TaxTMI 
TaxTMI 
2023 (1) TMI 1004
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....Representatives of both sides and perused the case-records consisting of orders of lower authorities; a Written-Submission and Paper-Book filed by Ld. AR. 3. The assessee is an individual who is tagged as part of "Tanya Jewellers Group" of Gwalior. A search u/s 132 was conducted upon the group including the assessee on 19.02.2014 wherein several incriminating documents were found and seized which divulged that the assessee was engaged courier/transfer of money from one place/person to another place/person which was termed by revenue-authorities as "Hawala business". The present assessment-year 2014-15 with which are concerned in this appeal was assessed u/s 143(3) wherein the total income of Rs. 3,23,50,410/- declared by assessee in the return was assessed at Rs. 11,65,45,918/- after making twin-additions, namely (i) addition of Rs. 8,25,03,772/- on account of unexplained hawala transactions, and (ii) addition of Rs. 16,91,736/- on account of commission income from hawala business. Aggrieved by such assessment, the assessee filed appeal to Ld. CIT(A) whereupon the Ld. CIT(A) granted substantial relief to assessee. Now, being aggrieved by order of Ld. CIT(A), the revenue has come i....
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....s had not turned up / denied to have made transactions, Ld. AO made a full addition of Rs. 8,25,03,772/- (ii) Explained transactions of Rs. 7,04,89,360/- i.e. the transactions where the persons had appeared and admitted to have made transactions, Ld. AO made an addition of Rs. 16,91,744/- by applying a commission-rate of Rs. 200/- per lac on 7,04,89,360/- which results in estimated commission-income of Rs. 1,40,978/- for 1 month and extrapolating the same for 12 months arrived at Rs. 16,91,744/-. Accordingly, the additions of Rs. 8,25,03,772/- and Rs. 16,91,744/- were made rejecting all submissions made by assessee during assessment-proceeding. 6. During first-appeal, the assessee made a detailed submission which the Ld. CIT(A) has noted in Para No. 5 of his order. After due consideration of the same, Ld. CIT(A) granted part-relief to the assessee by observing and holding as under: Page No. 23 to 32 of the order of Ld. CIT(A)" "I have given my thoughtful consideration to the facts and findings of the AO inter alia material brought on record. At the outset there is no denying of the fact that on retrieval of data/information from the mobiles(hand-sets) used by the appellant fo....
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.... were not functional. The data was retrieved in respect of 8 mobiles. Further analysis of this data showed that 79 different persons / concerns have made Hawala transactions through the assessee. The total amount sent through Hawala route in these transactions is Rs. 15,29,93,132/-. Based on the mobile numbers of senders and recipients, names and addresses of the persons were obtained using departmental data bases as well as taking help of mobile service providers. These persons were examined on oath. During their statements, a total of 35 persons admitted that they have sent money totalling to Rs. 7,04,89,360/- using the Hawala channel of the assessee. Rest of the persons either did not appear in response to the summons or denied sending any money using the Hawala channel of the assessee. Therefore, the source of this amount of Rs. 8,25,03,772/- remains unexplained. 10.1 Since, the seized documents show that this amount was sent by the assessee and no explanation about the source of such amount was available, therefore, vide show cause notice dated 17.3.2016, the assessee was required to show cause as to why this amount of Rs. 8,25,03,772/- (inadvertently mentioned as Rs. 7,91,....
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....tions to these persons and therefore, what can be taxed in his hands is merely the commission income and not the whole amount. However, he has not provided any evidence about providing services for Hawala transactions to these persons. ii) Although the assessee has claimed to provide postal address, mobile number and PAN, however, no admission from these persons about their using the Hawala network of the assessee has been submitted. The assessee has neither submitted any affidavit from these persons, nor has he even produced them for examination before the Assessing Officer. The details provided by the assessee at the fag end of the assessee do not serve any purpose as no meaningful enquiry can be carried out by the Assessing officer on the basis of those details. 10.4 Therefore, it is evident that the assessee has sent money amounting to Rs. 8,25,03,772/- through the Hawala channel. It is also established and held that the assessee has not been able to satisfactorily explain the source of such funds. Therefore, it is established and held that these sums belong to the assessee and the same are liable to be added to his total income for A. Y. 2014-15. Therefore, addition of R....
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....on flimsy ground. Obliviously, it is not the onus of the appellant to explain the 'source' of third person and there can be no method by which he can obtain such information. Ld. AO has the powers and wherewithal's to enforce the compliance from such 43 errant persons but in no circumstance, assessee cannot be held guilty for such default. It is well known fact that due to fear of department or to avoid tax liability those persons must have chosen the easy way to altogether deny they transaction. For their denial or default, the appellant cannot be made to suffer the tax liability. Hon'ble Bombay High Court in the case of CIT Vs. M Shah, Prop. Shreni & Trading co. (1973) 90 ITR 396 (Born) has held that if the parties had received the summons but did not appear, the assessee could not be blamed. Another aspect highlighted by the appellant that the above amount of Rs. 8,25,03,772/- does not represent the income of the appellant. Ld. AO has made the huge addition Simply on the basis of certain entries found in WhatsApp message retrieved from mobile phones seized from his premises. At the outset, Ld. AO has never alleged that nature of transaction involving huge amou....
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....oubt that the identity of persons was proved by the assessee to whom the DDIT(Inv) also issued summons as well. In some cases, they have even explained the transactions (recorded in coded form) giving all the details. It seems that rather going after those persons, the officer misdirected himself and erred in treating the impugned amount as income of the appellant which is neither justified on facts nor in law. Ld A.R. has also contended that AO has made addition u/s 68 of the Act. However, it is seen that Id AO has not invoked this provision anywhere in the assessment order. Nevertherless, despite the fact that provision of sec 68 have not been invoked. Even otherwise, the appellant has established the identity of these persons but in true sense provisions of sec 68 is not applicable in absence of books of accounts. Ld AO has simply made the addition on the basis of suspicion. On the other side, Id AO has utterly failed to bring any evidence or material on record to establish that impunged amount of Rs. 8,25,03,772/- belongs to the assessee and it represents his income. He has simply placed reliance on the fact that since concerned parties have denied or did not own up the transac....
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....e force in this argument and facts of record also support this proposition that in this case Ld AO erred in adding the entire amount of impugned transactions instead of adding commission income which the assessee could legitimately command from these clients for the services rendered by him. It is seen that Id A.O. has estimated the commission income @ Rs. 200 per one lakh rupees transferred by the appellant. By this way, the commission income which ought to have been worked out by AO should be Rs. 3,05,986/- per month (Rs. 200 for Rs. 15,29,93,132/-) instead of Rs. 1,40,978/- per month estimated by AO in the assessment order. Since the above commission income was for just ONE MONTH's period, commission income for the whole year comes to Rs. 36,71,832/- (Rs. 3,05,986 X 12 months). It is seen that Id AO has already made addition of Rs. 16,91,744/- towards commission income earned on transactions worth Rs. 7,04,89,360/- (admitted by 36 persons), further addition need to be made/sustained works out to Rs. 19,80,088/- towards commission income earned in respect of transactions of Rs. 8,25,03,772/-. Conclusion:- In view of the facts and circumstances of this case and consideri....
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....er) the nature of activity done by assessee which is just a courier/transfer of money for earning a commission of Rs. 100/- to Rs. 200/- per lac. This activity remains same in all transactions. Secondly, all transactions have been retrieved/decoded from the same set of evidences, namely the same mobile phones. Thirdly, the details of all transactions as retrieved/decoded, such as names/mobile numbers of senders/receivers, serial numbers of currency notes, amount of money transacted in code words like "Kg", "@", "P", "Peti", etc. and in some cases the full amounts itself or in lacs or after omitting zeros, were exactly identical. Fourthly, the assessee had provided complete postal addresses, phone numbers and PANs of the persons of all transactions which is clearly evident from Para No. 10.2 and 10.3 of the assessment-order. However, the only difference is such that out of 79 transactions, the persons of 43 transactions did not turn up and persons of 36 transactions only responded. Ld. AR pointed out that though the Ld. AO has made a casual remark that the persons of 43 transactions either did not turn up or denied transactions, but their statements are neither mentioned in the asse....
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....which results in estimated commission-income of Rs. 1,65,007/- for 1 month and extrapolating the same for 12 months arriving at commission of Rs. 19,80,088/- for the whole year. Finally, Ld. CIT(A) has rightly ordered the Ld. AO to assess commission-income of Rs. 19,80,088/- and thereby granted a relief of Rs. 8,05,23,676/- (Rs. 8,25,03,764/- minus Rs. 19,80,088/-) to the assessee. We do not find any infirmity in the action of Ld. CIT(A) and the same is hereby upheld. Therefore, Revenue's Ground No. 1 is devoid of merit. 9. Regarding second tranche of addition of Rs. 16,91,736/- on account of "explained-transactions" of Rs. 7,04,89,360/-, we observe that the Ld. CIT(A) has in fact upheld the addition made by Ld. AO, not deleted the addition as claimed by revenue in Ground No. 2. This is very much clear from following paragraphs of the order of Ld. CIT(A): Page No. 31 of the order of Ld. CIT(A)" "6.1 ..... It is seen that Ld. AO has estimated the commission income @ Rs. 200/- per one lakh rupees transferred by the appellant. By this way, the commission income which ought to have been worked out by AO should be Rs. 3,05,986/- per month (Rs. 200 for Rs. 15,29,93,132/-) instead o....