Diamond Tradex Co. Ltd, New Delhi V. ACIT, Central Circle-17, New Delhi

ITA 7385/DEL/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 3717 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 21-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Accommodation entries
• Section: 69C; 143(3)

Judgement Text

1 ITA No. 7385/Del./2018 M/s. Diamond Tradex Co. Ltd. IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘B’ : NEW DELHI) BEFORE SH. R.K.PANDA, ACCOUNTANT MEMBER AND SH. ANUBHAV SHARMA, JUDICIAL MEMBER ITA No. 7385/Del/2018 (Assessment Year : 2010-11) M/s. Diamond Tradex Company Ltd. 2885, 2 nd Floor, Haryana Singh Road, Karol Bagh, Delhi-110005 PAN – AACCD3460E Vs. ACIT Central Circle-17 Delhi (APPELLANT) (RESPONDENT) Assessee by None Revenue by Sh. Vivek Vardhan, Sr. DR Date of hearing: 27.04.2022 Date of Pronouncement: 27.04.2022 ORDER PER ANUBHAV SHARMA, JM: The appeal has been preferred by the assessee against order dated 25/09/2018 in appeal no. 311/2017-18 for the assessment year 2010-11 passed by the Commissioner of Income Tax Act, -27, New Delhi (hereinafter referred to as the ld. First Appellate Authority in short ‘Ld. F.A.A.) in appeal pending before it against order dated 18.12.2017 passed u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by ACIT, CC-17, New Delhi (hereinafter referred to as the Assessing Officer in short ‘the AO’). 2 ITA No. 7385/Del./2018 M/s. Diamond Tradex Co. Ltd. 2. The facts in brief are that return of income declaring total income of Rs. 21,93,620/- was filed by the assessee. Thereafter, information was received from the ADIT(Inv.), Unit 6(2), New Delhi that a Search & Seizure operation was carried out in the case of Gautam Jain & Others Group of cases and it was found that the searched concerns were not doing any real business activities and were only paper based concerns with the purpose of providing accommodation entries to various beneficiaries and that the assessee company was also one of the beneficiaries of the above said accommodation entries. 3. Thus on the basis of enquiry during assessment and the report of investigation wing, the Ld. AO held that ; “4. In view of the above facts of the case, it is clear that the assessee company had reduced its income by claiming bogus expenses on account of purchases from M/s Kothari Impex amounting to Rs. 82,18,178/- and amounting to Rs. 57,03,607/- from M/s Khushi Gems Pvt Ltd to inflate expenses. Therefore, the above amount totaling to 1,39,21,785/- is hereby treated as assessee company’s own income from undisclosed sources. Accordingly, addition of Rs. 1,39,21,785/- is made to the total income of the assessee company for the year under consideration. 5. Further, in his statement Sh. Vijay Narendera Kothari had stated that his concerns were engaged in providing accommodation entries against receipt of commission. Though the rate of commission was not mentioned in the statement, however, as per prevailing market practice the same is taken at the rate of 2% of the transactions of accommodation entries. Accordingly, it is hereby held that the assessee company had paid an amount of Rs. 2,78,435/- on account of commission for obtaining accommodation entries which it paid out of undisclosed sources. Therefore, an addition of Rs. 2,78,435/- is hereby made to the total income of the assessee company for the year under consideration being 3 ITA No. 7385/Del./2018 M/s. Diamond Tradex Co. Ltd. 'unexplained expenditure as per provision of Section 69C of the I.T. Act, 1961.” 4. In appeal, Ld. CIT(A) had restricted the addition made by AO to Rs. 34,80,446 being 25% of the total bogus purchased amounting to Rs. 1,39,21,785/- While confirming the commission expenses of Rs. 2,78,435/-. 5. Now before Tribunal assessee has raised following grounds of appeal :- “1. That on the facts and circumstances of the case and in law, the order passed by CIT (A)-27, New Delhi (hereinafter referred to as CIT (A)), is bad in law. 2. That on the facts and circumstances of the case and in law, the CIT (A) was not justified in upholding the action of AO in reopening the case u/s 147 of the act and contending that the AO has applied his mind and come to an independent conclusion that he has reason to believe that the income of the assessee has escaped assessment which was a jurisdictional requirement for reopening of the assessment under u/s 147/148 of the I.T Act 3. That on the facts and circumstances of the case and in law the CIT (A) was not justified in sustaining 25% of addition made by the Ld. AO being 25% of 1,39,21,785/- by relying on the decision of Hon'ble High Court of Gujrat in the case of CIT vs Bholanath Poly Fab Pvt ltd 355 ITR 290. 4. That on the facts and circumstances of the case and in law the CIT(A) was not justified in sustaining the addition made by AO on account of alleged bogus purchase from M/s Kothari Impex and M/s Khushi Gems Pvt Ltd . 5. That on the facts and circumstances of the case and in law, the CIT (A) was not justified and has erred in sustaining addition of Rs 2,78,435/- on the presumption that commission of 2% was paid for arranging accommodation entries aggregating to Rs. 1,39,21,785/-. 6. That the appellant craves leave to add, alter, modify any of the grounds at the time of hearing or before the hearing.” 4 ITA No. 7385/Del./2018 M/s. Diamond Tradex Co. Ltd. 6. As a matter was called today on 27.04.2022, non-appeared for assessee. The registered notice with acknowledgement due have been received back un served, earlier also notices were un-served. Assessee has not put in appearance on 14.09.2021, 24.11.2021, 01.02.2022 and today. It appears that assessee is not interested to prosecute the appeal, therefore arguments of Ld. Sr. DR were heard who supported the orders of Ld. Tax Authorities below. 7. Giving thoughtful consideration to the matter on record it can be observed from the order of Ld. Tax Authorities below that the Ld. AO has rightly relied the detailed collection of evidence by the Investigation Wing which stood un rebutted by the assessee and the ld. First Appellate Authority has benefited the assessee under law by restricting addition to 25% so no apparent case of any interferences made out. The appeal is dismissed Ex Parte. Order pronounced in open court on conclusion of hearing today i.e 27 th day of April, 2022. Sd/- Sd/- (R.K.PANDA) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 27.04.2022 *Binita, Sr.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI