TaxTMI 
TaxTMI 
2020 (5) TMI 123
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....ri Rajesh Dua who are engaged in trading of non-ferrous metals through various companies. Shri Himanshu Kohli is a close associate of Dua brothers, who, according to the AO, handles the unaccounted cash sale/purchase of metal business of the Dua family. The premises of Shri Himanshu Kohli was also searched and the statements of the assessee as well as Shri Kohli were recorded u/s 132(4) wherein they have admitted to have been indulged in out of the book sale/purchase of non-ferrous metals. In response to notice u/s 153A, the assessee filed the return of income on 29th August, 2016 declaring the income at Rs. 8,07,290/- which was declared earlier. 4. During the course of assessment proceedings, the AO noted that Shri Himanshu Kohli in his statement recorded on oath u/s 132(4), on being confronted with the seized documents had admitted that out of the book sale/purchase of metals was done by Dua group through him for which he was paid commission of Rs. 1 per Kg. He also admitted that 70% of the total turnover of this metal trading business belonged to Shri Pawan Kumar Dua and 30% belonged to M/s Kewal Metal Store, a proprietorship concern of his father, Shri Kewal Kohli. The AO, the....
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.... of Shri Himanshu Kohli that the transactions in question had been carried out by him for the assessee is concerned, the assessee submitted that he has no connection at all with these transactions. The assessee vehemently submitted that since the transactions do not belong to him, the assessee is not in a position to give any further details. The assessee also requested for cross-examination of Shri Himanshu Kohli. 7. However, the AO was not satisfied with the explanation given by the assessee for the following reasons as per para 10.1 of his order:- "10.1 The above replies to various queries filed by the assessee are not acceptable in view of the following facts:- 1. Vide answer to question no 13 of his statement recorded u/s 132(4) on 25.04.2014 the assessee deposed as under (English version as statement was recorded in Hindi):- Q.13. What is your relation with Sh Himanshu Kohli who is Director in M/s Kohli Homes Pvt Ltd ? Ans Sh Himanshu Kohli is my friend and there is no business relationship with him. 2. Vide answer to question no 5 of his statement recorded on 24.06.2014 the assessee deposed as under (English version as statement was recorded in Hindi). Q.5. Whet....
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.....7 crores the AO, applying the GP rate of 1.92% on the stock value of Rs. 88,91,83,008/- for the year under consideration, determined the taxable income in the hands of the assessee at Rs. 1,70,72,313/-. Similarly, the AO made addition of Rs. 1,31,95,532/- being the unaccounted investment in the metal trading business. The AO also made an addition of Rs. 27,44,392/- being the commission paid to Shri Himanshu Kohli as per his staemnt that he is being paid commission @ Rs. 1 per Kg. The AO accordingly determined the total income of the assessee at Rs. 3,38,19,530/-. 11. Similar addition has been made by the AO in A.Y. 2014-15 wherein he made addition of Rs. 6,13,71,688/- on account of GP on unaccounted metal trading business and Rs. 98,65,563/- being the commission paid in cash to Shri Himanshu Kohli. 11.1 For A.Y. 2015-16, the AO made addition of Rs. 5,40,803/- being GP on account of unaccounted metal trading business and Rs. 2,52,901/- being unaccounted investment in metal trading business and Rs. 55,08,739/- on account of unaccounted commission received from MCX Trading. 12. In appeal, the ld.CIT(A) upheld the addition so made by the AO for all the three years. 13. Aggrieved w....
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....se. 3(c) That in any case and in any view of the matter, impugned addition has been mad without confronting the entire adverse material available on record and without providing the opportunity of cross examination of Sh. Himanshu Kohli. 4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 27,44,392/- on account of alleged commission paid and that too by recording incorrect facts and findings and without observing the principles of natural justice. 5. That in any case and in any view of the matter, addition made in the impugned assessment order are beyond jurisdiction and illegal also for the reason that these could not have been made since no incriminating material has been found as a result of search. 6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest u/s 234B of Income Tax Act, 1961. 7. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without p....
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....hese circumstances, and in absence of any material to substantiate his case, the additional grounds raised by the assessee are dismissed. 20. The ld. Counsel for the assessee did not press grounds No.1(a) and 1(b). Accordingly, the same are dismissed. 21. Grounds of appeal No.5 and 7 being general in nature are dismissed. 22. Ground of appeal No.6 relates to charging of interest u/s 234B of the Act which is mandatory and consequential in nature. Accordingly this ground is also dismissed. 23. So far as the remaining grounds are concerned, these relate to the order of the CIT(A) in confirming the addition of Rs. 1,70,72,313/- as unaccounted income outside the books of account and Rs. 1,31,95,532/- on account of unaccounted investment and Rs. 27,44,392/- on account of alleged commission paid to Shri Himanshu Kohli. 24. The ld. Counsel for the assessee strongly challenged the order of the CIT(A) in sustaining the various additions made by the AO for different assessment years. 25. Referring to page 41 of the paper book, the ld. Counsel for the assessee drew the attention of the Bench to the statement recorded u/s 132(4)/133A on 25th April, 2014 of Shri Himanshu Kohli wherein he ....
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....c. Referring to page 44 of the paper book, he submitted that in his reply to question No.11 on the said date, he had mentioned that he owns two godowns out of which one is situated at Sadar Bazar and the second one is at Village Karala, Near Water Tank, Delhi. Referring to page 60 of the paper book, he submitted that Shri Himanshu Kohli in his reply to Question No.3, vide statement recorded u/s 132(4) on 25th April, 2014, had stated that his main source of income is from metal trading, commission income on metal trading and MCX trading/'dibba' trading, etc. Referring to pages 288 and 289 of the paper book, the ld. Counsel for the assessee drew the attention of the Bench to answer to Question No.2 recorded u/s 132(4)/133A of the Act wherein Shri Himanshu Kohli had stated that the godown at 5723, Basti Harphool Singh, Sadar Bazar, Delhi, was sealed on 1st May, 2014 and eight seals were put on it and that the stock lying in the godown as per stock inventory is true and correct. Referring to page 43 and 44 of the paper book filed by the Revenue, the ld. Counsel for the assessee drew the attention of the Bench to reply given in response to Question No.1, 2 and 3 in his statement recorde....
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.... No.3 has stated that he does all the transactions of metal business on commission basis which were not recorded in the books of account. Referring to page 50 of the paper book, the ld. Counsel drew the attention of the Bench to the reply given in response to Question No.6 recorded u/s 132(4)/133A on 24th June, 2015 wherein he had explained the seized documents found regarding the copper ingots, number of pieces, etc. Referring to various other pages of the Revenue's paper book, the ld. Counsel drew the attention of the bench to the reply given by Shri Himanshu Kohli explaining the manner in which he does the metal trading business. Referring to page 42 of the paper book filed by the assessee, the ld. Counsel for the assessee drew the attention of the Bench to the reply given in response to Question No.4 recorded u/s 132(4)/133A on 25th April, 2014 wherein Shri Himanshu Kohli has stated as under:- "I am taking part in running the business of M/s Kewal Metals by helping my father who is proprietor of this concern. Besides this I am Director in M/s Kohli Homes (P) Ltd." 31. He accordingly submitted that when the documents were seized from the premises of Shri Himanshu Kohli who ad....
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.... Sandeep Kwatra maintained the record of unaccounted transactions at flat 1-B, Pocket-A, Near Satyawati College, Ashok Vihar, New Delhi. Therefore, when both father and son were doing this unaccounted sale and purchase of metal trading from the premises owned by them at D-237, 3rd Floor Ashok Vihar, New Delhi and Flat No. 1-B, Pocket-A, Near Satyawati College, Ashok Vihar, additions could not have been made in the hands of the assessee on the basis of the seized documents found from the premises of Shri Kewal Kohli and Shri Himanshu Kohli. 33. He submitted that the ld.CIT(A) without appreciating the facts properly that Shri Himanshu Kohli was also indulged in unaccounted metal trading business and has given evasive reply to the questions put to him by the Revenue authorities and was residing in the premises from where the seized documents, which are the basis of addition, were found from the said premises has upheld the various additions made by the AO and, therefore, the same should be set aside. 34. The ld. DR, on the other hand, heavily relied on the order of the CIT(A). He submitted that the assessee in his statement has submitted that Shri Himanshu Kohli is just a friend and....
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....on. 35. The ld. Counsel for the assessee in his rejoinder submitted that on 25th April, 2014, the premises of both Shri Kohli as well as the assessee were searched. If at all the assessee was doing business of that much magnitude then how nothing was found from the premises of the assessee. Therefore, the preponderance of probability is not against the assessee, but, against Shri Himanshu Kohli who himself was doing such type of trading. He submitted that addition, if any, could only be made entirely in the hands of Shri Himanshu Kohli and no addition can be made in the hands of the assessee. He submitted that when the assessee was doing metal trading business in the name of the company M/s Klaxon Trading (P) Ltd., wherein he was a director and all the transactions were recorded in the said company, addition in the hands of the assessee cannot be made. 36. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO, on the basis of the seized documents found from D-237, 3rd Floor, Ashok Vihar, Phase-I, New....
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.... total sale in respect of these transactions noted in the said Annexures/diaries totaling to Rs. 845,93,84,275. The printout of the same was provided to the assessee as Exhlbit-2 with the questionnaire. d) Annexure A-18, A-20. A 22, A-24, A-27, A-29 and A-32 seized by party SA-10 from Flat 1-B, Pocket-A, Near Satyawati College, Ashok Vihar, New Delhi in form of various Notepads/Diaries which contain the datewise details of amounts received and paid. The total receipt comes to Rs. 1466,40,76,135 and the total payments made comes to Rs. 1224,01,14,255. The year wise detail of the above receipts and payments on the basis of material seized as per the above annexures was provided to the assessee as Exhibit-3 with the questionnaire. Further, the scanned image of one page each from Annexure A-22 was also displayed in the said questionnaire. 38. A perusal of the statement recorded of Shri Himanshu Kohli shows that on every occasion he has mentioned his residential address to be at D-237, 3rd Floor, Ashok Vihar, Phase-I, New Delhi. Similarly, Shri Himanshu Kohli had stated that he himself was in the business of metal trading which can be verified from various pages of the paper book fil....
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....3 381078442 2014-15 14093661.30 4228098.39 1369903878 2015-16 361287.22 108386.16 35117116 Total 18375508.62 5512652.58 1786099436 39. Thus, a perusal of the statement of Shri Himanshu Kohli and assessment order of Shri Kewal Kohli conclusively shows that both the premises D-237, 3rd Floor Ashok Vihar, New Delhi and Flat No. 1-B, Pocket-A, Near Satyawati College, Ashok Vihar, New Delhi are owned by Shri Himanshu Kohli who is also engaged in metal trading and was owning different godowns. Under these circumstances, merely because Shri Himanshu Kohli, in his statement has admitted only 30% belongs to him and 70% of the unaccounted turnover belongs to Shri Dua cannot be the basis for making addition in the hands of Shri Pawan Kumar Dua especially when the assessee in his statement had categorically stated that Shri Himanshu Kohli was doing some business through the family concern named M/s Klaxon Trading (P) Ltd. and the transactions were duly recorded in their books of account and payments were made by cheque and TDS was deducted from the said payments. We further find merit in the argument of the ld. Counsel for the assessee that had there been such huge unaccounted tr....
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....paid by the assessee to Shri Himanshu Kohli is called for. Accordingly, the same is directed to be deleted. ITA No.6589/Del/2018 (A.Y. 2014-15) 42. The grounds of appeal filed by the assessee read as under:- 2. (a)That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in assuming jurisdiction u/s 153A and further erred in passing the impugned assessment order. 1(b) That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in assuming jurisdiction and framing the impugned assessment order u/s 153 A, is bad in law and against the facts and circumstances of the case and the same is not sustainable on various legal and factual grounds. 2. (a)That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 6,13,71,688/- on account of alleged gross profit calculated on the basis of material allegedly found during the course of search of third person by treating it as alleged unaccounted income of assessee and that too by recording incorrect facts and fin....
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....ssessee read as under:- 1.(a)That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 15,73,246/- (which has been wrongly mentioned as Rs. 5,40,803/- in para 11 of the assessment order) on account of alleged gross profit calculated on the basis of material allegedly found during the course of search of third person by treating it as alleged unaccounted income of the assessee and that too by recording incorrect facts and findings and without observing the principles of natural justice. 1(b) That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs. 15,73,246/- on account of alleged gross profit, is bad in law and against the facts and circumstances of the case. 1(c) That in any case and in any view of the matter, impugned addition has been made without confronting the entire adverse material available on record and without providing the opportunity of cross examination of Shri Himanshu Kohli. 2. (a)That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on fact....
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....ing the course of assessment proceedings, noted that the name 'Pawan' appearing in the seized document as per Exhibit-4 is the assessee himself and the total commission on the basis of these documents comes to Rs. 55,08,739/-. In absence of any proper explanation given by the assessee, the AO made an addition to the total income of the assessee by observing as under:- "10.5 Further, as discussed in detail above that the name "Pawan" appearing in seized documents as per Exhibit-4 is the assessee himself the total commission on the basis of these documents as per Exhibit-4 of the questionnaire comes to Rs. 55,08,739. The same is being treated as undisclosed income of the assessee for the year under consideration." 51. Before the CIT(A), it was submitted that the interpretation taken by the AO has got serious ramifications as the name found in the seized documents from a third party is attributed to particular persons without corroborative evidence which would lead to miscarriage of justice and, therefore, no commission income of Rs. 55,08,739/- can be attributed to the assessee. 52. However, the ld.CIT(A) was not satisfied with the arguments advanced by the assessee and upheld th....