TaxTMI 
TaxTMI 
2021 (8) TMI 1316
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....e been framed u/s 153A r.w.s. 143(3) vide separate orders, all dated 21/03/2016. The assessment for AY 2014-15 has been framed u/s 143(3) vide order dated 21/03/2016. However, the appellate order is common order for AYs 2008-09 to AY 2004-15 and the same has been passed on 30/10/2017. The appellate order for AY 2007-08 has been passed on 26/03/2018. The date of search on assessee's group is 03/10/2013. For ease of reference, the details of assessment framed by lower authorities and adjudication thereto by learned first appellate authority could be tabulated in the following manner: - No. Assessment Year (AY) Section under which assessment framed Date of appellate order 1. 2007-08 143(3) r.w.s 147 dated 30/03/2015 26/03/2018 2. 2008-09 143(3) r.w.s. 153A dated 21/03/2016 30/10/2017 3. 2009-10 143(3) r.w.s. 153A dated 21/03/2016 30/10/2017 4. 2010-11 143(3) r.w.s. 153A dated 21/03/2016 30/10/2017 5. 2011-12 143(3) r.w.s. 153A dated 21/03/2016 30/10/2017 6. 2012-13 143(3) r.w.s. 153A dated 21/03/2016 30/10/2017 7. 2013-14 143(3) r.w.s. 153A dated 21/03/2016 30/10/2017 8. 2014-15 143(3) dated 21/03/2016 30/10/2017 1.3 Facts are stated to be pari-mat....
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....thout considering the facts and circumstances of the case. 5. The learned CIT (A) has erred in law and on facts in holding that the data found in the 4 GB white colour sony pen drive, allegedly seized by the Income Tax Department, belong to the appellant. 6. The learned CIT(A) has erred in law and on facts in relying on the confessional statements of various persons without granting any opportunity to the appellant to cross examine them. 7. The learned CIT(A) has erred in law and on facts in holding that the retractions made by the appellant and the other persons are merely "after thought" without appreciating the true facts and circumstances of the case. 8. The learned CIT(A) has erred in law and on facts by estimating the income of the appellant without rejecting the books of accounts maintained by the appellant. 9. The learned CIT(A) has erred in law and on facts in allowing deduction meagerly @ 25% towards expenses against gross unaccounted commission income computed as per the appellate order. 10. The learned CIT(A) has erred in not directing the Assessing Officer to give credit to the appellant for the income disclosed in the returns of the income of the said 70 e....
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....tion u/s 132 on 03/10/2013. The Warrant No. 9646 covered the case of the assessee & his two sons namely Shri Rajesh B. Jain and Shri Manish B. Jain. Based on the findings of search action, assessment was framed u/s 143(3) r.w.s. 153A wherein the assessee was saddled with additions of Rs.591.95 Lacs vide order dated 21/03/2016. This addition is the sole subject matter of dispute before us. 2.2 During assessment proceedings, in the background of search action, a final-show cause notice was issued by Ld. AO to the assessee on 16/02/2016 in which it was alleged that the assessee along with his son was operating and managing 70 benami concerns including benami concerns in the name of its various employees and associates. Through these entities, the assessee group imported diamond on behalf of others and provided accommodation entries of unsecured loans, bogus purchase to various beneficiaries. The attention was drawn to numerous loose papers (referred to as 'estimate sheets') containing hand written accounts as found during search operations. These sheets were seized as per various annexures and stated to be already confronted to the assessee during search as well as during the course ....
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.... any of the so-called employees / associates. The assessee also denied the ownership of pen-drive by submitting that the same was not found from residential premises but planted from outside. The stated fact were sought to be fortified by submitting that the seizure of the pen-drive was shown after almost 6 days i.e. on 08/10/2013 which could have been seized or inventorized on 04/10/2013 along with the inventory made for credit cards, bank account and jewellery etc. Further, the seizure of pen drive was not made the part of Panchnama annexure, officially drawn on 04/10/2013 and the admission about the same from his son Shri Rajesh Jain was recorded forcibly. In the above background, the assessee denied indulging in the activity of providing any accommodation bills, loans entries to other parties and opposed the proposed additions. 2.4 However, each and every objection as well as allegations leveled by the assessee in its reply dated 24/02/2016 was specifically dealt with by Ld. AO in the assessment order. It was observed that the statements were recorded in the presence of independent witnesses; the assessee had gone through the statements and understood the contents of the same ....
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....ealed common features of these concerns having similar business traits like high turnover, assets in the shape of loans & advances, debtors with matching creditors and no payment of taxes. After collating the data from different agencies like customs department, Bharat Diamonds Bourses, these entities were identified and arranged in a group based on similar parameter like common address, directors etc. The various entities of Shri Bhanwarlal Jain were found to be having similar characteristics / features as noted above. The same led to search proceedings on the assessee on 03/10/2013 wherein incriminating documents like hand written sheets containing parallel accounts, identical data in various computer systems at undisclosed offices of the assessee with similar data on pen drives of the employees who were caught and apprehended by the investigating team and a white color pen-drive containing calendar year-wise parallel accounts in financial accounting software seized at assessee's residence, was found and seized. 2.6 Shri Bhanwarlal Jain, in statement on oath u/s 132(4), categorically admitted about his engagement in providing accommodation entries through 70 benami concerns. Sim....
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....which indicated that there was an attempt by the assessee to destroy the parallel accounts / incriminating material. In one such instances, the search team apprehended an employee namely Rohit Birawat at CST Terminus, Mumbai when he was attempting to flee from Mumbai to Rajasthan with incriminating material. Three pen drives were found from his possession. The data in pen drive was found to be similar to data found in the pen drive found and seized from assessee's premises. 2.11 Proceeding further, modus operandi of providing accommodation entries was elaborately discussed by Ld. AO in para 4.6. The said modus operandi was duly admitted by the employee-cum-namesake directors / partners / proprietors of Shri Bhanwarlal Jain Group in their respective statements. The relevant extract of the same has already been reproduced as well as noted by Ld.AO in the assessment order. All these persons made categorical admission of the fact that all the entities were being managed and controlled by Shri Bhanwarlal Jain group and they were merely acting as name-sake or dummy directors / partners / proprietors in these entities against salary. 2.12 In fact, the assessee, himself, in statement rec....
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....see was immensely non-cooperative and he tried to derail the process of investigation. So much so, the assessee remained absent from his residence in the first 3 days since the commencement of search on 03/10/2013 and deliberately avoided coming back to his residential premises thereby showing complete non-cooperation with the Income Tax Authorities. Even after coming back, he did not cooperate and kept evading the questions. 2.16 On the basis of aforesaid facts, following conclusions were drawn by Ld. AO in para 4.14 of the order: - * Lunkaran Parasmal Kothari, Anil Khicha, Rajesh Chopra, Ritesh Sfroya, Rohit Birawat, Basant D Jain, Shreyansh L Jain, Vivek Noratmal Jain,Mahavir Mangalchand Jain, Ramniwas Choyal, Gautam Kumot, Rajesh Chopraf Atul Laddha are dummy directors, partners and proprietors. * They have been made name sake director, partner and proprietor at the direction and instruction of Bhanwarlal Jain, Rajesh B, Jain are merely their employees who receive salary mostly in cash from them which is more or less equivalent to the profit shown in the concerns in which they are dummy director/partner/proprietor. * All such dummy directors, partners and proprietors bel....
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....hanwarlal Jain. * Bhanwarlal Jain has also admitted that all the concerns (totaling to 70) in the names of various persons are actually controlled and managed by him. 2.17 The affidavit of retraction as filed by the assessee on 27/05/2014 i.e., almost after 8 months of the commencement of search was held to be mere after-thought and a tutored statement. Similar retraction affidavits as filed by other associates-cum-employees were held to be nothing but planned move in tandem to thwart the process of investigation. Glaring contradictions as well as similarities were found in the retraction affidavits. The said retraction, in the light of overwhelming / clinching evidences as found during the course of search action as well as in the light of various judicial precedents, was rejected since the same was termed as nothing but well-planned device to frustrate the efforts of the department to unearth unaccounted income. 2.18 After deciphering the accounts of these concerns, it transpired that the assessee made import in the name of benami concerns on behalf of real importers. The imported goods were handed over to the real importers against cash. The fictitious stock standing in the ....
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....tor and proprietor. * That the department has also established correlation between the parallel accounts maintained on the pen drive and the regular books of accounts of concerns managed and controlled by the assessee. * That the manner in which the accommodation entry is provided by the assessee i.e the movement of cash against cheque and vice versa. * That the department maintains that the assessee through his various concerns genuinely imports diamonds but they are issued to the real importers out of books and accommodation entries of bogus purchases and loans and advances are issued through a complex web of transactions including banks and angarias against this bogus stock standing in the books of the concerns managed and controlled by the assessee. * That during search from the back office of the assessee registers were seized which maintain the details pertaining to real importers to whom imported diamonds are issued out of books. * That the entire modus operandi employed by the assessee of providing accommodation entry was admitted by the important employees of the assessee including Lunkaran Parasmal Kothari. In view of the facts discussed above and the circumst....
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.... who availed accommodation entries was found / seized from assessee's residence containing calendar year-wise name of the beneficiaries, the amount of cash, the detail of brokerage / commission etc. The pen drive was password protected which was cracked with the help of professional software programmers which enabled the department to view the contents therein. The pen drive contained complete details of Angaria Account maintained by the assessee and his family since 2004 in electronic form. The print-outs of the cash account were also submitted along with the remand report. After correlating the print out with hand written sheets, it was found that the data was identical. These sheets were in the handwriting of Shri Lunkaran Kothari and Shri Rajesh Jain as admitted by them in statement u/s 132(4). These facts would conclusively prove that the estimates sheets were first written manually and subsequently entered into the pen drive. The percentage as estimated was stated to be based on admission made in the statement u/s 132(4) as well as on the basis of hand written estimation sheets found and seized. The remand report was duly confronted to the assessee which was again disputed by....
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....puts his signatures on the audit reports of these concerns, without verifying their books of accounts. 10. There is a confessional statement of the Appellant that all the 70 group concerns in the name of various persons, are actually controlled and managed by him. 11. The various employees / associates / directors / partners like Shri Lunkaran Parasmal Kothari, Shri Anil Khicha, Shri Rajesh Chopra, Shri Ritesh Siroya, Shri Rohit Birawat, Shri Basant D Jain, Shri Shreyansh L Jain, Shri Vivek Noratmal Jain, Shri Mahavir Mangalchand Jain, Shri Ramniwas Choyal, Shri Gautam Kumot, Shri Rajesh Chopra, Shri Atul Laddha has made confessional statements that they are just dummy and the various group concerns are actually run by the Appellant. They have clearly stated that they work as per the direction and instructions of the appellant and have no say in the actual working of the various group concerns. 12. These dummy directors /partners /proprietors gets remunerated by the Appellant for the services rendered. Almost all of them belong to Rajasthan and are well known to the appellant. Further, they reside in residences, whose ownership is with the appellant or his family members. 1....
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.... stood corroborated by relevant entries made in the estimation sheets which have also been illustrated in the impugned order. Accordingly, Ld. AO was directed to apply rate of 2 paisa per rupees 100 or 0.02% on imported purchases. Accordingly, partial relief was granted to the assessee under this head. (ii) Commission income on Bogus unsecured loans The Ld. AO has estimated this commission as 2.4% per annum. The computations made from the data extracted from pen drive corroborated the same and accordingly, this estimation made by Ld. AO was held to be justified. (iii) Commission income on Accommodation entries of Local Purchases The AO had not made any such addition on account of local purchases made by the assessee from registered dealers. However, Ld. CIT(A) opined that as per the findings that assessee earned commission on all dealings, the commission on these transactions was also to be estimated and added to the income of the assessee. Accordingly, enhancement notice was issued to the assessee which was disputed by the assessee. Finally, rejecting assessee's submissions, it was observed that if all the sales of the group were held as accommodation entries, then the local....
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....28 4596293 2353696 1106610 19359039 4 Commission of local purchase 0.02% 2763572 3739859 4864857 11190156 12697381 15848884 11718444 62823153 5 Gross Unaccounted Commission 44466591 59928438 73484803 136586761 169719120 207552720 127710729 819449162 6 Less : 25% expenses 11116648 14982110 18371201 34146690 42429780 51888180 31927682 204862291 7 Net Unaccounted Commission 33349944 44946329 55113602 102440070 127289340 155664540 95783046 614586872 The net relief as summed up by Ld. CIT(A), was as follows: - Assessment Year 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Total Net Unaccounted Commission Income, as per the Assessment Order (In Rs.) 59195321 70924593 84273714 178019195 194062033 199566306 117091409 903132572 Net Unaccounted Commission Income, as per the Appellate Order (In Rs.) 33349944 44946329 55113602 102440070 127289340 155664540 95783046 614586872 Net Relief to the Appellant (In Rs.) 25845378 25978264 29160112 75579125 66772693 43901766 21308363 288545700 3.7 All the other grounds raised by the assessee were dismissed in the appellate order and th....
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....s, 70 to be precise, being managed and controlled by assessee group. The password of the pen drive was cracked with the help of software programmers. After decrypting the data, print outs were taken and matched with the estimation sheets as well as other data gathered during the course of search action from various premises, disclosed as well as secret. The data was found to be identical. The complete correlation was established between the parallel books of accounts found on the pen drive with books of 70 concerns being managed and controlled by the assessee. It transpired that the daily accounts were first written manually on estimation sheets and thereafter entered into pen-drive electronically. So much so, identical pen drive was found from the possession of Shri Rohit Birawat at CST Terminus who was apprehended by the search team while attempting to flee from Mumbai to Rajasthan with incriminating material. 7. All these facts have been admitted not only by the assessee but also by his son as well as trusted employees in various statements as recorded on oath u/s 132(4) at various points of time. The statements were recorded in the presence of independent witnesses. The conten....
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....ide accommodation entries to various beneficiaries against commission. 10. So far as the retraction of the statement made by the assessee is concerned, we find that the retraction was made after more than 8 months and the same was devoid of any material evidence. The statements were made on oath u/s 132(4) and heavy onus was on assessee to rebut the same with cogent material while retracting the same. However, nothing of that sort as done by the assessee, has been shown before us. Glaring contradictions as well as similarities has been found in the retraction affidavits. As rightly held by lower authorities, the retraction was nothing but mere after-thought and tutored statement to thwart the process of investigation. The retraction was bereft of any material evidence and therefore, the same was to be completely ignored. 11. The aforesaid factual matrix as well as findings would lead to inescapable conclusion that all the 70 entities under consideration were being managed and controlled by the assessee group and therefore, lower authorities were quite justified in estimating commission income earned by the assessee group from all these benami concerns. 12. Accordingly, Ground No....
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....n Local Purchases made by the assessee Fully deleted as against 2 paisa per rupees 100 or 0.02% as enhanced by Ld. CIT(A) 5. Expense Allowance 25% of Gross Commission i.e. the stand of Ld. CIT(A) is confirmed 14. The estimation of 0.02% on import purchases as made by Ld. CIT(A) is based on confessional statement of the assessee and the same is also corroborated by relevant entries made in the estimation sheets which is illustrated in the impugned order. Therefore, we confirm this estimation. The estimation of commission on local purchase is based primarily on the assumption that the assessee would have earned commission on all the transactions. However, there is no reference to any incriminating material while making this enhancement. The assessee has also not admitted to have earned such commission. Thus, the same is based on mere presumption and hence, we are inclined to delete the same. The estimation of 0.05% on accommodation entries of bogus purchases provided by assessee is based on our estimation in the case of Shri Rajendra P. Jain. Our estimation with respect to bogus unsecured Loans provided by assessee draw strength from the fact that the assessee has carried out ....
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.... of Rs.14.01 Lacs but submitted that the jewellery as declared by the assessee was higher than jewellery actually found. However, rejecting the submissions, the said amount was added to the income of the assessee. 18. During appellate proceedings, the assessee filed detailed reconciliation statement of the jewellery found during the course of search vis-à-vis jewellery as declared in various wealth tax returns. In support thereof, the assessee filed copies of wealth tax returns, statement of net wealth and valuation report etc. A perusal of the reconciliation statement revealed that the declared jewellery in the books of accounts of the assessee as well as his family members was far more than jewellery actually found during the course of search action. Accordingly, the addition was deleted. Aggrieved, the revenue is in further appeal before us. 19. From the factual matrix, it is quite evident that during appellate proceedings, the assessee was able to reconcile the jewellery as found during the course of search operations vis-à-vis jewellery declared in the wealth tax return. It is undisputed fact that declared jewellery was more than actual jewellery found during s....
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....le belief of escapement of income could have been formed. The new tangible material showed possible escapement of income in the hands of the assessee. At this stage, nothing more, in our opinion, was required to reopen the case of the assessee in terms of decision of Hon'ble Supreme Court in Raymond Woollen Mills Ltd V/s ITO (1999; 236 ITR 34). Further, the reopening was initiated as per due process of law and there was no violation of principle of natural justice. The plea, thus raised by Ld. AR, stands dismissed. 24. The Ld. AR has raised another legal plea that reopening provisions could not be resorted to by the revenue once search was initiated u/s 132. This would be so since the non-obstante clause of Sec.153A precludes Ld. AO from issuing notice u/s 148 of the Act. The Ld. AR impressed upon the idea that the phrase notwithstanding anything contained as used in opening line of Sec.153A as opposed to phrase notwithstanding anything to the contrary contained as used in certain other provisions would preclude the applicability of other sections of the Act whether contrary or not. It was submitted that Ld. AO could initiate proceedings u/s 153A with respect to assessment years b....