Manoj Kumar Jain, New Delhi V. DCIT, Ghaziabad

ITA 3561/DEL/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1349 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 03-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRATIMA M BISWAS
• Keywords: Business income; Opportunity of being heard; Principle of natural justice; Accommodation entries; Documents seized; Set aside
• Section: 143(3); 133A; 143(2); 13; 153; 22; 153C; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. R.K. PANDA, ACCOUNTANT MEMBER ITA NO.3561/DEL/2015 ASSESSMENT YEAR: 2011-12 MANOJ KUMAR JAIN C/O. O.P. SAPRA & ASSOCIATES C-763, NEW FRIENDS COLONY NEW DELHI-110025 PAN NO.ACLPJ4982H VS. DCIT CENTRAL CIRCLE INCOME TAX OFFICE, 3 RD FLOOR, CGO COMPLEX -1, HAPUR ROAD, GHAZIABAD (APPELLANT) (RESPONDENT) APPELLANT BY SH. KAPIL GOEL, ADVOCATE RESPONDENT BY MS. PRATIMA M. BISWAS DATE OF HEARING: 16/03/2020 DATE OF PRONOUNCEMENT: 22/05/2020 ORDER PER R.K PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 31.03.2015 OF THE CIT(A), GHAZIABAD REL ATING TO A.Y. 2011-12. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT A SEARCH U /S. 132 OF THE IT ACT WAS CONDUCTED IN THE CASE SH. PANKAJ SHARMA AND AJAY SHARMA, DURING WHICH CERTAIN INCRIMINATING DOCUMENT S WERE FOUND. A SURVEY U/S. 133A OF THE IT ACT WAS CARRIED OUT ON PAGE | 2 11.10.2010 AT THE OFFICE OF THE ASSESSEE WHO IS THE PROPERITOR OF M/S. RISHAB TRADING COMPANY. IT WAS GATHERED BY THE SEARCH PARTY AND SURVEY TEAM THAT SH.PANKAJ SHARMA AND AJA Y SHARMA ALONGWITH THE ASSESSEE SH. MANOJ KUMAR JAIN, SANJAY THAKUR, PUSHKAR TYAGI, AMIT BANSAL AND VISHNU BHAGWAN WERE CARRYING ON THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES TO SEVERAL BUSINESS HOUSES BY GETTING THE AMOUNT TRANSFERRED F ROM THEIR ACCOUNTS BY RTGS AND / OR CHEQUE AND LATER ON (IMME DIATELY THEREAFTER, PREFERABLY ON THE SAME DAY) WITHDRAWING THE ENTIRE AMOUNT AND AS STATED BY THEM IN THEIR STATEMENTS, R ETURNING THEM TO THE PARTIES WHO HAD GOT SUMS TRANSFERRED I NTO ACCOUNTS OF THESE PERSONS (I.E. THE ENTRY PROVIDERS SHRI PAN KAJ SHARMA, AJAY SHARMAN AND OTHERS). THE AO EXTRACTED THE NAM ES OF DIFFERENT PERSONS/ FIRMS WHO HAD GIVEN THE ACCOMMOD ATION ENTRIES AND THE NAME OF THE BENEFICIARIES AND THERE AFTER ISSUED SUMMONS TO SOME OF THE PARTIES ON TEST CHECK BASIS WHO HAD BEEN PROVIDED ACCOMMODATION ENTRIES. ON BEING CONFR ONTED BY THE AO IT WAS CLAIMED BY THE ASSESSEE THAT HE WAS G ETTING COMMISSION OF 0.01% WHICH AMOUNTS TO RS.10,000/- PE R RS. 1 CRORE OF ACCOMMODATION ENTRY. ON THE BASIS OF THE S EARCH OPERATION AND POST SEARCH ENQUIRIES AND SURVEY U/S. 133 A IN THE PREMISES OF RISHAV TRADING COMPANY AND DETAILS OF B ANK ACCOUNT OF SH. MANOJ KUMAR JAIN IN THE NAME OF HIS PROPRIET ORSHIP FIRM M/S. RISHAV TRADING COMPANY, THE AO CONCLUDED THAT THE ASSESSEE WAS INVOLVED IN THE BUSINESS OF ENTRY PROV IDING. HE, THEREFORE, ISSUED NOTICE U/S. 153 C FOR THE A.Y. 20 05-06 TO 2010- 11 ON 18.09.2012 AND NOTICE U/S. 142 (1) FOR A.Y. 2 011-12 ON PAGE | 3 18.09.2012. THE ASSESSEE OBJECTED TO THE ISSUE OF NOTICE U/S. 153 C OF THE IT ACT ON THE GROUND THAT ONLY SURVEY U/S. 133 A WAS CONDUCTED ON 12.10.2010 IN THE ASSESSEES CASE AND OBJECTED TO THE VALIDITY OF NOTICE U/S. 153C. THE AO HELD THAT THE CASE OF THE ASSESSEE HAS BEEN SELECTED U/S.153 C BECAUSE A SEAR CH WAS CONDUCTED IN THE CASE OF A.K. TRADERS ON 11.10.2010 IN THE BANK PREMISES OF HDFC BANK, AMBEDKAR ROAD, GHAZIABAD AND THEREAFTER SURVEY WAS CONDUCTED IN THE CASE OF THE ASSESSEE. 3. RELYING ON THE ORDER IN THE CASE OF VARIOUS OTHE R PERSONS OF THE SAME GROUP WHO HAVE PROVIDED ENTRIES THE AO ADO PTED THE PROFIT RATE OF 3% ON THE AMOUNT OF RS.23,56,61,255/ - BEING ACCOMMODATION ENTRY PROVIDED WHICH COMES TO RS.70,6 9,838/-. SIMILARLY IN ABSENCE OF ANY EXPLANATION REGARDING T HE SOURCE OF DEPOSITS IN THE BANK ACCOUNT, THE AO TREATED THE EN TIRE AMOUNT THAT WERE DEPOSITED IN THE BANK ACCOUNT AS UNEXPLAI NED DEPOSITS AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSES SEE ON PROTECTIVE BASIS ON THE GROUND THAT THE ADDITION IS REQUIRED TO BE MADE IN ORDER TO PROTECT THE INTEREST OF THE REVENU E. THUS, THE AO MADE THE ADDITION OF RS.70,69,838/- AS BUSINESS INCOME BEING THE AMOUNT RECEIVED BY THE ASSESSEE AS COMMIS SION AND RS.23,56,61,255/-AS UNEXPLAINED CASH DEPOSIT IN THE BANK ACCOUNT. 4. BEFORE CIT(A) THE ASSESSEE CHALLENGED THE VALIDI TY OF ISSUANCE OF NOTICE U/S. 153 C AS WELL AS THE ADDITI ON ON MERIT HOWEVER, THE LD. CIT(A) DECIDED BOTH THE ISSUES AGA INST THE ASSESSEE. PAGE | 4 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE IMPUGNED ASSESSMENT ORDER DATED 31/03/2 013 AS PASSED BY THE LD. DY, CIT, CENTRAL CIRCLE, GHAZIABAD (IN SHORT AO) ON T OTAL INCOME OF RS.28,20,19,514/- U/S 143(3) OF I.T. ACT IS ARBITRA RY, UNJUST AND ILLEGAL INTER ALIA BECAUSE: A) NO VALID NOTICE U/S 143(2) OF I.T. ACT WAS ISSUE D AND SERVED ON THE APPELLANT WITHIN THE STIPULATED TIME. B) THE IMPUGNED ASSESSMENT ORDER AS PASSED BY THE A O IS BARRED BY LIMITATION AND THE LD. CIT(A) HAD ERRED ON FACTS AND UNDER THE LAW IN HOLDING THAT THE SAME WAS WITHIN THE STIPULATED TIME WITHOUT GIVING VALID REASON AND/OR WITHOUT DISPROVING THE EVIDENCE PRODUCED BY THE APPELLANT I N SUPPORT THIS CONTENTION. THE IMPUGNED ASSESSMENT ORDER DESERVES TO BE CANCELLED/ ANNULLED. 2. THAT THE IMPUGNED ASSESSMENT ORDER ALSO DESERVES TO BE CANCELLED/ANNULLED BECAUSE THE AO HAD FAILED TO OBSERVE PRINCIPLES OF NATURAL JUSTICE BY NOT GIVING PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD BEFO RE COMPLETING THE IMPUGNED ASSESSMENT ORDER. 3. THAT THE AUTHORITIES BELOW HAD FAILED TO APPRECI ATE THAT THE APPELLANT WAS AN / ACTUAL TRADER DULY REGISTERED WITH THE TRADE TAX AU THORITIES AND HAD VERIFIED THE TRANSACTIONS FROM RECORD OF THE APPELLANT AND THERE FORE, THE IMPUGNED ASSESSMENT ORDER AS PASSED ON THE SAME LINES AS HAS BEEN DONE IN OTHER ASSESSEES SHRI PANKAJ SHARMA, SHRI AJAY SHARMA AND OTHERS. FROM TH IS ANGLE ALSO, THE IMPUGNED ASSESSMENT ORDER BEING ILLEGAL, DESERVES T O BE CANCELLED/ANNULLED. 4. THAT WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE AUTHORITIES BELOW HAD NO JUSTIFICATION TO MAKE AN ADDITION OF JRSZ3J56/L265/ - REPRESENTING BANK CREDITS ON PROTECTIVE BASIS IN THE ABSENCE OF SUCH 'ADDITIONS HAVING BEEN MADE IN THE HANDS OF OTHERS ON SUBSTANTIVE BASIS AND WITHOUT GIVING P ROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD COUPLED WITH THE FACT TH AT THE FACTS STATED AND THE SUBMISSIONS MADE HAD NOT BEEN CONSIDERED PROPERLY. THEREFORE, THE ADDITION DESERVES TO BE DELETED. 5. THAT WITHOUT PREJUDICE TO GROUND NO 4 ABOVE, THE RE WAS NO JUSTIFICATION TO APPLY NET PROFIT RATE OF 3% ON THE BANK CREDITS AG GREGATING AT RS.23,56,61,265/- THEREBY MAKING AN ADDITION OF RS.70,69B38A-WILHOUT DISPROVING THE TRANSACTION RECORDED IN THE ACCOUNT BOOKS OF THE APPELLANT AND THEREFORE, THIS ADDITION ALSO BEING ILLEGAL, DESERVES TO BE DELETED. 6. THAT THE LD. CIT(A) HAD ERRED ON FACTS AND UNDER THE LAW IN SUSTAINING ADDITION OF RS.26,54,591/- FOR ALLEGED UNACCOUNTED PURCHASES. AT ANY RATE, WITHOUT PREJUDICE, THE ADDITION AS MADE IS VERY EXC ESSIVE. 7. THAT VARIOUS OBSERVATIONS MADE BY THE LD. CIT(A) WHILE UPHOLDING VARIOUS ADDITIONS OR PART THEREOF AS MADE BY THE AO ARE EITHER INCORRECT OR UNTENABLE. THE LD. CIT(A) HAD NOT GIVEN DUE WEIGHT TO THE SUBMISSIONS SUPPORTED BY THE DOCUMENTARY EVIDENCE AS MADE/ FILED BEFORE H IM BY THE APPELLANT. CONSEQUENTLY, THE ADDITIONS SUSTAINED BY THE LD. CI T(A) DESERVES TO BE DELETED. PAGE | 5 6. THE ASSESSEE HAS ALSO RAISED THE FOLLOWING ADDIT IONAL GROUNDS OF APPEAL :- THAT ASSESSMENT FRAMED U/S 143(3) FOR THE PERIOD U NDER CONSIDERATION (AY 2011-12) WHICH FALLS IN SIX YEARS BLOCK PRESCRIBED U/S 153C, IS INVALID, VOID-AB-INITIO AND LACKS JURI SDICTION AS IT SHOULD HAVE BEEN FRAMED U/S 153C, ACCORDINGLY THE ORDERS P ASSED BY AO AND FIRST APPELLATE AUTHORITY DESERVES TO BE QUASHE D. THAT ASSESSMENT FRAMED U/S 143(3) FOR THE PERIOD U NDER CONSIDERATION IS ULTRA VIRES TO SECTION 153C, IN AS MUCH AS THE NO DOCUMENT IS REFERRED IN SATISFACTION NOTE, MUCH LES S INCRIMINATING DOCUMENT, MUCH LESS BELONGING TO ASSESSEE HEREIN, M UCH LESS SEIZED DURING SEARCH ACTION U/S 132 MUCH LESS FOR THE SUBJ ECT PERIOD, SO AS TO GIVE RISE TO ANY UNDISCLOSED INCOME AND THEREFOR E SATISFACTION NOTE IS COMPLETELY INCHOATE AND NON STARTER AND THE REFORE ORDERS PASSED BY AO AND FIRST APPELLATE AUTHORITY DESERVES TO BE QUASHED. 7. REFERRING TO THE DECISION OF HONBLE SUPREME COU RT IN THE CASE OF NTPC LIMITED VS. CIT REPORTED IN 229 ITR 38 3 AND VARIOUS OTHER DECISIONS THE LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT THE ADDITIONAL GROUND IS PURELY LEGAL IN NATURE AND NO FRESH FACTS ARE REQUIRED TO BE INVESTIGATED AND, THEREFORE, THE SAME SHOULD BE ADMITTED FOR ADJUDICATION. 7.1 AFTER HEARING BOTH THE SIDES AND CONSIDERING TH E FACT THAT THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE P URELY LEGAL IN NATURE AND NO FRESH FACTS ARE REQUIRED TO BE INVEST IGATED, THE SAME ARE ADMITTED FOR ADJUDICATION. PAGE | 6 8. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET S UBMITTED THAT THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEA R HAVE BEEN COMPLETED U/S.143(3) WHEREAS THE SAME SHOULD HAVE B EEN COMPLETED U/S.153C SINCE THE SATISFACTION NOTE WAS PREPARED BY THE AO ON 18.09.2012 AND THE IMPUGNED ASSESSMENT YE AR I.E. A.Y. 2011-12 FALLS WITHIN THE PERIOD OF SIX YEARS. SINCE THE AO IN THE INSTANT CASE HAS NOT PASSED THE ORDER U/S. 153 C AS NO NOTICE U/S. 153C WAS ISSUED, THEREFORE, THE ORDER PASSED B Y THE AO U/S. 143 (3) IS NOT LEGALLY VALID. FOR THE ABOVE PROPOS ITION HE RELIED ON THE FOLLOWING DECISIONS PLACED IN THE PAPER BOOK :- 1. RECENT APEX COURT DECISION IN SINGHAD TECHNICAL SOCIETY (ORDER DATED 29.08.2017 ) 397 ITR 344 2. HONBLE DELHI HIGH COURT DECISION IN CASE OF FA ST BOOKING (I) PVT. LTD., ORDER DATED 02.09.2015 (ITA NO.334/2015) (378 ITR 693) 3. HONBLE DELHIH HIGH COURT DECISION IN THE CASE OF SILVER LINE, ORDER DATED 04.11.2015 (ITA NOL.578/20 15) (383 ITR 455) 4. HONBLE PUNJAB AND HARYANA HIGH COURT DECISION IN CASE OF M/S. VMT SPINNING CO. LTD., ORDER DATED 16.09.2016 (ITA NO.445/2015) (389 ITR 326) 5. HONBLE GUJARAT HIGH COURT IN CASE OF JOLLY FAN TASY WORLD LTD. 373 ITR 530 6. HONBLE DELHI ITAT IN CASE OF PAVITRA REALCON P VT; LTD. ITA NO.3185/DEL./2015 (A.Y. 2011-12) (REFER PA RA 15 TO 22 ) PAGE | 7 7. HONBLE DELHI ITAT IN CASE OF SATKAR ROADLINES PVT. LTD. ITA NO.3305/DEL/2014 ASSESSMENT YEAR 2009-10 DATE O F PRONOUNCEMENT 27.04.2016 8. HONBLE DELHI HIGH COURT IN THE CASE OF COMMISS IONER OF INCOME TAX VS. SHREE JASJEET SINGH IN ITA NO.337 /2015 9. THE LD. DR ON THE OTHER HAND STRONGLY OBJECTED T O THE ARGUMENTS ADVANCED BY THE LD. COUNSEL FOR THE ASSES SEE. SHE SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS TH E ASSESSEE HAD OBJECTED TO ISSUE OF NOTICE U/S. 153C OF THE IT ACT WHEREAS NOW HE IS ARGUING THAT THE ASSESSMENT SHOULD HAVE B EEN COMPLETED U/S.153C OF THE IT ACT. THIS SHOWS THAT THE ASSESSEE IS WILLFULLY TRYING TO MISLEAD THE TRIBUNAL REGARDI NG THE STAND TAKEN BY IT DURING ASSESSMENT PROCEEDINGS WHERE IT OBJECTED TO ISSUE OF NOTICE U/S.153 C AND NOW ARGUING THAT THE ASSESSMENT SHOULD HAVE BEEN COMPLETED U/S. 153C. REFERRING TO THE ORDER SHEET ENTRIES, COPIES OF WHICH ARE FILED BY THE ASS ESSEE HIMSELF, SHE SUBMITTED THAT THE AO HAS COMPLETED THE ASSESSM ENT U/S. 153C. SHE ACCORDINGLY SUBMITTED THAT THE ADDITION AL GROUND RAISED BY THE LD. COUNSEL FOR THE ASSESSEE SHOULD B E DISMISSED. 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND AT VARI OUS PLACES IN THE ORDER SHEET ENTRIES, COPIES OF WHICH WERE PRODUCED BY THE PAGE | 8 ASSESSEE, IT IS MENTIONED THAT NOTICE U/S. 153 C HA S BEEN ISSUED AND THE ASSESSMENT IS COMPLETED U/S. 153 C OF THE I T ACT. THE ORDER SHEET ENTRIES DATED 22.03.2013 AND 31.03.2013 TRANSLATED IN ENGLISH BY THE ASSESSEE HIMSELF PLACED AT PAGE 1 7 OF THE PAPER BOOK READ AS UNDER :- 22.03.2013 SUBMISSION OF THE AR IS PLACED ON RECORD. AR HAS O BJECTED TO NOTICE U/S. 153 AS ONLY SURVEY U/S.133A WAS CONDUCTED IN THE CASE AND REQUESTED TO DROP PROCEED INGS. SATISFACTION FOR TAKING THE CASE U/S. 153 C HAS BEE N RECORDED EARLIER. -SD- 31.03.2013 ASSESSMENT IS COMPLETED U/S. 153 C OF THE IT ACT, 1 961. ISSUE D/N, CHALLAN ETC. INITIATE PENALTY PROCEEDIN GS U/S. 271 (1) (C) FOR CONCEALMENT, 271 AAA, 271 B & 273 O F THE INCOME TAX ACT, 1961. 11. SINCE THE AO HAS ISSUED THE NOTICE U/S. 153 C A ND THE ASSESSMENT HAS BEEN COMPLETED U/S. 153C OF THE IT A CT, THEREFORE, WE DO NOT FIND AND SUBSTANCE IN THE ADDI TIONAL GROUNDS RAISED BY THE ASSESSEE. ACCORDINGLY THE ABOVE GROU NDS ARE DISMISSED. PAGE | 9 12. SO FAR AS THE OTHER GROUNDS ARE CONCERNED THE L D. COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUNDS OF APPEAL NO .1,2,3,7,8 AND 9 FOR WHICH THE LD. DR HAS NO OBJECTION. ACCORDING LY THE ABOVE GROUNDS ARE DISMISSED AS NOT PRESSED. 13. SO FAR AS THE GROUND NO.4 AND 5 ARE CONCERNED T HESE RELATE TO THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITI ON OF RS.23,56,61,265/- MADE BY THE AO ON PROTECTIVE BASI S AND THE ADDITION OF RS.70,69,838/- BEING COMMISSION @ 3% ON THE BANK CREDIT OF RS.23,56,61,265/-. 14. SO FAR AS THE COMMISSION @ 3% IS CONCERNED THE LD. COUNSEL FOR THE ASSESSEE RELYING ON A SERIES OF DEC ISIONS PLACED IN THE PAPER BOOK SUBMITTED THAT IN THE CASE OF ENTRY OPERATORS SUCH COMMISSION HAS BEEN ESTIMATED @ .15% TO .5%. REFER RING TO THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF SH. SANJAY VS. ACIT MADE VIDE ITA NO.162 TO 168/DEL/201 0 ORDER DATED 30.04.2013 HE SUBMITTED THAT THE TRIBUNAL WHI LE ADJUDICATING THE PENALTY APPEAL HAS MENTIONED THAT VIDE ORDER DATED 12.11.2008 THE COMMISSION @ 0.5% ON THE VALUE OF BOGUS ACCOMMODATION ENTRIES WAS ADDED IN THE HANDS OF THE ASSESSEE. REFERRING TO THE DECISION OF THE MUMBAI BENCH OF TH E TRIBUNAL IN THE CASE OF RAMESH KUMAR VS. ACIT VIDE ITA NO.3512/MUM/2013 TO 3513/MUM/2013 ORDER DATED 22.04.2015 HE SUBMITTED THAT THE TRIBUNAL IN THE SA ID DECISION HAS HELD THAT COMMISSION RATE OF 0.25% IS REASONABL E. REFERRING TO THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE PAGE | 10 OF GOLD STAR FINVEST VS. DCIT VIDE ITA NO.74/MUM/20 15 ORDER DATED 29.12.2016 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS DIRECTED THE AO TO TAKE COMMISSION @ . 15% AND ALLOW THE EXPENSES TO THE TUNE OF 50% OF THE SAID C OMMISSION AND BRING THE AMOUNT TO TAX. REFERRING TO THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF TALENT INFOWAY LTD. VS. DCIT VIDE ITA NO.6384/MUM/2012 AND BATCH OF OTHER APPEAL S VIDE ORDER DATED 24.01.2017 HE SUBMITTED THAT THE TRIBUN AL IN THE SAID DECISION HAS HELD THAT THE NET PROFIT RATE ON EACH COMMISSION SHOULD BE TAKEN @ 0.15 % AND THE EXPENDITURE CLAIME D SHOULD BE ALLOWED TO THE EXTENT OF 59 %. HE ACCORDINGLY SUBM ITTED THAT THE RATE OF COMMISSION @ 3% ADOPTED BY THE AO AND UPHEL D BY THE CIT(A) BEING ON THE HIGHER SIDE SHOULD BE REDUCED T O 0.15%. 15. SO FAR AS THE ADDITION OF RS.23,56,61265/- IS C ONCERNED HE SUBMITTED THAT THE SAME HAS BEEN ADDED ON PROTECTIV E BASIS WITHOUT ANY ADDITION ON SUBSTANTIVE BASIS. REFERRIN G TO THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. ANUJ KUMAR VIDE ITA NO.07/DEL/2012 ORDER DATED 05.0 6.2018 FOR A.Y.2008-09, HE SUBMITTED THAT THE TRIBUNAL IN THE SAID ORDER HAS HELD THAT IF NO SUBSTANTIVE ADDITION HAS BEEN MADE IN ANY OTHER HAND THERE IS NO ROOM FOR ADDITION TO BE MADE ON PR OTECTIVE BASIS. REFERRING TO THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. FUSSI FINANCIAL SERVICES PRIVATE LI MITED VIDE ITA NO.4227/DEL/2014 ORDER DATED 05.06.2017 FOR THE A.Y . 2005-06 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THAT THERE MAY BE SUBSTANTIVE ASSESSMENT WITHOUT ANY PRO TECTIVE PAGE | 11 ASSESSMENT, HOWEVER, THERE CANNOT BE ANY PROTECTIVE ASSESSMENT WITHOUT THERE BEING A SUBSTANTIVE ASSESSMENT. HE AL SO RELIED ON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF MP RAMCHANDARA VS. DCIT REPORTED IN 32 SOT 592 AND SURESH K. JAJOO VS. ACIT REPORTED IN 39 SOT 514 AND VARIOU S OTHER DECISIONS AND SUBMITTED THAT SINCE NO SUBSTANTIVE A DDITION HAS BEEN MADE IN THE HAND OF ANY OTHER PERSON, THEREFOR E, THERE CANNOT BE ANY PROTECTIVE ADDITION IN THE HANDS OF T HE ASSESSEE. 16. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE LD. CIT(A) SO FAR AS THE ADDITION OF RS.23,56,6 1,265/- IS CONCERNED SHE SUBMITTED THAT THE ASSESSEE WAS UNABL E TO GIVE THE FULL DETAILS REGARDING THE SOURCE OF SUCH DEPOSITS AND NAME OF THE PERSONS WHO HAD GIVEN THE MONEY AND, THEREFORE, THE AO WAS FULLY JUSTIFIED IN MAKING THE ADDITION ON PROTECTIV E BASIS WHICH HAS BEEN RIGHTLY UPHELD BY THE CIT(A). SO FAR AS T HE ADOPTION OF RATE OF 3% COMMISSION IS CONCERNED, SHE SUBMITTED T HAT THE SAME IS REASONABLE AND THEREFORE, THE SAME SHOULD BE UPH ELD. SHE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) ON THESE TWO ADDITIONS SHOULD BE UPHELD. 17. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE AO ON THE BASIS OF THE DEPOSITS IN THE BANK STATEMENT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION NOTED THAT AN AMOUNT OF RS.23,5 6,61,265/- PAGE | 12 HAS BEEN GIVEN TO VARIOUS PERSONS AS ACCOMMODATION ENTRY AND SINCE THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF SUCH DEPOSITS IN THE BANK ACCOUNT MADE ADDITION OF RS.23,56,61,26 5/- AS UNEXPLAINED DEPOSITS OF THE ASSESSEE ON PROTECTIVE BASIS. HE FURTHER MADE ADDITION OF RS.70,69,838/- BEING COMMI SSION @ 3% OF SUCH DEPOSITS AS INCOME OF THE ASSESSEE. 18. SO FAR AS THE ADOPTION OF RATE 3% COMMISSION IS CONCERNED, WE FIND THERE IS NO SUCH BASIS IN THE ORDER AS TO H OW THE AO HAS ARRIVED AT THE COMMISSION RATE OF 3% ON SUCH ACCOMM ODATION ENTRIES. THE COORDINATE BENCHES OF THE TRIBUNAL UN DER IDENTICAL CIRCUMSTANCES ARE ADOPTING THE RATE OF COMMISSION V ARYING FROM @ 0.15% TO 0.5%. CONSIDERING THE TOTALITY OF THE F ACTS OF THE CASE WE DIRECT THE AO TO ADOPT THE PROFIT RATE OF 0.5% A S COMMISSION ON SUCH ACCOMMODATION ENTRY OF RS.23,56,61,255/-. A CCORDINGLY THE ORDER OF THE CIT(A) IS MODIFIED AND THE AO IS D IRECTED TO RESTRICT THE ADDITION TO RS.11,78,306/- BEING COMMI SSION @0.5% OF RS.23,56,61,265/- AS AGAINST RS.70,69,838/- ADOP TED BY HIM AND UPHELD BY THE CIT(A). 18.1 NOW, COMING TO THE ADDITION OF RS.23,56,61,265 /- ON PROTECTIVE BASIS WE FIND FROM THE ORDER OF THE AO A S WELL AS THE CIT(A) THAT THERE IS NO SUCH ADDITION ON SUBSTANTIV E BASIS IN ANY OTHER HAND. THE AO HAS MADE THE ADDITION ON PROTECT IVE BASIS WITHOUT MAKING ANY ADDITION ON SUBSTANTIVE BASIS IN ANY OTHER HAND. IT HAS BEEN HELD IN VARIOUS DECISIONS THAT I F NO SUBSTANTIVE ADDITION HAS BEEN MADE IN ANY OTHER HAND, THEN THER E CANNOT BE PAGE | 13 ANY PROTECTIVE ADDITION. THE DELHI BENCH OF THE TRI BUNAL IN THE CASE OF SH. ANUJ KUMAR (SUPRA) AND IN THE CASE OF F USSI FINANCIAL SERVICES PRIVATE LIMITED (SUPRA) HAS HELD THAT WHEN AO HAS NOT MADE ANY ADDITION ON SUBSTANTIVE BASIS THERE CANNOT BE ANY PROTECTIVE ADDITION. IT HAS BEEN HELD THAT THERE MA Y BE SUBSTANTIVE ASSESSMENT WITHOUT THERE BEING A PROTEC TIVE ASSESSMENT. HOWEVER, THERE CANNOT BE ANY PROTECTIV E ASSESSMENT OR ADDITION WITHOUT ANY SUBSTANTIVE ASSESSMENT OR A DDITION. SINCE IN THE INSTANT CASE THE AO HAS NOT MADE ANY S UBSTANTIVE ASSESSMENT OR ADDITION IN ANY OTHER HAND, THEREFORE , THE PROTECTIVE ADDITION MADE IN THE HANDS OF THE ASSESS EE BEING NOT IN ACCORDANCE WITH LAW HAS TO BE DELETED. WE ACCORDIN GLY SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION OF RS.23,56,61,265/- MADE BY HIM ON PROTECTIVE BASIS W ITHOUT MAKING ANY ADDITION ON SUBSTANTIVE BASIS. 19. IN GROUND NO. 6 THE ASSESSEE HAS CHALLENGED THE ORDER OF THE CIT(A) IN SUSTAINING THE ADDITION OF RS.26,54,5 91/- FOR ALLEGED UNACCOUNTED PURCHASES. 20. FACTS OF THE CASE, IN BRIEF, ARE THAT DURING TH E COURSE OF SURVEY AT THE OFFICE PREMISES OF THE ASSESSEE, A DO CUMENT MARKED ANNEXURE A-1 CONTAINING 80 PAGES WAS IMPOUNDED WHIC H CONTAINED DETAILS OF SALES OF RS.6,97,54,767/- DURI NG THE MONTHS OF JULY TO OCTOBER 2010 PERTAINING TO 38 PARTIES. THE AO TREATED THESE TRANSACTIONS AS UNACCOUNTED SALES AND APPLIED THE GP RATE OF 1.42% WHICH IS THE RATE DISCLOSED FOR THE A.Y. 2 010-11. THE AO PAGE | 14 THEREAFTER EXTRAPOLATED THE SALES AND APPLYING GP @ 1.42 % ON THE TURNOVER OF RS.64,70,28,619/-ESTIMATED THE GP A T RS.90,44,509/-. HE ALSO COMPUTED THE UNACCOUNTED CA PITAL INVOLVED IN THE UNEXPLAINED TURNOVER @ 2,11,99,403/ - ON THE BASIS OF TOTAL CAPITAL RS.5177590/-. 20.1 IN APPEAL THE LD. CIT(A) SUSTAINED AN AMOUNT O F RS.26,54,591/- AND DELETED THE BALANCE ADDITION BY OBSERVING AS UNDER :- TO ADDRESS THE ISSUE IT WOULD BE APPROPRIATE TO EX AMINE THE STATEMENT OF SH. AKHLAK AHMAAD RECORDED DURING THE COURSE OF SURVEY. IN HIS STATEMENT SH. AKHLAK AHMAD HAS DEPO TED THAT I) HE IS AN EMPLOYEE OF BHARAT STEEL ROLLING MILL, MEERUT ROAD MUZAFFARNAGAR EARNING A SALARY OF RS. 10000/'- PER MONTH LOOKING AFTER SALES. II) BHARAT STEEL ROLLING MILL WAS OWNED BY SH. BANT Y AND SH. RAMAVTAR OF MUZAFFARNAGAR ALSO WORKS ON HIS BEHALF. ON THE DATE OF SURVEY, HE HAD COME TO MEET SH. RAM AVTAR IN THE OFFICE OF SH. MANOJ JAIN. III) HE HAD COME TO MEET SH. RAM AVTAR TO HAVE TEA IV) IN QUESTIONS 7 TO 13, SH. AKHLAK AHMAD WAS ASKE D AND REPLIED AS UNDER :- IT IS RELEVANT TO SEE THAT THE SAID ANNEXURE-AL IMP OUNDED DURING THE SURVEY ALSO HAS 80 PAGES CONTAINING DETA ILS OF SALES. IT IS ALSO NOTEWORTHY THAT IN THESE DOCUMENTS AS PER T HE ASSESSMENT ORDER THERE ARE ENTRIES OF RISHABH TRADING COMPANY, GHAZIABAD AMOUNTING TO RS.2654591/- AT SR.NO.36 IN THE TABLE GIVEN IN THE ASSESSMENT ORDER. PAGE | 15 BESIDES, ALSO NOTEWORTHY .IS THE STATEMENT OF SH. A JAY EMPLOYEE OF RISHABH TRADING COMPANY PROP. SH. MANOJ JAIN AT THE SURVEY PREMISES. THE QUESTION NO. 24 AND ANSWER THEREOF IS BEING REPRODUCED BELOW:- IN LIGHT OF ABOVE FACTS, THE CONTENTIONS OF THE APP ELLANT THAT TRANSACTION IN THESE PAPERS DO NOT BELONG TO HIM HA VE MERIT AND THE ASSESSING OFFICER HAS OFFERED NO COMMENTS ON TH E ASSESSEES OBJECTION AT THE ASSESSMENT STAGE OR THE REMAND REP ORT. IN FACTS AND CIRCUMSTANCES OF THE CASE, THE ABOVE STATEMENTS BEING ON RECORD AND NOT CONTROVERTED, I AM OF THE VIEW THAT THE SALES CONTAINED IN THESE PAGES DO NOT PERTAIN TO THE ASSE SSEE IN ENTIRETY. WERE THESE SALES OF THE ASSESSEE, NAME OF HIS CONCE RN WOULD NOT APPEAR IN THE LIST OF SALES OF THE ASSESSEE. THEREF ORE, ADDITION OF G.P. WITH RESPECT TO THE SALES AND THE EXTRAPOLATIO N THEREOF IS NOT SUSTAINABLE. HOWEVER, IT IS TRUE THAT THE PURCHASE OF RS. 2654591/- PERTAINING TO THE ASSESSEE ARE RECORDED I N THESE DOCUMENTS. THE EMPLOYEE OF THE ASSESSEE, SH. AJAY S AINI HAS DENIED ANY CONNECTION WITH THIS ACCOUNT. THIS LEADS TO THE INFERENCE THAT THESE REPRESENT UNACCOUNTED PURCHASE OF THE ASSESSEE EVEN THOUGH THE ASSESSEE HAS DENIED ANY RE LATION WITH THESE DOCUMENTS. SUCH DENIAL IS CONTRARY TO THE DOC UMENTARY EVIDENCE. THEREFORE, THESE REPRESENT UNACCOUNTED PU RCHASES OF THE ASSESSEE. THEREFORE, ADDITION OF RS. 2654591/- IS S USTAINED AND BALANCE ADDITION ON ACCOUNT OF UNACCOUNTED SALES IS DELETED. GROUND NO.8 IS PARTLY ALLOWED. IN VIEW OF ABOVE, ADDITION ON ACCOUNT OF INITIAL CA PITAL CONTESTED IN GROUND OF APPEAL NO. 1L IS DELETED AS IT IS HELD THAT THIS IS NOT TURNOVER OF THE APPELLANT. 13. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PAGE | 16 21. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE AS SESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 22. WE HAVE HEARD THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSI DERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE AO IN THE INSTANT CASE, ON THE BASIS OF DOCUMENTS SEIZED MARKED AS AN NEXURE-A-1 CONTAINING 80 PAGES WHICH WERE IMPOUNDED DURING THE COURSE OF SURVEY NOTED THAT THE SAID NOTE SHEET CONTAINS UNEX PLAINED PURCHASE OF RS.26,54,591/- AND ACCORDINGLY MADE ADD ITION OF THE SAME WHICH HAS BEEN UPHELD BY THE CIT(A). THE ADDI TION MADE BY THE AO ON ACCOUNT OF BUSINESS INCOME FROM OUTSID E BOOKS OF ACCOUNT AND UNEXPLAINED INITIAL INVESTMENT HAS BEEN DELETED BY THE CIT(A) AND THE REVENUE IS NOT IN APPEAL BEFORE US AND, THEREFORE, WE ARE NOT CONCERNED WITH THE SAME. 22.1 SO FAR AS THE ADDITION OF RS.26,54,591/- ON AC COUNT OF UNACCOUNTED PURCHASES IS CONCERNED IN OUR OPINION O NLY THE PROFIT ELEMENT IN SUCH UNACCOUNTED PURCHASE SHOULD BE MADE ESPECIALLY WHEN THERE IS NO UNACCOUNTED STOCK FOUND DURING THE SURVEY ON ACCOUNT OF SUCH UNACCOUNTED PURCHASES. I N OUR OPINION PROFIT RATE @10% ON SUCH UNACCOUNTED PURCHA SE WILL BE REASONABLE AND WILL MEET THE ENDS OF JUSTICE. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DIR ECT THE AO TO RESTRICT THE ADDITION TO RS.2,65,459/- AS AGAINST R S.2654591 PAGE | 17 MADE BY THE AO AND SUSTAINED BY THE CIT(A). THE GRO UNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY PARTLY ALLOWED. 23. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.05.2020. SD/- SD/- (H.S. SIDHU) (R.K PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER *NEHA* DATE:-22.05.2020 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 16.03.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 17.03.2020 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS 22.05.2020 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 22.05.2020 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 22.05.2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 22.05.2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 22.05.2020 DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER PAGE | 18