Shri Manoj Kumar Jain, Ghaziabad V. DCIT, Ghaziabad

ITA 554/DEL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1559 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 01-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAMITA M BISWAS
• Keywords: Accommodation entries; Set aside
• Section: 143(3); 145(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SH. H. S. SIDHU, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 554/DEL/2017 : ASSTT. YEAR : 2012-13 MANOJ KUMAR JAIN, R-8/11, FLAT NO. 700, RAJ NAGAR, GHAZIABAD VS DCIT, CENTRAL CIRCLE, GHAZIABAD (APPELLANT) (RESPONDENT) PAN NO. ACLPJ4982H ASSESSEE BY : SH. AKHILESH KUMAR, ADV. REVENUE BY : MS. PRAMITA M. BISWAS, CIT DR DATE OF HEAR ING: 07 . 12 .20 20 DATE OF PRONOUNCEMENT: 14 .12 .20 20 ORDER PER DR. B.R.R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-IV, KANPUR, DATED 25.11 .2016. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. THAT THE AUTHORITIES BELOW HAVE ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE BY COMPLETING AND UPHOLDING THE ASSESSMENT U/S 143(3) OF THE ACT AT A TOTAL INCOME OF RS.7,60,81,463/- AS AGAINST THE RETURNED INCOME OF RS. 1,14,400/- AND THE VARIOUS FINDINGS & CONCLUSIONS DRAWN ARE BASED ON INCORRECT APPRECIATION OF FACTS ON RECORD AND ON NON-EXISTENT FACTS, ONLY ON THE BASIS OF ASSUMPTIONS & HYPOTHECATIONS AND THE SUBMISSIONS OF ASSESSEE HAVE NOT BEEN CONSIDERED IN RIGHT PERSPECTIVE THEREOF. 2. THAT THE ID. CIT(A) GROSSLY ERRED IN CONFIRMING THE PROTECTIVE ADDITION OF TOTAL BANK CREDITS AMOUNTING TO ITA NO. 554/DEL/2017 MANOJ KUMAR JAIN 2 RS.7,37,54,430/- WITHOUT EVEN AFFIRMING THE BASIC FACT ABOUT THE FATE OF THE ASSESSMENTS OF BENEFICIARIES ABOUT THE SAME DESPITE A SPECIFIC ASSERTION TO THE SAME IN A. ORDER, BESIDE ID. AUTHO RITY FURTHER ERRED IN TREATING THE ADDITION AS SUBSTANTI VE WITHOUT ANY NEW FACT OR MATERIAL. 3. THAT THE ID. CIT(A) EVEN FAILED TO APPRECIATE TH AT THE SAID ADDITION THOUGH MADE ONLY TO PROTECT THE INTEREST OF REVENUE BUT WITHOUT DOUBTING EXPLANATIO N ON THE DEPOSITS AND WITHOUT FINDING DEBTORS/SALES E TC. FAKE OR INGENUINE IN AS MUCH AS VAT IS PAID ON SALE S. 4. THAT THE ID. CIT(A) EVEN FAILED TO APPRECIATE TH AT THE PROTECTIVE ASSESSMENT ITSELF IS AGAINST THE BAS IC TENETS OF LAW AS ID. AO HAD NOT EVEN WAITED FOR THE SUBSTANTIVE ASSESSMENT IN THE HANDS OF ALLEGED BENEFICIARIES, BESIDE ASSESSEE IS HELD TO BE EARNIN G COMMISSION ON SAID DEPOSITS SO THE SAME COULD NOT B E HIS INCOME. 5. THAT THE ID. CIT(A) ERRED IN SUSTAINING THE ASSUMED COMMISSION OF RS.22,12,633/-, WITHOUT ANY IOTA OF EVIDENCE IN SUPPORT OF ASSUMPTION IN AS MUC H AS A UNILATERAL THIRD PARTYS UNCONTROVERTED STATEM ENT IS REFERRED WHICH IS NO EVIDENCE, THAT TOO @ 3% ON TOTAL BANK DEPOSITS WHICH IS TOTALLY ILLEGAL & UNWARRANTED AND IN ANY CASE IS HIGHLY EXCESSIVE. 6. THAT THE ID. CIT(A) HAS FAILED TO APPRECIATE THA T NEITHER THE ID. A.O. HAS RECORDED ANY FINDING IN TE RMS OF S. 145(3) OF THE ACT NOR ANY TRANSACTIONS ARE FO UND INCORRECT IN AUDITED ACCOUNTS HENCE A PASSING REMAR K OF ID. AO ABOUT REJECTION OF ACCOUNTS IS UNTENABLE MORE SO WHEN DECLARED INCOME RS.1,14,400/- IS ACCEPTED BESIDE OTHER ADDITIONS. 7. THAT THE ID. CIT(A) ERRED IN UPHOLDING THE ADDITIONS OF RS. 7,59,67,063/- WITHOUT DISCHARGING THE HEAVY ONUS LAY UPON HIM TO PROVE THE ALLEGATION S FRAMED AGAINST THE ASSESSEE. 8. THAT THE ID. CIT(A) HAS ERRED IN LAW BY PASSING A NON-SPEAKING AND CRYPTIC ORDER IN TOTAL DISREGARD O F ITA NO. 554/DEL/2017 MANOJ KUMAR JAIN 3 THE MATERIAL AND FACTS ON THE RECORD JUST RELYING U PON THE ORDER OF THE GIT(A), GHAZIABAD IN THE CASE OF APPELLANT FOR A.Y.2011-12. THEREFORE, TOTAL ADDITIO N OF RS. 7,59,67,063/- IS PRAYED TO BE DELETED. 3. THE MOOT ISSUE INVOLVES ASSESSMENT OF CASH DEPOS ITS FOUND IN THE BANK ACCOUNT OF THE ASSESSEE OF RS.7.37 CRS. AND CO MMISSION EARNED AT THE RATE OF 3% ON THE SAID AMOUNT OF RS.7.37 CRS. T O THE TUNE OF RS.22.12 LACS. THE ASSESSEE HAS BEEN ALLEGED TO BE AN ENTRY OPERATOR PROVIDING BILLS OF PURCHASE & SALES WITHOUT ANY ACTUAL BUSINESS TRA NSACTIONS. 4. THE AMOUNT OF RS.7.37 CRS. HAS BEEN ADDED ON PRO TECTIVE BASIS AND INFORMATION REGARDING THE BENEFICIARIES WAS PASSED ON TO THE ASSESSING OFFICER HAVING JURISDICTION OVER THE BENEFICIARIES FOR SUBSTANTIVE ASSESSMENT. THE COMMISSION OF RS.22.12 LACS HAS BEE N ADDED ON SUBSTANTIVE BASIS. 5. THE CO-ORDINATE BENCH OF ITAT IN ITA NO.3561/DEL/ 2015 VIDE ORDER DATED 22.05.2020 HAS ADJUDICATED ON BOTH THE ISSUES . THE ADDITION BEING PROTECTIVE IN NATURE HAS BEEN DELETED BY THE ORDER OF THE TRIBUNAL. THE COMMISSION CHARGED @3% HAS BEEN BROUGHT DOWN TO 0.5 %. 6. SINCE, THE ISSUES STANDS SQUARELY COVERED BY THE EARLIER ORDER OF THE TRIBUNAL IN THE ABSENCE OF ANY MATERIAL CHANGE AND THE FACTS OF THE CASE EXCEPT THE AMOUNT INVOLVED, WE HEREBY HOLD AS UNDER : A) THE ADDITION MADE ON PROTECTIVE BASIS IS DIRECTED T O BE DELETED B) THE COMMISSION TO BE CHARGED @0.5% 7. FOR THE SAKE OF BREVITY AND READY REFERENCE, THE OPERATIVE PART OF THE ORDER OF THE TRIBUNAL IN THE CASE OF THE ASSESS EE FOR THE EARLIER YEAR IS REPRODUCED AS UNDER: 13. SO FAR AS THE GROUND NO.4 AND 5 ARE CONCERNED THESE RELATE TO THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITI ON OF ITA NO. 554/DEL/2017 MANOJ KUMAR JAIN 4 RS.23,56,61,265/- MADE BY THE AO ON PROTECTIVE BASIS 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 DECISIONS P LACED IN THE PAPER BOOK SUBMITTED THAT IN THE CASE OF ENTRY OPER ATORS SUCH COMMISSION HAS BEEN ESTIMATED @ .15% TO .5%. REFERR ING 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 SAID DECISION HAS HELD THAT COMMISSION RATE OF 0.25% IS REASONABLE. REFERRING T O THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF GOLD STAR FINVEST VS. DCIT VIDE ITA NO.74/MUM/2015 ORDER DATED 29.12.2016 HE SUBMITTED THAT THE TRIBUNAL IN THE SA ID DECISION HAS DIRECTED THE AO TO TAKE COMMISSION @ .15% AND A LLOW THE EXPENSES TO THE TUNE OF 50% OF THE SAID COMMISSION 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 EXPENDI TURE CLAIMED SHOULD BE ALLOWED TO THE EXTENT OF 59 %. HE ACCORDINGLY SUBMITTED THAT THE RATE OF COMMISSION @ 3% ADOPTED BY THE AO AND UPHELD BY THE CIT(A) BEING ON THE HIGHER SIDE S HOULD BE REDUCED TO 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. ITA NO. 554/DEL/2017 MANOJ KUMAR JAIN 5 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 M ADE IN ANY OTHER HAND THERE IS NO ROOM FOR ADDITION TO BE MADE ON PROTECTIVE BASIS. REFERRING TO THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. FUSSI FINANCIAL SERVICES PRIVATE LIMITED VIDE ITA NO.4227/DEL/2014 ORDER DAT ED 05.06.2017 FOR THE A.Y. 2005-06 HE SUBMITTED THAT T HE TRIBUNAL IN THE SAID DECISION HAS HELD THAT THERE MAY BE SUB STANTIVE ASSESSMENT WITHOUT ANY PROTECTIVE ASSESSMENT, HOWEV ER, THERE CANNOT BE ANY PROTECTIVE ASSESSMENT WITHOUT THERE B EING A SUBSTANTIVE ASSESSMENT. HE ALSO RELIED ON THE DECIS ION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF MP RAMC HANDARA VS. DCIT REPORTED IN 32 SOT 592 AND SURESH K. JAJOO VS. ACIT REPORTED IN 39 SOT 514 AND VARIOUS OTHER DECISIONS AND SUBMITTED THAT SINCE NO SUBSTANTIVE ADDITION HAS BE EN MADE IN THE HAND OF ANY OTHER PERSON, THEREFORE, THERE CANN OT BE ANY PROTECTIVE ADDITION IN THE HANDS OF THE 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 DEPOS ITS AND NAME OF THE PERSONS WHO HAD GIVEN THE MONEY AND, THEREFO RE, THE AO WAS FULLY JUSTIFIED IN MAKING THE ADDITION ON PROTE CTIVE BASIS WHICH HAS BEEN RIGHTLY UPHELD BY THE CIT(A). SO FAR AS THE ADOPTION OF RATE OF 3% COMMISSION IS CONCERNED, SHE SUBMITTED THAT THE SAME IS REASONABLE AND THEREFORE, THE SAME SHOULD BE UPHELD. 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. W E FIND THE AO ON THE BASIS OF THE DEPOSITS IN THE BANK STATEMENT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION NOTED THA T AN AMOUNT OF RS.23,56,61,265/- HAS BEEN GIVEN TO VARIOUS PERS ONS AS ACCOMMODATION ENTRY AND SINCE THE ASSESSEE COULD NO T EXPLAIN ITA NO. 554/DEL/2017 MANOJ KUMAR JAIN 6 THE SOURCE OF SUCH DEPOSITS IN THE BANK ACCOUNT MAD E ADDITION OF RS.23,56,61,265/- AS UNEXPLAINED DEPOSITS OF THE AS SESSEE ON PROTECTIVE BASIS. HE FURTHER MADE ADDITION OF RS.70 ,69,838/- BEING COMMISSION @ 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 UND ER IDENTICAL CIRCUMSTANCES ARE ADOPTING THE RATE OF COMMISSION V ARYING FROM @ 0.15% TO 0.5%. CONSIDERING THE TOTALITY OF THE FA CTS OF THE CASE WE DIRECT THE AO TO ADOPT THE PROFIT RATE OF 0 .5% AS COMMISSION ON SUCH ACCOMMODATION ENTRY OF RS.23,56, 61,255/-. ACCORDINGLY THE ORDER OF THE CIT(A) IS MODIFIED AND THE AO IS DIRECTED TO RESTRICT THE ADDITION TO RS.11,78,306/- B EING COMMISSION @0.5% OF RS.23,56,61,265/- AS AGAINST RS.70,69,838/- ADOPTED 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 IF NO SUBSTANTIVE ADDITION HAS BEEN MADE IN ANY OTHER HAND, THEN THER E CANNOT BE 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 PROTECTIVE ASSESSMENT OR ADDITION WITHOUT ANY SUBSTANTIVE ASSE SSMENT OR ADDITION. SINCE IN THE INSTANT CASE THE AO HAS NOT MADE ANY SUBSTANTIVE ASSESSMENT OR ADDITION IN ANY OTHER HAN D, THEREFORE, THE PROTECTIVE ADDITION MADE IN THE HANDS OF THE ASSES SEE BEING NOT IN ACCORDANCE WITH LAW HAS TO BE DELETED . WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND D IRECT THE AO ITA NO. 554/DEL/2017 MANOJ KUMAR JAIN 7 TO DELETE THE ADDITION OF RS.23,56,61,265/- MADE BY HIM ON PROTECTIVE BASIS WITHOUT MAKING ANY ADDITION ON SUB STANTIVE BASIS. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/12/2020. SD/- SD/- (H. S. SIDHU) (DR. B . R. R. KUMAR) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED: 14/12/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR