TaxTMI 
TaxTMI 
2016 (10) TMI 1046
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....her on the facts and in the circumstances of the case, the CIT(A) was right in modifying the G.P. addition made by the AO on transaction facilitated by the assessee by holding that only net commission income of Rs. 225/- per Rs. 1 lac could be taxed on the bank deposits taken by the AO as turnover without giving any specific findings on the owner of the deposits made in the bank accounts. 2. Whether on the facts and in the circumstances of the case, the CIT(A) was right in not appreciating the facts that the assessee has been unable to produce the depositors who have deposited cash in bank account, she also failed to give the name and addresses of the persons (beneficiaries) and in absence of these basic details, it was not proved by the assessee that she was providing facility of bringing unrecorded sales proceeds of any seller through her bank accounts and therefore in this situation, there was no other option except to hold that the deposits in bank accounts are nothing but assessee's own trading receipts/sale proceeds and withdrawals were for the corresponding purchases and expenses. 3.(i) Whether on the facts and in the circumstances of the case the CIT(A) wa....
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....arble traders to bring cash against unrecorded sales in their books of accounts. The cash deposited by other parties based in different parts of the country was withdrawn and handed over to the marble traders and for this activity they used to pay commission. He was confronted regarding transactions in his wife's bank accounts and he stated that the entire transactions in the bank accounts were carried out by him. He further stated that deposits do not belong to her and the amounts have been deposited by out station various parties and after making the same has been handed over to the concerned parties (Marble traders). He also stated that no books of accounts are maintained. During the course of survey, he was asked regarding names of the parties for whom these transactions have been done in his wife's bank accounts. He replied that all the deposits in the bank accounts belong to different parties. It is relevant to mention here that the prevailing market practice in the business of marble trading is that there is large scale under invoicing and under-billing of sales. Generally, for obtaining sale consideration of actual transaction from the buyers located outsi....
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..... Assessment year wise total amount of deposit in each bank account. In compliance she has stated that complete details of marble traders with addresses were furnished to the Investigation Wing. Further, the assessee has submitted neither bank statements nor names and addresses of the beneficiaries with details of deposits party wise and assessment year wise to the undersigned. Therefore, bank statements were called from the bank authorities by issue of notices u/s 133(6) of the I.T. Act and copies of the same were also made available to the assessee." And then, the AO finally concluded his findings stating as under: "The assessee has failed to produce any of the persons to prove that she has done work for them to being cash through her bank accounts from out station and handed over to them. Thus she remained unable to prove the identity of the persons to whom facility of bringing cash against sales was provided and also failed to prove genuineness of transactions made in her bank accounts. Thus the assessee has been unable to produce the depositors who had deposited cash in bank account. She also failed to give the names and addresses of the persons to whom th....
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....om the transactions facilitated by the appellant "Money withdrawn by taxpayers was given in cash to Marble traders and which is against the provision of Income tax Act, 1961...... ......and looking to this extra income tax can be recovered." This is also an admitted fact by the AO and relevant part of the remand report No. DCIT/CC/AJM/2015-16 dated 09.03.2015 read as under: "6. Reasons for reopening assessments were recorded for escapement of income on account of commission on amount of unaccounted sale consideration of beneficiaries received in their bank account." (6.2) The intention of assessing the commission income from the transactions facilitated by the appellant like persons is established from the fact that only commission income was taxed in cases of Shri Prakash Chand Vijayvargiya and Shri Manoj Kumar Agarwal A.Y. 2009-10 and that action of the AO was ratified by Pr. (Central) in rejecting the reopening proposal submitted in March, 2015. The relevant part of the remand report No.DCIT/CC/AJM/2015-16/451 dated 07.08.2015 read as under: (3) Further it was submitted to your goodself in the previous letter No.2419 dated 09.03.2015 ....
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....nder: "In the first part of assessment order, assessees are termed as facility provider on the basis of their submission. They claimed that they were getting commission on the amount of deposits made by the customers of beneficiaries Kishangarh in the bank accounts and handed over amount after making withdrawal to the beneficiaries. In the later part of assessment order they were treated as marble traders as gross profit on turnover in their bank accounts was applied for the reasons that they have not made available details as discussed in the fore-going para 6. Smt. Kusumdevi Vijayvargiya: a) Assessee is not registered with Sales tax Department and not filed sales tax return. b) Assessee is not registered with Central Excise and not filed Excise return. c) Assessee has not shown debtors and creditors. d) Assessee has no purchase and sales accout. e) Assessee has no depreciable assets. f) No books of accounts maintained. g) Assessee has no SSI registration number. h) Assessee has no power connection. (6.3.2) The swing in the position from taxing mere commission income on the transacti....
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....of the commission income is allowed as expenses, I think it would be close to justice if an expenses of 25% of commission income is allowed. In other words expenses of Rs. 75 per Rs. 1 lac of transaction facilitated could be allowed. (6.7) The combined finding of above para 6.5 and 6.6 is that a net commission of Rs. 225 per Rs. 1 lac of transaction facilitated could be taxed on the bank deposits taken by the AO. With the above finding, the GP addition made by the AO on transaction facilitated by appellant is modified for upholding only net commission income as concluded in para 6.7. Thus these grounds are treated as partly allowed." 2.2 We now refer to submissions of the ld AR who has vehemently argued the matter and submitted as under: (1.1.1) The ld. AR of the assessee submitted that the statement of the Husband of the Assessee clearly prove that it has earned only Commission Income. During the course of statement in response to Q. No.2, it was clearly stated by the husband of the assessee Shri Prakash Chand Vijayvargiya, that he was managing the bank accounts of the assessee through which the entire transactions took place. In the statement, the mo....
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....ecovered from the assessee and in the entire reasons there is no mention of any sort of trading in marble by the assessee. It is pertinent to note that the ld. AO itself has stated in the remand proceedings that initially the reasons were recorded for escapement of commission income and the relevant extract of the same is appearing below: "6. Reasons for reopening assessments were recorded for escapement of income on account of commission on amount of unaccounted sale consideration of beneficiaries received in the bank accounts". Therefore, even the reopening of assessment was made for taxing commission income and therefore change of stand by the ld. AO was without any basis and evidence on record and as such the consequent assessment by applying g.p. rate was also bad in law. (1.1.4) The ld AR further submitted that the explanation of the assessee was not found false. The AO could not refer a single evidence of trading in marble. It is further notable that in the entire assessment order there is even no whisper about the statement being incorrect or false and rather the statement is supported with corroborative and circumstantial evidences. Thus the stat....
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.... lacs but in several crores. For trading in marble, at least one would need a place where the buyer could choose the marble of their choice, at least it would need bare minimum infrastructure like table, chair etc., at least it would need some account books to enter the quality, quantity or weigh of marble etc., at least it would need some employees, at least it would need some power connection etc. These all were missing in the present case so by no stretch of imagination it could be assumed that the assessee was in the business of trading in marble and therefore, the ld. CIT(A) was right in assessing only the commission income. (1.1.8) The Department itself assessed Commission Income in the AY 2009-10, in case of Prakash Chand Vijayvargiya, @ Rs. 300/- per lakh on such bank transactions and we are enclosing herewith the copy of assessment which is placed at PB 53-55. From the assessment order it will be seen that in AY 200910 there were net transactions to the tune of Rs. 191949195/- and accordingly commission was assessed at Rs. 575847/- and out of the same bank charges of Rs. 70315/- was allowed and thus net addition of Rs. 505532/- was made by the ld. AO. (1.....
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....The buyers deposit amount below Rs. 50000/- to avoid mentioning PAN on pay-in-slips. After receipt of amount in bank account, the confidents i.e. Facility providers withdraw the amount of on-money aned handover to the beneficiaries i.e. sellers the facility providers claim that they receive Rs. 200/- to Rs. 300/- per Rs. 100000/- received in their bank account by way of commission. As has been admitted by the assessee during the course of survey U/S 133A, the assessee is also prima facie found engage in providing facility of bringing cash payment of the marble traders by allowing them to use his bank accounts. Also this is in conformity with the prevailing market practice in this business in this region. Thus the observation of the AO makes it abundantly clear that the alleged bank transactions were related to beneficiaries and the assessee was not involved in trading of marbles. (1.2.1) Change of Stand by the AO at the Fag End of Assessment Without Any Change in Facts & Circumstances: As submitted above that the ld. AO agreed with the contentions of the assessee and it proceeded for the assessment on that basis itself. However at the fag end of limitatio....
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....ere maintained by the assessee, however it has duly stated the various names & addresses of beneficiaries from whom it has received commission. Such names and addresses are appearing at Q. No.11, 14, 15, 16 & 19. Therefore rejecting the contention of the assessee merely on the ground that complete names and addresses of the beneficiaries were not provided by the assessee was uncalled for and the ld AO should have considered the totality of facts and circumstances. (1.2.4) Assessee Fully Co-operated in Assessment Proceedings: We may submit that the assessee has submitted the complete details to the extent it were available with it and also attended the various hearings and this fact is duly appearing at page 3 point no.4 of the assessment order. Thus it was not a case where the assessee was trying from escaping the assessment process or taxing of amount in proper hands though it may have its own limitation as has been discussed elsewhere in the submission. (1.2.5) Department Initiated Action Against the Beneficiaries: It is also notable that the department has reopened cases of various beneficiaries on the basis of information from the assessee and other persons on....
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....mbly pray to sustain the order of ld. CIT(A) while rejecting the appeal of the department. 2.3 We have heard the rival contentions and perused the material available on record. The issue under consideration relates to cash deposits amounting to Rs. 11,37,60,458 made in six bank accounts maintained by the assessee. The AO has held these receipts as receipts from the business of marble trading and the ld CIT(A) has held that these receipts belong to the marble traders and assessee who has facilitated these receipts should be brought to tax in terms of her commission income. Undisputedly, these bank accounts are opened in the name of the assessee and operated by the assessee herself with the assistance of her husband. The stand of the assessee is that she is not carrying on any business in the nature of marble trading as alleged by the AO. She has further stated that all these bank accounts were used by various marble traders operating in and around Kishangarh to bring cash against their unrecorded sales made to various parties from all over India. The assessee further submitted that the cash deposited by the various parties was subsequently withdrawn and handed over to the marble ....
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.... bank accounts as well as names and addresses of all the beneficiaries/marble traders to whom the cash was withdrawn and handed over by the assessee. 2.5 In compliance, the assessee has stated that the details of marble traders alongwith addresses were furnished to the Investigation wing who has carried out the survey, recorded her and her husband's statement and also obtained various exercise book, diaries and loose papers. On perusal of the statement of assessee's husband which was recorded during the course of survey and placed on record, we find that in response to various questions such as question No. 11,14,15,16 & 19 which are raised in the context of various exercise book, diaries and loose papers found during the course of survey, the assessee's husband has stated that all these documents contained data in terms of names and addresses of various parties who have deposited the money in her various bank accounts and also details of various marble traders/beneficiaries to whom that money belongs. 2.6 Here the fundamental question that arises for consideration is where cash has been found deposited in the bank accounts maintained by the assessee, the onus to prove that c....
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....ner was on the person who affirmed that he was not the owner, was incorrect and inapplicable to taxation proceedings. This contention was rejected. The High Court of Bombay held that what was meant by saying that the Evidence Act did not apply to the proceedings under the Act was that the rigour of the rules of evidence contained in the Evidence Act was not applicable but that did not mean that when the taxing authorities were desirous of invoking the principles of the Act in proceedings before them, they were prevented from doing so. Secondly, all that s. 110 of the Evidence Act does is that it embodies a salutary principle of common law jurisprudence which could be attracted to a set of circumstances that satisfy its conditions." (Emphasis supplied ) 2.7 In light of above, it is crystal clear that where the cash is found in possession of the assessee by virtue of deposits in her bank accounts maintained and operated by her, the onus is on the assessee to discharge the burden that cash doesn't belong to her and belong to the marble traders. Further, the assessee has to adduce necessary evidence to substantiate her claim. 2.8 The next question that arises for consideration is....
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....t by the assessee. The source and the nature of the receipt has to be proved by the assessee, and if he fails to prove satisfactorily the source and nature of the amount received, the assessing authority is entitled to draw an inference that the receipt is assessable income of the assessee. The Tribunal has cast doubts with regard to the investments and has even observed that some of them are not even genuine. A duty was cast on the Tribunal to have either remitted the matter to the CIT(A) or to the assessing authority to find out the correct position. There may be a number of creditors of similar nature, but the assessee has to discharge his burden in respect of all of them. The burden was to be discharged by the assessee and all the creditors were not produced, their addresses were not given and cogent reasons were given by the ITO. When the Tribunal was of the view that some of the investments were not genuine it should not have upheld the order of the CIT(A) and the proper course was to set aside the order of the CIT(A) with a direction to either allow such amounts for which the assessee has been able to prove satisfactorily the investment or to give him the opportunity to prov....
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....n general." (Emphasis supplied) 2.9 In our view, merely by making a statement before the Assessing officer that the details of the depositors and the beneficiaries were submitted to the investigation wing, the onus cast on the assessee is not discharged. It is for the assessee to explain each and every entry of deposit and withdrawal in the bank accounts and corroborate it with the details mentioned in the notebooks and other loose papers found during the course of survey. There is nothing on record to suggest that any such explanation and reconciliation of various transactions were submitted either during the course of survey or during the assessment proceedings or even during the appellate proceedings. Once the said exercise has been undertaken and examined, the question of looking at the circumstantial evidences or the theory of probability as to whether the assessee has the necessary infrastructure to undertake marble trading can be looked at. Where the transaction details are available, the same should take precedence over the circumstantial evidence. The Assessing officer thereafter has to apply his discretion and see whether he is comfortable with the explanation of th....
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....nd withdrawal in the bank accounts and corroborate it with the details mentioned in the notebooks and other loose papers found during the course of survey and the necessary linkage/nexus has to be established by the assessee. There is nothing on record to suggest that any such explanation and reconciliation of various transactions were submitted during the appellate proceedings or examined by the ld CIT(A). 2.12 In our view, the matter requires a deeper and a coordinated examination by the authorities at the higher level to bring the correct facts on record which should conclusively establish that either the assessee is the owner of the money found deposited in her bank accounts as claimed by the AO or the assessee is merely a facilitator and earns commission income as claimed by the assessee. Accordingly, we set-aside the matter to the file of the ld CIT(A) to examine the matter afresh with the following directions: (1) the assessee shall provide all the requisite details in terms of names and address and other requisite particulars of the depositors as well as of the beneficiaries; (2) the assessee has to explain the nature and source of the transactions in t....
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....यकà¥à¤¤à¤¿à¤¯à¥‹à¤‚ / पारà¥à¤Ÿà¤¿à¤¯à¥‹à¤‚ से मेरे नाम से या मेरी पतà¥à¤¨à¥€ शà¥à¤°à¥€à¤®à¤¤à¥€ कà¥à¤¸à¥à¤® देवी विजयवरà¥à¤—ीय के नाम से यहां किशनगढ़ सà¥à¤¥à¤¿à¤¤ à¤à¤¿à¤¨à¥à¤¨-à¤à¤¿à¤¨à¥à¤¨ बैंको में सà¥à¤¥à¤¿à¤¤ हमारे खातों में रकम नकद जमा करवाता हूà¤à¥¤ फिर यहां लोकल वà¥à¤¯à¤•à¥à¤¤à¤¿ या फरà¥à¤® मà¥à¤ से यह राशि नकद हो....
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....¥¤ मैं आयकरदाता हूà¤à¥¤ मेरा PAN No. मà¥à¤à¥‡ अà¤à¥€ याद नहीं। मैं अपनी आयकर विवरणी आयकर अधिकारी किशनगढ़ कारà¥à¤¯à¤¾à¤²à¤¯ में जमा करवाता हूà¤à¥¤ पà¥à¤°0नं0 (10) 3070 (10) आप अपने वà¥à¤¯à¤µà¤¸à¤¾à¤¯ की Modus Operandi बताà¤à¤‚। किशनगढ़ में देश के विà¤à¤¿à¤¨à¥à¤¨ शहरों से वà¥à¤¯à¤¾à¤ªà¤¾à¤°à¥€ à¤à¤µà¤‚ अनà¥à¤¯ वà¥à¤¯à¤•à¥à¤¤à¤¿ मारà¥à¤¬....
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.... मैं आपको Annexure A-2 जिसमें 1 से 16 तक पेज लिखे गये है और यह दिनांक 20.10.2010 से 04.01.2011 तक इनà¥à¤¦à¥à¤°à¤¾à¤œ लिखे है कृपया इनà¥à¤¹à¥‡à¤‚ देखकर बताà¤à¤‚ कि इनमें दरà¥à¤œ इनà¥à¤¦à¥à¤°à¤¾à¤œ कà¥à¤¯à¤¾ है। उ० नं० (14) मैने Annexure A-2 देख लिया है यह मेरी सà¥à¤µà¤¯à¤‚ की Handwriting में है इसमें जो इनà¥à¤¦à¥à¤°à¤¾à¤œ है वह दिनांक 21.10.2010 से 04....
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.... मारà¥à¤¬à¤², रामूराम जी चौधरी, संजय जी, पोकरना, महेनà¥à¤¦à¥à¤° चांडक, सà¥à¤°à¤œà¥€à¤¤ मारà¥à¤¬à¤², पंजाब मारà¥à¤¬à¤², राकेश नोटियार, सà¥à¤°à¤œà¤¿à¤¤ सिंह जी सरदार, सीताराम छपà¥à¤ªà¤°à¤µà¤¾à¤², मूंदडा जी कंवर साहब, धरà¥à¤®à¤¿à¤ ा मारà¥à¤¬à¤² इतà¥à¤¯à¤¾à¤¦à¤¿ है। इन वà¥à¤¯à¤¾à¤ªà¤¾à¤°à¤¿à¤¯à¥‹à¤‚ का काम मà¥à¤–à¥à¤¯à¤¤à¤ƒ में करता हà¥....
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....ा रखी है कृपया बताà¤à¤‚ कि इन Concern में कà¥à¤¯à¤¾ वà¥à¤¯à¤¾à¤ªà¤¾à¤° होता है ? 3070 (23) मेरे à¤à¤µà¤‚ मेरे परिवार के सदसà¥à¤¯à¥‹à¤‚ के नाम से कोई वà¥à¤¯à¤¾à¤ªà¤¾à¤° उपरोकà¥à¤¤ फरà¥à¤®à¥‹à¤‚ में नहीं होता है। न कोई Marble Trading होती है। केवल Bank खाते खोलने के लिठमें Concern बनाई हà¥à¤ˆ है। Document 2 पà¥à¤°0नं0 (19) मैं सरà¥à¤µà¥‡ की काà....
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....¤œ है वह 02.04.2010 से 23.04.2010 तक के है, Annexure A-11 के इनà¥à¤¦à¥à¤°à¤¾à¤œ जिन डायरियां का पहले उलà¥à¤²à¥‡à¤– किया गया है उनमें नहीं है बाकी Annexure A-8, A-9, A-10, A-11, A-12 Annexure A-2, 3, 4 की डायरियां में आ चà¥à¤•à¥‡ है। मैं पà¥à¤¨à¤ƒ सà¥à¤ªà¤·à¥à¤Ÿ कर देना चाहता हूं कि किशनगढ़ के कà¥à¤› पारà¥à¤Ÿà¤¿à¤¯à¥‹à¤‚ जैसे पंजाब मारà¥à¤¬à¤², राकेश नोटियाà....