M/S. NAVKAR INDIA,SURAT vs. ACIT CC -1(3), MUMBAI

PER OM PRAKASH KANT, AM PER OM PRAKASH KANT, AM

These appeals by the assessee are directed against two These appeals by the assessee are directed against two These appeals by the assessee are directed against two separate orders dated 20.01.2022 and 31.01.2022 passed by the separate orders dated 20.01.2022 and 31.01.2022 passed by the separate orders dated 20.01.2022 and 31.01.2022 passed by the Ld. Commissioner of Income Ld. Commissioner of Income-tax (Appeals)-47, Mumbai [in short 47, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2015 ‘the Ld. CIT(A)’] for assessment year 2015-16 respectively. The 16 respectively. The grounds raised in both these appeals d in both these appeals being identical, both appeals being identical, both appeals were heard together and disposed off by way of this consolidated were heard together and disposed off by way of this consolidated were heard together and disposed off by way of this consolidated order for sake of convenience. order for sake of convenience.

M/s Navkar India & Surya Diam. M/s Navkar India & Surya Diam. 3 ITA Nos. 450 & 452/M/2022

the current years the current years Trade Payables, without appreciating the Trade Payables, without appreciating the fact that the appellant had disclosed all the information fact that the appellant had disclosed all the information fact that the appellant had disclosed all the information regarding Current Liabilities submitted in the Audited regarding Current Liabilities submitted in the Audited regarding Current Liabilities submitted in the Audited Financial Statements for the relevant year and the said Financial Statements for the relevant year and the said Financial Statements for the relevant year and the said increase in Trade Payables is on account of ch increase in Trade Payables is on account of change in the ange in the exchange rate at the year end. exchange rate at the year end. 5. On the facts and circumstances of the case and in law the On the facts and circumstances of the case and in law the On the facts and circumstances of the case and in law the Ld. CIT(A) erred in confirming the addition of alleged Ld. CIT(A) erred in confirming the addition of alleged Ld. CIT(A) erred in confirming the addition of alleged commission income arising out of alleged bogus unsecured commission income arising out of alleged bogus unsecured commission income arising out of alleged bogus unsecured loans, bogus sales and bogus purchases and loans, bogus sales and bogus purchases and also confirming also confirming the addition of gross profit, on estimation basis. of a the addition of gross profit, on estimation basis. of a the addition of gross profit, on estimation basis. of a percentage of the total turnover, without appreciating the fact percentage of the total turnover, without appreciating the fact percentage of the total turnover, without appreciating the fact that both such additions cannot coexist togehter. that both such additions cannot coexist togehter. 6. On the facts and circumstances of the case and in law the On the facts and circumstances of the case and in law the On the facts and circumstances of the case and in law the Ld. CIT(A) e Ld. CIT(A) erred in confirming addition of alleged commission rred in confirming addition of alleged commission income arising out of alleged bogus unsecured loans, bogus income arising out of alleged bogus unsecured loans, bogus income arising out of alleged bogus unsecured loans, bogus sales and bogus purchases, without appreciating the fact sales and bogus purchases, without appreciating the fact sales and bogus purchases, without appreciating the fact that for the very same assessce for previous assessment that for the very same assessce for previous assessment that for the very same assessce for previous assessment years, being A.Y. 2010 years, being A.Y. 2010-11 to A.Y. 2014-15, the Ld. CIT(A) has 15, the Ld. CIT(A) has deleted the protective addition of alleged commission income, deleted the protective addition of alleged commission income, deleted the protective addition of alleged commission income, thereby not following the principal of consistency. thereby not following the principal of consistency. 7. On the facts and in the circumstances of the case and in law, On the facts and in the circumstances of the case and in law, On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in changing protective addition the Ld. CIT(A) erred in changing protective addition the Ld. CIT(A) erred in changing protective addition of commission income on alleged bogus sales to substantive commission income on alleged bogus sales to substantive commission income on alleged bogus sales to substantive addition on the incorrect presumption that the same was not addition on the incorrect presumption that the same was not addition on the incorrect presumption that the same was not considered in the order of the Hon'ble ITAT in the case of Shri considered in the order of the Hon'ble ITAT in the case of Shri considered in the order of the Hon'ble ITAT in the case of Shri Bhanwarlal Jain. Bhanwarlal Jain. 8. On the facts and in the circumstances of the case and i On the facts and in the circumstances of the case and i On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in changing protective addition to the Ld. CIT(A) erred in changing protective addition to the Ld. CIT(A) erred in changing protective addition to substantive addition without issuing any show cause notice substantive addition without issuing any show cause notice substantive addition without issuing any show cause notice or opportunity of being heard to the appellant, which is in or opportunity of being heard to the appellant, which is in or opportunity of being heard to the appellant, which is in violation of section 251(2) of the Income Tax Act, 1961 and in violation of section 251(2) of the Income Tax Act, 1961 and in violation of section 251(2) of the Income Tax Act, 1961 and in violation o violation of the principles of natural justice. 9. On the facts and in the circumstances of the case and in law, On the facts and in the circumstances of the case and in law, On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erredin confirming the addition made by Id. the Ld. CIT (A) erredin confirming the addition made by Id. the Ld. CIT (A) erredin confirming the addition made by Id. AO, without providing any opportunity of cross examination, AO, without providing any opportunity of cross examination, AO, without providing any opportunity of cross examination, without any corroborative evidence an without any corroborative evidence and without providing d without providing copy of statements relied upon. copy of statements relied upon. 3. Briefly stated, facts of the case are that the assessee filed Briefly stated, facts of the case are that the assessee filed Briefly stated, facts of the case are that the assessee filed return of income on 24.09.2015 declaring total income at return of income on 24.09.2015 declaring total income at return of income on 24.09.2015 declaring total income at Rs.44,370/-. In the return of income filed . In the return of income filed, the assessee assessee shown income from busines income from business, import & export and trading of cut and trading of cut and polished & rough diamonds. Subsequently, the Assessing Officer rough diamonds. Subsequently, the Assessing Officer rough diamonds. Subsequently, the Assessing Officer received information from the Investigation Wing, Mumbai that received information from the Investigation Wing, Mumbai that received information from the Investigation Wing, Mumbai that

M/s Navkar India & Surya Diam. M/s Navkar India & Surya Diam. 4 ITA Nos. 450 & 452/M/2022

during the course of search carried out on 11.10.2013 u/s 132(4) of during the course of search carried out on 11.10.2013 u/s 132(4) of during the course of search carried out on 11.10.2013 u/s 132(4) of the Income-tax Act, 1 tax Act, 1961 (in short ‘the Act’), at the premises of 961 (in short ‘the Act’), at the premises of “Shri Bhanwarlal Jain” group , it revealed that he was engaged in “Shri Bhanwarlal Jain” group , it revealed that he was engaged in “Shri Bhanwarlal Jain” group , it revealed that he was engaged in issuing accommodation entries to others for bogus issuing issuing accommodation accommodation entries entries to to others others for for bogus bogus loans/sales/imports through entities controlled by him , including loans/sales/imports through entities controlled by him , including loans/sales/imports through entities controlled by him , including the assessee . Thus, in view the assessee . Thus, in view of the information the assessee the assessee being one of the entity of one of the entity of Sh Bhanwar Lal Jain, the Assessing Officer the Assessing Officer recorded reasons to believe that income escaped assessment and recorded reasons to believe that income escaped assessment and recorded reasons to believe that income escaped assessment and reopened the assessment u/s 147 of the Act by way of issue of reopened the assessment u/s 147 of the Act by way of issue of reopened the assessment u/s 147 of the Act by way of issue of notice u/s 148 of the Act on notice u/s 148 of the Act on 05.09.2018. In the assessment 05.09.2018. In the assessment completed u/s 147 of the Act, the Assessing Officer treated the of the Act, the Assessing Officer treated the assessee as engaged in issuing accommodation entry bills and assessee as engaged in issuing accommodation entry bills and assessee as engaged in issuing accommodation entry bills and accordingly assessed the commission income on bogus unsecured accordingly assessed the commission income on bogus unsecured accordingly assessed the commission income on bogus unsecured ong with the commission loans/bogus purchase/sales etc. But al loans/bogus purchase/sales etc. But along with the commission income, the Assessing Officer also assessed not only assessed the income, the Assessing Officer also assessed not only assessed the income, the Assessing Officer also assessed not only assessed the trading results appearing in the books of account but also trading results appearing in the books of account but also trading results appearing in the books of account but also enhanced the profit from such trading activity. Though the enhanced the profit from such trading activity. enhanced the profit from such trading activity. commission on loans/sale/purchase appearing in t on loans/sale/purchase appearing in t on loans/sale/purchase appearing in the books of the assessee was assessed in substantive was assessed in substantive capacity in the case of Shri in the case of Shri Bhanwarlal Jain for AY 2015 Bhanwarlal Jain for AY 2015-16, but same was assessed on was assessed on protective basis in the case of assessee in the case of assessee. The computation of said . The computation of said commission income of Rs.5,73,082/ commission income of Rs.5,73,082/- in the case of a in the case of assessee is reproduced as under: reproduced as under: Sr. No. Nature of Accommodation entry Nature of Accommodation entry Amount Amount of of commission commission earned 1. Accommodation of Bogus unsecured loan Accommodation of Bogus unsecured loan Rs. 4,72,311/- Rs. 4,72,311/

M/s Navkar India & Surya Diam. M/s Navkar India & Surya Diam. 5 ITA Nos. 450 & 452/M/2022

(On P Proportionate basis on Rs. 1,96,79,659/- @2.4%) 1,96,79,659/ 2. Accommodation Accommodation of of Bogus Bogus Purchases Purchases Rs. 1,05,374/- Rs. 1,05,374/ (0.075% of Rs, 14,04,99,815/-) (0.075% of Rs, 3. Accommodation of Bogus sales (0.075% Accommodation of Bogus sales (0.075% Rs. 59,072/- Rs. 59,072/ of Rs. 7,87,63,131/-) of Rs. 7,87,63,131/ 4. Total Commission Total Commission Rs. 6,36,757/- Rs. 6,36,757/ 5. Less: 10% 10% of of total total commission as Rs. 63,675/- Rs. 63,675/ discussed above discussed above 6. Undisclosed commission income Undisclosed commission income Rs. 5,73,082/- Rs. 5,73,082/ 3.1 Further, the Assessing Officer computed business income of he Assessing Officer computed business income of he Assessing Officer computed business income of Rs.63,40,432/- at the rate of at the rate of 8.05% on the turnover of 8.05% on the turnover of Rs.7,87,63,131/- as against loss in the trading activity shown by as against loss in the trading activity shown by as against loss in the trading activity shown by the assessee. The Assessing Officer also made addition for increase the assessee. The Assessing Officer also made addition for increase the assessee. The Assessing Officer also made addition for increase in trading payables as compared to the last year which amounted to ing payables as compared to the last year which amounted to ing payables as compared to the last year which amounted to Rs.4,73,73,337/- and treated the same as unexplained cash credit and treated the same as unexplained cash credit and treated the same as unexplained cash credit u/s 68 of the Act.

M/s Navkar India & Surya Diam. M/s Navkar India & Surya Diam. 6 ITA Nos. 450 & 452/M/2022

commission income on issuing the bogus accommodation entry commission income on issuing the bogus accommodation entry commission income on issuing the bogus accommodation entry bills.

7.1 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that the Ld. CIT(A) has reffered reffered to the order of the Co-ordinate Bench of ordinate Bench of the Tribunal in the case of Shri Bhanwarlal Jain (supra) and the Tribunal in the case of Shri Bhanwarlal Jain (supra) the Tribunal in the case of Shri Bhanwarlal Jain (supra) observed that Shri Bhawarlal Jain observed that Shri Bhawarlal Jain was engaged in engaged in issuing accommodation entry bills through 70 entities controlled and accommodation entry bills through 70 entities controlled and accommodation entry bills through 70 entities controlled and managed by him including the assessee. The Ld. CIT(A) observed managed by him including the assessee. The Ld. CIT(A) observed managed by him including the assessee. The Ld. CIT(A) observed that commission income from the accommodation entries issued that commission income from the accommodation entries issued that commission income from the accommodation entries issued through 70 entities including the assessee has been assessed on entities including the assessee has been assessed on entities including the assessee has been assessed on the substantive basis in the case of Shri Bhanwarlal Jain and the substantive basis in the case of Shri Bhanwarlal Jain and the substantive basis in the case of Shri Bhanwarlal Jain and therefore, the Assessing Officer added part of the commission therefore, the Assessing Officer added part of the commission therefore, the Assessing Officer added part of the commission related to the assessee on protective basis. However, the Ld. CIT(A) related to the assessee on protective basis. However, the Ld. CIT(A) related to the assessee on protective basis. However, the Ld. CIT(A) was of the view that this estimation of the commission income was e view that this estimation of the commission income was e view that this estimation of the commission income was sub-judice and challenged by the Department before the higher judice and challenged by the Department before the higher judice and challenged by the Department before the higher appellate forum and therefore, to keep the issue alive , he sustained appellate forum and therefore, to keep the issue alive appellate forum and therefore, to keep the issue alive the disallowance made by the Assessing Officer. The relevant the disallowance made by the Assessing Officer. The relevant the disallowance made by the Assessing Officer. The relevant finding of the Ld. CIT(A) is reproduced as under: g of the Ld. CIT(A) is reproduced as under:

“10.2 On the issue whether the Assessing Officer has correctly made 10.2 On the issue whether the Assessing Officer has correctly made 10.2 On the issue whether the Assessing Officer has correctly made the addition of commission income in the hands of the Appellant "on the addition of commission income in the hands of the Appellant "on the addition of commission income in the hands of the Appellant "on protective basis", while substantive addition was made in the hands of protective basis", while substantive addition was made in the hands of protective basis", while substantive addition was made in the hands of Shri Bhanwarlal M. Jain, my observation is as under Bhanwarlal M. Jain, my observation is as under- 10.2.1 The Hon'ble ITAT, vide the above referred order in the case of 10.2.1 The Hon'ble ITAT, vide the above referred order in the case of 10.2.1 The Hon'ble ITAT, vide the above referred order in the case of Shri Bhanwarlal M. Jain, has given part relief in page no. 30 of the Shri Bhanwarlal M. Jain, has given part relief in page no. 30 of the Shri Bhanwarlal M. Jain, has given part relief in page no. 30 of the order, in the following manner order, in the following manner- No. Nature of Transaction Nature of Transaction Estimation Estimation of of the the

M/s Navkar India & Surya Diam. M/s Navkar India & Surya Diam. 7 ITA Nos. 450 & 452/M/2022

Hon’ble Tribunal in the Hon’ble Tribunal in the case of Shri Bhanwarlal case of Shri Bhanwarlal M. Jain 1. Import transaction by Shri Import transaction by Shri Bhanwarlal M. @ 0.02% Jain on behalf of others Jain on behalf of others 2. Accommodation Accommodation entries entries of of Bogus Bogus @ @ 0.05% 0.05% instead instead of of purchases purchases 0.075% 3. Bogus unsecured loan Bogus unsecured loan @ 1% instead @ 1% instead of 2.40% 4. Commission of Local purchases Commission of Local purchases Nil against 0.02% Nil against 0.02% Expenses Allowed 5. Expenses Allowed @ 25% 10.2.2 As informed, Department has not accepted the above percentage 10.2.2 As informed, Department has not accepted the above percentage 10.2.2 As informed, Department has not accepted the above percentage estimated by the Hon'ble ITAT and further appeal is being preferred. estimated by the Hon'ble ITAT and further appeal is being preferred. estimated by the Hon'ble ITAT and further appeal is being preferred. Therefore, the estimation is not Therefore, the estimation is not final. Hence, with due respect to the final. Hence, with due respect to the judgment of Hon'ble Tribunal, and to keep the issue alive, the judgment of Hon'ble Tribunal, and to keep the issue alive, the judgment of Hon'ble Tribunal, and to keep the issue alive, the undersigned confirms the estimation mad gned confirms the estimation made by the Assessing Officer, e by the Assessing Officer, with respect to commission income earnedby the appellant on bogus with respect to commission income earnedby the appellant on bogus with respect to commission income earnedby the appellant on bogus unsecured loan and unsecured loan and bogus purchases as well as 10% of commission bogus purchases as well as 10% of commission income for day income for day-to-day expenses as mentioned in the preceding day expenses as mentioned in the preceding paragraphs, on protective basis. paragraphs, on protective basis. 10.2.3 It is further observed that Commission income earned on Bogus 10.2.3 It is further observed that Commission income earned on Bogus 10.2.3 It is further observed that Commission income earned on Bogus sales does not form part of the Appellate Order sales does not form part of the Appellate Order of Hon'ble Tribunal. of Hon'ble Tribunal. Hence, the estimation of Rs. 59,072/ Hence, the estimation of Rs. 59,072/- @ 0.075% on the sales of Rs. @ 0.075% on the sales of Rs. 7,87,63,131/- is hereby confirmed on substantive basis. Thus, Ground is hereby confirmed on substantive basis. Thus, Ground of Appeal Nos. 3, 4, 5, 7 and 9 of the present appeal are dismissed. of Appeal Nos. 3, 4, 5, 7 and 9 of the present appeal are dismissed. of Appeal Nos. 3, 4, 5, 7 and 9 of the present appeal are dismissed.” 7.2 Before us, the Ld. counse Before us, the Ld. counsel for the assessee has referred to the l for the assessee has referred to the decision of the Tribunal in the case of Rare Diamond Pvt. Ltd. in ITA decision of the Tribunal in the case of Rare Diamond Pvt. Ltd. in ITA decision of the Tribunal in the case of Rare Diamond Pvt. Ltd. in ITA No. 313/M/2022 wherein identical finding was given by the Ld. wherein identical finding was given by the Ld. wherein identical finding was given by the Ld. CIT(A) , but the Tribunal after considering the facts the Tribunal after considering the facts the Tribunal after considering the facts, deleted the addition observing as under: as under:

“8. But on the issue whether the protective addition 8. But on the issue whether the protective addition made in the case of made in the case of the assessee should be deleted or the assessee should be deleted or upheld, the Ld. CIT(A) has given the upheld, the Ld. CIT(A) has given the reasoning that reasoning that the Department has not accepted the percentage the Department has not accepted the percentage estimated by the ITAT (supra), and ther estimated by the ITAT (supra), and therefore to keep the issue alive, he the issue alive, he confirmed the estimation made by confirmed the estimation made by the Assessing Officer. The relevant the Assessing Officer. The relevant finding of the Ld finding of the Ld CIT(A), is reproduced as under: 9.2 On the issue whether the Assessing Officer has 9.2 On the issue whether the Assessing Officer has 9.2 On the issue whether the Assessing Officer has correctly made the addition of commission income in made the addition of commission income in the hands of the the hands of the Appellant "on protective basis", while Appellant "on protective basis", while substantive addition was substantive addition was made in the hands of Shri made in the hands of Shri Bhanwarlal M. Jain, my observation Bhanwarlal M. Jain, my observation is as under is as under-

M/s Navkar India & Surya Diam. M/s Navkar India & Surya Diam. 8 ITA Nos. 450 & 452/M/2022

9.2.1 The Hon'ble ITAT, vide the above referred order in 9.2.1 The Hon'ble ITAT, vide the above referred order in 9.2.1 The Hon'ble ITAT, vide the above referred order in the case of Shri Bhanwarlal M. Jain, has of Shri Bhanwarlal M. Jain, has given part relief in page no. 30 in page no. 30 of the order, in the following manner of the order, in the following manner- No. Nature of Transaction Nature of Transaction Estimation Estimation of of the the Hon’ble Tribunal in the Hon’ble Tribunal in the case of Shri Bhanwarlal case of Shri Bhanwarlal M. Jain 1. Import transaction by Shri Import transaction by Shri Bhanwarlal M. @ 0.02% Jain on behalf of others Jain on behalf of others 2. Accommodation Accommodation entries entries of of Bogus Bogus @ @ 0.05% 0.05% instead instead of of purchases purchases 0.075% 3. Bogus unsecured loan Bogus unsecured loan @ 1% instead of 2.40% @ 1% instead of 2.40% 4. Commission of Local purchases Commission of Local purchases Nil against 0.02% Nil against 0.02% Expenses Allowed 5. Expenses Allowed @ 25% 92.2 As. informed, Department has not accepted the 92.2 As. informed, Department has not accepted the 92.2 As. informed, Department has not accepted the above percentage percentage estimated by the Hon'ble ITAT and further appeal is further appeal is being preferred. Therefore, the being preferred. Therefore, the estimation is not final. Hence, estimation is not final. Hence, with due respect to the with due respect to the judgment of Hon'ble Tribunal and to judgment of Hon'ble Tribunal and to keep the issue keep the issue alive, the undersigned confirms the estimation alive, the undersigned confirms the estimation made by made by the Assessing Officer, with respect to commission ing Officer, with respect to commission income earned by the appellant on bogus unsecured income earned by the appellant on bogus unsecured income earned by the appellant on bogus unsecured loan and bogus purchases as well as 10% of bogus purchases as well as 10% of commission income for day commission income for day- to-day expenses as day expenses as mentioned in the preceding paragraphs, on mentioned in the preceding paragraphs, on protective protective basis. 9.2.3 It is furthe 9.2.3 It is further observed that Commission income r observed that Commission income earned on Bogus sales does not form part of the Bogus sales does not form part of the Appellate Order of Hon'ble Appellate Order of Hon'ble Tribunal. Hence, the Tribunal. Hence, the estimation of Rs. 25,663/- @ 0.075% on the @ 0.075% on the sales of Rs. sales of Rs. 3,42,17,419/- is hereby confirmed on substantive is hereby confirmed on substantive basis. Thus, Ground o basis. Thus, Ground of Appeal Nos. 3, 4, 5, 7 and 9 f Appeal Nos. 3, 4, 5, 7 and 9 of the present appeal are dismissed. present appeal are dismissed. 9. In our opinion, the reasoning given by the Ld. 9. In our opinion, the reasoning given by the Ld. CIT(A) is against the CIT(A) is against the principle of judicial discipline. principle of judicial discipline. The Ld. CIT(A) being a appellate authority The Ld. CIT(A) being a appellate authority is required to follow the judicial prec to follow the judicial precedent available on the issue edent available on the issue in dispute. The Ld. CIT(A) has duly mentioned the dispute. The Ld. CIT(A) has duly mentioned the order of the Tribunal in order of the Tribunal in the case of Sh. Bhanwarlal the case of Sh. Bhanwarlal Jain where the commission income from Jain where the commission income from accommodation entries has been held to be assessed accommodation entries has been held to be assessed on substantive on substantive basis treating the va basis treating the various concern through which accommodation through which accommodation entries were provided entries were provided as his ‘benami’ concerns. 11. For ready reference, said findings of the Tribunal 11. For ready reference, said findings of the Tribunal is reproduced as is reproduced as under: 8.2 It will not be out of place to mention here that 8.2 It will not be out of place to mention here that Hon'ble ITAT, B Bench, Mumbai, in the combined order dated 06.08.2021 (ITA No. 98-104, 104, 108-114,2669, 108 3509/M/2018) in the case of Bhanwarlal M. Jain, has 3509/M/2018) in the case of Bhanwarlal M. Jain, has extensively examined the modus operandi of Bhanwarlal extensively examined the modus operandi of Bhanwarlal M. Jain and 70 odd associates. The Appellant is one of M. Jain and 70 odd associates. The Appellant is one of

M/s Navkar India & Surya Diam. M/s Navkar India & Surya Diam. 9 ITA Nos. 450 & 452/M/2022

the 70 associates, as mentioned in the preceding mentioned in the preceding paragraphs. The relevant findings of the Hon'ble paragraphs. The relevant findings of the Hon'ble Tribunal are reproduced as below: 4. We have carefully heard the rival submissions, oral as 4. We have carefully heard the rival submissions, oral as well as written. We have duly appreciated the factual well as written. We have duly appreciated the factual matrix matrix as as enumerated enumerated by by us us in in the the preceding paragraphs. The judicial pronouncements including our The judicial pronouncements including our own order in Rajendra P. Jain V/s DCIT (ITA Rajendra P. Jain V/s DCIT (ITA Nos.298/Mum/2018 & ors.; order dated 03/05/2019), ors.; order dated 03/05/2019), as cited before us during the course of hearing has been the course of hearing has been deliberated upon. We proceed to deal with the issues in the issues in the following manner. 5. The first and foremost argument taken before us is 5. The first and foremost argument taken before us is that the pendrive as found during the course of search the pendrive as found during the course of search proceedings proceedings was was planted planted from from outside outside and and the the admission thereof was taken forcibly in statement of thereof was taken forcibly in statement of assessee u/s 132(4). The Ld. AR has impressed upon 132(4). The Ld. AR has impressed upon the idea that the search took place on 03/10/2013 search took place on 03/10/2013 whereas the said pen drive was not inventorized for 6 drive was not inventorized for 6 days. It has been submitted that the same could have submitted that the same could have been seized or inventorized on 04/10/2013 along with inventorized on 04/10/2013 along with the inventory made for credit cards, bank account and made for credit cards, bank account and jewellery etc. jewellery etc. Further, the seizure of the pen drive was Further, the seizure of the pen drive was not made part of Panchnama annexure, officially drawn Panchnama annexure, officially drawn on 04/10/2013 and the admission about the same from and the admission about the same from his son Shri Rajesh Jain was extracted forcibl Rajesh Jain was extracted forcibly. 6. Going by the factual matrix as enumerated in preceding factual matrix as enumerated in preceding paragraphs, we find that the attitude of the assessee we find that the attitude of the assessee during the course of assessment proceedings was totally course of assessment proceedings was totally non- cooperative. In fact, the assessee remained absent cooperative. In fact, the assessee remained absent during search proceedings for 3 days. The summons 3 days. The summons were not complied with and no explanation was complied with and no explanation was furnished furnished on on incriminating incriminating material. material. Pertinently, Pertinently, voluminous hand written estimation sheets have been written estimation sheets have been found at various found at various premises of the assessee. The sheets premises of the assessee. The sheets have been admitted to be in the hand writing of and writing of assessee’s son as well as an employee of the assessee. employee of the assessee. These sheets contain parallel cash accounts. The entries cash accounts. The entries in the estimated sheets were in the nature of square in the nature of square-off transaction wherein cash received from one party was received from one party was paid back to another party through Angadiya Account. through Angadiya Account. The pen drive contained calendar year-wise names of wise names of beneficiaries, the amount of cash, details of brokerage cash, details of brokerage and commission etc. It also contained complete details of contained complete details of Angadiya Account since 2004 in electronic form. Th 2004 in electronic form. The parallel account maintained on the pen-drive pertained drive pertained to various concerns, 70 to be precise, being managed precise, being managed and controlled by assessee group. The password of the group. The password of the pen drive was cracked with the help of software the help of software programmers. After decrypting the data, prin data, print outs were

M/s Navkar India & Surya Diam. M/s Navkar India & Surya Diam. 10 ITA Nos. 450 & 452/M/2022

taken and matched with the estimation sheets as well estimation sheets as well as other data gathered during the course of search the course of search action from various premises, disclosed as well as disclosed as well as secret. The data was found to be identical. The complete identical. The complete correlation was established between the parallel books een the parallel books of accounts found on the pen drive with books of 70 drive with books of 70 concerns being managed and controlled by the assessee. controlled by the assessee. It transpired that the daily accounts were first written accounts were first written manually on estimation sheets and thereafter entered and thereafter entered into pendrive electronically. So much so, identical pen much so, identical pen drive was found from the possession of Shri Rohit possession of Shri Rohit Birawat at CST Terminus who was apprehended by the was apprehended by the search team while attempting to flee from Mumbai to flee from Mumbai to Rajasthan with incriminating material. 7. All these facts have been admitted not only by the been admitted not only by the assessee but also by his son as well as trusted assessee but also by his son as well as trusted employees in various statements as recorded on oath employees in various statements as recorded on oath u/s 132(4) at various points of time. The statements 132(4) at various points of time. The statements were recorded in the presence of independent witnesses. recorded in the presence of independent witnesses. The contents of the statement were said to be duly he statement were said to be duly explained to the assessee at the time of recording to the assessee at the time of recording thereof. 8. In the backdrop of such clinching and overwhelming 8. In the backdrop of such clinching and overwhelming evidences, no substance could be found in the plea that evidences, no substance could be found in the plea that the pen-drive did not belong to the assessee or the drive did not belong to the assessee or the same was not found from assessee’s premises particularly was not found from assessee’s premises particularly when the contents of the pen drive completely matched when the contents of the pen drive completely matched with incriminating material found during the course of with incriminating material found during the course of search operations. The seizure of the same was duly search operations. The seizure of the same was duly recorded in the Panchnama which was recorded in the Panchnama which was vouched by independent Panchas. The vital link was established independent Panchas. The vital link was established between the pen drive and the estimate sheets as well between the pen drive and the estimate sheets as well as the regular books of benami concerns being run by the regular books of benami concerns being run by the assessee. Therefore, we do not find any substance in assessee. Therefore, we do not find any substance in this plea as raised by Ld. AR before us and therefore, we before us and therefore, we reject the same. 9. So far as the other arguments are concerned, we find 9. So far as the other arguments are concerned, we find that that the assessee was running more than 70 that that the assessee was running more than 70 benami concern under name-sake directors / partners sake directors / partners /proprietors. These persons were acting as per the /proprietors. These persons were acting as per the direction of the assessee against remuneration. Most of ection of the assessee against remuneration. Most of them, in their statement u/s 132(4), made admission of them, in their statement u/s 132(4), made admission of those facts. They also made admission that they those facts. They also made admission that they assisted / abetted the assessee in the business of / abetted the assessee in the business of providing accommodation entries. Their PAN Cards, accommodation entries. Their PAN Cards, IDs, blank signed cheque books etc were found at centralized signed cheque books etc were found at centralized premises. They were visiting the centralized premises to premises. They were visiting the centralized premises to sign the blank cheque books as per the directions of the sign the blank cheque books as per the directions of the assessee. All these persons had superficial knowledge assessee. All these persons had superficial knowledge

M/s Navkar India & Surya Diam. M/s Navkar India & Surya Diam. 11 ITA Nos. 450 & 452/M/2022

about nature of business being conducted by their eing conducted by their respective concerns. Further, most of these persons were respective concerns. Further, most of these persons were residing at premises owned by the assessee group. The residing at premises owned by the assessee group. The books of accounts of all these entities were being books of accounts of all these entities were being maintained at two premises in a centralized manner. The maintained at two premises in a centralized manner. The books were found in the same computer and audited by nd in the same computer and audited by common Auditor. The auditor admitted to have signed common Auditor. The auditor admitted to have signed the financial statements as per the directions of Shri financial statements as per the directions of Shri Lunkaran Parasmal Kothari without verifying the books Lunkaran Parasmal Kothari without verifying the books of accounts. This is further fortified by survey action accounts. This is further fortified by survey action at BKC, Mumbai wherein more than 30 firms were found to BKC, Mumbai wherein more than 30 firms were found to be operating from common premises. All the 70 entities be operating from common premises. All the 70 entities were found to have common features in their respective were found to have common features in their respective financial statements. All these factors strongly prove the financial statements. All these factors strongly prove the financial statements. All these factors strongly prove the allegations of the department that all the concerns were hat all the concerns were being run by the group in a combined manner with a being run by the group in a combined manner with a view to provide accommodation entries to various to provide accommodation entries to various beneficiaries against commission. 10. So far as the retraction of the statement made by the 10. So far as the retraction of the statement made by the assessee is concerned, we find that the retraction was e retraction was made after more than 8 months and the same was made after more than 8 months and the same was devoid of any material evidence. The statements were of any material evidence. The statements were made on oath u/s 132(4) and heavy onus was on oath u/s 132(4) and heavy onus was on assessee to rebut the same with cogent material while the same with cogent material while retracting the same. However, nothing of that sort as of that sort as done by the assessee, has been shown before us. has been shown before us. Glaring contradictions as well as similarities has been as similarities has been found in the retraction affidavits. found in the retraction affidavits. As rightly held by As rightly held by lower authorities, the retraction was nothing but mere nothing but mere after-thought and tutored statement to thwart the process of investigation. The retraction was bereft of any bereft of any material evidence and therefore, the same material evidence and therefore, the same was to be completely ignored. 11. The aforesaid factual matrix as well as findings 11. The aforesaid factual matrix as well as findings would lead to inescapable conclusion that all th would lead to inescapable conclusion that all the 70 entities under consideration were being managed and entities under consideration were being managed and controlled by the assessee group and therefore, lower controlled by the assessee group and therefore, lower authorities were quite justified in estimating commission authorities were quite justified in estimating commission income earned by the assessee group from all these income earned by the assessee group from all these benami concerns. 12. Accordingly, Ground Nos.1,2,5,6,7 & 8 of the ound Nos.1,2,5,6,7 & 8 of the assessee’s appeal stands dismissed. Ground No.12 assessee’s appeal stands dismissed. Ground No.12 stand dismissed since we do not find any violation of dismissed since we do not find any violation of principle of natural justice during appellate proceedings of natural justice during appellate proceedings 12. The Ld. CIT(A) has summarized the factual 12. The Ld. CIT(A) has summarized the factual conclusions in conclusions in para 8.3 of the impugned order. Ld. a 8.3 of the impugned order. Ld. CIT(A) has also noted that CIT(A) has also noted that for the commission income for the commission income added on protective basis in the case added on protective basis in the case of the assessee of the assessee for such period from Assessment Year 2007 for such period from Assessment Year 2007-08

M/s Navkar India & Surya Diam. M/s Navkar India & Surya Diam. 12 ITA Nos. 450 & 452/M/2022

to AY 2014 2014-15 has been deleted by the concerned first 15 has been deleted by the concerned first appellate authority following the decision of the ty following the decision of the Tribunal in the case of Sh. Tribunal in the case of Sh. Bhanwarlal Jain. Despite Bhanwarlal Jain. Despite fully aware of the fact, the Ld. CIT(A) fully aware of the fact, the Ld. CIT(A) in the instant in the instant case has upheld the addition on the reasoning case has upheld the addition on the reasoning that the Income the Income-tax department has not accepted the tax department has not accepted the percentage estimated by the Tribunal in the case of ted by the Tribunal in the case of Sh. Bhanwarlal Jain, Sh. Bhanwarlal Jain, and further appeal has been and further appeal has been preferred. The Ld. CIT(A) has preferred. The Ld. CIT(A) has ignored that he, being a ignored that he, being a appellate authority, is required to follow appellate authority, is required to follow the decision the decision of the higher appellate forum irrespective whether of the higher appellate forum irrespective whether the department has preferred appeal again the same, department has preferred appeal again the same, department has preferred appeal again the same, unless the decision of that appellate forum has been decision of that appellate forum has been stayed by the higher stayed by the higher appellate forum. The Ld CIT(A) appellate forum. The Ld CIT(A) cannot confirm an addition on cannot confirm an addition on protective basis. He is protective basis. He is required to decided the issue either way required to decided the issue either way and cann and cannot proceed with keeping an addition on substantive in proceed with keeping an addition on substantive in one case and protective in other case that too even one case and protective in other case that too even one case and protective in other case that too even after a finding of the higher appellate forum i.e. ITAT. finding of the higher appellate forum i.e. ITAT. We accordingly, We accordingly, reject this approach of the Ld CIT(A) reject this approach of the Ld CIT(A) and set aside his finding on and set aside his finding on the issue the issue on dispute. Respectfully following the finding of the Respectfully following the finding of the ITAT in the ITAT in the case of Sh. Bhanwarlal Jain (Which has been case of Sh. Bhanwarlal Jain (Which has been extracted above), the protective addition made in the extracted above), the protective addition made in the extracted above), the protective addition made in the case of the assessee in respect of commission income assessee in respect of commission income from accommodation from accommodation entries is deleted. entries is deleted. The relevant grounds of the Appeal are grounds of the Appeal are accordingly allowed. accordingly allowed.” 7.3 In above case, the Tribunal (supra) has held that ld CIT(A) In above case, the Tribunal (supra) has held that ld CIT(A) In above case, the Tribunal (supra) has held that ld CIT(A) being appellate authority is required to follow the precedent , which being appellate authority is required to follow the precedent , which being appellate authority is required to follow the precedent , which in operation at relevant point of time. in operation at relevant point of time. Since, the issue in d Since, the issue in dispute in present case being identical being identical, following the finding of the Tribunal in following the finding of the Tribunal in the case of Rare Diamonds Pvt. Ltd. the case of Rare Diamonds Pvt. Ltd.(supra), the addition made (supra), the addition made on protective by the AO and sustained by the Ld. CIT(A) is deleted. The protective by the AO and sustained by the Ld. CIT(A) is deleted. The protective by the AO and sustained by the Ld. CIT(A) is deleted. The ground No. 2 of the appeal of the assesse ground No. 2 of the appeal of the assessee is accordingly allowed. e is accordingly allowed.

M/s Navkar India & Surya Diam. M/s Navkar India & Surya Diam. 13 ITA Nos. 450 & 452/M/2022

submitted in the tax audit report had no meaning and those were submitted in the tax audit report had no meaning and those were submitted in the tax audit report had no meaning and those were devoid of truth and genuineness devoid of truth and genuineness and not reliable. Despite the above espite the above observation, the Ld. CIT(A) computed the net profit on this business observation, the Ld. CIT(A) computed the net profit on this business observation, the Ld. CIT(A) computed the net profit on this business activity at Rs.63,40,432/ activity at Rs.63,40,432/- observing as under:

“12.2 While making the impugned addition, the Assessing Officer has 12.2 While making the impugned addition, the Assessing Officer has 12.2 While making the impugned addition, the Assessing Officer has noted that (i) The Appellant has (i) The Appellant has shown a turnover of Rs.7,87,63,131/-. . (i) The Appellant has failed to submit the transaction wise details as (i) The Appellant has failed to submit the transaction wise details as (i) The Appellant has failed to submit the transaction wise details as called for vide notice u/s 142(1) of the I T Act dated 03/11/2019. No called for vide notice u/s 142(1) of the I T Act dated 03/11/2019. No called for vide notice u/s 142(1) of the I T Act dated 03/11/2019. No information regarding the purchases, corresponding payments made for information regarding the purchases, corresponding payments made for information regarding the purchases, corresponding payments made for purchases, the effect of such purchases in the stock maintained, sales s, the effect of such purchases in the stock maintained, sales s, the effect of such purchases in the stock maintained, sales made, receipt of sales proceeds and the corresponding effect in the made, receipt of sales proceeds and the corresponding effect in the made, receipt of sales proceeds and the corresponding effect in the stock register, were provided. No detail in respect of the items of its stock register, were provided. No detail in respect of the items of its stock register, were provided. No detail in respect of the items of its account including expenses debited were supplied to t account including expenses debited were supplied to the AO. he AO. (iii) Accordingly, the AO rejected the income & expenses as declared in i) Accordingly, the AO rejected the income & expenses as declared in i) Accordingly, the AO rejected the income & expenses as declared in its P&L account, being un its P&L account, being un-substantiated by supporting documentary substantiated by supporting documentary evidences viz., details of expenses. stock etc. evidences viz., details of expenses. stock etc. (iv) Accordingly, the income of the Appellant was estimated as (iv) Accordingly, the income of the Appellant was estimated as (iv) Accordingly, the income of the Appellant was estimated as a percentage of turnover. The AO, thereafter compared the results shown percentage of turnover. The AO, thereafter compared the results shown percentage of turnover. The AO, thereafter compared the results shown by the group entities of Shri Bhanwarlal M. Jain claimed to be in the by the group entities of Shri Bhanwarlal M. Jain claimed to be in the by the group entities of Shri Bhanwarlal M. Jain claimed to be in the business of trading in diamonds. identical circumstances and business of trading in diamonds. identical circumstances and business of trading in diamonds. identical circumstances and environment. The AO concluded that the gross environment. The AO concluded that the gross profit involved nvolved should be in the identical range. in the identical range. iv) The gross profit percentage of a few of the entities for AY 2014 iv) The gross profit percentage of a few of the entities for AY 2014 iv) The gross profit percentage of a few of the entities for AY 2014-15 was found as under was found as under- Sr. No. Name Name GP for AY 2014-15 GP for AY 2014 Shri Ritesh Siroya Shri Ritesh Siroya 13.70 M/S Meridian Jewellery M/S Meridian Jewellery Pvt Ltd 11.35 M/S Meridian Gems M/S Meridian Gems 11.00 M/s Little Diam M/s Little Diam 10.29

(v) The AO took the average percentage of 11.5%. The AO has also given (v) The AO took the average percentage of 11.5%. The AO has also given (v) The AO took the average percentage of 11.5%. The AO has also given the findings that the business of the Appellant has not changed the findings that the business of the Appellant has not changed the findings that the business of the Appellant has not changed between AY 2014 between AY 2014-15 to A Y 2015-16 and most of the conditions have 16 and most of the conditions have remained unaltered. The remained unaltered. The meagre gross profit of 3.45 % as declared by meagre gross profit of 3.45 % as declared by the assessee for AY 2015 the assessee for AY 2015-16 is unacceptable. (vi) Therefore, the gross profit percentage of the Appellant for the year (vi) Therefore, the gross profit percentage of the Appellant for the year (vi) Therefore, the gross profit percentage of the Appellant for the year under consideration is adopted at 11.5%. Since, the Appellant had under consideration is adopted at 11.5%. Since, the Appellant had under consideration is adopted at 11.5%. Since, the Appellant had

M/s Navkar India & Surya Diam. M/s Navkar India & Surya Diam. 14 ITA Nos. 450 & 452/M/2022

declared a GP of 3.45%, t declared a GP of 3.45%, the difference in GP percentage of 8.05 % (11.5 he difference in GP percentage of 8.05 % (11.5 - 3.45) is added as income of the assessee for AY 2015 3.45) is added as income of the assessee for AY 2015-16. Accordingly, 16. Accordingly, an amount of Rs. 63,40,432/ an amount of Rs. 63,40,432/- (8.05 % of Rs. 7,87,63,131), is added to (8.05 % of Rs. 7,87,63,131), is added to the total income of the Appellant. the total income of the Appellant. 12.3 I am in full agreement with 12.3 I am in full agreement with the findings of the Assessing Officer. the findings of the Assessing Officer. When other group concerns of Shri Bhanwarlal M. Jain, claimed to be in When other group concerns of Shri Bhanwarlal M. Jain, claimed to be in When other group concerns of Shri Bhanwarlal M. Jain, claimed to be in the same business of trading in diamonds, in identical circumstances, the same business of trading in diamonds, in identical circumstances, the same business of trading in diamonds, in identical circumstances, have shown much higher gross profit, there is no reason for the have shown much higher gross profit, there is no reason for the have shown much higher gross profit, there is no reason for the Appellant to show such small profit, in the return of income. Hence, the o show such small profit, in the return of income. Hence, the o show such small profit, in the return of income. Hence, the estimation on the basis of comparables is justified. Moreover, the estimation on the basis of comparables is justified. Moreover, the estimation on the basis of comparables is justified. Moreover, the appellant has not found any lacuna in appellant has not found any lacuna in the comparison of results carried comparison of results carried out by the AO. Thus, the addition of Rs. out by the AO. Thus, the addition of Rs. 63,40,432/- to the total income the total income of the Appellant, is confirmed. As such, the Grounds of Appeal No. 8 of the Appellant, is confirmed. As such, the Grounds of Appeal No. 8 of the Appellant, is confirmed. As such, the Grounds of Appeal No. 8 and 10 of the appellant are dismissed. and 10 of the appellant are dismissed.” 8.1 We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. We find that the Ld. CIT(A) on one hand relevant material on record. We find that the Ld. CIT(A) on one relevant material on record. We find that the Ld. CIT(A) on one as held that the entity has been utilized by Shri Bhanwarlal Jain for as held that the entity has been utilized by Shri Bhanwarlal Jain for as held that the entity has been utilized by Shri Bhanwarlal Jain for issuing bogus accommodation entry bills however issuing bogus accommodation entry bills however on on other side he has upheld the profit from said business activity in addition to has upheld the profit from said business activity in addition to has upheld the profit from said business activity in addition to commission income sustained on bogus accommodation entries. commission income sustained on bogus accommodation commission income sustained on bogus accommodation The Tribunal in the case of Rare Diamond The Tribunal in the case of Rare Diamond Pvt. Ltd. Pvt. Ltd. (supra) in similar circumstances has deleted the addition made in respect of similar circumstances has deleted the addition made in respect of similar circumstances has deleted the addition made in respect of trading activity. The relevant finding of the Tribunal is reproduced trading activity. The relevant finding of the Tribunal is reproduced trading activity. The relevant finding of the Tribunal is reproduced as under:

“17. From the impugned order of the Ld. 17. From the impugned order of the Ld. CIT(A), we find that in one para CIT(A), we find that in one para he is treating the books of accounts and other details of quantitative tally he is treating the books of accounts and other details of quantitative tally he is treating the books of accounts and other details of quantitative tally in respect of trading activity as self in respect of trading activity as self-serving documents, devoid of truth serving documents, devoid of truth and genuineness and therefore cannot be relied upon. On the other hand, and genuineness and therefore cannot be relied upon. On the other hand, and genuineness and therefore cannot be relied upon. On the other hand, he is confirming the gross profit rate addition made by the Assessing he is confirming the gross profit rate addition made by the Assessing he is confirming the gross profit rate addition made by the Assessing Officer for the said trading activity. The Ld. CIT(A) Officer for the said trading activity. The Ld. CIT(A) cannot give both the cannot give both the finding that assessee was finding that assessee was engaged in providing accommodation entry engaged in providing accommodation entry and being simultaneously was engaged in tr simultaneously was engaged in trading activity. We ading activity. We find that tribunal in the case of Sh. Bhawarlal Jain tribunal in the case of Sh. Bhawarlal Jain (supra) has given a specific (supra) has given a specific finding that 70 associate finding that 70 associate concerns of Sh. Bhanwarlal Jain were engaged concerns of Sh. Bhanwarlal Jain were engaged in providing only accommodation entry and no real providing only accommodation entry and no real business was carried, business was carried, which was recorded in their corded in their books of accounts. The assessee also being books of accounts. The assessee also being one of the concern out of those 70 concerns, the Ld. CIT(A) has concern out of those 70 concerns, the Ld. CIT(A) has correctly concern out of those 70 concerns, the Ld. CIT(A) has

M/s Navkar India & Surya Diam. M/s Navkar India & Surya Diam. 15 ITA Nos. 450 & 452/M/2022

rejected the claim of the assessee in para rejected the claim of the assessee in para 11.1 that it was engaged in 11.1 that it was engaged in any trading activity. Once any trading activity. Once it is held, that assessee was not engaged in was not engaged in any trading activity, there is no justification for making trading activity, there is no justification for making any addition for any addition for low gross profit rate in such trading low gross profit rate in such trading activity. The finding of the Ld. CIT(A) activity. The finding of the Ld. CIT(A) in para 11.3 are in para 11.3 are accordingly set aside. The ground No. 3 and 4 (partly), accordingly set aside. The ground No. 3 and 4 (partly), of the appeal of the assessee are accordingly allowed. appeal of the assessee are accordingly allowed.” 8.2 Respectfully following the finding of the Tribunal Respectfully following the finding of the Tribunal Respectfully following the finding of the Tribunal (supra) above, the addition in the case of the assessee is being deleted. The above, the addition in the case of the assessee is being deleted. The above, the addition in the case of the assessee is being deleted. The ground No. 3 of the appeal of the assessee is accordingly allowed. ground No. 3 of the appeal of the assessee is accordingly allowed. ground No. 3 of the appeal of the assessee is accordingly allowed.

M/s Navkar India & Surya Diam. M/s Navkar India & Surya Diam. 16 ITA Nos. 450 & 452/M/2022

“20. We are of the opinion that when the Tribunal in the case of Sh. are of the opinion that when the Tribunal in the case of Sh. are of the opinion that when the Tribunal in the case of Sh. Bhanwar Lal Jain (supra) has considered the commission from Bhanwar Lal Jain (supra) has considered the commission from Bhanwar Lal Jain (supra) has considered the commission from accommodation entry on substantive basis, any addition if not accommodation entry on substantive basis, any addition if not accommodation entry on substantive basis, any addition if not considered in respect of such commission entry, same can only be considered in respect of such commission entry, same can only be considered in respect of such commission entry, same can only be made in the hand of Sh. Bhanwarlal Jain. When it is evident that the hand of Sh. Bhanwarlal Jain. When it is evident that the hand of Sh. Bhanwarlal Jain. When it is evident that after the finding of the Tribunal in the case of Sh. Bhanwarlal Jian, after the finding of the Tribunal in the case of Sh. Bhanwarlal Jian, after the finding of the Tribunal in the case of Sh. Bhanwarlal Jian, no addition can be made on protective basis in the case of the no addition can be made on protective basis in the case of the no addition can be made on protective basis in the case of the assessee, there is no question of further enhancement of said assessee, there is no question of further enhancement of said assessee, there is no question of further enhancement of said commission income from accommodation entry and that too on mission income from accommodation entry and that too on mission income from accommodation entry and that too on substantive basis. The enhancing of such commission income from substantive basis. The enhancing of such commission income from substantive basis. The enhancing of such commission income from accommodation entries of accommodation entries of bogus sales is without any reasoning bogus sales is without any reasoning and totally unjustified. We reject this action of Ld. CIT(A). unjustified. We reject this action of Ld. CIT(A). 21. The Ld. Counsel before us submitted that Hon’ble Counsel before us submitted that Hon’ble Tribunal in Tribunal in the case of Bhanwar Lal Jain, has duly the case of Bhanwar Lal Jain, has duly considered the alleged considered the alleged commission on sales, but in commission on sales, but in absence of any such details before us, absence of any such details before us, we are not adjudicating upon said contention of the Ld. Counsel. adjudicating upon said contention of the Ld. Counsel. adjudicating upon said contention of the Ld. Counsel. 22. The Ld. Counsel further submitted that Ld. Ld. Counsel further submitted that Ld. CIT(A) has CIT(A) has enhanced the commission income without enhanced the commission income without providing any show providing any show cause notice to the assessee, cause notice to the assessee, which is in violation of the section which is in violation of the section 251(2) of the Act. 251(2) of the Act. The relevant part of the provision is reproduced The relevant part of the provision is reproduced as under: 251(2). The [Commissioner (Appeals) shall not enhanced 1(2). The [Commissioner (Appeals) shall not enhanced an 1(2). The [Commissioner (Appeals) shall not enhanced assessment or a penalty or reduce the amount of assessment or a penalty or reduce the amount of assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable unless the appellant has had a reasonable opportunity of opportunity of showing cause against such enhancement showing cause against such enhancement or reduction. or reduction. 23. In the impugned order there is 23. In the impugned order there is no mention of any opportunity opportunity provided to the assessee by way of issue provided to the assessee by way of issue show cause notice, before show cause notice, before making the addition and making the addition and therefore this addition is unsustainable on therefore this addition is unsustainable on the ground of violation provision of section 251(2) of the Act also. of violation provision of section 251(2) of the Act also.” of violation provision of section 251(2) of the Act also. 11.2 The facts and ci The facts and circumstances of the instant case being rcumstances of the instant case being identical, respectively following the finding of the Tribunal in the respectively following the finding of the Tribunal in the respectively following the finding of the Tribunal in the case Rare Diamonds (supra) case Rare Diamonds (supra), the enhancement made by the Ld. the enhancement made by the Ld.

M/s Navkar India & Surya Diam. M/s Navkar India & Surya Diam. 17 ITA Nos. 450 & 452/M/2022

CIT(A) is hereby deleted. The ground No CIT(A) is hereby deleted. The ground Nos. 7 and 8 of the appeal are . 7 and 8 of the appeal are accordingly allowed.

Order pronounced in the open Court on nounced in the open Court on 25/04 /04/2024. Sd/ Sd/- Sd/ Sd/- (RAHUL CHAUDHARY RAHUL CHAUDHARY) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 25/04/2024 Rahul Sharma, Sr. P.S.

M/s Navkar India & Surya Diam. M/s Navkar India & Surya Diam. 18 ITA Nos. 450 & 452/M/2022

Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai