TaxTMI 
TaxTMI 
2023 (11) TMI 1360
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....Assessing Officer under section 143(3) of the Income Tax Act, 1961 [hereinafter referred to as the "Act"]. 2. Since, the issue involved in all the appeals are common and identical; therefore, these appeals have been heard together and are being disposed of by this consolidated order for the sake of convenience and brevity. The grounds as well as facts narrated in ITA No. 445/SRT/2023 for AY. 2018-19 have been taken into consideration for deciding the above appeals en masse. 3. The grounds of appeal raised by the assessee in "lead" case in ITA No. 445/SRT/2023 for AY. 2018-19 are as follows: "The appellant prefers an appeal against an appeal order passed by Ld. Commissioner of Income Tax (Appeal), Surat dated 04/05/2023 on following amongst other grounds each of which are without prejudice to each other:- Additional Grounds of Appeal 1.0 On facts and circumstances of the case and in law, the assessment order passed u/s. 143(3) dated 30/03/2022 is bad in law, since had been passed beyond the limitation period prescribed u/s. 153(1) read with Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 expired on 3 0/09/....
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....s from three suppliers namely Maviya Impex, Mafii Impex and Diamond field Trading Ltd, which belonged to Girish Kadel. The rough diamond imported by the assessee company having declared value of Rs. 64,59,14,875/- were valued by a panel of 4 members at Rs. 45,12,589/- on 11.07.2018. In the report, it was also mentioned that the average rate of Rough Diamond at the time of import into Hong Kong as per Import KPC Nos. 1611374 dated 03.10.2016 was US$ 1.2 per carat and that as per Import KPC No. HK1611107 dated 05.08.2016 was US$ 3 per carat whereas the import of rough diamond by the assessee company was ranging from US$ 424 per carat to 2367.7 per carat. On the basis of this, further inquiry was carried out to identify the parties from which, the company received funds which in turn pumped out from the country. During such investigation, it was observed that web of shell/no-means companies were opened in different layers for routing money and for camouflaging the same as accounted money. Considering this, the investigation further deepened to identify the beneficiaries at various layers. During investigation by the Assessing Officer, summonses were issued to the d....
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....uting money and for camouflaging the unaccounted money as accounted. The summons issued to the Directors of these companies for ascertaining the beneficiaries of the transactions were either unserved or in some cases the summons were served but none appeared in response to the said summons. During investigation, 117 companies were identified which were involved in importing overvalued diamonds and making outward remittances of Indian currency to foreign countries which, included bringing unaccounted money into banking system. The AO from page 6 to 12 of the assessment order, has reproduced the details of 117 concerns with whom the appellant has made purchases and sales and all the transactions with the said concerns are of accommodation entries. Accordingly, the AO issued show cause notice dated 07.06.2021 to the appellant wherein the investigation done in various group companies of Mr. Deepak fain, M/s Surya Diamonds Pvt. Ltd., M/s Sanmati Gems Pvt. Ltd., M/s Abhinandan Diamonds Pvt. Ltd., M/s Marudhar Diamonds Pvt. Ltd. and M/s Sidhant Gems Pvt. Ltd., which all were in the business of providing accommodation entries to show cause as to why the transactions of the appellant should....
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....said companies though admitted having done turnover of Rs. 114 Cr. but had fixed assets of only Rs. 1,512/- and office and salary expenses of Rs. 5,80,000/-. Hence, the AO came to the conclusion that though the said 2 parties confirmed the sales / purchases shown by the appellant but on the basis of the details furnished, it could be reasonably be presumed that the said 2 concerns had no real business activities and were in the business of providing accommodation entries. Accordingly, the AO rejected the books of accounts of the appellant as provided in Section 145(3) of the Act as the books maintained did not provide any satisfaction relating to correctness and completeness of the accounts. After rejecting the books of accounts of the appellant, the AO estimated the income of the appellant @ 0.5% being entry operating commission and made the addition of Rs. 9,02,46,425/- being the profit of Rs. 9,13,57,008/- reduced by the returned income of Rs. 11,10,583/-. The AO further made an addition of Rs. 7,19,60,390/- as interest income earned on loan and advances as shown in the P&L Account. 8. Aggrieved by the order of Assessing Officer, the assesse....
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.....11.2021 (7 appeals) IT(SS)A No. 294 to 299/SRT/2017 0.02% NIL 0.5% b) Bhanwarlal M Jain ITAT Mumbai dt. 06.08.2021 (16 appeals) ITA No. 108 to 114/MUM/2018 0.05% NIL 0.75% c) Rajendra P Jain ITAT Mumbai dt. 03.05.2019 (3 appeals) ITA No. 296 to 298/MUM/2018 0.05% NIL 0.5% 7.11 Thus considering the decisions of various Benches of Hon'ble ITAT, I am of the opinion that 0.05% of the total purchase and sales turnover (the Hon'ble ITAT has held that the commission to be in the range of 0.02% to 0.05%) can be estimated as the gross commission earned by the appellant in the business of providing accommodation entries of purchase and sale. The AR of the appellant argued that the commission should be charged only on sales and not on purchases. But I am of the opinion that the entry providers get commission for providing of entries of purchases as well as sales separately from the beneficiaries and hence, the commission has to be worked out on both purchases and sales. Similarly, the commission on loans and advances has to be worked out being a percentage on loans outstanding as on the last day of the FY instead of the interes....
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....d the limitation period prescribed u/s. 153(1) read with Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 expired on 30/09/2021." 11. In respect of above additional ground, the Ld. Counsel argued that assessee filed the return of income under section 139(1) of the Act on 24.10.2018. The notice under section 143(3) of the Act, was served on the assessee on 22.09.2019. The Ld. Counsel pointed out that time limit for completion of the assessment under section 153(1) was on 30.09.2020 (that is, within the eighteen months from end of assessment year in which the income was first assessable). The Ld. Counsel stated that as per last notification dated 25.06.2021 under taxation and other laws relaxation and Amendment Act, 2020 (TOLA). The extended time limit for completion of the assessment was upto 30.09.2021, therefore Assessing Officer must have passed the assessment order up to 30.09.2021. However, the assessment order was passed by the Assessing Officer under section 143(3) of the Act on 30.03.2022, which is outside the time limit prescribed by taxation and other laws relaxation and Amendment Act, 2020, therefore assessment order itself should be q....
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....information was required to be obtained from the above foreign entity. Hence by virtue of Sect. 90 of the I.T Act reference was made by the then A.O. to the Foreign Taxation & Tax Research (FT&TR) (copy of acknowledgement dtd. 16.05.2021 by Competent Authority enclosed for kind reference) for obtaining the transactions related information. (v) In the light of reference made to FT&TR, the period of limitation for completion of assessment was to be computed by excluding the period mentioned in explanation 1(x) of the Sect. 153 of the Act, For the sake of ready reference the relevant explanation 1(x) is reproduced below :- "Explanation 1. - For the purpose of this section, in computing the period of limitation- (i) (ii) ....... (iii) ....... (iv) ...... (x) the period commencing from the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in section 90 or 90A and ending with the date on which the information requested is last received by the Principal Commissioner or Commissioner or a period of one year, which is less, or ....
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....Assessing Officer made the addition on account of loans and advances to the tune of Rs. 7,19,60,390/-, however, the ld. CIT (A) reduced it at the rate of 0.75% of the loans and advances outstanding as on last date of the financial year of Rs. 81,91,61,303/- which is not acceptable. The ld. CIT-DR also pointed out that in addition to this, the ld. CIT (A) has provided the relief in respect of estimated expenditure at the rate of 25% of gross commission which comes to Rs. 38,19,853/-, therefore the order of the ld. CIT (A) is on commercial principles that the assessee was earning commission on purchase and sale and therefore the addition made by the Assessing Officer ought to be upheld. 15. On the other hand, on merit, Ld. Counsel for the assessee submitted that Assessing Officer made the estimation of income taking into account purchase and sale both which are not justifiable. The ld. CIT (A) has also considered both elements that is purchase and sale and made the estimated addition at the rate of 0.05% which is hot acceptable by applying the commercial principles. The Ld. Counsel pointed out that the profit is always linked with sales, therefore 0.05% should be es....
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....come Tax departmental representative (ld. CIT-DR) for the revenue and have gone through the entire record carefully. The Ld. AR for the assessee submits that investigation team was recorded the statement of assessee by pressurizing him. The assessee has already retracted the statement by filing retraction statement dated 21.10.2013 and 09.01.2014, before the assessing officer on 31.03.2014. When search was conducted the assessment for 2008-09 to 2012-13 were not pending and were already concluded either under section 143(3) or 143(1) and hence no income can be assessed unless there is incriminating material found during the course of search action. The A.O. merely relied on the fact that no stock of the diamonds was found at the time of search. The goods were given for approval to customers for sales. The assessing officer overlooked the entire documentary evidences. The Ld. AR for the assessee read over the written submissions filed before Ld. CIT(A). On merit the Ld. AR of the assessee submitted that the assessee was doing the real business and has shown business income while filing return of income. The ld. AR for the assessee submits that Kolkata Tribunal in Manoj Begani Vs ACI....
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....ciate, employees and family members are operating through a number of business concern of three natures i.e. Proprietorship firm, partnership firm as well as companies in the name of various persons including his employees. For all practical purposes, he himself ensures the chain of entire business network on profit sharing basis. During the search on business premises as well as residential premises and survey on their employee it was admitted by all the person and family members and relatives that they were working for the assessee. Not a single piece of diamond was found from any of the business or residential premises of the assessee. The ld. CIT-DR for the revenue further submits that while recording statement of the assessee, he was confronted with various emails extracted from his computers. The assessee clearly admitted that he was receiving commission on value of import at the rate of 0.2% from the real importer who route the transaction through his paper concern. It was also disclosed that on entry of unsecured loan, he received commission in the range of 0.25% to 0.5%. The AO on the basis of his statement, incriminating evidence found in the form of statement of account ....
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....ered. The assessing officer after serving statutory notices proceeded for assessment. During the assessment the assessing officer referred relevant part of the statement of assessee and diagram of modus operandi of business operation which was prepared during the search action, as followed by assessee and his group while making the business of accommodation entry. The assessing officer further noted that the statement of Sachin Pariekh proprietor of Arihant Export, director of Karnawat Impex Pvt. Ltd & Moulimani Impex, Manish Jain (prop of Kalash Enterprises, Director of Kriya Impex Pvt. Ltd and Karnawat Impex Pvt. Ltd.) and Anoop Jain (Prop of Adi Impex) was recorded during search. The Assessing Officer (AO) on the basis of statement of Sachin Parikh, Manish Jain and Anoop Jain in wherein they admitted that all they were working on remuneration with Rajinder Kumar Jain (assessee). The AO also held that during recording statement of assessee, in Question No. 15, the assessee was asked to explain the modus operandi of his business. The AO prepared the diagram of modus operandi disclosed by the assessee. The AO on the basis of incriminating material gathered during the search ac....
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.... 15. The Ld. CIT (A) confirmed the additions of commission income on export as well as on unsecured loan. The ld. CIT (A) while confirming the order of the assessing officer recorded that that the basic objection of the assessee that his admissions of doing only paper business of trading of diamonds, in providing accommodation entry; is not correct and not based on incriminating document recovered in search action. The ld. CIT (A) noted that assessee is Director in various companies/partners in various firms and also proprietor of a firm, the business of all firms and companies are controlled by the assessee. During the search no physical stock of diamonds was found, there were numerous e-mails including some e-mail found and seized during search clearly proved that the real beneficiary of importer of diamonds were different then the books, there were also e-mails which prove that the person wanting accommodation entry were approaching the assessee and his group, the correspondence of orders were found not placed by the assessee and his group to the foreign parties. Besides, books of account of various concerns was maintained by assessee, which the assessee himself said being run ....
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....h the corroborative evidence found in the form of e-mails and other evidence in the form of books of account recovered from the pen drive, which itself is incriminating evidence against the assessee. We further noted the assessee in his retraction statement has not explained the material evidence found in the form of e-mail, from his e-mail account, his background history as to how he entered in the this particular business of providing entry, which he himself disclosed during the search action that he learnt all this business module of providing accommodation entry from his ex-employer namely Ratanlal Jain. The said retraction is filed for the first time before AO after gap of 12 months period. The reliance in case Manoj Begani Vs ACIT (supra), passed by Kolkata Tribunal which is case of beneficiary of the alleged accommodation entry from Rajendra Jain, is not helpful to the assessee. Here in the present case, there is clear admissions of the assessee about the entire business affair carried out by him with his associate for providing bogus entry, mere obiter in case of beneficiary by the Coordinate bench, will not absolve the assessee from his own admission. The finding of Tribun....
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....in these grounds of appeal has already been discussed in ground No. 3 to 5, therefore, needs no further adjudication. In the result all the grounds of appeal raised by the assessee are rejected. 19. In the result, the appeal of the assessee for AY 2008-09 in ITA No. 294/SRT/2021 is dismissed. 20. Considering the fact that we have dismissed the appeal for AY 2008-09, the remaining appeals for AY 2009- 10 to 2014-15, are also dismissed with similar observation. No order as to cost." 18. As the issue is squarely covered against the assessee by the decision of the Division Bench, in the case of Shri Rajendra Sohan Lal Jain (supra) and there is no change in facts and law and the ld. Counsel is unable to produce any material to controvert the aforesaid findings of the Division Bench (supra). We find no reason to interfere in the said order of the Division Bench, therefore, respectfully following the judgment of the Division Bench, we dismiss the appeal of the assessee. 17. Therefore, we note that since the issue is squarely covered by the judgement of Co-ordinate Bench in the case of Sanjay Kumar Choudhary (HUF) & Ors. (supra), and there is no chan....