Income Tax Appellate Tribunal - Ahmedabad
Piyush B.Acharya, Mehsana vs Acit.,Cent.Circle-1(1),, Ahmedabad on 15 March, 2017
आयकर अपील
य अ धकरण, अहमदाबाद यायपीठ, अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
"A" BENCH, AHMEDABAD
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER
AND
SHRI AMARJIT SINGH, ACCOUNTANT MEMBER
ITA.No.2381 & 2382/Ahd/2012
नधा रण वष /Asstt.Year : 2008-2009 & 2009-2010
AND
ITA.No.1947/Ahd/2013
नधा रण वष /Asstt.Year : 2007-2008
Piyush Kumar B. Acharya ACIT, Cent.Cir.1(1)
Prop. of Utsav Corporation Vs Mehsana.
H-2, Market Yard
Mehsana 384 001.
ITA.No.2094 & 2095/Ahd/2012
नधा रण वष /Asstt.Year : 2008-2009 & 2009-2010
ACIT, Cent.Cir.1(1) Piyush Kumar B. Acharya
Mehsana. Vs Prop. of Utsav Corporation
H-2, Market Yard
Mehsana 384 001.
अपीलाथ / (Appellant) यथ / (Respondent)
Revenue by : Shri K. Madhusudan, Sr.DR
Assessee by : Shri K.C. Thakor, AR
ु वाई क तार ख/ Date
सन of Hearing : 14/03/2017
घोषणा क तार ख / Date of Pronouncement: 15/03/2017
आदे श/O RDER
PER RAJPAL YADAV, JUDICIAL MEMBER
Assessee and the Revenue are in cross-appeals in Asstt.Year 2008-09 and 2009-10 against common orders of the ld.CIT(A)-I, Ahmedabad dated 19.7.2012. In the Asstt.Year 2007-08 assessee alone is challenging the order ITA No.2381/Ahd/2012 and 4 others Shri Piyush Kumar B. Acharya Vs. ACIT, Mehsana 2 of the ld.CIT(A) dated 17.5.2013. Since common issue is involved in all these appeals, therefore, we heard them together and deem it appropriate to dispose of them by this common order.
2. The ld.representatives have argued appeal for the Asstt.Year 2008-09, therefore, for facility of reference, we take up the facts from the Asstt.Year 2008-09.
3. Before adverting to specific grievance of the assessee or the Revenue in these appeals, we deem it appropriate to take note of brief background of all the facts giving rise to the litigation in these appeals.
4. Assessee is an individual. He was engaged in the business of supplying foodgrains to different persons on commission basis and was not purchasing or selling any goods at his own. The assessee was also doing business of canvassing agent. Survey under section 133A of the Income Tax Act was carried out at the business premises of the assessee on 20.6.2008. It is pertinent to observe that department has carried out survey on a number of concerns engaged in the business of trading in edible oil in Patan District. During the course of survey, it revealed that one M/s.Vishal Traders, Virpur was a bogus concern and issuing bills to various concerns engaged in trading or manufacturing of cotton seeds, foodgrains, oil seeds etc. The assessee has also worked as a canvassing agent to Gujarat Ambuja Exports Ltd., and M/s.Vishal Traders. According to the assessee, he used to work as a commission agent. His job was to receive cheque in the name of Vishal Traders from M/s.Gujarat Ambuja Exports. Those cheques were deposited in current account no.06577 with Mehsana Nagrik Sahakari Bank Ltd. Vishal Traders used to give self-cheque to the assessee. He withdrew cash from the ITA No.2381/Ahd/2012 and 4 others Shri Piyush Kumar B. Acharya Vs. ACIT, Mehsana 3 bank and handed over the cash to Shri Madanlal L. Shah (Chadak). There is no dispute with regard to this modus operandi or with regard to earning of commission income in this clandestine manner. The ld.AO after an analysis of record called out details as noticed at page no.5 of the assessment order for Asstt.year 2008-09. He has tabulated turnover of Vishal Traders and how such turnover has been worked out from the different bank account in different years. In order to understand the controversy in more scientific way, it is incumbent upon us to take note of this table. It reads as under:
"
Bank and Bank A/c.No. Deposits during F.Y.
2006-07 2007-08 2008-09 Total
The Kalupur Commercial 2,27,48,110 7,35,31,655 0 9,62,79,765
Co.Op. Bank Ltd. A/c.
No.0120114293
Dena Gujarat Gramin Bank 0 1,64,42,500 0 1,64,42,500
A/c. No.639
The Mehsana Nagrik Sahakari 0 2,04,23,897 37,48,108 2,41,72,005
Bank Ltd. A/c. No.06577
The Harij Nagrik Sahakari 1,79,37,127 22,85,91,022 3,32,33,476 27,97,61,625
Bank Ltd. A/c. No.4775
Total 4,06,85,237 33,89,89,074 3,69,81,584 41,66,55,895
The deposits in the bank account represent the sales (bogus) claimed to have been made to various parties by M/s. Vishal Traders. In the statements recorded u/s 133A & 131 of the Income Tax Act, 1961 and vide submission dated 28.10.2010, the assessee himself admitted thi t he was doing the business as commission agent for Vishal Traders. During the course of assessment proceedings, assessee was given opportunity to furnish the details of commission income received from Vishal Traders. However, despite number of opportunities being given, the assessee has not given the details of commission received from Vishal Trades. Therefore, commission income has to be calculated on the basis of total deposits made in these bank accounts. Total deposits made in these bank accounts in F.Y.2007-08 (A.Y.08-09) is Rs.33,89,89,074/-. Thus, M/s. Vishal Traders has issued bogus sales bills of ITA No.2381/Ahd/2012 and 4 others Shri Piyush Kumar B. Acharya Vs. ACIT, Mehsana 4 Rs.33,89,89,074/- during A.Y.2008-09. Accordingly commission income received by Shri Piyushkumar Balkrushna Acharya for facilitating issue of bogus bills by M/s. Vishal Traders is calculated @2% of the total bogus bills which comes to Rs 67,79,780/-. The same is hereby added to the total income of the assessee. Penalty proceedings u/s.271(1)(c) is initiated for furnishing inaccurate particulars of income."
5. According to the AO, these are the transactions carried out in different banks and commission income deserves to be assessed at the rate of 2% in the case of the assessee. On the other hand, the case of the assessee is that he has disclosed carrying out of activity with regard to account no.6577 with Mehsana Nagrik Sahakari Bank Ltd. He has not handled any other bank account and the ld.AO has made addition on estimate basis. The ld.AO has considered the income at 2% of the alleged turnover in different assessment years. Accordingly, addition of Rs.67,79,780/- has been made in the Asstt.Year 2008-09. This is 2% of Rs.33,89,89,074/- the total turnover computed for this purpose as discernible in the observation of the AO reproduced above. Appeal to the ld.CIT(A) did not bring any relief to the assessee.
As far as working of the turnover is concerned, the ld.CIT(A) has confirmed the finding of AO but reduced the estimation of income from 2% to 1% in Asstt.Year 2008-09 and 2009-10, whereas in Asstt.Year 2007-08, the ld.CIT(A) has confirmed the estimation of commission income at the rate of 2%. The assessee is challenging computation of turnover from different banks (tabulated above) and estimation of such income at 2% in Asstt.Year 2007-08 and 1% in Asstt.Year 2008-09 and 2009-10. On the other hand, Department in its two appeals challenged reduction of rate from 2% to 1% for calculating commission income.
6. With the assistance of the ld.representatives, we have gone through the record carefully. There is no dispute with regard to the fact that the assessee ITA No.2381/Ahd/2012 and 4 others Shri Piyush Kumar B. Acharya Vs. ACIT, Mehsana 5 has taken part in transactions carried out by Vishal Traders in issuing bogus bills. The assessee did not dispute. The limited dispute between the Revenue and the assessee is that the AO has assumed the assessee of carrying out of the transactions of Vishal Traders in different banks located in different cities, whereas stand of the assessee is that he is based in Mehsana. He has taken care of transactions reflected in the Mehsana Nagrik Sahakari Bank Ltd. Transactions in rest of the banks were not carried out by him and he has not played any role with regard to the transactions reflected in Kalupur Commercial Co-op. Bank Ltd., Harij Nagnrik Sahakari Bank Ltd., Dena Gujarat Gramin Bank ltd. This plea was raised before ld.CIT(A) also, and the ld.CIT(A) has asked for a specific reply from the ld.AO vide show cause notice dated 8.6.2012. Copy of this letter has been extracted by the ld.CIT(A) on page no.8 for the Asstt.Year w008-09 and 2009-10. The AO has attended the office of the ld.CIT(A) and submitted his comments. The ld.CIT(A) thereafter made the following discussions:
"9. In response the A.O. attended this office on 18.07.2012 and argued that no fresh evidence had been filed by the appellant. That he is not stating anything new which he has not stated during assessment proceedings. The AO argued that the appellant has admitted himself that he worked as commission agent of Vishal Traders therefore, the addition should be upheld.
10. After going through rival submissions following points emerge:
(1) The appellant works on commission. In the returns, he has shown commission received from M/s.Gujarat Ambuja Exports Ltd on the basis of TDS certificates issued by this concern. Return of AY 2008-09 have been filed at just Rs. 1,07,637 and of AY 2009-10 of Rs. 1,55,300.
In the profit and loss account of AY 2008-09 Dalali Income has been shown at Rs.2,63,447 and in AY 2009-10 of Rs.3,06,204 and after claiming expenses like office expenses, salary, telephone etc. net profit at Rs.1,12,533 in AY 2008-09 and at Rs. 1,61,590 in AY 2009-10. The ITA No.2381/Ahd/2012 and 4 others Shri Piyush Kumar B. Acharya Vs. ACIT, Mehsana 6 profit and loss accounts of the two years filed with the returns are enclosed as Annexure-3 of this order.
(2) The appellant has admitted both during survey and during assessment/appellate proceedings that he has worked for M/s.Vishal Traders.
(3) The appellant has informed the modus operandi of depositing cheques received by Vishal Traders in its bank accounts and then withdrawing cash through self drawn cheques of Vishal Traders, and then handing over the cash to Shri Madanlal Shah.
(4) Search operation in the Edible Oil Group cases (like Gujarat Ambuja Exports, Pankaj Cotton Industries, Tirupati Cotton, Deep Cotton, Om Shri Nagraj Ginning and many others ) conducted by the Department on 01.09.2008 and subsequent dates revealed that these concerns were obtaining bogus bills from one M/s.Vishal Traders (proprietor Shri Dharmendra Pandya). Cheques issued to Vishal Traders were deposited in its bank accounts, but immediately cash withdrawals of equivalent amounts were made, which was an unusual pattern noticed. That the cash withdrawn was routed back to the concerns by Vishal Traders which issued cheques for the so called purchases of cotton seeds, oil seeds, food grains etc. The appellant has confirmed working for Vishal Traders and is an integral part .of this-bogus bill issuing business with Shri Dharmendra Pandya (the proprietor of Vishal Traders) and Shri Madanlal Shah, (to whom the appellant returned back the cash withdrawn from Vishal Traders bank accounts). This exercise the appellant would not have done without being recipient of some commission from Vishal Traders.
(5) Despite opportunities, the appellant did not submit English translation of his statements neither any other evidence in support of the contention that no addition should be made in his case and that his return declaring commission received from Gujarat Ambuja Exports Ltd. should be accepted. This was emphasized to the appellant during the course of hearing in this office on 16.4.2012 and also through this office letter dated 8.6.2012 which has been reproduced above.
(6) Gujarat Ambuja Exports filed return of AY 2008-09 in response to notice issued U/S.153A with ACIT Central Circle on 30.9.2009 ITA No.2381/Ahd/2012 and 4 others Shri Piyush Kumar B. Acharya Vs. ACIT, Mehsana 7 declaring income of Rs.114,56,29,143. During assessment proceedings it confirmed that it had made purchases of Rs.2,25,52,526 from Vishal Traders which had been added back in the assessment order dated 29.12.2010 as bogus purchases. In AY 2009-10, Gujarat Ambuja filed return on 30.9.2009 at Rs.54,44,98,730. In the assessment order dated 29.12.2010, purchases from Vishal Traders of Rs.36,28,531 have been added.
Similarly, other concerns of Edible Oil Group cases have shown huge purchases from Vishal Traders which had been added back in the assessment orders.
(7) The returns of the appellant are not supported by any TDS certificates to confirm the Dalali income shown in the returns. The appellant's claim that he has worked for Gujarat Ambuja Exports and has shown correct Dalali income is not proved in the absence of TDS certificates. If the argument is believed then the appellant would not have worked for less than 2% from Gujarat Ambuja Exports, and as per purchases shown from Vishal Traders by Gujarat Ambuja Exports in AY 2008-09 of Rs2,25,52,526, commission at 2% comes to Rs.4,51,050 and in AY 2009-10 at 2% of Rs.36,28,531 it comes to Rs.72,570. In the return of AY 2008-09 commission of just Rs.2,63,469 has been shown without specifying from whom it has been received and in AY 2009-10 commission at Rs.3,06,204 has been shown without specifying from whom it has been received and at what rate.
11. Points discussed in the above para prove that the appellant was an integral part of bogus bills operations conducted in complicity with Dharmendra Pandya and Madanlal Shah. During appellate proceedings he has not stated anything new which was not stated before the Assessing Officer. The argument of the Assessing Officer that all this would not be done by the appellant without receiving any commission is an argument which cannot be brushed aside, but 2% addition as commission of all the deposits appearing in the bank accounts in the years under consideration of Vishal Traders is not found justified in toto, because the rate of commission can only be estimated, and the appellant was actually assisting the main operator- M/s. Vishal Traders controlled by Shri Madanlal Shah and Shri Dharmendra Pandya, therefore, in the interest of justice this commission income addition is restricted to 1% of the deposits, which brings addition of Rs.33,89,890/- in A.Y 08-09 (1% of Rs.33,89,074) ITA No.2381/Ahd/2012 and 4 others Shri Piyush Kumar B. Acharya Vs. ACIT, Mehsana 8 and of Rs.3,69,815 in A.Y. 2009-10 (1% of Rs.3,69,81,584). The balance amounts are directed to be deleted."
7. Finding in the Asstt.Year 2007-08 is also in the same line. But in that case the ld.CIT(A) did not reduce the estimation of income from 2% to 1%. Before making an analysis of the impugned orders, we would like to make reference to the statement of the assessee recorded during the course of survey wherein he has declared as to how he has withdrawn cash from the accounts of Vishal traders and how this amount has been handed over to Mandalal Shah. Question No.12 and reply is important for deciding this controversy. Therefore, it is pertinent to take of this question and reply:
" नः 12 आपको आपके ऑ फस से मले प!ना न"बर 1 से 10 तथा 29 से 51 बताया जा रहा है िजसे क Ann- A-1 Inventorised कया गया है । यह कागज /वशाल 1े डस3 से संबं5धत है । इसके पैमे8ट के बारे म:
पुर जानकार द िजए।
उ>तरः 12 आपके बताए उपरो?त प!न@ म: कुछ कागज /वशाल 1े डस3 के Bबल हC जो गज ु रात अंबज ु ा से पैमे8ट Eनकलवाने के लए मझु े Gदए हुए हC तथा अ!य कागज गज ु रात अंबजु ा से आए हुए पैमे8ट क Debit Note है । गज ु रात अंबज ु ा के आए हुए चैक मC /वशाल 1े डस3 के Mehsana Nagrik Sahkari Bank, Arvind Baug के Current Account No. 6577 म: जमा कराता था। /वशाल 1े डस3 मझ ु े Self के चैक दे ता था जो क मदनलाल चावड के through मझ ु े मलते थे और मC बCक से Cash Eनकलवाकर Cash मदनलाल चावड को दे दे ता था।"
English translation:
Q. 12 We got page nos.1 to 10 and 29 to 51 from your office, which is inventorised as Ann-A-1. These papers related to Vishal Traders. Give complete details about these payments.ITA No.2381/Ahd/2012 and 4 others
Shri Piyush Kumar B. Acharya Vs. ACIT, Mehsana 9 A.12 The above papers shown by you are related to Vishal Traders. These papers were received by me for getting payment from Gujarat Ambuja. Others papers are related debit notes for payments received from Gujarat Ambuja. The cheques received from Gujarat Ambuja, which I deposited in the current account no.6577 of Vishal Traders with Mahsana Nagrik Sahakari Bank, Arvind Baug.
Vishal Traders was giving me self-cheque which were received through Madanlal Chavad, and therafter I withdrew cash from the bank and the cash was handed over to Madanlal Chavad.
8. This is the only evidence against the assessee for habouring a belief that the assessee has worked on behalf of Vishal Traders. The ld.CIT(A) has treated total turnover reflected in different bank accounts (extracted supra) as handled by the assessee on the basis of circumstantial evidence. The circumstances narrated by the ld.CIT(A) are that the assessee did not submit any TDS certificate to confirm dalali income shown in the returns. The assessee did not submit English translation of statement. The assessee has confirmed his working for Vishal Traders and he is an integral part of this issuance of bogus bills with Shri Dharmendra Pandya. Gujarat Ambuja Exports filed return of Asstt.Year 2008-09 and confirmed that it had made purchases of 2,25,52,526/- from Vishal Traders which had been added back in the assessment order as bogus purchases. The question is how this cumulative set of all these facts would goad adjudicating authority to arrive at a conclusion that the assessee has carried out issuance of bogus bills in all the banks. The assessee in his reply has only confirmed about transactions in Mehsana Nagrik Sahakari Bank Ltd. Papers were also found to this effect at his premises. Other bank accounts have been connected with the assessee only on assumption basis. It may be a case that person like assessee might have been carried out such transactions on behalf of Vishal Traders at ITA No.2381/Ahd/2012 and 4 others Shri Piyush Kumar B. Acharya Vs. ACIT, Mehsana 10 Ahmedabad and other cities where these banks are located. There is no conclusive proof with the Department exhibiting the fact that transactions in all other banks were also routed through the assessee or he has deposited the cheques received from the alleged purchaser, withdrew the cash on the self- cheque issued by Vishal trades and handed over these cheques to Shri Dharmendra Pandya. Therefore, we are of the view that commission income in the hands of the assessee is to be assessed qua the turnover available in Mehsana Nagrik Sahakari Bank Ltd. In Asstt.Year 2007-08 no transactions have been carried out in this bank account. Therefore, there should not be any addition in that year. We allow the appeal of the assessee i.e. ITA No.1947/Ahd/2013 and delete addition.
9. As far as other two years are concerned, we find that transactions are there in the Mehsana Nagrik Sahakari Bank Ltd. Commission rate adopted by the AO at 2% is reasonable rate in this type of activity. The ld.CIT(A) ought to have not reduced it to 1%. Therefore, we allow both the appeals of the Revenue and hold that whatever turnover is to be confirmed, rate for estimating the commission income will be at 2% (two percent).
10. As far as assessee's appeal for Asstt.Year 2008-09 and 2009-10 are concerned, we direct the AO to take the turnover available in Mehsana Nagrik Sahakari Bank Ltd. i.e. turnover of Rs.2,04,23,897/- in Asstt.Year 2008-09 and Rs.37,48,108/- in Asstt.Year 2009-10. The total turnover is to be computed at Rs.2,41,72,005/-. The income of the assessee from these activities is to be worked out at 2% (two percent) of this turnover. This income will be in addition to any other income disclosed by the assessee in both the years. The ld.counsel for the assessee has agreed for the rate of 2% (two percent) as well as estimation of income at 2% (two percent) of the ITA No.2381/Ahd/2012 and 4 others Shri Piyush Kumar B. Acharya Vs. ACIT, Mehsana 11 alleged turnover in addition to the income disclosed by the assessee. We have specifically confronted the ld.counsel for the assessee to this effect and he did not raise any objection. In this way, all these appeals are allowed.
11. In the result, all appeals are allowed.
Order pronounced in the Court on 15th March, 2017 at Ahmedabad.
Sd/- Sd/- (AMARJIT SINGH) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER