Vikas Jain, New Delhi V. DCIT, New Delhi

ITA 364/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0232 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 02-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 27-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMRENDER KUMAR
• Keywords: Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `H: NEW DELHI BEFORE SHRI C.L.SETHI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER I.T. A. NO.484/DEL/2010 ASSESSMENT YEAR : 2006-07 DY. COMMISSIONER OF INCOME-TAX, SHRI VIKAS JAIN, CENTRAL CIRCLE-10, NEW DELHI. VS. PROP. M/S. VIKAS TRADERS, E-128, G.K.-III, MASJID MOTH, NEW DELHI. PAN: AFSPJ8585N I.T.A. NO.364/DEL/2010 ASSESSMENT YEAR : 2006-07 VIKAS JAIN, DY. COMMISSIONER OF INCOME-TAX, E-128, GREATER KAILASH-II, VS. CENTRAL CIRCLE-10, N EW DELHI. MASJID MOTH, NEW DELHI. PAN: AFSPJ8585N (APPELLANTS) (RESPONDENTS) DEPARTMENT BY: SHRI AMRENDER KUMAR, SR. DR. ASSESSEE BY: SHRI RAJI V JAIN, CA. O R D E R PER C.L. SETHI, JUDICIAL MEMBER: BOTH REVENUE AND ASSESSEE ARE IN APPEAL AGAINST THE ORDER DATED 13.11.2009 PASSED BY THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS) PERTAINING TO THE ASSESSMENT YEAR 2006-07. 2 2. IN THIS CASE, THE ASSESSEE HAS CLAIMED TO BE ENG AGED IN THE BUSINESS OF TRADING OF COPPER AND ALUMINIUM SCRAP ON CONSIGNMEN T BASIS. HE HAS SHOWN A COMMISSION INCOME OF RS.2,42,187/- FROM THIS TRAN SACTION. IN THE LIGHT OF THE FACTS AND EVIDENCES FOUND DURING THE COURSE OF SEARCH AND SURVEY OPERATIONS CONDUCTED AGAINST GARIMA INTERNATIONAL G ROUP OF CASES AS WELL AS AGAINST THE ASSESSEE, THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEES STAND THAT THE ASSESSEE IS ENGAGED IN THE REAL BUSI NESS OF CONSIGNMENT SALES. THE AO HELD THAT THE ASSESSEE WAS ACTUALLY ENGAGED IN PROVIDING ACCOMMODATION ENTRIES IN THE SAME WAY, AS SHRI SANJ EEV KUMAR AGGARWAL, BRAIN BEHIND GARIMA INTERNATIONAL GROUP AND SHRI JI TENDER KUMAR JAIN PROPRIETOR OF M/S. R.N. TRADERS. THE AO ALSO DID N OT ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEES COMMISSION ON C ONSIGNMENT SALES WAS ONLY RS.0.05 PER KG. OF METAL SCRAP. IN THE LIGHT OF THE INFORMATION GATHERED DURING THE SURVEY, THE AO ESTIMATED COMMISSION INCO ME OF THE ASSESSEE FOR PROVIDING ACCOMMODATION ENTRY AT RS.0.50 PER KG. OF METAL SCRAP AS AGAINST RS.0.05 PER KG. SHOWN BY THE ASSESSEE. THE AO THEN ESTIMATED THE TOTAL TURNOVER OF THE BUSINESS OF ACCOMMODATION ENTRY AT RS.80,92,08,907/-. THE AO WORKED OUT THE TOTAL QUANTITY OF COPPER/METAL TO BE 34,43,442 KG. BY TAKING AVERAGE RATE OF COPPER AT RS.235/- PER KG. TAKING COMMISSION AT RS.0.50 PER KG. THE AO WORKED OUT THE TOTAL COMMISS ION OF THE ASSESSEE AT 3 RS.17,21,721/- OUT OF WHICH HE ALLOWED EXPENSES TO THE EXTENT OF 25% THEREOF. THE AO THEREFORE, ESTIMATED THE NET INCOM E OF THE ASSESSEE AT RS.12,91,291/- AS AGAINST COMMISSION INCOME SHOWN B Y THE ASSESSEE AT RS.2,42,187/-. IN THIS MANNER, HE MADE AN ADDITION OF RS.10,49,104/-. 3. ON AN APPEAL, AFTER CONSIDERING THE VARIOUS FACT S POINTED OUT BY THE AO IN THE ASSESSMENT ORDER, THE ASSESSEES SUBMISSI ON AND THE VARIOUS CONTRADICTIONS IN THE AOS STAND AND ASSESSEES STA ND, THE CIT(A) ADOPTED THE COMMISSION INCOME OF THE ASSESSEE AT 0.20 PER K G. AS AGAINST 0.50 KG. ESTIMATED BY THE AO. THE LEARNED CIT(A) HOWEVER, T AKEN THE QUANTITY OF GOODS AT 47,35,501 KG. AS PER THE ASSESSEES BOOKS OF ACCOUNT, WHICH IS HIGHER THAN THE QUANTITY ESTIMATED BY THE AO AT 34, 43,442/- KG. REGARDING ALLOWING EXPENSES @ 25%, THE LEARNED CIT(A) DID AGR EE WITH THE AOS VIEW. IN THIS MANNER, THE CIT(A) ESTIMATED THE TOT AL COMMISSION INCOME OF THE ASSESSEE AT RS.7,10,325/- AS AGAINST RS.12,91,2 90/- ESTIMATED BY THE AO AND RS.2,42,187/- SHOWN BY THE ASSESSEE. HE, THERE FORE, ALLOWED A RELIEF OF RS.5,80,966/- TO THE ASSESSEE. 4. THE DEPARTMENT IS IN APPEAL AGAINST THE CIT(A)S ORDER IN REDUCING THE TOTAL INCOME FROM RS.12,91,290/- TO RS.7,10,325/-. ON THE OTHER HAND, THE ASSESSEE IS IN APPEAL AGAINST THE CIT(A)S ORDER IN ESTIMATING THE ASSESSEES 4 INCOME FROM COMMISSION AT RS.7,10,325/- AS AGAINST RS.2,42,187/- SHOWN BY THE ASSESSEE. 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 6. AFTER CAREFULLY GOING THROUGH THE VARIOUS REASON S AND FACTS HIGHLIGHTED BY THE CIT(A) IN HIS ORDER, WE ARE OF T HE CONSIDERED VIEW THAT THE CIT(A) HAS TAKEN A REASONABLE VIEW IN ESTIMATIN G THE ASSESSEES INCOME AT RS.7,10,325/- AS WOULD BE CLEAR FROM HIS DISCUSS ION IN PARA 2.3.2 TO 2.3.5 OF HIS ORDER WHICH ARE REPRODUCED HEREUNDER FOR REA DY REFERENCE:- 2.3.2. ON A CAREFUL PERUSAL OF THE REPORT FROM ADI , THE ORDERS OF A.O. IN THE CASES OF THE APPELLANT AND SH . SANJEEV KUMAR AGGARWAL AND SUBMISSION OF THE APPELLANT, IN MY OPINION FOLLOWING PICTURES EMERGES: I) THERE ARE CERTAIN SELLERS OF COPPER (METAL) SCRAP A ND CERTAIN PURCHASERS OF THE SAME. IN A COLLUSIVE DEV ICE TO AVOID INCIDENCE OF VARIOUS TAXES INCLUDING SALES TA X, THE ENTRY OPERATORS ARE BEING ENGAGED TO PROVIDE BOGUS BILLS OF PURCHASES AND BOGUS BILLS OF CONSIGNMENT SALES. II) IT IS NOT THE CASE THAT NO GOODS HAD ACTUALLY BEEN TRANSFERRED AS THE APPELLANT HAS PRODUCED THE BILLS FROM AGGARWAL SALES CORPORATION WHICH AHS BEEN DULY ENDORSED AT DHARUHERA CHECK POST, BHIWADI GOVT. OF RAJASTHAN. THE VEHICLE NO. ETC. IS ALSO MENTIONED IN THE BILLS. THIS SHOWS THAT GOODS ARE ACTUALLY MOVED BU T NOT FROM THE AGGARWAL SALES CORPORATION OR M/S. GARIMA INTERNATIONAL THOUGH THEIR NAME AHS BEEN USED AS SE LLER OF THESE GOODS. III) SH. SANJEEV KUMAR AGGARWAL IS A PERSON WHO IS ORGANIZING THE BOGUS BILLS OF PURCHASES AND SALES A ND HE IN TURN HAS APPARENTLY ENGAGED THE APPELLANT AS CONSIGNMENT AGENT WHO IN TURNS GIVES BILLS OF 5 CONSIGNMENT SALES FROM BHIWANI, RAJASTHAN TO AVOID ST/VAT. 2.3.3. THE APPELLANT IS DEFINITELY NOT ENGAGED IN A GENUINE BUSINESS BUT IS ENTRY PROVIDER IN THE SENSE THAT HE IS SIMPLY RECEIVING THE GOODS ON PAPER AND THEN ISSUIN G BILLS OF CONSIGNMENT SALES TO THE PARTIES AT JAMMU AND IN TU RN GETTING COMMISSION FOR ISSUING THE BILLS. HE HIMSELF IS NO T TAKING POSSESSION OF THE GOODS AND NOT MAKING ANY DELIVERY OF THE GOODS. IN OTHER WORDS HE IS ONE OF THE CONDUITS IN THE ENTIRE PROCESS AND THEREFORE HIS INCOME IS ONLY OF COMMISS ION AS RIGHTLY HELD BY THE AO BUT HE IS NOT THE ENTRY PROV IDER IN THE SAME WAY AS SHRI SANJIV KUMAR AGGARWAL. WHEREAS SH . SANJAY KUMAR AGGARWAL IS MAIN ENTRY PROVIDER, THE APPELLAN T IS HIS ACCOMPLISH IN THIS JOB. THUS THE OBSERVATION OF TH E A.O. IS NOT CORRECT THAT THE APPELLANT IS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES IN THE SAME WAY AS SH. SANJEE V KUMAR AGGARWAL. RATHER HE IS PART OF THE CHAIN OF PROVID ING ENTRIES. THEREFORE, THE ACTION OF THE AO IN ESTIMATING SAME RATE OF COMMISSION AS IN THE CASE OF SH. SANJEEV KUMAR AGGA RWAL IS ALSO NOT UPHELD. 2.3.4. IN THE CASE OF SH. SANJEEV KUMAR AGGARWAL, MY PREDECESSOR CIT(A) IN HIS ORDER NO.DEL/CIT(A)-II/07 -08/574 DATED 2.5.2008 HAS HELD HIS COMMISSION INCOME @ RS. 0.40 PER KG. AS AGAINST RS.0.50 ESTIMATED BY THE A.O. AS HE LD EARLIER, SH. SANJEEV KUMAR AGGARWAL IS THE MAIN ENTRY PROVID ER AND THEREFORE HE WILL BE PASSING ON COMMISSION PARTLY T O THE APPELLANT OUT OF THE COMMISSION SO RECEIVED BY HIM. I, THEREFORE, FEEL IT MOST APPROPRIATE TO ESTIMATE THE COMMISSION OF THE APPELLANT FOR ISSUING THE BILLS OF CONSIGNMENT SALE @ RS.0.20 PER KG OF METAL SCRAP. AS NOW APPELLANT IS AWARE OF THE STATEMENT OF SH. SANJEEV KUMAR AGGARWAL AND ADDITIO N IS ALSO NOT BEING MADE BASED ON HIS STATEMENT, THERE IS NO NEED TO GIVE A COPY OF STATEMENT OF SH. SANJEEV KUMAR AGGARWAL T O THE APPELLANT AND OPPORTUNITY TO CROSS EXAMINE HIM AS W ELL. 2.3.5. FURTHER, IT IS SEEN THAT A.O. ESTIMATED THE TOTAL TURNOVER OF 34,43,442/- KGS BY APPLYING THE AVERAGE RATE OF COPPER. ON THE OTHER HAND THE APPELLANT HAS SUBMIT TED IN HIS 6 PAPER BOOKS THAT ETH QUANTITY OF COPPER AND ALUMINI UM SCRAP DEALT WITH BY HIM DURING THE YEAR IS 4735501 KGS. A S PER HIS BOOKS OF ACCOUNTS (WHICH IS HIGHER THAN THE QUANTIT Y ESTIMATED BY THE AO AT 34,43,442/- KGS). AS THE EXACT QUANTI TY HAS BEEN RECORDED IN THE BOOKS, I DO NOT FIND ANY REASON TO ESTIMATE THE QUANTITY OF TRANSACTION ON ARITHMETICAL BASIS. THE REFORE, COMMISSION IS ESTIMATED ON THIS QUANTITY OF 4735501 KGS. @ 0.20 PER KG. WHICH COMES TO RS.9,47,100/- (4735501 X 0.20). THEREFORE, THE GROSS COMMISSION IN THE CASE OF THE APPELLANT IS ESTIMATED AT RS.9,47,100/- AS AGAINST RS.17,21,721/ - ADOPTED BY THE A.O. WITHOUT INTERFERING IN THE ESTIMATION OF EXPENSES @ 25%, THE NET COMMISSION COMES TO RS.7,10,325/-. TH US A.O. IS DIRECTED TO ADOPT TOTAL INCOME OF RS.7,10,325/- AGA INST RS.12,91,290/- ADOPTED BY HIM. THE APPELLANT GETS RELIEF OF RS.5,80,966/-. 7. IN THE COURSE OF HEARING BOTH THE PARTIES HAVE N OT BEEN ABLE TO POINT OUT ANY IRREGULARITY OR UN-JUSTIFICATION ON THE PAR T OF THE CIT(A) IN ESTIMATING THE ASSESSEES INCOME FROM COMMISSION AT RS.7,10,325/-. WE ARE, THEREFORE, INCLINED TO UPHELD THE ORDER OF THE CIT(A). THUS, THE ORDER OF THE CIT(A) IS UPHELD AND APPEAL OF THE REVENUE AS W ELL AS OF THE ASSESSEE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE A S WELL AS BY THE ASSESSEE, BOTH ARE DISMISSED. 9. THIS DECISION IS PRONOUNCED IN THE OPEN COURT ON 11 TH MARCH, 2011. SD/- SD/- (B.C. MEENA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH MARCH, 2011. 7 ITA NOS.484 & 364/DEL/2010 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.