M/S. OLIVE OVERSEAS PVT. LTD.,MUMBAI vs. DCIT, CC-1(1), MUMBAI

The present appeals have been filed by the assessee challenging the common impugned order dated 08/02/2023, passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned Commissioner of Income Tax (Appeals)–47, Mumbai, [“learned CIT(A)”], inter-alia, for the assessment years 2008–09, 2009–10, 2010–11, 2011–12, 2012–13, and 2013–14.

Olive Overseas Pvt. Ltd. A.Y. 2008–09 to 2013–14 2. Since the present batch of appeals arise out of a similar factual matrix and involve common issues, therefore, as a matter of convenience, these appeals were heard together and are being disposed off by way of this consolidated order. The assessee has raised similar grounds in the present appeals, therefore, the grounds raised in assessee’s appeal being ITA no.1402/Mum./2023, for the assessment year 2008–09, are reproduced as under for reference:-

“I. The learned Commissioner of income Tax (Appeal) has erred in not allowing the appellant company's appeal for disapproving the learned Assessing officer's view of rejecting the Books of Accounts and Income of appellant by invoking the provision of section 145 (3) of the income tax Act, 1961. II. The learned Commissioner of Income Tax (Appeal) has again erred in upholding the action of learned assessing officer of treating all the business activities as accommodation entry without appreciating the submission / documentary evidence provided to prove the genuineness of all the transaction of Income, Expenses, Business Losses, Capital Gain / Loss, purchase, sales, loans and advances and Investments etc submitted by appellant company. III. The Learned Commissioner of Income Tax (Appeal) has again erred in upholding the addition made by the learned Dy. Commissioner of Income Tax by estimating addition at the rate of alleged commission income at 0.20% p.m. for Loans & Advances and 2% for Share Application money (Investments) during the captioned year. IV. The Learned Commissioner of Income Tax (Appeal) has again erred in upholding the proposition of the learned assessing officer and treatment of the alleged unaccounted commission income is confirmed on "Protective Basis”. V. The appellant craves to add, amend or alter the grounds of appeal at the time of or before the hearing of appeal.”

Olive Overseas Pvt. Ltd. A.Y. 2008–09 to 2013–14 Accordingly, it was submitted that the additions made on a protective basis be deleted in the hands of the assessee in the present appeals.

Olive Overseas Pvt. Ltd. A.Y. 2008–09 to 2013–14 Phase-III, Bhayander(E), Thane, which was not reflected in any of the official records filed with any of the government agencies and the said premises was a discrete place of operation of Mr. Praveen Kumar Jain. From the said premises various hard disks, pen drives, and documents were found which contain the books of accounts of various concerns in which various persons were shown as directors, partners, or proprietors. From the material found and seized from this premises, it was observed that the books of accounts of 71 concerns, including the assessee, were maintained at this premises, which are shown to be in the name of various persons but actually controlled, managed, and operated by Mr. Praveen Kumar Jain. The Assessing Officer also referred to the statement recorded by Mr. Praveen Kumar Jain, wherein he admitted that these companies, including the assessee, are under his or his close associates'/family members’ control. Considering the fact that the transactions recorded by the assessee are only bogus transactions entered into with the specific motive to provide accommodation entries to interested parties against some commission, the book results disclosed by the assessee are found to be not reliable and therefore, the books of accounts were rejected under section 145(3) of the Act. Accordingly, we find that the Assessing Officer computed the net profit of the assessee, inter-alia, at the rate of 2% for the bogus share application, 0.2% for the bogus loans and advances, and 0.2% for the bogus sales and purchases. Since the entire business of providing accommodation entries was run by Mr. Praveen Kumar Jain and the profit/income by way of commission on the turnover through the conduit companies was also enjoyed by him, the income earned on turnover through these concerns, including the assessee, was included as income in the individual case of Mr. Praveen Kumar

Olive Overseas Pvt. Ltd. A.Y. 2008–09 to 2013–14 Jain. However, the Assessing Officer also assessed this income in the hands of the assessee on a protective basis.

“17. It is also brought to the notice of the Bench by the Ld.DR for the Revenue that in hundreds of cases, Shri Pravin Kumar Jain has provided accommodation entry for unsecured loans, bogus share application money, etc. without carrying out any real business, but operating through dummy / paper companies. So in these circumstances, we are of the considered view that the Assessing Officer as well as Ld.CIT(A have rightly quantified the unaccounted commission earned by the assessees during the year under consideration from 54 companies which is nothing but a huge network of unlawful business to evade the tax for companies operating through them and by the assessee themselves also. Rather, they are in to money laundering.

Olive Overseas Pvt. Ltd. A.Y. 2008–09 to 2013–14 on a protective basis, is made in the hands of the assessee. Since the substantive addition has already been upheld by the coordinate bench in the case of Praveen Kumar Jain (supra), therefore the similar addition made on a protective basis in the hands of the assessee becomes unsustainable and therefore is directed to be deleted in all the assessment years under consideration before us. We further direct the Assessing Officer that in case the addition made in the hands of Mr. Praveen Kumar Jain is deleted in further appellate proceedings, then the addition made in the hands of the assessee be revived. With the above limited directions, the impugned additions made in all the assessment years under consideration before us are directed to be deleted.