TaxTMI 
TaxTMI 
2017 (5) TMI 725
X X X X Extracts X X X X
X X X X Extracts X X X X
....pellate Tribunal, Mumbai (hereinafter called "the Tribunal") read as under:- First, we shall take up assessee's appeal in ITA No. 3654/Mum/2016 for assessment year 2009-10. "1.0 A humble prayer is made to condone the delay of 167 days in filing of the appeal being caused under the bonafide reasons and compelling circumstances beyond control of the appellant; 2.0 On facts and circumstances of the case and in Law, Ld. CIT(A) erred in upholding the Search warrant u/s 132(1) and consequential assessment order u/s 153A as valid without considering the fact that the Search warrant had been invalidly issued in Joint names of 2 different persons; 3.0 On facts and circumstances of the case and in Law, Ld. CIT(A) erred in confirming the addition, on estimation basis, of undisclosed commission income of Rs. 8,70,800/- @ 1% of gross transaction value on ignoring the fact that the appellant, in statement u/s 132(4), disclosed the commission income @ 0.l0% of transaction value; 4.0 The Ld. CIT(A), before estimating the undisclosed commission income on very higher side @ 1% of entire transactions, erred in not considering the understated vital facts, being; a) The appellant, in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the interest of justice. We have observed that the appeal is delayed by 167 days. The assessee has brought on record documents evidencing illness of the father which included hospital records and treatment record from 21-05-2015 to 30-11-2016. The father was treated at both Jaipur and Mumbai as per these medical records placed in file . The assessee has claimed that his father met with brain stroke and thereafter suffered lung cancer and due to all these compelling circumstances, the assessee could not concentrate on his work as well as the tax matters. Thus, keeping in view the genuine and bonafide reasons demonstrated by the assessee as above, we are of the considered view that the assessee was prevented by sufficient cause in filing the appeal in time and in our considered view and in the interest of justice , the delay of 167 days in filing of the second appeal before the tribunal is hereby condoned and we direct admission of all the three appeal(s) for adjudication on merits. Thus, all the appeals bearing ITA no. 3653 to 3555/Mum/2016 filed by the assessee for assessment year 2010-11,2009-10 and 2011-12 are directed to be admitted to be adjudicated on merits. We order accordin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....group and Leela group of companies as share capital and share premium. The extract of the statement recorded of Shri Tejash J Shah on 13th March, 2012 by the DDIT (Inv.) Bhavnagar is reproduced hereunder:- "I do hereby acknowledge and confirm that after receiving cash from Bansal or Leela group of Bhavnagar , the same was converted in to cheques in favour of any of my managed company from different shroffs situated at Kalbadevi, Mumbai. Later on, after rotating said cheque in my owned managed companies, I used to issue either cheque or make RTGS in favour of the desired concern of Bansal or Leela group of Bhavnagar. Mr. Rahul Singhvi is the middleman in all the transactions which I have made with Mr. Vijay Bansal and Komalkant Sharma. In fact, Shri. Rahul Singhvi is the persons who asks me to arrange cheque of certain amount to Bansal or Leela Group of Bhavnagar and he only discuss with Shri. Vijay Bansal or Shri. Komalkant Sharma about the quantum of share capital or premium required and later on through angadia arranges cash. This cash is actually being sent by Shri.Vijay Bansal and Komalkant Sharma for want of desired entries. When the bank accounts of Mr. Vijay Bansal and Ko....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the assessee had received commission ranging from 1.5 to 2.45% for arranging the bogus entries for Leela Group and Bansal Group. The A.O., based on above facts, issued show cause notice dated 26th March, 2014 to the assessee , the contents of which are reproduced below:- "1. During the course of search proceedings, your statement recorded u/s 131 of the I.T. Act, 1961, on 17/02/2012 and thereafter on various dates, admitted that you have given bogus share capital entries amounting to Rs. 4.15 crs to Bansal Group and entries amounting to Rs. 4,55,80,000/- to Leela Group, Natraj Logistics & Services (P) Ltd. and Komalraj Transport (P) Ltd., Further, you stated that all the financial transactions recorded on the page number 101 of the impounded material from your premises were nothing but the cash received on various dates from Leela sub-group and Bansal Group, and datewise cheques deposited in their bank accounts. You further admitted that you used to receive cash from Komalkant Sharma and in turn provide RTGS/cheque entries to Leela sub-group in the guise of share capital and share premium. You further stated that you were only a mediator or communicator, who used to arrange ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nds of the assessee would be on very higher side, Further, such percentage @ 2% represents the gross brokerage and does not represent the actual brokerage earned by the assessee which was around 0.10%; It is to further submit that the seized papers discloses the various transactions entered into by and between the parties and does not represent any amounts received by the assessee. Further, in such seized papers, the brokerage is disclosed @1.50% to 2.45%. Factually, such brokerage represents the gross brokerage on entire transaction which had been received by various brokers and mediators including by Mr. Tejas Shah. Thus, it would be incorrect to presume that entire brokerage of 1.50% to 2.45% is earned by the assessee, accordingly the undisclosed income of 0.10% as brokerage belonging to the assessee may kindly be estimated; The assessee, during course of search in statement u/s 132(4) recorded on oath, categorically stated that the seized papers relate to the cash payment made by the companies to various cheque issuers/ investors through Mr. Tejas Shah and others and it is also stated that the assessee had earned a small brokerage of 0.10% on the value stated in the seized d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....disclosed commission income @ 0.10% . The learned CIT(A) also observed that Shri Tejash J. Shah had also admitted in his statement recorded u/s 131 of the Act that the assessee is a middleman and normal commission earned in the business of accommodation entries ranges from 0.30% to 0.40% on the value of transaction. The ld. CIT(A) allowed the expenses incurred by the assessee on account of angadia expenses for money transfer, conveyance and telephone expenses which was allowed by learned CIT(A). The ld. CIT(A) finally held that although no documentary evidence has been submitted, it would be appropriate to estimate the net commission(after allowing expenses)) earned by the assessee @ 1.00% of the transaction value which according to learned CIT(A) will meet the ends of justice and accordingly directed the A.O. to restrict the addition of undisclosed commission income @ 1% of the transaction value and directions were issued for deletion of the balance additions as were made by the AO , vide appellate orders dated 22-09-2015 passed by learned CIT(A). 9. Aggrieved by the appellate order dated 22-09-2015 passed by the ld. CIT(A), the assessee filed an appeal before the Tribunal. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The assessee also relied upon decision of Special Bench decision of the Tribunal in the case of Manoj Aggarwal v. DCIT(2008) 117 TTJ 0145 (Del) [SB] whereby the Tribunal accepted net commission income at 0.3 paise, wherein tax-payer in that case admitted to have earned commission at 0.5 paise for giving accommodation entries and allowance @10% of gross commission was allowed for expenses to bring to tax net commission income at 0.35 paise . The assessee also relied upon decision of the tribunal in the case of Gold Star Finvest Private Limited v. ITO (2013) 33 taxmann.com 129(Mum-trib.) and Sanjay Kumar Garg v. ACIT (2012) 134 ITD 0082(Del0- trib) 11. The ld. CIT-D.R. submitted that the ld. CIT(A) has granted maximum relief to the assessee based on facts and circumstances of the case.There was seized material marked page no 101 (pb/page1) which was seized from assessee which reflect commission @1.5% to 2.45% on transaction value. The assessee is a link in the chain of providing accommodation entry was the contention of learned CIT(A) which is itself admitted by assessee. The document marked as page 101 (pb/page1)was seized during the course of search and contents will be presumed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....roup. In his statement recorded on oath u/s 131 of the Act on 13th March, 2012, Sh Tejash J Shah had admitted that he had floated various companies for this scheme of conversion of cash into cheque through these bogus companies and introduction of unaccounted income into the regular books of account. It was also stated by Shri Tejash J Shah that the assessee was the facilitator for handling the cash from ship breakers through angdias and arranging cheque for Tejash J Shah group companies and cheques were introduced in the Bansal group and Leela group of companies as share capital and share premium. The extract of the statement recorded of Shri Tejash J Shah on 13th March, 2012 by the DDIT (Inv.) Bhavnagar is reproduced hereunder:- "I do hereby acknowledge and confirm that after receiving cash from Bansal or Leela group of Bhavnagar , the same was converted in to cheques in favour of any of my managed company from different shroffs situated at Kalbadevi, Mumbai. Later on, after rotating said cheque in my owned managed companies, I used to issue either cheque or make RTGS in favour of the desired concern of Bansal or Leela group of Bhavnagar. Mr. Rahul Singhvi is the middleman in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... few layers of other bank accounts and ultimately the money was transferred to various beneficiary companies in the form of share capital/premium. The A.O. noted that Bansal and Leela group approached the settlement commission and had offered the investment made in the share capital as well as commission paid/expenditure incurred for procuring the accommodation entries as additional income. Further the AO observed from the perusal of page No. 101 (pb/page1) of the seized material from the assessee during search u/s 132 of the 1961 Act that the assessee had received commission ranging from 1.5 to 2.45% for arranging the bogus entries by way of share capital/share premium for Leela Group and Bansal Group. The assessee admitted to be part of the chain being facilitator of the accommodation entries being provided to Bansal Group and Leela Group. The quantum of accommodation entries is also admitted by the assessee to be Rs. 8,70,80,000/- which was arranged by the assessee for Bansal and Leela Group as facilitator. The AO based on the material seized , statement recorded of the assessee and Mr Tejash J Shah brought to tax commission income which was worked out at 2% of the transaction a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a chain of conspiracy to conclude these accommodation entries to defraud revenue. This is an admitted position by the assessee himself that the assessee is part of the chain of activities leading to facilitating accommodation entries towards fictitious share capital and share premium for companies of Bansal Group and Leela Group of Bhavnagar. It is also brought on record that the Bansal Group and Leela Group approached settlement commission to declare these income representing by fictitious share capital/ share premium and commission / expenses paid thereto. The presumption u/s 132(4A) r.w.s. 292C shall apply and content of the document being seized by revenue marked as page 10 will be presumed to be true and correct. The onus as well burden of proof is squarely on the assessee to bring on cogent material and evidences on record to prove that all the income as reflected in the seized material is duly accounted for and dues taxes paid to Revenue. The AO has allowed an average of 2% of transaction amount to be brought to tax as commission keeping in view average of recorded commission of 1.5% to 2.45% mentioned in the seized document marked as 101(pb/101). The learned CIT(A) after c....