MANOJ VASUDEO PARDASANY (HUF),MUMBAI vs. DCIT CENTRAL CIRCLE-19, DELHI, NEW DELHI

Brief facts of the case are that the search and seizure action u/s 132 of the Act was carried out in case of DNC group wherein various documents pertaining to the assessee were found and seized. Accordingly, the proceedings u/s 153C of the Act were initiated in the case of the assessee HUF. The assessee is proprietor of M/s MVP Consults and as per the AO, assessee mainly working for Shapoorji Pallonji Group for booking bogus expenses and siphoning of funds and generating of cash. During the course of search, statement of various persons were recorded u/s 132(4) of the Act. The AO thus recorded the satisfaction thatthe assessee had provided accommodation entries in the shape of bogus bills of consultancy and job work charges. Statements of assessee are recorded u/s 132(4) on01.11.2019 and 05.11.2019 wherein it is admitted he had arranged bogus contracts and work orders for siphoning funds by Shapoorji Pallonji and M/s Afcon Infrastructure Ltd. and L&T who generate cash. Thereafter, the assessee has retracted from the statements recorded by stating that they were given under pressure and threat which was not accepted by the AO. The AO thereafter referred certain statements of the employees of the assessee and the auditors wherein it is observed that no documents were provided for actual services. Thereafter, during the course of assessment

After Considering the facts and the statements recorded of various persons and the bills based on job well charges and other consultancy services issued by the assessee to various companies, the AO concluded that the assessee has provided accommodation entries to various entitiesand take the average profit of 12% based on the profit shown in preceding 5 years and applying the same to the gross receipts declared by the assessee resulting into the addition of Rs.4,84,20,531/-for the year under appeal.

The ld. CIT(A) in terms of the order dated 22.04.2025 has confirmed the initiation of proceedings u/s 153C of the Act. However, has reduced the estimation of income by reducing the GP rate at 6% as against GP rate 12% applied by AO and accordingly the addition is reduced from Rs.4,84,20,531/- to Rs.1,47,98,514/- after reducing the profits of Rs. 1,88,23,686/- declared by the assessee.

Against the said order, both the parties are in appeal before the Tribunal. In assessee’sground of appeal number 1, the assessee has challenged theinitiation of proceedings u/s 153C of the Act. Before us, ld. AR for the assessee submits that

On the other hand, ld. CIT-DR vehemently supported the order of the AO and ld. CIT(A) and submits that the satisfaction was properly recorded and the ld. CIT(A) has discussed this issue in length in para 5 of its order and requested for the confirmation of the same.

Heard the parties and perused the material available on record. It is observed that from the perusal of the satisfaction note available in the papers filed, the Assessing Officer has referred the documents found andseized during the course of search on DNC group and after considering the entries contained therein, had recorded the satisfaction that these documents pertained to the assessee and has a bearing on the determination of the total income of the assessee. Accordingly, we find no error in initiation of proceedings u/s 153C of the Act

The grounds of appeal Nos. 2 to 4 of the assessee's appeal and ground number 1 to 3 of the Revenue are with respect to the estimation of income. The AO has applied 12% profit rate on the gross receipts declared by the assessee and the assessee has challenged the action of the ld. CIT(A) in reducing the same to 6% arbitrarily.

Before us, ld. AR submits a detailed written submission wherein it is stated that the rejection of books of accounts is unwarranted and further submits thatthe commission @ 12% is very high as well as 6% uphold by ld. CIT(A) is also very high. Ld. AR submits that nowhere in the seized material loose papers and documents, it is noted that assessee has received any commission. He further submits that when all the bills and vouchers referred as incriminating material were recorded in the books of accounts and profit thereof wascompleted form the same which has already been disclosed in the return of income filed, no further addition is required to be made. He thus prayed for the deletion of the addition.

On the other hand, ld. CIT-DR submits that, the assesseehimself in the statements recordedduring course of

Heard the parties and perused the material available on record. Though, the case of the assessee is that no document whatsoever was found which could be held as incriminating material for making the additions in the order passed u/s 153C of the Act. However, it is observed that the bills and thecorresponding entries in the books of accounts referred by the assessee has been accepted as bogus accommodation entry by the assessee himself in the statements recorded during the course of search. It is further observed that at the later stage, those statements were retracted. However, assessee has failed to explain the circumstances under which those statements were retracted. Therefore, the documents so foundand coupled

In the result, the appeal of the assessee is partly allowed and the appeal of the Revenueis dismissed. Order Pronounced in the Open Court on 15/05/2026.