TaxTMI 
TaxTMI 
2025 (3) TMI 881
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.... circumstances of the case and in law, the Hon'ble Tribunal was justified in restricting the addition to the commission income at 0.15% without considering that the material found during the course of search clearly established that the net commission charged by the assessee group of companies varied between 1.5% and 3.5% ?" Brief Facts : 2. The petitioner is a company formed and registered under the Companies Act, 1956. 3. On 29 August 2009, return of income was filed by the respondent-assessee declaring 'NIL' income. The said return of income was selected for scrutiny assessment by issuing notice under Section 142 (1) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'). 4. On 28 December 2011, an assessment order under Section 143 (3) was passed assessing the income of the respondent-assessee at Rs. 10,73,52,550/-. In the said order it is stated that the respondent had prepared profit and loss account and filed tax audit report. In the assessment order, an addition under Section 68 of the Act was made amounting to Rs. 10,73,52,553/- under the head 'Income from other sources'. The said addition was made on the ground that the credits appe....
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....ppellant shall furnish the names & addresses of the beneficiaries and failed to appreciate the facts that the records including names and addresses of beneficiaries are in possession of Income Tax Department and no copy of computerized documents including the names & addresses were furnished to the appellant 5. The learned Assessing Officer has erred in law and in facts in levying interest u/s. 234B and 234C of the Act. 6. The appellant craves leave to add to, alter, amend and / or delete in all the foregoing grounds of appeal. 8. On 30 May 2017, the Tribunal disposed of the appeal. In para 11 of its order, the Tribunal reduced the rate of 0.37% to 0.15% by merely following its own order for earlier assessment years. 9. It is on the above backdrop, that the present appeal is filed by the appellant-revenue. Submissions of the appellant-revenue : 10. Mr. Suresh Kumar, learned counsel for the appellant-revenue, submitted that since the respondent-assessee did not give the details of the credits appearing in its disclosed and undisclosed bank accounts, the same stands unexplained and therefore, the addition made under Section 68 of the Act is justified. He further submitted tha....
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....in the case of sister concern of the group company of the respondent-assessee in the case of PCIT Vs Alag Securities Pvt. Ltd. Income Tax Appeal No. 1512 of 2017 for the assessment year 2003-04. No other submissions have been advanced by the learned counsel for the respondent-assessee. Analysis and Conclusion : 13. We have heard learned counsel for the appellant-revenue and the respondent-assessee. 14. Section 68 of the Act as it existed for the assessment year 2009-10 reads as under: 68. Cash credits Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. 15. Before we delve into the issues raised in the present appeal, it is important to reproduce the statement of the Director of the respondent-assessee on which heavy reliance is placed by the counsel for the respondent-assessee. The said statement is scanned as follows: 16. At the outset, we wish to state that und....
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....its appearing in the bank account for AY 2009-10 have been assessed in the hands of the beneficiaries and, therefore, no addition should be made. If that be the case, we cannot accept the submission of the respondent-assessee that the amount added is included in the assessment of the beneficiaries and, therefore, same cannot be added once again in the hands of the respondent-assessee. There is no basis for such a submission made by the respondent-assessee, nor is it stated so before the Assessing Officer or the Appellate Authorities. Such a factual submission for the first time before this Court in a third appeal by oral argument across the bar cannot be permitted. 20. The CIT(A) has adopted a fair approach by stating that if the respondent-assessee identifies the beneficiaries, then the rate of commission adopted should 0.37% of such identified beneficiaries and if the respondent-assessee fails to identify the beneficiaries, then in that case, the sum credited in the bank accounts would stand confirmed under Section 68 of the Act. In our view, the Tribunal was not justified in directing 0.15% of the total deposits (explained and unexplained) appearing in the bank accounts as inco....
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....ntries by charging a commission of 0.15%. In answer to question No.7, the respondent-assessee admitted that in so far as 3321 cases are concerned, they do not have the details of the customers. Thereby, the respondent-assessee has admitted that they are not able to explain the source of credits appearing in its bank statements. It is important to note that the respondent-assessee has executed transactions of crores of rupees to accommodate various parties. Still, many of these beneficiaries' details are unknown to the respondent-assessee. This is something which this Court cannot accept. 24. In our view, such an explanation cannot be accepted more so from the respondent-assessee company who is claiming to have been engaged in the business of providing accommodation entries where crores of rupees are deposited and withdrawn. If the respondent-assessee does not have the details of the beneficiaries, then we fail to understand how the money were deposited in the bank accounts of the respondent-assessee and withdrawn from such bank accounts without respondent assessee knowing the details of these beneficiaries. The only person who can operate these bank account would be the respon....
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....tand how the said order giving effect for AY 2003-04 is of any assistance for considering the appeal for AY 2009-10 and more so when the same does not show that the sum added in the assessment has been assessed in the hands of the beneficiaries fot AY 2009-10 with which we are concerned. 29. Mr. Sharma, learned counsel for the respondent-assessee, thereafter relied upon the decision of the Co-ordinate Bench of this Court in the case of Bhaichand H. Gandhi (Supra) in support of his submission that bank statement would not constitute 'books of an assessee' and therefore, the provisions of Section 68 which requires the credits in the books of an assessee are not attracted in the present case and therefore, no addition is required to be made based on credits appearing in the bank statements. He submits that since the respondent-assessee is engaged in illegal business, he is not maintaining any books of account or any books for that matter and therefore, even if the provisions of some other Acts are violated, no addition could be made under Section 68 of the Income-tax Act. 30. In our view, the above submissions made by the learned counsel for the respondent-assessee are requi....
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....respondent-assessee. In answer to question No. 19, the director of the respondent-assessee has further admitted that whatever details he has, the same, are reflected in the CDs and to the same effect is answer to question No. 23. 32. On a reading of various answers given by Shri. Choksi, director of the respondent-assessee, it is admitted that books of accounts are maintained by the respondent-assessee and from those very books of accounts the revenue has extracted the data by copying the same on 2 CDs. This statement has been given on oath, and counsel for the respondent-assessee has heavily relied on this very statement in his submissions before this Court. In our view, based on above Shri. Choksi, director of respondent-assessee has admitted that the respondent-assessee has maintained the books of accounts. Therefore, in our view, the contention of the respondent-assessee that an addition cannot be made under Section 68 on the ground that the respondent-assessee has not maintained books and the bank statement cannot be treated as books is self-destructive in itself since, he has admitted that books of accounts are maintained and the data have been extracted from those very book....
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....essee. 35. In our view, the respondent-assessee cannot be heard to say that the provisions of Section 68 cannot be made applicable to its case because the respondent-assessee does not maintain the books. The person who is required to maintain the books of accounts and does not maintain books of account cannot turn around and contend that because he has not maintained books or books of accounts, provisions of Section 68 which requires credits in the books of an assessee cannot be made applicable. It is settled position that the person cannot take the benefit of its own wrong or violation. When it comes to provisions of Section 68 of the Act, such a contention which is self-defeating and which will make the provision of Section 68 otiose cannot be accepted. If the contentions of the counsel for the respondent-assesses are accepted, then it will amount to providing escape route to an assessee who is unable to explain the credits but still goes scot-free by arguing that since although he is required to maintain books, but because he has not maintained books, provisions of Section 68 of the Act cannot be made applicable. Indeed, this Court cannot accept such a submission and provide an....
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....not been properly shown by the appellant. [Emphasis supplied] 37. We do not accept the submissions of the respondent-assessee that because he is engaged in the business of providing accommodation entry, revenue cannot assess the credits appearing in its bank account which are the money deposited by its customers. The respondent-assessee, to succeed in this submission, must give verifiable details of these customers; only then can the revenue verify whether the credits appearing belong to such customers. The CIT (A), therefore, gave the relief in para 4.3 by observing that an estimate of income will be made only in case of identified beneficiaries and balance credits would be assessed under Section 68 of the Act. 38. The respondent-assessee cannot contend that they will not give details of beneficiaries, but at the same time, credits cannot be assessed in its hands. We wonder how the revenue can find out to whom the credits belong to unearth unaccounted income. The respondent-assessee cannot act as a shield for beneficiaries by making such a submission and at the same time refuse to pay taxes for the unexplained amounts in its bank accounts. 39. If the submissions made by the c....
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....d mean that Shri Choksi has admitted that he was engaged in the offence of commission of 'fraud'. If so, and based on such fraud, it is necessary to enquire whether he has committed an offence under the Indian Penal Code/BNS, 2023. We, therefore, direct that a necessary investigation be conducted by the concerned police station against Shri Mehul Choksi to ascertain the offence, if any, committed under Indian Penal Code and the consequent action. 43. Shri Choksi, in this statement, has also admitted that he has abetted in evasion of tax by various beneficiaries. He has also admitted that he cannot give details of the beneficiaries. Mr. Choksi has also admitted that by engaging in accommodation entry, he has engaged in the laundering of money. Therefore, in our view, the authorities under the Prevention of Money Laundering Act, 2002 should also investigate Shri Choksi on these activities. 44. This Court would also like to know from the Chief Commissioner of Income Tax in charge of Mumbai whether any prosecution is launched under the Income Tax Act and, if not, why it is not launched. If launched, what is the status of such prosecution and what steps the revenue has taken t....