NARESH B VORA,MUMBAI vs. ASST CIT CEN CIR 18 &19, MUMBAI

Assessee by : None Revenue by : Shri Kailash Kanojiya (DR) Date of hearing : 03.05.2017 Date of Pronouncement : 05.05.2017 Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeal by assessee under section 253 of the Income-tax Act (the Act) are directed against two separate order of ld. CIT(A)-39, Mumbai dated 07.03.2013 for AY 1997-98 & 1998-99 respectively. The facts of both the AYs are almost similar; the assessee has raised some common grounds of appeal. Thus, both the appeals were heard together and are deciding by a consolidated order to avoid the conflicting decision. For appreciation of facts we are referring the facts of appeal for AY 1997-98 & 4624/M/201- Shri Naresh B. Vora

3. The learned CIT (A) erred in confirming A.O.'s action taxing the commission income of Rs. 55,56,468 @ 4% of Rs. 13, 89, 11,705.

4. The learned CIT (A) erred in confirming the addition of Rs.1,84,076/- on account of opening balance in the capital accounts.

5. The learned CIT (A) erred in holding that 4% of Rs. 21, 68,000 be taxed, not accepting the fact that Rs. 21, 68,000 is a part if the total cash receipts of Rs. 13, 89, 11.705 on which commission income is taxed.

6. The learned CIT(A) erred in holding that 4% commission income on Rs, 10,49,000 be taxed not accepting the fact that Rs. 10,49,000 is a part of total cash receipts of Rs. 13, 89, 11,705.

7. The learned CIT(A) erred in holding that 4% commission be taxed on Rs. 1,72,85,000/- not accepting the fact that the total receipts of Rs. 13,89,11,705 commission has been taxed.

8. The learned CIT(A) erred in confirming addition of Rs. 31,99,965 not accepting the fact that the said amount is included in the total cash receipt of Rs. 13,89,11,705 on which commission of 4& income is taxed.

3. The background facts are that the assessee filed return of income on 31.10.1997 declaring taxable income of Rs. 78,804/-. Subsequently a revised return was filed on 08.10.1999 declaring income of Rs. 10,62,340/- wherein the assessee withdrew the deduction claimed u/s 80IA, as claimed in the original return of income. Subsequently, a survey action u/s 133A was conducted on 24.09.1998. The original assessment was completed on 28.03.2000, considering the material found during the survey, the AO determined the income of assessee at Rs.17,30,00,600/-. On appeal before the ld. CIT(A), the assessee was granted partial relief. Assessee as well as Revenue filed cross appeal before the Tribunal. The Tribunal in a common order in dated 19.11.2007 set-aside the assessment order and restored the case for fresh assessment. In the set-aside proceeding, the AO observed as under: “The A.O. observed that the assessee Shri Naresh Balwant Rai Vora and his brother Shri Sudhir Balwant Rai Vora are Hawala bill providers to certain petroleum product dealers in Mumbai. They have mainly provided hawala bills to the members of Thakkar Group and Pilot Vijan Group. The A.O. also observed that the petroleum product dealers have licence to trade in Naphtha and other Naphtha based products. The licenses are issued by the Ministry of Petroleum and the end users of the Naphtha related petroleum products are paint and varnish industries. However, the A.O. noticed that the Naphtha was sold to the petrol bunks at a heavy premium of Rs. 8.00 per litre 2 & 4624/M/201- Shri Naresh B. Vora in tanker loads. Each tanker has capacity of 12,000 litres. For indulging in this operation, the assessee provided bogus purchase bills to the Naphtha dealers. The A.O. also observed that the assessee has accepted that he has indulged in this practice. Further, the A.O. observed that the assessee has accepted cash along with fabricated transport bills from the Naphtha dealers and deposited the cash in the bank accounts maintained by him and has issued demand draft/pay order to the Naphtha dealers. The A.O. has further stated that the assessee claimed that he used to get a fixed commission on the value of the bills. The tanker load of the Naphtha is clandestinely sold to the petrol bunk owners for adulteration and the owner pays the price of the tanker in cash to the Naphtha dealers. The purchase price of the Naphtha needs to be paid to the oil companies such as IOCL etc. and hence part of the sale proceeds in: cash received from the petrol bunk owners was diverted by the Naphtha dealers to the assessee who had deposited it in his bank and returned the pay order / DD to the Naphtha dealers. The A.O. observed that the assessee received commission for his services on the total value of the bogus bills provided by him.”

4. In the set-aside proceeding, the AO while passing the assessment order on 17.11.2008 u/s 143(3) r.w.s 254 of the Act and made the following addition: Sr. Particulars Addition (Rs.) (1) u/s 80-IA claim withdrawn 9,83,541 (2) Brokerage income 80,600 (3) Net profit on the sale of Rs.3,64,92,493 (4%) 14,59,699 (4) Unexplained credit in the Balance Sheet- Sundry creditors 57,93,252 (5) Unexplained credit in the Balance Sheet- Loan credit 45,860 (6) Opening balance in the Capital A/c 1,84,076 (7) Undisclosed income utilized in making payments to Seven 21,68,000 Petroleum Company (8) Undisclosed income utilized in making payments to Seven 10,49,000 Petroleum Company (9) Sale proceeds not recorded in books 96,70,356 (10) Investment in closing stock 76,14,644 (11) Unexplained receipts 31,99,965 (12) Unexplained receipts 20,29,000 5. On appeal before the ld. CIT(A), the addition of Rs. 14,59,699/- on account of net profit @ 4% on the sale of Rs. 3,64,92,934/-, unexplained cash credit in the balance of sundry creditor of Rs. 57,93,253/-, the addition on account of capital account of Rs. 1,84,076/-, unexplained income utilized in making payment to seven Petroleum Company of Rs. 21,68,000/- and undisclosed income utilized in making the payments to seven Petroleum Company of Rs. 10,49,000/- was sustained and rest of the addition was deleted. Further, aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before us.

6. The appeals were fixed on 03.05.2017, none-appeared on behalf of assessee despite repeated calls and pass over. Perusal of record reveals that assessee is very & 4624/M/201- Shri Naresh B. Vora well aware about the dates of hearing. The assessee himself made an application before the Tribunal on 29.09.2014 for seeking adjournment and the case was adjourned on his application for 11.03.2015. The assessee was informed by court notice was through RPAD. The notice for hearing fixed for today was also served by RPAD as AD Card is on record. In these circumstances, we left no option except to hear the submissions of ld. DR for the Revenue and to rely upon the material available on record. The ld. DR for the Revenue argued that in the first round of litigation, the appeal of the assessee was restored back to the file of AO vide order dated 29.11.2007 in ITA No. 4043/M/02. The AO after giving full opportunity to the assessee made the other addition besides the other additions. On appeal before the ld. CIT(A), the assessee was given substantial relief. The ld. DR for the Revenue argued that assessee has neither came to substantiate his claim nor filed any documentary evidence on record. Thus, the appeal of the assessee is liable to be dismissed.

raised by assessee are rejected. 8. In the result, appeal filed by assessee is dismissed. & 4624/M/201- Shri Naresh B. Vora