ACIT, NEW DELHI vs. SMT. RAJSHREE JALAN, NEW DELHI

Briefly the facts are that in this case original return of income was filed declaring total income of Rs.3,87,841/-. Assessment u/s 143(3) of the Income Tax Act, 1961 was completed on 30th December, 2009 accepting the returned income. Subsequently a search and seizure operation u/s 132 of the Income Tax Act, 1961 was carried out on 15th Feb., 2011 and notice u/s 153(A) of the Income Tax Act, 1961 was issued on 27.01.2012. In response to this notice, assessee filed ITA 3063/Del/2017 A.Y.: 2007-08 ACIT vs. Smt.Rajashree Jalan return of income on 08.01.2013, declaring total income of Rs.3,87,841/- which is accepted. Subsequently notice u/s 148 was issued on 31st March, 2014 in response to which assessee filed return of income on 10.6.2014 declaring total income at Rs.3,87,841/-. The A.O. passed assessment order u/s 144/147 of the Act vide order dt. 24th June, 2014 at a total income of Rs.46,43,241/- as against returned income of Rs.3,87,841/- by making addition of Rs.41,71,960/- on account of unexplained expenses u/s 68 of the Act and addition of Rs.83,440/- on account of unexplained expenses as commission. The A.O. noted in the assessment order that assessee was a salaried employee as Manager with M/s Jalco Plastochem Industries (P) Ltd. Information was received that assessee has been given accommodation entry of Rs.3,73,000/-. It is noticed from the bank statements and her account maintained with Citi Bank that assessee had deposited Rs.3,73,000/- on 5th Feb., 2007. The same amount appears to have been given to M/s Vitrag Jewels on 8th Feb.,2007. Since the details match with the information received by Investigation Wing, therefore, assessee was asked to explain the credit entry of Rs.3,73,000/- appearing in her bank statement. The assessee did not attend the proceedings before the A.O. On further verification of bank account, it is noticed that the assessee had deposited other sums in her bank account from the same source as cheque numbers are in serial. The details of such deposits are given here under. Date of Cheque No. Amount in Rs. deposit 27.7.2006 920830 99480 Sept.2006 920834 6,00,000 Sept. 2006 920836 30,00,000 2/2/2007 920850 99,480 5/2/2007 920851 3,73,000 Total: 41,71,960 ITA 3063/Del/2017 A.Y.: 2007-08 ACIT vs. Smt.Rajashree Jalan The assessee was asked to explain the entries in the above bank account which assessee failed to explain, therefore, the same was treated as unexplained credit u/s 68 of the Act and amount of Rs.41,70,960/- was added. The A.O. observed that the prevailing market rate of commission for accommodation entry is generally 2%, further addition of commission expenses at Rs.83,440/- was made.

The assessee challenged the addition before the Ld.CIT(A). The grounds of the assessee is reproduced in the appellate order. The assessee also filed application for admission of additional evidences. The assessee requested that earlier two regular assessments have been framed against the assessee examining the bank account of assessee and no notice has been served upon assessee as she was out of India. The assessee requested that additional evidences may be admitted for hearing which are : copies of two assessment orders passed u/s 143(3) and 153(A) for the same assessment years, copy of bank account, copy of invoices of the jewellers, copy of receipts, copy of ticket and copy of Pass Port of assessee and Shri Sanjay Jalan. Ld.CIT(A) admitted the additional evidences and called for remand report from A.O. The A.O. in the remand report reiterated the facts stated in the assessment order and submitted that assessee failed to explain the entries in the bank account. The assessee in the rejoinder reiterated the same facts as were submitted earlier. It was also explained that earlier same bank statements were produced before the A.O. and the A.O. did not make any additions. The assessee was an employee with M/s Jalco Plastochem Industries (P) Ltd. and the two credits were in relation to receipt of salary and other three credits were receipts of advances from said company which amounts were credited to the bank account of assessee. Same amount has been utilised for acquisition of jewellery. The details of all these transactions were