Income Tax Appellate Tribunal - Mumbai
Vijay Kumar Kheria, Mumbai vs Acit Cc 22 & 30, Mumbai on 16 August, 2017
आयकर अपीलीय अिधकरण, अिधकरण मुंबई " जी"
जी खंडपीठ Income-tax Appellate Tribunal -"G"Bench Mumbai सव ी राजे ,ले लेखा सद य एवं, राम लाल नेगी, ी याियक सद य Before S/Shri Rajendra,Accountant Member and Ram Lal Negi,Judicial Member आयकर अपील सं./I.T.A./3176/Mum/2016, िनधा रण वष /Assessment Year: 2010-11 आयकर अपील सं./I.T.A./3177/Mum/2016, िनधा रण वष /Assessment Year: 2011-12 आयकर अपील सं./I.T.A./3178/Mum/2016, िनधा रण वष /Assessment Year: 2012-13 Vijay Kumar Kheria ACIT,-CC 22 & 30 A-21, Adarsh Regal, Adarsh Dugdhalaya , Room No.1913, 19th Floor, Air India Vs. Marve Road, Malad(W),Mumbai-64. Building, Nariman Point PAN:AGFPK 3758 C Mumbai-400 021.
(अपीलाथ /Appellant) ( यथ / Respondent)
आयकर अपील सं./I.T.A./3228-3231/Mum/2016,
िनधा रण वष Assessment Years: 2009-10 to 2012-13
DCIT-CC-3(3); Vijay Kumar Kheria
Vs.
Air India Building, Mumbai -400 021. Mumbai.
(अपीलाथ /Appellant) ( यथ / Respondent)
Revenue by: Shri Sanjay Singh
Assessee by: Shri Hari S. Raheja
सुनवाई क तारीख / Date of Hearing: 25.05.2017
घोषणा क तारीख / Date of Pronouncement:16.08.2017
आयकर अिधिनयम,1961
अिधिनयम क धारा 254(1)के के अ
तग त आदे श
Order u/s.254(1)of the Income-tax Act,1961(Act)
लेखा सद
य राजे
के अनुसार PER RAJENDRA, AM-
Challenging the order 15/02/2016 of CIT(A)-51 Mumbai,the Assessing Officer(AO)and the assessee have filed cross appeals for the above mentioned assessment years(AY.s).The assessee is an individual.An action u/s. 132 of the Act was taken in PPP Group of cases on 25thand 27th of August,2011.The assessee was also covered in the search and seizure proceed
-ings.Most of the issues raised in these appeals are almost identical,so,we are adjudicating all the appeals together for the sake of convenience.
2.We would like to summarise the details of returned incomes for the below mentioned four AY.s giving details of original ROI, income shown in the original ROI etc.:
A.Y. Date of filing Income as per Date of filing of Income as per return original return original return return u/s.153A filed u/s. 153A 2009-10 11,03.2011 Rs.56,631/- 25.03.2013 Rs.93,591/-
2010-11 ---- Rs.1,07,500/- 25.03.2013 Rs.3,17,360/-
2011-12 12.12.2011 Rs.5,07,324/- 25.03.2013 Rs.6,67,470/-
2012-13 ----- Rs.4,93,500/- ---- ----
2.1.While completing the assessment,the AO made the following additions:
Addition made on account of Assessment Year wise amount of addition (In Rs.) 2009-10 2010-11 2011-12 2012-13 Commission on DEPB 4,80,279/- 33,06,523/- 41,99,560/- 15,91,919/- Commission out of bogus billing ---- 37,90,250/- 39,34,276/- 18,47,998/- Commission out of other entries in bank a/c ---- 15,05,204/- 23,27,936/- ----
Addition on account of 26AS ---- 13,650/- ---- 2,56,310/-
Addition on account of commission on ---- ---- 4,92,60,685/- 1,08,11,554/-
3176+6-VKKheria
behalf of Snehshil Marketing P.Ltd.
Addition on account of seized papers ---- ---- ---- 1,33,08,377/-
The AO determined the income of the assessee for AY.s 2009-10; 2010-11;2011-12 and 2012
-13 at Rs.5.73 lakhs; Rs.89.32lakhs; Rs.6.03 crores and Rs.2.83 crores respectively.
3.In the four appeals,filed by the AO,there are certain common issues.First we will deal with such issues.
3.1.With regard to appeal for AY.2009-10(ITA/3228/Mum/2016),it was brought to our notice that while completing the assessment for that AY.,except for the addition made on account of DEPB commission,no other addition was made by the AO,that the other Grounds of appeal, raised by the AO,were not arising out of the order of the FAA for the AY.2009-10.
3.1.a.From the table given in the earlier paragraph,it becomes clear that only one addition was contested by the assessee before the CIT(A)i.e.DEPB commission and he had adjudica- ted that issue only.But,we find that the AO has raised three grounds of appeal for the AY. and none of them deal with issue of DEPB.Clearly,the AO had raised the grounds of appeal with- out applying his mind and the sanctioning authority approved the grounds in a mechanical manner.The AO had not filed revised form no.36 for that AY.2009-10. As the grounds of appeal,raised by the AO,are not arising out of the order of the FAA,so,we dismiss the appeal filed by him for the AY.2009-10.
ITA.s/3229-3231/Mum/2016-AY.s.2010-11:
4.An analysis of the appeals,filed by the AO,for the subsequent three AY.s. reveal that he has raised following common grounds for those years:
i. Directing the AO to apply commission on bogus bills @ 2%instead of 3.5%, ii.Directing the AO to apply commission received form Snehseel Marketing Pvt. Ltd. (SMPL)@ 2%instead of 3.5%, iii.Directing the AO to apply commission on other entries in bank account @2% instead of 3.5%.
But,if we read the order of the First Appellate Authority(FAA),we find that except for the first issue remaining two issues are not there in all the three AY.s.Addition on account of commission on behalf of SMPLwas made for AY.s.2011-12 and 2013 only and not for 2010-
11.Similarly,addition for commission received for other entries in bank account is subject matter of appeal for the AY.s.2010-11 and 2011-12 and not for the AY.2012-13.Thus,it is clear that the AO and the sanctioning authorities have not verified the facts before filing the appeal and have raised the issues in a very casual manner.
23176+6-VKKheria Therefore,we dismiss the ground dealing with commission received on behalf of SMPL for the AY.2010-11.We also dismiss the ground related to commission received for other bank entries in bank account for the AY.2012-13.We would now adjudicate the remaining grounds.
4.1.First effective Ground of appeal for all the three AY.s is about directing the AO to apply commission on bogus bills @ 2%instead of 3.5%.
4.1.a.The assessee,in his appeals,has also challenged the rate of commission and has stated that rate applied by the FAA i.e.2% is excessive.Thus,the ground of rate of commission is interlinked with the appeal of the assessee.In short,both of them i.e.the AO as well as by the assessee,have challenged the order of the FAA for the rate of commission. 4.2.The assessee was subjected to search and seizure proceedings in the month of August, 2011.It was found that he,along with Bhanwarlal Harsh(BH) and others,was involved in providing bogus bills,bogus loans,bogus commission entries in the name of proprietary concern M/s.Rohit Enterprises(RE),that such activities were also carried out in the name and style of other bogus entities also.
During the search and seizure proceedings,statements of various persons including the assessee were recorded.During the post search enquiries,he admitted that he was engaged in providing accommodation entries through several bogus entities,that he had opened bank account for providing the entries,that all bogus transactions were routed through those bank accounts,that he was charging commission for issuing bogus bills/entries.Empty bill books of bogus concerns were seized from the assessee.As stated earlier,the AO had made addition of Rs.37.90 lakhs, Rs.39.34 lakhs and Rs.18.47 lakhs under the head commission out of bogus billing for the AY.s 2010-11;2011-12 and 2012-13 respectively. During the statements,recorded on various occasions,the assessee had accepted that he would earn commission @ 0.1% to 0.25%.His statements were recorded on 25/08/2011;13/09/2011 and 21/10/2011.On 6/03/2014,he reiterated the facts again when statements were recorded during the assessment-proceedings.In his statement on 06/03/2014,he accepted that he earned 0.25% to 0.75 % for arranging DEPB licence.Based on his statements and seized material,the AO prepared details of bogus bills,tax invoices,share application money and estimated the rate of commission at 3.5%.He held that,that was the existing market rate for providing bogus entries.
5.Aggrieved by the order of the AO,the assessee preferred an appeal before the FAA.Before him,it was argued that all the entries were codified by the AO,that all the entries did not 3 3176+6-VKKheria belong to the assessee,that he did not earn commission on the said transactions,that most of the entries belonged to one Pawan Kumar Poddar(PKP),who was a separate entity,that the commission earned by PKP was wrongly assessed in the hands of the assessee,that he had earned commission @ 0.1% to 0.25%, that the AO had estimated commission @3.5% which was highly excessive,that there were totaling mistakes, that the AO had not taken into consideration the double entries,that entries belonging to different AY.s were also mixed. After considering submission of assessee and orders passed by AO,the FAA held that PKP was not a different person,that PKP did not provide bogus entry on his own,that the assessee was earning commission on the transactions handled by PKP,that the assessee himself had admitted that PKP was his assistant who would help him in day to day office work,that it was common in the entry giving business that entry providers would open various accounts and would use different names,that the search proceedings proved that assessee was the main person,that PKP was only his assistant.
With regard to percentage of commission he held that claim made by the assessee about the commission rate(0.1% to 0.25%)was very low,that general brokerage in that line of business was not so low,that nobody would do such a business for such a low percentage of commissi
-on,that estimated rate of commission(3.5%)adopted by the AO was on a higher side, that percentage of commission in entry providing trade was about 2 to 2.5%.Finall, 'to meet the ends of justice',he estimated commission rate at of 2%.
With regard to double entries and the amount of turnover as arrived at by the AO,he directed the AO to work out the turnover correctly and to apply 2% commission rate on the reworked turnover.
6.Before us,the Departmental Representative(DR)referred to the statement of assessee wherein he had promised that he would be submitting details of the commission received by him.He stated that the assessee never filed any details,that no lenient view should be taken, that the FAA was not justified in reducing the commission rate to 2%.He referred to the cases of Pride Steels Pvt.Ltd.(ITA.s7707 & 7711/ Mum/ 2014 AY.s 2007-08,11-12 dt.19/10/16); Sudhir B. Vora(151ITD635);Naresh B.Vora(ITA/2978/ Mum/2007,ITA/1947/Mum/2007 and ITA/2427/Mum/2007,AY.s 1999-00 and 2000-01,dtd. 08/3/2013)and argued that in case of bogus bills additions up to 2% of the transactions have been upheld by the Tribunal. The AR argued that assessee was receiving very small commission for the bogus entries provided by him,that he had accepted that he was getting [email protected]% to 0. 025% for bogus entries,that from the bank account entries the assessee was getting commission at very 4 3176+6-VKKheria low rate,that he was returning back cash and was retaining back only a very small portion as commission,that the estimate made by the FAA was on higher side.He referred to the cases of Mukesh Chokshi;Goldstar Finvest;(ITA/4908-10/Mum/2016)and stated that in those cases commission @ .025% was considered reasonable.
7.We have heard the rival submissions and perused the material.We find that one of the major issue to be decided is the rate of commission to be taxed in the hands of the assessee.It is a fact that the assessee himself had admitted that he was providing non-genuine entries to various entities and was charging commission for it,that he would be issuing bogus bills,that through his personal bank account(RE),he would return cash after receiving cheques. Thus, there is no doubt about earning of commission by him for non genuine transactions.The AO had estimated the commission rate at 3.5% of the transaction value,whereas the FAA had reduced it to 2% for all type of transactions.The assessee had claimed that he was receiving commission at very low rate [email protected]% to 0.025%.
In our opinion,the rate of commission for bogus transactions cannot be determined by apply - ing rule of thumb.It depends upon so many factors like industry or business for which non genuine bills are issue,amount involved,type of entries provided etc.No two cases are similar. The entity availing facility of bogus bills sometimes contacts agents who in turn contacts hawala entry providers and it is possible that the beneficiary and the bogus bill provider may not know each other.In other cases,the bill provider may directly deal with beneficiary.Period of providing bogus bill is also one of the deciding factors.In short,many a factors affect the rate of commission.The Tribunal has,in the cases relied upon by both the parties,adopted on or other rate depending upon the particular facts of the case.The assessee was doing this business with the help of some persons including PKP and BH.
Considering the above and the peculiar facts and circumstances of the case,we are of the opinion that commission rate for all the AY.s has to be estimated.We hold that the rate of commission should be adopted at 1% as against 2% estimated by the FAA.This rate has to be applied for all type of bogus transactions entered in to by the assessee for all the AY.s i.e.for bogus bills issued,for bogus entries provided or for cheques issued against cash receipt or any other kind of non genuine entry.Effective ground of appeal,raised by the AO,stands dismissed for all the AY.s.involved.
7.1.Ground raised by the assessee about rate of commission is allowed,in part.
53176+6-VKKheria
8.Next effective Ground is about addition on account of commission received from Snehshil Marketing P.Ltd.(SMPL) for the AY.s.2011-12 and 2012-13.
8.1.The assessee had also challenged the rate of commission applied by the FAA with regard to commission income received from SMPL.Thus,this issue is also common in the appeals filed by the AO and the assessee.
During the search proceedings,a sales promotion agreement was seized.As per the agreement, entered into between SMPL and Raymond Ltd.(RL),the assessee was an authorised signatory on behalf of SMPL.He was directed to explain his relationship with SMPL.The assessee stated that SMPL operated from his office premises,that the debit notes raised in the names of different parties were signed by the assessee and that the entries in question were provided on commission.Considering these facts,the AO held that the assessee provided accommodation entries on behalf of SMPL and earned commission out of such activities.Accordingly,he added Rs.4.92 crores and Rs.1.08 crores to the total income of the assessee for the AY.s 2011
-12 and 2012-13 respectively.
8.2.Before the FAA,during the appellate proceedings,it was contended that SMPL was a Kolkatta based company showing active status on MCA Website,that he was neither director nor share holder of the company,that SMPL had earned service charges/commission on its own,that it was separately assessed to tax in Kokatta,that the assessee had introduced SMPL to RL,Futura Fibres(FF)and other parties,that he would receive commission @ 0.5% from the debit notes raised by SMPL on those parties,that during the search proceedings he had admit - ed to have received commission @ 0.1% for introducing SMPL to various parties,that the AO erred in adding the entire amount in the hands of the assessee.In his support,he furnished copies of returns filed by SMPL wherein it had declared the commission earned from RL,FF and other parties.Considering these evidence,the FAA held that SMPL was assessed to tax, that it had declared commission income in its returns of income.As the evidences of filing return of income by SMPL were not furnished before the AO,so,the FAA restored the issue to the file of the AO.He directed the AO to examine the correctness of the evidence filed.He further observed that if the AO was satisfied that disputed commission amount was reflected in the accounts of SMPL,then he would tax only the commission that was earned by the assessee for acting as an agent of SMPL in Mumbai.
With regard to percentage of commission,he held that AO should apply the rate of 2% of the gross amount of turn over accruing to SMPL on account of Mumbai parties.
63176+6-VKKheria 8.3.Before us,the DR supported the order of the FAA to the extent the,but with regard to the rate of commission he stated that the AO had rightly adopted the rate of commission at 3.5%. The AR stated that entire amount appearing in the name of SMPL was not received by the assessee or had accrued to it,that the assessee was getting only commission. He referred to Pages-100 & 114 of the PB showing that SMPL was assessed to tax and had paid taxes on the commission income.He also argued that nothing passed through the books of account of the assessee,that the estimated commission income @2% was on the higher side.
8.4.We have heard the rival submissions and perused the material before us.We find that the FAA had forwarded the evidences produced before him by the assessee for the first time and had directed the AO to re-examine the issue and decide it on merits.In our opinion,there is no perversity in the order of the FAA.As per the settled principles same income cannot be taxed in two hands.So,if the evidences produced by the assessee were supporting his claim,same have to be aceepted.To that extent we endorse the order of the FAA.
As far as rate of commission is concered,we would direct the AO to reduce it to 1%,as against 2%, after complying with the directions of the FAA.Accordingly,we dismiss the ground raised by the AO,about SMPL commission,for both the AY.s.2011-12 and 2012-13.
8.5.For rate purposes,ground stands partly allowed,in favour of the assessee.
9.Last common ground of appeal,raised by the AO for the AY.s.2010-11 and 2011-12,is about addition on account of other entries in bank account.On analysis of bank statements of RE,the AO found that there were various credit entries which were cheque deposits,credits of bill purchases by banks,transfer entry reflecting money transfers into/from other accounts controlled by the assessee and BH.The AO totalled the various credit and debit entries that reflected providing of accommodation entries by the assessee.He held that assessee is earning commission on both purchase and sale bills i.e.debit and credit entries as per prevalent market rate,that the total of credit and debit entries of sale and purchase was Rs.4.30 crores for the AY.2010-11.Applying the rate of 3.5% as commission on the credit and debit entries he brought to tax an amount of Rs.23.27 lakhs and Rs.15.05 lakhs for the AY.s 2011-12 and 2010-11 respectively.
9.1.In the appellate proceedings,the assessee argued that the bank account of RE was used for rotating the entries in respect of parties in case of whom the bills for accommodation entries were raised,that such entries could not be considered for computing commission,that all those transactions did not pertain to the assessee but to the other concerns of the PPP 7 3176+6-VKKheria group,that the rate of commission applied by AO was excessive.The FAA held that the AO had analysed the entries in a detailed manner and had accordingly brought the commission to tax,that the assessee was only stating that the entries did not belong to him,that he was unable to substantiate his claim with reliable evidences,that arguments made by him were devoid of any merit.Finally,he directed the AO to adopt the rate of 2% as against 3.5% for calculating the commission.
9.2.Before us,the DR supported the order of the AO except for the rate of commission.The AR contended that in the bank acccount of RE the assessee would also be receiving payments in respect of accommodation bills issued,that many of the amounts in the bank account of the assessee were received from or paid into accounts of the PPP group entities,that the assessee had not earned any commission income from such transactions.
9.3.We have heard the rival submissions and perused the material before us.We find that the assessee was maintaining an account for its proprietary concern namely RE,that the bank account reflected various transactions including deposits/withdrawal of cheques or cash and through RTGS,debits for retirement of bills and credit of certain bills purchased by the bank. It is a fact that the assessee had claimed before both the authorities that all the entries were not commission yielding entries,that certain entries pertained to PPP group,that no inquiry was made in that regard.There is no doubt that unaccounted income has to be brought to tax. But,for taxing it quantification of such income is a legal precondition.When the assessee had taken a specific plea that all the credit and debit entries did not result in commission income the AO had to give a finding about such entries.The FAA also did not call for a remand report in that regard.Therefore,in the interest of justice,we are of the opinion that the issue should be restored back to the file of the AO for fresh adjudication,who would afford a reasonable opportunity of hearing to the assessee.The assessee would provide the details of entries- appearing in the bank account of RE-that did not give rise to any income.The AO is directed to give a clear and speaking finding on each and every entry that is claimed to have not generated any income.The assesee would provide detail for both the AY.s and the AO would scrutinize all the entries and quantify the amount for those years.
As far as rate of commission is concerned,we would like to mention that same should be applied @ 1% for both the years.Ground of appeal raised by the AO,with regard to income from bank account,for the AY.s. 2010-11 and 2011-12 is adjudicated accordingly. 9.4.Assessee's grounds for the same issue stands allowed in his favour,in part,for both the AY.s.
83176+6-VKKheria ITA.s/3176-3178/Mum/2016-AY.s.2010-11to 2012-13:
10.The assessee has filed appeals for three AY.s.,as stated earlier,raising several grounds of appeal.Some of them are for more than one AY.and others are for one AY.only.First we will deal with the common grounds.
10.1.Commission on bogus bills and accommodation entries is the first common ground of appeal for all the three AY.s.While deciding the appeals filed by the AO,we have dealt with the issue at paragraphs 7 and 7.1 of our order.Accordinlgy,we direct the AO to adopt rate of 1% for commission on bogus bills and accommodation entries.
First ground of appeal for all the three AY.s.stand allowed in favour of the assessee,in part as held in paragraph 7.1.
11.Second common ground of appeal,for AY.s.2010-11 to 2012-13,deals with addition on account of commission on total of debit and credit entries in bank account.We find that as per the chart given by the FAA about various additions made by the AO the issue of commission on bank account is only for two AY.s.i.e.2010-11 and 2011-12.As the ground no.2 for the AY.2012-13 is not arising out of the order of the FAA,so,we are not adjudicating it. 11.1.While deciding the appeal filed by the AO,we have dealt the issue of commission on bank account at paragraphs 9.3. and 9.4.Accordinlgy,we allow the grounds of appeal, regard - ing income to be taxed in relation with bank account,in favour of the assessee,in part.The assessee is directed,as stated earlier,to furnish the necessary details about the bank account entries to the AO.
12.Next common grounds is about addition on account of commission on DEPB licences. During the search proceedings certain papers including custom clearance certificates; custom clearance numbers; exporters name etc.were seized.When enquired about the papers, the assessee stated that the note books belonged to PKP in respect of DEPB licences.During the block assessment proceedings,he informed the AO that transactions were for arranging DEPB licences to different parties on which commission income of 0.25% to 0.75 % was earned by PK.He also submitted an affidavit of PKP wherein he confirmed that the said transactions belonged to him i.e.,PKP.In his statement dtd.21/3/2014 PKP had confirmed that he was earning commisssion income from DEPB licence transactions.The AO held that commission DEPB licences had to be calculated@1%.Keeping in view the statement of PKP,the commission income was assessed in the hands of the assessee on protective basis. 12.1.In the appellate proceedings,the assessee contended that seized material belonged to PKP,that he was earning commission of 0.25% on the same,that the rate of commission earn 9 3176+6-VKKheria
-ed by PKP was also mentioned in the seized paper,that PKP had owned the transactions.The FAA held that the AO had held that DEPB licence papers belonged to PKP,that PKP was only an assistant to the assessee,that AO had added the commission income in the hands of the assessee on protective basis,that once PKP would admit that said income was to assessed in his hands (PKP);and would pay taxes thereon on substantive basis the protective assessment would automatically get deleted.Finally,he upheld the action of the AO i.e., to tax the assessee on protective basis.
12.2.Before us,the AR argued that the paper belonged to PKP and were related to DEPB licence-business,that the papers contained party-wise details of DEPB licences and commissi
-on thereon,that as per the seized papers PKP had earned commission of Rs.50,857/-only with regard to the entries in the above seized papers,that the AO had added entire amount in the hands of the assessee,that during the course of search proceedings and in the statements recorded later on he had stated that DEPB papers did not belong to him,that he had not admit
-ted receipt of commission from DEPB business,that PKP had owned the DEPB business by filing an affidavit in that regard admitting that DEBP business and papers belonged to him i.e.to PKP,that PKP had filed his return for the income received by him from the DEPB busi- ness,that in the statement recorded on oath on 21/03/2014 PKP reiterated the above facts,that the AO deliberately ignored those vital facts,that PKP had produced before the AO the certificate for deduction of tax in his case in respect of DEPB business, that the AO had not given the basis for arriving at the figure of 33.06 crores of the business carried out by PKP, that the AO did not provide the details of the figures adopted by him for estimating the income for alleged DEPB business,that he made the addition without confronting the material to the assessee,that figure adopted by the AO was also not made available to PKP,that the Tribunal had also held that PKP should be assessed for DEPB commission income and not the assessee.The DR supported the order of the FAA.
12.3.We have heard the rival submissions and perused the material on record.We find that annexture A-13 and A-15 contained the details of DEPB licences,that during the search proceedings the assessee said that seized material dealing with DEPB licences belonged to PKP,that in answer to question 12,dtd.06.03.2014,the assessee had stated as under:
"These are transactions for arranging licences to different parties on which commission income is received @.25% to .75%.These transactions are being operated by Mr.Pawan Poddar."
It is also a fact the PKP had owned these transactions in his statement and the affidavit filed before the AO,that AO had not given any working of alleged unrecorded DEPB sales turnover of Rs.41,99,56,248/-.We find that PKP,in his return,has admitted of having received 10 3176+6-VKKheria income from DEPB business.The AO,by protectively assessing the income in the hands of the assessee,has admitted indirectly that income arising of DEPB sales commission was of PKP.The AO is relying upon the statement of the assessee for protectively assessing the income in the hands of the assessee wherein he had stated that PKP was working in his office. But,in our opinion this was a sufficient base for arriving at the conclusion for protective assessment-especially in light of the other part of the statement recorded during the search and the statements recorded during the assessment proceedings.The AO cannot rely upon one part of the statement and disbelieve the other part as per his convenience.Besides,we find that the Tribunal in its order,in assessee's own case,dated 27.06.2016(ITA/3175/Mum/2016-AY. 2009-10)has held that substantive addition in the hands of PKP had become final. Considering the above facts,we are of the opinion that the AO/FAA was not justified in making protective assessment in the hands of the assessee for the DEPB entries/ confirming the order of the AO.So,reversing the order of the FAA,we decide the DEPB commission issue in favour of the assessee.
13.Other common ground of appeal is about addition made on account of non-reconciliation of 26AS.It is found that as per the 26AS details the assessee had received commission of Rs.2.56 lakhs and Rs.13,650/- for the AY.s 2012-13 and 2010-11 respectively.Tax was also deducted for the commission income.As per the AO,the assessee had not offered the disputed income in the returns filed for the above mentioned two years.Therefore,he added the amount in question to the total income of the assessee.
13.1.Before the FAA,the assessee stated that he had already disclosed the income that has been questioned by the AO.The FAA directed the AO to verify the claim made by the assessee and to delete the addition,if he had already offered the income for taxation. 13.2.In our opinion,directions of the FAA does not need any interference from our side.If the AO has not followed the directions of the FAA,he should complete the verification within a period of one month of receiving our order.Ground,raised by the assessee,is allowed for statistical purposes.
14.The assessee has challenged the addition made by the AO and confirmed by the FAA with regard to debit and credit entries appearing in the bank-account of RE.While adjudicating the appeals filed by the AO,we have deliberated upon and decided the issue at paragraphs 9 to 9.4.The AO and the assessee would follow the direction mentioned in the earlier part of the 11 3176+6-VKKheria order.Ground,with regard to entries in bank-account,is allowed in favour of the assessee,in part.
15.One of the grounds,raised by the AO,for the AY.2012-13 is about addition made on account of seized papers. Referring to the seized paper 30 to 33 of Annex A-6, the AO held that the source of the amounts appearing in the documents (Rs.1.33 crores), was not explained by the assessee during the search proceedings, that at the time of assessment the assessee disowned the papers stating that he did not know how to read or write English.However, the AO did not agree with the assessee and stated that as per the seized papers the assessee had received Rs.1.33 crores from various entities. Finally he added the said amount to the income of the assessee for the AY 2012-13.
15.1. During the appellate proceeding the assessee stated that seized paper belonged to PKP. After considering the available material the FAA held that whatever papers belonged to PKP were admitted by him in his statement, that on the date of search the assessee stated that he did not know anything about the papers, that later on the assessee claimed that papers dealt with DEPB licences and belonged to PKP, that the entries in the papers were not reflecting in the DEPB licences, that the AO had correctly invoked the provisions of section (4A) for taxing the amounts in the hands of the assessee.
15.2. Before us,the AR stated that the assessee had furnished explanation with regard to seized papers as per Annex- 6 vide his letter dtd.08/11/2013,that the documents belonged to PKP,that PKP had owned all the papers of Annex-6 and had stated that pages 30-33 of the annexure pertained to his DEPB licence business,that it was brought to the notice of the AO that Rs.1.33 crores was the total value of DEPB licences and not of the income arising out of it,that no dates were mentioned in the papers,that the AO had considered the papers twice,that while computing the income from bogus billing for the AY.2011-12 he had considered the disputed figure, that he made an addition of Rs.1.33 crores to the declared income of the assessee,while computing the income for the AY.2012-13.The DR supported the order of the FAA.
15.3.We have heard the rival submissions and perused the material before us.We find that during the search and seizure proceedings certain papers were seized as per annex-6, that pages 33-36 contained notings about certain amounts, that the assessee at the time of search proceedings had stated that he did not know anything about the papers, that later on he stated that seized documents pertained to PKP, that PKP had earned commission on DEPB licences, 12 3176+6-VKKheria that the amount of Rs.1.33 crores appears at two (2) places (in the AY 2011-12 under the head income from bogus billing and for AY-2012-13 under the head income appearing in the seized documents).We further find that PKP had filed an affidavit cum declaration stating that seized paper 1-33 of Annex -6 belonged to him, that he further claimed that pg-33 of Annex -6 contained noting of the value of DEPB licences and the names of the parties for onward sales, that page-32 of the said annex as per PKP contained information of DEPB licenses which were disposed off by him. We have already mentioned that PKP had owned the income arising out of DEPB licences and had filed the return of income in that regard. The issue of DEPB licences commission has attained finality after the order of the Tribunal i.e. ITA/3175/Mum/16(supra).We have gone through the papers of Annex - 6 and find that the documents deal with DEPB licences.Considering the affidavits of PKP and the return of income filed by him with regard to DEPB licences alongwith the order of the Tribunal mentioned above, we are of the opinion that FAA was not justified in confirming the addition made by AO amounting to Rs.1.33 crores. Ground No.5, raised by the assessee for AY 2012-13 is allowed.
As a result, appeal filed by the AO for AY 2009-10 is dismissed and appeals filed by AO and the assessee for the remaining three years stand partly allowed. फलतः िनधा रती अिधकारी ारा िन. व. 2009-10 के िलए दािखल क गई अपील नामंजूर क जाती है . िनधा रती अिधकारी और िनधा रती ारा शेष तीन िन.व.के िलए दािखल क गई अपील अंशतः मंजूर क जाती ह .
Order pronounced in the open court on 16th August, 2017.
आदेश क घोषणा खुले यायालय म "दनांक 16 अग$त, 2017 को क गई ।
(राम लाल नेगी / Ram Lal Negi) (राजे / Rajendra)
Sd/- Sd/-
याियक सद य / JUDICIAL MEMBER लेखा सद
य / ACCOUNTANT MEMBER
मुंबई Mumbai; दनांक/Dated : 16.08 .2017.
Jv.Sr.PS.
आदेश क ितिलिप अ ेिषत/Copy of the Order forwarded to :
1.Appellant /अपीलाथ 2. Respondent /
यथ
3.The concerned CIT(A)/संब अपीलीय आयकर आयु , 4.The concerned CIT /संब आयकर आयु
5.DR "A " Bench, ITAT, Mumbai /िवभागीय ितिनिध, खंडपीठ,आ.अ. याया.मुंबई
6.Guard File/गाड फाईल स यािपत ित //True Copy// आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst. Registrar आयकर अपीलीय अिधकरण, मुंबई /ITAT, Mumbai.
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