NANDGOPAL NANK KRISHNANI,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, PUNE

आदेश / ORDER

PER R.S.SYAL, VP :

This appeal filed by the assessee is directed against the order passed by the CIT(A)-12, Pune on 13-03-2015 in relation to the assessment year 2010-11.

2 ITA No.924/PUN/2015 Shri Nandgopal Nanak Krishnani

order are that a search in the case of Shraddha Group, engaged in

carrying out irrigation contracts, was conducted on 08-09-2010.

Pursuant to it, a consequential search was carried out in the cases

of the assessee, as a proprietor of NNK Constructions, Uniglory

Infra Projects Pvt. Ltd., Shri Sopan D. Patil and Devgiri

Engineering vide a single warrant on 17-09-2010 at the premises

located at Room No.102 and 103, B-Wing, Parmar Trade Centre,

Sadhu Vaswani Chowk, Pune – 01. The Assessing Officer (AO)

has recorded that Uniglory Infra Projects Pvt. Ltd. is a sub-

contractor of Shraddha Group and Shri Sushil Agarwal of Uniglory

Infra Projects Pvt. Ltd. is associated with the assessee-NNK

Constructions, Devgiri Engineering and Shri Sopan D. Patil in

some way or the other. A bundle of loose papers containing 33

pages was seized from the searched premises, that is, 102-103, B-

wing, Parmar Trade Centre, Pune, which is the office of the

assessee. Sh. Sopan D. Patil got a contract in Sangamner from the

Irrigation Department and such work of Sangamner Project was sub-contracted, inter alia, to the assessee. The AO issued notice

u/s.153A of the Act, in response to which the assessee furnished a

return declaring total income of Rs.3,15,50,670/-, which was

subsequently revised to Rs.6,25,41,874/-. The additional income

3 ITA No.924/PUN/2015 Shri Nandgopal Nanak Krishnani

of Rs.3,09,91,204/- was mainly on account of bogus purchases. The AO completed the assessment making addition, inter alia, of

Rs.51 lakh on account of `Labour expenses’ mentioned on page 24

of the seized Bundle No.1. The assessee remained unsuccessful

before the ld. CIT(A). Aggrieved by the same, the assessee has

come up in appeal before the Tribunal.

material on record. The addition of Rs.51 lakh has been made on the basis of seized document No.24 which, inter alia, recorded

“Labour payment” of Rs.51 lakh. This page has total of six

transactions totaling Rs.3,05,39,481/-. Apart from that, page 26

also contains a list of certain items totalling Rs.4.69 crore.

Instantly, we are concerned with the amount shown as “Labour

payment” worth Rs.51 lakh on page 24 of the seized document.

The case of the Revenue is that the assessee made payments to Sh.

Sushil Agarwal for securing contracts from the Maharashtra

Government in an illegal way and recorded such amounts in the books of account through accommodation entries, inter alia,

“Labour payment” of Rs.51 lakh. On the other hand, the case of

the assessee is that the items mentioned on page 24 and 26 of the

seized documents contain certain entries which are in the nature of

4 ITA No.924/PUN/2015 Shri Nandgopal Nanak Krishnani

accommodation entries but this Rs.51 lakh was paid directly by Sh.

Sushil Agarwal without involvement of the assessee. In nutshell,

the position is that the assessee made payment to Sh. Sushil

Agarwal for procuring contracts from Maharashtra Government in

an illegal manner and in order to adjust such payments in the books

of account, the assessee inflated expenses. The dispute is about the

sum of Rs.51 lakh which has been shown as “Labour payment” on

page 24 of the seized documents, which is admittedly a chart

containing a list of payments made by the assessee. It is not

understandable as to how the assessee can claim that this single

sum of Rs.51 lakh was paid directly by Sh. Sushil Agarwal as bribe

and not by him, when the same is actually recorded on the

document seized from the assessee and the remaining transactions

are admittedly of the assessee. The fact of this amount passing

over as bribe to Maharashtra Government authorities is not

disputed. Once it is found that this sum of Rs.51 lakh was

admittedly paid, the same is liable to be charged to tax in the hands

of the assessee as it was found recorded along with other entries,

which admittedly pertain to the assessee and furthermore there is

no evidence to show that this Rs.51 lakh was paid by Sh. Sushil

Agarwal. We, therefore, uphold the addition of Rs.51 lakh

sustained in the first appeal.

5 ITA No.924/PUN/2015 Shri Nandgopal Nanak Krishnani

of Rs.60,74,000/-.

hawala dealers, Mumbai, who had given accommodation entries to

several customers was sent by Sales Tax Department (VAT) of

Maharashtra Government to the Income-tax Department. This list

contained a concern named, Tube India, placed at Sl.No.1119.

The assessee had also shown to have made purchases from this

concern. As the assessee could not produce transport bills,

delivery challans, weightment slips and entries in inward registers

at site in respect of such purchases totaling Rs.60.74 lakh, the AO

recorded in the assessment order that assessee made disclosure of

Rs.60.74 lakh as additional income for the year. He, therefore,

made addition of the said amount, which came to be sustained in

the first appeal. Now, the assessee is aggrieved by such an

addition.

material on record. The AO has categorically recorded that when

the assessee was confronted with accommodation entries made

through hawala dealers, he disclosed a sum of Rs.60.74 lakh as

additional income. A copy of the letter offering such additional

6 ITA No.924/PUN/2015 Shri Nandgopal Nanak Krishnani

income dated 04-03-2013 has been placed at page 41 of the paper

book. It has been mentioned therein that the assessee purchased

and used material at its work sites but movement of material was

misplaced. It further records that “As such we are submitting

entire purchases amounting to Rs.60,74,186/- during financial year

ended on 31-03-2010 (A.Y. 2010-11) as disallowance u/s.37(1) of

the Income-tax Act, 1961”. In view of the above categorical

admission by the assessee, there remains nothing which can be

done further in this regard. The Pune Benches of the Tribunal in

M/s. Chhabi Electricals Pvt. Ltd. and others Vs. DCIT vide its

order dated 28-04-2017 in ITA No.795/PUN/2014 and others, has

divided such cases of the beneficiaries of accommodation entries

into certain categories. One of the categories talks of 100%

addition of the amount of bogus purchases, whereas in other

category, it has been held that 10% over and above the normal GP

rate should be added. Since the assessee has himself offered 100%

of the amount of purchases for taxation during the course of

assessment proceedings, which is one of the categories in the case

of M/s. Chhabi Electricals Pvt. Ltd. (supra), we hold that no further

relief can be granted to the assessee in this regard.

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Order pronounced in the Open Court on 07th March, 2019.

Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT

पुणे Pune; �दनांक Dated : 07th March, 2019 सतीश

आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to: अ�ेिषत

अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. 3. The CIT(A)-12, Pune 4. The CIT Central, Pune िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे 5. “बी” / DR ‘B’, ITAT, Pune; 6. गाड� फाईल / Guard file. / True copy // आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

ITA No.924/PUN/2015 Shri Nandgopal Nanak Krishnani

Date 1. Draft dictated on 06-03-2019 Sr.PS 2. Draft placed before author 06-03-2019 Sr.PS 3. Draft proposed & placed before JM the second member 4. Draft discussed/approved by JM Second Member. 5. Approved Draft comes to the Sr.PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *