REKHA MANISH KAPADIA ,MUMBAI vs. ACIT-CC-8(2), MUMBAI

2 During th was also reco that there wa Only bills we same. Thus, statement rec K Traders, M/ and manage accommodatio bills without a 8.3 During th Urvil A. Jani, u/s 132(4) of Urvil Jani ha Kapadia. It is and controlle and sales. T billing was do One World G sales transac Shri Hemendr 8.4 From the on the appell proprietary co managed by business acti in the books o 8.5 In the ass assessment, t the copy of financials. Th wise purchas goods, proof o It is further no not carry out sales shown is an undispu actual busi accommodatio maintained a AO rejected th 145(3) of the total turnover Manish Kantilal Kap ITA Nos. 264, 318 t he search, the statement of Shri Hemend orded u/s 132(4) of the IT Act, wherein h as no actual delivery of goods to One Wor ere provided to them whenever they de Shri Hemendra Kapadia has admit corded u/s 132(4) of the IT Act that the en M/s R K Impex, and M/s R M Textiles we ed by him and he was engaged i on entries in the form of bogus purcha any actual supply of goods. he search on One World Group, the state director of One World Group entities, w f the IT Act on 08.11.2019. In this sta as confirmed the statement given by Shr s further admitted that he has used the ed by Shri Hemendra Kapadia to inflat There was no actual movement of good one. Thus, Shri Urvil Jani has accepted Group entities have entered into bogus p ctions with the entities controlled and m ra Kapadia. above facts unearthed during the searc lant and on One World Group, it is evid oncern of the appellant was totally co Shri Hemendra Kapadia. In this concer ivity was carried out and all the transac of account are paper transactions. sessment order, the AO noted that at th the appellant has submitted the basic do the return of income, computation of he appellant has not furnished the detail se and sales, documents showing trans of delivery, address of place for delivery oted that in the absence of these details, t independent inquiries regarding the pu by the appellant. As per the findings of t uted fact that the appellant has not car iness transactions and has pro on entries. The AO held that the books are incorrect and hence, unreliable. Acco he books of accounts as per the provisio IT Act and estimated the commission inc r shown of Rs.51,78,40,543/-. padia & Rekha Manish Kapadia 9 to 322/MUM/2025 & ITA Nos. 263, 280 to 284/MUM/2025 dra Kapadia he has stated rld concerns. emanded the tted in this ntities M/s R ere controlled in providing ase and sale ement of Shri was recorded atement, Shri ri Hemendra e entities run te purchases ds and only the fact that urchase and managed by ch conducted dent that the ontrolled and rn, no actual ctions shown he fag end of ocuments like income and ls like party- sportation of of goods etc. the AO could urchases and the search, it rried out any vided only s of accounts ordingly, the ns of section come @5% on 8.6 During th were issued appellant has above. In this engaged in te of her husba husband, the handed over on the facts concern of th managed by S that her busi Hemendra Ka 8.7 The appe consideration sales with the only. Further, entities. How total purchas contended tha side. For the Hon'ble ITAT. 8.8 From the appellant has the One Wor regarding the non-One Wo commission o 8.9 Regarding parties, the a and hence, n transactions. shown total s 12,72,10,096 entities. How documentary and sales sh admitted fact appellant hav Kapadia. No activity and s recorded dur Hemendra Ka actual purcha Manish Kantilal Kap ITA Nos. 264, 318 t he appeal proceedings, several notices to the appellant. In response to these s filed a submission dated 21.12.2023 as s submission, the appellant contended th extile trading business since 2010 with th and. However, due to health issues fa e responsibility of running the business to Shri Hemendra Kapadia. Thus, there i unearthed during the search that the he appellant (M/s RM Textiles) was co Shri Hemendra Kapadia. The appellant h iness was entirely managed and contro apadia. ellant further contended that during the n, out of total sales shown of Rs.26,87,1 e One World Group entities are of Rs. 12, , there is no purchase made from One wever, the AO assessed the commission ses and sales of Rs.51,78,40,543/-. I at the estimation of commission @5% is o same, the appellant has relied on dec submissions of the appellant, it is evid s not disputed the fact that the turnover rld Group entities is bogus. The only c e estimation of commission on other trans orld Group entities and rate of pe n such transactions. g the remaining purchase and sales w appellant's contention is that the same no commission income can be estimat In the year under consideration, the ap sale of Rs.26,87,14,833/-, out of which 6/- is shown with other than One W wever, the appellant has not furn evidence to establish the fact that the oth hown are from genuine business activ t that the activities of the proprietary co ve been controlled and managed by Sh documentary evidence regarding actu stock was found during the search. In th ring the search u/s 132(4) of the I apadia has admitted that he has not car ase and sale transaction. Thus, as per th padia & Rekha Manish Kapadia 10 to 322/MUM/2025 & ITA Nos. 263, 280 to 284/MUM/2025 for hearing notices, the s reproduced hat she was he assistance aced by her activity was is no dispute e proprietary ntrolled and has admitted olled by Shri e year under 14,833/-, the ,72,10,096/- World Group n income on It is further on the higher isions of the dent that the r shown with contention is sactions with ercentage of ith the other are genuine ted on such ppellant has sales of Rs. World Group nished any her purchase ity. It is an oncern of the ri Hemendra ual business he statement IT Act, Shri rried out any he admission of Hemendra actual busine Further, durin appeal proce appellant ha establish the carried out by the appellant 8.10 As there that the app activity and w bills, the boo incorrect and rejected as p Accordingly, I accounts and 8.11 Now co estimation of whereas the a estimated @ Kapadia and findings of the search, th ess activity carried out by the appellan ng the assessment proceedings as well a eedings, despite giving several oppor as not furnished any documentary fact that any genuine business activi y the appellant's concern. Therefore, the deserves to be rejected. e is a specific finding unearthed during pellant has not carried out any genui was involved in providing bogus purcha oks of accounts maintained by the ap d hence, unreliable. Therefore, the sam per the provisions of section 145(3) of I upheld the decision of the AO rejecting estimating the commission on the total tu oming to the rate of commission to be income, the AO has estimated the comm appellant has contended that the commis @0.05% to 0.2%. To support her con s relied on the decision of Shri Anil Ku and decision in the case of Sanjay Kumar T Surat). I have perused the decisions re . It is seen that the Honorable Delhi ITAT Kumar vs ITO (ITA NO 6002/DEL/2017), of the CIT(Appeals) in estimating the comm is relevant and applicable in the facts of . The other decision of the Hon'ble ITAT, i. Sanjay Kumar Chaudhary is in the of facts. The issue involved is the import o diamonds and hence, this decision is not he appellant. llowing the decision of the Hon'ble ITAT Anil Kumar vs. ITO, which is also relied direct the AO to adopt the rate of commis over of Rs.51,78,40,543/- instead of 5%. s ground is PARTIALLY ALLOWED.” ully considered the rival submis rties and have perused the mat ersy that falls for adjudication padia & Rekha Manish Kapadia 11 to 322/MUM/2025 & ITA Nos. 263, 280 to 284/MUM/2025 here was no nt's concern. as during the rtunities, the evidence to ty has been contention of g the search ine business ase and sale appellant are me are to be f the IT Act. the books of urnover. charged for mission @5%, ssion is to be ntention, the umar vs ITO r Chaudhary elied upon by T, in the case , has upheld mission @3%. of the case of Surat in the e context of of rough and applicable in T Delhi in the upon by the sion @3% on Accordingly, ssions advanced terial placed on pertains to the rejection of the book commission income ostensibly carried on more than a conduit 5.1 Before us, the l entire operations wer Shri Hemendra Kapa the impugned transa tax in his hands and however, belies the fo produced before the contemporaneous do purchase and sales records, or other prim of genuine trading a were tendered only a meaningful verificati admission of additi CIT(A). 5.2 In the absence claim that actual tra the relevant year, the Manish Kantilal Kap ITA Nos. 264, 318 t ks of account and the conseque on the footing that the textile- n by the assessee was, in sub for accommodation entries. earned counsel for the assessee re, in fact, conceived, directed, a adia, and that any commission actions ought, if at all, to have b d not in the hands of the assess oundation of such a plea. The a Assessing Officer or before the ocumentary evidence—whether i s registers, delivery challans, mary documents—to substantia ctivity. The few ledger extracts at the eleventh hour, leaving no ion; and significantly, no appl onal evidence was preferred of even the rudiments of proof ading in textile goods was und e assessee’s contention cannot b padia & Rekha Manish Kapadia 12 to 322/MUM/2025 & ITA Nos. 263, 280 to 284/MUM/2025 nt estimation of -trading activity bstance, nothing e urged that the and executed by n attributable to been brought to see. The record, assessee has not e Ld. CIT(A) any in the nature of transportation ate the existence eventually filed opportunity for lication seeking before the Ld. f supporting the dertaken during be accepted. The finding that the a accommodation entri 5.3 The further grie has been treated as acceptance. The ass interest income; the in accordance with it attaches to the appro 5.4 Upon a compre the evidence—or the in the conclusions ar books of account an been rightly upheld. 5.5 In the result, G stand dismissed. 6. In Ground No. ₹2,75,000/– made u unsecured loan refle assessee’s case that advanced by her hus sum stood credited Manish Kantilal Kap ITA Nos. 264, 318 t alleged transactions bore the ies thus stands on firm factual f evance that the interest income part of the operational income sessee herself has disclosed su Assessing Officer has merely b ts true character. No infirmity, oach adopted by the lower autho ehensive consideration of the su conspicuous want thereof—we rrived at by the Ld. CIT(A). The nd the estimation of commissio Ground Nos. 1 to 4 raised by . 5, the assessee challenges under section 68 of the Act in ected in her audited balance t the amount in question rep sband, Shri Manish Kapadia, an d in her books, as well as padia & Rekha Manish Kapadia 13 to 322/MUM/2025 & ITA Nos. 263, 280 to 284/MUM/2025 e character of foundation. e of ₹4,10,010/- e also merits no uch amount as brought it to tax factual or legal, ority. ubmissions and discern no error rejection of the on income have y the assessee the addition of n respect of an sheet. It is the presents a loan nd that the said correspondingly recorded as a loan Kapadia, well prior to 6.1 In principle, if 01.04.2013, the sam cash credit in the as the assessee has not evidence—such as b ledger entries—to sub the absence of such adjudicated at this st 6.2 In the interests to remit this issue to shall be afforded an including bank stat that the loan was Officer shall examine accordance with law statistical purposes. 7. As regards the 2015-16 to 2019-20, account and estima circumstances being assessment year 20 Manish Kantilal Kap ITA Nos. 264, 318 t and advance in the books o o 01.04.2013. f the credit pertains to a pe me cannot be brought to tax as ssessment year under consider t produced any contemporaneou bank statements, confirmations bstantiate the factum and timin h material, the matter cannot tage. of justice, therefore, we conside o the file of the Assessing Office opportunity to furnish all nece ements and supporting record received prior to 01.04.2013. e the same and adjudicate the w. Ground No. 5 is, according remaining appeals for the as , the sole issue relates to reject ation of commission income. identical, our findings rendere 014-15 shall apply mutatis m padia & Rekha Manish Kapadia 14 to 322/MUM/2025 & ITA Nos. 263, 280 to 284/MUM/2025 of Shri Manish eriod preceding an unexplained ration. However, us documentary s, or supporting ng of the loan. In be conclusively er it appropriate er. The assessee essary evidence, ds, to establish The Assessing issue afresh in gly, allowed for ssessment years tion of books of The facts and ed in relation to mutandis to the corresponding groun disposed of according 8. Now we take up for assessment year assessee are reprodu 1. Whether in2,24,77,726 (Appeal) has for total turno loss account, Rs.69,49,11,8 Purchase w Rs.12,81,11,9 natural justice Further Ld C 6,61,315/- ad 2. Whether on the Learned allowing the a 3. Whether on the learned upholding the business acti the submissi genuineness appellant 4. Whether on learned Com allowing the a officer's view appellant by tax Act, 1961 5. The Learne in allowing 53,28,330/- Balance Shee Manish Kantilal Kap ITA Nos. 264, 318 t nds in those years. The sai gly. p the appeals in the case of Mr. M 2014-15. The relevant ground uced as under: on the facts and circumstances of t 6 law, the Learned Commissioner of wrongly estimated the income of the ap over of Purchase and Sales as reported prepared from Audited Book of Accounts 846/ though the alleged turnover of with 'One World Group Comp 995/-, during the captioned year, which e. CIT(A) has wrongly confirmed the Intere dded by DCIT as operational income n the facts and circumstances of the cas Commissioner of Income Tax (Appeal) appeal partly on assumption bases and n n the facts and circumstances of the cas Commissioner of Income Tax (Appeal) e action of learned assessing officer of tr ivities as accommodation entry without ion / documentary evidence provided of all the Audited purchase and sales n the facts and circumstances of the case mmissioner of income Tax (Appeal) ha assessee's appeal for disapproving the le w of rejecting the Books of Accounts a invoking the provision of sectior 145 (3) . ed Commissioner of Income Tax (Appeal h the respondent made an addition u/ in respect of unsecured loan appearin et of the appellant prepared from the book padia & Rekha Manish Kapadia 15 to 322/MUM/2025 & ITA Nos. 263, 280 to 284/MUM/2025 id grounds are Manish Kapadia ds raised by the the case and f Income Tax ppellant @ 3% d in profit and s amounting to of Sales and panies' was is against the est Income of se and in law, has erred in not on facts se and in law has erred in reating all the t appreciating to prove the submitted by e and in la the as erred not arn Assessing and Income of of the income has aga erred /s. 68 of Rs. ng in audited ks of accounts which were re from Shri. Gu 260 Building were received 8.1 The ground No grounds raised in the same are decided mu 8.2 The ground No. Rs.53,28,330/- in Gurucharan Bhanda credited in the books 8.3 As identical iss 2014-15 has been re for deciding afresh documentary evidenc prior to 01.04.2013. allowed for statistical 8.4 The grounds rai 2019-2020 in the c grounds raised in as amount and there assessment year 2 mutandis. Manish Kantilal Kap ITA Nos. 264, 318 t ejected u/s 145(3) of the Act The said loa urucharan Bhandari [(PAN: ADAPC024 No.2 A.P.M market Vashi New Mumbai 4 d a credited in Books of Accounts prior 01 o. 1 to 4 of the appeal are i e case of Rekha Manish Kapadi utatis mutandis. . 5 of the appeal relation to add respect of unsecured loan ari which is claimed to hav s of accounts of ground prior to 0 ue in the case Rekha Manish estored back to the file of the A h after considering the su ce of the assessee that said loa Accordingly, this ground of th l purposes. ised in other assessment years f case of Mr. Manish Kapadia a ssessment year 2014-15 excep fore, respectfully following o 014-15, the grounds are d padia & Rekha Manish Kapadia 16 to 322/MUM/2025 & ITA Nos. 263, 280 to 284/MUM/2025 n was availed 7Q) (Address: 00705)] which 1.04.2013 identical to the a and therefore, dition u/s 68 of received from e received or 01.03.2013. Kapadia for AY Assessing Officer ubmission and an was received e appeal is also from 2015-16 to are identical to t change of the our finding in ecided mutatis

In the result, al for statistical purpose Order pronoun (RAJ KUMAR C JUDICIAL M Mumbai; Dated: 26/11/2025 Rahul Sharma, Sr. P.S.