DCIT, NEW DELHI vs. SH. PAWAN KUMAR GUPTA, DELHI

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F ”: NEW DELHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K.N.CHARY, JUDICIAL MEMBER ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) DCIT, Vs. Pawan Kumar Gupta, Central Circle-5, New Delhi A-288, A-491, Pocket-00, Rohini, Sector-2, Delhi PAN: AAEPG8701G (Appellant) (Respondent)

Revenue by : Smt Sulekha Verma, CIT DR Assessee by: None Date of Hearing 05/12/2018 Date of pronouncement 28/12/2018

O R D E R PER BENCH 1. These are the appeals filed by the revenue against the order of the learned Commissioner of income tax appeals – XXXI for assessment year 2006 – 07 dated 28/2/2014, for AY 2008-09 dated 28.02.2014 and for assessment year 2009 – 10, 2010 – 11 and 2011 – 12 dated 27/3/2014, 2. The revenue has raised the following grounds of in ITA No. 2877/Del/2014 for the Assessment Year 2006-07:- “1. The order of the ld CIT(A) is not correct in law and facts. 2. On the facts and circumstances of the case the ld CIT(A) has erred in deleting the addition of Rs. 2,68,84,296/- u/s 69 of the Act made on protective basis on account of unexplained credit entries appearing in the bank account of Rama Jain, Proprietor M/s. Vinayak Industries, even though the account was managed by the assessee. 3. On the facts and circumstances of the case the ld CIT(A) has erred in addition of Rs. 2,68,843/- made on account of commission earned by the assessee from providing accommodation entries from the bank account of Rama Jain, even though the account was managed by the assessee.” 3. The revenue has raised the following grounds of in ITA No. 2879/Del/2014 for the Assessment Year 2008-09:- “1. The order of Ld. CIT (A) is not correct in law and-facts. Page | 1

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) 2. On the facts and circumstances of the case the Ld CIT(A) has erred in deleting the addition of Rs.38,68,62,465/- u/s 69 of the Act made on protective basis-on account of unexplained credit entries appearing in the bank account of the assessee and his. associates, even though the assessee failed to provide the details thereof. 3. On the facts and circumstances of the case the Ld CIT(A) has erred in restricting the commission earned on account of providing accommodation entries, from bank accounts of the assessee, to 0.75% as against 1% held by the AO by allowing expenses, details of which were never filed by the assessee. 4. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 81,77,79,502/- u/s 69 of the Act made on protective basis on account of unexplained credit entries appearing in the bank account of other persons, management by the assessee, even though the assessee failed to provide the details thereof. 5. On the facts and circumstances of the case the Ld. CIT(A) has erred in restricting the commission earned on account of providing accommodation entries, from bank accounts of other persons, managed by the assessee, to 0.75% as against 1% held by the AO, by allowing expenses, details of which were never filed by the assesse.” 4. The revenue has raised the following grounds of in ITA No. 3356/Del/2014 for the Assessment Year 2009-10:- “1. The order of Ld. CIT (A) is not correct in law and facts. “2. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.157,05,95,101/- u/s 69 of the Act made on protective basis on account of unexplained credit entries appearing in the bank account of the assessee and his associates, even though the assessee failed to provide the details thereof. 3. On the facts and circumstances of the case the Ld. CIT(A) has erred in restricting the commission earned on account of providing accommodation entries, from bank accounts of the assessee, to 0.75% as against 1% held by the AO by allowing expenses, details of which were never filed by the assessee. 4. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 123,56,99,687/- u/s 69 of the Act made on protective basis on account of unexplained credit entries appearing in the bank account of other persons, management by the assessee, even though the assessee failed to provide the details thereof. 5. On the facts and circumstances of the case the Ld. CIT(A) has erred in restricting the commission earned on account of providing accommodation entries, from bank accounts of other persons, managed by the assessee, to 0.75% as against 1% held by the AO, by allowing expenses, details of which were never filed by the assesse.

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) 6. On the facts and circumstances of the case Ld. CIT(A) has erred in deleting the addition of Rs. 66,900/- on account of investment found in seized documents during the course of search on the ground that the same could be explained by means of saving and income declared by the group as such.” 5. The revenue has raised the following grounds of in ITA No. 3357/Del/2014 for the Assessment Year 2010-11:- “1. The order of Ld. CIT (A) is not correct in law and facts. 2. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.167,59,65,228/- u/s 69 of the Act made on protective basis on account of unexplained credit entries appearing in the bank account of the assessee and his associates, even though the assessee failed to provide the details thereof. 3. On the facts and circumstances of the case the Ld. CIT(A) has erred in restricting the commission earned on account of providing accommodation entries, from bank accounts of the assessee, to 0.75% as against 1% held by the AO by allowing expenses, details of which were never filed by the assessee. 4. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 261,65,34,210/- u/s 69 of the Act made on protective basis on account of unexplained credit entries appearing in the bank account of other persons, management by the assessee, even though the assessee failed to provide the details thereof. 5. On the facts and circumstances of the case the Ld. CIT(A) has erred in restricting the commission earned on account of providing accommodation entries, from bank accounts of other persons, managed by the assessee, to 0.75% as against 1% held by the AO, by allowing expenses, details of which were never filed by the assesse. 6. The revenue has raised the following grounds of in ITA No. 3358/Del/2014 for the Assessment Year 2011-12:- “1. The order of Ld. CIT (A) is not correct in law and facts. 2. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.7,00,000/- u/s 69 of the Act made on protective basis on account of unexplained credit entries appearing in the bank account of the assessee and his associates, even though the assessee failed to provide the details thereof. 3. On the facts and circumstances of the case the Ld. CIT(A) has erred in restricting the commission earned on account of providing accommodation entries, from bank accounts of the assessee, to 0.75% as against 1% held by the AO by allowing expenses, details of which were never filed by the assessee. 4. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 87,20,81,787/- u/s 69 of the Act made on Page | 3

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) protective basis on account of unexplained credit entries appearing in the bank account of other persons, managed by the assessee, even though the assessee failed to provide the details thereof. 5. On the facts and circumstances of the case the Ld. CIT(A) has erred in restricting the commission earned on account of providing accommodation entries, from bank accounts of other persons, managed by the assessee, to 0.75% as against 1% held by the AO, by allowing expenses, details of which were never filed by the assesse. 6. On the facts and circumstances of the case the Ld. CIT(A) has erred in restriction the addition of Rs. 2,31,000/- to Rs. 1,81,000/- on account of cash found during the curse of search on the ground that the same could be explained by means of saving and income declared by the group as such. 7. On the facts and circumstances of the case the Ld. CIT(A) has erred in restricting the addition of Rs. 27,44,660/- to Rs. 5,00,000/- on account of jewellery found during the course of search, on the ground that it belongs to various members of the family and therefore it is within the limit prescribed by CBDT’s Instruction. 8. On The facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 15,000/- on account of cash found during the course of search on the ground that the same could be explained by means of saving and income declared by the group as such.” 7. Brief facts of the case are that search and seizure action under section 132 (1) of the income tax act, 1961 was conducted on 19/5/2010. In case of assessee and his group of cases at its business devices and the residential premises of his entire group. Consequent upon this action under section 132 of the income tax act on 19th/5/2010 the case of the aforesaid assessee and his entire group were centralised in central circle – 5, New Delhi wide order is passed under section 127 of the income tax 1961. Consequently, notice under section 153A of the income tax act was issued to the assesee for respective years. 8. The learned assessing officer has explained the background of search and seizure operation under section 132 of the income tax act and consequent addition in the hence of the assessee for all these years as under. “3 Background of search and seizure operation u/s 132 of ttie I T Act 1961 A Search and seizure operation'was u/s 132 of the Income Tax Act, 1961 was conducted in the case of M/s Valley Iron & Steel Co. Ltd. (VISCO) group of cases and M/s Gee Ispat Group of cases on 07-01- 2010. During the course of search operation, a number of incriminating Page | 4

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) documents were found and seized. On examination of these documents, it was noticed that Shri Pawan Kumar Gupta was assisting both the above stated companies in managing their unaccounted business affairs. During survey operation u/s 133A of the I.T.Act, 1961 conducted in the case of M/s Sai Enterprises, M/s Deep Enterprises, and M/s Balaji Enterprises Prop Shri Rajeev Kumar in his statement had stated that Shri Pawan Gupta is.running all the concerns directly or indirectly and managing all their affairs. To verify this fact, Summon u/s 131(1A) of the Income Tax Act, 1961 was issued to Sh Pawan Gupta to appear in this office on 15.04.2010. It was reported by the Postal Authorities that he had refused to accept the summons. Summons was again sent through Inspector on 28.4.2010 which was duly served on 29.4.2010, requiring his personal deposition in this office in connection with the post search proceedings in the case of M/s Valley Iron & Steel Co. Ltd. on 30.4.2010. But on the given date, he did not turn up for examination. One more opportunity was also given vide letter dated 13.5.2010 to him for his personal appearance in this office on 14.05.2010 but on this occasion too, he didn’t turn up for examination. On many occasions, the AR of the VISCO and Gee group was requested to produce Shri Pawan Gupta for examination but he also failed to do so. From the sequence of events, it appears that he had avoided appearing in this office for personal deposition. As he-had deliberately avoided his presence in this office, a search and seizure action u/s 132 of the Income Tax Act, 1961 was carried out on 19.5.2010 in his case. The concerns which are controlled directly or indirectly by Shri Pawan Kumar Gupta are as under:- S.NO. Name of the person/concern Paras Sales Corporation Prop. Suresh Kumar 2 Yojana Engineers & Associates Prop, Sanjay 3 Balaji Enterprises Prop, Gaurav Gupta 4 M/s Rima Trading Co. Prop. Pawan Gupta 5 M/s Sita Steel Prop Anii Sharma 6 Manvee Traders Prop. Rishu Gupta 7 Balaji Enterprises Prop. Rajiv Kumar 8 Yojana Engineers & Associates Prop. Rajiv Kumar 9 Tirupati Associates Prop. Pawan Gupta 10 Vinayak Industries Prop. Rama Jain 11 Balaji Enterprises Prop. Rajeev Kumar 12 ROyal Sales (India) Prop. Sanjay 13 Yojana Engineers & Associates Prop. Vinod Kumar 14 Manvee Traders Prop. Rishu Gupta 15 Venus Glass & Plywood co. 16 Tirupati Associates Prop. Dev Kant Vashishtha 17 Balaji Enterprises

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) 18 Rima Trading Co. Prop. Sanjay 19 Prima Industries 20 M.S. Enterprises Prop. Pramod Kumar Gupta 21 Sai Enterprises Prop Rajiv Kumar 22 Deep Enterprises Prop. Rajiv Kumar 23 M.S. Enterprises Prop. Sanjay 24 M/s. Param Enterprises, Prop. Shri Sanjay Kumar Singh 25 Vinayak Industries Prop. Rima Jain

It has also been noticed that same concern is being run by showing different proprietors. All these parties noted on this paper are shown as consignment agents and commission agents in the books of M/s. VISCO Ltd. The copies of most of the bank accounts have been obtained and examined. On examination, huge cash deposits have been noticed in each account. Most of the deposits were either transferred to the group directly or indirectly through cheque or RTGS or the same are transferred by routing the entries through different bank accounts. Sh. Pawan Gupta has managed to open the bank account in the name of almost all these concerns showing different proprietors and assisted VISCO group as well as Gee Ispat group in their unaccounted business. As stated earlier he is the main conduit of VISCO Group as well as Gee Ispat Group. All these concerns are only paper concerns and have been opened just to help VISCO Group as well as Gee Ispat Group in their unaccounted business and to reduce the profit margin on the recorded transactions. The sale bills are issued to these concerns without any physical delivery of goods. Similarly, purchase bills are obtained from these concerns at inflated rates without receiving any material To verify the source of deposits in the bank accounts operated by Sh. Pawan Gupta and his associates, summons u/s. 131(1 A)'of the Income tax Act 1961 were issued to him but he refused to accept the summons sent through speed post. Thereafter,, summons has been served upon him through Inspector but on the given date he has not turned up for examination As Shri Pawan Kumar Gupta was deliberately avoiding his presence, a search action u/s 132 of the Income Tax Act 1961 had to be conducted at his residence situated at A-488,490 & 491, Pocket 00, Sector - 2, Rohini, New Delhi on 19-05-2010. But on this date also, he was absconding from his residence and could not be examined again. Although he was contacted on his Mobile Number 9873688Q11 on the day of search and a request was made to him to come to his residence and cooperate with the search party but he never turned up for examination and even switched off his Mobile. The enquiries made from the service provider reveal that he was in Delhi at the time of search and deliberately avoided his presence even during search proceedings. It was also enquired from the service provider that he was in constant touch with Shri Rakesh Bindal, Director of VISCO Group and Shri Vijay Page | 6

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) Pal Garg, Director of Gee Ispat Group. However, during the course of search operation, statements of Sh.Pramod Kumar Gupta his brother, Sh. Gaurav Gupta his nephew and Sh. Rishu Gupta his son were recorded in whose name he has opened various properietory concerns. All these persons have been shown as sole proprietors of some of these concerns indirectly controlled by Sh. Pawan Kumar Gupta in his statement, Sh. Gaurav Gupta nephew of Sh. Pawan Gupta has stated that the bank account in the name of M/s. Balaji Enterprises, 111, Vardhman Plaza, Sector -3. Rohini. New Delhi has been opened by his uncle Sh. Pawan Gupta in his name in Punjab National Bank and is being operated only by him. He also stated that he has signed only blank cheque books and handed over to Sh. Pawan Gupta. About the nature of transactions in the bank account, he stated that oniy Sh. Pawan Gupta can reveal the nature of these entries. About the nature of work of M/s. Balaji Enterprises, he again stated that Sh. Pawan Gupta can explain the nature of work of M/s. Balaji Enterprises and only he knows about the books of accounts of M/s. Balaji Enterprises. Statement of Sh. Pramod Kumar Gupta, brother of Sh. Pawan Gupta was aiso recorded. In his statement, he also stated that bank account in the name of M/s. M.S. Enterprises, C-123, Peera Garhi, Delhi has been opened by his brother Sh. Pawan Gupta in his name and he has no knowledge about the nature of business of M/s. M.S. Enterprises. He further stated that he just signed the biank cheque books and handed over to Sh. Pawan Gupta. About the incorrect address given, he stated that he deliberately gave wrong addressesto open'bank accounts in'the name of different concerns. He also stated that he is not maintaining any books of accounts. During the course of survey, statement of Sh. Rishu Gupta son of Sh. Pawan Gupta was also recorded on oath. He stated that he is a sole proprietor of M/s Manvee Traders and this concern had been opened by him on the direction of his father Shri Pawan Kumar Gupta and he Is the person who can explain the nature of business of M/s Manvee Traders. About the huge cash deposit in the bank account of M/s Manvee Traders, he stated that they receive cash from M/s VISCO Ltd and. M/s Gee Ispat Ltd. and others and deposit the same in bank account and there after issue cheques in their favour.- During the survey operations in; the Visco group of cases statements of the following persons were also recorded:- (i) Sh. Rajeev Kumar Prop. M/s. Balaji Enterprises, M/s Sai Enterprises. M/s. Yojana Engineers & Associates and M/s. Deep Enterprise: M/s. VISCO Ltd. has shown above stated four concerns as consignment agents and commission agents. Sh. Rajeev Kumar is the proprietor of all these four concerns. To verify the genuineness of these four concerns, survey u/s. 133A of the Income Tax Act 1961 has been conducted at the premises located at 111, Vardhman Plaza, Sector-3, Page | 7

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) Rohini, New Delhi and 165, Vardhman Plaza, Sector-3, Rohini, New Delhi. The business premises located at 111, Vardhman Plaza, Sector- 3, Rohini, New Delhi was found locked. During the survey operation at 165, Vardhman Plaza, Sector-3, Rohini, New Delhi, statement of Sh. Rajeev Kumar was recorded. In his statement he. has stated that he receive letters which are addressed to shop No. 111 and 165, Vardhman Grand Plaza, Sector -3, Rohini, Delhi on the instruction of Sh. Pawan Kumar Gupta and hand over these letters to him. For this work he gets Rs. 10,000/- per month. He also stated that he is a sole proprietor of M/s. Balaji Enterprises and M/s. Sai Enterprises. Both these concerns and bank accounts in the name of these concerns have been opened by him on the instruction of Sh. Pawan Kumar Gupta. He further stated that he is not doing any business of sale and purchase of material in these concerns. After the bank accounts are opened, the complete blank cheque book . is signed by him and handed over to Sh. Pawan Gupta. He further stated that he has no knowledge of the entries regarding deposits in cash and payments through cheque in the bank accounts. About both the concerns i.e. M/s. Balaji Enterprises and M/s. Sai Enterprises, Sh. Pawan Gupta has complete information. He also stated that he has no information about the whereabouts of books of accounts and business transaction of these concerns. In his statement, Sh. Rajeev Kumar has not disclosed the names of M/s. Yojana Engineers & Associates and M/s. Deep Enterprises which are also running from this address and' he has been shown as properietor of these concers. The statement of Sh. Rajeev Kumar clearly indicates'that M/s. Balaji Enterprises and M/s. Sai Enterprises are non genuine concerns and are run indirectly by Sh. Pawan Kumar Gupta to facilitate VISCO Limited in its unaccounted business. The other concerns M/s. Deep Enterprises and M/s.Yojana Engineers & Associates are also non genuine concerns which are directly or indirectly controlled by Sh. Pawan Kumar Gupta. All these concerns are not doing any business and they are just issuing sales and purchase bills to facilitate M/s VIsco Limited in its unaccounted business. On examination of seized material during post search investigation in the cases of M/s Valley Iron & Steel Co. Ltd. & M/s. Gee Ispat Pvt. Ltd., it has been noticed that Shri Pawan Gupta is assisting both groups in managing their unaccounted business affairs. He used to deposit huge cash in different bank accounts of different concerns controlled directly or indirectly by him and transfer the amount to M/s Valley Iron & Steel Co. Ltd., M/s. Gee ispat Pvt. Ltd. and others through RTGS and cheques. During the course of search, Sh. Pawan Gupta did could not be examined as he was not present at his residence However, the statements of Sh. Pramod Kumar Gupta, brother of Shri Pawan Gupta, Sh. Gaurav Gupta. Nephew of Shri Pawan Gupta and Sh. Rishu Gupta, son of. Shri Pawan Gupta were recorded. In their statements they have stated that Sh. ' Pawan Kumar Gupta is running all the concerns in their names and managing ail affairs of these concerns. Sh. Rishu Page | 8

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) Gupta S/o of Sh. Pawan Kumar Gupta in his statement has categorically stated that cash has been received from M/s. Valley iron and Steei Company Limited and M/s. Gee Ispat Private Limited and deposited in the bank accounts of the concern being run in his name. Later on the amount have been transferred to M/s Valley Iron & Steei Co. Ltd. & M/s. Gee Ispat Pvt. Ltd. through cheque or Real Time Gross Settlement Scheme(RTGS). M/s. VISCO Ltd. and Gee Ispat groups sell major part of the goods in cash and bring back part of this cash in their books of accounts with the help of the consignment/commission agents. Most of the concerns which have been shown, as consignment agents by M/s. VISCO Ltd are concerns which actually do not perform any real business but have been used as conduits to account for only part of the cash sale proceeds. M/s. VISCO Ltd. used to give these so called consignment agents cash and who used to deposit this cash in their bank accounts and issue cheque, Pay order or RTGS as per the requirement of M/s Vi SCO Limited. A number of bank accounts of different consignment agents have been obtained directly from banks and examined. On examination of these accounts, it is noticed that in all the bank accounts of the so called consignment agents huge amount of cash has been deposited and payment made through cheque, DD/Pay order and RTGS directly or indirectly to the M/s. VISCO Ltd. Sometimes cash deposited in one bank account is transferred to other bank accounts of the associate concerns by cheque or through RTGS to create layers between the origin and destination before transferring the amount of cash to these groups. 4. During the course of assessment proceeding information was called for u/s 133(6) of the I T Act from the banks in respect of the parties as per details mention in the following table:-

TABLE-2 S.No. Name Business Bank A/c No, Name of the Bank Concern 1 Pawan Prirna 3945010102 Union Bank of India Mangolpur Khurd, Gupta Industries . 82081 Delhi-83 2 Anil Sharma Sita Steel 05350500 United Bank of India 6/90, WEA, Pdam Prop. 15251 Singh Road, Karol Bagh, New Delhi- 110005 3 Dev Kant Tirupati 41660021000 Punjab National Bank C-3/9, Prashant Vashishtha Associates 18616 Vihar, Deihi- 85 Prop. 4 Gaurav Balaji 01150021000 Punjab National Bank Civil Line, Delhi-54 Gupta Prop. Enterprises 56298 ! 5 Pawan Gupta Rima Trading 05350500 United Bank of India 6/90, WEA, Pdam Prop. Co. 15279 Singh Road, Karol Bagh, New Delhi- 110005 6 Pawan Gupta Tirupati 18720210000 UCO Bank Rohini, Delhi-110085 Prop. Associates 250 7 Pawan Gupta Venus Glass & 416600210000 Punjab National Bank C-3/9, Prashant Prop. Plywood Co. 1906 Vihar, Delhi- 85 8 Pramod Kumar M.S. 39450101028 Union Bank of India Mangolpur Khurd, Gupta Prop Enterprises 2073 Delhi-83 Page | 9

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12)

9 Rajeev Kumar Balaji 18720210000 UCO Bank Rohini, Delhi-110085 Prop. Enterprises 595

10 Rajiv Balaji 37101020000 Axis Bank Vikas Surya Plaza, Community Kumar Enterprises 4015 Centre, D.C. Chowk, Sector-9, Rohini, Prop. Delhi-85 11 Rajiv Yojana Engineers 0876113100 Oriental Bank of Commerce LU Block, Kumar & Associates 2104 Pitampura,Delhi 88 12 Rajiv Sai 39450101028 Union Bank of India Mangolpur Khurd, Prop. Kumar Enterprises 2099 Delhi-83 13' Rajiv Deep 06370021000 Punjab National Bank B-23, Ashok Vihar Prop. Kumar Enterprises 53085 Phase-I, Delhi-110052 14 Rama Jain Vinayak 18720210000 UCO Bank Rohini, Delhi-110085 Prop. Prop. Industries 557 15 Rama Jain Vinayak 0587041000 Andhra Bank Prop. Industries 13397 C-33, Lawrence Road, Deihi- 110035 16 Rishu Manvee 37101020000 Axis Bank Vikas Surya Plaza, .Community Gupta Traders 4466 Centre, D C. Chowk, Sector-9, Rohini, 17 Rishu Manvee 359030111 Bank of Rajasthan Ltd A-1/3, Paschim Prop: Deihi-85 Gupta Traders 4554 Vihar, New Delhi-110063 18 Prop. Sanjay Param. 06370021000 Punjab National Bank B-23, Ashok Vihar Kumar Enterprises 53535 . Phase-I, Delhi-110052 19 Sanjay Yojana Engineers 410411500000 The KarurVysya Bank Ltd Rohini, Delhi-85 Singh Prop. & Associates 6233 Prop. 20 Sanjay Royal Sales 18720200000 UCO Bank Rohini, Delhi-110085 Prop. 300 21 Sanjay Everest 0876113100 Oriental Bank of Commerce LU Block, Prop. International 2364 Pitampura,Delhi 88 22 Sanjay Rima Trading i Co, 41660021000 Punjab National Bank C-3/9, Prashant Prop. 16113 Vihar,Delhi 85 23 Sanjay M.S. 01972000000 Kotak Mahindra Bank Sec.-8, Rohini, Prop, Enterprises 843 Delhi-85. 24 Suresh Paras Sales 410411500000 The KarurVysya Bank Ltd Rohini, Delhi-85 Kumar Corporation 7691 25 Vinod Yojana Engineers 18720200000 UCO Bank Rohini, Delhi-110085 Prop Kumar & Associates 303 Prop In response to the above the relevant bank statements for the period 01.04.2004 to 31.03.2011 have been received in respect of parties mentioned in aforesaid TABLE-1 above. The summary of amount credited in the bank accounts respect of the parties mentioned in TABLE-1 above Is given as under:-

S.N0. Name Business Bank A/c No. Name of the Bank Period Total Credit Concern Entries comprising- Cash/RTGS etc. 1 Pawan Prima 3945010102 Union Bank of India 01.04.04 389047747 Gupta Industries 82081 Mangolpur Khurd, Delhi- to 83 31.03.11 2 Anil Sharma Sita Steel 05350500 United Bank of India 6/90, 01.04.04 5000 Prop. 15251 WEA, Pdam Singh Road, to Karol Bagh, New Delhi- 31.03.11 110005 . Page | 10

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12)

3 Dev Kant Tirupati ' 41660021000 Punjab National Bank C- 01.04.04 150400000 Vashishtha • Associates 18616 3/9, Frashant Vihar, Delhi- to Prop. 85 31.03.11 4 Gaurav Gupta Balaji 01150021000 Punjab National Bank 01.04.04 608780335' Prop. Enterprises 56298 Civil Line, Delhi-54 to 31.03.11 5 Pawan Gupta Rima 05350500 United Bank of India 6/90. 01.04.04 1521975221 Prop. Trading .15279 WEA. Pdam Singh Road, to 1 Co. Karol Bagh, New DejhL . 31.03,11 110005 6 Pawan Gupta. Tirupati 18720210000 UCO Bank Rohini, Delhi- 01.04.04 334815966 Prop. Associates 250 110085 to 31.03.11 7 Pawan Gupta Venus Glass & 41660021000 Punjab National Bank C- 01.04.04 327978064 Prop. Plywood Co. 0 1906 3/9, Prashant Vihar, Delhi- to 85 31.03.11 Pramod M.S. 39450101028 j Union Bank of India 01.04.04 1563238390 8 Kumar Gupta j Enterprises 2073 Mangolpur Khurd, Delhi- to Prop. 83 31.03.11 9 Rajeev Kumar Balaji 18720210000 UCO Bank Rohini, Delhi- 01.04.04 40188117 Enterprises : Prop. 595 110085 to 31.03.11

10 Rajiv Balaji 37101020000 Axis Bank 01.04.04 735172301 Kumar Enterprises 4015 Vikas Surya Plaza, . to Prop. Community Centre, D.C. 31.03.11 Chowk, Sector-9, Rohini, Delhi-85 11 Rajiv Yojana 0876113100 Oriental Bank of 01.04.04 614525772 Kumar Engineers 2104 Commerce, j 'tU Block, to Prop. & Pitampura, Delhi-88 31.03.11 Associates 12 Rajiv Sai 39450101028 Union Bank of India, 01.04.04 438478938 Kumar Enterprises- 2099 . • . ' Mangolpur Khurd, Delhi -88 to Prop. 31.03.11 13 Rajiv Deep 06370021000 Punjab National Bank B-23, 01.04.04 286725588 Kumar Enterprises- 53085 Ashok Vihar Phase-I, Delhi- to' Prop: - 110052 31.03.11 14 Rama Jain Vinayak 18720210000 UCO Bank Rohini, Delhi- 01.04.04 254917720 Prop. Industries 557 110085 to 31,03.11 15 Rama Jain Vinayak 0587041.000 Andhra Bank 01.04.04 78789047 Prop: industries 13397 C-33, Lawrence Road, to Delhi-110035 31.03.11 16 Rishu Manvee - 37101020000 Axis Bank 01.04.04 244895000 Gupta .Traders 4466 . Vikas Surya-Plaza, ... to j Prop. Community Centre, . D.C. 31.03.11 Chowk, Sector-9, Rohini, Delhi-85 17 Rishu Manvee 359030111 Bank of Rajasthan Ltd A-1/3, 01.04,04 21930898 Gupta Traders 4554 Paschim Vihar, New Delhi- to Prop. 110063 31.03.11 18 Sanjay . Param 06370021000 Punjab National Bank B-23, 01.04.04 1078083250 Kumar Enterprises 53535 * Ashok Vihar to Singh Prop. Phase-1, Delhi-110052 31.03.11

19 Sanjay Yojana - 41041150000- 0 The Karur Vysya Bank Ltd 01.04.04 . Prop. Engineers & 6233 Rohini, Delhi-85 to 147005774 Associates 31.03.11 20 Sanjay Royal 18720200000 UCO Bank Rohini, Delhi- 01.04.04 325942219 Prop. Sales 30.0 110085 to 31.03,11 Page | 11

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) 21 Sanjay Everest 0876113100 Oriental Bank of Commerce 01.04.04 1181671084 1 -i Prop, Internation 2364 LU Block, Pitampura, Delhi- to al 88 31.03.11 22 Sanjay Rima 41660021000 Punjab National Bank C-3/9, 01.04.04 36191696 Prop. Trading 16113 Prashant Vihar, Delhi-85 to Co. 31.03.11 23 Sanjay M.S. 01972000000 Kotak Mahindra Bank Sec.- 01.04.04 30052182 Prop. Enterprises 843 8, Rohini, Delhi- to 85. 31.03.11

24 Suresh Paras 41041150000 The Karur Vysya 01.04.04 18414753 Kumar Prop. 0 7691 Bank Ltd Sales to 25 Vinod Kumar Yojana 18720200000 UCO Bank Rohini, 01.04.04 228853669 Rohini, Delhi-85 Prop: Corporation Delhi-110085 31.03.11 303 Engineers to TOTAL 9288301032 & 31.03,11 Associates During the course of assessment proceedings statement of Shri Pawan Kumar Gupta was recorded u/s 131 of the I T. Act 1961 on 18.03.2013 relevant portion of which is reproduced as under. Q. 1 Please identify yourself? Ans. I am Pawan Kumar Gupta, aged 57 years son of Late Shri R D Gupta, A- 488, A-490, A-491, Pocket-00, Rohini, Sector-2, Delhi - 110085, I am producing my driving license no is DL-0319940221657 issued by Delhi Transport Department, Govt of NCT of Delhi and furnishing a copy of the same for your record. Q.2 What are the sources of your income and your family member’s income ' please explain? Ans. I am acting as commission agent in Steel items. My son Rishu Gupta is working with my brother Shri Pramod Kumar Gupta in his business of retail trade in shoe materials independently and I have no involvement in this business. We are the two earning members in the family. Q.3 What is your connection with M/s Valley Iron Steel Co Ltd and M/s Gee Ispat Pvt Ltd?. ., . ... , . Ans I have acted as their commission agent and have provided entries to them in their business activity. The activity was actually carried out by the respective companies and their staff. I have signed cheques/RTGS instructions etc. to bank on their instructions. Q.4 What are the bank accounts that you have use for these activities? Ans. Eight bank accounts have been used and details have been furnished to the department vide my letter dated 23.01.2013 during the assessment proceedings.

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) Q.5 It is noticed that huge cash has been deposited in these bank accounts. What are the source and nature of these? Ans. Cash used to be handed over to me by staff members and Shri Ashok Gupta on the instruction of Shri Rakesh Bindal the director of the company M/s Valley Iron & Steel Co Ltd. Mr Sheilesh, the accountant of M/s Gee Ispat Pvt Ltd used to hand over to me cash on instruction of Shri Vijay Pal Garg director of M/s Gee Ispat Pvt Ltd. After receiving cash and sometimes cheques from the companies, I used to deposit these cash/ cheque in different bank accounts operated by me as stated above in answer to Q.No.4 and in turn I used to issue cheques in favour of M/s VISCO (M/s Valley Iron & Steel Co Ltd) and M/s Gee. Ispat Pvt Ltd. Q. 6 What was your interest in doing the aforesaid activity and who is the beneficiary of these activities? Ans. I was getting commission of Rs. 100/- per metric ton steel and company has deducted TDS on this payment. The ultimate beneficiaries were M/s VISCO (M/s Valley Iron & Steel Co Ltd) and M/s Gee Ispat Pvt Ltd. Q.7 What was the modus operandi of this business ? Ans. I have filed detailed note with my letter dated 06.03.2013. I say again that I did not employ any outside for the aforesaid activities. Q.8 Do you want to say anything? " Ans. No I have already explained in my letters and do not want to say anything more. Conclusion: On the basis of aforesaid detailed discussion following important facts are have been emerged:- All the parties appearing in TABLE-1 above are commission agents in the books of M/s. VISCO Ltd. The copies of bank account of these parties have been obtained and examined: On examination, huge cash deposits are appearing in each bank account. Most of the deposits were either transferred to the group directly to the VISCO group directly or indirectly through cheque or RTGS or the same are transferred by routing the entries through different bank accounts. Sh. Pawan Gupta has managed to open the bank, account in the name of almost ail these concerns showing different proprietors and assisted VISCO group as well as Gee Ispat group in their unaccounted business. As stated earlier he is the main conduit of VISCO Group as well as Gee Ispat Group. All these concerns, are only paper concerns and have been opened just to help VISCO Group as well as Gee Ispat Group in their unaccounted business and to reduce the profit margin on the recorded transactions. The sale bills are issued to these concerns without any physical

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) delivery of goods. Similarly, purchase bills are obtained from these concerns at inflated rates without receiving any material. During the course of assessment proceedings the assessee in his statement has categorically admitted that the ultimate beneficiaries were M/s VISCO (M/s Valley Iron & Steel Co Ltd) and M/s Gee Ispat Pvt Ltd. It is pertinent to mention here that on this basis major additions were made in the case of M/s Gee Ispat P. Ltd. Group and the proceedings in this group are pending with Ld. CIT(A). Whereas the the other group M/s Valley Iron & Steel Co. P. Ltd. moved an application in the Income Tax Settlement Commission New Delhi for the assessment years 2004-05 to 2010-11 before completion of its assessments and the sellement proceeding are pending in the ITSC as on date. Another important and crucial fact in this case is that the assessee is not maintaining any books of accounts. Keeping in view the aforesaid detailed discussion, the assessment of the assessee is completed on the basis of the information and material available on record and income is assessed accordingly. On the basis of banks statements received from banks in compliance to information called u/s 133(6) in respect of the parties appearing in TABLE-1,2 and 3 above it is seen that total amount of credit entries comprising of cash, RTGS, cheques etc. in the bank accounts of 25 parties comes to Rs.928,83,01,032/- as appearing in TABLE-3 above. 5. Addition under section 69 of the Income Tax Act in respect of seven business concerns having eight bank accounts controlled by the assessee out of 25 bank accounts oV earing in Table 2 and 3 above. - During Lis course of assessment proceedings the assessee in his reply dated 06.03.2013 has. stated as under:- “The details of proprietors altars of the concerns whose names have been used as under:- S. N0. Name Business Bank Ale No. Name of Bank Concern 1 Pawan Gupta Venus Glass & ' 4166002100001906 Punjab National Bank, Proprietor "Plywood Co C-3/9, Prashant Vihar, Delhi 110 085 2 Pawan Gupta Tirupati 18720210000250 UCO Bank, Rohini, ■ Proprietor Delhi 110 085 Associates j 3 Pawan Gupta Pnma Industries 394501010282081 Unoin Bank of India Proprietor Mangolpur Khurd, Delhi - 110 083

Rohini, Delhi 110 085

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) 5. Pramod Kumar , , Gupta M S 394501010282073 Union Bank of India Mangolpur Proprietor . Enterprises Khurd, Delhi 110 083 6. Gaurav Gupta Proprietor Balaji 0115002100056298 Punjab National Bank, Civil Lines, Delhi 110 054 Enterprises 7 Pawan Gupta Proprietor Rim a Trading 0535050015279 United Bank of Indiad / 90 Co. WEAPadam, Singh Road,Karol Bagh, New Delhi 110 005

In view of the aforesaid detailed discussion and conclusion, the amount shown for the AY 2008-09, in respect of aforesaid seven business concerns having eight bank accounts (out of 25 hank accounts shown in Table-2 and 3 above) controlled by the assessee on the basis of his aforesaid reply dated 06.03.2013, is treated as unexplained investment u/s 69 of the I T Act, 1961 and is added to the income of the assessee for the A.Y. :2008-09, Detail of the addition in respect of aforesaid seven business concerns having eight bank accounts (out of 25 bank accounts shown in Table-2 and-3 above controlled by-the assessee on- the basis of the information received from the bank is given as under:-

S Name Business Bank A/c No. Name of Assessment Total No. concerns Bank Year credit entries in the bank account comprising cash cheques RTGS 1. Pawan Gupta Varieties 4166002100001906 Punjab 2008-09 0 proprietor and ply National co. Bank, C- 3/9, Prashant Vihar, Delhi 110085 2. Pawan Gupta Tripati 18720210000250 UCO 2008-09 93075486 Proprietor Associates Bank, Rohini, Delhi 1100085 3. Pawan Gupta 394501010282081 Union 2008-09 95316647 Proprietor Bank of India, Mangolpur Khurd Delhi 110083

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12)

On the basis of the debited amount Rs 386862465/- in respect of eight bank accounts mentioned in the said table is added as unexplained investment u/s 69 of the I T Act, 1961 in, the hands of the assessee on protective basis. The addition equal to the amount total credit entries in the bank account if any is also to be made in respect of other partiers having bank account appearing in sr no 4, 5, 6 and 8 in their respective assessment for the AY.2008-09 on protective, basis. (Addition of Rs. 386862465l-on protective basis) 6. Addition in respect of commission income :- In view of the aforesaid detailed discussion and conclusion, the amount of commission at the rate of 1% on amount of total credit entries is shown in the following

S. No. Name Business Bank a/c Name of Assessment Total Amount of concerns name Bank Year credit commission entries in at the rate the bank of 1% on account total credit comprising entries in cash, bank cehques account RTGSD 1 Pawan Punjab 2008-09 0 0 Gupta National Proprietor bank, C3/9, Parashant Vihar, Delhi Page | 16

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12)

1100085

Pawan Tirupati . 187:02100 UCO Bank, Rohini, Delhi 110 2008- 93075486 930755 2 Associate 085 09 00 2'GO Gupta 3 Pawan 394.01010 Unoin Bank of India Mangolpur 2008- 95316647 953167 Proprietor Khurd, Delhi- 110 083 09 282031 Gupta 4. Rishu Manvee 371010200 Axis Bank Ltd.Vikas Surya 2008- 18220000 182200 Proprietor Plaza, Community Centre,D C C9 ' : l/rr/fors', . Gupta Chowk, Sector 9, . Proprietor Rohini,Delhi 110 085 ! Pramod Eiusrpris 39P. no w Union Bank of India Mangolpur 2008- 164244062 1642441 282073 Khurd, Delhi 110 083 09 Kumar Gupta 6. Gaurav -c,,. :}i . 01 Hi 00210 E: Punjab National Bank, Civil 2008- 0 0 \orpris ; GO51298 Lines, Delhi 110 054 09 Proprietor Gupta 7 Pawan /’ 1 c 053 .001 527 United Bank of India6 2008- 0 0 Proprietor 3 09 Gupta / SO WEA Padam Singh Road, Karo! Bagh, New Delhi 110 Proprietor 005. 8 Rishu iers -4564 • ICICI Bank Ltd, A-1/3, Paschim 16006270 1SQ063 Vihar, Delhi 110063 Gupta i- TOTAL 386862465 3868626 Proprietor ........ i

The amount of commission of Rs. 3868626/- i.e. 1% of Rs. 386862465/- as appearing in the aforesaid table added to the income of the assessee for the AY 2008-09. The addition on account of commission income 1% of the amount of credit entries in the bank account if any in respect of parties having bank account appearing at Sr. No. 4,5,6, and also to be made in their respective assessment for the AY 2008-09. ( Additions of Rs. 3868626/-) 7. Addition under section 59 of the income Tax Act in respect of 17 remaining bank seven business concerns having eight bank accounts controlled by the assessee out 25 bank accounts appearing in Table 2 and 3 above. In view of the aforesaid detailed discussion and conclusion on the amount of addition as unexplained investment u/s 69 of the IT Act 1961 in respect of parties having following accounts appearing is also made in the hands of the assessee on protective basis for Assessment Year 2008-09 as per the details given in the following table:-

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12)

S. Name Business Bank A/c No. Name of the Bank A.Y. Total Credit Entries N Concern comprising Cash/ 0. RTGS etc. 1 Anil Sharma Sita Steel 05350500 United Bank of India 2003- 5000 Prop. 15251 6/90, VVEA, Pdam Singh 03 Road, Karol Bagh, New Delhi- 110005 2 Dev Kant Tirupati ' ' 4166002100' Punjab National Bank 2008- 0 Vashishtha Associates 018616 C-3/9, Prashant Vihar, 09 Prop. Delhi-85 3 Rajeev Kumar Balaji Enterprises 1872021000 0 UCO Bank Rohini, Delhi-. 2008- 611000 Prop. 595 110085 09 4 Rajiv Kumar Balaji Enterprises. 3710102000 0 Axis Bank Vikas Surya 2008- 96311107 Prop. . 4015 Plaza, 09 'Community Centre, D.C. Chowk, Sectcr-9, Rohini, Delhi-85 5 Rajiv Kumar Yojana Engineers 0876113100 Oriental Bank of Commerce 2008- 0 Prop. & Associates 2104 LU Block, Pitampura, Delhi- 09 88 . 6 Rajiv Kumar Sai Enterprises 3945010102 8 Union Bank of India 2008- 20341675 Prop.. 2099 Mangolpur Khurd, Delhi-83 09 |7 Rajiv Kumar Deep Enterprises 0637002100 0 Punjab National Bank 2008- 0 Prop. 53085 B-23, Ashok Vihar Phase-I, 09 Delhi- 110052 1 8 ! Rama Jain Vinayak 1872021000 0 UCO Bank Rohini, Delhi- 2008- 210980484 Prop. Industries 557 110085 09 9 Rama Jain Vinayak 0587041000 Andhra Bank C-33, 2008- 19949937 Prop. Industries 13397 Lawrence Road, Delhi- 09 110035

10 Sanjay Param 0637002100 0 Punjab National Bank 2008- 0 Kumar Singh Enterprises 53535 B-23, Ashok Vihar Phase- 09 Prop. I, Delhi- 110052 11 Sanjay Prop. Yojana Engineers & 4104115000 00 The Karur Vysya Bank 2008- 15326615 Associates 6233 Ltd 09 Rohini, Delhi-85 12 Sanjay Prop. Royal Sales 1872020000 UCO Bank 2008- 303301580 0 300 Rohini, Deihi- 110085. 09 13 Sanjay Prop. Everest 0876113100 Oriental Bank of 2008- 0 International 2364 Commerce LU Block, 09 Pitampura, Delhi- 88 14 Sanjay Prop. Rima Trading Co. 4166002100 0 Punjab National Bank 2008- 35206169 16113 C-3/9, Prashant Vihar, 09 Delhi-85 15 Sanjay Prop. M.S. Enterprises. 0-197200000 0 Kotak Mahindra Bank 2008- 0 843 Sec.-8, Rohini, Delhi-85. 09 16 Suresh Paras Sales 4104115000 00 The Karur Vysya Bank 2008- 0 Kumar Prop. Corporation 7691 Ltd Rohini, Delhi-85 09 17 Vinod Kumar Yojana. Engineers 1872020000 0 UCO Bank Rohini, DeLhi- 2008- 115745935 Prop. & Associates ; 303 110085 09 ' TOTAL 817779502

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) It is pertinent to mention that addition on amount of credit entries shown in the aforesaid table in hands of the parties having bank account as appearing in the aforesaid table is also to be made as unexplained investment u/s 69 of the Act in their respective assessment for the AY 2008-09 on protective basis. (Addition of Rs. 817779502/- on protective basis) 8. Addition in respect of commission on protective basis Similarly in view of the aforesaid detailed discussion and conclusion the amount of addition made on account of commission income in respect of following parties having 17 bank accounts out of 25 bank accounts appearing in table-1, 2 and 3 above is also added in the hands of the assessee on protective basis for the AY 2008-09 as per the details are given in the following table:- s. Name Business Bank A/c No. Name of the Bank A.Y. Total Credit Amount N Concern Entries of 0. comprising Commiss Cash/ ion @ 1% RTGS etc.

... 50. 1 Anil Sita Steel 05350500 United Bank of India 2003- 5000 S.harma 15251 6/90, WEA, Pdam 09 Prop. Singh • Road, Karol Bagh, New Dellii- 110005 2 Dev Kant Tirupati 416600210 Punjab 2008- 0 0 Vashishtha Associates 00 18616 National Bank C-3/9, 09 Prop. Prashant Vihar, Delhi- 85 3 Rajeev . .... Balaji 187202100 UCO Bank Rohini, 200309 611000 6110 Kumar . Enterprises. 00 595 Delhi- 110085 Prop. 4 Rajiv Balaji 371010200 Axis Bank Vikas 2008- 96311107 963111 Kurnar Enterprises 00 4015 Surya Plaza, 09 Prop. Community Centre, D.C. Chowk, Sector- 9, Rohini, Delhi- 85 ' 5 Rajiv Yojana 087611310 Oriental Bank 2008- 0 i Kumar .. - Engineers. & 02104 ofCommerce LU 09 0 Prop. Associates Block, Pitampura, Delhi-88 6 Rajiv Sai 394501010 Union Bank of India 2008- 20341675 203417 Kumar Enterprises 28 2099 Mangolpur Khurd, 09 i Prop. Delhi- 83 7 Rajiv Deep 063700210 Punjab 2008- 0 0 Kumar Enterprises 00 53085. ; National-Bank B-23, 09 Prop. Ashok Vihar Phase-I, I i Delhi-110052 j 8 Rama Jain Vinayak 187202100 UCO Bank Rohini, 2008- 210980484 2109805 Prop Industries 00 557 Delhi- 110085 09

S. Name Business Bank A/c Name of the A.Y. Total Credit Amount N Concern No. Bank Entries of o. comprising Commiss Cash/ ion @ 1% RTGS etc. Page | 19

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12)

1 Anil Sita Steel 05350500 United Bank 2008-09 5000 50 Sharma 15251 of India Prop. 6/90, WEA, Pdam Singh Road, Karol Bagh, New 2 Dev Kant Tirupati 416600210 Delhi-110005 Punjab 2008-09 0 0 Vashishtha Associates 00 18616 National Bank Prop. C-3/9, Prashant Vihar, Deihi- 3 Rajeev Balaji 187202100 UCO Bank 2008 09 611000 6110 85 Kumar Enterprises. 00 595 Rohini, Delhi- Prop. 110085 4 Rajiv Balaji . 371010200 Axis Bank 2008-09 96311107 963111 Kurnar Enterprises 00 4015 Vikas Surya Prop. Plaza, Community Centre, D.C. Chowk, Sector-9, 5 Rajiv Yojana 087611310 Oriental Bank 2008-09 0 0 Rohini, Delhi- . Kumar .. - Engineers & 0 2104 ofCommerce 85 ' Prop. Associates LU Block, Pitampura, ' 6 Delhi-88 Rajiv Sai 394501010 Union Bank of 2003-09 20341675 203417 Kumar Enterprises 28 2099 India Prop. Mangolpur Khurd, Delhi- 83 7 Rajiv Deep 063700210 Punjab 2008-09 0 0 Kumar Enterprises 00 53085. National-Bank Prop. B-23, Ashok Vihar Phase- 1, Delhi- 8 Rama Jain Vinayak 187202100 UCO Bank 2008-09 210980484 2109805 110052 Prop. Industries 00 557 Rohini, Deihi- 110085 It Is pertinent to mention that commission income @1% of amount of credit entries of the parties having bank account as appearing in the aforesaid table is also to be made in their respective assessment for AY 2008-09. (Addition of Rs. 8177795/- on protective basis) 3 Background of search and seizure operation u/s 132 of ttie I T Act 1961 A Search and seizure operation'was u/s 132 of the Income Tax Act, 1961 was conducted in the case of M/s Valley Iron & Steel Co. Ltd. (VISCO) group of cases and M/s Gee Ispat Group of cases on 07-01- 2010. During the course of search operation, a number of incriminating documents were found and seized. On examination of these documents, it was noticed that Shri Pawan Kumar Gupta was assisting both the above stated companies in managing their unaccounted business affairs. During survey operation u/s 133A of the I.T.Act, 1961 conducted in the case of M/s Sai Enterprises, M/s Deep Enterprises, and M/s Balaji Enterprises Prop Shri Rajeev Kumar in his statement Page | 20

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) had stated that Shri Pawan Gupta is.running all the concerns directly or indirectly and managing all their affairs. To verify this fact, Summon u/s 131(1A) of the Income Tax Act, 1961 was issued to Sh Pawan Gupta to appear in this office on 15.04.2010. It was reported by the Postal Authorities that he had refused to accept the summons. Summons was again sent through Inspector on 28.4.2010 which was duly served on 29.4.2010, requiring his personal deposition in this office in connection with the post search proceedings in the case of M/s Valley Iron & Steel Co. Ltd. on 30.4.2010. But on the given date, he did not turn up for examination. One more opportunity was also given vide letter dated 13.5.2010 to him for his personal appearance in this office on 14.05.2010 but on this occasion too, he didn’t turn up for examination. On many occasions, the AR of the VISCO and Gee group was requested to produce Shri Pawan Gupta for examination but he also failed to do so. From the sequence of events, it appears that he had avoided appearing in this office for personal deposition. As he-had deliberately avoided his presence in this office, a search and seizure action u/s 132 of the Income Tax Act, 1961 was carried out on 19.5.2010 in his case. The concerns which are controlled directly or indirectly by Shri Pawan Kumar Gupta are as under:- S.NO. Name of the person/concern Paras Sales Corporation Prop. Suresh Kumar 2 Yojana Engineers & Associates Prop, Sanjay 3 Balaji Enterprises Prop, Gaurav Gupta 4 M/s Rima Trading Co. Prop. Pawan Gupta M/s Sita Steel Prop Anii Sharma 5 6 Manvee Traders Prop. Rishu Gupta 7 Balaji Enterprises Prop. Rajiv Kumar Yojana Engineers & Associates Prop. Rajiv Kumar 8 9 Tirupati Associates Prop. Pawan Gupta 10 Vinayak Industries Prop. Rama Jain 11 Balaji Enterprises Prop. Rajeev Kumar 12 ROyal Sales (India) Prop. Sanjay 13 Yojana Engineers & Associates Prop. Vinod Kumar 14 Manvee Traders Prop. Rishu Gupta 15 Venus Glass & Plywood co. 16 Tirupati Associates Prop. Dev Kant Vashishtha 17 Balaji Enterprises 18 Rima Trading Co. Prop. Sanjay 19 Prima Industries 20 M.S. Enterprises Prop. Pramod Kumar Gupta 21 Sai Enterprises Prop Rajiv Kumar 22 Deep Enterprises Prop. Rajiv Kumar 23 M.S. Enterprises Prop. Sanjay Page | 21

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) 24 M/s. Param Enterprises, Prop. Shri Sanjay Kumar Singh 25 Vinayak Industries Prop. Rima Jain

It has also been noticed that same concern is being run by showing different proprietors. All these parties noted on this paper are shown as consignment agents and commission agents in the books of M/s. VISCO Ltd. The copies of most of the bank accounts have been obtained and examined. On examination, huge cash deposits have been noticed in each account. Most of the deposits were either transferred to the group directly or indirectly through cheque or RTGS or the same are transferred by routing the entries through different bank accounts. Sh. Pawan Gupta has managed to open the bank account in the name of almost all these concerns showing different proprietors and assisted VISCO group as well as Gee Ispat group in their unaccounted business. As stated earlier he is the main conduit of VISCO Group as well as Gee Ispat Group. All these concerns are only paper concerns and have been opened just to help VISCO Group as well as Gee Ispat Group in their unaccounted business and to reduce the profit margin on the recorded transactions. The sale bills are issued to these concerns without any physical delivery of goods. Similarly, purchase bills are obtained from these concerns at inflated rates without receiving any material To verify the source of deposits in the bank accounts operated by Sh. Pawan Gupta and his associates, summons u/s. 131(1 A)'of the Income tax Act 1961 were issued to him but he refused to accept the summons sent through speed post. Thereafter,, summons has been served upon him through Inspector but on the given date he has not turned up for examination As Shri Pawan Kumar Gupta was deliberately avoiding his presence, a search action u/s 132 of the Income Tax Act 1961 had to be conducted at his residence situated at A-488,490 & 491, Pocket 00, Sector - 2, Rohini, New Delhi on 19-05-2010. But on this date also, he was absconding from his residence and could not be examined again. Although he was contacted on his Mobile Number 9873688Q11 on the day of search and a request was made to him to come to his residence and cooperate with the search party but he never turned up for examination and even switched off his Mobile. The enquiries made from the service provider reveal that he was in Delhi at the time of search and deliberately avoided his presence even during search proceedings. It was also enquired from the service provider that he was in constant touch with Shri Rakesh Bindal, Director of VISCO Group and Shri Vijay Pal Garg, Director of Gee Ispat Group. However, during the course of search operation, statements of Sh.Pramod Kumar Gupta his brother, Sh. Gaurav Gupta his nephew and Sh. Rishu Gupta his son were recorded in whose name he has opened various properietory concerns. All these persons have been shown as sole proprietors of some of these concerns indirectly controlled by Sh. Pawan Kumar Gupta in his statement, Sh. Gaurav Gupta nephew of Sh. Pawan Gupta has stated Page | 22

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) that the bank account in the name of M/s. Balaji Enterprises, 111, Vardhman Plaza, Sector -3. Rohini. New Delhi has been opened by his uncle Sh. Pawan Gupta in his name in Punjab National Bank and is being operated only by him. He also stated that he has signed only blank cheque books and handed over to Sh. Pawan Gupta. About the nature of transactions in the bank account, he stated that oniy Sh. Pawan Gupta can reveal the nature of these entries. About the nature of work of M/s. Balaji Enterprises, he again stated that Sh. Pawan Gupta can explain the nature of work of M/s. Balaji Enterprises and only he knows about the books of accounts of M/s. Balaji Enterprises. Statement of Sh. Pramod Kumar Gupta, brother of Sh. Pawan Gupta was aiso recorded. In his statement, he also stated that bank account in the name of M/s. M.S. Enterprises, C-123, Peera Garhi, Delhi has been opened by his brother Sh. Pawan Gupta in his name and he has no knowledge about the nature of business of M/s. M.S. Enterprises. He further stated that he just signed the biank cheque books and handed over to Sh. Pawan Gupta. About the incorrect address given, he stated that he deliberately gave wrong addressesto open'bank accounts in'the name of different concerns. He also stated that he is not maintaining any books of accounts. During the course of survey, statement of Sh. Rishu Gupta son of Sh. Pawan Gupta was also recorded on oath. He stated that he is a sole proprietor of M/s Manvee Traders and this concern had been opened by him on the direction of his father Shri Pawan Kumar Gupta and he Is the person who can explain the nature of business of M/s Manvee Traders. About the huge cash deposit in the bank account of M/s Manvee Traders, he stated that they receive cash from M/s VISCO Ltd and. M/s Gee Ispat Ltd. and others and deposit the same in bank account and there after issue cheques in their favour.- During the survey operations in; the Visco group of cases statements of the following persons were also recorded:- (i) Sh. Rajeev Kumar Prop. M/s. Balaji Enterprises, M/s Sai Enterprises. M/s. Yojana Engineers & Associates and M/s. Deep Enterprise: M/s. VISCO Ltd. has shown above stated four concerns as consignment agents and commission agents. Sh. Rajeev Kumar is the proprietor of all these four concerns. To verify the genuineness of these four concerns, survey u/s. 133A of the Income Tax Act 1961 has been conducted at the premises located at 111, Vardhman Plaza, Sector-3, Rohini, New Delhi and 165, Vardhman Plaza, Sector-3, Rohini, New Delhi. The business premises located at 111, Vardhman Plaza, Sector- 3, Rohini, New Delhi was found locked. During the survey operation at 165, Vardhman Plaza, Sector-3, Rohini, New Delhi, statement of Sh. Rajeev Kumar was recorded. In his statement he. has stated that he receive letters which are addressed to shop No. 111 and 165, Vardhman Grand Plaza, Sector -3, Rohini, Delhi on the instruction of Sh. Page | 23

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) Pawan Kumar Gupta and hand over these letters to him. For this work he gets Rs. 10,000/- per month. He also stated that he is a sole proprietor of M/s. Balaji Enterprises and M/s. Sai Enterprises. Both these concerns and bank accounts in the name of these concerns have been opened by him on the instruction of Sh. Pawan Kumar Gupta. He further stated that he is not doing any business of sale and purchase of material in these concerns. After the bank accounts are opened, the complete blank cheque book . is signed by him and handed over to Sh. Pawan Gupta. He further stated that he has no knowledge of the entries regarding deposits in cash and payments through cheque in the bank accounts. About both the concerns i.e. M/s. Balaji Enterprises and M/s. Sai Enterprises, Sh. Pawan Gupta has complete information. He also stated that he has no information about the whereabouts of books of accounts and business transaction of these concerns. In his statement, Sh. Rajeev Kumar has not disclosed the names of M/s. Yojana Engineers & Associates and M/s. Deep Enterprises which are also running from this address and' he has been shown as properietor of these concers. The statement of Sh. Rajeev Kumar clearly indicates'that M/s. Balaji Enterprises and M/s. Sai Enterprises are non genuine concerns and are run indirectly by Sh. Pawan Kumar Gupta to facilitate VISCO Limited in its unaccounted business. The other concerns M/s. Deep Enterprises and M/s.Yojana Engineers & Associates are also non genuine concerns which are directly or indirectly controlled by Sh. Pawan Kumar Gupta. All these concerns are not doing any business and they are just issuing sales and purchase bills to facilitate M/s VIsco Limited in its unaccounted business. On examination of seized material during post search investigation in the cases of M/s Valley Iron & Steel Co. Ltd. & M/s. Gee Ispat Pvt. Ltd., it has been noticed that Shri Pawan Gupta is assisting both groups in managing their unaccounted business affairs. He used to deposit huge cash in different bank accounts of different concerns controlled directly or indirectly by him and transfer the amount to M/s Valley Iron & Steel Co. Ltd., M/s. Gee ispat Pvt. Ltd. and others through RTGS and cheques. During the course of search, Sh. Pawan Gupta did could not be examined as he was not present at his residence However, the statements of Sh. Pramod Kumar Gupta, brother of Shri Pawan Gupta, Sh. Gaurav Gupta. Nephew of Shri Pawan Gupta and Sh. Rishu Gupta, son of. Shri Pawan Gupta were recorded. In their statements they have stated that Sh. ' Pawan Kumar Gupta is running all the concerns in their names and managing ail affairs of these concerns. Sh. Rishu Gupta S/o of Sh. Pawan Kumar Gupta in his statement has categorically stated that cash has been received from M/s. Valley iron and Steei Company Limited and M/s. Gee Ispat Private Limited and deposited in the bank accounts of the concern being run in his name. Later on the amount have been transferred to M/s Valley Iron & Steei Co. Ltd. & M/s. Gee Ispat Pvt. Ltd. through cheque or Real Time Gross Settlement Scheme(RTGS). Page | 24

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) M/s. VISCO Ltd. and Gee Ispat groups sell major part of the goods in cash and bring back part of this cash in their books of accounts with the help of the consignment/commission agents. Most of the concerns which have been shown, as consignment agents by M/s. VISCO Ltd are concerns which actually do not perform any real business but have been used as conduits to account for only part of the cash sale proceeds. M/s. VISCO Ltd. used to give these so called consignment agents cash and who used to deposit this cash in their bank accounts and issue cheque, Pay order or RTGS as per the requirement of M/s Vi SCO Limited. A number of bank accounts of different consignment agents have been obtained directly from banks and examined. On examination of these accounts, it is noticed that in all the bank accounts of the so called consignment agents huge amount of cash has been deposited and payment made through cheque, DD/Pay order and RTGS directly or indirectly to the M/s. VISCO Ltd. Sometimes cash deposited in one bank account is transferred to other bank accounts of the associate concerns by cheque or through RTGS to create layers between the origin and destination before transferring the amount of cash to these groups. 4. During the course of assessment proceeding information was called for u/s 133(6) of the I T Act from the banks in respect of the parties as per details mention in the following table:-

TABLE-2 S.No. Name Business Bank A/c No, Name of the Bank Concern 1 Pawan Prirna 3945010102 Union Bank of India Mangolpur Khurd, Gupta Industries . 82081 Delhi-83 2 Anil Sharma Sita Steel 05350500 United Bank of India 6/90, WEA, Pdam Prop. 15251 Singh Road, Karol Bagh, New Delhi- 110005 3 Dev Kant Tirupati 41660021000 Punjab National Bank C-3/9, Prashant Vashishtha Associates 18616 Vihar, Deihi- 85 Prop. 4 Gaurav Balaji 01150021000 Punjab National Bank Civil Line, Delhi-54 Gupta Prop. Enterprises 56298 ! 5 Pawan Gupta Rima Trading 05350500 United Bank of India 6/90, WEA, Pdam Prop. Co. 15279 Singh Road, Karol Bagh, New Delhi- 110005 6 Pawan Gupta Tirupati 18720210000 UCO Bank Rohini, Delhi-110085 Prop. Associates 250 7 Pawan Gupta Venus Glass & 416600210000 Punjab National Bank C-3/9, Prashant Prop. Plywood Co. 1906 Vihar, Delhi- 85 8 Pramod Kumar M.S. 39450101028 Union Bank of India Mangolpur Khurd, Gupta Prop Enterprises 2073 Delhi-83 9 Rajeev Kumar Balaji 18720210000 UCO Bank Rohini, Delhi-110085 Prop. Enterprises 595

10 Rajiv Balaji 37101020000 Axis Bank Vikas Surya Plaza, Community Kumar Enterprises 4015 Centre, D.C. Chowk, Sector-9, Rohini, Prop. Delhi-85 11 Rajiv Yojana Engineers 0876113100 Oriental Bank of Commerce LU Block, Kumar & Associates 2104 Pitampura,Delhi 88 Prop. Page | 25

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12)

12 Rajiv Sai 39450101028 Union Bank of India Mangolpur Khurd, Kumar Enterprises 2099 Delhi-83 13' Rajiv Deep 06370021000 Punjab National Bank B-23, Ashok Vihar Prop. Kumar Enterprises 53085 Phase-I, Delhi-110052 14 Rama Jain Vinayak 18720210000 UCO Bank Rohini, Delhi-110085 Prop. Prop. Industries 557 15 Rama Jain Vinayak 0587041000 Andhra Bank Prop. Industries 13397 C-33, Lawrence Road, Deihi- 110035 16 Rishu Manvee 37101020000 Axis Bank Vikas Surya Plaza, .Community Gupta Traders 4466 Centre, D C. Chowk, Sector-9, Rohini, 17 Rishu Manvee 359030111 Bank of Rajasthan Ltd A-1/3, Paschim Prop: Deihi-85 Gupta Traders 4554 Vihar, New Delhi-110063 18 Prop. Sanjay Param. 06370021000 Punjab National Bank B-23, Ashok Vihar Kumar Enterprises 53535 . Phase-I, Delhi-110052 19 Sanjay Yojana Engineers 410411500000 The KarurVysya Bank Ltd Rohini, Delhi-85 Singh Prop. & Associates 6233 Prop. 20 Sanjay Royal Sales 18720200000 UCO Bank Rohini, Delhi-110085 Prop. 300 21 Sanjay Everest 0876113100 Oriental Bank of Commerce LU Block, Prop. International 2364 Pitampura,Delhi 88 22 Sanjay Rima Trading i Co, 41660021000 Punjab National Bank C-3/9, Prashant Prop. 16113 Vihar,Delhi 85 23 Sanjay M.S. 01972000000 Kotak Mahindra Bank Sec.-8, Rohini, Prop, Enterprises 843 Delhi-85. 24 Suresh Paras Sales 410411500000 The KarurVysya Bank Ltd Rohini, Delhi-85 Kumar Corporation 7691 25 Vinod Yojana Engineers 18720200000 UCO Bank Rohini, Delhi-110085 Prop Kumar & Associates 303 Prop In response to the above the relevant bank statements for the period 01.04.2004 to 31.03.2011 have been received in respect of parties mentioned in aforesaid TABLE-1 above. The summary of amount credited in the bank accounts respect of the parties mentioned in TABLE-1 above Is given as under:-

S.N0. Name Business Bank A/c No. Name of the Bank Period Total Credit Concern Entries comprising- Cash/RTGS etc. 1 Pawan Prima 3945010102 Union Bank of India 01.04.04 389047747 Gupta Industries 82081 Mangolpur Khurd, Delhi- to 83 31.03.11 2 Anil Sharma Prop. Sita Steel 05350500 United Bank of India 01.04.04 5000 15251 6/90, WEA, Pdam Singh to Road, Karol Bagh, New 31.03.11 Delhi- 110005 . 3 Dev Kant Tirupati ' 41660021000 Punjab National Bank C- 01.04.04 150400000 Vashishtha • Associates 18616 3/9, Frashant Vihar, Delhi- to Prop. 85 31.03.11 4 Gaurav Gupta Balaji 01150021000 Punjab National Bank 01.04.04 608780335' Prop. Enterprises 56298 Civil Line, Delhi-54 to 31.03.11

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12)

5 Pawan Gupta Rima 05350500 United Bank of India 01.04.04 1521975221 Prop. Trading .15279 6/90. WEA. Pdam Singh to 1 Co. Road, Karol Bagh, New 31.03,11 DejhL . 110005 6 Pawan Gupta. Tirupati 18720210000 UCO Bank Rohini, Delhi- 01.04.04 334815966 Prop. Associates 250 110085 to 31.03.11 7 Pawan Gupta Venus Glass & 41660021000 0 Punjab National Bank C- 01.04.04 327978064 Prop. Plywood Co. 1906 3/9, Prashant Vihar, Delhi- to 85 31.03.11 Pramod M.S. 39450101028 j Union Bank of India 01.04.04 1563238390 8 Kumar Gupta j Enterprises 2073 Mangolpur Khurd, Delhi- to Prop. 83 31.03.11 9 Rajeev Kumar Balaji 18720210000 UCO Bank Rohini, Delhi- 01.04.04 40188117 Enterprises : Prop. 595 110085 to 31.03.11

10 Rajiv Kumar Balaji 37101020000 Axis Bank 01.04.04 735172301 Prop. Enterprises 4015 Vikas Surya Plaza, . to Community Centre, D.C. 31.03.11 Chowk, Sector-9, Rohini, Delhi-85 11 Rajiv Kumar Yojana 0876113100 Oriental Bank of Commerce, j 01.04.04 614525772 Prop. Engineers 2104 'tU Block, Pitampura, Delhi-88 to & 31.03.11 Associates 12 Rajiv Kumar Sai 39450101028 Union Bank of India, 01.04.04 438478938 Prop. Enterprises- 2099 . • . ' Mangolpur Khurd, Delhi -88 to 31.03.11 13 Rajiv Kumar Deep 06370021000 Punjab National Bank B-23, 01.04.04 286725588 Prop: - Enterprises- 53085 Ashok Vihar Phase-I, Delhi- to' 110052 31.03.11 14 Rama Jain Vinayak 18720210000 UCO Bank Rohini, Delhi- 01.04.04 254917720 Prop. Industries 557 110085 to 31,03.11 15 Rama Jain Vinayak 0587041.000 Andhra Bank 01.04.04 78789047 Prop: industries 13397 C-33, Lawrence Road, Delhi- to 110035 31.03.11 16 Rishu Gupta Manvee - 37101020000 Axis Bank 01.04.04 244895000 Prop. .Traders 4466 . Vikas Surya-Plaza, ... to j Community Centre, . D.C. 31.03.11 Chowk, Sector-9, Rohini, Delhi-85 17 Rishu Gupta Manvee 359030111 Bank of Rajasthan Ltd A-1/3, 01.04,04 21930898 Prop. Traders 4554 Paschim Vihar, New Delhi- to 110063 31.03.11 18 Sanjay Kumar . Param 06370021000 Punjab National Bank B-23, 01.04.04 1078083250 Singh Prop. Enterprises 53535 * Ashok Vihar to Phase-1, Delhi-110052 31.03.11

19 Sanjay Prop. Yojana - 41041150000- 0 The Karur Vysya Bank Ltd 01.04.04 . Engineers & 6233 Rohini, Delhi-85 to 147005774 Associates 31.03.11 20 Sanjay Prop. Royal 18720200000 UCO Bank Rohini, Delhi- 01.04.04 325942219 Sales 30.0 110085 to 31.03,11 21 Sanjay Prop, Everest 0876113100 Oriental Bank of Commerce LU 01.04.04 1181671084 1 -i Internation 2364 Block, Pitampura, Delhi-88 to al 31.03.11 22 Sanjay Prop. Rima 41660021000 Punjab National Bank C-3/9, 01.04.04 36191696 Trading 16113 Prashant Vihar, Delhi-85 to Co. 31.03.11

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) 23 Sanjay Prop. M.S. 01972000000 Kotak Mahindra Bank Sec.-8, 01.04.04 30052182 Enterprises 843 Rohini, Delhi- to 85. 31.03.11

24 Suresh Kumar Paras 41041150000 0 The Karur Vysya Bank 01.04.04 18414753 Prop. 7691 Ltd Sales to 25 Vinod Kumar Yojana 18720200000 UCO Bank Rohini, 01.04.04 228853669 Rohini, Delhi-85 Corporation 31.03.11 Prop: Delhi-110085 303 Engineers to & TOTAL 31.03,11 9288301032 Associates During the course of assessment proceedings statement of Shri Pawan Kumar Gupta was recorded u/s 131 of the I T. Act 1961 on 18.03.2013 relevant portion of which is reproduced as under. Q. 1 Please identify yourself? Ans. I am Pawan Kumar Gupta, aged 57 years son of Late Shri R D Gupta, A- 488, A-490, A-491, Pocket-00, Rohini, Sector-2, Delhi - 110085, I am producing my driving license no is DL-0319940221657 issued by Delhi Transport Department, Govt of NCT of Delhi and furnishing a copy of the same for your record. Q.2 What are the sources of your income and your family member’s income ' please explain? Ans. I am acting as commission agent in Steel items. My son Rishu Gupta is working with my brother Shri Pramod Kumar Gupta in his business of retail trade in shoe materials independently and I have no involvement in this business. We are the two earning members in the family. Q.3 What is your connection with M/s Valley Iron Steel Co Ltd and M/s Gee Ispat Pvt Ltd?. ., . ... , . Ans I have acted as their commission agent and have provided entries to them in their business activity. The activity was actually carried out by the respective companies and their staff. I have signed cheques/RTGS instructions etc. to bank on their instructions. Q.4 What are the bank accounts that you have use for these activities? Ans. Eight bank accounts have been used and details have been furnished to the department vide my letter dated 23.01.2013 during the assessment proceedings. Q.5 It is noticed that huge cash has been deposited in these bank accounts. What are the source and nature of these? Ans. Cash used to be handed over to me by staff members and Shri Ashok Gupta on the instruction of Shri Rakesh Bindal the director of the company M/s Valley Iron & Steel Co Ltd. Mr Sheilesh, the accountant of Page | 28

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) M/s Gee Ispat Pvt Ltd used to hand over to me cash on instruction of Shri Vijay Pal Garg director of M/s Gee Ispat Pvt Ltd. After receiving cash and sometimes cheques from the companies, I used to deposit these cash/ cheque in different bank accounts operated by me as stated above in answer to Q.No.4 and in turn I used to issue cheques in favour of M/s VISCO (M/s Valley Iron & Steel Co Ltd) and M/s Gee. Ispat Pvt Ltd. Q. 6 What was your interest in doing the aforesaid activity and who is the beneficiary of these activities? Ans. I was getting commission of Rs. 100/- per metric ton steel and company has deducted TDS on this payment. The ultimate beneficiaries were M/s VISCO (M/s Valley Iron & Steel Co Ltd) and M/s Gee Ispat Pvt Ltd. Q.7 What was the modus operandi of this business ? Ans. I have filed detailed note with my letter dated 06.03.2013. I say again that I did not employ any outside for the aforesaid activities. Q.8 Do you want to say anything? " Ans. No I have already explained in my letters and do not want to say anything more. Conclusion: On the basis of aforesaid detailed discussion following important facts are have been emerged:- All the parties appearing in TABLE-1 above are commission agents in the books of M/s. VISCO Ltd. The copies of bank account of these parties have been obtained and examined: On examination, huge cash deposits are appearing in each bank account. Most of the deposits were either transferred to the group directly to the VISCO group directly or indirectly through cheque or RTGS or the same are transferred by routing the entries through different bank accounts. Sh. Pawan Gupta has managed to open the bank, account in the name of almost ail these concerns showing different proprietors and assisted VISCO group as well as Gee Ispat group in their unaccounted business. As stated earlier he is the main conduit of VISCO Group as well as Gee Ispat Group. All these concerns, are only paper concerns and have been opened just to help VISCO Group as well as Gee Ispat Group in their unaccounted business and to reduce the profit margin on the recorded transactions. The sale bills are issued to these concerns without any physical delivery of goods. Similarly, purchase bills are obtained from these concerns at inflated rates without receiving any material. During the course of assessment proceedings the assessee in his statement has categorically admitted that the ultimate beneficiaries were M/s VISCO (M/s Valley Iron & Steel Co Ltd) and M/s Gee Ispat Pvt Ltd. It is pertinent to mention here that on this basis major additions Page | 29

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) were made in the case of M/s Gee Ispat P. Ltd. Group and the proceedings in this group are pending with Ld. CIT(A). Whereas the the other group M/s Valley Iron & Steel Co. P. Ltd. moved an application in the Income Tax Settlement Commission New Delhi for the assessment years 2004-05 to 2010-11 before completion of its assessments and the sellement proceeding are pending in the ITSC as on date. Another important and crucial fact in this case is that the assessee is not maintaining any books of accounts. Keeping in view the aforesaid detailed discussion, the assessment of the assessee is completed on the basis of the information and material available on record and income is assessed accordingly. On the basis of banks statements received from banks in compliance to information called u/s 133(6) in respect of the parties appearing in TABLE-1,2 and 3 above it is seen that total amount of credit entries comprising of cash, RTGS, cheques etc. in the bank accounts of 25 parties comes to Rs.928,83,01,032/- as appearing in TABLE-3 above. 5. Addition under section 69 of the Income Tax Act in respect of seven business concerns having eight bank accounts controlled by the assessee out of 25 bank accounts oV earing in Table 2 and 3 above. - During Lis course of assessment proceedings the assessee in his reply dated 06.03.2013 has. stated as under:- “The details of proprietors altars of the concerns whose names have been used as under:- S. Name Business Bank Ale No. Name of Bank N0. Concern 1 Pawan Gupta Venus Glass & ' 4166002100001906 Punjab National Proprietor "Plywood Co Bank, C-3/9, Prashant Vihar, Delhi 2 Pawan Gupta Tirupati 18720210000250 UCO Bank, Rohini, 110 085 ■ Proprietor Delhi 110 085 Associates j 3 Pawan Gupta Pnma Industries 394501010282081 Unoin Bank of India Proprietor Mangolpur Khurd, Delhi - 110 083 4. Rishu Gupta Ms /ee Traders 371010200004466 Axis Bank Ltd. Vikas Proprietor Surya Plaza, Community Centre, D C Chowk,Sector 9

Rohini, Delhi 110 085 5. Pramod Kumar , , M S 394501010282073 Union Bank of India Mangolpur Khurd, Gupta Proprietor . Enterprises Delhi 110 083 6. Gaurav Gupta Balaji 0115002100056298 Punjab National Bank, Civil Lines, Delhi Proprietor 110 054 Enterprises 7 Pawan Gupta Rim a Trading 0535050015279 United Bank of Indiad / 90 WEAPadam, Proprietor Co. Singh Road,Karol Bagh, New Delhi 110 005

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) In view of the aforesaid detailed discussion and conclusion, the amount shown for the AY 2008-09, in respect of aforesaid seven business concerns having eight bank accounts (out of 25 hank accounts shown in Table-2 and 3 above) controlled by the assessee on the basis of his aforesaid reply dated 06.03.2013, is treated as unexplained investment u/s 69 of the I T Act, 1961 and is added to the income of the assessee for the A.Y. :2008-09, Detail of the addition in respect of aforesaid seven business concerns having eight bank accounts (out of 25 bank accounts shown in Table-2 and-3 above controlled by-the assessee on- the basis of the information received from the bank is given as under:-

S Name Business Bank A/c No. Name of Assessment Total credit No. concerns Bank Year entries in the bank account comprising cash cheques RTGS 1. Pawan Gupta Varieties 4166002100001906 Punjab 2008-09 0 proprietor and ply co. National Bank, C- 3/9, Prashant Vihar, Delhi 110085 2. Pawan Gupta Tripati 18720210000250 UCO Bank, 2008-09 93075486 Proprietor Associates Rohini, Delhi 1100085 3. Pawan Gupta 394501010282081 Union Bank 2008-09 95316647 Proprietor of India, Mangolpur Khurd Delhi 110083

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) TOTAL 386862465

On the basis of the debited amount Rs 386862465/- in respect of eight bank accounts mentioned in the said table is added as unexplained investment u/s 69 of the I T Act, 1961 in, the hands of the assessee on protective basis. The addition equal to the amount total credit entries in the bank account if any is also to be made in respect of other partiers having bank account appearing in sr no 4, 5, 6 and 8 in their respective assessment for the AY.2008-09 on protective, basis. (Addition of Rs. 386862465l-on protective basis) 6. Addition in respect of commission income :- In view of the aforesaid detailed discussion and conclusion, the amount of commission at the rate of 1% on amount of total credit entries is shown in the following

S. No. Name Business Bank a/c Name of Assessment Total Amount of concerns name Bank Year credit commission entries in at the rate the bank of 1% on account total credit comprising entries in cash, bank cehques account RTGSD 1 Pawan Punjab 2008-09 0 0 Gupta National Proprietor bank, C3/9, Parashant Vihar, Delhi 1100085

Pawan Tirupati . 187:02100 UCO Bank, Rohini, Delhi 110 085 2008- 93075486 930755 2 Associate 09 00 2'GO Gupta 3 Pawan 394.01010 Unoin Bank of India Mangolpur Khurd, 2008- 95316647 953167 Proprietor Delhi- 110 083 09 282031 Gupta Proprietor

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12)

The amount of commission of Rs. 3868626/- i.e. 1% of Rs. 386862465/- as appearing in the aforesaid table added to the income of the assessee for the AY 2008-09. The addition on account of commission income 1% of the amount of credit entries in the bank account if any in respect of parties having bank account appearing at Sr. No. 4,5,6, and also to be made in their respective assessment for the AY 2008-09. ( Additions of Rs. 3868626/-) 7. Addition under section 59 of the income Tax Act in respect of 17 remaining bank seven business concerns having eight bank accounts controlled by the assessee out 25 bank accounts appearing in Table 2 and 3 above. In view of the aforesaid detailed discussion and conclusion on the amount of addition as unexplained investment u/s 69 of the IT Act 1961 in respect of parties having following accounts appearing is also made in the hands of the assessee on protective basis for Assessment Year 2008-09 as per the details given in the following table:- S. Name Business Bank A/c No. Name of the Bank A.Y. Total Credit Entries N Concern comprising Cash/ 0. RTGS etc. 1 Anil Sita Steel 05350500 United Bank of India 2003- 5000 Sharma 15251 6/90, VVEA, Pdam Singh 03 Prop. Road, Karol Bagh, New Delhi- 110005

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12)

2 Dev Kant Tirupati ' ' 4166002100' Punjab National Bank 2008- 0 Vashishtha Associates 018616 C-3/9, Prashant Vihar, 09 Prop. Delhi-85 3 Rajeev Balaji Enterprises 1872021000 0 UCO Bank Rohini, Delhi-. 2008- 611000 Kumar 595 110085 09 Prop. 4 Rajiv Balaji Enterprises. 3710102000 0 Axis Bank Vikas Surya 2008- 96311107 Kumar 4015 Plaza, 09 Prop. . 'Community Centre, D.C. Chowk, Sectcr-9, Rohini, Delhi-85 5 Rajiv Yojana Engineers 0876113100 Oriental Bank of Commerce 2008- 0 Kumar & Associates 2104 LU Block, Pitampura, Delhi- 09 Prop. 88 . 6 Rajiv Sai Enterprises 3945010102 8 Union Bank of India 2008- 20341675 Kumar 2099 Mangolpur Khurd, Delhi-83 09 Prop.. |7 Rajiv Deep Enterprises 0637002100 0 Punjab National Bank 2008- 0 Kumar 53085 B-23, Ashok Vihar Phase-I, 09 Prop. Delhi- 110052 1 8 ! Rama Jain Vinayak 1872021000 0 UCO Bank Rohini, Delhi- 2008- 210980484 Prop. Industries 557 110085 09 9 Rama Jain Vinayak 0587041000 Andhra Bank C-33, 2008- 19949937 Prop. Industries 13397 Lawrence Road, Delhi- 09 110035

10 Sanjay Kumar Param 0637002100 0 Punjab National Bank 2008- 0 Singh Prop. Enterprises 53535 B-23, Ashok Vihar Phase-I, Delhi- 09 110052 11 Sanjay Prop. Yojana Engineers & 4104115000 00 The Karur Vysya Bank Ltd 2008- 15326615 Associates 6233 Rohini, Delhi-85 09 12 Sanjay Prop. Royal Sales 1872020000 UCO Bank 2008- 303301580 0 300 Rohini, Deihi- 110085. 09 13 Sanjay Prop. Everest 0876113100 Oriental Bank of Commerce LU Block, 2008- 0 International 2364 Pitampura, Delhi- 88 09

14 Sanjay Prop. Rima Trading Co. 4166002100 0 Punjab National Bank 2008- 35206169 16113 C-3/9, Prashant Vihar, Delhi-85 09

15 Sanjay Prop. M.S. Enterprises. 0-197200000 0 Kotak Mahindra Bank 2008- 0 843 Sec.-8, Rohini, Delhi-85. 09 16 Suresh Kumar Paras Sales Corporation 4104115000 00 The Karur Vysya Bank Ltd Rohini, 2008- 0 Prop. 7691 Delhi-85 09 17 Vinod Kumar Yojana. Engineers & 1872020000 0 UCO Bank Rohini, DeLhi- 110085 2008- 115745935 Prop. Associates ; 303 09 ' TOTAL 817779502

It is pertinent to mention that addition on amount of credit entries shown in the aforesaid table in hands of the parties having bank account as appearing in the aforesaid table is also to be made as unexplained investment u/s 69 of the Act in their respective assessment for the AY 2008-09 on protective basis. (Addition of Rs. 817779502/- on protective basis) 8. Addition in respect of commission on protective basis

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12)

Similarly in view of the aforesaid detailed discussion and conclusion the amount of addition made on account of commission income in respect of following parties having 17 bank accounts out of 25 bank accounts appearing in table-1, 2 and 3 above is also added in the hands of the assessee on protective basis for the AY 2008-09 as per the details are given in the following table:- s. Name Business Bank A/c No. Name of the Bank A.Y. Total Credit Amount N Concern Entries of 0. comprising Commiss Cash/ ion @ 1% RTGS etc. ... 50. 1 Anil Sita Steel 05350500 United Bank of India 2003- 5000 S.harma 15251 6/90, WEA, Pdam Singh • 09 Prop. Road, Karol Bagh, New Dellii-110005 2 Dev Kant Tirupati 416600210 00 Punjab 2008- 0 0 Vashishtha Associates 18616 National Bank C-3/9, 09 Prop. Prashant Vihar, Delhi- 85 3 Rajeev . .... Balaji 187202100 00 UCO Bank Rohini, Delhi- 200309 611000 6110 Kumar . Enterprises. 595 110085 Prop. 4 Rajiv Balaji 371010200 00 Axis Bank Vikas Surya 2008- 96311107 963111 Kurnar Enterprises 4015 Plaza, Community Centre, 09 Prop. D.C. Chowk, Sector-9, Rohini, Delhi- 85 '

5 Rajiv Yojana 087611310 Oriental Bank ofCommerce 2008- 0 i Kumar .. - Engineers. & 02104 LU Block, Pitampura, 09 0 Prop. Associates Delhi-88

6 Rajiv Sai 394501010 28 Union Bank of India 2008- 20341675 203417 Kumar Enterprises 2099 Mangolpur Khurd, Delhi- 09 i Prop. 83 7 Rajiv Deep 063700210 00 Punjab 2008- 0 0 Kumar Enterprises 53085. ; National-Bank B-23, Ashok 09 Prop. Vihar Phase-I, i Delhi- I 110052 j 8 Rama Jain Vinayak 187202100 UCO Bank Rohini, Delhi- 2008- 210980484 2109805 Prop Industries 00 557 110085 09

S. Name Business Bank A/c Name of the A.Y. Total Amount N Concern No. Bank Credit of o. Entries Commiss comprising ion @ 1% Cash/ 1 Anil Sita Steel 05350500 United Bank 2008- 5000 50 RTGS etc. Sharma 15251 of India 09 Prop. 6/90, WEA, Pdam Singh Road, Karol Bagh, New Delhi-110005 2 Dev Kant Tirupati 416600210 Punjab 2008- 0 0 Vashishtha Associates 00 18616 National 09 Prop. Bank C-3/9, Prashant Vihar, Deihi- 85 Page | 35

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) 3 Rajeev Balaji 187202100 UCO Bank 2008 09 611000 6110 Kumar Enterprises. 00 595 Rohini, Prop. Delhi- 110085 4 Rajiv Balaji . 371010200 Axis Bank 2008- 96311107 963111 Kurnar Enterprises 00 4015 Vikas Surya 09 Prop. Plaza, Community Centre, D.C. Chowk, Sector-9, Rohini, 5 Rajiv Yojana 087611310 Oriental 2008- 0 0 Delhi- 85 ' . Kumar .. - Engineers & 0 2104 Bank 09 Prop. Associates ofCommerce LU Block, Pitampura, ' 6 Rajiv Sai 394501010 Union Bank 2003- 20341675 203417 Delhi-88 Kumar Enterprises 28 2099 of India 09 Prop. Mangolpur Khurd, Delhi- 83 7 Rajiv Deep 063700210 Punjab 2008- 0 0 Kumar Enterprises 00 53085. National- 09 Prop. Bank B-23, Ashok Vihar Phase-1, 8 Rama Jain Vinayak 18720210 UCO Bank 2008-09 210980484 2109805 Delhi-110052 Prop. Industries 0 00 557 Rohini, Deihi- 110085 It Is pertinent to mention that commission income @1% of amount of credit entries of the parties having bank account as appearing in the aforesaid table is also to be made in their respective assessment for AY 2008-09. (Addition of Rs. 8177795/- on protective basis)

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) the assessee on protective basis. However with respect to the commission income. He held that the commission income chargeable to tax should be 0.75% against 1% adopted by the learned assessing officer. He dealt with the whole issue as under:- “4.1 An action u/s 132 of the Act was carried out in the appellant’s case on 19/05/2010. The said action was in consequence to search and survey operations conducted in the case of Valley Iron and Steel Co Ltd (VISCO) and Gee Ispat (GI Group) group of cases on 07/01/2010. In the assessment order, it is stated that during the search and survey actions in the case of the said two groups, it was found that the appellant was providing accommodation entries to the said two groups through various companies which were under his direct or indirect control. These entities were shown as consignment agents of the companies of the said groups. These entities are supposed to have helped the two groups in their unaccounted business as well as in reducing the profit margin on the recorded transactions. The relevant paragraph (the last Para on Page-6 of assessment order for A.Y.2007- 08) giving details, as to how the companies under the direct or indirect control of the appellant played their roles, is reproduced below. “M/s VISCO Ltd and Gee Ispat groups sell major part of the goods in cash and bring back part of this cash in their books of accounts with the help of the consignment/commission agents. Most of the concerns which have been shown as consignment agents by M/s VISCO Ltd are concerns which actually do not perform any real business but have been used as conduits to account for only part of the cash sale proceeds. M/s VISCO Ltd used to give these so-called consignment agents cash and who used to deposit this cash in their bank accounts and issue cheques, Pay orders or RTGS as per the requirement of M/s VISCO Ltd. A number of bank accounts of different consignment agents have been obtained directly from banks and examined. On examination of these bank accounts, it is noticed that all the bank accounts of the so-called consignment agents huge amount of cash has been deposited and payment made through check, DD/Pay order and RTGS directly or indirectly to M/s VISCO Ltd. Sometimes cash deposited in one bank account is transferred to other bank accounts of the associate concerns by cheque or through RTGS to create layers between the origin and destination before transferring the amount of cash to these groups.” 4.2 In the order, the AO has given the details of the statement given by one Mr Rajeev Kumar during survey proceedings u/s 133 A of the IT act. The AO states in the last para of Page-5 that Mr. Rajeev Kumar is the proprietor of M/s Sai Enterprises, M/s Balaji Enterprises, M/s Yojana Engineers and Associates and M/s Deep Enterprises. The bank accounts opened in the names of these entities are supposed to have Page | 37

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) been used to provide accommodation entries to the companies of the the names of the two proprietary concerns namely M/'s Sai Enterprises and M/s Balaji Enterprises, have been opened by him on the instructions of the appellant and that he was not doing any actual business of sale and purchase of material in these concerns. He has claimed to have handed over all the blank cheque books, duly signed by him, to the appellant and that he was only receiving a salary of Rs. 10,000/-per month. He is supposed to have stated that he was not aware of the entries in the bank accounts regarding deposit of cash and payments through the cheques in the said bank accounts and that it was known to the appellant only. The AO also states in the same paragraph that, Mr Rajeev Kumar has not disclosed the names of M/s Yojana Engineers and Associates and M/s Deep Enterprises which are also operating from the same address and he has been shown as proprietor of the said concerns. 4.3 Based on the above information, the AO has concluded at second para on Page-6 that, all the four above-mentioned concerns, of whom Mr Rajeev Kumar is the proprietor, are directly or indirectly controlled by the appellant and that these concerns have been just issuing sale and purchase bills to facilitate M/s VISCO Ltd in its unaccounted business. 4.4 The AO has narrated at Page-6 and 7, the procedure followed by the appellant in providing accommodation entries. The AO also mentions, in the assessment order, about the information given by Mr Gaurav Gupta, nephew of the appellant, Mr Promod Kumar Gupta, brother of the appellant and Mr Rishu Gupta, son of the appellant in statements on oath recorded during action u/s 132. In their statements all them on the direction of the appellant and that everything was known to the appellant only. 4.5 The assessment order also gives details of the statement given by the appellant recorded u/s 131 on 18/03/2013. In the said statement the appellant has admitted to have provided accommodation entries acting as consignment agent of VISCO and Gee Ispat Private Limited. He has also stated in the said statement that he was receiving commission of Rs. 100/-per metric ton of steel. In the same statement he has also stated that he has utilised eight bank accounts mentioned in his letter dated 23/01/2013 for providing the accommodation entries. These are the bank accounts opened in the names of the proprietary concerns of the Appellant, his son, brother and his nephew. He has also stated that he has provided a detailed note with his letter dated 06/03/2013 on the modus operandi followed by him. 4.6 It is noted here that the assessment order gives description about the four proprietary concerns in the names of Mr Rajeev Kumar and the concerns which are in the names of the appellant and his close family members including appellant’s brother, nephew and son. However, the AO has obtained the account statements of 25 bank Page | 38

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) accounts which are in the names of certain persons who are neither the close family members of the appellant nor Mr Rajeev Kumar. The list of bank accounts in different proprietary names is given in the Table - 1 at Page- 3 of the assessment order. The AO has thereafter made the following four types of additions to the total income of the appellant by holding that the appellant is linked to all the 25 bank accounts which have been 1. The AO has treated all the credit entries in the eight bank accounts opened in the names of 7 proprietary concerns belonging to Pawan Gupta (the appellant), Rishu Gupta (the son of appellant), Pramod Kumar Gupta (brother of appellant) and Gaurav Gupta (nephew of appellant) as unexplained investment u/s 69 of the Act and assessed the same on protective basis. 2. 1% of the amount added at serial number 1 above has been held as commission income of the appellant on substantive basis. 3. The AO has treated all the credit entries in the remaining 17 bank accounts as unexplained investment u/s 69 of the Act and assessed the same on protective basis. 4. 1% of the amount added at serial number 3 above has been held as income of the appellant on protective basis. 4.7 Thus the issues to be decided in the appeal are whether the appellant is liable to be assessed on protective basis for the credits appearing in the 25 bank accounts of the proprietary concerns which have been held by the AO to be those which are directly or indirectly controlled by or managed by the appellant. The second issue is what is the rate to be applied for computing the commission supposed to have been earned by the appellant in respect of the accommodation entries provided by him. Thirdly whether the appellant is liable to be held accountable even in respect of 17 of the 25 bank accounts which have not been owned up by the appellant. 4.8 The AR has made detailed written submissions and argued that the appellant has himself admitted on oath that he was providing accommodation entries to VISCO Ltd and Gee Ispat groups. However these accommodation entries were provided only through eight bank accounts belonging to the proprietary concerns of his family members. He was not aware of the other 17 bank accounts which have also been considered by the AO for making additions in the hands of the appellant. He submitted that there are no evidences linking the said 17 bank accounts with the appellant. The assessment order is also silent about the linkage of the appellant with the 17 bank accounts. He submitted that the statement of Mr Rajeev Kumar has never been confronted to the appellant. He submitted that the statement of Rajeev Kumar was not reliable as the same was not confronted to the appellant. Further even if one takes the statement of Mr Rajeev Kumar Page | 39

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) as true, for the argument sake, that would only explain five accounts which are in the names of the four proprietary concerns of Mr Rajeev Kumar. Thus, the question of making the appellant accountable even for the bank accounts not belonging to him and never owned up by him and without any evidence on record, should not arise. 4.9 As regards assessing the entire credits into the bank accounts as unexplained investment u/s 69, the AR has argued that it is not in dispute that the appellant was a mere accommodation entry provider. This is a fact which has been admitted by the appellant. The AO also admits the same fact. Thus there is no dispute that the appellant is only an accommodation entry provider. The AO also does not dispute that the appellant received cash from VISCO Ltd and Gee Ispat group and issued cheques/DDs/RTGS in lieu of the cash received. When the AO he has no basis for holding the entire such amount as unexplained investment u/s 69 even on protective basis. He has further submitted that the AO himself admits in the assessment order that, on the basis of the search and survey findings and admissions by the appellant, major group and that M/s VISCO Ltd has moved an application before the Honorable settlement commission for all the years involved. Since the ultimate beneficiaries have been already assessed and there is no dispute between the AO and the appellant about the ownership of the amount credited into the bank accounts, the addition made to the total income even on protective basis was bad in law. He therefore argued for deleting all the protective additions. As regards assessing commission income at the rate of 1 % of the amount credited into the bank accounts, the AR has submitted that in the sworn statement made before the AO the appellant had categorically stated that he had received Rs. 100/- per metric tonne of steel as his commission and even TDS has also been made on the said amount. He therefore argued that the rate adopted by the AO was uncalled for. The AR argued that there is no material to show that the appellant received Commission at the rate adopted by the AO. Therefore, he prayed that the addition made only based upon conjunctures and surmises should be deleted. 4.10 The AR also argued that the assessments have been completed without issuing notice u/s 143(2) and hence the proceedings are bad in law. In order to ascertain whether notice u/s 143(2) of the act was infact issued in the appellant’s case or not, a remand report was called for from the AO vide this office letter dated 27/06/2013 which has remained unanswered. 4.11 It is observed that the AO had not specifically mentioned, in whose hands, the substantive additions are being made in respect of the protective additions made in the hands of the appellant. Further from the assessment order it was not clear as to why the said 17 bank accounts have been held to be those connected to the appellant. It was also not clear whether the statement of Mr Rajeev Kumar was confronted to the appellant or not. Therefore a remand report was called for from the AO vide this office letter dated 11/09/2013 seeking Page | 40

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) above clarifications. The contents of the said letter seeking remand report is reproduced below for ready reference. Sub: Seeking remand report during appeal proceedings in the cases of : Sh. Pawan Kumar Gupta A.Ys 2005-06 to 2011-12, Sh. Rishu Gupta A.Ys. 2009-10 & 2010- 11, Sh. Gaurav Gupta A.Ys 2009-10 & 2010-11, Sh. Pramod Kumar Gupta A.Ys 2008-09, 2009-10 & 2010-11- reg- 1. In the above appeals, the AR has submitted that the statement of Sh. Rajiv Kumar, which has been made use of in the assessment of Sh. Pawan Kumar Gupta, has not been confronted to the appellant. This fact may be verified from the record and a finding may be given by the AO as to whether the statement of Sh. Rajiv Kumar was confronted the appellant any time or not 2. In the assessment order of all the 4 persons for the respective assessment years mentioned in the subject above, the additions have been made on protective basis. The AO is requested to verify the records & give a finding as to in whose hands the substantive addition has been made for the respective assessment years. 3. In the assessment orders of the above said persons, it has been mentioned that there were 25 bank accounts which were used for providing accommodation entries to M/s Gee Ispat Pvt. Ltd. and Valley Iron Ltd. From the assessment order of Sh. Pawan Kumar Gupta it emerges that he has owned up only 8 of the 25 bank accounts. Sh. Rajiv Kumar has alleged that another 4 bank accounts are managed by Sh. Pawan Kumar Gupta directly or indirectly (e.g. referred to paragraph 2 on Page No. 6 of assessment order of Sh. Pawan Kumar Gupta for A.Y. 2005-06). However, while making addition the credit entries of all the 25 bank accounts have been added in the hands of the Sh. Pawan Kumar Gupta and his family members. The AO is requested to mention the reasons for considering the credit entries of the balance 13 bank accounts also in the hands of Sh. Pawan Kumar Gupta. 4. From the assessment order in the above persons, it is not clearly brought out as to what extent of evasion of profit or income was achieved by M/s Gee Ispat Pvt. Ltd. and Valley Iron Ltd. through the so called accommodation entries provided by the above mentioned appellants. It is Page | 41

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) not clear whether the entire Rs. 928 crores mentioned at para 3 of page 13 of the assessment order in the case of sh. Pawan Kumar Gupta for A.Y. 2005-06 amounted to undisclosed income and if so whether the same has been taxed in the hands of any assessee on substantive basis. It may be noted that the said entire Rs. 928 crore has been assessed on protective basis in the hands of Sh. Pawan Kumar Gupta for different assessment years. 5. The AO is requested to submit his report on the above issues by 25/09/2013.

4.12 The AO has submitted his remand report vide his letter dated 05/12/2013 which has been endorsed by the additional CIT vide her letter dated - 06/12/2013. In the said letter, the AO has informed that the statement of Mr Rajeev Kumar has been confronted to the appellant in the questionnaire for A.Y.2011-12 dated 14/12/2012 at Question No. 16 and also vide questionnaire dated 26/09/2012. As regards the details of the persons in whose hands the substantive addition has been made, the AO has informed that in respect of the credits into the 25 bank accounts, no further substantive additions has been made in the hands of any other assessee. However respect of the commission income at the rate of 1% on the credits into the 17 bank accounts, the addition has been made in the hands of the respective holders of accounts. 4.13 As regards the query of this office as to the reason for holding all the 25 accounts as linked to the appellant, no worthwhile information has been submitted. The AO has merely reproduced the contents of the assessment order which in any way are of no use in deciding the linkage of the appellant with the said accounts. The AO has reported that no addition on substantive basis has been made in either of the groups (VISCO Ltd a group and Gee Ispat private limited group) on the basis of transactions with the Mr Pawan Kumar Gupta and others. The AO also stated that many transactions in the bank accounts have been made to the parties other than VISCO Ltd and Gee Ispat private limited. The AO, during the remand proceedings, requested the AR to provide PAN details, addresses and nature of transactions with the said parties. The AR informed the AO that the bank accounts of the appellant and his associates whose transactions have been added in the hands of the appellant and his associates on protective basis were maintained to provide accommodation entries by way of cheque payments to those two companies only. There may be some instances where the payments by cheques/ RTGS might have been made to other parties and such payments are under instruction and for the benefit of such parties only. The AO therefore requested this office to direct the AR to provide all the relevant details such as PAN, address and nature of transaction with the parties, other than those two companies, so that the necessary information may be shared with the jurisdictional Page | 42

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) assessing officer of such parties for verification and necessary action. The relevant report of the AO is reproduced below. (Through Addl. CIT, Central Range- 3, New Delhi). Sir, Subject: Seeking remand report during appeal proceedings in the cases of Sh. Pawan Kumar Gupta A.Y. 2005-06 to 2011-12, Sh. Rishu Gupta A.Y. 2009-10 & 2010-11, Sh. Gaurav Gupta A.Y. 2009-10 & 2010-11 and Sh. Pramod Kumar Gupta A.Y. 2008-09, 2009-10 & 2010-11- reg- Kindly refer to letter F.No. CIT(A)-XXXI/Remand Report/13- 14/217 & 247 dated 11/09/2013 and 08.10.2013 respectively on the subject mentioned above. In this connection, as required the para-wise remand report is submitted as under:- 1. In the above appeals, the AR has submitted that the statement of Sh. Rajiv Kumar ……………was confronted the appellant any time or not. Statement U/s 132(4) /133A of the Income Tax Act, 1961 of Sh. Rajiv Kumar, Aged 34 Years S/o Chhote Lai Resident of 142, B-3 Sector-6, Rohini New Delhi, was recorded on 25.03.2010 at 111, first Floor Vardhman Grand Plaza, Sector-3, Rohini, Delhi-110085 in the case of M/s Balaji Enterprises and Rima Trading & Sai Enterprises and stated that he is working with Pawan Gupta who is Steel Dealer at Wazirpur Indl. Area New Delhi. I (Rajiv Kumar) draw salary of Rs. 10,000/- per month & working with him for the last one and half year. Two firms namely Balaji Enterprise & Sai Enterprises and Bank A/Cs were opened / operated by me on behalf of Sh. Pawan Kumar Gupta and all signed blank cheq+ues are handed over to Sh. Pawan Gupta and all above mention cheques are transaction by Sh. Pawan Kumar Gupta without my knowledge. During the course of assessment proceedings, the statement of Rajiv Kumar has been confronted to Sh. Pawan Kumar Gupta vide Question no.16 of questionnaire for A.Y. 2011- 12 dated 14.12.2012 and also vide questionnaire dt. 26.09.2012. 2. In the assessment order, of all the 4 persons for the respective assessment year substantive addition has been made for the respective assessment Years. In the case of Sh. Pawan Kumar Gupta, the following types of additions have been made:

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) (i) Credit entries in 08 bank a/c s in the name of the assessed and his family members- addition made on protective basis as unexplained investment u/s 69 of the Act. No substantive addition has been made (ii) Addition in respect of commission income on amount of total credit entries in 08 bank a/cs- Addition made on substantive basis (iii) Credit entries in 17 bank a/cs - addition made on protective basis as unexplained investment u/s 69 of the Act. No substantive addition has been made. (iv) Addition in respect of commission income on amount of total credit entries in 17 bank a/cs- Addition made on protective basis. Substantive addition has been made in the hands of the respective holders of the accounts. In the case of Sh. Pramod Kumar Gupta, the following types of additions have been made: (i) Credit entries in bank a/c s in the name of the assessee - addition made on protective basis as unexplained investment u/s 69 of the Act. No substantive addition has been made (ii) Addition in respect of commission income on amount of total credit entries in bank a/cs- Addition made on protective basis. Substantive addition has been made in the hands of Sh. Pawan Kumar Gupta. In the case of Sh. Gaurav Gupta, the following types of additions have been made: (i) Credit entries in bank a/c s in the name of the assessee - addition made on protective basis as unexplained investment u/s 69 of the Act. No substantive addition has been made (ii) Addition in respect of commission income on amount of total credit entries in bank a/cs- Addition made on protective basis. Substantive addition has been made in the hands of Sh. Pawan Kumar Gupta . In the case of Sh. Rishu Gupta, the following types of additions have been made: (i) Credit entries in bank a/c s in the name of the assessee - addition made on protective basis as unexplained investment u/s 69 of the Act. No substantive addition has been made (ii) Addition in respect of commission income on amount of total credit entries in bank a/cs- Addition made on

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) protective basis. Substantive addition has been made in the hands of Sh. Pawan Kumar Gupta. 3. In the assessment orders of the above said persons, it has been mentioned that there were 25 bank accounts which were used for providing accommodation entries considering the credit entries. The 8 bank account owned/accepted by Shri Pawan Kumar Gupta and his relatives and balance 17 bank accounts also treated that it is operated and managed by Shri Pawan Kumar Gupta and added in the hands of Sh. Pawan Kumar Gupta. A search & Seizure and survey operation was carried out in the case of M/s. Valley Iron & Steel Co. Ltd. (VISCO) group and M/s. Gee Ispat Pvt. Ltd, group of cases on 07.01.2010. From the seized record of the above two concerns, it was noticed that Sh. Pawan Kumar Gupta is the main consignment agent of the group who is controlling a number of paper concerns directly or indirectly in his own name, in the relative and friends. To verify the transactions made by VISCO group and Gee Ispat group through Sh. Pawan Kumar Gupta & others, summons was issued to sh. Pawan Gupta but he deliberately avoided his presence before the ADIT(Inv.) Unit- IV(2), New Delhi. For this reason a searched seizure operation was under taken in his case on 19.05.2010. 8 Bank A/Cs, out of 25 Bank A/Cs, are directly operated by Sh. Pawan Gupta and his family member. This is evident from the statements of Sh. Gaurav Gupta, Sh. Pramod Kumar Gupta and Sh. Rishu Gupta recorded during the course of search/survey action and the statement of Sh. Pawan Kumar Gupta recorded on 18.03.2013 during the course of assessment proceedings. Others are directly operated by friends of his family member on behalf of Sh. Pawan Kumar Gupta. It is proved from the statement of Sh. Rajiv Kumar wherein he has stated that all bank A/Cs in the name of Rajiv Kumar are indirectly controlled by Sh. Pawan Kumar Gupta. Therefore, it is revealed that all the 25 Bank A/Cs in the name of different concerns are managed / controlled by Shri Pawan Kumar Gupta. Hence, the amounts of transactions in all the 25 bank a/cs have been added in the income of Sh. Pawan Kumar Gupta. 4. From the assessment order in the above persons, it is not clearly brought out as to what extent of evasion of profit or Rs.928 crores has been assessed on protective basis in the hands of Sh. Pawan Kumar Gupta for different assessment years. The assessments in M/s Gee Ispat Pvt. Ltd. were completed u/s 143(3) of the Act on 29.12.2011. In the case of Page | 45

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) M/s Valley Iron Ltd. order u/s 245D(4) has been passed by Hon’ble Income Tax Settlement Commission. The perusal of the orders shows that no addition on substantive basis has been made in either of the cases on the basis of transactions with Sh. Pawan Kumar Gupta and others. However, in this regard it is stated that the bank A/Cs of the assesee were perused. From their perusal, it is revealed that many transactions have been made with parties other than M/s Valley Iron Ltd and M/s Gee Ispat Pvt. Ltd. On the directions of the Ld. CIT (A), the AR of the assessee appeared before the undersigned. The AR of the assessee was provided a list of some parties on a sample basis, other than M/s Valley Iron Ltd and M/s Gee Ispat Pvt. Ltd. appearing in the bank A/Cs of the assessee. He was asked to provide the PAN, address and nature of transactions with the said parties. The AR was also asked to furnish the relationship of the parties with M/s Valley Iron Ltd and M/s Gee Ispat Pvt. Ltd, if any. In the reply submitted by the assessee (copy enclosed), the assessee has submitted that “In this connection it is submitted that the bank accounts of the appellant and his associates whose transactions have been added in the hands of the appellant and his associates whose transactions have been added in the hands appellant on protective basis were maintained to provide accommodation entries by way of cheque payments to those two companies only. There may be some instances where the payments by cheques/ RTGS might have gone to other parties but such payments are under instructions and for the benefit of such parties only.'” The assessee has not provided any evidence in support of its contention as to how the payments have been made under instructions and for the benefit of M/s Valley Iron Ltd and M/s Gee Ispat Pvt. Ltd. Hence the contention of the assessee cannot be accepted. In this regard, it is pertinent to mention that the assessee has himself accepted that he was in the business of providing accommodation entries. It is necessary that the assessee provides the PAN, address and nature of transactions with the parties to which accommodation entries have been provided by the assessee. Hence, it is requested that the assessee may be directed to furnish the PANs, addresses and nature of transactions with the parties appearing in the bank A/Cs controlled directly or indirectly by the assessees so that the necessary information may be shared with jurisdictional Assessing Officers of such parties for verification and necessary action. Yours faithfully, (Rajat Mittal)

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) Deputy commissioner of Income Tax. Central circle-5, New Delhi 4.14 In the rejoinder, the AR submitted that he was not aware that the statement of Mr Rajeev Kumar was confronted to the appellant as he was not the one who had represented before the AO and that his records did not contain the relevant details. However, he has submitted copies of the replies given by the appellant to the questionnaire dated 26/09/2012 and 14/12/2012 and pointed out that in the reply dated 06/03/2013, on page 3 of their reply at serial number 16 of PART-A, the appellant had categorically denied that he had ever controlled the business of the proprietary concerns of Mr Rajeev Kumar. The AR also pointed out that the appellant had also requested for providing an opportunity to cross examine Mr Rajeev Kumar. The relevant reply given by the appellant to the AO at serial number 16 of their reply dated 6.03.2013 is reproduced below. 16. The statement of Shri Rajeev Kumar proprietor of M/s Sai Enterprises, M/s Deep Enterprises, M/s Balaji Enterprises is denied. I have never controlled the business of these concerns. He was never under my employment. An opportunity may be provided to me for cross examination. 4. 15 The AR also pointed out that the said query has been raised only in respect of A.Y.2010-11 and A.Y.2011-12. He also stated that the AO had only provided a gist of the statement of Mr Rajeev Kumar and not the statement itself. Further, after receiving the reply from the appellant, the AO did not proceed to provide any opportunity of cross- examination. In addition, in the statement of the appellant recorded on 18/03/2013 (Subsequent to the reply above mentioned reply dtd 06.03.2013) the AO never showed any inclination to enquire about the benami concerns in the name of Rajeev Kumar. The failure of the AO to make enquiry about the claim of Mr Rajeev Kumar while recording the appellant’s statement on oath lead to unequivocal inference that AO by his omission gave a positive impression that the query raised earlier in the questionnaire stood satisfied and no more action was required from the appellant. He argued that, from the facts, it is clear that the AO has held the bank accounts of the proprietary concerns of Mr Rajeev Kumar to be linked to the appellant without following the principles of natural Justice and hence the said action should not be confirmed. 4. 16 With regard to the issue of making protective additions, the AR submitted that the assessments of the beneficiary companies namely Gee Ispat Private Limited and Valley Iron and Steel Co Ltd have attained finality so far as exercise of powers of the Dept in the face of available evidences are concerned. There was absolutely no case made out by the AO that the appellant had, besides providing accommodation entries to the above two companies, also carried out any other activity. Page | 47

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) It was therefore imperative on the part of the AO that he did not make any protective addition in the hands of the appellant so far as the transactions with Gee Ispat private limited is concerned. He also informed that the proceedings before the honourable settlement commission in the case of Valley Iron and Steel Co Ltd had also attained finality after the order u/s 254D(4) of the IT act 1961. In view of this he submitted that there was no justification for taking recourse to protective assessment when the Dept has made whatever additions it deemed if fit, considering all the material available on record including the material concerning the activity of providing accommodation entries by the appellant. 4.17 With regard to the quantum of addition made under the head commission earned by the appellant at the rate of 1% of the credit entries in the bank accounts, the AR reiterated his arguments that the appellant has stated on record (in his statement given to the AO u/s 131) that he had only received Rs. 100/-per tonne of steel. The AO has not found any material to counter the above facts. The TDS certificates are part of the submissions already made. 4.18 With regard to additions made in respect of all the 25 bank accounts, the AR has submitted that as per the AO there were 25 bank accounts found during action u/s 132 in the premises of the two beneficiary groups. The AO’s statement that there materials to justify that all those accounts were controlled/operated by the appellant and his family members was completely incorrect. There were no material to arrive at such a conclusion. The AO has also not given, any reference to such materials. There is no dispute that eight of the 25 bank accounts are controlled/managed by the appellant. However in respect of the remaining 17 accounts there are no evidences to link them with the appellant except for the statement of Mr Rajeev Kumar. The appellant has already denied the contents of the statements of Mr Rajeev Kumar. The AO has not given any opportunity to cross examine him despite being asked to do so. Even otherwise, it is only five accounts of which Rajeev Kumar which could have been linked to the appellant. However the AO has not pointed out any evidences to show that the remaining 12 accounts were also controlled/managed by the appellant. In view of this there was no case for holding all the 25 bank accounts as controlled /managed by the appellant. 4.19 As regards the AO’s report that no addition has been made on substantive basis in the assessments of Gee Ispat Private Limited and in the case of Valley Iron and Steel Co Ltd, the AR pointed out that the said assessments have attained finality. The proceedings in those cases completed on the basis of material found in the course of search on their respective premises. Therefore there remains no reason for grievance on the part of the Dept which requires further redresal in those cases by providing mechanism for taking action on the basis of protective assessment in the hands of the appellant.

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) 4.20 The AR further submitted that the remand report points out to stray incidences when payments from the bank accounts through cheques/RTGS as have been made to other parties also. He had explained to the AO, during the remand proceedings, that such payments were made to the other parties on the instructions of such beneficiary companies only. The said explanation was in line with the findings of the AO that all the transactions of the appellant are part of the accommodation entries provided to the beneficiary companies named as above. It was further explained before the AO during the remand proceedings that the appellant had no relation with such parties and to say that these are independent transactions of the appellant is something which is contrary to the crux of the findings of the AO given in the assessment order. The finding of the AO was duly supported with the material on record and the same has been accepted by the Dept in the statements recorded and in the information given during the assessment proceedings. There is absolutely no material to suggest that there is any other business activity of the appellant in these years except for providing accommodation entries to the said two beneficiary companies. In view of this, the AR argued, that the request of the AO to require the appellant to furnish the particulars of such parties cannot be accepted for the following two reasons. Firstly the appellant has never been in interaction with such parties. Secondly the Dept has not discovered any material or evidence to support that the appellant has conducted any other activity except to provide accommodation entries to the beneficiary companies under reference. The new stand of the AO in the remand report is inconsistent or rather contrary to the finding of the AO on the basis of which the assessments have been made in the appellant’s case including his family members. 4.21 I have considered the submissions of the AR, assessment order and the remand report. The various grounds in appeal are adjudicated as under. 5. Ground No. 1 5.1 The first ground of appeal is legal and general ground. The appellant has challenged the validity of the assessment order arguing that the assessment has been completed without issue of notice u/s 143(2) which is an essential requirement before completing assessment u/s 143(3). He has relied upon the decision of the Apex Court in the case of ACIT Vs. Hotel Bluemoon (2010 321 ITR 362 (SC)) and other decisions of Delhi High Court in this regard. It is noted that the above decision of the Hon’ble Supreme Court in Hotel Bluemoon (supra) has been distinguished by the Hon’ble Delhi High Court in the case of Ashok Chadha vs. ITO 337 ITR 399 (Del.). It was held in this case that in the case of assessment u/s 153 A, the AO need not compulsorily issue notice u/s 143(2) of the Act. Following the jurisdictional High Court’s decision, I do not consider there is any legal infirmity even if no notice u/s 143(2) has not been issued before completing u/s 153A. Therefore, this argument of the assessee is rejected. Page | 49

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) 6. Ground No. 2 6.1 The AO has held the entire credit entries in the said 8 bank accounts as unexplained investment u/s 69 of the Act. It is not in dispute that the appellant has controlled and managed the said eight bank accounts. It is also not in dispute that the appellant has provided accommodation entries through these eight bank accounts. The AO himself has accepted that in the activity of providing accommodation entries, the cheques are issued by the respective bank account holders in exchange for cash received from the beneficiaries of the cheque payments. Once the AO accepts that there is a payment by check against cash received from the parties, it would be open for him to simultaneously hold that the said cash belongs to the bank account holder. However, in case there is a dispute between the AO and the account holder about the source of cash/credits into the bank account, the AO might possibly resort to protective addition in order to create a mechanism by which the interest of the Exchequer is protected. In the instant case, both the appellant and the AO agree that the transactions in question were in the nature of accommodation entries. Both also agree that the beneficiaries are VISCO and GI groups. Both agree that the cash was received by the appellant from the said two beneficiary groups. In this factual matrix, I do not consider that there is any merit in the AO’s action of treating all the credit entries in the said bank accounts as unexplained to be added u/s 69 on protective basis. 6.2 It is noted that the assessment does not give any reasons for making the addition on protective basis. Further, it is also a fact that the assessments at the AO level have attained finality in respect of the two beneficiary companies. The protective addition is resorted to when there is a legal issue on the ownership of the income involved or when explanations/new facts cannot be anticipated in advance. However, in the present case, when both the AO and the appellant categorically agree that the cheques from the bank accounts have been issued only after receiving cash from the beneficiary companies, and the assessments of the beneficiary entities have been finalized, it would be totally contradictory stand of the AO himself, if he also resorts to treat the said cash as unexplained investment to be added u/s 69. In the present case the appellant has given explanation for the credits in his bank accounts which are also accepted by the AO. Hence there could be no basis, for holding the said amounts as unexplained investment. I therefore hold that the action of the AO is a contradiction of his own stand that the appellant received cash from the two beneficiary groups and issued cheques /DDs/RTGS in order to facilitate those companies in their unaccounted business and in reducing the profit margins in their accounted transactions. In view of this, the addition made u/s 69 on protective basis in respect of the eight bank accounts is hereby deleted. The ground on the issue is allowed. 7. Ground No.3

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) 7.1 In this ground, the appellant is agitating against AO’s action in holding that the appellant received commission at the rate of 1% of the total accommodation entries as income. There is no dispute that the appellant has provided accommodation entries through the said eight bank accounts. The dispute is with regard to the quantum of commission/income received by the appellant on such activity. In the assessment order, the AO does not give any reasons or basis for arriving at the figure of 1% as the rate of commission charged by the appellant for providing accommodation entries. The relevant para of the assessment order is reproduced below. 6. Addition in respect of commission income In view of the aforesaid detailed discussion and conclusion, the amount of commission at the rate of 1% on amount of total credit is shown in the following table:- Table.... The amount of commission of Rs. 41346/- i.e. 1% of Rs. 4134628/- as appearing in the aforesaid table is added to the income of the assessee for the A.Y. 2007-08. The addition on account of commission income @1% of the amount of credit entries in the bank account if any, in respect of parties having bank account appearing at sr no 4,5,6 and 8 is also to be made in their respective assessment for the AY 2007- 08. (Addition of Rs. 41346/-) 7.2 It is noted that the AO has simply held that 1% of the amount is the commission income of the appellant. On the contrary, the AR cites the statement of the appellant recorded by the AO u/s 131 on 18/03/2013 wherein he had categorically mentioned that he only received Rs. 100/-per tonne of steel. It is not possible to ascertain the amount claimed to have received by the appellant in terms of percentage of the quantum of accommodation entry provided by the appellant as the price of steel is not a static constant at various points of time. The AR has stated that the value of one metric tonne of steel is taken as Rs.2 lakh approximately. All this is very' vague and not exactly quantifiable. If the ratio of Rs.100 per Rs.2,00,000/- is taken the same comes to 0.05%. Such an amount claimed to have been received by the appellant on which even tax has been deducted at source, is so meagre that, in the given circumstances, it could not be a true statement of facts. The whole activity is a dubious one and meant to help the beneficiaries in reducing their tax liabilities. The transactions are not what they otherwise appeared to be. For being party to such a dubious and illegal transactions, it is not possible to think that the appellant did not receive even 1 % of the amount as commission. The AR’s argument that the appellant was providing accommodation entries in large volume to the same two groups and he was satisfied with whatever he was getting does not appear to be a Page | 51

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) correct statement of affairs. Hence I do not find it appropriate to interfere with the action of the AO in holding that the appellant has received commission at the rate of 1% of the amount involved. On this the AR has argued that if the AO holds 1% to be the rate of commission, the same could not be the net income of the assessee. He would be incurring expenditure on the same and that only the net profit from the same should be brought to tax and not the gross amount. I have considered the AR’s argument. In the given circumstances where the exact facts and figures on the issue are not available on record, it would be necessary to estimate the net profit from the said source. Income, net of all expenses, is taxable. It would therefore be reasonable if the appellant is allowed an expenditure at the rate of 0.25% of the commission amount and addition to the total income is restricted to 0.75% of the amount involved instead of 1% as adapted by the AO. Therefore, AO is directed to re-compute the total addition under this head by taking commission at the rate of 0.75% instead of 1% of the amount. This would take care of the possible expenditure. The ground on the issue is partly allowed. 8. Ground No. 4 8.1 In this ground the appellant is agitating against treating the total credits into the remaining 17 bank accounts as unexplained income of the appellant u/s 69 of the IT act. In the assessment order there are no specific evidences linking all the 17 said bank accounts with the appellant. The Dept is supposed to have discovered 25 bank accounts through which VISCO and GI groups are supposed to have received accommodation entries from the consignment agents. The assessment order gives some indication of linking the proprietary concerns in the name of Mr Rajeev Kumar with the appellant. However, even in that case, the AO himself notes that Mr Rajeev Kumar did not give any information about M/s Yojana Engineers & Associates and M/s Deep Enterprises which were also running from the same address and Mr Rajeev Kumar has been shown as proprietor of the said two entities. Thus what is being linked by Mr Rajeev Kumar to the appellant would be only two of the four concerns which are in the name of Mr Rajeev Kumar. 8.2 It is true that the appellant has been confronted with the adverse statement of Mr Rajeev Kumar during the assessment proceedings. I also note, that during pre-search proceedings, and even on the date of search at the appellant’s premises, the appellant has evaded the tax authorities. The facts narrated in Page-4 of the assessment order show that the appellant intentionally avoided appearing before the tax authorities after the survey action in the case of Mr Rajeev Kumar and search action is in the case of Visco and GI groups. Therefore, the arguments of the AR about the AO not giving opportunity to cross examine Mr Rajeev Kumar has to be taken with a pinch of salt. This is not a case of the assessee not getting adequate opportunities. The appellant had all the time in his command after the search and survey Page | 52

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) operations mentioned above, to come out clean before the Dept. He chose to be away from his premises even on the day of action u/s 132 in his own case. He is stated to have been incontinuous touch with the promoters of VISCO on the day of the said action on his mobile. The transactions in which he was involved are by themselves dubious in nature and the intention is to facilitate others to reduce their tax liabilities. In this background, the reliance of the AO on the statement of Mr Rajeev Kumar taken without any coercion and before being tutored by other members in the loop, cannot be brushed aside merely because of some technical issue. Considering all these factors, I am inclined to believe that the five bank accounts standing in the names of the four proprietary concerns of Mr Rajeev Kumar, namely M/s Sai Enterprises, M/s Balaji Enterprises, M/s Yojana Engineers and Associates and M/s Deep Enterprises were also under the direct or indirect control /Management of the appellant. However in respect of the remaining 13 bank accounts there are no facts or evidences whatsoever in the assessment order that could link them with the appellant who has denied any link with them. Therefore, I do not consider that there are any valid grounds to hold that the appellant was directly or indirectly controlling or managing the said 13 bank accounts. 8.3 As regards the issue of treating the credit entries in the 17 bank accounts as unexplained investment to be brought to tax u/s 69 in the hands of the appellant, it is noted that I have already held (at Ground No. 2 above) that the AO cannot hold the cash introduced in the bank accounts of the accommodation entry provider as unexplained. That would be a stand contrary to the AO’s own stand that the bank account holder used his account for providing accommodation entries and that the payments made by cheques drawn from such accounts are not genuine transactions. Therefore, irrespective of the fact as to whether all the 17 bank accounts or only five bank accounts are linked to the appellant, the credits into these accounts could not have been held as unexplained investment to be brought to tax u/s 69 of the IT Act. Therefore even though I have given a finding that five of the 17 bank accounts did have linkage- with the appellant, I hold that the aggregate credits into the said accounts cannot be held as unexplained investment u/s 69 in the present circumstances. To arrive at this conclusion the reasons mentioned at Ground No. 2 above are equally applicable for the present ground. Thus the ground on the issue is allowed. 9. Ground No.5 9.1 This ground is similar to Ground No. 3 above except that the addition on account of commission income at the rate of 1% is made in respect of the aggregate credit entries in the remaining 17 bank accounts. The assessment order once again does not give any reasons for bringing to tax this amount on protective basis. It does not also mention as to in whose hands the substantive addition is being made. While deciding the said Ground No. 3 above,11 have upheld the action Page | 53

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) of the AO in adopting the rate of commission at 1% of the gross amount. I have also held that the appellant should be allowed 0.25% of the commission earned as expenditure on the gross income. Therefore I have directed the AO to recompute the net addition at the rate of 0.75% instead of 1% of the aggregate credits into the bank accounts. On similar lines a nd for the same reasons, I direct the AO to recompute the addition in respect of commission income at the rate of 0.75% instead of 1% of the aggregate credits into the bank accounts. Since I have held that there are evidences to link only five of the 17 bank accounts to the appellant, the AO is directed to re-compute the commission income only in respect of the said five bank accounts which are in the name of Mr Rajeev Kumar as proprietor of his four above named concerns (namely M/s Sai Enterprises, M/s Balaji Enterprises, M/s Yojana Engineers and Associates and M/s Deep Enterprises). The addition made in respect of the remaining 13 accounts is hereby deleted as there are no evidences on record to link them with the appellant. 9.2 As regards whether the addition made on protective basis should be retained or not, I have noted here that in the remand report dated 05/12/2013 the AO has mentioned that the corresponding substantive additions have been made in the hands of the respective holders of the bank accounts. The assessment order once again does not give any reasons for bringing to tax this amount on protective basis. It does not also mention as to in whose hands the substantive addition is being made. It is not ascertainable as to the fate of the assessments in those cases. It is not known as to whether those persons have come out with any new explanations in this regard. In such circumstances I do not consider it appropriate to delete the said protective addition in the case of five bank accounts standing in the name of Mr Rajeev Kumar. Thus the addition of commission income being confirmed in respect of the five bank accounts shall continue to be on protective basis as done by the AO. To this extent the ground raised by the appellant on the issue is partly allowed.” 11. Therefore revenue is aggrieved with the orders of the learned Commissioner of income tax appeals has preferred an appeal before us for all these years. 12. The learned Commissioner of income tax departmental representative vehemently submitted that the learned CIT appeal has deleted the whole addition under section 69 of the act without finding and verifying whether on substantive basis additions have been confirmed in the hands of those persons are not. She submitted that the beneficiaries in the present case, whether they have been taxed on the above amount or not has not been verified by the learned Commissioner of income tax appeals. She further stated that even though the entries are stated to be accommodation entries in the hands of the assessee’s and rightfully the beneficiaries should have Page | 54

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) been tax. However, it is for the assessee to show who are the beneficiaries and whether they have been assessed on these income or not. She further stated that the assessee must have explained each and every entry in his bank account or in the bank account of its associates to show that the beneficiaries are different then the assessee and the assessee has merely earned the commission income. She further stated that all these bank accounts are though in the name of the different person but the amount is owned by the assessee himself. She therefore stated that the deletion of the addition under section 69 by the learned CIT(A) without first examining whether the addition on the substantive basis has been upheld in the hands of those beneficiaries or not, is not proper. She further stated that if the addition is not finalised in the hands of the beneficiaries than naturally the addition made in the hands of the assessee on protective basis become substantive basis. She further referred to the finding of the learned Commissioner of income tax appeals in paragraph number 6.2 of his order that the assessment at the AO level has had attained finality in respect of the two beneficiaries companies. Without verifying whether in those hands the addition has been made or not, she stated, that the assessee cannot be allowed to go scot-free. Therefore, she stated that the protective addition deleted by the learned CIT(A), is not proper. 13. With respect to the commission income at the rate of 1% of the amount of the commission, she stated that the learned Commissioner of Income Tax (Appeal) has the deleted the 0.25% of the commission as an expenses without having any proof of the expenses incurred by the assessee. Therefore, she stated that on this count the order of the learned CIT(A) is not sustainable. 14. Despite notice to the assessee, none appeared on behalf of assessee. These appeals are pending since 2016 and till to date the assessee has never turned up before the coordinate bench for prosecuting these appeals filed by the revenue. Therefore, the issue is decided on the merits of the case as per the facts available on record. 15. Brief facts shows that the appellant is an individual and had declared income under the head business and profession during the year. The Page | 55

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) search and seizure operation was conducted in the appellant’s case under section 132 of the income tax act on 19/05/2010. During the course of search, it was found that assessee is operating as an accommodation entry provider. He has opened 25 bank accounts in name of different persons in the form of proprietary concerns. In those bank accounts of these proprietary concerns huge cash is deposited and they are transferred either to the group directly or indirectly, through cheques or RTGS. It is found that the beneficiaries in the case of the assessee are VISCO and Gee Ispat Private Limited. The learned assessing officer has also carried a detailed enquiry by obtaining the bank account of these parties. The statement of the assessee under section 131 of the income tax act was also recorded on 18/03/2013, wherein he has confirmed that he has provided accommodation entries to M/s. VISCO and M/s GEE Ispat Private Limited. Therefore, the learned assessing officer has made addition under section 69 of the income tax act in respect of various business concerns having different bank accounts controlled by the assessee. The learned assessing officer has made addition in the hands of the assessee on protective basis. The learned AO made addition on account of one percent of commission on substantive basis in the hands of the assessee. With respect to other bank accounts also the learned assessing officer adopted the same technique and made addition under section 69 of the income tax act with respect to several other persons whose bank accounts were held to be in the control and management of the assessee. The addition was made in the hands of the assessee on protective basis. The learned assessing officer further made addition on protective basis on account of commission at the rate of 1%. with respect to these persons. The learned CIT (A) at para No. 6.1 of his order has dealt with the addition on account of unexplained investment under section 69 of the act wherein he held that the assessment at the AO level have attained finality in respect of the two beneficiary companies. However, he has not given any finding with respect to what is the amount added in the hands of those companies. Even if transactions in general were held to be accommodation entries; it is necessary that the entry operator provides the name of the beneficiaries. Unless the beneficiaries are known Page | 56

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) and the amount is taxed in the hands of the beneficiary, the entry operator naturally cannot be allowed to go scot-free. Because in fact, the amount has been credited in the bank account of the entry operator. If the entry operator justifies that the real beneficiary of these transaction is somebody else then only the addition made in the hands of the entry operator on protective basis gets deleted after finalisation of the assessment in the hands of the beneficiary. In the present process the learned Commissioner of income tax appeals has not given a categorical finding whether the amount has been added in the hands of the beneficiary or not and without doing so, he has deleted the addition in the hands of the entry operator on protective basis. One of the beneficiaries have filed the application before the settlement commission. However the learned CIT(A) has also not verified that the amount offered by them, in the Settlement Commission, includes the above amount, which has been added in the hands of the assessee on protective basis or not. With respect to the other persons, where the learned assessing officer has made addition on account of unexplained investment u/s 69, as well as commission income on protective basis, the learned CIT(A) has not given any categorical finding that whether the amount of addition has been made in the hands of those persons on substantive basis or not. On reading of the order of the learned CIT(A) is apparent that without finding the beneficiaries properly being taxed on the above accommodation entry, the learned CIT(A) deleted the addition in the hands of the accommodation entry provider which was made on protective basis. The identical issue has been decided by the Hon’ble Delhi High Court in case of CIT vs DK Garg in ITA No. 115/2005 dated 04.08.2017, wherein it has been held as under:- “13. There have been numerous cases before the AO, CIT (A), the ITAT and for that matter even before this Court, where the question involved concerns the treatment of 'accommodation entries'. Basically, what an accommodation entry provider does is to accept cash from an Assessee and arranges to have a cheque issued from his own account or some other account, usually of 'paper' or fake entities, to make it appear to be a loan or an investment in share capital. The accommodation entry provider usually charges a commission which is deducted upfront. Where the Assessee is unable to explain the source of such credit in his Page | 57

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) account - i.e. by demonstrating the identity of the provider of the credit, the creditworthiness of such entity, and the genuineness of the transaction - the credit entry is treated as unexplained and the income is treated under Section 68 of the Act as the income of the Assessee. 14. In cases where the Assessee discharges the initial onus of establishing the identity and creditworthiness of the credit provider and the genuineness of the transaction, be it one of loan or subscribing to share capital, the onus shifts to the revenue to show the contrary. Where, for instance, an Assessee furnishes the complete details of the entity like its certificate of incorporation, PAN number, income tax returns, bank accounts, names and addresses of the directors and so on, the Courts have insisted on the AO to make a proper enquiry to examine the identity and creditworthiness of such companies and the genuineness of the transactions in question. Where the AO fails to make such an enquiry, a Court might delete the additions made by the AO. 15. The present case, however, is of a different nature. Here, we are dealing with an Assessee who does not deny that he is an accommodation entry provider. He, in fact, makes no bones of the fact that he either owned or floated 'paper companies' only for that purpose. He also does not dispute the fact that he has not been able to explain the source of all the deposits in his accounts or the ultimate destination of all the outgo from his accounts. 16. The Assessee's plea that he should be taxed only on a composite 'peak credit' is based entirely on principles of accountancy. He questions the logic behind allowing peak credits for some of the credit entries by way of cheques and denying it for the other entries in cash. He also questions the practice of working out separate peak credits for cheque and cash transactions. 17. The premise underlying the concept of peak credit is the squaring up of the deposits in the account with the corresponding payments out of the account to the same person. In Bhaiyalal Shyam Bihari v. CIT (supra), the Allahabad High Court explained that benefit of peak can be given only when the assessee owns up all the cash credits in the books of accounts. It was further held: "For adjudicating upon the plea of peak credit the factual foundation has to be laid by the assessee. He has to own all cash credit entries in the books of account and only thereafter can the question of peak credit be raised." 18. In that case, it was held that as the amount of cash credits stood in the names of different persons which the Assessee had all along been claiming to be genuine deposits, withdrawals/payments to different persons during the previous years, the Assessee was, therefore, not entitled to claim the benefit of peak credit. Later in CIT v. Vijay Agricultural Industries (supra), it was reiterated that: "The principle of peak credit is not applicable in case where the deposits remained unexplained under Section 68 of the Act. It cannot apply in a case of Page | 58

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) different depositors where there has been no transaction of deposits and repayment between a particular depositor and the assessee." On the facts of that case it was held that peak credit could be applied only in the case of squared up accounts. In other words, where an Assessee was unable to explain the sources of deposits and the corresponding payments then he would not get the benefit of 'peak credit'. 19. The legal position in respect of an accommodation entry provider seeking the benefit of 'peak credit' appears to have been totally overlooked by the ITAT in the present case. Indeed, if the Assessee as a self-confessed accommodation entry provider wanted to avail the benefit of the 'peak credit', he had to make a clean breast of all the facts within his knowledge concerning the credit entries in the accounts. He has to explain with sufficient detail the source of all the deposits in his accounts as well as the corresponding destination of all payments from the accounts. The Assessee should be able to show that money has been transferred through banking channels from the bank account of creditors to the bank account of the Assessee, the identity of the creditors and that the money paid from the accounts of the Assessee has returned to the bank accounts of the creditors. The Assessee has to discharge the primary onus of disclosure in this regard. 20. While the AO in the present case did not question the working out of the peak credit by the Assessee, he, at the same time, insisted that the additions made by him to the returned income of the Assessee should be sustained. The peak credit worked out by the Assessee was on the basis that the principle of peak credit would apply, notwithstanding the failure of the Assessee to explain each of the sources of the deposits and the corresponding destination of the payment without squaring them off. That is not permissible in law as explained by the Allahabad High Court in the aforementioned decisions which, this Court concurs with. Conclusion 21. As already noted, the ITAT went merely on the basis of accountancy, overlooking the settled legal position that peak credit is not applicable where deposits remain unexplained under Section 68 of the Act. The question of law framed by this Court, is accordingly, answered in the negative i.e. in favour of the Revenue and against the Assessee. The impugned order of ITAT is, accordingly, set aside and the order of the AO is restored to file.” 16. Though in the case before the Hon'ble Delhi High Court, the issue was with respect to the allowance of the benefit of peak credit to the assessee, in that situation also the honourable High Court has held that it is a settled principle that peak credit is not applicable where deposit remains unexplained under section 68 of the income tax act. The section applicable Page | 59

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) in the present case is section 69 of the income tax act. Even in that particular case, applying the above principle, it is imperative and necessary for the assessee to show before the assessing officer, who are the beneficiaries of these accommodation entries. Unless this fact is proved by the assessee, it cannot be said that addition cannot be made in the hands of the assessee under section 69 of the income tax act with respect to the various bank account operated by the assessee as an accommodation entry provider. Merely accepting the addition of commission income for providing accommodation entries in the hands of the assessee cannot absolve assessee from the burden of onus of proof under section 69 of the income tax act with respect to the various bank accounts. Such burden can only be discharged by showing who are the real beneficiaries of those accommodation entries. In view of the above facts, we set aside these appeals back to the file of the learned assessing officer with a direction to the assessee to show that the protective addition made in the hands of the assessee has been added in the hands of the beneficiaries and ultimately it has been sustained. If the assessee failed to prove the beneficiaries being taxed on the above amount of accommodation entries, the protective addition in the hands of the assessee become substantive addition. Otherwise the whole purpose of making the protective addition does not survive. The assessee is further directed to show before the learned assessing officer that in the hands of the beneficiaries, who have approached settlement commission the above amount of accommodation entries have been included in the settlement commission orders. After assessee provides all these details. The learned assessing officer may carry out necessary enquiries with respect to the taxability of the above sum in the hands of the beneficiaries and then decide the whole issue afresh. Accordingly all the grounds in all these appeals with respect to addition under section 69 and addition on account of commission income on protective basis is set aside to the file of the learned assessing officer with above direction to the assessee. 17. With respect to the addition of the commission income at the rate of 1% by the assessing officer and reduction by the learned CIT(A) to the rate of Page | 60

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) 0.75% does not merit any interference for the reason that the accommodation entry provider has to incur several other expenditure and considering that aspect, the learned CIT(A) has granted 25% deduction for the expenditure. Such ad hoc deduction cannot be found to be unreasonable, in view of the large business carried on by the assessee of accommodation entry provider. Accordingly the ground relating to the reduction in the addition from 1% to 0.75% on account of commission earned on accommodation entries is dismissed. 18. Accordingly, ground number 2 and 3 of the appeal of the revenue for assessment year 2006 – 07 are allowed with above direction. For assessment year 2008 – 09, ground number 2, 4 and 5 of the appeal of the learned assessing officer are allowed with above direction for statistical purposes and ground number 3 of the appeal is dismissed. For assessment year 2009 – 10. Ground number 2, 4 and 5 are allowed with above direction for statistical purposes and ground number 3 of the appeal is dismissed. For assessment year 2010 – 11. Ground number 2, 4 and 5 of the appeal of the revenue are allowed with above direction for statistical purposes and ground number 3 is dismissed. For assessment year 2011 – 12. Ground number 2, 4 and 5 of the appeal of the revenue are allowed with above direction for statistical purposes and ground number 3 of the appeal is dismissed. 19. In appeal for assessment year 2011 – 12, the revenue has also raised an issue that during the course of search operation cash amounting to INR 231000/- was found from the premises belonging to the assessee. The assessee explained that the above sum belongs to his son, daughter-in-law et cetera. However the learned assessing officer made the addition of the above sum. On appeal before the learned CIT(A), he confirmed the addition of only INR 50,000 and deleted the addition of INR 181,000. The learned CIT appeal has given a reason that the above amount of cash can be explained by the means of savings and income declared by the group as such, however, the sum of INR 50,000 could not be explained and the learned CIT – A, has confirmed the addition.

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) 20. The learned CIT DR relied upon the order of the learned assessing officer and submitted that merely because the income is declared by the group as such the cash amount found during the course of search has been correctly added by the learned assessing officer as unexplained income of the assessee. 21. We have carefully considered the rival contentions. The learned CIT(A) has deleted the whole addition with respect to the various income charged to tax in the hands of the assessee as well as looking to the size of the family and for a plausible explanation that savings can be retained by the family members specially ladies. In view of this, we do not find any infirmity in the order of the learned CIT(A) in deleting the addition of INR 181,000 out of the cash seized of Rs. 231000/–. According to ground number 6 of the appeal of the revenue for assessment year and 11, 12 is dismissed. 22. During the course of search operation jewellery amounting to INR 2744660 was found at the premises of the assessee. However, the aforesaid amount of jewellery was not seized during the course of search operations. The assessee was asked the explanation about the acquisition of the jewelry. However, no explanation was provided by the assessee and therefore the addition of INR 2744660/– was made in the hands of the assessee. The assessee challenged the said addition before the learned CIT appeal, who deleted the addition relying on the CBDT instructions and retaining the addition of INR 500,000/-. 23. The learned CIT DR vehemently supported the order of the learned assessing officer and stated that when the assessee has failed to give any explanation with respect to the above sum the addition cannot be deleted. 24. We have carefully considered the rival contentions and find that the jewelry found during the course of search is within the specified limit as prescribed by CBDT instruction number 1916, dated 11/5/1994. The learned CIT – A, has restricted the addition, despite the above facts to the extent of INR 500,000. In view of this we do not find any infirmity in the order of the learned CIT(A) and accordingly, ground number 7 of the appeal for assessment year 2011-12 is dismissed.

DCIT Vs Pawan Kumar Gupta, ITA No. 2877, 2879, 3356, 3357, 3358/Del/2014 (Assessment Year: 2006-07, 2008-09 to 2011-12) 25. The ground number 8 of the appeal of the revenue is with respect to the deleting the addition of INR 15,000 on account of cash found during the course of search on the ground that the same could have been explained by means of savings and income declared by the group as such. For the findings given by us with respect to ground number 6 of the appeal of the revenue for assessment year 2011 – 12, this ground does not merit, any consideration and therefore same is dismissed. 26. In view of this, all the appeals filed by the revenue are partly allowed for statistical purposes. Order pronounced in the open court on 28/12/2018. -Sd/- -Sd/- (K.N.CHARY) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 28/12/2018 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi