Tribunal rejects Assessing Officer's presumptions, deems addition of notional income unsustainable.

The Tribunal concluded that the additions made by the Assessing Officer were based on presumptions without concrete evidence. The assessee, found to be an old company with regular business activities and compliance, had no incriminating material found during the search. The Tribunal deemed the addition of notional commission income unsustainable and deleted all the additions, allowing the appeals of the assessee.

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Issues Involved:
1. Validity of assessment orders under section 153A.
2. Allegation of the assessee being a non-existent paper/shell company.
3. Basis for additions made by the Assessing Officer (AO) on account of commission income.
4. Incriminating material found during the search.
5. Role of the assessee in providing accommodation entries.

Detailed Analysis:

1. Validity of Assessment Orders under Section 153A:
The assessee challenged the validity of the assessment orders on the grounds that no valid search was conducted and no incriminating material was found. The CIT (A) held that a search warrant was issued in the name of the assessee and executed, proving the conduct of a search under section 132. The CIT (A) further noted that the appellant was found to be a shell entity engaged in providing accommodation entries, which constituted incriminating material justifying the initiation of proceedings under section 153A.

2. Allegation of the Assessee Being a Non-Existent Paper/Shell Company:
The AO alleged that the assessee was a non-existent paper/shell company controlled by entry operators and involved in providing accommodation entries. The AO based this conclusion on the fact that no company was found operating at the registered address during the search. However, the assessee contended that it had been regularly filing returns and complying with statutory requirements, and the registered office address was duly disclosed in records.

3. Basis for Additions Made by the AO on Account of Commission Income:
The AO made additions by estimating unaccounted commission income at 2% of total deposits in the bank accounts, presuming the assessee earned commission for providing accommodation entries. The CIT (A) confirmed these additions, stating that the assessee was a shell entity not carrying out genuine business and had provided accommodation entries to various companies.

4. Incriminating Material Found During the Search:
The AO noted that blank signed receipts related to share proceeds and loan repayments were found during the search of Sanjay Bhandari and his group companies, suggesting that the assessee provided accommodation entries. The CIT (A) held that this constituted incriminating material. However, the assessee argued that no incriminating material was found from its possession, and the addition was based on presumptions and surmises.

5. Role of the Assessee in Providing Accommodation Entries:
The AO alleged that the assessee provided accommodation entries to various companies of Sanjay Bhandari group and earned commission. The assessee refuted these claims, stating that no dealings were made with most of the companies listed by the AO, and the transactions with a few companies were legitimate investments. The Tribunal found that the assessee had been regularly filing returns and had substantial investments and business activities, contradicting the AO's claim of it being a non-existent paper company.

Decision:
The Tribunal concluded that the additions made by the AO were based on presumptions without concrete evidence. The assessee was found to be an old company with regular business activities and compliance with statutory requirements. The Tribunal noted that no incriminating material was found during the search, and the addition of notional commission income was unsustainable. Consequently, the Tribunal deleted the additions made in all the years and allowed the appeals of the assessee.

Order pronounced in the Open Court on 29th January, 2021.

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