HIMANSHU KOHLI, NEW DELHI V. ACIT, CENTRAL CIRCLE- 28, NEW DELHI

ITA 6592/DEL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2096 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 01-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJIT SINGH
• Assessee Lawyers: PIYUSH K. KAMAL
• Keywords: Search and seizure; Document seized; Principle of natural justice; Retraction; Documents seized
• Section: 132; 15; 139; 133A; 153A; 143(1); 250; 43; 13; 22; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SH. N.K.BILLAIYA, ACCOUNTANT MEMBER AND SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.6590-92/DEL/2017 (ASSESSMENT YEAR: 2013-14, 2014-15, 20015-16) HIMANSHU KOHLI D-210, 1 ST FLOOR, ASHOK VIHAR, PHASE-1 NEW DELHI PIN : 110052 PAN : AKZPK7127R VS. ACIT CENTRAL CIRCLE-28 NEW DELHI APPELLANT RESPONDENT ASSESSEE BY : SH. SRI GAUTAM JAIN & PIYUSH K. KAMAL, ADV. REVENUE BY : SH. SANJIT SINGH, CIT DR DATE OF HEARING : 12.06.2018 DATE OF PRONOUNCEMENT : 05.09.2018 O R D E R PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER: THESE THREE APPEALS PREFERRED BY ASSESSEE ARE DIREC TED AGAINST SEPARATE ORDERS DATED 1.9.2017 PASSED BY LD. CIT (A PPEALS)- XXVI, NEW DELHI RELATING TO ASSESSMENT YEARS 2013-14, 2014 -15 AND 2 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) 2015-16. SINCE THESE APPEALS INVOLVE CONSIDERATION OF IDENTICAL ISSUES, THEY WERE HEARD TOGETHER AND ARE THUS BEING DISPOSED BY THIS CONSOLIDATED ORDER. 2.0 AT THE OUTSET, THE LEARNED COUNSEL OF THE ASSE SSEE SUBMITTED THAT THE APPEAL FOR ASSESSMENT YEAR 2013- 14 IN ITA NO. 6590/DEL/2017 MAY BE TAKEN AS THE LEAD MATTER IN TH ESE APPEALS. THE LEARNED CIT DR DID NOT OBJECT TO THE AFORESAID PRAYER OF THE LEARNED COUNSEL. AS SUCH, WE TAKE UP THE APPEAL FO R ASSESSMENT YEAR 2013-14. 2.1 IN ITA NO. 6590/DEL/2017 FOR ASSESSMENT YEAR 2 013-14, THE FACTUAL MATRIX EMANATING FROM ORDERS BELOW ARE T HAT THE ASSESSEE HAD FILED THE ORIGINAL RETURN OF INCOME ON 20.7.2013 DECLARING AN INCOME OF RS.2,20,815/- WHICH WAS PROCES SED U/S 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CAL LED THE ACT). A SEARCH & SEIZURE ACTION U/S 132 OF THE ACT WAS CARRI ED OUT IN DUA GROUP OF CASES INCLUDING THE ASSESSEE ON 25.4.2014. THE ASSESSEE WAS A CLOSE ASSOCIATE OF DUA BROTHERS AND HANDLED AL L UNACCOUNTED CASH SALE/PURCHASE OF METAL BUSINESS OF DUA GROUP A PART FROM HIS OWN BUSINESS IN THE NAME OF FIRM M/S KEWAL METALS. D URING THE COURSE OF SEARCH VARIOUS INCRIMINATING DOCUMENTS WER E FOUND AND 3 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) SEIZED AND STATEMENTS OF VARIOUS PERSONS WERE ALSO RECORDED. ACCORDINGLY, A NOTICE U/S 153A OF THE ACT WAS ISSUED ON 16.5.2016 REQUIRING THE ASSESSEE TO FILE THE RETURN OF INCOME . IN RESPONSE TO THE NOTICE, THE ASSESSEE, VIDE LETTER DATED 8.8.201 6, FURNISHED THE COPY OF RETURN OF INCOME E-FILED U/S153A ON 3.6.201 6 DECLARING AN INCOME OF RS.24,61,850/-. THE DIFFERENCE OF RS. 22, 41,035/- DUE TO ADDITIONAL INCOME OF RS. 23,16,150/- WAS DECLARED UN DER THE HEAD BUSINESS OR PROFESSION IN THE RETURN FILED U/S 15 3A OF THE ACT WHEREAS NO SUCH INCOME UNDER THE HEAD BUSINESS OR P ROFESSION WAS SHOWN BY THE ASSESSEE IN THE RETURN FILED U/S 139 OF THE ACT. 2.2 AS A RESULT OF SEARCH IT WAS REVEALED THAT THE ASSESSEE WAS INVOLVED IN UNACCOUNTED SALE AND PURCHASE OF NON -FERROUS METALS. IN THE ORDER OF ASSESSMENT THE AO HAS NOTE D THAT THE ASSESSEE WAS A KEY PERSON WHO HANDLED OUT OF BOOKS SA LE/PURCHASE OF THE METAL FOR THE DUA GROUP. THE STATEMENT OF T HE ASSESSEE WAS ALSO RECORDED ON OATH U/S 132(4) OF THE ACT DURING THE COURSE OF SEARCH, IN WHICH ASSESSEE STATED THAT HE WAS PAID COM MISSION OF RE. 1 PER KG. HOWEVER, SINCE THE ASSESSEE HAD MADE SURRENDER OF COMMISSION INCOME @ 0.50 PAISE PER KG, THE AO HELD THAT THE ASSESSEE HAD MADE THE SURRENDER LESS BY RS. 12,50,3 56/- IN THE 4 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) INSTANT YEAR. THE AO PASSED THE ASSESSMENT ORDER U /S 153A/143(3) OF THE ACT ON 30.12.2016 ASSESSING THE TOTAL INCOME OF RS.59,62,201/-. 2.3 THIS ADDITION WAS CONFIRMED BY THE LD. CIT (AP PEALS) BY HOLDING AS UNDER: IN THE INSTANT CASE, THE AO HAS ESTIMATED COMMIS SION ON THE BASIS OF STATEMENT OF THE APPELLANT WHEREIN IT WAS STATED THAT THE COMMISSION RECEIVED WAS RS.1 PER KG. DURIN G THE APPELLATE PROCEEDINGS, THE APPELLANT STATED THAT IN THE STATEMENT RECORDED IT WAS ALSO STATED THAT THE PROF ITS MARGIN IN SALE VALUE IS OF 0.22%, O.3% AND 0.47% IN TRADING O F COPPER BRASS AND ZINC RESPECTIVELY. IT WAS FURTHER STATED HAVING REGARD TO THE ABOVE FACTOR THE COMMISSION WAS ESTIMATED AT 50 PAISA PER KG. A CHART WAS FILED BEFORE THE AO TO SUPPORT THE ABOVE CALCULATION WHICH IS AS UNDER: SR. NO. ITEM AVERAGE RATE PER KG. PROFIT MARGIN % COMMISSION IN RS. PERCENTAGE OF TOTAL VOLUME OF BUSINESS WEIGHTED COMMISSION 1. COPPER 325 PER KG 0.22 71.5 PAISA 10% 7.15 RS. 2. BRASS 250 PER KG 0.30 75 PAISA 10% 7.5 RS 3 ZINC 100 PER KG 0.47 47 PAISA 80% 37.6 RS. TOTAL 52.25 LD AR HAS SUBMITTED THAT NO DEFECT WAS POINTED OUT IN THE ORDER OF ASSESSMENT PROCEEDINGS IN THE ABOVE ESTIMATION B Y THE APPELLANT. IT WAS ALSO CLAIMED THAT THE FORESAID C OMPUTATION OF 5 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) COMMISSION WAS DONE AT THE BEHEST OF THE INVESTIGAT ION WING AND NO ASSETS WERE FOUND IN THE COURSE OF SEARCH IN CLUDING CASH AND STOCK TO WARRANT ANY FURTHER ADDITION; OTHER TH AN THE SUM DECLARED BY THE APPELLANT. THE ASSESSEE HAS TO TAKE RESPONSIBILITY FOR HIS STATEMENTS AS THE ASSESSEE I S NOT COERCED INTO CONCEDING ANY POSITION. IN THIS MATTER, THE IN COME FROM COMMISSION ON TRADING OF METAL ON BEHALF OF MR.PAWA N DUE IS TO BE ESTIMATED. THE AO HAS PROCEEDED TO ESTIMATE ON T HE BASIS OF STATEMENT OF THE APPELLANT AND ADOPTED THE FIGURE A T RS. 1 PER KG. HOWEVER I FIND THAT A STATEMENT OF SH. PAWAN DU A WAS ALSO RECORDED ON 24.6.2014 U/S 132(4) OF THE ACT WHEREIN HE STATED AS UNDER: Q.NO. 5 IF SH. HIMANSHU KOHLI WAS HAVING THE BUSI NESS RELATIONS WITH YOU, IF YES THEN PRODUCE THE ACTIVIT IES OF THE SAME. ANS. YES. HIMANSHU KOHLI IS SELLING MY GOODS ON COMMISSION BASIS AND THE RATIO OF THE SAID COMMISSI ON IS 25-30 PAISE PER KGS. THE CRITICAL AND MATERIAL FACT HERE IS THE STATEMEN T OF THE ASSESSEE WHEREBY HE HAS GIVEN CERTAIN EXPLANATION A BOUT RATE OF COMMISSION EARNED BY HIM. IN VIEW OF THE FACTUAL STATEMENT, I FIND IT PRUDENT TO UPHOLD THE ORDER OF THE ASSESSIN G OFFICER IN RESPECT OF THE COMMISSION EARNED BY HIM. THE STATEM ENT OF OTHER PARTY SHALL NOT IMPACT AS THE ASSESSEE HAS AL READY STATED HIS EARNINGS IN THIS REGARD. FURTHER, THERE IS NO S UPPORTING MATERIAL AVAILABLE AND THE SO CALLED EXPENSES ARE A LSO PURE ESTIMATIONS ONLY. 6 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) AS A RESULT, THE ADDITION ON ACCOUNT OF THE COMMISS ION EARNED FOR METAL TRADE IS SUSTAINED. 2.4 AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE TH E TRIBUNAL RAISING THE FOLLOWING GROUNDS: 1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) XXVI, NEW DELHI HAS ERRED BOTH IN LAW AND ON FACTS IN SUSTAINING AN ADDITION OF RS. 12,50,000/- REPRESENT ING ALLEGED INCOME FROM COMMISSION ON TRADING OF METAL FOR THE INSTANT ASSESSMENT YEAR. 1.1 THAT BASIS ADOPTED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FOR DETERMINING THE COMMISSION INCOME AT RS. 27,44,392/- INSTEAD OF RS. 14,94,036/- IS FACTU ALLY AND LEGALLY MISCONCEIVED AND UNTENABLE. 1.2 THAT NO BASIS HAS BEEN STATED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) THAT COMMISSIO N INCOME EARNED BY THE APPELLANT WAS RS. 1 PER KG. AND NOT R S. 0.50 PAISA PER KG WHICH IS CONSISTENT STAND OF THE APPEL LANT SINCE THE DATE OF SEARCH AND ACCEPTED BY THE INVESTIGATION WI NG AND NO MATERIAL HAS BEEN FOUND AS A RESULT OF SEARCH OR GA THERED IN THE COURSE OF ASSESSMENT PROCEEDINGS TO HOLD TO THE CON TRARY AND, THEREFORE ADDITION MADE IS ILLEGAL, INVALID AND UNT ENABLE. 1.3 THAT EVEN THE QUANTITY ADOPTED FOR COMPUTING TH E COMMISSION INCOME IS INCORRECT AND EXCESSIVE AND TH EREFORE UNTENABLE. 1.4 THAT THE FINDING THAT I FIND IT PRUDENT TO UPH OLD THE ORDER OF THE ASSESSING OFFICER IN RESPECT OF THE COMMISSI ON EARNED BY 7 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) HIM. THE STATEMENT OF OTHER PARTY SHALL NOT IMPACT AS THE ASSESSEE HAS ALREADY STATED HIS EARNINGS IN THIS RE GARD. FURTHER, THERE IS NO SUPPORTING MATERIAL AVAILABLE AND THE SO CALLED EXPENSES ARE ALSO PURE ESTIMATIONS ONLY IS FACTUALLY INCORRECT, LEGALLY MISCONCEIVED AND UNTENABLE. 2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS FURTHER ERRED BOTH IN LAW AND ON FACTS IN SUSTA INING AN ADDITION OF RS. 15,00,000/- OUT OF RS. 22,50,000/- ON ACCOUNT OF ALLEGED COMMISSION INCOME FROM MCX DABBA TRADING FOR THE INSTANT ASSESSMENT YEAR. IT IS THEREFORE, PRAYED THAT IT BE HELD THAT, ADDIT IONS MADE AND UPHELD BY THE LEARNED COMMISSIONER OF INCO ME TAX (APPEALS) MAY KINDLY BE DELETED AND APPEAL OF THE A PPELLANT BE ALLOWED. 3.0 BEFORE US, THE LD. COUNSEL CONTENDED THAT THE LD. CIT (APPEALS) HAS PARTIALLY APPRECIATED THE STATEMENT R ECORDED ON 26.4.2014 BUT HAS OVERLOOKED THE REPLY DATED 26.12. 2016 IN THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS CONTENDED T HAT COMMISSION WAS RECEIVED FROM SH. PAWAN DUA, WHO IN HIS STATEMENT RECORDED ON 24.6.2014 U/S 132(4) OF THE A CT, HAD STATED THAT THE ASSESSEE WAS SELLING GOODS ON COMMISSION @ 25-30 PAISE PER KG. RELIANCE WAS PLACED BY THE LD. COUNSEL ON LETTER DATED 24.6.2014 AND STATEMENT DATED 24.6.2014 U/S 132(4) OF THE ACT. IT 8 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) WAS PRAYED THAT THE AVERAGE RATE OF COMMISSION @ 0.5 0 PAISE PER KG BE ACCEPTED AND ADDITION MADE BY ADOPTING THE COMMI SSION @ RE. 1 PER KG MAY KINDLY BE DELETED. 4. ON THE OTHER HAND, THE LD. CIT DR RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW AND REQUESTED THAT ESTIMATI ON OF INCOME FROM COMMISSION FROM TRADING OF METALS OF THE ASSES SEE BE REJECTED. IN THE WRITTEN SUBMISSIONS FILED BY THE DEPARTMENT, IT WAS STATED AS UNDER: IT IS HUMBLY SUBMITTED THAT THE FOLLOWING DECISI ONS MAY KINDLY BE CONSIDERED WITH REGARD TO VALIDITY OF STA TEMENT RECORDED U/S 132(4) OF I.T. ACT.: 1 KISHORE KUMAR V CIT (62 TAXMANN.COM 215, 234 TAXM AN 771) (COPY ENCLOSED) WHERE HONBLE SUPREME COURT D ISMISSED SLP AGAINST HIGH COURTS ORDER WHERE IT WAS HELD TH AT SINCE ASSESSEE HIMSELF HAD STATED IN SWORN STATEMENT DURI NG SEARCH AND SEIZURE ABOUT HIS UNDISCLOSED INCOME, TAX WAS T O BE LEVIED ON BASIS OF ADMISSION WITHOUT SCRUTINIZING DOCUMENT S. B KISHORE KUMAR V. CIT (52 TAXMANN.COM 449) MADRAS HIGH COURT CONFIRMED (COPY OF ENCLOSED) 2 BHAGIRATH AGGARWAL V. CIT (31 TAXMANN.COM 274, 21 5 TAXMAN 229, 351 ITR 143) (COPY ENCLOSED) WHERE HON BLE DELHI HIGH COURT HELD THAT AN ADDITION IN ASSESSEES INCO ME RELYING 9 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) ON STATEMENTS RECORDED DURING SEARCH OPERATIONS CAN NOT BE DELETED WITHOUT PROVING STATEMENTS TO BE INCORRECT. 3 SMT. DAYAWANTI V. CIT [2016] 75 TAXMANN.COM 308 ( DELHI) [2017] 245 TAXMAN 293 (DELHI)/[2017] 390 ITR 496 (DELHI)/[2016] 290 CTR 361 (DELHI) (COPY ENCLOSED) WHERE HONBLE DELHI HIGH COURT HELD THAT WHERE INFERENCES DRAWN IN RESPECT OF UNDECLARED INCOME OF ASSESSEE WERE PREMI SED ON MATERIALS FOUND AS WELL AS STATEMENTS RECORDED BY A SSESSEES SON IN COURSE OF SEARCH OPERATIONS AND ASSESSEE HAD NOT BEEN ABLE TO SHOW AS TO HOW ESTIMATION MADE BY ASSESSIN G OFFICER WAS ARBITRARY OR UNREASONABLE, ADDITIONS SO MADE BY ASSESSING OFFICER BY REJECTING BOOKS OF ACCOUNT WAS JUSTIFIED . 4 M/S PEBBLE INVESTMENT AND FINANCE LTD. V. ITO (20 17- TIOL-238-SC_IT) (COPY ENCLOSED) WHERE HONBLE SUPRE ME COURT DISMISSED SLP CHALLENGING THE JUDGMENT, WHEREBY THE HIGH COURT HAD HELD THAT STATEMENT MADE U/S 133A COULD B E RELIED UPON FOR PURPOSES OF ASSESSMENT, IN ABSENCE OF ANY CONTRARY EVIDENCE OR EXPLANATION AS TO WHY SUCH STATEMENT MA DE WAS NOT CREDIBLE. M/S PEBBLE INVESTMENT AND FINANCE LTD. V. ITO (017- TIOL-188- HC-MUM-IT) BOMBAY HIGH COURT CONFIRMED (COPY ENCLOS ED) 5 GREENVIEW RESTAURANT V. ACIT [2003] 133 TAXMAN 43 2 (GAUHATI)/[2003] 263 ITR 169 (GAUHATI)/[2003] 185 C TR 651 (GAUHATI) FROM FACTS, IT WAS CLEAR THAT THERE WAS A DELAY ON THE PART OF THE APPELLANT AND ITS PARTNER IN RETRACTING THE 10 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) STATEMENTS RECORDED. THE ATTENTION OF THE COURT HA D ALSO NOT BEEN DRAWN TO ANY MATERIAL ON RECORD TO ESTABLI SH THAT ANY ATTEMPT WAS MADE ON BEHALF OF THE APPELLANT TO PROVE THE ALLEGATION OF INDUCEMENT, THREAT OR COERCION TH ROUGH THE WITNESSES. HAVING EXAMINED THE IMPUGNED ORDERS RENDERED BY THE TRIBUNAL WITH THE REASONINGS IN SUP PORT OF ITS FINDING AGAINST THE COMPLAINT OF THREAT, INDUCE MENT OR COERCION, NO GOOD AND SUFFICIENT REASON WAS FOUND T O DIFFER FROM IT. IN THE FACTS AND CIRCUMSTANCES OF THE CAS E, HAVING REGARD TO THE MATERIAL ON RECORD, THE APPELLANT HAD FAILED TO ESTABLISH THAT THE STATEMENTS OF ITS PARTNER HAD BEEN RECORDED IN THE COURSE OF SEARCH BY USING COERCION, THREAT OR INDUCEMENT. HENCE, THE CONTENTIONS ADVANCED BY THE APPELLANT IN THAT REGARD WERE DISMISSED AND THE CONCLUSION OF THE TRIBUNAL ON THAT COUNT WAS AFFIRM ED. [PARA 9] 6 RAJ HANS TOWERS (P) LTD. V. CIT [56 TAXMANN.COM 6 7, 230 TAXMAN 567, 373 ITR 9) WHERE HONBLE DELHI HIGH COU RT HELD THAT WERE ASSESSEE HAD NOT OFFERED ANY SATISFACTORY EXPLANATION REGARDING SURRENDERED AMOUNT BEING NOT BONA FIDE AND IT WAS ALSO NOT BORNE OUT IN ANY CONTENTIONS RA ISED BEFORE LOWER AUTHORITIES, ADDITIONS SO MADE AFTER ADJUSTIN G EXPENDITURE WERE JUSTIFIED (SURVEY CASE) 7 PCIT V. AVINASH KUMAR SETIA [2017] 81 TAXMANN.COM 476 (DELHI) WHERE HONBLE DELHI HIGH COURT HELD THAT WH ERE ASSESSEE SURRENDERED CERTAIN INCOME BY WAY OF DECLA RATION AND 11 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) WITHDRAW SAME AFTER TWO YEARS WITHOUT ANY SATISFACT ORY EXPLANATION, IT COULD NOT BE TREATED AS BONAFIDE AN D, HENCE ADDITION WOULD SUSTAIN (SURVEY CASE) 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE AL SO PERUSED THE MATERIAL ON RECORD. THE UNDISPUTED FAC T IS THAT THE AO HAS ESTIMATED COMMISSION ON THE BASIS OF STATEMENT OF THE ASSESSEE WHEREIN IT WAS STATED THAT THE COMMISSION RECEIVED WAS RE. 1 PER KG. IT IS NOTED THAT IN STATEMENT RECORDED ON 25.4. 2014, IT WAS STATED AS UNDER: Q.21 PLEASE STATE ASSOCIATION WITH DUA GROUP AND W ITH SH. NARESH KUMAR DUA, SH. PAWAN KUMAR DUA AND SH. RAJES H DUA? ANS. I HAVE BUSINESS ASSOCIATION WITH DUA GROUP. I HANDLE THE SALE & PURCHASE OF METAL BUSINESS OF DUA GROUP APAR T FROM MY OWN BUSINESS IN THE NAME OF M/S KEWAL METALS I FUNC TION AS A AGENT BY SECURING SELLING/PURCHASER PARTIES FOR THE PURPOSE OF METAL TRADING BUSINESS OF DUA GROUP FOR WHICH THEY GIVE COMMISSION TO ME WHICH IS AROUND RS. 1 PER 1 KG AND WHICH TRANSLATES TO 01%.. 5.1 FURTHER, IN THE SAID STATEMENT IN REPLY TO QUE STION NO. 24 IT HAD BEEN STATED AS UNDER: 12 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) Q. NO. 24. THE QUESTION NO. 19 AND 20 IN REPLY TO THE SAME IN THE ANNEXURE METAL PIECES/SCRAP OF SALE TRANSACT ION IS GIVEN. PLEASE TELL THAT WHAT IS YOUR PROFIT MARGIN IN THE SAID SALE TRANSACTION. ANS. IN THE SAID SALE TRANSACTION THE SALE VALUE A BOUT 0.2% TO 0.5% PROFIT MARGIN IS THERE HOWEVER THE SAID PROFIT MARGIN OF DIFFERENT METAL TRADING IN SALE VALUE OF DIFFERENT PERCENTAGE VALUE IS THERE. THE ABOVE SAID ANNEXURES MOSTLY OF COPPER BRASS AND ZINC AND IN WHICH PROFIT MARGIN IS ABOUT SALE VALUE OF 0.22%, 0.3% AND 0.47% UPTO THAT ONLY. 5.2 IT IS FURTHER SEEN THAT THE ASSESSEE, IN THE C OURSE OF ASSESSMENT PROCEEDINGS, HAD STATED AS UNDER: 6.23.2 IT WILL BE APPARENT FROM THE ABOVE THAT THE ASSESSEE HAD STATED THAT PROFIT MARGIN IN THE SHAPE OF COMMI SSION ON THE TRADING OF METALS IS IN THE RANGE OF 0.25% TO 0.5%. THE AFORESAID PROFIT MARGIN ON VARIOUS ITEM-WISE IS AS UNDER: SR. NO. ITEM PERCENTAGE OF PROFIT 1 COPPER 0.22 2 BRASS 0.30 3 ZINC 0.47 6.23.3 IT IS SUBMITTED THAT IF THE RATE PER KG IS A DOPTED ON THE AFORESAID PROFIT MARGIN AND WEIGHTED AVERAGE METHOD IS APPLIED, THE COMMISSION WILL WORK OUT AT 50 PAISA PER KG AS WOULD BE EVIDENT FROM THE CHART HEREUNDER: 13 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) SR. NO. ITEM AVERAGE RATE PER KG PROFIT MARGIN % COMMISSION IN RS. PERCENTAGE OF TOTAL VOLUME OF BUSINESS WEIGHTED COMMISSION 1. COPPER 325 PER KG 0.22 71.5 PAISA 10% 7.15 RS. 2. BRASS 250 PER KG 0.30 75 PAISA 10% 7.5 RS. 3. ZINC 100 PER KG 0.47 47 PAISA 80% 37.6 RS. TOTAL 52.25 6.23.4 THUS, FROM THE AFORESAID TABULATION, IT WOUL D BE EVIDENT THAT THE AVERAGE RATE OF COMMISSION IS 50 P AISA PER KG AND THE INCOME DECLARED MAY KINDLY BE ACCEPTED AS S UCH. 6.23.5 SHOULD YOUR GOODSELF REQUIRE ANY EVIDENCE TO VERIFY THE ABOVE SUBMISSION, THE ASSESSEE IS WILLING TO FU RNISH THE SAME THOUGH IT IS SUBMITTED THAT THE AFORESAID COMP UTATION OF COMMISSION WAS DONE AT THE BEHEST OF THE INVESTIGAT ION WING AND NO DOUBT, IT IS ON ESTIMATED BASIS AND AVERAGE RATES WERE ADOPTED TO WORK OUT THE ESTIMATE REAL INCOME OF THE ASSESSEE HAVING REGARD TO THE NATURE OF INVOLVEMENT OF ASSES SEE AND THE ASSETS FOUNDS IN THE COURSE OF SEARCH INCLUDING CAS H AND STOCK. 5.3 WE ALSO NOTE THAT THE LD. CIT (APPEALS) HAS AL SO NOTED THAT THE ASSESSEE HAS CLAIMED THAT NO DEFECT WAS POI NTED OUT IN THE ORDER OF ASSESSMENT IN THE ABOVE ESTIMATION BY THE ASSESSEE. MOREOVER, IT IS A MATTER OF FACT AND UNDISPUTED THA T WHAT IS BEING ESTIMATED IN THE INCOME FROM COMMISSION ON TRADING OF METAL IS 14 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) SAID TO BE RECEIVED FROM SHRI PAWAN DUA WHO HAD DEPOS ED AS UNDER: Q.NO. 5 IF SH. HIMANSHU KOHLI WAS HAVING THE BUSIN ESS RELATIONS WITH YOU, IF YES THEN PRODUCE THE ACTIVIT IES OF THE SAME. ANS. YES. HIMANSHU KOHLI IS SELLING MY GOODS ON COM MISSION BASIS AND THE RATIO OF THE SAID COMMISSION IS 25-30 PAISE PER KGS. 5.4 THE LD. CIT (APPEALS), DESPITE THE ABOVE FACTU AL POSITION, HAS UPHELD THE ADDITION ON THE BASIS THAT CRITICAL AND MATERIAL IS THE STATEMENT OF THE ASSESSEE AND FURTHER THAT THE STATEMENT OF THE OTHER PARTY SHALL NOT IMPACT AS THE ASSESSEE HAD AL READY STATED HIS EARNINGS IN THIS REGARD. THE CASE OF THE ASSESSEE IS THAT THIS DECLARATION OF RE. 1 PER KG WAS AN INITIAL DECLARATI ON WHICH WAS EXPLAINED IN THE VERY SAID STATEMENT BY PERCENTAGES OF PROFITS AND ON BASIS OF THE SAID PERCENTAGES, COMMISSION WAS DET ERMINED AT 0.50 PAISA PER KG WHICH IS HIGHER THAN THE COMMISSIO N OF 0.30 PAISA PER KG AS STATED BY THE PERSON WHO HAS PAID TH E COMMISSION. 15 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) 5.5 THE LD. CIT DR HAS NOT BEEN ABLE TO ASSAIL THE ABOVE FACTUAL ASPECT OF THE MATTER. HE HAS RELIED ON VAR IOUS JUDGMENTS AS TO THE VALIDITY OF THE STATEMENT UNDER SECTION 132( 4) OF THE ACT. HERE IS NOT A CASE OF NON ACCEPTANCE OF THE STATEME NT OF THE ASSESSEE BUT IS A CASE OF APPRECIATION OF THE STATE MENT AS A WHOLE. APPLYING THE SAID PRINCIPLE IT IS NOTED THAT THERE IS NO MATERIAL DETERMINING THE COMMISSION AT RE. 1 PER KG., PARTIC ULARLY WHEN THE ASSESSEE HAS EXPLAINED THE BASIS OF THE FIGURE OF 0 .50 PAISE PER KG WHICH HAS NOT BEEN SHOWN TO BE INCORRECT AND IS ALSO HIGHER THAN ADMITTED TO HAVE BEEN PAID BY SHRI PAWAN DUA. IN FA CT IN THIS CASE, A SURRENDER WAS MADE BY THE ASSESSEE VIDE LETTER DAT ED 24.6.2014 ON THE BASIS OF THE ENTIRE SEIZED DOCUMENTS AND THE STATEMENT WAS RECORDED TO SAID EFFECT U/S 132(4) OF THE ACT. THE AMOUNT AS SURRENDERED BY THE ASSESSEE STANDS DULY OFFERED AND ASSESSED TO TAX. THERE IS NO RETRACTION TO THE SAID EXTENT. H AVING REGARD TO THE FOREGOING, WE ARE INCLINED TO ACCEPT THE CLAIM THAT IN ABSENCE OF ANY MATERIAL OR EVIDENCE TO REJECT THE BASIS GIVEN BY T HE ASSESSEE OF 0.50 PAISA PER KG, THE ADDITION MADE BY ADOPTING THE COM MISSION RATE OF RE. 1 PER KG. IS UNTENABLE AND, THEREFORE, LIABLE T O BE DELETED. ACCORDINGLY, GROUND NOS 1 TO 1.4 OF THE APPEAL ARE ALLOWED. 16 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) 6.0 GROUND NO 2 RELATES TO ADDITION OF RS. 15,00,0 00/- ON ACCOUNT OF COMMISSION INCOME FROM MCX DABBA TRADING FOR THE INSTANT ASSESSMENT YEAR. DURING THE INSTANT YEAR, THE ASSESSEE HAD ALSO EARNED COMMISSION ON MCX DABBA TRADING AND HAVING REGARD TO THE SEIZED DOCUMENTS THE ASSESSEE HAD OFFERED COMMISSION OF RS. 7,50,000/- BY ADOPTING THE RATE OF RS. 500/- PE R CRORE OF TRADE VALUE. IN THE COURSE OF SEARCH, STATEMENT ON ONE S HRI GAGAN ARORA WAS RECORDED AND DEPOSED THAT THE RATE OF COMMISSION INCOME ON SUCH TRADING IS RS. 2000/- PER CRORE OF TRADING VAL UE AND AS SUCH THE INCOME WAS DETERMINED AT RS. 30,00,000/- AND CON SEQUENTLY ADDITION WAS MADE OF RS. 22,50,000/-. THE LD. CIT (APPEALS) RESTRICTED THE SAME TO RS. 1500/- PER CRORE OF TRAD ING VALUE AND THE ASSESSEE HAS CHALLENGED THE SAID DETERMINATION. 7.0 BEFORE US IT WAS CONTENDED BY THE LD. COUNSEL T HAT NO MATERIAL HAS BEEN LED TO SUPPORT THE ABOVE ESTIMATI ON AT RS. 1500/- PER CRORE. IT WAS STATED THAT THE STATEMENT OF SH. GAGAN ARORA COULD NOT BE RELIED UPON IN ABSENCE OF CROSS EXAMIN ATION, DESPITE HAVING SPECIFICALLY SOUGHT SO IN THE ASSESSMENT PRO CEEDINGS. 17 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) 8.0 ON THE OTHER HAND, THE LD. CIT DR RELIED UPON THE ORDER OF THE AUTHORITIES BELOW. 9.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE A LSO PERUSED THE MATERIAL ON RECORD. ON THE GIVEN FACTS AND IN TERMS OF SETTLED LAW, THE STATEMENT OF SH. GAGAN ARORA, IN AB SENCE OF CROSS- EXAMINATION CANNOT BE USED AGAINST THE ASSESSEE. TH E HON'BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTR IES V. CCE REPORTED IN 62 TAXMANN.COM 3, WHILE DECIDING AN ISSUE REGARDING NOT ALLOWING THE CROSS EXAMINATION, HAS HE LD THAT NOT ALLOWING THE ASSESSEE TO CROSS EXAMINE THE WITNESS BY THE ADJUDICATING AUTHORITY, THOUGH STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER, AMOUNTED TO A SERIOUS LAPSE WHICH MAKES THE ORDER A NULLITY AS IT AMOUNTED TO VI OLATION OF PRINCIPLES OF NATURAL JUSTICE. ALSO IN THE CASE OF KISHANICHAND CHELLARAM V. CIT REPORTED IN 125 ITR 713 (SC) IT WAS HELD THAT ANY MATERIAL COLLECTED AT THE BACK OF THE ASSESSEE AND THE ASSESSEE NOT BEING CONFRONTED WITH THE SAME AND NO OPPORTUNITY HA VING BEEN GIVEN THE ASSESSEE TO CROSS-EXAMINE, SUCH MATERIAL CANNOT BE RELIED UPON AGAINST THE ASSESSEE. WE ARE ALSO GUIDED BY TH E JUDICIAL PRECEDENTS AS LAID DOWN IN CIT V. SUNIL AGARWAL 379 I TR 367 (DEL) 18 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) AND CIT V. BEST INFRASTRUCTURE (INDIA) (P) LTD. 39 7 ITR 82 (DEL). ACCORDINGLY, THE ADDITION MADE ON THIS ACCOUNT IS D ELETED AND THE GROUND NO 2 OF THE APPEAL IS ALLOWED. 10.0 IN THE RESULT ITA NO. 6590/DEL/2017 FILED BY THE ASSESSEE IS ALLOWED. 11.0 WE NOW TAKE UP APPEALS BEARING ITA NO. 6591/D EL/2017 AND ITA NO. 6592/D/2017 FOR ASSESSMENT YEARS 2014-1 5 AND 2015- 16 RESPECTIVELY. GROUND NOS. 1 AND 2 OF THE APPEAL S ARE IDENTICAL TO GROUND NOS. 1 AND 2 RAISED IN THE APPEAL FOR ASSESS MENT YEAR 2013-14. WE HAVE ALREADY HELD WHILE DISPOSING OFF T HE APPEAL FOR ASSESSMENT YEAR 2013-14 THAT ESTIMATION OF INCOME F ROM COMMISSION FROM TRADING OF METALS AND COMMISSION IN COME FROM MCX DABBA TRADING WERE NOT IN ACCORDANCE WITH LAW, THEREFORE, FOLLOWING THE AFORESAID FINDINGS, WE DELETE THE ADDIT IONS IN ASSESSMENT YEARS 2014-15 AND 2015-16 AND ACCORDINGL Y, ALLOW THE GROUNDS NO. 1 AND 2 OF BOTH THE APPEALS. 12.0 GROUNDS 3 TO 3.2 IN ITA NO. 6591/DEL/2017 FOR AY 2014- 15 CHALLENGE ADDITION ON ACCOUNT OF UNEXPLAINED REC EIPTS OF RS. 10 LACS IN RESPECT OF COMMISSION RECEIVED FROM SH. SUS HIL KUMAR FOR THE INSTANT ASSESSMENT YEAR. BEFORE US, THE LEARNED COUNSEL OF THE 19 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) ASSESSEE CONTENDED THAT THE SAID ADDITION SUSTAINED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS WITHOUT APPR ECIATING THE FOLLOWING ASPECTS: A) THAT ONCE THE COMMISSION FROM MCX TRADING HAS BE EN ESTIMATED THERE REMAINS NO VALID BASIS TO MAKE SPEC IFIC ADDITION; B) THAT STATEMENT OF SH. SUSHIL KUMAR RECORDED ON 25.4.2017 HAVE BEEN RECORDED BEHIND THE BACK OF THE ASSESSEE AND WITHOUT ANY OPPORTUNITY FOR CROSS EXAMINATION AND THEREFORE COULD NOT BE MADE A BASIS TO MAKE AN ADDITION; C) THAT NO MATERIAL GATHERED BY THE LEARNED ASSESSI NG OFFICER TO ALLEGE THAT SUM OF RS. 10 LACS WAS RECEIV ED OVER AND ABOVE THE INCOME ESTIMATED ON ACCOUNT OF COMMISSION. 13.0 ON THE OTHER HAND, THE LD. CIT DR RELIED UPON THE ORDER OF THE AUTHORITIES BELOW. 14.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. HAVING CONSIDERED THE FACTUAL 20 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) MATRIX WE ARE OF THE CONSIDERED OPINION THAT INCOME FROM COMMISSION FROM MCX TRADING HAS BEEN DECLARED AND A SSESSED SEPARATELY AND HAVING SO DONE, IN OUR OPINION THERE IS NO MATERIAL TO INDEPENDENTLY TAX THE FIGURE OF RS. 10 LACS. TH ERE IS NO MATERIAL BROUGHT ON RECORD TO STATE THAT THIS SUM RS. 10 LAC S WAS RECEIVED OVER AND ABOVE THE FIGURE OF COMMISSION OF MCX TRAD ING SEPARATELY ESTIMATED BY THE REVENUE. THIS ESTIMATION IS DONE ON THE BASIS OF PAGES 1 TO 10, 13 AND 15 OF ANNEXURE A-27 (EXHIBIT 5 FROM FLAT 1-B POCKET-A, NEAR SATYAWATI COLLEGE, ASHOK VIHAR, NEW D ELHI AND STATEMENT OF SH. SUSHI KUMAR RECORDED U/S 132(4) OF THE ACT. IT IS NOTED THAT THAT THE ASSESSEE, ON THE SAID BASIS AND DOCUMENTS, HAD ESTIMATED THE COMMISSION FROM MCX TRADING. THUS, O NCE THE SAID DOCUMENTS HAVE ALREADY BEEN CONSIDERED AS PART OF T HE ESTIMATION OF COMMISSION, NO SEPARATE ADDITION IS CALLED FOR. ACCORDINGLY, THE ADDITION MADE OF RS. 10 LACS IS DELETED AND GROUND NOS. 3 TO 3.3 OF THE APPEAL IS ALLOWED. 15.0 IN THE FINAL RESULT, ALL THE THREE APPEALS F OR ASSESSMENT YEARS 2013-14, 2014-15 AND 2015-16 FILED BY THE ASS ESSEE ARE ALLOWED. 21 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH SEPTEMBER, 2018. SD/- SD/- (N.K.BILLAIYA) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 5 TH SEPTEMBER, 2018 *BINITA* COPY OF ORDER TO: - 1) THE APPELLANT; 2) THE RESPONDENT; 3) THE CIT; 4) THE CIT(A)-, NEW DELHI; 5) THE DR, I.T.A.T., NEW DELHI; TRUE COPY BY ORDER ITAT, NEW DELHI 22 ITA NO.6590-92/DEL/2017) (HIMANSHU KOHLI) DATE OF DICTATION 13.06.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13.06.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 1 3 .0 9 .2018 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 0 5 .0 9 .2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 0 5 .0 9 .2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 0 5 .0 9 .2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 0 5 .0 9 .2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .0 9 .2018 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER