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Income Tax Appellate Tribunal, MUMBAI BENCH “E” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI NARENDER KUMAR CHOUDHRY
This appeal by the Revenue is directed against order dated 23.02.2022 passed by the Ld. Commissioner of Income-tax (Appeals)-47, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following grounds:
1. "Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) erred in deleting the estimated income @ 1% of the total turnover without
M/s Manan Trading Company Pvt. Ltd. M/s Manan Trading Company Pvt. Ltd. 2 ITA No. 864/M/2022 appreciating the fact that the books of accounts so appreciating the fact that the books of accounts so appreciating the fact that the books of accounts so produced during the course of assessment proceeding produced during the course of assessment proceeding produced during the course of assessment proceeding were rejected elaborating the facts of were rejected elaborating the facts of rejection of the rejection of the same and correct estimation of income relying on the same and correct estimation of income relying on the same and correct estimation of income relying on the decision of the Hon'ble ITAT in the assessee own case decision of the Hon'ble ITAT in the assessee own case decision of the Hon'ble ITAT in the assessee own case for Assessment Year 2011 for Assessment Year 2011-12" 2. "Whether on the facts and circumstances of the case "Whether on the facts and circumstances of the case "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was correct in allowing the and in law, the Ld. CIT(A) was correct in allowin and in law, the Ld. CIT(A) was correct in allowin appeal filed by the assessee and deleting the appeal filed by the assessee and deleting the appeal filed by the assessee and deleting the addition of Rs.4,98,00,000/ addition of Rs.4,98,00,000/- being the addition made being the addition made us 68 of the I.T. Act 1961* though the identity, us 68 of the I.T. Act 1961* though the identity, us 68 of the I.T. Act 1961* though the identity, creditworthiness of the parties from whom the share creditworthiness of the parties from whom the share creditworthiness of the parties from whom the share application money was received and genuineness of application money was received and genuineness of application money was received and genuineness of the said transaction were not proved" the said transaction were not proved" 3. "Whether on the facts and circumstances of the case "Whether on the facts and circumstances of the case "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating and in law, the Ld. CIT(A) erred in not appreciating and in law, the Ld. CIT(A) erred in not appreciating the contents in the remand report of the AO and the contents in the remand report of the AO and the contents in the remand report of the AO and allowed allowed allowed the the the appeal appeal appeal of of of the the the assessee assessee assessee without without without considering the considering the remand report of the AO.
Briefly stated, facts of the case are that the assessee filed its Briefly stated, facts of the case are that the assessee filed its Briefly stated, facts of the case are that the assessee filed its return of income electronically on 30.10.2017 declaring loss of return of income electronically on 30.10.2017 declaring loss of return of income electronically on 30.10.2017 declaring loss of Rs.10,26,279/-. As per the return of income, the assessee claimed As per the return of income, the assessee claimed As per the return of income, the assessee claimed to have engaged in trading of di to have engaged in trading of diamond. The return of income filed The return of income filed by the assessee was selected for scrutiny and statutory notices by the assessee was selected for scrutiny and statutory notices by the assessee was selected for scrutiny and statutory notices under the Act were issued and complied with. In the scrutiny under the Act were issued and complied with. In the scrutiny under the Act were issued and complied with. In the scrutiny proceedings, the Assessing Officer proceedings, the Assessing Officer rejected the claim of diamond rejected the claim of diamond trading and held the assessee as trading and held the assessee as engaged in in providing of accommodation entry and accommodation entry and made addition of Rs.20,92,631/ made addition of Rs.20,92,631/- as net profit profit profit earned earned earned @ @ @ 1% 1% 1% on on on business business business turnover/sales turnover/sales turnover/sales of of of Rs.20,92,63,170/-. The Assessing Officer also made addition u/s . The Assessing Officer also made addition u/s . The Assessing Officer also made addition u/s 68 of the Act in respect of creditor 68 of the Act in respect of creditor namely M/s Jayant M/s Jayant Oil Products Ltd. amounting to Rs.4,98,00,000/ s.4,98,00,000/-.
M/s Manan Trading Company Pvt. Ltd. M/s Manan Trading Company Pvt. Ltd. 3 ITA No. 864/M/2022
On further appeal, the Ld. CIT(A) allowed relief to the On further appeal, the Ld. CIT(A) allowed relief to the On further appeal, the Ld. CIT(A) allowed relief to the assessee on both the issues.
Aggrieved, the Revenue is in appeal before the Tribunal raising Aggrieved, the Revenue is in appeal before the Tribunal raising Aggrieved, the Revenue is in appeal before the Tribunal raising grounds as reproduced above. grounds as reproduced above.
Before us, the Ld. Before us, the Ld. Departmental Representative (DR) has filed Departmental Representative (DR) has filed a Paper book containing pages 1 to 52 a Paper book containing pages 1 to 52 alongwith copy alongwith copy of statement of sh Vinayk Gopal More dated 27.11.2019 as of sh Vinayk Gopal More dated 27.11.2019 as additional evidences. additional evidences.
The ground No. 1 of the appeal relates to The ground No. 1 of the appeal relates to The ground No. 1 of the appeal relates to deletion of the estimated income @ 1% of the total turnover made by the Assessing 1% of the total turnover made by the Assessing 1% of the total turnover made by the Assessing Officer. The facts qua the issue in dispute are that the assessee Officer. The facts qua the issue in dispute are that the assessee Officer. The facts qua the issue in dispute are that the assessee claimed to have engaged in the business of trading of diamonds claimed to have engaged in the business of trading of diamonds claimed to have engaged in the business of trading of diamonds whereas, according to the Assessing Officer, the assessee was only according to the Assessing Officer, the assessee was only according to the Assessing Officer, the assessee was only an accommodation entry provider and following his predecessor in an accommodation entry provider and following his predecessor in an accommodation entry provider and following his predecessor in assessment year 2011 assessment year 2011-12, he estimated the net profit @ 1% on the e estimated the net profit @ 1% on the business of providing accommodation entries. The Ld. CIT(A) business of providing accommodation entries. The Ld. CIT(A) business of providing accommodation entries. The Ld. CIT(A) however, deleted the addition following the finding the Tribunal in eted the addition following the finding the Tribunal in eted the addition following the finding the Tribunal in the case of the assessee for assessment year 2008-09, where the the case of the assessee for assessment year 2008 the case of the assessee for assessment year 2008 Tribunal deleted the estimated rate of profit of 0 Tribunal deleted the estimated rate of profit of 0.50 0% restricted by the Ld. CIT(A) as against the net profit rate of 1% estimated by the the Ld. CIT(A) as against the net profit rate of 1% estimated the Ld. CIT(A) as against the net profit rate of 1% estimated Assessing Officer. The relevant finding of the Ld. CIT(A) is Assessing Officer. The relevant finding of the Ld. CIT(A) is Assessing Officer. The relevant finding of the Ld. CIT(A) is reproduced as under: reproduced as under:
“5.3 I have carefully considered the submission of the I have carefully considered the submission of the I have carefully considered the submission of the appellant in the light of facts on record and the decisions appellant in the light of facts on record and the decisions appellant in the light of facts on record and the decisions of the Hon'ble ITAT, in the appellant's own casefor of the Hon'ble ITAT, in the appellant's own casefor of the Hon'ble ITAT, in the appellant's own casefor AY
M/s Manan Trading Company Pvt. Ltd. M/s Manan Trading Company Pvt. Ltd. 4 ITA No. 864/M/2022
2008-09 and that of Ld. CIT(A) for AY 2011 09 and that of Ld. CIT(A) for AY 2011-12. From the 12. From the assessment order it is found that the AO has followed the assessment order it is found that the AO has followed the assessment order it is found that the AO has followed the decision of AY 2011 decision of AY 2011-12, while making the impugned 12, while making the impugned disallowance of Rs. 44,60,433/ disallowance of Rs. 44,60,433/-. No new fact has been . No new fact has been brought on record. In all these yea brought on record. In all these years, commission income rs, commission income of 1% has been worked out with respect to alleged bogus of 1% has been worked out with respect to alleged bogus of 1% has been worked out with respect to alleged bogus purchases from entities connected to Praveen Jain group. purchases from entities connected to Praveen Jain group. purchases from entities connected to Praveen Jain group. The Hon'ble ITAT, vide order dated 11.09.2014, in Hon'ble ITAT, vide order dated 11.09.2014, in ITA no. The Hon'ble ITAT, vide order dated 11.09.2014, in ITA no. 5956, 6036/Mum/2011 for AY 2008 5956, 6036/Mum/2011 for AY 2008-09 has allowed the 09 has allowed the appeal of the appellant by deleted the commission income e appellant by deleted the commission income e appellant by deleted the commission income of 1% estimated by the AO and restricted to 0.5% by the of 1% estimated by the AO and restricted to 0.5% by the of 1% estimated by the AO and restricted to 0.5% by the CIT(A). 5.4 It is further observed that the Ld. CIT(A), while It is further observed that the Ld. CIT(A), while It is further observed that the Ld. CIT(A), while deciding the appeal for AY 2011 deciding the appeal for AY 2011-12, has deleted the 12, has deleted the commission income @ 1% by following the d commission income @ 1% by following the decision of the ecision of the Hon'ble ITAT for AY 2008 Hon'ble ITAT for AY 2008-09, in the following words 09, in the following words- "5.1 In Grounds no. 1, 2 & 3, the appellant has "5.1 In Grounds no. 1, 2 & 3, the appellant has "5.1 In Grounds no. 1, 2 & 3, the appellant has averred that the AO has erred In holding that the averred that the AO has erred In holding that the averred that the AO has erred In holding that the appellant was engaged in providing accommodation appellant was engaged in providing accommodation appellant was engaged in providing accommodation entries and In rejecting the books of acc entries and In rejecting the books of account and ount and estimating Income @1%. In the impugned order the estimating Income @1%. In the impugned order the estimating Income @1%. In the impugned order the AO noted that Shri Ashok Mahawar and Shri AO noted that Shri Ashok Mahawar and Shri AO noted that Shri Ashok Mahawar and Shri Dilkhush Babel were two main executive directors of Dilkhush Babel were two main executive directors of Dilkhush Babel were two main executive directors of the appellant company. The AO further noted that the appellant company. The AO further noted that the appellant company. The AO further noted that Shri Ashok Mahawar in his statement recorded on Shri Ashok Mahawar in his statement recorded on Shri Ashok Mahawar in his statement recorded on 31.03.2 31.03.2008 admitted that he and Shri Babel were 008 admitted that he and Shri Babel were mere office assistants working for Shri. Jitendra mere office assistants working for Shri. Jitendra mere office assistants working for Shri. Jitendra Jain, who had made them dummy directors of the Jain, who had made them dummy directors of the Jain, who had made them dummy directors of the company. The AO noted that search action was company. The AO noted that search action was company. The AO noted that search action was carried out by the Department in the case of Shri carried out by the Department in the case of Shri carried out by the Department in the case of Shri Praveen Jain and Shri J Praveen Jain and Shri Jitendra Jain receipt of itendra Jain receipt of information from the Sales Tax Department that information from the Sales Tax Department that information from the Sales Tax Department that these persons were engaged in bogus billing. The these persons were engaged in bogus billing. The these persons were engaged in bogus billing. The AQ observed that this fact had been admitted to in AQ observed that this fact had been admitted to in AQ observed that this fact had been admitted to in the statement of Shri Praveen Jain as well. The AO the statement of Shri Praveen Jain as well. The AO the statement of Shri Praveen Jain as well. The AO also observed that enquiry letters also observed that enquiry letters sent to the sent to the purchase parties of the appellant company had purchase parties of the appellant company had purchase parties of the appellant company had returned unserved and that subsequently, the returned unserved and that subsequently, the returned unserved and that subsequently, the confirmations filed by the appellant contained the confirmations filed by the appellant contained the confirmations filed by the appellant contained the unique and suspicious feature that in all accounts unique and suspicious feature that in all accounts unique and suspicious feature that in all accounts the appellant's balance was shown as Nil. The AO the appellant's balance was shown as Nil. The AO the appellant's balance was shown as Nil. The AO
M/s Manan Trading Company Pvt. Ltd. M/s Manan Trading Company Pvt. Ltd. 5 ITA No. 864/M/2022 further observed that other than stated imports of urther observed that other than stated imports of urther observed that other than stated imports of diamonds werth Rs.2,41,28,948/ diamonds werth Rs.2,41,28,948/- the appellant the appellant didnot produce any supporting documents like didnot produce any supporting documents like didnot produce any supporting documents like purchase orders, invoices, payment details, bank purchase orders, invoices, payment details, bank purchase orders, invoices, payment details, bank statements etc. and that if the import purchases statements etc. and that if the import purchases statements etc. and that if the import purchases were excluded, th were excluded, the remaining purchases and sales e remaining purchases and sales of the appellant were almost equal in value. The A of the appellant were almost equal in value. The A of the appellant were almost equal in value. The A noted that no proof of merchandise allegedly bought noted that no proof of merchandise allegedly bought noted that no proof of merchandise allegedly bought and sold by the appellant was furnished. The AO and sold by the appellant was furnished. The AO and sold by the appellant was furnished. The AO further noted that books of accounts were also not further noted that books of accounts were also not further noted that books of accounts were also not produced by the appell produced by the appellant during assessment ant during assessment proceedings. In light of these facts, following the proceedings. In light of these facts, following the proceedings. In light of these facts, following the assessments made in preceding years, the AO held assessments made in preceding years, the AO held assessments made in preceding years, the AO held that the Audit Report In the case of the appellant that the Audit Report In the case of the appellant that the Audit Report In the case of the appellant could not be taken as satisfactory. The AO then could not be taken as satisfactory. The AO then could not be taken as satisfactory. The AO then observed that commission rates In observed that commission rates In the trade ranged the trade ranged between 0.5% and 1.5% and proceeded to reject the between 0.5% and 1.5% and proceeded to reject the between 0.5% and 1.5% and proceeded to reject the books of account of the appellant before estimating books of account of the appellant before estimating books of account of the appellant before estimating commission income @ 1%. commission income @ 1%. 5.1.1 In appeal It has been submitted that the AO 5.1.1 In appeal It has been submitted that the AO 5.1.1 In appeal It has been submitted that the AO has followed the assessments In earlier years in has followed the assessments In earlier years in has followed the assessments In earlier years in rejecting the rejecting the books of accounts and estimating books of accounts and estimating commission income @1%. Copy of order of the ITAT commission income @1%. Copy of order of the ITAT commission income @1%. Copy of order of the ITAT In the appellant's own case for AY 2008-09 (TTA In the appellant's own case for AY 2008 In the appellant's own case for AY 2008 5956 and 6036/M/11 dated 11.09.2014) wherein 5956 and 6036/M/11 dated 11.09.2014) wherein 5956 and 6036/M/11 dated 11.09.2014) wherein such rejection of books of account and estimation of such rejection of books of account and estimation of such rejection of books of account and estimation of Income Income was was deleted, deleted, has has been been furnished. furnished. Accordingly it has been argued that as the there is Accordingly it has been argued that as the there is Accordingly it has been argued that as the there is no distinguishing feature, following the order of the no distinguishing feature, following the order of the no distinguishing feature, following the order of the ITAT, the addition made by the AO should be ITAT, the addition made by the AO should be ITAT, the addition made by the AO should be deleted. deleted. 5.1.2 On perusal of the order of the Hon'ble Tribunal 5.1.2 On perusal of the order of the Hon'ble Tribunal 5.1.2 On perusal of the order of the Hon'ble Tribunal cited supra it is seen that the cited supra it is seen that the ITAT has held as ITAT has held as under: under: "5... We have considered the rival contentions and "5... We have considered the rival contentions and "5... We have considered the rival contentions and carefully gone through the orders of authorities carefully gone through the orders of authorities carefully gone through the orders of authorities below and found from record that similar issue was below and found from record that similar issue was below and found from record that similar issue was dealt with by the Tribunal in a number of decisions dealt with by the Tribunal in a number of decisions dealt with by the Tribunal in a number of decisions cited hereinabove, copy of w cited hereinabove, copy of which are also placed on hich are also placed on record wherein addition sustained has been deleted record wherein addition sustained has been deleted record wherein addition sustained has been deleted
M/s Manan Trading Company Pvt. Ltd. M/s Manan Trading Company Pvt. Ltd. 6 ITA No. 864/M/2022 by the Tribunal. The observationsof the Tribunal in by the Tribunal. The observationsof the Tribunal in by the Tribunal. The observationsof the Tribunal in the case of M/ Riddhi Siddhi Multitrate P. Ltd. the case of M/ Riddhi Siddhi Multitrate P. Ltd. the case of M/ Riddhi Siddhi Multitrate P. Ltd. (supra) was as under: (supra) was as under: "We observe that id CIT(A) has himself stated in "We observe that id CIT(A) has himself stated in "We observe that id CIT(A) has himself stated in para 9 tha para 9 that AC has estimated the income without t AC has estimated the income without reference to any cogent material and the estimation reference to any cogent material and the estimation reference to any cogent material and the estimation was made on the basis of statement of Shri Pravin was made on the basis of statement of Shri Pravin was made on the basis of statement of Shri Pravin Kumar Jain and as far as assessee is concemed, no Kumar Jain and as far as assessee is concemed, no Kumar Jain and as far as assessee is concemed, no such statement was ever made by anyone on its such statement was ever made by anyone on its such statement was ever made by anyone on its behalf. Ld CIT(A) st behalf. Ld CIT(A) stated that in the impugned order ated that in the impugned order that it is seen from the record that no specific defect that it is seen from the record that no specific defect that it is seen from the record that no specific defect was pointed out by the AO in the books of account. was pointed out by the AO in the books of account. was pointed out by the AO in the books of account. Further, we observe that id CIT(A) has sustained the Further, we observe that id CIT(A) has sustained the Further, we observe that id CIT(A) has sustained the addition 0.5% of the total turnover by rejecting books addition 0.5% of the total turnover by rejecting books addition 0.5% of the total turnover by rejecting books of accoun of account merely on the ground that the income t merely on the ground that the income shown by the assessee is meager. Ld CIT(A) has not shown by the assessee is meager. Ld CIT(A) has not shown by the assessee is meager. Ld CIT(A) has not brought on record any defects in the books of brought on record any defects in the books of brought on record any defects in the books of account of the assessee. Ld. CIT(A) has also not account of the assessee. Ld. CIT(A) has also not account of the assessee. Ld. CIT(A) has also not brought on record anything that assessee was brought on record anything that assessee was brought on record anything that assessee was engaged engaged in in the the business business of of providing providing accommodation entries. In view of above, we hold accommodation entries. In view of above, we hold accommodation entries. In view of above, we hold that above addition sustained by Id. CIT(A) by that above addition sustained by Id. CIT(A) by that above addition sustained by Id. CIT(A) by rejecting books results of the assessee is not based rejecting books results of the assessee is not based rejecting books results of the assessee is not based on cogent material and accordingly, same is deleted. on cogent material and accordingly, same is deleted. on cogent material and accordingly, same is deleted. Hence, grounds of appeal taken by assessee is Hence, grounds of appeal taken by assessee Hence, grounds of appeal taken by assessee allowed." allowed."
6. We find that the facts and circumstances of the 6. We find that the facts and circumstances of the 6. We find that the facts and circumstances of the case during the year under consideration are para case during the year under consideration are para case during the year under consideration are para material, material, material, therefore, therefore, therefore, respectfully respectfully respectfully following following following the the the decision of the Tribunal in other group cases, we decision of the Tribunal in other group cases, we decision of the Tribunal in other group cases, we delete the addition sustained by estimating the delete the addition sustained by estimating delete the addition sustained by estimating income at % of the turnover. We direct accordingly." income at % of the turnover. We direct accordingly." income at % of the turnover. We direct accordingly." Thus respectfully following the above decision of the Thus respectfully following the above decision of the Thus respectfully following the above decision of the Tribunal the addition on account of estimated Tribunal the addition on account of estimated Tribunal the addition on account of estimated income is deleted and Grounds 1, 2, and 3 raised in income is deleted and Grounds 1, 2, and 3 raised in income is deleted and Grounds 1, 2, and 3 raised in appeal are allowed." appeal are allowed." 5.5 It is also observed 5.5 It is also observed that Hon'ble Tribunal has also that Hon'ble Tribunal has also confirmed the above observation of the Ld. CIT(A) in its confirmed the above observation of the Ld. CIT(A) in its confirmed the above observation of the Ld. CIT(A) in its order passed for the relevant year. Since facts remain the order passed for the relevant year. Since facts remain the order passed for the relevant year. Since facts remain the same, I donot have any reason to differ with the decision same, I donot have any reason to differ with the decision same, I donot have any reason to differ with the decision
M/s Manan Trading Company Pvt. Ltd. M/s Manan Trading Company Pvt. Ltd. 7 ITA No. 864/M/2022 taken by Ld. CIT(A) in AY 2011 taken by Ld. CIT(A) in AY 2011-12, which is confirm 12, which is confirmed by the Hon'ble ITAT. Hence, the impugned addition of Rs. the Hon'ble ITAT. Hence, the impugned addition of Rs. the Hon'ble ITAT. Hence, the impugned addition of Rs. 20,92,631/- is deleted. The AO is directed accordingly. is deleted. The AO is directed accordingly. The ground of appeal no. 1 and 2 are allowed. The ground of appeal no. 1 and 2 are allowed.”
7. Before Before Before us, us, us, the the the Ld. Ld. Ld. Departmental Departmental Departmental Representative Representative Representative (DR) (DR) (DR) submitted that there is a change in fa submitted that there is a change in facts as compared to the cts as compared to the assessment year 2008 assessment year 2008-09. She submitted that Mr. Vinayk Gopal
09. She submitted that Mr. Vinayk Gopal More, director of the assessee company in the statement recorded director of the assessee company in the statement recorded director of the assessee company in the statement recorded u/s 131 of the Act on 27.11.2019 himself u/s 131 of the Act on 27.11.2019 himself has admitted that as admitted that assessee was engaged in providing accommodation entry and no assessee was engaged in providing accommodation assessee was engaged in providing accommodation business of ‘diamond trading diamond trading’ was carried out in the year under in the year under consideration. The Ld. DR accordingly submitted a copy of the . The Ld. DR accordingly submitted a copy of the . The Ld. DR accordingly submitted a copy of the statement recorded u/s 131 of the Act and submitted that may be statement recorded u/s 131 of the Act and submitted that may be statement recorded u/s 131 of the Act and submitted that may be admitted as additional evidence. admitted as additional evidence.
We have heard ri We have heard rival submission of the parties on the issue val submission of the parties on the issue-in- dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that the Ld. CIT(A) has followed the finding of the Tribunal in assessee’s the Ld. CIT(A) has followed the finding of the Tribunal in the Ld. CIT(A) has followed the finding of the Tribunal in own case for assessment year 2008 own case for assessment year 2008-09, wherein it is held that wherein it is held that allegation of providing accommodation entries providing accommodation entries is not correct not correct and deleted the addition made by the Assessing Officer/sustained by the deleted the addition made by the Assessing Officer/sustained by the deleted the addition made by the Assessing Officer/sustained by the Ld. CIT(A). However, Ld. CIT(A). However, before us the Ld. DR has filed anew before us the Ld. DR has filed anew fact/additional fact, according to which the assessee director of the according to which the assessee director of the according to which the assessee director of the assessee company itself has admitted that assessee company was assessee company itself has admitted that assessee company was assessee company itself has admitted that assessee company was engaged in providing accommodation entry engaged in providing accommodation entry in his statement dated in his statement dated 27.11.2019 recorded 27.11.2019 recorded u/s 131 of the Act. The Ld DR has requested u/s 131 of the Act. The Ld DR has requested
M/s Manan Trading Company Pvt. Ltd. M/s Manan Trading Company Pvt. Ltd. 8 ITA No. 864/M/2022 that the issue need to be reexamined in the light of the additional eed to be reexamined in the light of the additional eed to be reexamined in the light of the additional evidence filed.Before us the Ld Counsel of the assessee submitted .Before us the Ld Counsel of the assessee submitted .Before us the Ld Counsel of the assessee submitted that statement of that statement of Sh Vinayak Gopal More was recorded on Vinayak Gopal More was recorded on 26/11/2019 and therefore same pertained to AY 20-21 and not 26/11/2019 and therefore same pertained to AY 20 26/11/2019 and therefore same pertained to AY 20 relevant for year unde relevant for year under consideration. Further, the ld Counsel Further, the ld Counsel submitted that without submitted that without prejudice, the addition for 1% net profit on the addition for 1% net profit on business turnover has been estimated in addition to the gross profit business turnover has been estimated in addition to the gross profit business turnover has been estimated in addition to the gross profit declared by the assessee in books of account. He submitted that declared by the assessee in books of account. He submitted that declared by the assessee in books of account. He submitted that Assessing Officer cannot blow hot and cold simultaneously and cer cannot blow hot and cold simultaneously and cer cannot blow hot and cold simultaneously and assess the gross profit declared on diamond trading and add the assess the gross profit declared on diamond trading and add the assess the gross profit declared on diamond trading and add the profit @ 1 % assuming that business activity of the assessee was of profit @ 1 % assuming that business activity of the assessee was of profit @ 1 % assuming that business activity of the assessee was of providing accommodation entries. We concur with the submission providing accommodation entries. We concur with the submission providing accommodation entries. We concur with the submission of the Ld Counsel as both gross profit returned on account nsel as both gross profit returned on account of nsel as both gross profit returned on account diamond trading as well as estimation of profit assuming that diamond trading as well as estimation of profit assuming that diamond trading as well as estimation of profit assuming that assessee was engaged in providing accommodation entries can’t be assessee was engaged in providing accommodation entries assessee was engaged in providing accommodation entries made simultaneously made simultaneously. The Assessing officer has to take a firm stand . The Assessing officer has to take a firm stand in his finding, and keep income from one business either of ng, and keep income from one business either of ng, and keep income from one business either of diamond trading or accommodation entry diamond trading or accommodation entry, as income of assessee , as income of assessee. Accordingly, we set aside the finding of the ld Accordingly, we set aside the finding of the ld CIT(A) on the issue in ) on the issue in dispute and restore the matter back to the file of the Assessing dispute and restore the matter back to the file of the Assessing dispute and restore the matter back to the file of the Assessing officer for deciding to assess income from one business either or deciding to assess income from one business either or deciding to assess income from one business either diamond trading or accommodation entry and if the gross profit diamond trading or accommodation entry and if the gross profit diamond trading or accommodation entry and if the gross profit declared on diamond trading is more than the profit estimated on declared on diamond trading is more than the profit estimated on declared on diamond trading is more than the profit estimated on accommodation entry, then there is no requirement of making accommodation entry, then there is no requirement of making accommodation entry, then there is no requirement of making separate addition in respect of income from accommodation entry. ion in respect of income from accommodation entry. ion in respect of income from accommodation entry.
M/s Manan Trading Company Pvt. Ltd. M/s Manan Trading Company Pvt. Ltd. 9 ITA No. 864/M/2022 The ground No. 1 of the appeal of the Revenue is accordingly The ground No. 1 of the appeal of the Revenue is accordingly The ground No. 1 of the appeal of the Revenue is accordingly allowed for statistical purposes. allowed for statistical purposes.
The ground No. 2 of the appeal relates to deletion of addition The ground No. 2 of the appeal relates to deletion of addition The ground No. 2 of the appeal relates to deletion of addition of Rs.4,98,00,000/- which was made by the Assessing Officer u/s ssessing Officer u/s 68 of the Act. The facts qua the issue in dispute are that from 68 of the Act. The facts qua the issue in dispute are that 68 of the Act. The facts qua the issue in dispute are that financial statement of the assessee , financial statement of the assessee , the Assessing Officer observed the Assessing Officer observed unsecured loan of Rs.4,98,00,000/ unsecured loan of Rs.4,98,00,000/- received from from M/s Jayant Oil Products Ltd. and therefore asked the Products Ltd. and therefore asked the assessee to file necessary assessee to file necessary documentary evidence in support of identity, creditworthiness and documentary evidence in support of identity, creditworthiness and documentary evidence in support of identity, creditworthiness and genuineness of the transaction. The Ld. Assessing Officer observed genuineness of the transaction. The Ld. Assessing Officer observed genuineness of the transaction. The Ld. Assessing Officer observed that the assessee failed to submitted the details called for except that the assessee failed to submitted the details called for except that the assessee failed to submitted the details called for except submission of the assessee t submission of the assessee that said loan was advance for sale of hat said loan was advance for sale of shares and as the sale of the shares did not happen the money was shares and as the sale of the shares did not happen the money was shares and as the sale of the shares did not happen the money was returned back. The Ld. Assessing Officer accordingly rejected the returned back. The Ld. Assessing Officer accordingly rejected the returned back. The Ld. Assessing Officer accordingly rejected the contention contention of of the the assessee assessee and and made the the addition addition of of Rs.4,98,00,000/-.
On further appeal before the Ld. CIT(A), the assessee appeal before the Ld. CIT(A), the assessee appeal before the Ld. CIT(A), the assessee submitted that it has already filed all the documents before the has already filed all the documents before the has already filed all the documents before the Assessing Officer for discharging its onus u/s 68 of the Act. It was for discharging its onus u/s 68 of the Act. It was for discharging its onus u/s 68 of the Act. It was also submitted before the ld CIT(A) that also submitted before the ld CIT(A) that the Assessing Officer also the Assessing Officer also carried out inquiry u/s 133(6) of the Act and the concerned party t inquiry u/s 133(6) of the Act and the concerned party t inquiry u/s 133(6) of the Act and the concerned party has also filed documentary evidence in response to notice u/s has also filed documentary evidence in response to notice u/s has also filed documentary evidence in response to notice u/s 133(6) of the Act issued by the Assessing Officer issued by the Assessing Officer. The Ld. Authorised representative of the assessee before the ld CIT(A) Authorised representative of the assessee before the ld CIT(A) Authorised representative of the assessee before the ld CIT(A)
M/s Manan Trading Company Pvt. Ltd. M/s Manan Trading Company Pvt. Ltd. 10 ITA No. 864/M/2022 submitted that the Ld. Assessing Officer ignored those documentary he Ld. Assessing Officer ignored those documentary he Ld. Assessing Officer ignored those documentary evidences while adjudicating the issue. The Ld. CIT(A) issued a evidences while adjudicating the issue. The Ld. CIT(A) issued a evidences while adjudicating the issue. The Ld. CIT(A) issued a letter to the Assessing Officer for confirming the above facts of the letter to the Assessing Officer for confirming the above facts of the letter to the Assessing Officer for confirming the above facts of the assessee, however the Ld. CIT(A) noted that in view of no reply or assessee, however the Ld. CIT(A) noted that in view of no reply or assessee, however the Ld. CIT(A) noted that in view of no reply or comment from the Assessing Officer ent from the Assessing Officer, he decided the issue on merit. e decided the issue on merit. The relevant observation The relevant observations of the Ld. CIT(A) are as under: of the Ld. CIT(A) are as under:
“6.7 It is observed that the assessment order is completely 6.7 It is observed that the assessment order is completely 6.7 It is observed that the assessment order is completely silent about various details submitted by the appellant as silent about various details submitted by the appellant as silent about various details submitted by the appellant as well as received by the AO u/s 133(6) from M/s. Jayant well as received by the AO u/s 133(6) from M/s. Jayant well as received by the AO u/s 133(6) from M/s. Jayant Oil Products Ltd., as claimed above. Accordingly, a letter is Oil Products Ltd., as claimed above. Accordingly, a letter is Oil Products Ltd., as claimed above. Accordingly, a letter is issued to the AO on 0 issued to the AO on 09.02.2022, requesting him to 9.02.2022, requesting him to examine the assessment records about various details examine the assessment records about various details examine the assessment records about various details received during the assessment proceedings as claimed by received during the assessment proceedings as claimed by received during the assessment proceedings as claimed by the appellant. Appellant's submissions produced before the appellant. Appellant's submissions produced before the appellant. Appellant's submissions produced before the undersigned were also forwarded for verification of the the undersigned were also forwarded for verification of the the undersigned were also forwarded for verification of the AO. In-spite of necessary follow up by this office, no reply spite of necessary follow up by this office, no reply spite of necessary follow up by this office, no reply or comment is received from the AO. Hence, I donot have or comment is received from the AO. Hence, I donot have or comment is received from the AO. Hence, I donot have any option but to decide the present appeal based on merit any option but to decide the present appeal based on merit any option but to decide the present appeal based on merit and and and documents documents documents submitted submitted submitted during during during the the the appellate appellate appellate proceedings. proceedings. 6.8 I find that during 6.8 I find that during the assessment proceedings, the the assessment proceedings, the appellant company has submitted before the AO, various appellant company has submitted before the AO, various appellant company has submitted before the AO, various documents in support of it's claim made above i.e., share documents in support of it's claim made above i.e., share documents in support of it's claim made above i.e., share sale agreement, board resolution, ledger confirmation, sale agreement, board resolution, ledger confirmation, sale agreement, board resolution, ledger confirmation, bank statement evidencing receipts, etc. It was also bank statement evidencing receipts, etc. It was also bank statement evidencing receipts, etc. It was also clarified that the said receipts are not in unsecured loans rified that the said receipts are not in unsecured loans rified that the said receipts are not in unsecured loans but were in-fact advances in lieu of sale of shares. These -fact advances in lieu of sale of shares. These fact advances in lieu of sale of shares. These documents establish the genuineness of the transaction documents establish the genuineness of the transaction documents establish the genuineness of the transaction entered into by the appellant with M/s. Jayant Oil entered into by the appellant with M/s. Jayant Oil entered into by the appellant with M/s. Jayant Oil Products Ltd. Furthermore, the sai Products Ltd. Furthermore, the said transaction was d transaction was independently confirmed by the said party in response to independently confirmed by the said party in response to independently confirmed by the said party in response to the notice issued us 133(6) by ld. AO during the course of the notice issued us 133(6) by ld. AO during the course of the notice issued us 133(6) by ld. AO during the course of assessment proceedings. There is no substance in the assessment proceedings. There is no substance in the assessment proceedings. There is no substance in the observation of the AO that PAN details were not submitted observation of the AO that PAN details were not submitted observation of the AO that PAN details were not submitted by the appe by the appellant, which was very much available in the llant, which was very much available in the reply received in response to notice issued u/s 133(6) to reply received in response to notice issued u/s 133(6) to reply received in response to notice issued u/s 133(6) to M/s. Jayant Oil Products Ltd. M/s. Jayant Oil Products Ltd.
M/s Manan Trading Company Pvt. Ltd. M/s Manan Trading Company Pvt. Ltd. 11 ITA No. 864/M/2022
6.9 In my considered opinion, there is no reason for the AO 6.9 In my considered opinion, there is no reason for the AO 6.9 In my considered opinion, there is no reason for the AO not to consider these evidences during the assessment not to consider these evidences during the assessment not to consider these evidences during the assessment proceedings. The appellant has also claimed that these gs. The appellant has also claimed that these gs. The appellant has also claimed that these details were duly submitted at least 10 days before the details were duly submitted at least 10 days before the details were duly submitted at least 10 days before the date of passing of the assessment order. The documents date of passing of the assessment order. The documents date of passing of the assessment order. The documents submitted by the appellant as well as concernedM/s. submitted by the appellant as well as concernedM/s. submitted by the appellant as well as concernedM/s. Jayant Oil Products Ltd. clearly establish the Jayant Oil Products Ltd. clearly establish the Jayant Oil Products Ltd. clearly establish the identity, credit worthiness and genuineness of the party. No doubt credit worthiness and genuineness of the party. No doubt credit worthiness and genuineness of the party. No doubt has been raised on the veracity of the said transaction. has been raised on the veracity of the said transaction. has been raised on the veracity of the said transaction. Even the AO has failed to avail the opportunity granted by Even the AO has failed to avail the opportunity granted by Even the AO has failed to avail the opportunity granted by the undersigned to pin point any discrepancy in the the undersigned to pin point any discrepancy in the the undersigned to pin point any discrepancy in the submission made by th submission made by the appellant during appellate e appellant during appellate proceedings. Considering the totality of the facts and proceedings. Considering the totality of the facts and proceedings. Considering the totality of the facts and circumstances of the issue involved, the addition of Rs. circumstances of the issue involved, the addition of Rs. circumstances of the issue involved, the addition of Rs. 4,98,00,000/ 4,98,00,000/- deserved to be deleted. Thus, the ground of deserved to be deleted. Thus, the ground of appeal no. 3 is allowed. appeal no. 3 is allowed.”
11. Before us, the Ld. DR refer Before us, the Ld. DR referred to the Paper Book and red to the Paper Book and submitted that the Ld. CIT(A) has provided only a period of seven submitted that the Ld. CIT(A) has provided only a period of seven submitted that the Ld. CIT(A) has provided only a period of seven days for responding to the letter issued by him. She referred to the days for responding to the letter issued by him. She referred to the days for responding to the letter issued by him. She referred to the letter of the Assessing Officer seeking further time for filing remand letter of the Assessing Officer seeking further time for filing remand letter of the Assessing Officer seeking further time for filing remand report , which is availa available on page 13 to 14 of the Paper Book. She ble on page 13 to 14 of the Paper Book. She submitted that the assessee did not submitted that the assessee did not respond to the letter issued by to the letter issued by the Assessing Officer in the year under consideration during the Assessing Officer in the year under consideration the Assessing Officer in the year under consideration remand proceedings and therefore, the Assessing Officer could not remand proceedings and therefore, the Assessing Officer could not remand proceedings and therefore, the Assessing Officer could not submit response within ithin the stipulated time of seven days. She the stipulated time of seven days. She submitted that the Ld. CIT(A) is not correct submitted that the Ld. CIT(A) is not correct in obser observing that no reply or comment sent by the Assessing Officer whereas she reply or comment sent by the Assessing Officer whereas she reply or comment sent by the Assessing Officer whereas she referred to the remand report filed by the Assessing Officer on the remand report filed by the Assessing Officer on the remand report filed by the Assessing Officer on 08.03.2022 [which is a which is after the date of the passing of the impugned fter the date of the passing of the impugned order by the Ld. CIT(A) order by the Ld. CIT(A)]. Accordingly, she submitted that the finding she submitted that the finding of the Ld. CIT(A) on the issue in dispute might be set aside and of the Ld. CIT(A) on the issue in dispute might be set aside and of the Ld. CIT(A) on the issue in dispute might be set aside and M/s Manan Trading Company Pvt. Ltd. M/s Manan Trading Company Pvt. Ltd. 12 ITA No. 864/M/2022 matter may be restored back to the file of the Ld. Assessing Officer matter may be restored back to the file of the Ld. Assessing Officer matter may be restored back to the file of the Ld. Assessing Officer for deciding afresh in the light of the evidences furnished by the iding afresh in the light of the evidences furnished by the iding afresh in the light of the evidences furnished by the assessee and inquiries carried out in the remand proceedings. assessee and inquiries carried out in the remand proceedings. assessee and inquiries carried out in the remand proceedings.
12. On the other hand, the ld. Counsel of the assessee submitted On the other hand, the ld. Counsel of the assessee submitted On the other hand, the ld. Counsel of the assessee submitted that no additional evidence that no additional evidences were filed by the assessee before the filed by the assessee before the Ld. CIT(A) and therefore there is no violation of the principle of d. CIT(A) and therefore there is no violation of the principle of d. CIT(A) and therefore there is no violation of the principle of natural justice or rule 46A of income tax rules, 1962. He submitted or rule 46A of income tax rules, 1962. He submitted or rule 46A of income tax rules, 1962. He submitted that the assessing officer suppressed the facts in his order and that the assessing officer suppressed the facts in his order and that the assessing officer suppressed the facts in his order and omitted to refer the documents filed by the assessee and the omitted to refer the documents filed by the assessee and omitted to refer the documents filed by the assessee and response filed by the loan party to the notice u/s 133(6) of the Act. response filed by the loan party to the notice u/s 133(6) of the Act. response filed by the loan party to the notice u/s 133(6) of the Act. Hence, the objection of the ld. DR might be rejected and the Ld. the objection of the ld. DR might be rejected and the Ld. the objection of the ld. DR might be rejected and the Ld. CIT(A) has already decided the issue on merit after considering CIT(A) has already decided the issue on merit after considering CIT(A) has already decided the issue on merit after considering documentary evidence filed by the assessee in support of claim of documentary evidence filed by the assessee in support documentary evidence filed by the assessee in support advance received from M/s Jayant Oil Products Ltd. for sale of the advance received from M/s Jayant Oil Products Ltd. for sale of the advance received from M/s Jayant Oil Products Ltd. for sale of the shares by the assessee. shares by the assessee.
We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused d the relevant material on record. We find that the relevant material on record. We find that the Ld. CIT(A) had had sent the letter to the Assessing Officer for ent the letter to the Assessing Officer for verification whether the documents verification whether the documents for discharging its onus under for discharging its onus under section 68 were filed by the assessee filed by the assessee and the loan party had also and the loan party had also filed documents in response to notice u/s 133(6) of the Act. The filed documents in response to notice u/s 133(6) of the Act. The filed documents in response to notice u/s 133(6) of the Act. The Assessing officer in the remand report filed has not disputed this er in the remand report filed has not disputed this er in the remand report filed has not disputed this fact. In such circumstances, the documents in question filed by the In such circumstances, the documents in question filed by the In such circumstances, the documents in question filed by the assessee before ld CIT(A) and forwarded by the ld CIT(A) to the assessee before ld CIT(A) and forwarded by the ld CIT(A) to the assessee before ld CIT(A) and forwarded by the ld CIT(A) to the M/s Manan Trading Company Pvt. Ltd. M/s Manan Trading Company Pvt. Ltd. 13 ITA No. 864/M/2022 Assessing officer are not in the nature of additional evidence under Assessing officer are not in the nature of additional evidence under Assessing officer are not in the nature of additional evidence under Rule 46A of income e 46A of income-tax Rules. 1962 and therefor tax Rules. 1962 and therefore there is no violation on the part of the ld CIT(A) as far as rule 46A of the violation on the part of the ld CIT(A) as far as rule 46A of the violation on the part of the ld CIT(A) as far as rule 46A of the Income-tax Rules is concerned. T s concerned. The Ld. CIT(A) proceeded and he Ld. CIT(A) proceeded and decided the issue on merit decided the issue on merit after taking into consideration of after taking into consideration of documents filed iled iled by by by the the the assessee assessee assessee in in in support support support of of of identity, identity, identity, creditworthiness and genuineness of transaction and also taking creditworthiness and genuineness of transaction and also taking creditworthiness and genuineness of transaction and also taking into consideration the response of notice u/s 133(6) of the Act by into consideration the response of notice u/s 133(6) of the Act by into consideration the response of notice u/s 133(6) of the Act by the said unsecured loan party. the said unsecured loan party. The relevant finding of ld CIT(A) on The relevant finding of ld CIT(A) on the issue in dispute is reproduced as under: dispute is reproduced as under:
“6.8 I find that during the assessment proceedings, the 6.8 I find that during the assessment proceedings, the 6.8 I find that during the assessment proceedings, the appellant company has submitted before the AO, various appellant company has submitted before the AO, various appellant company has submitted before the AO, various documents in support of it's claim made above i.e., share documents in support of it's claim made above i.e., share documents in support of it's claim made above i.e., share sale agreement, board resolution, ledger confirmation, sale agreement, board resolution, ledger confirmation, sale agreement, board resolution, ledger confirmation, bank statement evidencing receipts, etc. It was also bank statement evidencing receipts, etc. It was also bank statement evidencing receipts, etc. It was also clarified that the said receipts are not in unsecured loans clarified that the said receipts are not in unsecured loans clarified that the said receipts are not in unsecured loans but were in-fact advances in lieu of sale of shares. These -fact advances in lieu of sale of shares. These fact advances in lieu of sale of shares. These documents establish the genuineness of the transaction documents establish the genuineness of the transaction documents establish the genuineness of the transaction entered into by the appellan entered into by the appellant with M/s. Jayant Oil t with M/s. Jayant Oil Products Ltd. Furthermore, the said transaction was Products Ltd. Furthermore, the said transaction was Products Ltd. Furthermore, the said transaction was independently confirmed by the said party in response to independently confirmed by the said party in response to independently confirmed by the said party in response to the notice issued us 133(6) by Id. AO during the course of the notice issued us 133(6) by Id. AO during the course of the notice issued us 133(6) by Id. AO during the course of assessment proceedings. There is no substance in the assessment proceedings. There is no substance in the assessment proceedings. There is no substance in the observation of the AO that PAN details were not submitted of the AO that PAN details were not submitted of the AO that PAN details were not submitted by the appellant, which was very much available in the by the appellant, which was very much available in the by the appellant, which was very much available in the reply received in response to notice issued u/s 133(6) to reply received in response to notice issued u/s 133(6) to reply received in response to notice issued u/s 133(6) to M/s. Jayant Oil Products Ltd. M/s. Jayant Oil Products Ltd. 6.9 In my considered opinion, there is no reason for the AO 6.9 In my considered opinion, there is no reason for the AO 6.9 In my considered opinion, there is no reason for the AO not to consider these evidences during the assessment consider these evidences during the assessment consider these evidences during the assessment proceedings. The appellant has also claimed that these proceedings. The appellant has also claimed that these proceedings. The appellant has also claimed that these details were duly submitted at least 10 days before the details were duly submitted at least 10 days before the details were duly submitted at least 10 days before the date of passing of the assessment order. The documents date of passing of the assessment order. The documents date of passing of the assessment order. The documents submitted by the appellant as well as conc submitted by the appellant as well as concernedM/s. ernedM/s. Jayant Oil Products Ltd. clearly establish the identity, Jayant Oil Products Ltd. clearly establish the identity, Jayant Oil Products Ltd. clearly establish the identity,
M/s Manan Trading Company Pvt. Ltd. M/s Manan Trading Company Pvt. Ltd. 14 ITA No. 864/M/2022 credit worthiness and genuineness of the party. No doubt credit worthiness and genuineness of the party. No doubt credit worthiness and genuineness of the party. No doubt has been raised on the veracity of the said transaction. has been raised on the veracity of the said transaction. has been raised on the veracity of the said transaction. Even the AO has failed to avail the opportunity granted by Even the AO has failed to avail the opportunity granted by Even the AO has failed to avail the opportunity granted by the undersigned the undersigned to pin point any discrepancy in the to pin point any discrepancy in the submission made by the appellant during appellate submission made by the appellant during appellate submission made by the appellant during appellate proceedings. Considering the totality of the facts and proceedings. Considering the totality of the facts and proceedings. Considering the totality of the facts and circumstances of the issue involved, the addition of Rs. circumstances of the issue involved, the addition of Rs. circumstances of the issue involved, the addition of Rs. 4,98,00,000/ 4,98,00,000/- deserved to be deleted. Thus, the ground of deserved to be deleted. Thus, the ground of appeal no. 3 is allowed. appeal no. 3 is allowed.” 13.1 The finding of ld CIT(A) of ld CIT(A) on the issue-in-dispute is well dispute is well reasoned. In our opinion, there is no error in the finding of the ld reasoned. In our opinion, there is no error in the finding of the ld reasoned. In our opinion, there is no error in the finding of the ld CIT(A) on the issue in dispute and accordingly, we uphold the same. CIT(A) on the issue in dispute and accordingly, we uphold the same. CIT(A) on the issue in dispute and accordingly, we uphold the same.