TaxTMI 
TaxTMI 
2026 (6) TMI 1120
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....ng the post survey enquiry, a statement of Prateek Bansal was recorded on 04.09.2017 wherein he admitted that after demonetization, he had received cash of Rs. 12,37,50,000/- (Rs.7,48,000/- from Anirudh Aggarwal Rs. 47,50,000/- from Ravi Aggarwal and Rs. 4,42,00,000/- from Vinod Deshmukh). The AO extracted the above statement at page 2 of the assessment order as per which he confirmed that he had given cash of Rs. 10,39,50,000/- to Nitin Gupta to purchase gold and diamond. In return, Nitin Gupta gave him 11 kgs. Gold worth Rs. 5,37,50,000/- and 5 pieces of diamond worth Rs. 2,64,00,000/-. Therefore, its total purchase from Nitin Gupta was Rs. 8,01,50,000/-. The gold and diamond were thus sold to the parties who had given him cash of Rs. 8,34,50,000/- and accordingly he had earned profit of Rs. 33,00,000/- in this whole transaction and Rs. 2,38,00,000/- is due from Nitin Gupta. He had given details of the transactions of purchase, which are given at page 2 of the assessment order. He further stated that Rs. 1,98,00,000/- given to the assessee to purchase 4 kgs. of Gold. He gave this 4 kgs. Gold to Vinod Deshmukh in lieu of Rs. 2,02,00,000/- that he had given him in cash thereby earn....
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....at Rs. 9,00,00,000/- had escaped assessment. Based on the statement of Mr. Mohit Garg and Mr. Prateek Bansal, assessing officer has made protective addition of Rs. 9,00,00,000/- being amount paid to Mr. Nitin Gupta and of Rs. 1,98,00,000/- being amount received from Mr. Prateek Bansal for purchasing 4 KG Gold, on protective basis. During the assessment proceedings of Mr. Nitin Gupta, the AO himself stated and agreed that Mr. Nitin Gupta had created a story to explain the unaccounted cash of Rs. 9 crore which he admitted to give to Mr. Mohit Garg and therefore Mr. Nitin Gupta had failed to prove that Rs. 9 Cr. was given to Mr. Nitin Gupta by Mr. Shashank Jain. Relevant extract of Mr. Nitin Gupta's statement, is reproduced as under: Thus the statement given by Shri Nitin Gupta proved completely falsed that he received the money of Rs. 9 cr. from Shashank Jain. Further. Shri Nitin Gupta was issued n detailed showcause notice and asked again why the amount of Rs. 9 cr. (out of which Rs. 26.54.00,000/-) received from Shri Shashank Jain should not be treated as his unexplained money. In his reply to his show cause notice Mr. Nitin Gupta is referred to the statement recorded ....
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....en vivid details about his involvement in the impugned transactions, including the fact that Sh. Kanav Gupta, who was son of his friend, wanted to convert demonetized currency and for this purpose Sh. Jain has sent his staff Sh. Anil Verma alongwith Sh. Kanav Gupta to the residence of Sh. Mohit Garg for delivering the said amount. He also stated that he had a booking of purchase of 20 KG gold. with the assessee, out of which he sold 9 Kg to Sh. Kagav Gupta and balance to various persons and eventual balance of 2 Kg gold was retained by him as his commission. It is further observed that this 2 Kg gold was seized by ED during search at the premises of the appellant and the same corroborates the fact that the appellant has acted as middlemen for converting cash of various acquaintances and earning commission in the process. It is further seen that ED had also recorded the statement of his staff Sh. Anil Verma, which corroborates the facts admitted by the appellant before ED, particularly regarding the admission of the source of Rs. 9 crores paid by him to procure 20 Kg of gold. From the statements of Sh. Shashank Jain and others, ED has established that out of 20 Kg of gold, 9 Kgs wer....
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.... appeal :- "Assessee's Grounds 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad, both in the eye of law and on the facts. 2. On the facts and circumstances of the case, the initiation of the proceedings under Section 147, read with Section 148, made by AO. is bad and liable to be quashed as the condition and procedure prescribed under the statute have not been satisfied and complied with. 3. (i) On the fact and circumstances of the case, the order passed by the AO. is bad in the eye of law and on facts, as the same is made on the basis of reasons recorded without there being any independent application of mind. (ii) That the reassessment order passed by the AO. is bad and liable to be quashed as the same has been reopened on the basis of the reasons which are vague and against the facts on record. 4. On the fact and circumstances of the case, Ld. AO has erred in reopening u/s 147 of the income tax Act, 1961 without obtaining valid approval from the prescribed authority as required u/s 151 of the Income Tax Act, 1961. 5. On the fact and ci....
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....ng the addition of Rs. 9,00,00,000/- (on protective basis) and substituting the same with unaccounted commission income or Rs. 57,20,000/-, even when the assessee could not substantiate his claim with evidence." 7. At the time of hearing, ld. AR submitted as under :- "The Assessing Officer made the following two additions under section 68, both on Protective basis. 1. Rs. 1,98,00,000/- on the basis of statement of Sh. Prateek Bansal recorded at the time of post search investigation after the search having been carried out in the case of Mohit Garg group. 2. Rs. 9,00,00,000/- on the basis of statement of Sh. Nitin Gupta recorded during post search investigation search in Mohit Garg group. With respect to addition of Rs. 9,00,00,000/- the CIT(A) referring to certain sequence of events on the basis of statement of assessee recorded under section 50 of the PMLA as on 02.12.2016 held that assessee had earned income to the extent of 2 Kg. gold. On the basis of valuation report an addition of Rs. 57,20,0001- was sustained by him. The findings of CIT(A) are at Pg. 49 Para 6.2.2 onwards. CIT(A) after referring to the Assessment order held that....
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....posed in the hands of assessee. Copy of reasons recorded are placed in PB. Pg. 9 onwards, for which approval was granted by the authorities as on 26.02.2021 (PB Pg. 18). It is clear from the above that the case of the assessee was reopened only for the purpose of making protective assessment, which is not as per law. The reopening under section 148 is bad in law as the same was based on reasons for making addition on protective basis: From the copy of reasons recorded (PB Pg 9), the only reasons recorded are first four Paragraphs, the remaining 6 pages are repeated copy of the said four paragraphs. Forth Paragraph clearly states that reopening is initiated on the basis of statement of Nitin Gupta recorded post search in Mohit Garg group. It has been stated that Nitin Gupta had stated giving Rs. 9 Crores to the assessee and this was confirmed during Nitin Gupta's assessment also. A copy of Nitin Gupta's assessment order is placed in PB Pg. 63, The relevant would be to read PB Pg. 76 (Internal page 14 of the order), whereby it has been clearly stated that 'Niiin Gupta has failed to prove that Rs. 9 cr. Was given to him by Shash....
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....act of gold belonging to the company can be verified from the Tax Audit Report Placed in PB P. 231, relevant Pg. 239. The case of the company M/s Basant Rai Hukam Chand was finalised under section 143(3), based on the said Audit Report without giving any adverse finding in this regard." 8. On the other hand, ld. DR of the Revenue objected to the detailed submissions of the ld. AR of the assessee and he brought to our notice page 91 of the paper book which is the assessment order in the case of Prateek Bansal and he brought to our notice that assessee has received Rs. 1.98 crores to purchase 4 kgs. Gold and further he brought to our notice assessment order in the case of assessee and the assessment order passed in the case of Nitin Gupta in whose hands substantive addition was made and protective addition was made in the hands of the assessee. Further, he brought to our notice decision of ITAT in the case of Nitin Gupta wherein the addition was deleted on jurisdictional issue of section 153D. He submitted that the assessee has been involved in the above transactions and taken money from Nitin Gupta and has not explained the transactions. In this regard, he heavi....
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....ince the assessee has involved only receiving the cash and purchasing 4 kgs. gold on behalf of Prateek Bansal, we observed that ld. CIT (A) has acknowledged the above transaction and presumed that assessee has supplied gold to Prateek Bansal in lieu of cash and by doing so, he must have earned certain amount of commission, accordingly he proceeded to add Rs. 4 lakhs as commission income as disclosed by Prateek Bansal in the hands of the assessee. We observed that the whole transaction and assessment of the assessee was reopened mainly on the basis of statement of Prateek Bansal and he himself accepted that he had earned the profit of Rs. 4,00,000/- in the whole transaction. The ld. CIT (A) presumed that whole profit earned by Prateek Bansal includes the commission income of assessee also. In our view, the Prateek Bansal had already owned up the transaction and confirmed that he had made profit of Rs. 4 lakhs, the same should be added in the hands of Prateek Bansal, not in the hands of the assessee. As discussed in the above, the cash relevant to purchase of gold belongs to Prateek Bansal and as the same was owned up by him, the same cannot be added in the hands of the assessee. In ....
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....to procure the gold was came from the interest of persons who intended to buy the abovesaid gold. Since 2 kgs. of gold was seized by the ED based on the information available on record, it is not clearly established that the above said 2 kgs. of gold was belonged to the assessee only. Therefore, the question arises, whether the above said gold retained by the assessee after the assisting the interested person, is the commission income of the assessee or it belongs to the company, where the assessee is one of the director. It is submitted that it belongs to the Basant Rai Hukum Chand Jain Private Limited (BRHCJPL). 12. After careful consideration of the information available on record, we observed that ED had found 2 kgs of Gold from the residence of the assessee, further noticed that the assessee recorded the statement in connection with the case of Nitin Gupta and issue of cash involvement in purchase the Gold. In the statement given by the assessee before ED, based on the above statement, the gold was recovered from the assessee. Now, the assessee before us and before FAA, claimed that the gold found and seized by the ED belongs to the Company BRHCJPL. We observed that the ass....