Sri Manoj Kumar Jain, Kolkata V. I.T.O Wd - 41(1), Kolkata

ITA 978/KOL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7005 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-08-2020
• Assessment Year: 2006-2007
• Appeal Filed On: 30-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Keywords: Search and seizure; Peak credit; Accommodation entries; Set aside
• Section: 143(3); 133(6); 68; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER ITA NO.978/KOL/2019 ASSESSMENT YEAR: 2006-07 MANOJ KUMAR JAIN 19, GALLIF STREET, KOLKATA-700 004 [ PAN NO.ACOPJ 3303 K ] / V/S . INCOME TAX OFFICER WARD- 44(1), 1 ST FLOOR, 3, GOVT. PLACE (WEST), KOLKATA-001 /APPELLANT .. /RESPONDENT ITA NO.1400/KOL/2019 ASSESSMENT YEAR: 2006-07 INCOME TAX OFFICER WARD- 44(1), 1 ST FLOOR, 3, GOVT. PLACE (WEST), KOLKATA-001 / V/S . MANOJ KUMAR JAIN 19, GALLIF STREET, KOLKATA-700 004 [ PAN NO.ACOPJ 3303 K ] /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI ANIL KOCHAR, ADVOCATE ' /BY REVENUE SMT. RANU BISWAS, ADDL. CIT-DR /DATE OF HEARING 18-08-2020 /DATE OF PRONOUNCEMENT 10-09-2020 /O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THE ASSESSEE AND REVENUE HAVE FILED THEIR CROSS-AP PEAL FOR ASSESSMENT YEAR 2006-07 ARISE AGAINST THE COMMISSIONER OF INCOME TA X (APPEALS)-13, KOLKATAS ORDER DATED 29.03.2019 PASSED IN CASE NO.64/CIT(A)-13/W-4 4(1)/KOL/2015-16 RESTRICTING THE ASSESSING OFFICERS ACTION MAKING UNDISCLOSED I NCOME ADDITION OF 2,45,62,196 ITA NO.978 & 1400/KOL/2019 ASSESSMENT YEAR 2006-07 MANOJ KR. JAIN. VS ITO WD-44(1), KOL. PAGE 2 MADE IN ASSESSMENT ORDER DATED 24.03.2015 TO PEAK C REDIT SUM OF 24,33,711/- INVOLVING PROCEEDINGS U/S 143(3) R.W.S. 254 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE(S) PERUSED. 2. WE NOTICE FROM A PERUSAL OF THE RIVAL PLEADINGS THAT ASSESSEES SOLITARY SUBSTANTIVE GRIEVANCE SEEK TO REVERSE THE CIT(A)S ACTION ADDING THE FOREGOING PEAK AMOUNT OF 24,33,711/- WHEREAS THE REVENUES CORRESPONDING GRI EVANCE IS THAT THE ASSESSING OFFICERS ENTIRE ADDITION AMOUNT OF 245,62,195/- DESERVES TO BE RESTORED. 3. CASE FILE INDICATES THAT THIS IS THE SECOND ROU ND OF LITIGATION BETWEEN THE PARTIES QUA THE INSTANT SOLE ISSUE. THIS TRIBUNALS CO-ORDINAT E BENCHS ORDER DECIDED ON 15.02.2013 IN ITA NO.1772/KOL/2009 HAD RESTORED THE SAME BACK TO THE ASSESSING OFFICER AS UNDER:- 2 . AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE S TATED THAT THE OUTCOME OF THE APPEAL FOR AY 2006-07 AS DIRECT BEARING ON THE APPEAL OF A Y 2007-08 AND ISSUES ARE COMMON. ACCORDING TO LD. COUNSEL, WHO HAS DRAWN OUR ATTENTION TO THE ORDER OF CIT(A) AT PAGE 9, WHICH READS AS UNDER: THE MOST IMPORTANT DISCREPANCY NOTICED IS THAT THE APPELLANT FAILED TO FURNISH THE RELEVANT TRANSFER DEEDS INDICATING PURCHASES AN D SALES. EVEN AT THE TIME OF REMAND REPORT STAGE, THE CORRESPONDENCE TRANSFER DE EDS HAVE NOT BEEN FURNISHED. IN THE REJOINDER GIVEN WITH RESPECT TO R EMAND REPORT, THE APPELLANT SUBMITTED THAT HE PURCHASED UNQUOTED SHARES FOR WHI CH DELIVERY WAS OBTAINED ALONG WITH TRANSFER MEMO AND SALES WERE AFFECTED BY HIM AND THE TRANSFER MEMOS WERE HANDED OVER TO BUYERS OF THE SHARES. THI S KIND OF ARGUMENT, IN MY OPINION WOULD NOT SUPPORT THE APPELLANTS CASE. AT LEAST THE APPELLANT COULD HAVE SUBMITTED THE PURCHASE MEMOS AND SALE ME MOS WHEREIN THE DESCRIPTION AND THE DISTINCTIVE NUMBER OF SHARES AR E MENTIONED. WITHOUT THESE VITAL DETAILS AND IN THE ABSENCE OF DEMAT ACCOUNT I T IS HARD TO BELIEVE THAT THE ASSESSEE COULD HAVE CARRIED OUT ANY REAL TRANSACTIO NS IN SHARE TRADING BUSINESS. FIRSTLY, THAT THE APPELLANT HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT PRIMA FACIE INDICATING THE SHARE TRADING BUSINESS. SECONDLY, TH E SUBSTANTIAL SALE TRANSACTIONS HAVE NOT BEEN ESTABLISHED. THIRDLY, TH E ASSESSEE COULD NEITHER PRODUCE THE TRANSFER DEEDS/MEMOS EFFECTING THE SALE TRANSACTIONS IN SHARES. MOST IMPORTANTLY THE ASSESSEE FAILED TO PRODUCE ANY DISTINCTIVE NUMBERS OF SUCH SHARES PURCHASED AND SOLD. THIS INFORMATION IS VERY CRUCIAL SINCE THE SHARE TRANSACTIONS DONE BY THE APPELLANT DID NOT CO ME UNDER DEMAT ACCOUNT. AS SUCH THE POSSESSION OF SHARES AND PARTING OF SHA RES PHYSICALLY WITH REFERENCE TO DISTINCTIVE NUMBERS COULD NOT BE ESTAB LISHED TO PROVE THAT THE APPELLANT REALLY CARRIED OUT PURCHASE AND SALE OF S HARES. ITA NO.978 & 1400/KOL/2019 ASSESSMENT YEAR 2006-07 MANOJ KR. JAIN. VS ITO WD-44(1), KOL. PAGE 3 3. FROM THIS PARA, LD. COUNSEL FOR THE ASSESSEE STATE D THAT THESE DOCUMENTS ARE NOW FILED BEFORE THE TRIBUNAL FOR THE FIRST TIME AND AL SO FILED DOCUMENT AT SL. NOS. 5, 6 TO 10 OF THE PAPER BOOK, WHICH ARE SUBMITTED BEFORE CI T(A) FOR THE FIRST TIME AND CIT(A) HAS NOT CONSIDERED THESE DOCUMENTS. IT WAS ALSO STA TED THAT THE DOCUMENTS AT SL. NOS. 11 & 12 I.E. DETAILS OF DATE WISE PURCHASE AND SALE S, TRIAL BALANCE, BALANCE SHEET, P&L ACCOUNT AND LEDGER, ACCOUNT COPIES ARE FILED FO R THE FIRST TIME BEFORE THE TRIBUNAL. IN VIEW OF THIS, LD. COUNSEL FOR THE ASSE SSEE URGED THIS BENCH TO ADMIT THESE DOCUMENTS AND IN THE EVENTUALITY OF ADMISSION OF TH ESE DOCUMENTS BY THE TRIBUNAL, THESE NEEDS VERIFICATION AT THE LEVEL OF AO. HENCE, IN BOTH THE YEARS THE ISSUES WILL GO BACK TO THE AO FOR FRESH ADJUDICATION. ON QUERY FRO M THE BENCH, THE LD. CIT(DR), HOWEVER, RELIED ON THE ORDERS OF THE LOWER AUTHORIT IES BUT HE STATED THAT THE DOCUMENTS BEING NEW, THESE HAVE TO BE ADMITTED BECAUSE THESE ARE VITAL FOR ADJUDICATION OF THE ASSESSEE AND ONCE THESE ARE ADMITTED, THESE HAVE TO BE REMITTED BACK TO THE FILE OF AO FOR EXAMINATION, VERIFICATION AND INVESTIGATION. WE ARE IN AGREEMENT WITH THE FACTUAL ASPECT NOTED BY CIT(A) THAT THE ASSESSEE HAS NOT PR ODUCED BEFORE HIM DEMAT ACCOUNTS, TRANSFER DEEDS, MEMOS EFFECTING SALE TRAN SACTIONS IN SHARES AND IN THE ABSENCE OF THE SAME, THE CIT(A) COULD NOT HAVE TAKE N ANY DECISION EXCEPT TO CONFIRM THE ADDITION. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH F ACTS AND CIRCUMSTANCE OF THE CASE. WE FIND THAT THE DOCUMENTS PRODUCED BY ASSESS EE BEFORE US RELATE TO BOTH THE YEARS AND THESE REQUIRE FURTHER INVESTIGATION. THE DOCUMENTS ARE CASH DEPOSIT IN BANK AND SOURCES, COPY OF BANK STATEMENT, DETAILS OF PUR CHASES, SUMMARY AND LETTERS OF CONFIRMATIONS, DETAILS OF SALES, SUMMARY AND LETTER S OF CONFIRMATIONS, COPY OF DECLARATION DATED 05.05.2009, DETAILS OF DATE WISE PURCHASES AND SALES AND TRIAL BALANCE, BALANCE SHEET, P/L A/C & LEDGER. AS THESE DOCUMENTS REQUIRE VERIFICATION, WE SET ASIDE THE ASSESSMENTS TO THE FILE OF THE AO AND REMAND 3 ITA NOS. 1772/K/2009 &1004/K/2011 MANOJ KR. JAIN A.Y. 2006-07 & 2007-08 BACK THE PROCEEDINGS DE NOVO. THE AO WILL FRAME ASSESSMENTS AFRESH AFTER EXAMINING THE DETAILS AND EVIDENCE TO BE PRODUCED BY THE ASSESSEE . APPEALS OF ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. IT IS IN THIS BACKDROP OF FACTS THAT THE ASSESSING OFFICERS CONSEQUENTIAL ASSESSMENT DATED 24.03.2015 REITERATED THE IMPUGNED ADDITION. HE ISSUED SEC. 133(6) NOTICES TO THE PARTIES WHOSE LIST HAD COME F ROM ASSESSEES SIDE FOR THE PURPOSE OF VERIFYING THE IMPUGNED SALES / PURCHASES . HE WAS OF THE VIEW THAT THE SAID PARTIES DID NOT MAINTAIN THE BOOKS OF ACCO UNT REGARDING THE CORRESPONDING SHARE TRANSACTIONS. HE THUS CONCLUDED THAT MOST OF THE ASSESSEES PURCHASERS AND SELLERS TURNED OUT TO BE THE SAME PA RTIES AND THEREFORE, IT WAS AN INSTANCE INVOLVING ACCOMMODATION ENTRIES WHEREIN SH ARE TRADING HAD BEEN SHOWN AS A COLORABLE DEVICE TO LEGITIMISE CHANNELIN G OF AMOUNTS FROM UNACCOUNTED SOURCES. ALL THIS RESULTED IN THE IMPUG NED UNDISCLOSED INCOME ADDITION OF 245,62,195/-. ITA NO.978 & 1400/KOL/2019 ASSESSMENT YEAR 2006-07 MANOJ KR. JAIN. VS ITO WD-44(1), KOL. PAGE 4 4. THE ASSESSEE PREFERRED APPEAL. THE CIT(A) HAS CO NFIRMED ONLY THE PECK SUM ADDITION AMOUNT OF 24,33,744/- VIDE THE FOLLOWING DISCUSSION:- 6. IT WAS A CASE OF THE APPELLANT BEFORE THE AO THA T THE CASH DEPOSITED IN THE UNDISCLOSED BACK ACCOUNT WAS SALE CONSIDERATION OF SHARES SOLD TO VARIOUS PARTIES OVER THE FINANCIAL YEAR INVOLVED. FROM THE TENOR OF THE TWO ASSESSMENT ORDE RS I WAS LOOKING FOR THE EXPLANATION AS TO THE NATURE OF CASH DEPOSIT IN THE BANK ACCOUNT. HE DID NOT CONCERN HIMSELF MUCH WITH RELEVANT PURCHASES CLAIMED BY THE ASSESSEE. IT MAY FURTHER B E NOTED THAT ONCE PURCHASE OF SHARES ARE CLAIMED THE CASH DEPOSIT CANNOT BE VIEWED IN ISOLAT ION OF THE SAID PURCHASES WHICH INVOLVED PAYMENTS TO VARIOUS PARTIES FROM WHICH SHARES ARE C LAIMED TO HAVE BEEN PURCHASED. FROM THE PATTERN OF THE DEPOSIT AND WITHDRAWAL IN THE BANK A CCOUNT IT APPEARS THAT THE CASH DEPOSITS /. FOUND WAS TRANSFERRED TO VARIOUS PARTIES AND THERE IS NO CASH WITHDRAWAL IN THE BANK. 7. ONCE THE CLAIM IS MADE BY THE APPELLANT THAT THE SAID BANK ACCOUNT WAS USED FOR SALE AND PURCHASE OF SHARES IN PRIVATE COMPANIES, WITHOUT AN Y FINDINGS THAT PURCHASES WERE LONG TERM INVESTMENT AND NOT THE STOCK IN TRADE ( WHICH IS TRANSITORY HAVING THE HOLDING OF SHORT PERIOD ), AGGREGATING THE WHOLE CASH DEPOSIT AND EQUATING THE SUM TO THE INCOME OF THE ASSESSEE MAY NOT BE CORRECT. THAT APPROACH WOULD AM OUNT TO INFERRING THAT THE ASSESSEE ACCUMULATED THE ASSET IN THE FORM OF SHARES OR OTHE RWISE BY MAKING CASH DEPOSIT APPEARING IN THE BANK ACCOUNT. 8. FROM THE ASSESSMENT ORDER I DO NOT SEE ANY SUGGE STION COMING FROM THE AO THAT THE PURCHASES REPRESENTED INVESTMENT OR ACQUISITION OF LONG TERM ASSETS. LACK OF ANY SUCH FINDINGS BECOMES VERY RELEVANT IN DECIDING THE INCO ME REPRESENTED BY DEPOSITS AND WITHDRAWALS APPEARING IN RESPECT TO HE BANK STATEME NT. 9. ONCE THE ABOVE APPROACH OF THE AO IS NOT ACCEPT ED, ACCEPTING HIS DECISION ( EVEN FOR THE TIME BEING ) ABOUT THE FAILURE TO OFFER THE SATISFACTORY EXPLA NATION ABOUT THE SOURCE OF CASH DEPOSITS, I HAVE TO COME UP WITH THE METHOD TO ESTI MATE THE INCOME ASSOCIATED WITH THESE TRANSACTIONS. 10. I DO NOT DISCUSS AT LENGTH ABOUT THE ENQUIRIES AND FINDINGS ABOUT THE GENUINENESS OF THE SALES FOR BREVITY SAKE. FROM THE NATURE OF THE DOCU MENTS SUBMITTED AND THE EXTENT OF COMP0LIACNE MADE ON BEHALF OF THE PARTIES CLAIMED T O HAVE GIVEN CASH TO THE ASSESSEE AND FROM THE FINDING OF THE AO, I GET THE IMPRESSION TH AT IT IS VERY DIFFICULT TO PROVE WITH FINALTY EVEN FOR THE ASSESSEE THAT THE CASH WERE INDEED GIV EN BY THESE PARTIES. 11. NOW COMING TO THE POINT OF INCOME TO BE ESTIMAT ED ASSOCIATED WITH THE TRANSACTIONS INVOLVED, I PROCEED WITH THAT PART OF THE ASSESSING OFFICER'S FINDINGS WHICH TREATS THE CASH AS THE ASSESSEE OWN MONEY. BUT ONE RELEVANT CONSIDERAT ION WHICH WAS IGNORED BY THE AO IS THAT THE SAID CASH WAS TURNED OVER IN SUBSEQUENT PURCHAS ES AND SALES. IN OTHER WORDS HE ( ASSESSEE ) SEEMS MORE AS A TRADER OF STOCKS IN PRIVATE EQUIT IES. 12. I DISCUSS A LITTLE ABOUT THE ASSESSING OFFICER' FINDINGS OF TREATING THIS MUCH OF TRANSACTIONS AS ONE FOR FUND TRANSFER. BUT IT DOES NOT MEAN THAT THE WHOLE OF THE MONEY TRANSFERRED WAS ASSESSEES OWN MONEY. BECAUSE IN ABSENCE OF ANY POS ITIVE FINDINGS TO THE SAID EFFECT IT IS DIFFICULT TO SUPPORT THE ASSESSING OFFICER' DECISIO N TO AGGREGATE THE CASH DEPOSITS AS THE APPELLANTS INCOME. THIS IS ALL THE MORE RELEVANT I N VIEW OF THE ASSESSEES ASSERTION OR CLAIM THAT THE APE USED THE SAID BANK ACCOUNT FOR PURCHAS E OF SHARES, WHICH WERE SOLD IN CASH MAINLY WHICH WAS AGAIN ROUTED BACK TO THE BANK ACCO UNT FOR FURTHER PURCHASES. 13. I FIND INTRIGUING THAT PURCHASES HAVE BEEN MADE ALWAYS IN CHEQUE BUT SALES HAVE BEEN MADE MOSTLY IN CASH THOUGH SALES IN CHEQUE IS ALSO QUIET APPRECIABLE, WHICH HAS NOT BEEN TOUCHED BY THE AO. I ALSO FIND IT STRANGE THAT THE AO HAS COMPLETELY IGNORED CHEQUE DEPOSITS ITA NO.978 & 1400/KOL/2019 ASSESSMENT YEAR 2006-07 MANOJ KR. JAIN. VS ITO WD-44(1), KOL. PAGE 5 IN THIS ACCOUNT WHICH WAS FOUND UNDISCLOSED BY THE AO. IF THE AO WAS LOOKING FOR THE EXPLANATION OF DEPOSITS IN THIS UNDISCLOSED BANK AC COUNTS, CHEQUE DEPOSITS OF ALMOST TWO CORE IN THE SAID ACCOUNT SHOULD ALSO HAVE ATTRACTED THE ASSESSING OFFICER'S ATTENTION. THIS GIVES ME FURTHER IMPRESSIONS THAT THE AO WAS PROBABLY NOT SU RE OF THE AGGREGATE DEPOSITS IN THE SAID UNDISCLOSED ACCOUNT BEING THE INCOME OF THE ASSESSE E. 14. COMING BACK TO THE CASH DEPOSITS I SUPPORT THE ASSESSING OFFICER' VIEW THAT THE ASSESSEE DID NOT GIVE THE SATISFACTORY EXPLANATION ABOUT TH E OWNERSHIP OF THE CASH DEPOSITS IN THE BANK ACCOUNT BEING NOT HIS OWN MONEY. IT MAY BE NOTED TH AT THE DOCUMENTS WHICH HAS BEEN FURNISHED IN ASSESSMENT PROCEEDING HAS BEEN MADE LA TER. ONE METHOD USUALLY APPLIED IN CASES WHERE DEPOSITS AND WITHDRAWALS ARE NOT FULLY ASCERTAINABLE, IS PEAK THEORY METHOD, WHICH ASSUMES THAT ASSESSEE MAY BE ASSUMED TO BE TH E OWNER OF THE MONEY WHICH MAY BE IN HIS POSSESSION AT ANY ITEM AND SO THE MAXIMUM AMOUN T OF CASH OR MONEY FOUND IN THE HAND OF THE ASSESSEE MAY BE TREATED AS AN INCOME FOR THE PU RPOSE OF ASSESSING ESTIMATED INCOME ASSOCIATED WITH SUCH UNEXPLAINED WITHDRAWALS AND DE POSITS. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE I THEREFORE FIND THIS CAS E A FIT ONE FOR THE APPLICATION OF SAID PEAK METHOD. 15. A PERUSAL OF THE SAID UNDISCLOSED BANK ACCOUNT SHOWS VARIOUS AMOUNT AS BALANCES IN THE SAID BANK ACCOUNT. THESE AMOUNTS VARY FROM A FEW LA KH ON VARIOUS DATES TO A MAXIMUM FIGURE OF RS.24,33,744/- ON 06/04/2005. THESE BEING THE PE AK AMOUNT I TREAT IT AS THE UNDISCLOSED INCOME FOR THE PURPOSE OF THIS ASSESSMENT. THE BALA NCE ADDITION OF RS.2,21,28,452/- ( RS.2,45,62,196/- - RS.24,33,744/- ) IS HEREBY DELETED . THIS LEAVE BOTH THE PARTIES AGGRIEVED TO THE EXTENT INDICATED IN THEIR RESPECTIVE PLEADINGS (SUPRA). 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO R IVAL PLEADINGS AGAINST AND IN SUPPORT OF THE IMPUGNED SEC. 68 ADDITION OF 2,45,62,196/-. WE NOTICE THAT THE ASSESSING OFFICERS CASE IN HIS ASSESSMENT IS THAT THE ASSESSEE IS ENGAGED IN ACCOMMODATION ENTRIES BUSINESS ONLY WHO HAS TAKEN R ECOURSE ALLEGED FICTITIOUS SHARE TRANSACTIONS (SUPRA). HE HAS TREATED ALL SALES & PU RCHASE AS BOGUS IN OTHER HANDS. THAT BEING THE CASE, WE SEE NO REASON TO SUSTAIN EVEN TH E PEAK CREDIT ADDITION AMOUNT AS WELL SINCE HIS ENTRY OPERATOR ACTIVITY CAN BE VERY WELL PRESUMED TO BE TAKING CREDITS THROUGH BANKING TRANSACTIONS AND CHANNELING THE SAM E TO OTHER PARTIES IN LIEU OF ENTRY CHARGES ONLY. THIS TRIBUNALS CO-ORDINATE BENCHS D ECISION IN ITA NO.190/KOL/2020 IN SARASWATIGUPTA VS. INCOME TAX OFFICERWARD-47(1), KO LKATA DECIDED ON 06.07.2020 HOLDS THAT ONLY THE PROFIT RATE AND NOT THE ENTIRE SUM(S) DESERVES TO BE ADDED IN SUCH A CASE AS FOLLOWS;- 2 . THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL , WHO FILED HER RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION O N 31.03.2013 DECLARING TOTAL INCOME OF RS.2,34,620/-. THE SAID R ETURN WAS INITIALLY ITA NO.978 & 1400/KOL/2019 ASSESSMENT YEAR 2006-07 MANOJ KR. JAIN. VS ITO WD-44(1), KOL. PAGE 6 PROCESSED BY THE ASSESSING OFFICER UNDER SECTION 14 3(1) OF THE INCOME TAX ACT, 1961 ON 11.02.2014. THEREAFTER HE RECEIVED INFORMATION ABOUT THE BANK ACCOUNT MAINTAINED BY THE ASSESSEE W ITH BANK OF INDIA, SALKIA BRANCH, HOWRAH, WHEREIN HUGE TRANSACT IONS WERE REFLECTED. ON THE BASIS OF THE SAID INFORMATION, TH E ASSESSING OFFICER REOPENED THE ASSESSMENT FOR THE YEAR UNDER CONSIDER ATION AND ISSUED A NOTICE UNDER SECTION 148 TO THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS CALLED UPO N BY THE ASSESSING OFFICER TO EXPLAIN THE NATURE AND SOURCE OF TOTAL CREDITS/DEPOSITS FOUND TO BE MADE IN HER BANK ACCOU NT WITH BANK OF INDIA, SALKIA BRANCH, HOWRAH AGGREGATING TO RS.2,39 ,30,000/-. IN REPLY, IT WAS EXPLAINED BY THE ASSESSEE THAT THE SA ID CREDITS/DEPOSITS REPRESENTED SALE PROCEEDS OF HER TRADING BUSINESS. IT WAS ALSO SUBMITTED BY THE ASSESSEE THAT PROFIT CALCULATED @ 2% IN RESPECT OF THE SAID SALE COULD BE TREATED AS HER INCOME FROM T HE TRANSACTIONS REFLECTED IN THE BANK ACCOUNT WITH BANK OF INDIA, S ALKIA BRANCH, HOWRAH SINCE THE PROFIT DECLARED BY HER FROM THE TR ADING BUSINESS FOR THE YEAR UNDER CONSIDERATION AS WELL AS FOR THE EAR LIER YEARS WAS AROUND 2%. THIS EXPLANATION OF THE ASSESSEE WAS NOT FOUND FULLY ACCEPTABLE BY THE ASSESSING OFFICER. HE TREATED THE PEAK CREDIT APPEARING IN THE BANK ACCOUNT OF THE ASSESSEE CALCU LATED ON INCREMENTAL BASIS AT RS.25,30,000/- AS THE UNEXPLAI NED CASH CREDIT AND AN ADDITION TO THAT EXTENT WAS MADE BY HIM TO T HE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 68. HE ALSO MADE A FU RTHER ADDITION OF RS.19,14,400/- TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF PROFIT @ 8% ON THE UNACCOUNTED TURNOVER OF RS.2,39, 30,000/- AS REFLECTED IN THE BANK ACCOUNT OF THE ASSESSEE WITH BANK OF INDIA, SALKIA BRANCH, HOWRAH. ACCORDINGLY A TOTAL ADDITION OF RS.44,44,400/- WAS MADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE IN THE ASSESSMENT COMPLETED UNDER S ECTION 143(3)/147 OF THE ACT VIDE AN ORDER DATED 20.12.2018. 3 . AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3)/147 OF THE ACT, AN APPEAL WAS PREFERRED BY T HE ASSESSEE BEFORE THE LD. CIT(APPEALS). AFTER CONSIDERING THE SUBMISS IONS MADE ON BEHALF OF THE ASSESSEE AS WELL AS THE MATERIAL AVAI LABLE ON RECORD, THE LD. CIT(APPEALS) FOUND MERIT IN THE CONTENTION RAIS ED ON BEHALF OF THE ASSESSEE THAT THE PEAK CREDIT IN THE BANK ACCOUNT O F THE ASSESSEE AS WORKED OUT BY THE ASSESSING OFFICER ON INCREMENTAL BASIS AT RS.25,30,000/- COULD NOT BE ADDED UNDER SECTION 68 AS THE BANK ACCOUNT OF THE ASSESSEE WITH BANK OF INDIA, SALKIA BRANCH, HOWRAH DID NOT CONSTITUTE BOOKS OF ACCOUNT OF THE ASSESSEE . TO ARRIVE AT THIS CONCLUSION, HE RELIED ON THE VARIOUS JUDICIAL PRONO UNCEMENTS AS DISCUSSED IN HIS IMPUGNED ORDER. HE ACCORDINGLY DEL ETED THE ADDITION OF RS.25,30,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INCREMENTAL PEAK CREDIT IN THE BANK ACCOUNT OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 68. HE, HOWEVER, CONFIRMED THE ADDITION OF RS.19,14,400/- MADE BY THE ASSESSING OF FICER ON ACCOUNT OF PROFIT FROM THE UNACCOUNTED PROFIT @ 8% ALLEGEDL Y EARNED BY THE ITA NO.978 & 1400/KOL/2019 ASSESSMENT YEAR 2006-07 MANOJ KR. JAIN. VS ITO WD-44(1), KOL. PAGE 7 ASSESSEE FROM THE UNACCOUNTED SALE OF RS.2,39,30,00 0/- OBSERVING THAT EVEN THOUGH THE PROFIT OF 2% WAS DECLARED BY T HE ASSESSEE IN RESPECT OF DISCLOSED SALES, NO EVIDENCE COULD BE PR OVIDED BY THE ASSESSEE TO SHOW THAT THE PROFIT ON UNDISCLOSED SAL ES WAS THE SAME AS DECLARED IN RESPECT OF SALES RECORDED IN THE BOOKS OF ACCOUNT. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4 . I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE PROFIT FROM THE DISCLOSED SAL ES AS DECLARED/RECORDED BY THE ASSESSEE IN HER BOOKS OF A CCOUNT FOR THE YEAR UNDER CONSIDERATION AS WELL AS FOR THE IMMEDIA TELY PRECEDING YEARS BEING AROUND 2%, THE PRESUMPTION COULD JUSTIF IABLY BE DRAWN THAT THE PROFIT EARNED BY THE ASSESSEE FROM THE UNA CCOUNTED SALES SHOULD BE AROUND 2%, ESPECIALLY WHEN THERE WAS NOTH ING BROUGHT ON RECORD BY THE ASSESSING OFFICER THAT THE PROFIT ACT UALLY EARNED BY THE ASSESSEE FROM THE UNDISCLOSED SALES WAS ABNORMALLY HIGHER THAN THE PROFIT DECLARED BY THE ASSESSEE IN RESPECT OF DISCL OSED SALES. THE LD. D.R., ON THE OTHER HAND, HAS SUBMITTED THAT SINCE T HE HUGE AMOUNT OF SALES AS REFLECTED IN THE BANK ACCOUNT OF THE ASSES SEE WITH BANK OF INDIA, SALKIA BRANCH, HOWRAH WAS NOT DECLARED BY TH E ASSESSEE AND THE SAME WAS ALSO NOT RECORDED IN THE BOOKS OF ACCO UNT, THE ACTUAL PROFIT EARNED BY THE ASSESSEE FROM SUCH UNACCOUNTED SALES WAS UNVERIFIABLE AND THERE BEING NO EVIDENCE PRODUCED B Y THE ASSESSEE TO SHOW THAT ANY EXPENDITURE OTHER THAN PURCHASES WAS ACTUALLY INCURRED BY THE ASSESSEE FOR MAKING SUCH UNACCOUNTE D SALES SEPARATELY, THE APPLICATION OF HIGHER PROFIT RATE T O ESTIMATE THE INCOME OF THE ASSESSEE FROM THE UNACCOUNTED SALES I S FULLY JUSTIFIED. KEEPING IN VIEW THE SUBMISSIONS MADE BY THE LD. REP RESENTATIVES OF BOTH THE SIDES AND HAVING REGARD TO THE FACTS OF TH E CASE, I AM OF THE VIEW THAT IT WOULD BE FAIR AND REASONABLE TO APPLY A PROFIT RATE OF 4% TO ESTIMATE THE INCOME OF THE ASSESSEE FROM THE UNA CCOUNTED SALES OF RS.2,39,30,000/-. I ACCORDINGLY MODIFY THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION ON THIS ISSUE BY APPLYING A PROFIT RAT E OF 4% TO THE UNDISCLOSED SALES OF THE ASSESSEE. 6. HON'BLE BOMBAY HIGH COURTS RECENT JUDGMENT IN ITA NO.1512 OF 2017 IN PRINCIPAL COMMISSIONER OF INCOME TAX-14 VS. ALAG SE CURITIES PVT. LTD., (FORMERLY KNOWN AS MAHASAGAR SECURITIES AND RICHMOND SECURITI ES PVT. LTD.) DATED 12.06.2020 HAS ALSO UPHELD THE TRIBUNALS DECISION IN ASSESSIN G ONLY 0.15% COMMISSION IN CASE OF SUCH ACCOMMODATION ENTRY BUSINESS. WE DRAW SUPPORT FROM THE FOREGOING JUDICIAL PRECEDENTS AND HOLD THAT A LUMP SUM COMMISSION INCO ME COMPONENT OF 2% OF THE ITA NO.978 & 1400/KOL/2019 ASSESSMENT YEAR 2006-07 MANOJ KR. JAIN. VS ITO WD-44(1), KOL. PAGE 8 IMPUGNED UNDISCLOSED SUM OF 2,45,62,196/- ONLY SHALL MEET THE INTEREST OF JUSTI CE WITH A RAIDER THAT SAME SHALL NOT BE TREATED AS A P RECEDENT IN ANY OTHER CASE OR ASSESSMENT YEAR; AS THE CASE MAY BE. THE ASSESSEE G ETS PART RELIEF IN HIS APPEAL ITA 978/KOL/2019 WHEREAS REVENUES CROSS APPEAL ITA NO. 1400/KOL/2019 IS DISMISSED AS NECESSARY COROLLARY. NECESSARY COMPUTATION TO FO LLOW AS PER LAW. 7. THIS TAXPAYERS APPEAL ITA NO.978/KOL/2019 IS PARTLY IS ALLOWED AND REVENUES APPEAL ITA NO. 1400/KOL/2019 IS DISMISSED. A COPY OF THIS COMMON ORDER BE PLACED IN THE RESPECT CASE FILE(S). ORDER PRONOUNCED IN OPEN COURT ON 10/09/2020 SD/- SD/- ( ') (* ') (J.SUDHAKAR REDDY) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER *DKP-SR.PS + - 10/09/2020 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-MANOJ KR. JAIN 19, GALLIF STREET, KOLKAT A-004 2. ' /REVENUE-ITO WD-44(1), 1 ST FL, 3, GOVT. PLACE (WEST), KOLKATA-001 3. . / / CONCERNED CIT 4. / - / CIT (A) 5. **. , . /DR, ITAT, KOLKATA 6. 3 / GUARD FILE. BY ORD ER/ , /TRUE COPY/ .,