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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI VIKAS AWASTHY & SHRI AMARJIT SINGH
आदेश / O R D E R
PER AMARJIT SINGH, AM:
The present appeals filed by the assessee are directed against the order passed by the ld. CIT(A), Mumbai, which in turn arises from the order passed by the A.O. u/s 143(3) r.w.s 153A of the Income Tax Act, 1961, for A.Ys. 2010-11 & 2011-12. We shall first take up the appeal i.e as a lead case and its finding will be applied to other case. The assessee has assailed the impugned order on the following grounds before us:
“1. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of the investigation wing in initiating search and seizure action against the appellant, which is bad, illegal, void and is without jurisdiction as the same was merely on suspicion without any evidence or material information, more so when the survey was already undergoing and found nothing incriminating and without the satisfaction of requirements of section 132(1) of the Act.
2. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in completing assessment u/s. 143(3) r.w.s. 153A which is without jurisdiction and void ab-initio, since the search and seizure action carried out by the department is bad, illegal and without any evidence or material available.
3. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in completing assessment u/s. 143(3) r.w.s. 153A of the Act without any incriminating documents being found during the course of survey/search at the premises of the appellant, without considering the facts and circumstances of the case.
On the facts and circumstances of the case as well as in Law, the Learned CIT(A) has erred in confirming the action of the Learned Assessing Officer in making disallowance of interest u/s.36(1)(iii) of the Income Tax Act, 1961 of Rs.17,51,188/- on the alleged plea that the funds were used for accommodation purchases, without considering the facts and circumstances of the case.
5. On the facts and circumstances of the case as well as in law, the learned CIT(A) has erred in confirming the action of the Learned Assessing Officer in making an addition u/s 69C of the Income Tax Act,1961 on account of alleged commission paid @ 1% amounting to Rs.74,495/- for obtaining accommodation bills without any evidence of the same and without considering the facts and circumstances of the case. The appellant craves leave to add, amend, alter or delete the said ground of appeal.
This case was listed for hearing before us on nine occasions but neither the assessee has attended the appellate proceedings nor furnished any details before us, therefore, the appeal of the assessee is adjudicated after hearing the ld. D.R and after taking into consideration the material on record.
The fact in brief is that return of income declaring total income at Rs.501,01,890/- was filed on 28.09.2010. Assessment u/s 143(3) of the Act was completed on 26.11.2012 assessing the total income at Rs.502,24,660/- . The search and survey action was carried out in the case of Shri Pravin Kumar Jain and his group concern on 1.10.2013 resulted into collection of evidences and other finding which proved that Shri Pravin Kumar Jain through the concerns operated by him was engaged in providing accommodation entries of various natures like bogus unsecured loan/bogus share application money and bogus purchases and sales etc. It was also found that assessee and its group concerns were beneficiaries of the accommodation entries. Therefore, a survey action was carried out at the business premises of the assessee on 25.03.2014 which was converted into search action u/s 132 of the Act on 28.03.2014. In response to notice u/s 153A the assessee filed its return of income on 12.08.2015 declaring its total income at Rs.519,84,157/-. The A.O has completed the assessment u/s 143(3) r.w.s 153A of the Act on 29.03.2016 and assessed the total income at Rs.544,91,420/- after making disallowance of depreciation of Rs.6,81,582/- on bogus assets, addition u/s 69C of Rs.74,495/- being unaccounted commission for availing accommodation entries and disallowance of interest expenditure of Rs.17,51,188/-. The assessee’s claim of deduction u/s 80IB was restricted to the returned income of Rs.519,84,157/- as against the assessed income of Rs.544,91,420/-. Further facts of the case are discussed while adjudicating the ground of appeal filed by the assessee as under:
Ground No. 1 to 3: Addition made without any incriminating document: 4. All these grounds of appeal filed by the assessee are interconnected, therefore, for the sake of convenience these are adjudicated together. The survey action which was commenced on 25.03.2014 at the premises of the assessee was converted into search action on 28.03.2014. During the course of search action several evidences were found which revealed that the assessee’s claim of acquiring and installing certain assets at its factories was found to be non-genuine considering that the inword registers of such factories did not have any such entries of having received/installed the said assets. The details of such incriminating evidences are elaborated at page 12 of the order of the ld. CIT(A) and the same was also corroborated by the statements recorded of the relevant persons at the time of search action. Similarly, premises of Hasmukh Mehta who had acted as a broker for providing bogus accommodation entries to the assessee group was also covered in the search action and a diary was seized which had details of the various accommodation entries obtained by the assessee.
During the course of appellate proceedings before us, the ld.CIT(A) has elaborately discussed the incriminating evidences found from the premises of the assessee at page 12 of his order which clearly demonstrate that the assessee had availed accommodation entries in respect of capital assets as well as raw material purchases. Therefore, considering the facts and finding reported in the order of assessing officer and ld. CIT(A), we don’t find any error in the decision of ld. CIT(A). Accordingly, these 3 grounds of appeal of the assessee stand dismissed.
Ground No. 4: Disallowance of interest u/s 36(1)(iii) of the Act of Rs.17,51,188/-:
In the course of assessment proceedings the A.O observed that assessee has availed various loans for acquiring capital assets which were found to be bogus during the course of search action. Consequently, the assessing officer held that interest expenditure claimed for acquisition of the bogus capital assets cannot be allowed as revenue expenditure till the capital assets were put to use. During the course of assessment in spite of giving opportunity assessee had not furnished any details of the loan fund utilized for acquiring such bogus capital assets. Therefore, the A.O has estimated the interest expenditure related to the bogus capital assets @ 15% per annum on the total amount of expenditure incurred towards the bogus capital assets, and disallowed Rs.17,51,188/- out of interest expenditure claimed by the assessee.
During the course of appellate proceedings before the ld. CIT(A) the assessee was asked to furnish the detail of the funds actually utilized in acquiring bogus capital assets, however, the assessee had failed to furnish the required details. Considering the detailed finding of the ld. CIT(A) showing that claim of interest expenditure were related to bogus capital assets and assessee was failed to prove contrary in spite of giving opportunity, this ground of appeal of the assessee stand dismissed.
Ground No. 5: Addition made u/s 69C being commission paid @ 1% amounting to Rs.74,495/- for obtaining accommodation bills:
The assessee has claimed payment of commission to the broker Shri Hasmukh Mehta for arranging accommodation entries and facilitating the said transaction.
During the course of assessment the A.O has added Rs.74,495/- u/s 69C being the estimated commission paid by the assessee for availing of accommodation entries. This amount was estimated @ 1% for the total accommodation entries availed by the assessee during the year under consideration. During the search action u/s 132(4) of the Act, Shri Sudeep Dutta has admitted in his statement reproduced at page 25 & 26 of the assessment order that assessee had obtained accommodation entries from various purchase parties and most of these accommodation entries were merely accounting entries based in the books of account without actually movement of material/capital goods and in most of the cases without corresponding payment/cheques. The assessee has also admitted that cheques for accommodation entries were issued to the bogus concern and subsequently, the cheques were realized/converted by Shri Hasmukh G. Mehta into equivalent amount of cash after deducting his commission. In the light of the above facts and detailed finding of CIT(A), we don’t find any infirmity in the order of the CIT(A). Accordingly, this ground of appeal of the assessee stand dismissed.
The appeal of the assessee stand dismissed.
Ground Nos. 1 to 3 & 5: 11. As the facts and the issue involved in these grounds are the same as in therefore, the same is applying mutatis mutandis for disposing off these grounds of appeal and the same stand dismissed.
Ground No. 4: (Disallowance of deduction u/s 80IC of Rs.10,84,000/-:
During the course of assessment proceeding the A.O noticed that assessee has claimed an amount of Rs.10,84,000/- under the head other income on account of excise refund as eligible for deduction u/s 80IB/80IC pertaining to eligible unit located at Sikkim. The A.O had rejected the claim of the assessee for deduction u/s 80IB/80IC after following the decision of Hon’ble Supreme Court in the case of Sterling Food Limited 237 ITR 579 (SC) wherein it is held that the profits arising on sale of import entitlements provided by the Government as incentive to promote exports could not constitute profit derived from the eligible undertaking and therefore, the same has to be excluded while computing the quantum of deduction u/s 80HH of the Act. After following the aforesaid judicial pronouncements and the detailed finding of the ld. CIT(A) we don’t find any infirmity in the decision of ld. CIT(A), therefore, this ground of appeal of the assessee stand dismissed.
In the result, the appeals of the assessee stand dismissed.
Order pronounced in the open court on 12.05.2022