TaxTMI 
TaxTMI 
2011 (2) TMI 1399
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....see in this appeal, had floated various companies including his personal capacity for providing accommodation entries to the entry seekers. A survey under section 133A was also carried out on the same day at the business premises of Mr. Mukesh Chowkshi and his concern M/s. Mahasagar Securities Pvt. Ltd. Shri Chowkshi at the time of survey admitted that the following companies had been operating at the address and they were engaged in providing accommodation entries : i) M/s.Goldstar Finvest (P) Ltd. ii) M/s.Richmond Securities (P) Ltd. iii) M/s. Alliance Intermediateries (P) Ltd. iv) M/s.Mahasagar Securities (P) Ltd. (formerly known as Richmond Securities (P) Ltd. v) M/s.Alpha Chemie Trade Agency (P) Ltd. vi) M/s.Mihir Agencies (P) Ltd. vii) M/s.Talent Infoway (P) Ltd. viii) M/s. Buniyad Chemicals Ltd. ix) Mukesh Chowkshi, Individual 3. The AO noted that the modus operandi adopted by the assessee was that he first received cash from entry seekers which were deposited in the bank account of one of the group companies and after depositing the cash in the bank accounts, a cheque was issued and the equal amount in favour of entry seekers. The assessee thus....
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....es to the entry seekers and was earning commission there from @ 0.15%. The commission earned was therefore much less the limit of Rs. 40 lacs for compulsory audit of accounts. It was also submitted that the amount received by the assessee belonged to the entry seekers and hence the same could not be regarded as the receipt of the assessee. His position was identical to that of share broker who earned commission on share transactions. The assessee referred to the decision of Ahmedabad Bench of the tribunal in case of R.Wadiwala & Co. vs ACIT (72 ttj 34) in which the tribunal had held that turnover of dealing in shares made on behalf of the various buyers and sellers of shares was not includable in the turnover for the purpose of section 44AB. It was pointed out that the AO himself had not initiated penalty proceedings in the earlier years and that the AO had not issued defect memo under section 139(9) of the Income-tax Act for defect in the return. The assessee also referred to the CBDT circular No.452 dated 17.3.86 in which the Board had clarified that in case of Kaccha Arathia only the commission was to be considered for the purpose of determining the applicability of section 44AB....
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....d carried out the audits for all the years. Shri S.M.Bhatt the CA in the affidavit has stated that he had issued the audit reports within the specified time and the same were filed with return of income for all the years. It has also been stated that when he was informed that the audit reports were not available on record he had requested the AO to verify the records pertaining to the original return of income or other reports where report may have been kept and had volunteered to file the report during the penalty proceedings. It was requested that the additional evidence should be admitted and the matter may be referred to AO for verification and fresh orders. 6. We have to first deal with the admissibility of the additional evidence. The provisions for admitting additional evidence are contained in rule 29 of ITAT rules. As per the said rule the parties are not entitled to produce additional evidence which can be admitted only if the tribunal requires any document to be produced or witness to be examined or an affidavit to be filed to enable it to pass order or for any other substantial cause or if the Income- tax authorities have decided the case without giving sufficient op....
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....s also not done. It is interesting to note that the auditors were also the Authorized Representative of the assessee in the penalty proceedings. But they did not even file the copy of the audited accounts and audit reports even during the penalty proceedings. Considering the entirety of facts and circumstances we have to hold that the authorities below had rightly concluded that no audited accounts and audit reports had been filed by the assessee. We also note that under section 44AB the audited accounts were required to be furnished to the AO within 31st October of the relevant assessment year and even if the assessee's conversion was to be accepted for the sake of arguments that the audit reports had been filed with the return of income these had been filed much after the due date i.e. 31st October of the relevant assessment year. Therefore in our view the assessee had committed default for which penalty was leviable. 8. The assessee had also raised some legal issues before CIT(A) that the assessee was not liable for audit. It was submitted that the case of the assessee was akin to the share brokers and therefore only the commission should be considered as receipts of the ....