY . 6. UNDER THE GIVEN CIRCUMSTANCES, THE ONLY RECOURSE L EFT TO THIS OFFICE IS TO PROCEED ON MAKING THE ASSESSMENT ON THE BASIS OF THE INSTRUCTIONS OF THE HONBLE CIT AS MENTIONED IN THE ORDER PASSED U/S. 263 OF THE I.T ACT I.E. BY ADDING THE SAID BANK DEPOSITS AMOUNTING TO PS. 1,388.09 CRORES SUBSTANTIVELY IN THE HANDS OF THE TWO PERSONS TO DI VIDE PROPORTIONATELY AS PER, HE SHARE OF HIS PROFITS IN THE SAID BUSINESS. 7. IT WOULD BE PERTINENT TO MENTION HERE THAT SINCE T HE SAID DEPOSITS ARE BEING ADDED SUBSTANTIVELY, THE CO MMISSION INCOME 2% SHALL NOT BE ADDED FURTHER ON THESE DEPOS ITS. HOWEVER IN CASE THE ASSESSEE IS TO BE GRANTED RELIE F IN THE APPELLATE STAGES ON THIS ADDITION, HE WOULD STILL H AVE TO BE TREATED AS A BILLER AND INCOME @ 2% OF THE SAID BAN K DEPOSITS BEING COMMISSION EARNED FOR PROVIDING AND FACILITAT ING THE ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 25 SAID BILLS WOULD BE ELIGIBLE TO BE ADDED IN HIS HAN DS PROPORTIONATELY AS PER THE SHARE OF IS PROFITS IN T HE SAID BUSINESS. 2.9.3 I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AFLER PERUSING THE RECORD, I AM COMPLETELY IN AGREE MENT WITH THE VIEW TAKEN BY THE LD. A.O. THAT THE APPELL ANT WAS ENGAGED IN ISSUING BOGUS BILLS AND FOR THAT PURPOSE HE WAS MAINTAINING BENAMI BANK ACCOUNTS IN THE NAMES OF DI FFERENT PERSONS, DUMMY OR EXISTING. FURTHER, THE APPELLANT WAS ENGAGED IN SUCH TRANSACTIONS AND EARNED SUBSTANTIAL COMMISSION ON THE SAME. TO ME IT APPEARS TO BE A PU RE CASE OF MONEY LAUNDERING AND NOTHING ELSE AS THE APPELLANT DESPITE BEING GIVEN A NUMBER OF OPPORTUNITIES FAILED TO PRODUCE ALL THE PARTIES IN WHOSE NAMES THE BANK ACCOUNTS WERE BEING MAINTAINED AND THE LET TERS ISSUED BY THE LD. A.O. FROM TIME TO TIME TO THESE P ARTIES AT THE ADDRESSES MENTIONED WERE RETURNED BACK UNSERVED . EVEN THE PARTIES WHO WERE PRODUCED BEFORE THE LD. A G. DID NOT FILE ANY RETURN OF INCOME EXCEPT IN ONE SOL ITARY INSTANCE AND NO BOOKS OF ACCOUNTS OR OTHER DOCUMENT S WERE PRODUCED TO SUBSTANTIATE THE CLAIM MADE BY THE APPE LLANT AND HIS WITNESSES THAT THEY CARRIED OUT INDEPENDENT IDENTIFIABLE GENUINE BUSINESS. THAT BEING THE CASE, IT CAN BE SAFELY PRESUMED THAT THE ONUS WHICH WAS CAST ON THE APPELLANT TO SUBSTANTIATE THE CLAIM MADE WAS NOT DISCHARGED A ND THEREFORE NO FAULT CAN BE FOUND WITH THE ACTION TOK EN BY THE LD. A.O. IN BRINGING TO TAX THE AMOUNTS AS IN T HE ASSESSMENT ORDER. THE CASE LAWS CITED BY ID. A.1. A RE DISTINGUISHABLE ON FACTS AS NONE OF THEM DEAL WITH HAWALA RACKET. 2.9.4 EVEN AS PER THE STATEMENT OF SHRI PRADEEP M. JOBALIA RECORDED ON 8.3.2007 HAVING OFFICE AT PO DAR CHAMBERS, GROUND FLR PARSI BAZAR ST., FORT, MUMBAI 400001, IT IS APPARENT THAT HIS OFFICE ADDRESS WAS BEING USED BY THE APPELLANT FOR RECEIVING CORRESPONDENCE FROM BANK ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 26 SHRI JOBAHA IN REPLY TO QUESTION NO .2 CLEARLY MENT IONED THAT HE DID NOT KNOW ANY OF THE PARTIES AND IT WAS ONLY SHRI DILIP CHUNHAL SHAH AND SHRI ATUL AMRUTLAL SANG HVI WHO WERE COLLECTING THE CORRESPONDENCE APART FROM H IS OFFICE. EVEN IN THE CROSS EXAMINATION OF SHRI JOBAL IA DONE BY SHRI ATUL SANGHVI AND HIS AUTHORIZED REPRESENTAT IVE IT WAS CLEAR THAT NONE OF THE PERSONS WHOSE CORRESPONDENCE ADDRESS WAS GIVEN AS THAT OF SHRI JO BALIAS OFFICE HAD MET SHRI JOBALIA AND IT WAS ONLY SHRI AT UL SANGHVI WHO USED TO VISIT SHRI JOBALIA'S OFFICE WIT H SHRI DILIP C.SHAH FOR COLLECTING THE CORRESPONDENCE. FUR THER, A SUM OF RS.300/- WAS GIVEN BY SHRI ATUL A. SANGHVI T O SHRI JOBALIA FOR EACH SUCH CONCERN. THUS, ITIS C1&IR FRO M THE SEQUENCE OF EVENTS THAT SHRI ATUL A. SANGHVI AND SH RI DILIP C. SHAH WERE MASTER MIND BEHIND MAINTAINING O F THE FICTITIOUS BANK ACCOUNTS FOR WHICH DIFFERENT ADDRES S WERE GIVEN. SIMILAR STATEMENTS WERE ALSO RECORDED O F SHRI VINODUMAR UTTAMIAL SHAH ON 21.3.2007, AND SHRI N.V. NEELAKANTAN ON 26.02.2007 WHERE IT WAS CONFIRMED TH AT VARIOUS ACCOUNTS WERE OPERATED/HANDLED BY SHRI ATUL A. SANGHVI AND SHRI DILIP C. SHAH FORMER INTRODUCED ON E SHRI 5ANDEEP POONAMCHAND SHAH AT THE BEHEST OFSHRLATFAT3NGH . VI FOR OENINA BANK ACCOUNT. IT IS IMPORTANT TO NOTE THAT THE PHOTOGRAPH APPEARING IN THE ACCOUNT OPENING FORM OF SHRI SANDEEP POONAMCHAND SH AH WITH BANK OF MAHARASHTRA JHAVERI BRANCH WAS ALSO AP PEARING IN THREE DIFFERENT NAMES AND ALL THE CHEQUE BOOKS PERTAINING TO THE SAME HAVE BEEN FOUND FROM THE POSSESSION OF SHRI ATUL SANGHVI AND SHRI DILIP C. S HAH. SHRI NEELKANTAN WAS WORKING WITH NATIONAL CO-OPERATIVE B ANK, FORT BRANCH AND HE STATED THAT A NUMBER OF ACCOUNTS WERE BEING OPERATED BY SHRI ATUL A. SANGHVI AND SHR I BILIP C. SHAH IN VARIOUS BRANCHES INCLUDING HIS BRA NCH AND THAT THESE ACCOUNTS WERE NEVER OPERATED BY ANY PERSON OTHER THAN SHRI ATUL A. SANGHVI AND SHRI DIL IP C. SHAH. ALL THE CHEQUES IN THESE ACCOUNTS WERE DEPOSI TED ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 27 BY THEM AND THE CHEQUES FOR WITHDRAWAL OR TRANSFER WERE ALSO SUBMITTED BY THEM FURTHER CONFIRMED THAT ACCOU NTS WERE NEVER OPERATED OR HANDLED B Y THE ACTUAL ACCOUNT HOLDERS. THIS STATEMENT WAS ALSO SHOWN TO SHRI ATUL A. SANGHVI AND SHRI DILIP C. SHAH WHO CONFIRMED, DURIN G THE COURSE OF CROSS EXAMINATION, THAT THE STATEMENT WAS CORRECT. LD. A.Q. HAD DISCUSSED AT LENGTH IN THE OR IGINAL ASSESSMENT THE SEIZED DOCUMENTS AT PARA 11 THEREOF TO COME TO THE FOLLOWING CONCLUSION: '1. THAT IN FACT SH. ATUL SANGHVI AND SH. DILIP 5HA H WERE THE PERSONS WHO HAD OPERATED THE OVER HUNDRED BANK ACCOUNTS AND DIFFERENT ENTITIES. 2. THAT SHRI DILIP SHAH AND SHRI ATUL SANGHVI WERE IN FACT INVOLVED IN ISSUING MERE BILLS IN THE NAME OF DIFFERENT ENTITIES. 3. SHRI B/LIP SHAH AND SHRI ATUL SANGHVI (DUO) WAS FABRICATING DOCUMENTS LIKE PAN CARDS SIGNATURES ETC . TO OPEN BANK ACCOUNTS IN THE NAME OF DIFFERENT PERSONS , WHO HAD NOTHING TO DO WITH THOSE TRANSACTIONS, IN FACT THEY WERE MERE NAME LENDERS OR DUMMIES. 4. THE DUO WERE HANDLING ALL THE CORRESPONDENCE OF THE DIFFERENT CONCERNS. 5 THE DUO WERE OPERATING THE BANK ACCOUNTS AND CASH WITHDRAWAL AND OTHER TRANSACTIONS WERE CARRIED OUT BY THE ASSESSEE.' DISMISSED THE APPEAL FILED BY THE ASSESSEE. THE SUM AND SUBSTANCE OF THE OBSERVATIONS OF THE CIT(A), THE EV IDENCES COLLECTED DURING THE COURSE OF SEARCH, AND INQUIRY CONDUCTED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS UND OUBTEDLY PROVE THE FACT THAT THE ASSESSEE ALONG WITH SHRI AT UL SANGHVI ARE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES IN THE FORM OF BOGUS BILLS TO VARIOUS PERSONS. THE CIT(A) FURTH ER OBSERVED ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 28 THAT THE STATEMENT RECORDED FROM THE ASSESSEE AND O THER ASSOCIATE AND THE STATEMENTS SHRI P.M. JOBALIA, SHR I N.V. NEELAKANTAN, AND SHRI VINOD KUMAR UTTAMAL SHAH FURT HER SUPPORTED THE FINDINGS OF THE A.O THAT THE ASSESSEE IS A HAWALA OPERATOR ISSUED BOGUS BILLS IN THE NAME OF DUMMY/FI CTITIOUS CONCERNS AND OPERATED MORE THAN 100 BANK ACCOUNTS V ARIOUS NAMES BY FABRICATING DOCUMENTS LIKE RATION CARD, PA N CARD, AND PHOTOGRAPH ON INDIVIDUAL OF THESE EVIDENCE LEAD S TO A CONCLUSION THAT THE ASSESSEE IS A HAWALA OPERATOR I SSUED BOGUS BILLS TO VARIOUS BENEFICIARIES AND ASSESSMENT ORDER PASSED BY THE A.O TREATING THE TOTAL ACTIVITY AS A HAWALA OPE RATOR AND ADDITIONS MADE BY THE A.O TOWARDS ESTIMATION OF COM MISSION ON TOTAL SALES BILLS, ADDITIONS TOWARDS TOTAL SALES ON PROTECTIVE BASIS, ADDITIONS TOWARDS UNEXPLAINED BANK CREDITS, ADDITIONS TOWARDS 2% COMMISSION ON PROTECTIVE BASIS ON TOTAL BANK CREDITS AND ADDITIONS TOWARDS UNEXPLAINED CASH DEPO SITS TO BANK ACCOUNT HAS BEEN CONFIRMED. 18. THE CIT(A), FOR THE DETAILED REASONS IN HIS ORDER V IDE PARAA 2.6.1 TO 2.9.4 UPHELD ADDITIONS MADE BY THE A O AND DISMISSED APPEAL FILED BY THE ASSESSEE FOR ALL ASSE SSMENT YEARS FROM 2001-02 TO 2007-08.AGGRIEVED BY THE CIT(A) ORD ER THE ASSESSEE IS IN APPEAL BEFORE US. 19. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATION IS LEGALITY OF CONSOLIDATED ORDER PASSED BY THE A.O FOR ALL SEV EN ASSESSMENT YEARS FROM 2001-02 TO 2007-08. THE LD. A.R FOR THE ASSESSEE THOUGH RAISED THE GROUND CHALLENGING VALIDITY OF CONSOLIDA TED ORDER FOR ALL SEVEN ASSESSMENT YEARS, SUBMITTED THAT HE DO NOT WA NT TO FRESH GROUND NO. 1 AND 2 CHALLENGING THE CONSOLIDATED ORD ER PASSED BY THE A.O; HENCE GROUNDS NO. 1 OR 2 RAISED BY THE ASSESSE E ARE DISMISSED, AS NOT PRESSED. 20. EVEN ON MERITS, WE FIND THAT THOUGH THE A.O HAD PAS SED CONSOLIDATED ORDER, INSOFAR AS ADDITIONS AND COMPUT ATION OF TOTAL INCOME ARE CONCERNED NOTICEABLY SEPARATE ORDER HAS BEEN PASSED FOR EACH ASSESSMENT YEAR WHICH CAN BE ASCERTAINED INDEP ENDENTLY FROM THE ORDER OF THE A.O. THE LD. CIT(A) AFTER CONSIDER ING THE FACT AND ALSO PROVISIONS OF SECTION 292B, OBSERVED THAT NO A SSESSMENT MADE IN PURSUANCE OF ANY OF THE PROVISIONS OF I.T. ACT SHALL BE INVALID OR SHALL BE DEEMED TO BE INVALID MERELY BY REASON OF ANY MISTAKE, ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 29 DEFECT OR OMISSION IN SUCH ASSESSMENT, IF SUCH ASSE SSMENT IS IN SUBSTANCE AND EFFECT IS IN CONFORMITY WITH THE INTE NT AND PURPOSE OF THE I.T. ACT, 1961. IN THIS CASE, ADMITTEDLY, THE A .O HAD ISSUED SEPARATE NOTICE U/S 153A FOR ALL THE YEARS AND IT W AS ONLY FOR THE SAKE OF BREVITY AND CONSOLIDATION OF THE FACT THAT ONE SINGLE ORDER WAS PASSED THOUGH MANIFESTLY ADDITIONS FOR ALL THE ASSESSMENT YEARS HAVE BEEN MADE SEPARATELY AND COMPUTATION OF INCOME OF EACH YEAR IN THE BLOCK PERIOD HAS BEEN DONE SEPARATELY. THERE IS NO ERROR IN THE ORDER OF THE CIT(A). THEREFORE, WE ARE INCLINE D TO UPHOLD THE FINDINGS OF THE CIT(A) AND DISMISS THE GROUNDS RAIS ED BY THE ASSESSEE. 21. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATION F ROM GROUNDS NO. 3 TO 7 REVOLVES AROUND ONE COMMON ISSUE OF ACTIVITY OF THE ASSESSEE AND COMPUTATION OF INCOME FROM SUCH AC TIVITY. THE LOWER AUTHORITIES CAME TO THE CONCLUSION THAT THE A SSESSEE IS A HAWALA OPERATOR INVOLVED IN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PARTIES BY ISSUING BOGUS PURCHASE BILLS AND ENGAGED IN MONEY LAUNDERING ACTIVITIES, THEREFORE CONCLUDED TH AT THE ASSESSEE IS A HAWALA OPERATOR AND INCOME FROM SUCH ACTIVITIES H AS TO BE COMPUTED BY TAKING INTO ACCOUNT OF TOTAL SUM FOUND CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE AND ALSO INCOME FROM E STIMATION OF INCOME FROM SUCH TOTAL RECEIPTS. THE FACUAL MATRIX OF THE CASE WHICH LEAD TO THE DISPUTE ARE THAT INITIALLY A SURV EY OPERATION U/S 133A OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT IN THE OFFICE PREMISES OF THE ASSESSEE, WHEREIN INFORMATION ABOUT THREE BANK LOCKERS WERE FOUND. SUBSEQUENTLY, THE CASE HAS BEE N CONVERTED INTO SEARCH BY ISSUING WARRANT U/S 132 AND CONDUCTED SEA RCH IN THE PREMISES OF THE ASSESSEE. DURING THE COURSE OF SEA RCH INCRIMINATING DOCUMENTS IN THE FORM OF MORE THAN 100 BANK ACCOUNT S AND ALSO INFORMATION ABOUT MORE THAN 130 DUMMY/FICTITIOUS CO NCERNS INCORPORATED/OPERATED BY THE ASSESSEE TO FACILITATE ISSUE OF BOGUS BILLS WERE FOUND. THE DEPARTMENT ALSO SEIZED SALES BILLS ISSUED TO M/S VARUN INDUSTRIES LTD. IN THE NAME OF VARIOUS CO NCERNS. BASED ON ALL THESE EVIDENCES, COUPLED WITH FURTHER INQUIR IES CONDUCTED DURING THE COURSE OF SEARCH AND DURING ASSESSMENT P ROCEEDINGS THE AO DRAWN AN UNDISPUTED CONCLUSION THAT THE ASSESSEE IS A HAWALA OPERATOR INVOLVED IN PROVIDING ACCOMMODATION ENTRIE S. THEREFORE ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 30 THE A.O HAS CONCLUDED THE ISSUE BY DETERMINING THE INCOME FROM SUCH ACTIVITY BY ESTIMATING THE COMMISSION AT 2% O N TOTAL SALES BILLS ISSUED IN THE NAME OF M/S VARUN INDUSTRIES LT D. AND ADDED 50% OF THE SAME IN THE HANDS OF THE ASSESSEE AND RE MAINING 50% IN THE HANDS OF SHRI ATUL SANGHVI. THE A.O ALSO ADDED TOTAL VALUE OF SALES WHICH WAS AMOUNTING TO RS.856,64,49,533/- ON PROTECTIVE BASIS TO PROTECT THE INTEREST OF THE REVENUE. INSOF AR AS THE TOTAL CREDITS APPEARING IN THE BANK ACCOUNTS, THE A.O HAS MADE ADDITIONS TOWARDS TOTAL CREDITS FOUND IN THE BANK ACCOUNT AFT ER REDUCING SALES BILLS ISSUED IN THE NAME OF M/S VARUN INDUSTRIES LT D. IN THE HANDS OF THE ASSESSEE AND HIS PARTNER SHRI ATUL SANGHVI IN T HE RATIO OF 50% EACH. 22. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE LD.AO WAS ERRED IN ESTIMATING COMMISSION ON TOTAL SALE BILLS ISSUED IN THE NAME OF M/S VARUN INDUSTRIES LTD @2% IGNORING THE F ACT THAT THE PREVAILING COMMON RATE IN THE STEEL MARKET RANGING BETWEEN 0.2% TO 0.5% SHALL BE HAVING REGARD TO THE FACT THAT THE ASSESSEE IS A REGISTERED BROKER IN THE MARKET. THE LD.AR REFERRI NG TO THE PAPER BOOK FILED, SUBMITTED THAT THE ASSESSEE IS A REGIST ERED BROKER IN THE STEEL MARKET INVOLVED IN FACILITATING BUSINESS OF PROSPECTIVE MANUFACTURER OF STEEL GOODS TO THE BUYERS IN THE MA RKET FOR WHICH HE CHARGES COMMISSION. THE AO IGNORING THE FACT HA S CONCLUDED THAT THE ASSESSEE IS A HAWALA OPERATOR ENGAGED IN P ROVIDING ACCOMMODATION ENTRIES AND ESTIMATED COMMISSION INCO ME @2% WITHOUT ANY BASIS. INSOFAR AS ADDITION MADE BY THE AO TOWARDS TOTAL SALE BILLS ISSUED IN THE NAME OF M/S VARUN IN DUSTRIES LTD ON PROTECTIVE BASIS, WHEN A SUBSTANTIVE ADDITION MADE IN THE HANDS OF M/S VARUN INDUSTRIES LTD, MAKING AN ADDITION ON PRO TECTIVE BASIS IN THE HANDS OF THE ASSESSEE IS INCORRECT, MORE SO, WH EN THE ASSESSEE IS TREATED AS AN HAWALA OPERATOR AND INCOME FROM SU CH ACTIVITY HAS BEEN ESTIMATED AT 2% ON TOTAL SALE BILLS ISSUED. I N THIS REGARD, HE RELIED UPON THE DECISION OF ITAT, CHENNAI BENCH IN THE CASE OF PARASMAL DANGI ALIAS PARASMAL JAIN 100 TTJ 508. 23. THE LD.DR, ON THE OTHER HAND, STRONGLY SUPPORTING T HE ORDER OF THE CIT(A) SUBMITTED THAT EVIDENCES GATHERED DURING THE COURSE OF ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 31 SEARCH AND POST SEARCH INVESTIGATION CONDUCTED DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS CLEARLY ESTABLISH THE FAC T THAT THE ASSESSEE, A HAWALA OPERATOR, ISSUED BOGUS PURCHASE BILLS IN THE NAME OF VARIOUS DUMMY / FICTITIOUS CONCERNS AND OPE RATED MORE THAN 100 BANK ACCOUNTS IN THE NAMES OF VARIOUS PERS ONS WHETHER EXISTING OR FICTITIOUS, THEREFORE, THE AO HAS RIGHT LY TREATED THE ASSESSEE AS A HAWALA OPERATOR AND ESTIMATED INCOME FROM SUCH ACTIVITY AND HIS ORDER SHOULD BE UPHELD. 24. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. IT IS AN UNDISPUTED FACT THAT INCRIMINATING MATERIALS FOUND AND SEIZED DURING THE COURSE OF SEA RCH CLEARLY INDICATES THAT THE ASSESSEE IS ENGAGED IN ISSUING B OGUS BILLS IN THE NAME OF VARIOUS DUMMY / FICTITIOUS CONCERNS / COMPA NIES AND OPERATED MORE THAN 100 BANK ACCOUNTS IN DIFFERENT B ANKS IN THE NAME OF VARIOUS COMPANIES / FIRMS AND THIS FACT HAS NOT BEEN REBUTTED BY THE ASSESSEE WITH ANY EVIDENCES. THOUG H THE ASSESSEE CLAIMS TO HAVE INVOLVED IN THE BUSINESS OF COMMISSI ON AGENT IN STEEL MARKET, THE EVIDENCES COLLECTED DURING THE CO URSE OF SEARCH UNDISPUTEDLY PROVES THE CASE OF THE REVENUE THAT IT IS A CASE OF HAWALA ENTRY OPERATOR AND ISSUED BOGUS BILLS IN VAR IOUS ENTITIES NAME. THE AO HAS RECORDED CLEAR FACT TO THE EFFECT THAT THE ASSESSEE HAS ISSUED BOGUS PURCHASE BILLS IN THE NAM E OF M/S VARUN INDUSTRIES LTD AND THIS FACT HAS BEEN ACCEPTED BY T HE DIRECTORS OF M/S VARUN INDUSTRIES LTD IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH AND ACCORDINGLY A SUBSTANTIVE ADDI TION HAS BEEN MADE IN THE HANDS OF M/S VARUN INDUSTRIES LTD. THI S FACT WAS ALSO FURTHER SUPPORTED BY THE FACT THAT THE DEPARTMENT H AD RECORDED STATEMENTS FROM VARIOUS PERSONS, WHO HAD ACCEPTED T HAT SHRI DILIP SHAH AND SHRI ATUL SANGHVI HAVE ISSUED BILLS IN THE NAME OF VARIOUS CONCERNS AND OPERATED BANK ACCOUNTS. THE STATEMENT GIVEN BY SHRI YASHWANT PANDYA, WHO IS AN ACCOUNTANT OF THE A SSESSEE HAS CLEARLY STATED IN HIS STATEMENT THAT UNDER INSTRUCT ION FROM SHRI ATUL SANGHVI AND SHRI DILIP SHAH, THE BILLS IN RESPECT O F VARIOUS COMPANIES WERE PREPARED IN THE OFFICE OF THE ASSESS EE AND THOSE BILLS WERE PREPARED IN THE NAME OF VARIOUS CONCERNS , WHOSE BLANK ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 32 CHEQUES HAVE BEEN FOUND WITH THE ASSESSEE DURING TH E COURSE OF SEARCH. THE STATEMENT OF SHRI PRADIP M JABALIA REC ORDED DURING THE COURSE OF SURVEY ON 05-02-2007 ALSO LEADS TO AN UNDISPUTED CONCLUSION THAT SHRI PRADIP M JABALIA HAD GIVEN HIS ADDRESS FOR CORRESPONDENCE FOR SOME OF THE ACCOUNTS BEING OPERA TED BY THE DUO, SHRI ATUL SANGHVI AND SHRI DILIP SHAH. IN HIS STATEMENT, SHRI PRADIP M JABALIA HAS CONFIRMED THAT THE LETTERS FRO M THE BANKS WERE COLLECTED BY SHRI ATUL SANGHVI AND SHRI DILIP SHAH. FURTHER, STATEMENT OF SHRI N.V. NEELAKANTAN RECORDED ON 26-0 2-2007 THROWS LIGHT ON THE MODUS OPERANDI OF THE ASSESSEE THAT HE FABRICATED VARIOUS DOCUMENTS INCLUDING ADDRESS PROO F, PAN CARDS AND ID PROOF OF VARIOUS INDIVIDUALS TO OPEN BANK AC COUNTS IN DIFFERENT NAMES BY FABRICATING THE DOCUMENTS. THIS FACT WAS CONFIRMED BY SHRI N.V. NEELAKANTAN, WHO CATEGORICAL LY ADMITTED THAT THE ASSESSEE HAS OPERATED NUMBER OF BANK ACCOU NTS IN THE NATIONAL CO-OPERATIVE BANK. ALL THESE FACTS LEAD T O A CONCLUSION THAT THE ASSESSEE HAS FLOATED VARIOUS DUMMY COMPANI ES / FIRMS TO FACILITATE ISSUING OF BOGUS PURCHASE BILLS AND OPER ATED BANK ACCOUNTS BY FABRICATING DOCUMENTS. THE ASSESSEE HA S NOT BEEN ABLE TO REBUT ANY OF THE FINDINGS RECORDED BY THE A O, THOUGH HE CLAIMS THAT HE IS A REGISTERED BROKER IN THE STEEL MARKET. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE L OWER AUTHORITIES WERE RIGHT IN CONCLUDING THAT THE ASSES SEE IS ENGAGED IN THE ACTIVITY OF PROVIDING ACCOMMODATION ENTRIES. H ENCE, WE ARE INCLINED TO UPHOLD THE FINDINGS OF CIT(A) AND DISMI SS THE GROUND RAISED BY THE ASSESSEE. 25. COMING TO THE ADDITIONS MADE BY THE AO TOWARDS ESTI MATION OF COMMISSION @2% ON TOTAL SALE BILLS ISSUED IN THE NA ME OF M/S VARUN INDUSTRIES LTD ON SUBSTANTIVE BASIS AND ADDIT ION MADE TOWARDS TOTAL SALE VALUE ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE, THE AO HAS ESTIMATED COMMISSION @2% ON TO TAL SALE BILLS ISSUED IN THE NAME OF M/S VARUN INDUSTRIES LTD AND MADE ADDITIONS IN THE HANDS OF ASSESSEE AND HIS PARTNER, SHRI ATUL SANGHAVI @50% EACH. THE AO HAS ESTIMATED 2% COMMISSION BY TAKING INTO ACCOUNT THE FACT THAT THE ASSESSEE HAS EARNED SUBSTANTIAL I NCOME IN THE ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 33 FORM OF COMMISSION WHICH IS EVIDENT FROM THE FACT T HAT THE ASSESSEE HAS WITHDRAWN SUBSTANTIAL AMOUNT OF CASH F ROM THE BANK. THOUGH ASSESSEE CLAIMS THAT COMMISSION IN THE STEEL MARKET IS RANGING FROM 0.02% TO 0.05%, BUT FAILED TO JUSTIFY THE RATE OF COMMISSION WITH ANY CORROBORATIVE EVIDENCE IN THE F ORM OF SOME COMPARABLE CASES OR IN THE FORM OF WRITTEN AGREEMEN TS BETWEEN THE PARTIES FOR CHARGING COMMISSION. UNDER THESE C IRCUMSTANCES, THE LOWER AUTHORITIES CAME TO THE CONCLUSION THT IT IS FAIR AND REASONABLE TO ESTIMATE COMMISSION AT 2% AS ASSESSEE S INCOME FROM THE ACTIVITY OF ISSUING BOGUS BILLS. BEFORE U S, THE ASSESSEE HAS NOT BEEN ABLE TO REBUT THE FACTS RECORDED BY THE AO AS WELL AS THE CIT(A). THOUGH THE ASSESSEE HAS RELIED UPON CERTAI N DECISIONS OF CO-ORDINATE BENCH, ON GOING THROUGH THE CASE LAWS R ELIED UPON BY THE ASSESSE,E WE CAME TO THE CONCLUSION THAT THE FA CT OF THOSE CASES ARE ENTIRELY DIFFERENT FROM FACTS OF THE CASE OF THE ASSESSEE; HENCE, CANNOT BE APPLIED TO THIS CASE. THEREFORE, WE ARE OF THE VIEW THAT THE AO WAS RIGHT IN ESTIMATING COMMISSION @2% ON TOTAL SALE BILLS ISSUED IN THE NAME OF M/S VARUN INDUSTRI ES LTD. THE CIT(A) AFTER CONSIDERING THE FACTS HAS RIGHTLY UPHE LD THE ORDER OF THE AO. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). HENCE, WE ARE INCLINED TO UPHOLD THE ORDER OF THE C IT(A) AND DISMISS THE GROUND RAISED BY THE ASSESSEE. 26. COMING TO ADDITION MADE TOWARDS TOTAL SALE BILLS IS SUED IN THE NAME OF M/S VARUN INDUSTRIES LTD ON PROTECTIVE BASI S. THE AO HAS MADE ADDITIONS TOWARDS SALE BILLS ISSUED IN THE NAM E OF M/S VARUN INDUSTRIES LTD ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE TO PROTECT THE INTEREST OF THE REVENUE. ASSESSEE CLAI MS THAT ONCE SUBSTANTIAL ADDITION HAS BEEN MADE IN THE HANDS OF M/S VARUN INDUSTRIES LTD, PROTECTIVE ADDITION MADE IN THE HAN DS OF THE ASSESSEE CANNOT SURVIVE IN THE EYES OF LAW. WE DO NOT FIND ANY MERITS IN THE ARGUMENTS OF THE ASSESSEE FOR THE REA SON THAT THOUGH SUBSTANTIAL ADDITION HAS BEEN MADE IN THE HANDS OF M/S VARUN INDUSTRIES LTD, THE OUTCOME OF ADDITION MADE BY THE REVENUE AUTHORITIES WILL ONLY BE CLEAR ONCE IT HAS BEEN DEC IDED IN APPELLATE FORUMS. THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH ANY EVIDENCES ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 34 WITH REGARD TO ADDITIONS MADE IN THE HANDS OF M/S V ARUN INDUSTRIES LTD EXCEPT FURNISHING AN ASSESSMENT ORDE R COPY. THE FACT WITH REGARD TO NATURE OF DISPUTE AND THE STAGE S OF OUTCOME IN APPELLATE FORUMS IS NOT ASCERTAINABLE AT PRESENT. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THOUGH THE ACT, DOE S NOT PROVIDE FOR PROTECTIVE ASSESSMENTS, IN THE INTEREST OF REVE NUE, THE AO CAN MAKE PROTECTIVE ADDITIONS TO PROTECT THE INTEREST O F THE REVENUE. THEREFORE, WE ARE OF THE VIEW THAT THE AO WAS RIGHT IN MAKING PROTECTIVE ADDITIONS TOWARDS SALE BILLS ISSUED IN T HE NAME OF M/S VARUN INDUSTRIES LTD. NEVERTHELESS, THE ASSESSEE S HALL BE ENTITLED TO RELIEF AS AND WHEN THE SUBSTANTIVE ADDITION MADE IN THE HANDS OF M/S VARUN INDUSTRIES LTD IS CONFIRMED ONCE ALL R OUNDS OF LITIGATION ENDS. THE CIT(A) AFTER CONSIDERING THE RELEVANT FACTS HAS RIGHTLY UPHELD ADDITIONS MADE BY THE AO. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE CIT(A); HENCE, WE ARE INCLINED TO UPHOLD THE FINDINGS OF THE CIT(A) AND REJECT GROUND RAISED BY THE ASSESSEE. 27. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATION I S ADDITION MADE ON ACCOUNT OF DEPOSITS IN THE BANK ACCOUNT OF THE PERSONS OTHER THAN THE ASSESSEE WHICH WERE FOUND FROM THE P OSSESSION OF THE ASSESSEE DURING THE COURSE OF SEARCH ALONG WITH SIGNED BLANK CHEQUES, SALE BILLS, PAN CARDS, ETC. WHICH WERE REM AINED UNEXPLAINED BY THE ASSESSEE. THE AO MADE ADDITIONS TOWARDS CREDITS FOUND IN THE BANK ACCOUNT FOR RS.1388,09,01 ,411 ON THE GROUND THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCES OF CREDITS FOUND IN THE BANK ACCOUNT WITH NECESSARY EV IDENCE. 28. THE FACTS WHICH LEAD TO THE IMPUGNED ADDITION ARE T HAT THE ASSESSEE ALONG WITH SHRI ATUL SANGHVI ARE FOUND IN POSSESSION OF VARIOUS DOCUMENTS LIKE BLANK CHEQUES, SALE BILLS, P AN CARDS, RATION CARDS, ETC. DURING THE COURSE OF SEARCH, THESE DOC UMENTS WERE FOUND AND SEIZED. WHEN THESE DOCUMENTS WERE CONFRO NTED TO THE ASSESSEE, THE ASSESSEE CLAIMED THAT THE DOCUMENTS B ELONG TO THE FIRMS / COMPANIES, WHO MANUFACTURE GOODS AND TRADED THROUGH HIM. THE ASSESSEE FURTHER CONTENDED THAT THE PROSP ECTIVE SELLERS OF THE GOODS HAVE KEPT THOSE DOCUMENTS WITH THE ASS ESSEE TO ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 35 FACILITATE EASY MOVEMENT OF SALES OF THEIR GOODS WH ICH CANNOT BE CONSIDERED AS FABRICATED DOCUMENTS TO OPERATE DUMMY / FICTITIOUS CONCERNS AND OPEN BANK ACCOUNTS IN VARIOUS FIRMS / COMPANIES NAME. THE AO MADE ADDITION ON THE GROUND THAT THE ASSESSEE HAS NOT DISCHARGED HIS ONUS OF PROVING THE IDENTITY AND GENUINENESS AND CREDITWORTHINESS OF ANY OF THESE TRANSACTIONS P ERTAINING TO RS.1388.09 CRORES. THE ASSESSEE CLAIMS THAT THE CR EDITS FOUND IN THE BANK ACCOUNTS OF VARIOUS PERSONS ARE IN FACT NO T BELONGING TO HIM AS SOME OF THE PARTIES HAVE APPEARED BEFORE THE AO AND ACCEPTED THAT THE BANK ACCOUNTS ARE OPERATED BY THE MSELVES AND CONSIDERED IN THEIR INCOME-TAX RETURNS FILED FOR TH E RESPECTIVE ASSESSMENT YEARS. THE ASSESSEE FURTHER CONTENDED T HAT THE AO HAS ACCEPTED THE FACT IN THE ORIGINAL ASSESSMENT OR DER PASSED U/S 143(3) R.W.S. 153A DATED 28-12-2011 WHEREIN HE HAS CATEGORICALLY ACCEPTED THAT CERTAIN PARTIES HAVE APPEARED BEFORE HIM AND FILED CONFIRMATION WITH REGARD TO THE BANK ACCOUNT FOUND IN THE POSSESSION OF THE ASSESSEE. 29. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS NOT BEEN ABLE TO DISCHARGE ONUS BY FILING NECESSARY EVIDENCE TO PROVE THE CRED ITS FOUND IN THE BANK ACCOUNT. IT IS INCUMBENT UPON THE ASSESSEE TO EXPLAIN EACH AND EVERY CREDIT FOUND IN THE BANK ACCOUNTS AND SOU RCES OF SUCH CREDITS. IN THIS CASE, THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCES TO IDENTIFY CREDITS, GENUINENESS OF SUCH CREDITS AND CREDITWORTHINESS OF ANY OF THE CREDITS FOUND IN THE BANK ACCOUNT. THEREFORE, WE ARE OF THE VIEW THAT THE AO WAS RIGHT IN TREATING THE SUMS FOUND CREDITED IN THE BANK ACCOUNTS AS UNEXPLA INED CREDITS IN THE HANDS OF THE ASSESSEE. AS REGARDS THE CLAIM OF THE ASSESSEE THAT SOME OF THE PARTIES HAVE APPEARED BEFORE THE A O AND FILED THEIR INCOME-TAX RETURNS EXPLAINING BANK ACCOUNTS F OUND IN THE POSSESSION OF THE ASSESSEE AND HENCE THOSE BANK ACC OUNTS, SHOULD BE EXCLUDED. WE DO NOT FIND ANY MERITS IN THE ARGU MENT OF THE ASSESSEE FOR THE REASON THAT THE EVIDENCES GATHERED DURING THE COURSE OF SEARCH AND FURTHER ENQUIRIES CONDUCTED IN THE COURSE OF POST SEARCH INVESTIGATION CLEARLY ESTABLISHES THE F ACT THAT THE ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 36 ASSESSEE HAS OPERATED MORE THAN 100 BANK ACCOUNTS I N DIFFERENT BANKS. ALL EVIDENCES GATHERED DURING THE COURSE OF SEARCH CLEARLY INDICATES FABRICATION OF VARIOUS DOCUMENTS LIKE PAN CARD, RATION CARD, ETC. AND PHOTOGRAPHS OF CERTAIN INDIVIDUALS T O OPEN BANK ACCOUNTS IN DIFFERENT BANKS WITH THE HELP OF ONE, S HRI PRADIP M JABALIA, WHO HAD CATEGORICALLY ADMITTED IN HIS STA TEMENT RECORDED ON 08-03-2007 THT CORRESPONDENCE WITH REGARD TO BAN K ACCOUNTS ARE MADE BY SHRI DILIP SHAH AND SHRI ATUL SANGHVI. SHRI JABALIA, IN REPLY TO QUESTION NO.2 CLEARLY MENTIONED THAT HE DI D NOT KNOW ANY OF THE PARTIES AND IT IS ONLY SHRI DILIP SHAH AND S HRI ATUL SANGHVI, WHO WERE COLLECTING THE CORRESPONDENCE FROM HIS OFF ICE. SIMILAR STATEMENTS WERE ALSO RECORDED FROM SHRI VINOD KUMAR SHAH AND SHRI N.V. NEELAKANTAN ON 26-02-2007 AD 21-03-2007 W HEREIN IT WAS CONFIRMED THAT VARIOUS ACCOUNTS WERE OPERATED / AVAILED BY THE ASSESSEE. ALL THESE FACTS LEAD TO AN UNDISPUTE D FACT THAT THE ASSESSEE IS INDULGING IN PROVIDING BOGUS BILLS AND MORE SO, OPERATED ALL BANK ACCOUNTS. THEREFORE, IT IS ON TH E ASSESSEE TO EXPLAIN THE CREDITS FOUND IN THOSE BANK ACCOUNTS. FURTHER, THE ASSESSEE HAS FILED DETAILS OF CONFIRMATION FILED BY SOME PARTIES ALONG WITH THEIR I.T. RETURNS FILED FOR THE RESPECT IVE ASSESSMENT YEARS. ON PERUSAL OF THE DETAILS, WE FIND THAT CER TAIN PARTIES HAVE FILED THEIR INCOME-TAX RETURNS AFTER THE DATE OF SE ARCH AND THE INCOME DECLARED IN SAID RETURNS IS MEAGER. THEREFO RE, WE ARE OF THE VIEW THAT BY FILING SOME I.T. RETURNS OF CERTAI N PARTIES, THE ASSESSEE CANNOT PROVE THE GENUINENESS OF CREDITS FO UND IN THE BANK ACCOUNTS. THEREFORE, WE ARE OF THE VIEW THAT THE AO WAS RIGHT IN TREATING CREDITS FOUND IN THE BANK ACCOUNT S AS UNEXPLAINED INCOME OF THE ASSESSEE. 30. T HE CIT(A) AFTER CONSIDERING RELEVANT FACTS AND ALSO RELYING UPON A PLETHORA OF JUDGEMENTS INCLUDING THE DECISIO N OF APEX COURT IN THE CASE OF CIT VS DURGAPRASAD MORE 82 ITR 540 (SC) AND SUMATI DAYAL VS CIT 214 ITR 801 (SC) WHEREIN IT WAS HELD THAT APPARENT MUST BE CONSIDERED REAL UNLESS IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT REAL AN D THAT TAXING AUTHORITIES ARE ENTITLED TO LOOK INTO SURROUNDING C IRCUMSTANCES TO ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 37 FIND OUT THE REALITY AND THE MATTER HAS TO BE CONSI DERED BY APPLYING THE TEST OF HUMAN PROBABILITIES. THE HON BLE COURT ALSO HELD THAT IT IS NO DOUBT TRUE THAT IN ALL CASES IN WHICH A RECEIPT IS SOUGHT TO BE TAXED AS INCOME, THE BURDEN LIES ON TH E DEPARTMENT TO PROVE THAT IT IS WITHIN THE TAXING PROVISION AND IF A RECEIPT IS IN THE NATURE OF INCOME, THE BURDEN TO PROVE THAT IT I S NOT TAXABLE BECAUSE IT FALLS WITHIN THE EXEMPTION PROVIDED BY T HE ACT LIES ON THE ASSESSEE. FURTHER, THE PROVISIONS OF SECTION 68 OF THE ACT, IS CLEAR INASMUCH THAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR ANY PREVIOUS YEAR, T HE SAME MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASS ESSEE ABOUT THE NATURE AND SOURCE THEREOF IS, IN THE OPINION OF THE AO, IS NOT SATISFACTORY. THE ASSESSEE COULD NOT PROVE CREDITS FOUND IN THE BANK ACCOUNTS. THEREFORE, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY UPHELD THE ADDITIONS MADE BY THE AO TOWARDS TOTAL CREDITS FOUND IN THE BANK ACCOUNT AMOUNTING TO RS.1388.09 C RORES AS UNEXPLAINED CREDITS IN THE HANDS OF THE ASSESSEE. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE CIT(A). HENCE, WE AR E INCLINED TO UPHOLD THE FINDINGS OF THE CIT(A) AND REJECT THE GR OUND RAISED BY THE ASSESSEE. 31. T HE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATION IS ADDITION TOWARDS CASH DEPOSITS TO THE BANK ACCOUNTS. THE AO MADE ADDITIONS TOWARDS TOTAL CASH DEPOSITS IN THE BANK A CCOUNT AMOUNTING TO RS.7,01,650 BEING 50% SHARE OF THE ASS ESSEE ON THE GROUND THAT THE ASSESSEE HAS NOT FILED ANY EVIDENC ES TO PROVE THE IDENTITY, GENUINENESS OF TRANSACTION AND CREDITWORT HINESS OF THE CREDITORS. THE AO HAS TAKEN TOTAL CASH DEPOSITS FO R THE YEAR AND DIVIDED INTO 50% IN THE HANDS OF THE ASSESSEE AND 5 0% IN THE HANDS OF SHRI ATUL SANGHVI AND MADE ADDITIONS U/S 6 8 OF THE ACT. THE ASSESSEE CLAIMS THAT HE HAS SOURCE OF INCOME TO EXPLAIN CREDITS FOUND IN THE BANK ACCOUNTS. THEREFORE, THE AO WAS NOT CORRECT IN MAKING ADDITIONS TOWARDS CASH DEPOSIT U/S 68 OF THE ACT. 32. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATERIAL ON ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 38 RECORD, WE FIND FORCE IN THE ARGUMENT OF THE ASSESS EE FOR THE REASON THAT, THE AO HAS MADE SUBSTANTIAL ADDITIONS TOWARDS COMMISSION INCOME ON TOTAL SALES MADE AND THE SOURC E OF INCOME IN THE FORM OF COMMISSION IS AVAILABLE TO EXPLAIN C ASH DEPOSITS TO THE BANK ACCOUNT. THE AO MADE ADDITIONS TOWARDS CO MMISSION ON ONE HAND AND ADDITION TOWARDS CASH DEPOSIT ON THE O THER HAND WITHOUT TELESCOPING THE SOURCE AVAILABLE IN THE FOR M OF ESTIMATION OF INCOME TOWARDS COMMISSION. THEREFORE, WE ARE OF THE VIEW THAT THERE IS A MERIT IN THE CLAIM OF THE ASSESSEE THAT TELESCOPING HAS TO BE ALLOWED TOWARDS CASH DEPOSITS TO THE INCOME ESTI MATED FOR THE RELEVANT ASSESSMENT YEARS. HENCE, WE ARE OF THE VI EW THAT THE ISSUE NEEDS TO BE EXAMINED BY THE AO IN THE LIGHT O F THE EXPLANATION OF THE ASSESSEE AND HENCE, WE SET ASIDE THE ISSUE TO THE FILE OF THE AO FOR THE LIMITED PURPOSE OF EXAMI NING WHETHER THE INCOME ESTIMATED FOR THE YEAR IS IN EXCESS OF CASH DEPOSITS FOUND IN THE BANK ACCOUNTS. IF THE INCOME IS MORE THAN T HE CASH DEPOSIT, THEN THE AO IS DIRECTED TO TELESCOPE THE SOURCES AV AILABLE IN THE FORM OF INCOME TO THE CASH DEPOSITS AND ALLOW RELIE F ACCORDINGLY TOWARDS ADDITION TO CASH DEPOSITS. 33. T HE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATION FO R THE ASSESSMENT YEAR 2007-08 IS ADDITIONS TOWARDS CASH F OUND AT THE TIME OF SEARCH. DURING THE COURSE OF SEARCH CASH T O THE EXTENT OF RS.47,30,000 HAS BEEN FOUND AND SEIZED. THE AO MAD E ADDITIONS TOWARDS CASH FOUND AT THE TIME OF SEARCH ON THE GRO UND THAT THE ASSESSEE HAS AGREED FOR ADDITION AND ALSO FAILED TO EXPLAIN SOURCE OF CASH FOUND AT THE TIME OF SEARCH. THE ASSESSEE CLAIMS THAT THE AO HAS MADE ADDITION TOWARDS INCOME ON ESTIMATION B ASIS AND ALSO MADE ADDITION TOWARDS CASH FOUND WITHOUT ALLOW ING TELESCOPING THE SOURCES AVAILABLE IN THE FORM OF IN COME. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REAS ON THAT IF THE SOURCE AVAILABLE IN THE FORM OF INCOME, THE AO IS B OUND TO TELESCOPE THE SOURCES WITH CASH FOUND AT THE TIME O F SEARCH. THEREFORE, WE ARE OF THE VIEW THAT THE ISSUE NEEDS TO BE EXAMINED BY THE AO IN THE LIGHT OF THE CLAIM OF THE ASSESSEE AND HENCE, WE SET ASIDE THE ISSUE FOR THE LIMITED PURPOSE OF VERI FICATION OF SOURCES ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 39 AVAILABLE IN THE FORM OF ESTIMATION OF INCOME WITH CASH FOUND AT THE TIME OF SEARCH. IF THE SOURCE IS IN EXCESS OF CASH FOUND DURING THE COURSE OF SEARCH AND IF IT IS NOT FLOATED TO AN Y OTHER ASSETS OR NOT EXPENDED ELSEWHERE, THEN THE AO IS DIRECTED TO ALLOW TELESCOPING TOWARDS INCOME TO THE CASH FOUND AT THE TIME OF SEARCH AND ALLOW RELIEF ACCORDINGLY. 34. T HE FACTS AND CIRCUMSTANCES NARRATED ABOVE ARE IDENT ICAL TO ALL OTHER APPEALS UNDER CONSIDERATION, THEREFORE, THE D ECISION ARRIVED AT ABOVE APPLIES MUTATIS MUTANDIS TO ALL OTHER APPE ALS IN THIS CONSOLIDATED ORDER. 35. ITA NOS 5713 TO 5719/MUM/2012 AYS 2001-02 TO 2007-08 THE FACTS AND CIRCUMSTANCES NARRATED ABOVE ARE IDEN TICAL TO ALL OTHER APPEALS UNDER CONSIDERATION, THEREFORE, THE D ECISION ARRIVED AT ABOVE APPLIES MUTATIS MUTANDIS TO ALL OTHER APPE ALS IN THIS CONSOLIDATED ORDER. 36. I N THE RESULT, ALL THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. 2.2. WE FIND THAT IN THE AFORESAID ORDER, WHILE DE ALING WITH THE QUANTUM ADDITION, THE TRIBUNAL CONSIDERED THE FACTUAL FINDING AND ARGUMENTS FROM BOTH SIDES AND THEREAFTER FOUND THAT INCRIMINATING MATERIAL WAS FO UND AND SEIZED FROM DILIP SHAH/ATUL SANGHVI, DURING THE COU RSE OF SEARCH, CLEARLY INDICATING THAT THE ASSESSEE WAS EN GAGED IN ISSUING BOGUS BILLS IN THE NAME OF VARIOUS DUMMY/FICTITIOUS CONCERN AND OPERATED MORE THAN 100 BANK ACCOUNTS IN DIFFERENT BANKS IN THE NAME OF SUC H ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 40 FICTITIOUS CONCERN. THOUGH THE ASSESSEE CLAIMED TO HAVE INVOLVED IN THE BUSINESS OF STEEL MARKET AS A COMMI SSION AGENT BUT THE EVIDENCES COLLECTED DURING SEARCH PRO VED THAT THE ASSESSEE WAS INVOLVED AS A HAWALA OPERATOR AND USED TO ISSUE BOGUS BILLS IN THE NAME OF VARIOUS ENTITIE S. THE LD. ASSESSING OFFICER ALSO RECORDED A FINDING THAT THE ASSESSEE USED TO ISSUE BOGUS PURCHASE BILLS IN THE NAME OF M /S VARUN INDUSTRIES AND THIS FACT WAS ACCEPTED BY THE DIRECTORS OF M/S VARUN INDUSTRIES LTD. WHILE TENDER ING THE STATEMENT DURING SEARCH. THE STATEMENT OF OTHER PER SONS WERE ALSO RECORDED, WHEREIN, IT WAS FOUND THAT THE ASSESSEE USED TO ISSUE BILLS IN THE NAME OF VARIOUS CONCERNS AND OPERATED BANK ACCOUNTS. THE STATEMENT OF YASHWANT PANDYA, SHRI PRADEEP M. JABALIA, RECORDED ON 05/02/ 2007 THAT SHRI PRADEEP M. JABALIA HAS GIVEN HIS ADDRESS FOR CORRESPONDENCE FOR THE SOME OF THE ACCOUNT BEING OP ERATED BY THE ASSESSEE. THE STATEMENT OF N.V. NEELKANTAN, RECORDED ON 26/02/2007 THROWS LIGHT UPON THE MODUS OPERANDI OF THE ASSESSEE THAT HE FABRICATED VARIOUS DOCUMENTS INCLUDING ADDRESS PROOF, PAN AND ID PROOF OF VARIOUS INDIVIDUAL TO OPEN BANK ACCOUNT IN DIFFEREN T NAMES ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 41 BY FABRICATING VARIOUS DOCUMENTS. THERE IS FURTHER FINDING IN THE QUANTUM ORDER PASSED BY THE TRIBUNAL THAT TH E FACTUAL FINDING RECORDED BY THE ASSESSING OFFICER W ERE NEVER REVERTED BY THE ASSESSEE. IT WAS CONCLUDED THAT THE ASSESSEE WAS PROVIDING ACCOMMODATION ENTRIES, THERE FORE, THE ADDITION WAS SUSTAINED. 2.3. IN VIEW OF THIS ORDER, NOW WE SHALL DEAL WITH THE PENALTY SO IMPOSED BY THE LD. ASSESSING OFFICER AND CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX (AP PEAL). BEFORE ADVERTING FURTHER, IT IS OUR BOUNDED DUTY TO ANALYZE SECTION 271(1)(C) OF THE ACT, WHICH IS REPRODUCED HEREUNDER:- 271. (1) IF THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE [PRINCIPAL COMMISSIONER OR] COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON XXXXXXXXXXXXXXXXXXXXX ( C ) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, OR XXXXXXXXXXXXXXXXXXXXXXXXXX EXPLANATION 1. WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, ( A ) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFE RS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMM ISSIONER (APPEALS) OR THE 48 [PRINCIPAL COMMISSIONER OR] COMMISSIONER TO BE FALSE, OR ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 42 ( B ) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMP UTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE P URPOSES OF CLAUSE ( C ) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INC OME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. XXXXXXXXXXXXXXXXXXX EXPLANATION 2. WHERE THE SOURCE OF ANY RECEIPT, DEPOSIT, OUTGOING OR INVESTMENT IN ANY ASSESSMENT YEAR IS CLAIMED BY ANY PERSON TO BE AN AMOUNT WHICH HAD BEEN ADDED IN COMPUTING THE INC OME OR DEDUCTED IN COMPUTING THE LOSS IN THE ASSESSMENT OF SUCH PERSON FOR ANY EARLIER ASSESSMENT YEAR OR YEARS BUT IN RESPECT OF WHICH NO PENALTY UNDER CLAUSE ( III ) OF THIS SUB-SECTION HAD BEEN LEVIED, THAT PART OF THE AMOUNT SO ADDED OR DEDUCTED IN SUCH EAR LIER ASSESSMENT YEAR IMMEDIATELY PRECEDING THE YEAR IN WHICH THE RE CEIPT, DEPOSIT, OUTGOING OR INVESTMENT APPEARS (SUCH EARLIER ASSESS MENT YEAR HEREAFTER IN THIS EXPLANATION REFERRED TO AS THE FIRST PRECEDING YEAR) WHICH IS SUFFICIENT TO COVER THE AMOUNT REPRESENTED BY SUCH RECEIPT, DEPOSIT OR OUTGOING OR VALUE OF SUCH INVESTMENT (SU CH AMOUNT OR VALUE HEREAFTER IN THIS EXPLANATION REFERRED TO AS THE UTILISED AMOUNT) SHALL BE TREATED AS THE INCOME OF THE ASSESSEE, PAR TICULARS OF WHICH HAD BEEN CONCEALED OR INACCURATE PARTICULARS OF WHI CH HAD BEEN FURNISHED FOR THE FIRST PRECEDING YEAR; AND WHERE T HE AMOUNT SO ADDED OR DEDUCTED IN THE FIRST PRECEDING YEAR IS NO T SUFFICIENT TO COVER THE UTILISED AMOUNT, THAT PART OF THE AMOUNT SO ADDED OR DEDUCTED IN THE YEAR IMMEDIATELY PRECEDING THE FIRS T PRECEDING YEAR WHICH IS SUFFICIENT TO COVER SUCH PART OF THE UTILI SED AMOUNT AS IS NOT SO COVERED SHALL BE TREATED TO BE THE INCOME OF THE ASSESSEE, PARTICULARS OF WHICH HAD BEEN CONCEALED OR INACCURA TE PARTICULARS OF WHICH HAD BEEN FURNISHED FOR THE YEAR IMMEDIATELY P RECEDING THE FIRST PRECEDING YEAR AND SO ON, UNTIL THE ENTIRE UT ILISED AMOUNT IS COVERED BY THE AMOUNTS SO ADDED OR DEDUCTED IN SUCH EARLIER ASSESSMENT YEARS. EXPLANATION 3. WHERE ANY PERSON FAILS, WITHOUT REASONABLE CAUSE, TO FURNISH WITHIN THE PERIOD SPECIFIED IN SUB-SECTI ON (1) OF SECTION 153 A RETURN OF HIS INCOME WHICH HE IS REQUIRED TO FURNISH UNDERSECTION 139 IN RESPECT OF ANY ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 1989, AND UNTIL THE EXPIRY OF THE PERIOD AFORESAID, NO NOTICE HAS BEEN ISSUED TO HIM UNDER C LAUSE ( I ) OF SUB- SECTION (1) OF SECTION 142 OR SECTION 148 AND THE A SSESSING OFFICER OR THE COMMISSIONER (APPEALS) IS SATISFIED THAT IN RES PECT OF SUCH ASSESSMENT YEAR SUCH PERSON HAS TAXABLE INCOME, THE N, SUCH PERSON SHALL, FOR THE PURPOSES OF CLAUSE ( C ) OF THIS SUB-SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME IN RES PECT OF SUCH ASSESSMENT YEAR, NOTWITHSTANDING THAT SUCH PERSON F URNISHES A RETURN OF HIS INCOME AT ANY TIME AFTER THE EXPIRY OF THE P ERIOD AFORESAID IN PURSUANCE OF A NOTICE UNDER SECTION 148. ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 43 XXXXXXXXXXXXXXXXXXX (5) THE PROVISIONS OF THIS SECTION AS THEY STOOD IM MEDIATELY BEFORE THEIR AMENDMENT BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1989 SHALL APPLY TO AND IN RELATIO N TO ANY ASSESSMENT FOR THE ASSESSMENT YEAR COMMENCING O N THE 1ST DAY OF APRIL, 1988, OR ANY EARLIER ASSESSMENT Y EAR AND REFERENCES IN THIS SECTION TO THE OTHER PROVISIONS OF THIS ACT SHALL BE CONSTRUED AS REFERENCES TO THOSE PROVISION S AS FOR THE TIME BEING IN FORCE AND APPLICABLE TO THE RELEV ANT ASSESSMENT YEAR. 2.4. A GLANCE AT THIS PROVISION WOULD SUGGEST THAT IN ORDER TO BE COVERED UNDER THIS SECTION FIRSTLY, THE RE HAS TO BE CONCEALMENT OF INCOME BY THE ASSESSEE AND SECON DLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICU LARS OF HIS INCOME. PRESENT IS CLEAR CUT CASE OF FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME AND CONSEQUEN T CONCEALMENT. THIS IS EXACTLY THE CASE OF THE REVEN UE. AS PER LAW LEXICON, THE MEANING OF THE WORD 'PARTICULA R' IS A DETAIL OR DETAILS (IN PLURAL SENSE); THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACCOUNT. THEREFORE, THE WO RD 'PARTICULARS' USED IN THE SECTION 271(1)(C) WOULD E MBRACE THE MEANING OF THE DETAILS OF THE CLAIM MADE. THE W ORDS ARE PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESS EE TO THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. IN COMMISS IONER OF INCOME TAX, DELHI VS. ATUL MOHAN BINDAL [2009(9) SCC ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 44 589], WHERE HON'BLE APEX COURT WAS CONSIDERING THE SAME PROVISION, THE COURT OBSERVED THAT THE ASSESSING OF FICER HAS TO BE SATISFIED THAT A PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HON'BLE COURT REFERRED TO ANOTHER DECISION OF THIS COURT IN UNION OF INDIA VS . DHARAMENDRA TEXTILE PROCESSORS [2008(13) SCC 369], AS ALSO, THE DECISION IN UNION OF INDIA VS.RAJASTHAN S PG. & WVG. MILLS [2009(13) SCC 448] AND REITERATED IN PAR A 13 THAT:- '13. IT GOES WITHOUT SAYING THAT FOR APPLICABILITY OF SECTION 271(1)(C), CONDITIONS STATED THEREIN MUST E XIST.' 2.5. THEREFORE, IT IS OBVIOUS THAT IT MUST BE SHOW N THAT THE CONDITIONS UNDER SECTION 271(1)(C) MUST EX IST BEFORE THE PENALTY IS IMPOSED. THERE CAN BE NO DISP UTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY TH E ASSESSEE BECAUSE THAT IS THE ONLY DOCUMENT, WHERE T HE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LI ABILITY WOULD ARISE. IN DILIP N. SHROFF VS. JOINT COMMISSIO NER OF INCOME TAX, MUMBAI & ANR. [2007(6) SCC 329], HON'BL E ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 45 COURT EXPLAINED THE TERMS 'CONCEALMENT OF INCOME' A ND 'FURNISHING INACCURATE PARTICULARS'. THE COURT WENT ON TO HOLD THEREIN THAT IN ORDER TO ATTRACT THE PENALTY U NDER SECTION 271(1)(C), MENS REA WAS NECESSARY, AS ACCORDING TO THE COURT, THE WORD 'INACCURATE' SIGNIFIES A DELIBE RATE ACT OR OMISSION ON BEHALF OF THE ASSESSEE. IT WENT ON T O HOLD THAT CLAUSE (III) OF SECTION 271(1) PROVIDED FOR A DISCRETIONARY JURISDICTION UPON THE ASSESSING AUTHO RITY, INASMUCH AS THE AMOUNT OF PENALTY COULD NOT BE LESS THAN THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF SUCH CONCEALMENT OF PARTICULARS OF INCOME, BUT IT MAY NO T EXCEED THREE TIMES THEREOF. IT WAS POINTED OUT THAT THE TERM 'INACCURATE PARTICULARS' WAS NOT DEFINED ANYWHERE I N THE ACT AND, THEREFORE, IT WAS HELD THAT FURNISHING OF AN ASSESSMENT OF THE VALUE OF THE PROPERTY MAY NOT BY ITSELF BE FURNISHING INACCURATE PARTICULARS. IT WAS FURTHER H ELD THAT THE ASSESSEE MUST BE FOUND TO HAVE FAILED TO PROVE THAT HIS EXPLANATION IS NOT ONLY BONA FIDE BUT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS INCOME WERE NOT DISCLOSED BY HIM. IT WAS THEN HELD THAT TH E EXPLANATION MUST BE PRECEDED BY A FINDING AS TO HOW AND ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 46 IN WHAT MANNER, THE ASSESSEE HAD FURNISHED THE PARTICULARS OF HIS INCOME. THE COURT ULTIMATELY WEN T ON TO HOLD THAT THE ELEMENT OF MENS REA WAS ESSENTIAL. IT WAS ONLY ON THE POINT OF MENS REA THAT THE JUDGMENT IN DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. WAS UPSET. IN UNION OF INDIA VS. DHARAMENDRA T EXTILE PROCESSORS (CITED SUPRA), AFTER QUOTING FROM SECTIO N 271 EXTENSIVELY AND ALSO CONSIDERING SECTION 271(1)(C), THE COURT CAME TO THE CONCLUSION THAT SINCE SECTION 271 (1)(C) INDICATED THE ELEMENT OF STRICT LIABILITY ON THE AS SESSEE FOR THE CONCEALMENT OR FOR GIVING INACCURATE PARTICULAR S WHILE FILING RETURN, THERE WAS NO NECESSITY OF MENS REA. THE COURT WENT ON TO HOLD THAT THE OBJECTIVE BEHIND ENA CTMENT OF SECTION 271(1)(C) READ WITH EXPLANATIONS INDICAT ED WITH THE SAID SECTION WAS FOR PROVIDING REMEDY FOR LOSS OF REVENUE AND SUCH A PENALTY WAS A CIVIL LIABILITY AN D, THEREFORE, WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS WAS THE CASE IN T HE MATTER OF PROSECUTION UNDER SECTION 276-C OF THE ACT. THE BAS IC REASON WHY DECISION IN DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CITED SU PRA) ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 47 WAS OVERRULED BY HON'BLE APEX COURT IN UNION OF IND IA VS. DHARAMENDRA TEXTILE PROCESSORS (CITED SUPRA), WAS T HAT ACCORDING TO THE COURT THE EFFECT AND DIFFERENCE B ETWEEN SECTION 271(1)(C) AND SECTION 276-C OF THE ACT WAS LOST SIGHT OF IN CASE OF DILIP N. SHROFF VS. JOINT COMMI SSIONER OF INCOME TAX, MUMBAI & ANR. (CITED SUPRA). HOWEVER, I T MUST BE POINTED OUT THAT IN UNION OF INDIA VS. DHARAMEND RA TEXTILE PROCESSORS (CITED SUPRA), NO FAULT WAS FOUN D WITH THE REASONING IN THE DECISION IN DILIP N. SHROFF VS . JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CITED SU PRA), WHERE THE COURT EXPLAINED THE MEANING OF THE TERMS 'CONCEAL' AND INACCURATE'. IT WAS ONLY THE ULTIMATE INFERENCE IN DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CITED SUPRA) TO THE EFFE CT THAT MENS REA WAS AN ESSENTIAL INGREDIENT FOR THE PENALTY UNDER SECTION 271(1)(C) THAT THE DECISION IN DILIP N. SHR OFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CI TED SUPRA) WAS OVERRULED. WE ARE NOT CONCERNED IN THE P RESENT CASE WITH THE MENS REA . HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A MATTER OF FACT, THE ASSE SSEE HAS ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 48 GIVEN INACCURATE PARTICULARS. IN WEBSTER'S DICTIONA RY, THE WORD 'INACCURATE' HAS BEEN DEFINED AS:- 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRAN SCRIPT'. WE HAVE ALREADY SEEN THE MEANING OF THE WORD 'PARTICULARS' IN THE EARLIER PART OF THIS ORDER. RE ADING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SU PPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THESE CASES, THERE IS FINDING THAT THE DETAILS FILED BY THE ASSESSEE ARE INCORRECT AND THE ASSESSEE KNOWINGLY FURNISHED INACCURATE PARTICULARS OF INCOM E AND WAS VERY MUCH AWARE THAT HE WAS INVOLVED IN HAWALA ENTRIES. IN THESE APPEALS, THE PENALTY WAS LEVIED/C ONFIRMED ON THE BASIS OF INVOLVEMENT OF THE ASSESSEE AS DISC USSED IN THE EARLIER PARAS OF THIS ORDER. THUS, THERE IS CLE AR CUT CASE OF CONCEALMENT OF INCOME/FURNISHING OF INACCURATE PARTICULAR OF SUCH INCOME, THAT BEING THE CASE, WE FIND NO INFIRMITY IN IMPOSING/CONFIRMING THE PENALTY. 2.6. CONSIDERING THE PROVISION OF THE ACT AND THE FOREGOING DISCUSSION, ORDER OF THE TRIBUNAL ON QUAN TUM ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 49 ADDITION, MATERIAL FACTS AVAILABLE ON RECORD, AND T HE RATIO LAID DOWN IN FOLLOWING CASES, IT CAN BE CONCLUDED T HAT IT WAS A CONSCIOUS ACT OF THE ASSESSEE TO HIDE SOMETHI NG FROM THE DEPARTMENT. THE RATIO LAID DOWN IN THE FOLLOWI NG THE CASES, SUPPORTS THE CASE OF THE REVENUE. I. CIT VS SATISH MEDICAL AGENCIES 277 ITR 394 (ALL.) II. JYOTI LAXMAN KONKAR VS CIT 292 ITR 163 (BOM.), III. DEEPAK CONSTRUCTION COMPANY VS CIT 293 ITR 285(GUJ.) IV. CIT VS MAHAVIR PRASAD BAJAJ 298 ITR 109(JHAR.) V. D & H SECHERON ELECTRODS PVT. LTD. VS CIT 281 ITR 421 (MP.) VI. SHRI NITHYAKALYANI TEXTILES LTD. VS DCIT 282 ITR 154 (MAD.) VII. LMP PRECISION ENGINEERING COMPANY LTD. VS DCIT (330 ITR 93) (GUJ.) VIII. CIT VS DEEP CHAND 336 ITR 292 (P & H) IX. SETHY INDUSTRIES CORPORATION VS DCIT 338 ITR 243 (P &H) X. B.DAMODAR V.B. JEWELLERS VS JCIT 353 ITR 206 (KARNA.) XI. STANDARD HIND COMPANY VS CIT (2014) 361 ITR 370 (ALL.) XII. BAJRANG GLASS EMPORIUM VS CIT (2014) 361 ITR 376 (ALL.) XIII. INDUS ENGINEERING COMPANY VS ACIT (2010) 323 ITR 302 (BOM.), ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 50 2.7. SO FAR AS, THE DECISION FROM HON'BLE GUJARAT HIGH COURT IN THE CASE OF BHAILAL MANILAL PATEL ((SUPRA) ) IS CONCERNED, IT IS WITH RESPECT TO THE ISSUE OF IMPOS ING PENALTY UNTIL SUBSTANTIVE ADDITION IS MADE IN THE H ANDS OF THE ASSESSEE, IN THAT SITUATION, INITIATION OF PENA LTY PROCEEDINGS WAS HELD TO BE NOT PERMISSIBLE AND FURT HER IDENTICALLY IN RESPECT OF PROTECTIVE ASSESSMENT ORD ER. HOWEVER, IN THE CASE OF THE PRESENT ASSESSEE, THE Q UANTUM ADDITION WAS UPHELD BY THE TRIBUNAL VIDE AFORESAID ORDER DATED 25/09/2017 THAT TOO AFTER HAVING AN ELABORATE DISCUSSION. THEREFORE, THIS DECISION FROM HON'BLE G UJARAT HIGH COURT MAY NOT HELP THE ASSESSEE. SO FAR AS THE DECISION IN THE CASE OF M/S VARUN INDUSTRIES LTD. V S ACIT (ITA NO.2779 TO 2781/MUM/2012 AND ITA NO.3854 TO 3860/MUM/2012), ORDER DATED 24/07/2017 IS CONCERNED MAY ALSO NOT HELP THE ASSESSEE AS THE COMMON ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA L) WAS RESTORED FOR FRESH CONSIDERATION AND ALLOWED FO R STATISTICAL PURPOSES ONLY. HOWEVER, IN THE CASE OF THE PRESENT ASSESSEE, THE QUANTUM ADDITION HAS BEEN CONFIRMED. HOWEVER, IN PRINCIPLE, THE PENALTY LEVIE D BY THE ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 51 ASSESSING OFFICER IN RESPECT OF ADDITIONS CONFIRMED BY THE TRIBUNAL SHOULD BE SUSTAINED. HOWEVER, BY A LATER DEVELOPMENT, THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF VARUN INDUSTRIES LTD., VIDE ORDER IN ITA NO .2779 TO 2781/MUM/2012, ORDER DATED 24/04/2017, SIMPLY SET- ASIDE THE MATTER TO THE FILE OF THE LD. COMMISSIONE R OF INCOME TAX (APPEAL), TO DECIDE THE ISSUE AFRESH AFT ER TAKING INTO ACCOUNT ADDITIONS MADE IN THE HANDS OF THE BRO KERS. THE LD. ASSESSING OFFICER IS DIRECTED TO ASCERTAIN THE FACTS AS TO IN WHOSE HANDS THE SUBSTANTIVE/PROTECTIVE ADD ITION HAS TO BE MADE AND THEN DECIDE THE ISSUE OF LEVY OF PENALTY U/S 271(1)(C) OF THE ACT ON SUCH ADDITIONS. IN THE LIGHT OF THE AFORESAID DECISION OF THE TRIBUNAL, IN THE CASE OF VARUN INDUSTRIES LTD., WE ARE FORCED TO SEND THESE PENALT Y APPEALS TO THE FILE OF THE LD. ASSESSING OFFICER TO DECIDE IN ACCORDANCE WITH LAW AS THE SAME WILL BE DEPENDENT U PON THE OUTCOME OF THE ADDITIONS TO BE MADE IN THE HAND S OF VARUN INDUSTRIES LTD. OR THE PRESENT ASSESSEE OR AN Y OTHER RELATED PERSONS. RESULTANTLY, THESE PENALTY APPEAL S ARE ALSO SET-ASIDE TO THE FILE OF THE LD. ASSESSING OFF ICER. ITA NO.281 TO 287/MUM/2016 DILIP C. SHAH 52 FINALLY, THE APPEALS OF THE ASSESSEE ARE ALLOWED FO R STATISTICAL PURPOSES ONLY. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 04/05/2018. SD/- (G. MANJUNATHA) SD/- (JOGINDER SINGH) ' # / ACCOUNTANT MEMBER $ # / JUDICIAL MEMBER MUMBAI; , DATED : 16/05/2018 F{X~{T? P.S/. .. , !%$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. -./0 / THE APPELLANT 2. 12/0 / THE RESPONDENT. 3. 3 3 4' , ( -. ) / THE CIT, MUMBAI. 4. 3 3 4' / CIT(A)- , MUMBAI 5. 6#71' , 3 -.'- * , / DR, ITAT, MUMBAI 6. 8 / GUARD FILE. ! / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI
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