RAHUL L. SINGHVI, MUMBAI V. ASST CIT CEN CIR 13, MUMBAI

ITA 3654/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0812 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 26-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R AHUL RAMAN
• Keywords: Bogus Share capital; Income from undisclosed sources; Search and seizure; Document seized; Accommodation entries; Onus to prove; Condonation of delay
• Section: 143(3); 153A; 131; 132

Judgement Text

H IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.3653/ MUM/2016 ( / ASSESSMENT YEAR : 2010-11) ./ I.T.A. NO.3654/ MUM/2016 ( / ASSESSMENT YEAR : 2009-10) ./ I.T.A. NO.3655/ MUM/2016 ( / ASSESSMENT YEAR : 2011-12) SHRI RAHUL L. SINGHVI, C/O SHRI PRAKASH JHUNJHUNWALA, CHARTERED ACCOUNTANT, 5, JOLLY BHAWAN NO. 2, GROUND FLOOR, 7 NEW MARINE LINES, CHURCHGATE, MUMBAI 400 020. / V. ASST. COMM. OF INCOME TAX CENTRAL CIRCLE 13, MUMBAI. ./ PAN : ABAPS8698F ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SHRI PRAKASH G. JHUNJHUNWALA AND SHRI ABHISHEK JHUNJHUNWALA REVENUE BY : SHRI RAHUL RAMAN, CIT - DR / DATE OF HEARING : 09-03-2017 / DATE OF PRONOUNCEMENT : 11-05-2017 ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 2 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THESE THREE APPEALS BY THE ASSESSEE ARE DIRECTED AG AINST COMMON ORDER DATED 22 ND SEPTEMBER, 2015 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)- 48, MUMBAI (HEREINAFTER CALLED THE C IT (A)) PERTAINING TO THE ASSESSMENT YEARS 2009-10 TO 2011-12. SINCE IDENTIC AL ISSUES ARE INVOLVED IN ALL THREE APPEALS, THESE APPEALS WERE HEARD TOGETHE R AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND B REVITY. 2. THE COMMON GROUNDS OF APPEAL RAISED BY THE ASSES SEE IN ALL THESE APPEALS (ONLY DIFFERENCE IN AMOUNT) IN THE MEMO OF APPEALS FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- FIRST, WE SHALL TAKE UP ASSESSEES APPEAL IN ITA NO . 3654/MUM/2016 FOR ASSESSMENT YEAR 2009-10. 1.0 A HUMBLE PRAYER IS MADE TO CONDONE THE DELAY OF 167 DAYS IN FILING OF THE APPEAL BEING CAUSED UNDER THE BONAFIDE REASONS AND COMPELLING CIRCUMSTANCES BEYOND CONTROL OF THE APPEL LANT; 2.0 ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , LD. CIT(A) ERRED IN UPHOLDING THE SEARCH WARRANT U/S 132(1) AND CONSEQUENTIAL ASSESSMENT ORDER U/S 153A AS VALID WITHOUT CONSIDERIN G THE FACT THAT THE SEARCH WARRANT HAD BEEN INVALIDLY ISSUED IN JOINT NAMES OF 2 DIFFERENT PERSONS; 3.0 ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , LD. CIT(A) ERRED IN CONFIRMING THE ADDITION, ON ESTIMATION BASIS , OF UNDISCLOSED COMMISSION INCOME OF RS. 8,70,800/- @ 1% OF GROSS T RANSACTION VALUE ON IGNORING THE FACT THAT THE APPELLANT, IN STATEMENT U/ S 132(4), DISCLOSED THE COMMISSION INCOME @ 0.L0% OF TRANSACTIO N VALUE; 4.0 THE LD. CIT(A), BEFORE ESTIMATING THE UNDISCLOSE D COMMISSION INCOME ON VERY HIGHER SIDE @ 1% OF ENTIRE TRANSACTIONS , ERRED IN NOT CONSIDERING THE UNDERSTATED VITAL FACTS, BEING; ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 3 A) THE APPELLANT, IN STATEMENT RECORDED U/S 132(4), S TATED OF HAVING EARNED A MEAGER INTRODUCTORY COMMISSION @ 0.1 0% OF TRANSACTION VALUE; B) THE MAIN BROKER MR TEJAS SHAH, IN STATEMENT U/S 13 1, CONFIRMED THAT THE APPELLANT ACTED AS MERELY AS A MIDDL EMAN AND NORMAL BROKERAGE EARNED IS AROUND @ 0.30% TO 0.4 0% OF TRANSACTION VALUE; C) THE COMPARATIVE INSTANCES RELIED BY THE APPELLANT D ISCLOSES THE COMMISSION INCOME OF 0.15% TO 0.35% OF TRANSACTIO N VALUE; D) THE UNDISCLOSED COMMISSION EARNED BY MAIN BROKER MR TEJAS SHAH CANNOT BE TAXED IN HANDS OF THE APPELLANT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CHARTERED ACCOUNTANT BY PROFESSION AND IS HAVING INCOME FROM PROFESSION AND OTHER SOURCES. 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS APPEAL IS DELAYED BY 167 DAYS. AFFIDAVIT DATED 07-0 3-2017 FOR CONDONATION OF DELAY HAS BEEN FILED WHEREBY THE ASSESSEE AVERRED A ND DEPOSED IN THE SAID AFFIDAVIT THAT THE APPEAL COULD NOT BE FILED IN TIM E AS THE ASSESSEE WAS TERRIBLY DISTURBED DUE TO SERIOUS MEDICAL ILLNESS OF HIS FAT HER SH. LEKRAJ SINGHVI WHO IS RESIDING IN JAIPUR. IN HIS ABOVE STATED AFFIDAV IT DATED 07-03-2017 FILED BY THE ASSESSEE, IT IS STATED THAT HIS FATHER SUFFERE D A BRAIN STROKE RESULTING INTO LOSS OF EYE-VISION AND PARALYSIS AND WAS HOSPITALIZ ED SEVERAL TIMES. IT IS DEPOSED IN THE SAID AFFIDAVIT THAT DUE TO THE ABOVE COMPELLING CIRCUMSTANCES HE HAD TO GO TO JAIPUR FREQUENTLY FOR A SUBSTANTIAL PERIOD OF TIME TO ATTEND HIS FATHERS ILLNESS. THEREAFTER, HIS FATHER SUFFERED FROM LUNG CANCER AND DUE TO ALL THESE PROBLEMS, THE ASSESSEE COULD NOT CONCENTR ATE ON HIS BUSINESS AND OTHER TAX MATTERS , ARE THE DEPOSITION AND AVERMENT S OF THE ASSESSEE IN THE SAID AFFIDAVIT DATED 07-03-2017. THE ASSESSEE HAS A LSO PLACED ON RECORD DOCUMENTS BY WAY OF HOSPITAL AND DOCTOR RECORDS CON CERNING MEDICAL ILLNESS OF HIS FATHER WHICH ARE PLACED IN FILE. THE AFFIDAV IT ALONG WITH OTHER ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 4 HOSPITAL/MEDICAL RECORDS ARE FILED BY THE ASSESSEE AND IS PLACED ON RECORD VIDE PAGE NO. 1 TO 20 IN FILE. THUS, THE ASSESSEE PRAYED THAT THE DELAY OF 167 DAYS MAY BE CONDONED AND THE APPEAL MAY BE DECIDED ON MERITS. THE LD. CIT- D.R. AFTER PERUSAL OF THE DOCUMENTS ON RECORDS SUBM ITTED THAT SINCE THE ASSESSEE HAS PRODUCED ALL THE RELEVANT RECORDS CONC ERNING ILLNESS OF HIS FATHER, THE DECISION IN THIS MATTER IS LEFT TO THE DISCRETION OF BENCH TO BE DECIDED ON MERITS IN THE INTEREST OF JUSTICE. WE H AVE OBSERVED THAT THE APPEAL IS DELAYED BY 167 DAYS. THE ASSESSEE HAS BROUGHT ON RECORD DOCUMENTS EVIDENCING ILLNESS OF THE FATHER WHICH INCLUDED HOS PITAL RECORDS AND TREATMENT RECORD FROM 21-05-2015 TO 30-11-2016. THE FATHER WA S TREATED AT BOTH JAIPUR AND MUMBAI AS PER THESE MEDICAL RECORDS PLACED IN F ILE . THE ASSESSEE HAS CLAIMED THAT HIS FATHER MET WITH BRAIN STROKE AND T HEREAFTER SUFFERED LUNG CANCER AND DUE TO ALL THESE COMPELLING CIRCUMSTANCE S, THE ASSESSEE COULD NOT CONCENTRATE ON HIS WORK AS WELL AS THE TAX MATTERS. THUS, KEEPING IN VIEW THE GENUINE AND BONAFIDE REASONS DEMONSTRATED BY THE AS SESSEE AS ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE WAS PREVEN TED BY SUFFICIENT CAUSE IN FILING THE APPEAL IN TIME AND IN OUR CONSIDERED VIE W AND IN THE INTEREST OF JUSTICE , THE DELAY OF 167 DAYS IN FILING OF THE SE COND APPEAL BEFORE THE TRIBUNAL IS HEREBY CONDONED AND WE DIRECT ADMISSION OF ALL THE THREE APPEAL(S) FOR ADJUDICATION ON MERITS. THUS, ALL THE APPEALS B EARING ITA NO. 3653 TO 3555/MUM/2016 FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2010-11,2009-10 AND 2011-12 ARE DIRECTED TO BE ADMITTED TO BE ADJUD ICATED ON MERITS. WE ORDER ACCORDINGLY. 5. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT GROUND NO. 1, WHICH RELATES TO THE CONDONATION OF DELAY IS ALREADY ARGUED BY HIM SEPARATELY BEFORE THE TRIBUNAL AND HENCE THE SAME D OES NOT REQUIRE SEPARATE ADJUDICATION. GROUND NO. 2 IS NOT PRESSED BY THE LD . COUNSEL AND REQUEST HAS BEEN MADE DURING THE COURSE OF HEARING BY LEARNED C OUNSEL FOR THE ASSESSEE TO DISMISS THIS GROUND AS NOT BEING PRESSED. THE L D. D.R. HAS ALSO NOT RAISED ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 5 ANY OBJECTION FOR DISMISSAL OF GROUND NO 2 , WHILE IT IS AGREED BY LEARNED DR THAT GROUND NO 1 CONCERNS WITH CONDONATION OF DELAY OF 167 DAYS WHICH IS ALREADY ARGUED BY BOTH THE RIVAL PARTIES BEFORE THE TRIBUNAL. HENCE, AFTER HEARING BOTH THE PARTIES, WE DISMISS GROUND NO. 2 A S NOT PRESSED BEFORE THE TRIBUNAL. THE GROUND NO 1 IS ALREADY ADJUDICATED BY US IN PRECEDING PARAS OF THIS ORDER AND NOW IT DOES NOT REQUIRE SEPARATE ADJ UDICATION BY US. WE ORDER ACCORDINGLY. 6. WITH RESPECT TO THE GROUND NO. 3 AND 4, THE BRIE F FACTS OF THE CASE ARE THAT THE ASSESSEE WAS SEARCHED U/S 132 OF THE ACT O N 17 TH FEBRUARY, 2012 BY THE DDIT (INV.), BHAVNAGAR ALONG WITH SHIP BREAKERS GROUP OF BHAVNAGAR VIZ BANSAL SUB-GROUP AND LELEA SUB-GROUP. THE DDIT (INV .), BHAVNAGAR RECORDED THE STATEMENT OF THE ASSESSEE U/S 131 OF THE ACT AN D THEREAFTER ON VARIOUS DATES , WHEREBY THE ASSESSEE HAD ADMITTED THAT HE U SED TO RECEIVE CASH FROM KOMALKANT SHARMA AND IN TURN PROVIDE RTGS/CHEQUE EN TRIES TO LEELA SUB- GROUP AND BANSAL GROUP IN THE GUISE OF SHARE CAPITA L AND SHARE PREMIUM FROM FICTITIOUS COMPANIES. IN HIS STATEMENT , HE A LSO STATED THAT MR TEJASH J. SHAH RAN THE FICTITIOUS COMPANIES AND ENGAGED FEW P ERSONS OF NO MEANS AS DIRECTORS OF THESE COMPANIES. THE ASSESSEE FURTHER ADMITTED THAT HE RECEIVED 0.1% AS COMMISSION FOR ARRANGING BOGUS ENTRIES BY W AY OF CHEQUE AGAINST THE CASH FOR BANSAL GROUP AND LEELA GROUP. IN HIS STATEMENT RECORDED ON OATH U/S 131 OF THE AC T ON 13 TH MARCH, 2012, SH TEJASH J. SHAH HAD ADMITTED THAT HE HAD FLOATED VAR IOUS COMPANIES FOR THIS SCHEME OF CONVERSION OF CASH INTO CHEQUE THROUGH TH ESE BOGUS COMPANIES AND INTRODUCTION OF UNACCOUNTED INCOME INTO THE REG ULAR BOOKS OF ACCOUNT. IT WAS ALSO STATED BY SHRI TEJASH J. SHAH THAT THE ASS ESSEE WAS THE FACILITATOR FOR HANDLING THE CASH FROM SHIP BREAKERS THROUGH AN GDIAS AND ARRANGING CHEQUE FOR TEJAS SHAH GROUP COMPANIES AND CHEQUES W ERE INTRODUCED IN THE BANSAL GROUP AND LEELA GROUP OF COMPANIES AS SHARE CAPITAL AND SHARE ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 6 PREMIUM. THE EXTRACT OF THE STATEMENT RECORDED OF SHRI TEJASH J SHAH ON 13 TH MARCH, 2012 BY THE DDIT (INV.) BHAVNAGAR IS REPROD UCED HEREUNDER:- I DO HEREBY ACKNOWLEDGE AND CONFIRM THAT AFTER REC EIVING CASH FROM BANSAL OR LEELA GROUP OF BHAVNAGAR , THE SAME WAS C ONVERTED IN TO CHEQUES IN FAVOUR OF ANY OF MY MANAGED COMPANY FROM DIFFERENT SHROFFS SITUATED AT KALBADEVI, MUMBAI. LATER ON, AFTER ROTA TING SAID CHEQUE IN MY OWNED MANAGED COMPANIES, I USED TO ISSUE EITHER CHEQUE OR MAKE RTGS IN FAVOUR OF THE DESIRED CONCERN OF BANSAL OR LEELA GROUP OF BHAVNAGAR. MR. RAHUL SINGHVI IS THE MIDDLEMAN IN AL L THE TRANSACTIONS WHICH I HAVE MADE WITH MR. VIJAY BANSAL AND KOMALKA NT SHARMA. IN FACT, SHRI. RAHUL SINGHVI IS THE PERSONS WHO ASKS M E TO ARRANGE CHEQUE OF CERTAIN AMOUNT TO BANSAL OR LEELA GROUP OF BHAVN AGAR AND HE ONLY DISCUSS WITH SHRI. VIJAY BANSAL OR SHRI. KOMALKANT SHARMA ABOUT THE QUANTUM OF SHARE CAPITAL OR PREMIUM REQUIRED AND LA TER ON THROUGH ANGADIA ARRANGES CASH. THIS CASH IS ACTUALLY BEING SENT BY SHRI.VIJAY BANSAL AND KOMALKANT SHARMA FOR WANT OF DESIRED EN TRIES. WHEN THE BANK ACCOUNTS OF MR. VIJAY BANSAL AND KOMALKANT SHA RMA GOT CREDITED, SHRI. RAHUL SINGHVI USED TO CONFIRM THIS DEPOSITION OF CHEQUES TO MR. VIJAY BANSAL ON TELEPHONE. SIR HERE I WANT TO MENTION THAT THIS PRACTICE OF PR OVIDING CHEQUES-IN- EXCHANGE-OF CASH AMOUNT IS PREVALENT ACROSS MUMBAI AND THE PLACE KALBADEVI IN MUMBAI IS HUB OF SUCH FINANCIAL TRANS ACTIONS. SEVERAL PERSONS BASED IN KALBADEVI AREA OF MUMBAI ARE DOING BUSINESS OF PROVIDING CHEQUES IN EXCHANGE OF CASH AMOUNT. IT IS ALSO SUBMITTED THAT THIS IS A VOLUMINOUS NATURE OF CHEQUE-CASH TRA NSFER BUSINESS DONE ON DAILY BASIS AND SEVERAL PARTIES BANK ACCOUNTS/CH EQUES/SHARE TRANSFER FORMS/STAMP PADS/SIGNATURES ARE USED FOR M ULTI-LAYERING. SIR IN THIS BUSINESS BROKERAGE/COMMISSION INCOME @0.30- 0.40 PAISA PER HUNDRED RUPEES (RS. 30,000 RS. 40,000 PER CRORE) IS EARNED/GIVEN ON EVERY TRANSFER OF CASH/CHEQUE AMOUNT. THE MODUS OPERANDI FOR THIS ARRANGEMENT OF MOVEMENT OF UNACCOUNTED CASH AS ADMITTED BY SHRI TEJASH J SHAH AND ASSESSEE IS I N THE FOLLOWING STYLE:- GENERATION OF UNACCOUNTED CASH INCOME FROM SALE OF SHIP-BREAKING MATERIAL AT ALANG SHIP BREAKING YARD ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 7 COLLECTION AND DEPOSITION OF CASH AT OFFICE PREMIS ES AT BHAVNAGAR DEPOSITING THE CASH AT ANAGDIA OFFICE A T BHAVNAGAR TRANSFER OF CASH TO ANAGDIA OFFICE AT MUMBAI PROVIDING CASH AMOUNT TO RAHUL SINGHVI/TEJASH SHAH AT MUMBAI FOR CONVERSION OF CASH INTO CHEQUE IN THE GUISE OF SHAR E CAPITAL/SHARE PREMIUM DEPOSITION OF CHEQUES THROUGH FICTITIOUS COMPANIES IN THE BANK ACCOUNT OF LEELA SUB-GROUP CONCERNS. IT WAS ALSO ADMITTED BY THE ASSESSEE AND SHRI TEJAS H J SHAH THAT THE CASH RECEIVED FROM LEELA AND BANSAL GROUP WAS REINVESTED IN THEIR GROUP COMPANIES AS SHARE CAPITAL AFTER ROUTING THE SAME T HROUGH FICTITIOUS COMPANIES OF SHRI TEJAS J. SHAH AND IN MANY CASES T HE CASH WAS DEPOSITED IN SOME INDIVIDUAL SHROFFS ACCOUNT AND THE SAME WAS ROUTED THROUGH FEW LAYERS OF OTHER BANK ACCOUNTS AND ULTIMATELY THE MONEY WAS TRANSFERRED TO VARIOUS BENEFICIARY COMPANIES IN THE FORM OF SHARE CAPITAL/ PREMIUM. THE A.O. NOTED THAT BANSAL AND LEELA GROUP APPROACHED THE SETTLEME NT COMMISSION AND HAD OFFERED THE INVESTMENT MADE IN THE SHARE CAPITAL AS WELL AS COMMISSION PAID/EXPENDITURE INCURRED FOR PROCURING THE ACCOMMO DATION ENTRIES AS ADDITIONAL INCOME. FURTHER THE AO OBSERVED FROM THE PERUSAL OF PAGE NO. 101 OF THE SEIZED MATERIAL FROM THE ASSESSEE DURING SEA RCH U/S 132 OF THE 1961 ACT THAT THE ASSESSEE HAD RECEIVED COMMISSION RANGI NG FROM 1.5 TO 2.45% FOR ARRANGING THE BOGUS ENTRIES FOR LEELA GROUP AND BAN SAL GROUP. ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 8 THE A.O., BASED ON ABOVE FACTS, ISSUED SHOW CAUSE NOTICE DATED 26 TH MARCH, 2014 TO THE ASSESSEE , THE CONTENTS OF WHICH ARE RE PRODUCED BELOW:- 1. DURING THE COURSE OF SEARCH PROCEEDINGS, YOUR S TATEMENT RECORDED U/S 131 OF THE I.T. ACT, 1961, ON 17/02/20 12 AND THEREAFTER ON VARIOUS DATES, ADMITTED THAT YOU HAVE GIVEN BOGUS SHARE CAPITAL ENTRIES AMOUNTING TO RS. 4.15 CRS TO BANSAL GROUP AND ENTRIES AMOUNTING TO RS. 4,55,80,000/- TO LEEL A GROUP, NATRAJ LOGISTICS & SERVICES (P) LTD. AND KOMALRAJ T RANSPORT (P) LTD., FURTHER, YOU STATED THAT ALL THE FINANCIAL TR ANSACTIONS RECORDED ON THE PAGE NUMBER 101 OF THE IMPOUNDED MA TERIAL FROM YOUR PREMISES WERE NOTHING BUT THE CASH RECEI VED ON VARIOUS DATES FROM LEELA SUB-GROUP AND BANSAL GROUP , AND DATE- WISE CHEQUES DEPOSITED IN THEIR BANK ACCOUNTS. YOU FURTHER ADMITTED THAT YOU USED TO RECEIVE CASH FROM KOMALKA NT SHARMA AND IN TURN PROVIDE RTGS/CHEQUE ENTRIES TO LEELA SU B-GROUP IN THE GUISE OF SHARE CAPITAL AND SHARE PREMIUM. YOU FURTHER STATED THAT YOU WERE ONLY A MEDIATOR O R COMMUNICATOR, WHO USED TO ARRANGE CHEQUE ENTRIES BY CONVERTING CASH IN TO CHEQUE AND IN FACT, SHRI TEJASH J SHAH W AS THE REAL ENTRY PROVIDER, WHO MANAGED ALL DAILY AFFAIRS OF AL LEGED BOGUS CONCERNS. 2. IT IS SEEN FROM THE ANALYSIS OF SEIZED MATERIAL THAT YOU WERE GETTING COMMISSION FOR CONVERSION OF CASH IN CHEQUE IN RANGE FROM 1.5% TO 2.45%. IN THIS REGARD YOU ARE REQUESTE D TO SHOW CAUSE AS TO WHY THE AVERAGE RATE OF COMMISSION INCO ME WHICH IS @ 2% SHOULD NOT BE ADDED BACK TO YOUR TOTAL INCOME. IN REPLY TO THE ABOVE SHOW CAUSE NOTICE, THE ASSES SEE SUBMITTED AS UNDER:- THE ASSESSEE HUMBLY SUBMITS THAT THE ADDITION PRO POSED IN THE SHOW NOTICE OF RS. 17,41,600/- (2% OF RS. 8,70,80,0 00/-) WOULD BE UNJUSTIFIED FOR UNDERSTATED REASONS :- THE ASSESSEE AS A FINANCE BROKER HAD ARRANGED FUNDS TO CERTAIN PARTIES. HIS ROLE WAS MERELY TO INTRODUCE THE INVES TOR (HAVING FUNDS) AND /OR BROKERS OF SUCH INVESTORS WITH THE C OMPANIES WHO WERE INTERESTED IN OBTAINING SHARE CAPITAL MONEY FR OM SUCH ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 9 INVESTOR PARTIES. SUCH TRANSACTIONS HAD BEEN ROUTED MAINLY THROUGH COMPANIES MANAGED, OPERATED AND FLOATED BY MR. TEJAS SHAH AND OTHERS. THE ASSESSEE, PERSONALLY, DID NOT HANDLE THE CASH FUNDS AS CASH PAYMENTS WERE MADE DIRECTLY BY A ND BETWEEN THE PARTIES. THE RECIPIENT COMPANY PAID THE GROSS B ROKERAGE RANGING FROM 1.50% TO 2.45% WHOSE MAJOR PORTION WA S HANDED OVER TO CHEQUES ISSUING PARTIES AND THEIR BROKERS A ND THE ASSESSEES SHARE OF BROKERAGE WAS ONLY @0.10% OF TH E TRANSACTED VALUE; THE ASSESSEE HAD NOT TAKEN ANY RISK OF FUNDS AND DI D NOT HANDLE THE MOVEMENT OF CASH FUNDS. FURTHER, THE ASSESSEE H AS NOT ROUTED ANY TRANSACTIONS TO /FROM HIS OWN BANK ACCOU NTS, THUS THE BROKERAGE MARGIN EARNED BY THE ASSESSEE IS NOMI NAL OF AROUND 0.10% OF THE TRANSACTION VALUE. IT IS ONLY I N EXCEPTIONAL CASES, ITS STAFF MR. VILAS WANKHEDE ACCOMPANIED WIT H EITHER OF THE PARTIES TO ENSURE THAT THE FUNDS ARE HANDED OVE R TO PROPER HANDS. AS THE ASSESSEE WAS NOT INVOLVED IN HANDLING OF FUNDS AND MINIMIZED RISK, THUS THE ASSESSEE RECEIVED A NOMINA L BROKERAGE OF 0.10% ON THE TRANSACTIONS; IT IS TO FURTHER SUBMIT THAT IN SUCH TRANSACTIONS, MANY FINANCE BROKERS/ MEDIATORS ARE INVOLVED WHO JOINTLY SHARE T HE GROSS BROKERAGE PROVIDED BY THE CHEQUE RECEIVER AND SUCH GROSS BROKERAGE, THEREAFTER, IS DISTRIBUTED BETWEEN THE B ROKERS/ MEDIATORS BY MR. TEJAS SHAH, ACCORDINGLY, THE ESTIM ATION OF UNDISCLOSED BROKERAGE INCOME @ 2% IN HANDS OF THE A SSESSEE WOULD BE ON VERY HIGHER SIDE, FURTHER, SUCH PERCENT AGE @ 2% REPRESENTS THE GROSS BROKERAGE AND DOES NOT REPRESE NT THE ACTUAL BROKERAGE EARNED BY THE ASSESSEE WHICH WAS AROUND 0 .10%; IT IS TO FURTHER SUBMIT THAT THE SEIZED PAPERS DISC LOSES THE VARIOUS TRANSACTIONS ENTERED INTO BY AND BETWEEN THE PARTIE S AND DOES NOT REPRESENT ANY AMOUNTS RECEIVED BY THE ASSESSEE. FURTHER, IN SUCH SEIZED PAPERS, THE BROKERAGE IS DISCLOSED @1.5 0% TO 2.45%. FACTUALLY, SUCH BROKERAGE REPRESENTS THE GROSS BROK ERAGE ON ENTIRE TRANSACTION WHICH HAD BEEN RECEIVED BY VARIO US BROKERS AND MEDIATORS INCLUDING BY MR. TEJAS SHAH. THUS, IT WOULD BE INCORRECT TO PRESUME THAT ENTIRE BROKERAGE OF 1.50% TO 2.45% IS EARNED BY THE ASSESSEE, ACCORDINGLY THE UNDISCLOSED INCOME OF 0.10% AS BROKERAGE BELONGING TO THE ASSESSEE MAY KI NDLY BE ESTIMATED; ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 10 THE ASSESSEE, DURING COURSE OF SEARCH IN STATEMENT U/S 132(4) RECORDED ON OATH, CATEGORICALLY STATED THAT THE SEI ZED PAPERS RELATE TO THE CASH PAYMENT MADE BY THE COMPANIES TO VARIOUS CHEQUE ISSUERS/ INVESTORS THROUGH MR. TEJAS SHAH AN D OTHERS AND IT IS ALSO STATED THAT THE ASSESSEE HAD EARNED A SMALL BROKERAGE OF 0.10% ON THE VALUE STATED IN THE SEIZE D DOCUMENTS. THE STATEMENT OF THE ASSESSEE U/S 132(4) RECORDED O N OATH/MAY KINDLY BE GIVEN DUE IMPORTANCE, THUS THE ESTIMATION OF INCOME BELONGING TO THE ASSESSEE BE DETERMINED @ 0.10% OF THE TRANSACTION VALUE. IN VIEW OF THE ABOVE, A HUMBLE PRAYER IS MADE TO ES TIMATE THE ASSESSEE'S INCOME AT RS. 87,080/ - BEING 0.10% OF RS.8,70,80,000/ - FOR WHICH THE ASSESSEE SHALL EVER GRATEFUL AND OBLIGE. ' THE A.O., HOWEVER, REJECTED THE CONTENTION OF THE A SSESSEE AS THE ASSESSEE COULD NOT PRODUCE ANY DOCUMENTARY EVIDENCE WHICH CO ULD SHOW THAT THE COMMISSION RATE OF 0.10% FOR ARRANGING CHEQUE AGAIN ST THE CASH. THE AO ALSO OBSERVED THAT THE SEIZED MATERIAL IN THE CASE OF TH E ASSESSEE CLEARLY MENTIONS THAT THE ASSESSEE HAS RECEIVED COMMISSION RANGING F ROM 1.5% TO 2.45% ON VARIOUS TRANSACTION. THE A.O. ACCORDINGLY TOOK THE AVERAGE OF 2.45% AND 1.5% AS 2% ON THE TOTAL AMOUNT OF RS. 8,70,80,000/ - WHICH WORKED OUT TO COMMISSION OF RS. 17,41,600/- WHICH WAS ADDED TO TH E TOTAL INCOME OF THE ASSESSEE BY THE AO VIDE ASSESSMENT ORDER DATED 31-0 3-2014 U/S 153A R.W.S. 143(3) OF THE 1961 ACT. 7. AGGRIEVED BY THE ASSESSMENT ORDER DATED 31-03-20 14 PASSED BY THE A.O. U/S 143(3) R.W.S. 153A OF THE 1961 ACT, THE ASSESSE E FILED AN APPEAL BEFORE THE LD. CIT(A). 8.THE ASSESSEE REITERATED ITS SUBMISSIONS AS WERE M ADE BEFORE THE AO AND ASSAILED THE ASSESSMENT ORDER DATED 31-03-2014 PASS ED BY THE AO U/S 143(3) R.W.S. 153A OF THE 1961 ACT. THE LD. CIT(A) OBSERVE D THAT THE ASSESSEE HAS NOT DISPUTED TO HAVE ACTED AS MIDDLEMAN FOR ARRANGING T HE ACCOMMODATION ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 11 ENTRIES OF SHARE CAPITAL AND SHARE PREMIUM FOR BANS AL GROUP AND LEELA GROUP THROUGH FICTITIOUS COMPANIES FLOATED BY MR TE JASH J SHAH. IT WAS ALSO OBSERVED BY LEARNED CIT(A) THAT THE ASSESSEE HAS NO T DISPUTED THE QUANTUM OF TRANSACTION ON WHICH UNDISCLOSED COMMISSION INCOME HAD BEEN COMPUTED BY THE AO . THE LEARNED CIT(A) OBSERVED THAT ONLY DIS PUTE IS WITH RESPECT TO THE A.O. ADOPTING 2% OF THE ADMITTED TRANSACTION VALUE AS COMMISSION INCOME IN THE HANDS OF THE ASSESSEE. THE LEARNED CIT(A) OBSE RVED FROM PERUSAL OF SEIZED MATERIAL / PAGE NO 101(PB/PAGE 1) THAT ASSESSEE HAD RECEIVED COMMISSION @1.5% ON TRANSACTION VALUE AND IN FEW INSTANCES COM MISSION WAS RANGING FROM 2.35% TO 2.45% AND AVERAGE COMMISSION WORKS TO 1.6% OF THE TRANSACTION VALUE. THE LEARNED CIT(A) ALSO OBSERVE D THAT THE ASSESSEE IN THE STATEMENT RECORDED ADMITTED THE UNDISCLOSED COMMISS ION INCOME @ 0.10% . THE LEARNED CIT(A) ALSO OBSERVED THAT SHRI TEJASH J . SHAH HAD ALSO ADMITTED IN HIS STATEMENT RECORDED U/S 131 OF THE ACT THAT T HE ASSESSEE IS A MIDDLEMAN AND NORMAL COMMISSION EARNED IN THE BUSIN ESS OF ACCOMMODATION ENTRIES RANGES FROM 0.30% TO 0.40% ON THE VALUE OF TRANSACTION. THE LD. CIT(A) ALLOWED THE EXPENSES I NCURRED BY THE ASSESSEE ON ACCOUNT OF ANGADIA EXPENSES FOR MONEY TRANSFER, CON VEYANCE AND TELEPHONE EXPENSES WHICH WAS ALLOWED BY LEARNED CIT(A). THE LD. CIT(A) FINALLY HELD THAT ALTHOUGH NO DOCUMENTARY EVIDENCE HAS BEEN SUBMITTED , IT WOULD BE APPROPRIATE TO ESTIMATE THE NET COMMISSION(AFTER AL LOWING EXPENSES)) EARNED BY THE ASSESSEE @ 1.00% OF THE TRANSACTION VALUE WH ICH ACCORDING TO LEARNED CIT(A) WILL MEET THE ENDS OF JUSTICE AND ACCORDINGL Y DIRECTED THE A.O. TO RESTRICT THE ADDITION OF UNDISCLOSED COMMISSION INC OME @ 1% OF THE TRANSACTION VALUE AND DIRECTIONS WERE ISSUED FOR DE LETION OF THE BALANCE ADDITIONS AS WERE MADE BY THE AO , VIDE APPELLATE O RDERS DATED 22-09-2015 PASSED BY LEARNED CIT(A). 9. AGGRIEVED BY THE APPELLATE ORDER DATED 22-09-201 5 PASSED BY THE LD. CIT(A), THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL. ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 12 10. THE LD. COUNSEL FOR THE ASSESSEE REITERATED ITS SUBMISSIONS AS WERE MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T A SEARCH ACTION AGAINST THE ASSESSEE WAS CONDUCTED BY REVENUE U/S 132 OF TH E ACT ON 17 TH FEBRUARY, 2012 BY THE DDIT (INV.), BHAVNAGAR ALONG WITH SHIP BREAKERS GROUP OF BHAVNAGAR VIZ. BANSAL SUB-GROUP AND LEELA SUB-GROUP . IT IS SUBMITTED THAT THE ASSESSEE WAS NOT THE ACCOMMODATION ENTRY PROVID ER BUT A MIDDLEMAN AND FACILITATOR OF PROVIDING THESE ACCOMMODATION ENTRIE S BY WAY OF SHARE CAPITAL /SHARE PREMIUM TO COMPANIES OF BANSAL SUB-GROUP AND LEELA SUB-GROUP THROUGH COMPANIES PROMOTED BY SH TEJASH J SHAH. IT WAS SUBMITTED THAT ACCOMMODATION ENTRIES WERE PROVIDED BY SH. TEJASH J . SHAH. IT WAS SUBMITTED THAT IN THE STATEMENT RECORDED U/S 131 OF THE ACT, THE ASSESSEE ALSO ADMITTED THAT HE HAD RECEIVED 0.10% COMMISSION FOR ARRANGING THE BOGUS ENTRIES BY WAY OF CHEQUE AGAINST THE CASH FOR BOTH THE BANSAL GROUP AND LEELA GROUP. IN THE STATEMENT RECORDED U/S 131, SHRI TEJASH J SH AH ALSO STATED THAT THE ASSESSEE IS MERELY A MIDDLEMAN AND NORMAL COMMISSION EARNED IN ACCOMMODATION ENTRIES WAS OF 0.30% TO 0.4 0%. IT IS SUBMITTED THAT ADEQUATE OPPORTUNITY WAS NOT PROVIDED TO THE ASSESS EE AS THE NOTICES WERE ISSUED AT FAG END ON 14-03-2014 WHILE THE ASSESSMEN T WAS GETTING TIME BARRED ON 31-03-2014. IT WAS SUBMITTED THAT SUFFIC IENT TIME WAS NOT GRANTED BY THE AO TO THE ASSESSEE FOR FILING RETURN OF INCO ME U/S 153A OF THE 1961 ACT. IT WAS SUBMITTED THAT SUFFICIENT TIME WAS NOT GRANTED BY THE AO TO REPLY TO SCN WHICH WAS ISSUED ON 26-03-2014 WHILE THE ASS ESSMENT WAS GETTING TIME BARRED ON 31-03-2014. THE A.O. ADOPTED COMMISS ION @2% ON TRANSACTION AMOUNT OF THESE ACCOMMODATION ENTRIES W HILE THE LD. CIT(A) REDUCED THE SAME TO 1%. IT IS SUBMITTED THAT DURIN G COURSE OF SEARCH DOCUMENT MARKED AS 101(PB/PAGE1) WAS FOUND AND SEIZ ED BY REVENUE WHICH REFLECTS COMMISSION RANGING FROM 1.5% TO 2.45% OF T RANSACTION AMOUNT , WHEREIN AVERAGE COMES TO 1.6% . OUR ATTENTION WAS D RAWN TO THE SEIZED MATERIAL MARKED PAGE NO 101 WHICH IS PLACED IN PAPE R BOOK/PAGE 1. THE LD. ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 13 COUNSEL ALSO INVITED OUR ATTENTION TO THE ORDER OF THE A.O. AND LEARNED CIT(A). THE LD. COUNSEL ALSO RELIED ON THE DECISION OF THE MUMBAI-TRIBUNAL IN THE CASE OF SHRI RAMESH KUMAR JAIN V. ACIT IN ITA NO. 3512 - 3518/MUM/2013 FOR ASSESSMENT YEARS 2004-05 TO 2010-11 VIDE COMMON ORD ER DATED 22 ND APRIL, 2015 . THE ASSESSEE ALSO RELIED UPON DECISION OF S PECIAL BENCH DECISION OF THE TRIBUNAL IN THE CASE OF MANOJ AGGARWAL V. DCIT( 2008) 117 TTJ 0145 (DEL) [SB] WHEREBY THE TRIBUNAL ACCEPTED NET COMMISSION I NCOME AT 0.3 PAISE, WHEREIN TAX-PAYER IN THAT CASE ADMITTED TO HAVE EAR NED COMMISSION AT 0.5 PAISE FOR GIVING ACCOMMODATION ENTRIES AND ALLOWANC E @10% OF GROSS COMMISSION WAS ALLOWED FOR EXPENSES TO BRING TO TAX NET COMMISSION INCOME AT 0.35 PAISE . THE ASSESSEE ALSO RELIED UPON DECIS ION OF THE TRIBUNAL IN THE CASE OF GOLD STAR FINVEST PRIVATE LIMITED V. ITO (2 013) 33 TAXMANN.COM 129(MUM-TRIB.) AND SANJAY KUMAR GARG V. ACIT (2012) 134 ITD 0082(DEL0- TRIB) 11. THE LD. CIT-D.R. SUBMITTED THAT THE LD. CIT(A) HAS GRANTED MAXIMUM RELIEF TO THE ASSESSEE BASED ON FACTS AND CIRCUMSTA NCES OF THE CASE.THERE WAS SEIZED MATERIAL MARKED PAGE NO 101 (PB/PAGE1) WHICH WAS SEIZED FROM ASSESSEE WHICH REFLECT COMMISSION @1.5% TO 2.45% ON TRANSACTION VALUE. THE ASSESSEE IS A LINK IN THE CHAIN OF PROVIDING ACCOMM ODATION ENTRY WAS THE CONTENTION OF LEARNED CIT(A) WHICH IS ITSELF ADMITT ED BY ASSESSEE. THE DOCUMENT MARKED AS PAGE 101 (PB/PAGE1)WAS SEIZED DU RING THE COURSE OF SEARCH AND CONTENTS WILL BE PRESUMED TO BE TRUE. TH E ASSESSEE IS NOT DENYING AND RATHER ADMITTING THAT THE ASSESSEE ARRANGED ACC OMMODATION ENTRIES IN CONCERT WITH OTHER MIDDLEMEN SUCH AS ANGADIAS , SH TEJASH J SHAH . THE LEARNED CIT-DR CONTENDED THAT THE ASSESSEE WAS HAND LING CASH WHICH WAS RECEIVED FROM BENEFICIARIES OF THESE ACCOMMODATION ENTRIES AND WHICH WAS PASSED ON TO SH TEJASH J SHAH IN LIEU OF CHEQUES AR RANGED BY TEJASH J SHAH FAVOURING COMPANIES OF BANSAL GROUP AND LEELA GROUP THE LEARNED CIT-DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW.THE FICTITIOUS COMPANIES WHICH ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 14 ARE USED AS CONDUITS FOR ORGANIZING FICTITIOUS SHAR E CAPITAL AND SHARE PREMIUM IN FAVOUR OF BANSAL GROUP AND LEELA GROUP A RE OWNED BY SH TEJASH J SHAH WHO WAS MASTERMIND OF THESE CLANDESTINE ACTI VITIES. 12. ON BEING ASKED BY BENCH, IT COULD NOT BE BROUGH T ON RECORD BOTH BY LEARNED COUNSEL FOR THE ASSESSEE AS WELL BY LEARNED CIT-DR AS TO THE FACT WHETHER REVENUE HAS FILED ANY APPEAL BEFORE THE TRI BUNAL AGAINST THE ORDER OF LEARNED CIT(A) GRANTING PART RELIEF TO THE ASSESSEE .THE LEARNED COUNSEL FOR THE ASSESSEE STATED BEFORE THE BENCH THAT NO NOTICE HAS BEEN RECEIVED FROM TRIBUNAL/REVENUE INTIMATING THAT APPEAL HAS BEEN FI LED BY REVENUE AGAINST THE APPELLATE ORDER OF LEARNED CIT(A). 13. WE HAVE CONSIDERED RIVAL CONTENTIONS AND ALSO P ERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING CASE LAWS RELIED UPON BY THE RIVAL PARTIES. WE HAVE OBSERVED THAT ASSESSEE IS A CHARTERED ACCOUNTA NT BY PROFESSION AND HAVING INCOME FROM PROFESSION AND OTHER SOURCES. THE ASSESSEE WAS SEARCHED U/S 132 OF THE ACT ON 17 TH FEBRUARY, 2012 BY THE DDIT (INV.), BHAVNAGAR ALONG WITH SHIP BREAKERS GRO UP OF BHAVNAGAR VIZ. BANSAL SUB-GROUP AND LELEA SUB-GROUP. THE DDIT (INV .), BHAVNAGAR RECORDED THE STATEMENT OF THE ASSESSEE U/S 131 OF THE ACT AN D THEREAFTER ON VARIOUS DATES , WHEREBY THE ASSESSEE HAD ADMITTED THAT HE U SED TO RECEIVE CASH FROM KOMALKANT SHARMA AND IN TURN PROVIDE RTGS/CHEQUE EN TRIES TO LEELA SUB- GROUP AND BANSAL GROUP IN THE GUISE OF SHARE CAPITA L AND SHARE PREMIUM FROM FICTITIOUS COMPANIES. IN HIS STATEMENT , THE ASSESSEE ALSO STATED THAT MR TEJAS J. SHAH RAN THE FICTITIOUS COMPANIES AND ENGA GED FEW PERSONS OF NO MEANS AS DIRECTORS OF THESE FICTITIOUS CONDUIT COMP ANIES. THE ASSESSEE FURTHER ADMITTED THAT HE RECEIVED 0.1% AS COMMISSIO N FOR ARRANGING BOGUS ENTRIES BY WAY OF CHEQUE AGAINST THE CASH FOR BANSA L GROUP AND LEELA GROUP. IN HIS STATEMENT RECORDED ON OATH U/S 131 OF THE AC T ON 13 TH MARCH, 2012, SH ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 15 TEJASH J SHAH HAD ADMITTED THAT HE HAD FLOATED VARI OUS COMPANIES FOR THIS SCHEME OF CONVERSION OF CASH INTO CHEQUE THROUGH TH ESE BOGUS COMPANIES AND INTRODUCTION OF UNACCOUNTED INCOME INTO THE REG ULAR BOOKS OF ACCOUNT. IT WAS ALSO STATED BY SHRI TEJASH J SHAH THAT THE ASSE SSEE WAS THE FACILITATOR FOR HANDLING THE CASH FROM SHIP BREAKERS THROUGH ANGDIA S AND ARRANGING CHEQUE FOR TEJASH J SHAH GROUP COMPANIES AND CHEQUES WERE INTRODUCED IN THE BANSAL GROUP AND LEELA GROUP OF COMPANIES AS SHARE CAPITAL AND SHARE PREMIUM. THE EXTRACT OF THE STATEMENT RECORDED OF SHRI TEJASH J SHAH ON 13 TH MARCH, 2012 BY THE DDIT (INV.) BHAVNAGAR IS REPROD UCED HEREUNDER:- I DO HEREBY ACKNOWLEDGE AND CONFIRM THAT AFTER REC EIVING CASH FROM BANSAL OR LEELA GROUP OF BHAVNAGAR , THE SAME WAS C ONVERTED IN TO CHEQUES IN FAVOUR OF ANY OF MY MANAGED COMPANY FROM DIFFERENT SHROFFS SITUATED AT KALBADEVI, MUMBAI. LATER ON, AFTER ROTA TING SAID CHEQUE IN MY OWNED MANAGED COMPANIES, I USED TO ISSUE EITHER CHEQUE OR MAKE RTGS IN FAVOUR OF THE DESIRED CONCERN OF BANSAL OR LEELA GROUP OF BHAVNAGAR. MR. RAHUL SINGHVI IS THE MIDDLEMAN IN AL L THE TRANSACTIONS WHICH I HAVE MADE WITH MR. VIJAY BANSAL AND KOMALKA NT SHARMA. IN FACT, SHRI. RAHUL SINGHVI IS THE PERSONS WHO ASKS M E TO ARRANGE CHEQUE OF CERTAIN AMOUNT TO BANSAL OR LEELA GROUP OF BHAVN AGAR AND HE ONLY DISCUSS WITH SHRI. VIJAY BANSAL OR SHRI. KOMALKANT SHARMA ABOUT THE QUANTUM OF SHARE CAPITAL OR PREMIUM REQUIRED AND LA TER ON THROUGH ANGADIA ARRANGES CASH. THIS CASH IS ACTUALLY BEING SENT BY SHRI.VIJAY BANSAL AND KOMALKANT SHARMA FOR WANT OF DESIRED EN TRIES. WHEN THE BANK ACCOUNTS OF MR. VIJAY BANSAL AND KOMALKANT SHA RMA GOT CREDITED, SHRI. RAHUL SINGHVI USED TO CONFIRM THIS DEPOSITION OF CHEQUES TO MR. VIJAY BANSAL ON TELEPHONE. SIR HERE I WANT TO MENTION THAT THIS PRACTICE OF PR OVIDING CHEQUES-IN- EXCHANGE-OF CASH AMOUNT IS PREVALENT ACROSS MUMBAI AND THE PLACE KALBADEVI IN MUMBAI IS HUB OF SUCH FINANCIAL TRANS ACTIONS. SEVERAL PERSONS BASED IN KALBADEVI AREA OF MUMBAI ARE DOING BUSINESS OF PROVIDING CHEQUES IN EXCHANGE OF CASH AMOUNT. IT IS ALSO SUBMITTED THAT THIS IS A VOLUMINOUS NATURE OF CHEQUE-CASH TRA NSFER BUSINESS DONE ON DAILY BASIS AND SEVERAL PARTIES BANK ACCOUNTS/CH EQUES/SHARE TRANSFER FORMS/STAMP PADS/SIGNATURES ARE USED FOR M ULTI-LAYERING. SIR IN THIS BUSINESS BROKERAGE/COMMISSION INCOME @0.30- 0.40 PAISA PER HUNDRED RUPEES (RS. 30,000 RS. 40,000 PER CRORE) IS EARNED/GIVEN ON EVERY TRANSFER OF CASH/CHEQUE AMOUNT. ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 16 THE MODUS OPERANDI FOR THIS ARRANGEMENT OF MOVEMENT OF UNACCOUNTED CASH AS ADMITTED BY SHRI TEJASH J SHAH AND ASSESSEE IS I N THE FOLLOWING STYLE:- GENERATION OF UNACCOUNTED CASH INCOME FROM SALE OF SHIP-BREAKING MATERIAL AT ALANG SHIP BREAKING YARD COLLECTION AND DEPOSITION OF CASH AT OFFICE PREMIS ES AT BHAVNAGAR DEPOSITING THE CASH AT ANAGDIA OFFICE AT BHAVNAGAR TRANSFER OF CASH TO ANAGDIA OFFICE AT MUMBAI PROVIDING CASH AMOUNT TO RAHUL SINGHVI/TEJASH SHAH AT MUMBAI FOR CONVERSION OF CASH INTO CHEQUE IN THE GUISE OF SHAR E CAPITAL/SHARE PREMIUM DEPOSITION OF CHEQUES THROUGH FICTITIOUS COMPANIES IN THE BANK ACCOUNT OF LEELA SUB-GROUP CONCERNS. IT WAS ALSO ADMITTED BY THE ASSESSEE AND SHRI TEJAS H J SHAH THAT THE CASH RECEIVED FROM LEELA AND BANSAL GROUP WAS REINVESTED IN THEIR GROUP COMPANIES AS SHARE CAPITAL AFTER ROUTING THE SAME T HROUGH FICTITIOUS COMPANIES OF SHRI TEJASH J SHAH AND IN MANY CASES T HE CASH WAS DEPOSITED IN SOME INDIVIDUAL SHROFFS ACCOUNT AND THE SAME W AS ROUTED THROUGH FEW LAYERS OF OTHER BANK ACCOUNTS AND ULTIMATELY THE MO NEY WAS TRANSFERRED TO VARIOUS BENEFICIARY COMPANIES IN THE FORM OF SHARE CAPITAL/PREMIUM. THE ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 17 A.O. NOTED THAT BANSAL AND LEELA GROUP APPROACHED T HE SETTLEMENT COMMISSION AND HAD OFFERED THE INVESTMENT MADE IN T HE SHARE CAPITAL AS WELL AS COMMISSION PAID/EXPENDITURE INCURRED FOR PROCURI NG THE ACCOMMODATION ENTRIES AS ADDITIONAL INCOME. FURTHER THE AO OBSERV ED FROM THE PERUSAL OF PAGE NO. 101 (PB/PAGE1) OF THE SEIZED MATERIAL FROM THE ASSESSEE DURING SEARCH U/S 132 OF THE 1961 ACT THAT THE ASSESSEE HA D RECEIVED COMMISSION RANGING FROM 1.5 TO 2.45% FOR ARRANGING THE BOGUS E NTRIES BY WAY OF SHARE CAPITAL/SHARE PREMIUM FOR LEELA GROUP AND BANSAL GR OUP. THE ASSESSEE ADMITTED TO BE PART OF THE CHAIN BEING FACILITATOR OF THE ACCOMMODATION ENTRIES BEING PROVIDED TO BANSAL GROUP AND LEELA GROUP. THE QUANTUM OF ACCOMMODATION ENTRIES IS ALSO ADMITTED BY THE ASSES SEE TO BE RS. 8,70,80,000/- WHICH WAS ARRANGED BY THE ASSESSEE FO R BANSAL AND LEELA GROUP AS FACILITATOR. THE AO BASED ON THE MATERIAL SEIZED , STATEMENT RECORDED OF THE ASSESSEE AND MR TEJASH J SHAH BROUG HT TO TAX COMMISSION INCOME WHICH WAS WORKED OUT AT 2% OF THE TRANSACTIO N AMOUNT OF RS.8,70,80,000/- BASED ON AVERAGE COMMISSION OF 1.5 % AND 2.45% OF TRANSACTION AMOUNT AS WAS RECORDED IN SEIZED MATERI AL MARKED AS 101(PB/PAGE 1). THE LEARNED CIT(A) AFTER CONSIDERIN G THE SUBMISSION OF THE ASSESSEE REDUCED THE ADDITIONS ON ACCOUNT OF COMMIS SION INCOME TO 1% OF TRANSACTION AMOUNT AS THE LEARNED CIT(A) ALLOWED TH E BENEFIT OF EXPENSES INCURRED IN CONNECTION WITH EARNING OF THESE COMMIS SION INCOME FROM ARRANGING ACCOMMODATION ENTRIES AS ALSO TREND OF GE NERATION OF INCOME IN THESE ACTIVITIES , WHICH ASPECTS WERE CONSIDERED BY THE LEARNED CIT(A) WHILE PARTLY ALLOWING THE RELIEF TO THE ASSESSEE . THUS, THE ASSESSEE WAS GRANTED PART RELIEF BY THE LEARNED CIT(A) . IT IS NOT BROUGHT ON RECORD BY BOTH THE RIVAL PARTIES THAT REVENUE HAS FILED ANY APPEAL AGAINST T HE ORDERS OF LEARNED CIT(A) GRANTING PART RELIEF TO THE ASSESSEE. THE ACTIVITIE S OF ARRANGING ACCOMMODATION ENTRIES WHICH ARE HAWALA TRANSACTIONS IN VARIOUS MO DES AND FORMS TO GENERATE OR CONVERT BLACK MONEY AND/OR EVASION OF T AXES IS RAMPANT IN INDIAN ECONOMY WHICH IS DESTROYING THE ECONOMIC FABRIC OF THE COUNTRY BY CREATING A ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 18 PARALLEL ECONOMY . SEVERAL LAUDABLE MEASURES ARE TA KEN BY GOVERNMENT OF INDIA TO CURB THIS MENACE WHICH INCLUDED THE LATEST MOVE OF THE GOI TO DEMONETIZE CURRENCY NOTES OF RS. 500 AND RS 1000 ON 8 TH NOVEMBER 2016. SUCH TYPES OF CLANDESTINE ACTIVITIES OF ENGAGING IN HAWALA/ACCOMMODATION ENTRIES ARE HAMPERING NATIONAL GROWTH AND PROSPERIT Y AND NEEDS TO BE DISCOURAGED AT ALL LEVELS. CONSPIRACIES ARE HATCHED IN SECRECY AND EXECUTED IN DARK. SEVERAL PERSONS FORM A CHAIN IN THE RING OF C ONSPIRACY TO CONVERT OR GENERATE BLACK MONEY THROUGH ACCOMMODATION ENTRIES WITH OBJECTIVE TO DEFRAUD REVENUE TO EVADE TAXES WHICH ARE OTHERWISE LEGITIMATELY DUE TO GOVERNMENT. INCOME GENERATED OUT OF SUCH ACTIVITIES ARE NOT DECLARED IN NORMAL COURSE TO THE STATE AND IT IS ONLY THROUGH T HE EXTRA-ORDINARY MEASURES EXECUTED BY STATE SUCH AS SEARCHES AND SURVEYS, THE SE CLANDESTINE ACTIVITIES ARE DISCOVERED. COMING BACK TO THE INSTANT CASE, TH E REVENUE HAS SEIZED DOCUMENT MARKED 101 (PB/ PAGE 101) FROM THE POSSESS ION OF THE ASSESSEE DURING THE COURSE OF SEARCH OPERATIONS U/S 132(1) O F THE ACT. THE SAID DOCUMENT MARKED 101 (PB/PAGE1)REVEALS THAT COMMISS ION TO THE EXTENT OF 1.5% TO 2.45% ON TRANSACTION VALUE OF THESE ACCOMMO DATION ENTRIES HAS CHANGED HAND FACILITATED BY OR THROUGH ASSESSEE IN A CHAIN OF CONSPIRACY TO CONCLUDE THESE ACCOMMODATION ENTRIES TO DEFRAUD REV ENUE. THIS IS AN ADMITTED POSITION BY THE ASSESSEE HIMSELF THAT THE ASSESSEE IS PART OF THE CHAIN OF ACTIVITIES LEADING TO FACILITATING ACCOMMO DATION ENTRIES TOWARDS FICTITIOUS SHARE CAPITAL AND SHARE PREMIUM FOR COMP ANIES OF BANSAL GROUP AND LEELA GROUP OF BHAVNAGAR. IT IS ALSO BROUGHT ON RECORD THAT THE BANSAL GROUP AND LEELA GROUP APPROACHED SETTLEMENT COMMISS ION TO DECLARE THESE INCOME REPRESENTING BY FICTITIOUS SHARE CAPITAL/ SH ARE PREMIUM AND COMMISSION / EXPENSES PAID THERETO. THE PRESUMPTION U/S 132(4A) R.W.S. 292C SHALL APPLY AND CONTENT OF THE DOCUMENT BEING SEIZED BY REVENUE MARKED AS PAGE 10 WILL BE PRESUMED TO BE TRUE AND C ORRECT. THE ONUS AS WELL BURDEN OF PROOF IS SQUARELY ON THE ASSESSEE TO BRIN G ON COGENT MATERIAL AND EVIDENCES ON RECORD TO PROVE THAT ALL THE INCOME AS REFLECTED IN THE SEIZED ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 19 MATERIAL IS DULY ACCOUNTED FOR AND DUES TAXES PAID TO REVENUE. THE AO HAS ALLOWED AN AVERAGE OF 2% OF TRANSACTION AMOUNT TO B E BROUGHT TO TAX AS COMMISSION KEEPING IN VIEW AVERAGE OF RECORDED COMM ISSION OF 1.5% TO 2.45% MENTIONED IN THE SEIZED DOCUMENT MARKED AS 101(PB/1 01). THE LEARNED CIT(A) AFTER CONSIDERING THE MARKET TRENDS IN THESE TYPE OF CLANDESTINE ACTIVITIES AND ALSO KEEPING IN VIEW THAT EXPENSES A RE ALSO INCURRED IN THE COURSE OF SUCH CLANDESTINE ACTIVITIES DEEM IT FIT T O BRING TO TAX COMMISSION INCOME @1% OF TRANSACTION AMOUNT. THE QUANTUM OF TR ANSACTION IS NOT DISPUTED BY THE ASSESSEE NOR INVOLVEMENT/PARTICIPAT ION IN THESE ACCOMMODATION ENTRIES ARE DISPUTED BY THE ASSESSEE . THE REVENUE IS NOT IN APPEAL AGAINST PART-RELIEF GRANTED BY LEARNED CIT(A ) . THE ASSESSEE HAS PLACED RELIANCE ON OTHER CASE LAWS AS MENTIONED IN PRECEDI NG PARAS WHICH WE HAVE GONE THROUGH AND WE ARE AFRAID THAT SAID CASE LAWS CANNOT COME TO RESCUE OF THE ASSESSEE AS IT IS PURELY A FACTUAL MATTER AND E VERY CASE IS TO BE DECIDED ON FACTS AND CIRCUMSTANCES OF THE SAID CASE. IN THE IN STANT CASE THERE IS A FINDING SUPPORTED BY DOCUMENT SEIZED DURING THE SEARCHES CO NDUCTED BY REVENUE U/S 132(1) WHEREIN IT IS MENTIONED THAT COMMISSION RANGING FROM 1.5%- 2.45% ON TRANSACTION VALUE IS PAID ON ACCOMMODATION ENTRIES . THE ASSESSEE HAS ADMITTED TO BE INVOLVED IN THESE CLANDESTINE AC TIVITIES. THE ASSESSEE MAY BE A PART OF THE CHAIN OF PERSONS WHO ARE BENEFICIA RY OF THESE CLANDESTINE ACTIVITIES BUT SINCE THE DOCUMENT IS SEIZED FROM TH E ASSESSEE , THE ASSESSEE HAS TO DEMONSTRATE THAT THE ENTIRE INCOME AS IS REF LECTED IN THE SEIZED DOCUMENT MARKED AS 101 ( PB/PAGE 1) IS BROUGHT TO T AX ALBEIT IN THE HANDS OF OTHER PERSONS WHO WERE PART OF COMMON CONSPIRACY IN THESE CLANDESTINE ACTIVITIES AND THE ENTIRE INCOME SUFFERED TAXATION. NO SUCH COGENT MATERIAL AND EVIDENCES HAS BEEN BROUGHT ON RECORD BY THE ASS ESSEE. MERE STATEMENT RECORDED OF SH. TEJAS J SHAH U/S 131 IS NOT SUFFICI ENT AS IT IS MERELY MATERIAL OBTAINED DURING SEARCH, WHILE THE DOCUMENT SEIZED D URING THE SEARCH SPEAKS LOUDLY OF COMMISSION TO THE TUNE OF 1.5% TO 2.45% B EING PAID ON THESE ACCOMMODATION ENTRIES. IN-ANY CASE , LEARNED CIT(A) HAS FACTORED FOR EXPENSES ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 20 TO BE ALLOWED FOR MEETING VARIOUS EXPENSES WHICH AR E LIKELY TO HAD BEEN INCURRED BY THE ASSESSEE IN UNDERTAKING THESE CLAND ESTINE ACTIVITIES OF BEING FACILITATOR OF ACCOMMODATION ENTRIES. WE DONOT FIND ANY INFIRMITY IN THE APPELLATE ORDER OF THE LEARNED CIT(A) WHICH WE ARE INCLINED TO AFFIRM/SUSTAIN. THE ASSESSEE FAILS IN THIS APPEAL. WE ORDER ACCORDI NGLY. 14. IN THE RESULT , APPEAL OF THE ASSESSEE IN ITA N O.3654/MUM/2016 FOR ASSESSMENT YEAR 2009-10 IS DISMISSED. WE ORDER ACCO RDINGLY. 15. OUR ABOVE DECISION IN ITA NO. 3654/MUM/2016 FOR ASSESSMENT YEAR 2009-10 SHALL APPLY MUTATIS MUTANDIS TO THE ASSESSE ES OTHER APPEALS IN ITA NO. 3653/MUM/2016 ASSESSMENT YEAR 2010-11 AND ITA N O. 3655/MUM/2016 FOR ASSESSMENT YEAR 2011-12 , WHEREIN THE FACTS ARE IDENTICAL.WE ORDER ACCORDINGLY. 16. IN THE RESULT, APPEALS FILED BY THE ASSESSEE IN ITA NO. 3653/MUM/2016 FOR ASSESSMENT YEAR 2010-11, ITA NO. 3654/MUM/2016 FOR ASSESSMENT YEAR 2009-10 AND ITA NO. 3655/MUM./2016 FOR ASSESSMENT Y EAR 2011-12 ARE DISMISSED. WE ORDER ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MAY, 2017. # $% &' 11/05/2017 ( ) (C.N. PRASAD) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 11/05/2017 .9../ R.K. R.K. R.K. R.K. , EX. SR. PS ITA NO. 3653/MUM/2016 TO ITA NO. 3655/MUM/2016 21 !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI H BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI