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Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’, CHANDIGARH
Before: SHRI S.S.GODARA & SMT. ANNAPURNA GUPTA
common order dated 30.11.2016 passed in case No. 83 to 89/CIT(A)- 3/GGN/2015-16, involving proceedings u/s.153A r.w.s 153B(1)(b) r.w.s.143(3) of the Income Tax Act, 1961 (in short 'the Act').
Heard both the parties. Case files perused.
ITA Nos. 302 to 308-Chd-2017 2
It transpires at the outset that all these assessee’s appeals raise identical questions of law and facts. The same are therefore decided together for the sake of convenience and brevity.
The assessee’s “lead” assessment year AY.2007-08 appeal contains the following substantive grounds:
“1. That the Ld. CIT(A) was not justified in partly upholding that the appellant had arranged some accommodation entries for M/s Synergy Group amounting to Rs. 72,36,807/- i.e., 11.09% of turnover of Rs.6,52,60,220/- and also a turnover of Rs.97,04,680/- made during the year.
2. That the Ld. CIT(A) was not justified to uphold the alleged commission earned @ 3% on providing alleged accommodation entries by the appellant.
That the Ld. CIT(A) was not justified to uphold the decision of the Ld. Assessing Officer regarding rejection of books of accounts.
4. That the Ld. CIT(A) was not justified to estimate the net profit of the appellant @ 6% on turnover declared by the appellant in the books of M/s Inveet Industries as reduced by alleged bogus sales without any basis and particularly when the net profit in earlier years was much less.
5. That the appellant craves leave to add, amend or delete any of the grounds of appeal on or before the disposal of the present appeal.”
3. We advert to the assessee’s former three substantive grounds qua commission assessment @3% regarding the alleged bogus accommodation entries provided to M/s. Synergy Group as per the incriminating material based/seized in the search in question dt.15-02- 2013. He has pleaded the very substantive grievance in AYs.2008-09, 2009-10, 2011-12 and 2012-13 as well involving varying sums. The CIT(A)’s detailed discussion regarding the relevant facts reads as follows:
ITA Nos. 302 to 308-Chd-2017 3
ITA Nos. 302 to 308-Chd-2017 4
Both the learned representatives next take us to the CIT(A)’s findings under challenge in this “lead” AY.2007-08 as follows:
ITA Nos. 302 to 308-Chd-2017 5
ITA Nos. 302 to 308-Chd-2017 6
It has come on record with the able assistance of both the parties that the learned Income Tax Settlement Commission’s findings seal the final outcome of the assessee’s instant former grievance. It has inter alia since held therein that the assessee has all along been engaged in various trading activities than a mere accommodation entry provider.
And that the department could not prove “Synergy” to have been engaged in availing bogus purchase entries from this taxpayer as a conduit through various proprietary concerns. There is further no quarrel that the assessee’s total sales trading receipts to M/s. Synergy group read a composite figure of Rs.18.03 crores in these assessment years. And we are now left with the amount in dispute of Rs.2 crores only since the remaining sum of Rs.16.03 crores stands accepted as genuine. Learned CIT-DR is fair enough in not controverting the clinching fact that the Settlement Commission’s findings forming the basis of the CIT(A)’s detailed discussion partly upholding the bogus sales/purchase figure of Rs.18.03 crores to the extent of Rs.2 crores only, have attained finalty.
ITA Nos. 302 to 308-Chd-2017 7
Faced with this situation, we conclude that there is no material left for the department to assess the assessee for the remaining amount of Rs.2 crores at least on mere conjunctures and surmises since there is no specific material found or seized during the course of search correlating the alleged bogus element with the corresponding sales/supplies vouchers. We therefore accept the assessee’s instant former substantive ground in assessment years AYs.2007-08 to 2009-10 and 2011-12 to 2012-13 (supra) and direct the Assessing Officer to delete the impugned commission income addition. Ordered accordingly.
Next comes the latter common issue in all these assessment years regarding rejection of assessee’s books of accounts culminating in income element assessment @8% in the Assessing Officer’s orders and restricted to 6% in the CIT(A) lower appellate discussion. The Revenue’s only argument in light of the CIT(A)’s detailed discussion is that the hon'ble jurisdictional high court has also assessed profit element @12% in resources as well which is much more that in dispute.
Learned CIT-DR’s next contention is that even Section 44AD also prescribes 8% presumptive rate of taxation and therefore, the assessee has already been granted sufficient relief. We find no merit in Revenue’s contentions in entirety for the reason that the assessee’s books of accounts declaring with gross profit @3.31% and 1.16% net profit rate of 1.81% and 0.38% in AYs.2005-06 and 2006-07, respectively, have already attained finality. The mere fact that the said
ITA Nos. 302 to 308-Chd-2017 8 twin assessment years do not involve scrutiny assessment(s); in our considered opinion, would not form the sole substantive reason to assess this taxpayer at a higher profit rate of 6% in issue. We therefore direct the Assessing Officer to reduce the impugned profit element @6% to 1.25% only on estimation basis or that already recorded in books at assessee’s behest, whichever is higher, in all these assessment years with a rider that the same shall not be taken as a precedent. Ordered accordingly. The assessee’s instant latter substantive ground is partly accepted in foregoing terms. Necessary computation shall follow as per law.
All these assessee’s appeals are partly allowed in above terms. A copy of this common order be placed in the respective case files.
Order pronounced in the Open Court on 04.08.2021