M/S. CAMPARI FISCAL SERVICES PVT. LTD.,NEW DELHI vs. DCIT, NEW DELHI

The above captioned appeals by several appellants have been preferred against the separate orders of the first appellate authority for respective Assessment Years.

At the very outset, the ld. counsel for the assessee for the appellants stated that the underlying facts in issue are identical in all the appeals and if the facts of only one appeal are considered, all the appeals can be disposed of accordingly. The ld. counsel for the assessee stated that he would be arguing only the facts of Adonis Financial Services Pvt. Ltd in ITA No. 6507/DEL/2015.

On such concession, the representatives of both the sides were heard at length and all the appeals are disposed of by this common order for the sake of convenience and brevity.

Out of 86 appeals, 64 appeals are against the order passed by the Assessing Officers in Delhi Charges and the remaining 22 appeals are against the order passed by the Assessing Officers in Noida Charge. In so far as the appeals against the orders passed by the Assessing Officer in Delhi charges are concerned, this is the second round of litigation and in the remaining appeals, this is the first round of litigation.

In the first round of litigation, the Tribunal restored the matter to the file of the Assessing Officer. In the first round of litigation, the Assessing Officer has adopted rate of commission at 2.25% on the basis of some notings found in the seized documents. The Tribunal, vide order dated 18.10.2013, directed the Assessing Officer to consider the material on record and precedence on the issue and determine the rate of commission accordingly.

The Assessing Officers once again, on the basis of rough notings, adopted the rate of 2% as against 2.25% adopted in original order. The Assessing Officers of Noida Charge adopted the same at 2.25%.

Before us, the quarrel boiled down to the determination of rate of commission alleged to have been earned by the appellants from providing accommodation entries.

There is no dispute that the appellants were engaged in clandestine activities in the illegal business of providing accommodation entries to the beneficiaries. The beneficiaries purchased cheques from the appellants by paying cash. We are of the considered opinion that in such illegal activities, there cannot, and should not be any precedence. However, the Assessing Officer has referred to some loose sheets on which the percentage was mentioned at 1.69% to 2.5%.

The evidentiary value of loose sheets have been considered at length by the Hon'ble Supreme Court in the case of CBI Vs. V.S. Shukla [1998] Taxmann.com 2155 .

In the case of V.C. Shukla [supra] the Hon'ble Supreme Court held as under:

Similar view was taken by the Hon'ble Supreme Court in the case of Common Cause, A registered Society Vs. UOI 394 ITR 220.

In the light of the ratio laid down by the Hon'ble Supreme Court [supra], notings found in the loose sheets would not do any good to the Revenue. The assessee has claimed 25 paise or 0.25% on the strength of the statement of kingpin Shri Tarun Goyal, who in his statement recorded under oath u/s 132(4) of the Income tax Act, 1961 has categorically stated that the rate of commission charged on accommodation entries provided through various companies was 0.25%.

However, the statement of Shri Tarun Goyal recorded u/s 132(4) of the Act can be a good piece of evidence in the case of Shri Tarun Goyal only.

The ld. counsel for the assessee also relied heavily on various decisions of the co-ordinate bench wherein the Tribunal has adopted rate ranging from 0.15 paise to 0.50 paise i.e 0.15% to 0.50%.

As mentioned elsewhere, in such illegal activities, there cannot be any precedence and the rate varies from facts of each case.

To put an end to the litigation and in the interest of justice and fair play, in our considered opinion, 0.50 paise or 0.50% should be taken as the reasonable rate of profit/commission in such clandestine activities. We, accordingly, direct the Assessing Officers to adopt 0.50% or 0.50 paise and compute the profit accordingly,

We are of the opinion that there cannot be any profit element in intra-group transactions. We, therefore, direct the Assessing Officers to consider the transactions with outside parties only and then compute the profit.

Thus, the common ground in the case of the appellants is partly allowed.

In so far as charging of interest u/s 234B and 234C of the Act is concerned, the Assessing Officer is directed to charge interest as per relevant provisions of the law.

To sum up, in the result, all the appeals of the appellants in 86 appeals are disposed of accordingly and are partly allowed.