Income Tax Appellate Tribunal - Mumbai
Abans Jewels Ltd, Mumbai vs Assistant Commissioner Of Income Tax ... on 30 September, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL, 'A' BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SMT RENU JAUHRI, ACCOUNTANT MEMBER ITA No.3315/Mum/2024 (Assessment Year :2014-15) ITA No.3443/Mum/2024 & 3444/Mum/2024 (Assessment Year :2015-16 & 2016-17) ITA No.3445/Mum/2024 (Assessment Year :2020-21) & ITA No.3446/Mum/2024 (Assessment Year :2018-19) Abans Commodities(I) Private Vs. Assistant Commissioner Ltd. of Income Tax, Central 36,37,38A, Circle 4(3),Mumbai Nariman Bhavan Backbay Reclamation Nariman Point Mumbai-400 021 PAN/GIR No.AAICA0476H (Appellant) .. (Respondent) ITA No.3516/Mum/2024 (Assessment Year :2018-19) ITA No.3517/Mum/2024 (Assessment Year :2020-21) & ITA No.3518/Mum/2024 (Assessment Year :2021-22) Abans Jewels Ltd Vs. Assistant 36,37,38A, Nariman Bhavan Commissioner of Backbay Reclamation Income Tax, Central Nariman Point Circle 4(3),Mumbai Mumbai-400 021 PAN/GIR No.AAKCA1844K (Appellant) .. (Respondent) 2 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others ITA No.3666/Mum/2024 to 3668/Mum/2024 (Assessment Year :2013-14 to 2015-16) ITA No.3669/Mum/2024 (Assessment Year :2018-19) & ITA No.3670/Mum/2024 (Assessment Year :2020-21) Abans Securities Private Ltd. Vs. Assistant Commissioner 36,37,38A, of Income Tax, Central Nariman Bhavan Circle 4(3),Mumbai Backbay Reclamation Nariman Point Mumbai-400 021 PAN/GIR No.AAGCA6645Q (Appellant) .. (Respondent) ITA No.3499/Mum/2024 (Assessment Year :2020-21) Abans Enterprises Ltd. Vs. Assistant Commissioner 36,37,38A, of Income Tax, Central Nariman Bhavan Circle 4(3),Mumbai Backbay Reclamation Nariman Point Mumbai-400 021 PAN/GIR No.AAACM3843L (Appellant) .. (Respondent) ITA No.3437/Mum/2024 (Assessment Year :2014-15) ITA No.3438/Mum/2024 (Assessment Year :2018-19) & ITA No.3439/Mum/2024 (Assessment Year :2020-21) 3 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others Abans Broking Services Vs. Assistant Commissioner Pvt.Ltd. of Income Tax, Central 36,37,38A, Circle 4(3),Mumbai Nariman Bhavan Backbay Reclamation Nariman Point Mumbai-400 021 PAN/GIR No.AAHCA5788K (Appellant) .. (Respondent) ITA No.3520/Mum/2024 (Assessment Year :2020-21) Abans Metals Private Ltd Vs. Assistant Commissioner 36,37,38A, of Income Tax, Central Nariman Bhavan Circle 4(3),Mumbai Backbay Reclamation Nariman Point Mumbai-400 021 PAN/GIR No.AAICA4779P (Appellant) .. (Respondent) ITA No.3664/Mum/2024 (Assessment Year :2018-19) & ITA No.3665/Mum/2024 (Assessment Year :2020-21) Abans Fintrade Private Ltd Vs. Assistant Commissioner 36,37,38A, of Income Tax, Central Nariman Bhavan Circle 4(3),Mumbai Backbay Reclamation Nariman Point Mumbai-400 021 PAN/GIR No.AANCA7194H (Appellant) .. (Respondent) ITA No.3521/Mum/2024 (Assessment Year :2013-14) ITA No.3522/Mum/2024 4 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others (Assessment Year :2015-16) & ITA No.3523/Mum/2024 (Assessment Year :2018-19) Abhishek Pradeepkumar Vs. Assistant Commissioner Bansal of Income Tax, Central 261/262, 26 Floor, th Circle 4(3),Mumbai Garand Paradi August Kranti Marg Kemps Corner, Mumbai-400 006 PAN/GIR No.AJGPB2574F (Appellant) .. (Respondent) Assessee by Shri Suyog Bhave & Shri Yash Prakash Revenue by Shri Manoj Kumar Sinha Date of Hearing 04/09/2024 Date of Pronouncement 30/09/2024 आदे श / O R D E R PER AMIT SHUKLA (J.M):
All the aforesaid appeals filed by different assessees for various assessment years have been filed against separate impugned orders passed by CIT (A)-52, Mumbai for the quantum of assessment passed u/s.147 /143(3) for the A.Y.2014-15, 2015-16, 2016-17, 2018-19 and 2020-21.
2. In all the appeals the issues involved are common arising out of identical set of facts therefore, same were heard together 5 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others and have been disposed of by way of this consolidated order. In a summary manner, the issues raised in various grounds are summarized in the following manner:-
Sr. Appeal No. AY Issues Grounds No
Abans Commodities (1) Private Limited 1 ITA 2014- 1. Disallowance of 1. Re-opening 3315/MUM/2024 15 loss on select 2. Disallowance of trades loss on
2. Estimated selected trades commission for 3. Commission on obtaining loss @ impugned 0.25% (reduced illiquid option by CIT(A) from @ 2% trades considered by AO) 2 ITA3443/MUM/ 2015- 1. Disallowance of l. Re-opening 2024 16 loss on select 2. Disallowance of trades loss on
2. Estimated selected trades commission for 3. Commission on obtaining loss @ impugned 0.25% (reduced illiquid option by CIT(A) from @ 2% trades considered 4. Commission on by AO) impugned
3. Estimated purchases commission @ 0.25% on purchases from select parties treated as non genuine transactions 6 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others 3 ITA 2016- 1. Estimated 1. Re-opening 3444/MUM/2024 17 commission @ 2.Commission 0.25% on purchases on impugned from select purchases parties treated as non genuine transactions.
4 ITA3446/MUM/2024 2018- 1. Estimated 1. Re-opening
19 commission @ 2. Commission on
0.25% on purchases impugned
from select purchases
parties treated as
non genuine
transactions
5 ITA3445/MUM/2024 2020- 1. Estimated 1. Commission on
21 commission @ impugned
0.25% on purchases purchases
from select
parties treated as
non genuine
transactions
6 ITA3664/MUM/ 2018- 1. Estimated l.Re-opening
2024 19 commission @ 2. Commission on 0.25% on all sales all and all purchases and purchases treating sales. This appellant as year only exports non entity and and earning imports.
commission on entries.
7 ITA3665/MUM/2024 2020- 1. Estimated 1. Commission on
21 commission @ 0.25% all purchases and
on all sales and all sales. This year
purchases treating some local
appellant as non purchases and
entity and earning sales apart from
commission on exports and
entries imports.
7
ITA No.3315/Mum/2024 and others
M/s. Abans Commodities (I) Pvt. Ltd. and others 8 1TA3437/MUM/2024 2014- 1. Estimated 1. Re-opening 2.
15 commission for Commission on obtaining profit @0. impugned Illiquid 25% (reduced by option trades CIT(A) from @2% considered by AO) 9 ITA3438/MUM/ 2018- 1. Estimated 1. Re-opening 2.
2024 19 commission @ 0.25% Commission on
on purchases from impugned
select parties treated purchases
as non genuine
transactions
10 ITA3439/MUM/ 2020- 1. Estimated 1. Commission on
2024 21 commission @ 0.25% impugned
on purchases from purchases
select parties treated
as non genuine
transactions
11 ITA3666/MUM/ 2013- 1. Estimated 1. Re-opening 2.
2024 14 commission on buy & Commission on
sell turnover of non- impugned illiquid genuine illiquid option trades options @0.25% alleged to be earned (reduced by CIT(A} as broker on both from @2% considered legs of transaction by AO) 12 ITA3667/MUM/ 2014- 1. Estimated 1. Re-opening 2. 2024 15 commission on buy & Commission on sell turnover of non- impugned illiquid genuine illiquid option trades options @0.25% alleged to be earned (reduced by CIT(A) as broker on net from @2% considered premium on such by AO) options 13 ITA3668/MUM/ 2015- 1. Estimated 1. Re-opening 2. 2024 16 commission on buy & Commission on sell turnover of non- impugned illiquid genuine illiquid option trades options @0.25% alleged to be earned (reduced by as broker on net CIT(A)from @2% premium on such 8 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others considered by AO) options 14 ITA3669/MUM/ 2018- 1. Estimated 1. Re-opening 2.
2024 19 commission @ 0.25% Commission on
on purchases from impugned
select parties treated purchases
as non genuine
transactions
15 ITA3670/MUM/ 2020- 1. Estimated 1. Commission on
2024 21 commission @ 0.25% impugned
on purchases from purchases
select parties treated
as non genuine
transactions
16 ITA3516/MUM/ 2018- 1. Estimated 1. Re-opening 2,
2024 19 commission @ 0.25% Commission on
on purchases from impugned
select parties treated purchases
as non genuine
transactions
17 ITA3517/MUM/ 2020- 1. Estimated 1. Commission on
2024 21 commission @ 0.25% impugned
on purchases from purchases
select parties treated
as non genuine
transactions
18 ITA351S/MUM/ 2021- 1. Estimated 1. Commission on
2024 22 commission @ 0.25% impugned
on purchases from purchases
select parties treated
as non genuine
transactions
19 ITA3499/MUM/ 2020- 1, Estimated 1. Commission on 2024 21 commission @ 0.25% impugned on purchases from purchases select parties treated as non genuine transactions 9 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others 20 ITA3520/MUM/ 2020- 1. Estimated 1. Commission on 2024 21 commission @ 0.25% impugned on purchases from purchases select parties treated as non genuine transactions 21 ITA3521/MUM/ 2013- 1. Disallowance of 1. Re-opening 2.
2024 14 loss on select trades Disallowance of
2.Estimated loss on select trade
commission for 3. Commission on
obtaining loss impugned illiquid
@0.25% (reduced by option trades
CIT(A) from @2%
considered by AO
22 ITA3522/MUM/ 2015- ---- ------
2024 16
23 ITA3523/MUM/ 2018- 1. Estimated 1. Re-opening
2024 19 commission @ 0.25% 2.Cornmission on
on purchases from impugned
select parties treated purchases
as non genuine
transactions
3. We will take first up the appeals for various assessment years in the case of Abans Commodities (I) Pvt. Ltd. vs. ACIT. In various years following additions / disallowances have been challenged by the assessee:-
Sr. AY Appeal No. Non- Commi- Non- Total No. genuine ssion genuine Addition loss in on non- purchases illiquid genuine options trades in illiquid options
1. 2014-15 3315/M/2024 7,24,000 4,718 - 7,28,718 10 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others
2. 2015-16 3443/M/2024 12,47,500 4,881 13,85,915 26,38,296
3. 2016-17 3444/M/2024 - - 13,62,736 13,62,736
4. 2018-19 3446/M/2024 - - 69,87,985 69,87,985
5. 2020-21 3445/M/2024 - - 47,29,921 47,29,921 Total 19,71,500 9,599 1,44,66,557 1,64,47,656
4. Though assessee had challenged reopening u/s.147 for the A.Y.2014-15, 2015-16, 2016-17 and 2018-19. However, we will take up the issues raised on merits first. For the sake of ready reference appeal for the A.Y.2014-15 is taken up.
5. The assessee company is engaged in the business of broking and proprietary trade in shares, derivative contracts and in buying and selling of physical commodities. For the A.Y.2014-15, it has filed its return of income on 27/09/2014 declaring total income at Rs.1,61,99,420/- under the head 'profits and gains' from business or profession. The assessee's case was reopened u/s.148 vide notice dated 31/03/2021 u/s.148 on the basis of information received under 'Project Falcon' from DGIT (Inv) Mumbai on 26/03/2021 that there was coordinated and premeditated trading in the Bombay Stock Exchange by engaging in reversal trades in stock / currency options resulting in non- genuine business loss / gains to the beneficiary assessees and that the present assessee is a party to such manipulation. The ld. AO noted that assessee has purchased options for an aggregate premium value amounting to Rs.13,05,500/- and sold 11 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others the same for an aggregate premium value of Rs.5,81,500/- resulting in loss of Rs.7,24,000/-. All the buy and sell trades have been executed through the broker, M/s. Abans Securities Ltd.
6. The ld. AO noted that assessee has undertaken trades in the currency options through its broker and found that:-
The assessee has traded in 2 unique contracts and has undertaken both sell as well as buy trades in each of the contracts. It is relevant to note that the buy quantity and sell quantity for each of the 2 contracts in which trades have been undertaken by assessee is identical. Also, it is to be noted that each of the trades have been squared within the same day and also there is large difference between that the buy rate and sell rate. Further, lupon data analysis, it may be noted that the time gap in buy and sell trade ranges in minutes and seconds only. Also, it is seen that by trading in each of the 2 contracts enumerated in the table above the assessee has consistently recorded losses for each contract. Also, it is seen that by trading in each of the 2 contracts enumerated in the table above, the assessee has overall loss of Rs. 7,24,000/- in the above contracts which becomes non-genuine gain for other counter parties in the form of accommodation entries
7. Further, upon data analysis, it is seen that identical quantities of contracts are traded with the same counterparty for both the buy trade and sell trade, Also, it is to be noted that each of the trades have been squared within the same day and also there is large difference between that the buy rate and sale rate.
12 ITA No.3315/Mum/2024 and othersM/s. Abans Commodities (I) Pvt. Ltd. and others The following table gives the contract-wise & day-wise details of the trades undertaken by the assessee:
S. Trade Date Contract name Counter Traded Buy rate No. party quantity (Rs) client 1 13-03-2014 USDMAY14C61.5 EDEN 10 2,550.00 TRADING SERVICES PRIVATE LIMITED 2 13-03-2014 USDMAY14C61.5 BHARAT 500 2,560.00 RUIA HUF
8. Thus, AO held that the trade of the assessee in reversal trades in currency options has resulted in non-genuine loss amounting to Rs. Rs.7,24,000/- though manipulative trading of currency options on the stock exchange and this cannot be part of regular business activity of the assessee in trading/derivatives in shares/ securities commodity/currency
9. Further, in such kind of accommodation entries, generally an unaccounted commission amounting to 2% on the buy and sell turnover is usually paid by the clients in cash, for availing of non-genuine loss/profit.
10. In response to show-cause notice assessee filed its replies, however, the explanations of the assessee has not been accepted 13 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others by the ld. AO and he has simply relied upon the report forwarded by DGIT (Inv) Mumbai. He has also noted that the Hon'ble Supreme Court in the case of Rakhi Trading Private Limited in CA No.1969 of 2001 has laid parameter which defines manipulative trading and from the order and judgment of SEBI, the chief characteristics of manipulative reversal trades were as under:-
1. Identical purchase and sale quantity
2. Huge variation in purchase price and sale price.
3. Trades carried out between same party and counter-party i.e. if a client A purchased X qty from a counter-party client B, then A sells X qty to B only.
4. Time gap between purchase and sale transaction lasts few seconds and not more than an hour.
5. Insignificant change in the price of the underlying scrip as compared to the change in buy rates and sell rates scrip ENT 6 Trading repeatedly in deep in-the-money options and deep out- of-the- money options, which were thinly traded.
7. The trades by these entities, in many cases, contribute to 70% to 100% of total traded volume for the contracts on those days.
11. Accordingly, relying on the report of manipulative trades as highlighted in the SEBI report, AO held that assessee has indulged into fraudulent transaction resulting into non-genuine loss of Rs.7,24,000/-. He further, referred to the materials available under the 'project falcon' available on ITBA portal wherein there was some statement of Shri Arun Shah, Director of one of the share broking firm wherein he has admitted that in such kind of accommodation entries an unaccounted 14 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others commission amounting to 2% on the buy and sell are received or paid and accordingly, he estimated commission expenditure of Rs.37,740/- in cash for availing non-genuine loss of Rs.7,24,000/- from trading in currency options.
12. Ld. CIT (A) has confirmed the said addition in his consolidated order dated 22/05/2024 passed for all the assessment years. However, on the commission he has reduced the percentage to 0.25% from 2% following the decision of the Tribunal in some other case of Vijay Kumar Kheria vs. ACIT in ITA No.3176/Mum/2016.
13. We have heard both the parties at length and also perused various materials referred to before us and the relevant finding given in the impugned orders. From the perusal of the assessment order, it is seen that ld. AO has solely relied upon the report of Investigation Wing known as 'project falcon'. He has not carried out any independent enquiry or any investigation, whether the assessee had entered into any such transaction and has ignored all the evidence placed before the AO in support of all the trade transactions. One very important fact which has been brought on record by the ld. Counsel for the assessee that assessee had done many trades during the year in currency derivatives and commodity derivatives, out of which only couple of trades have been selected by the ld. AO holding it to be non-genuine only because in such trades assessee has incurred loss and under same trade where assessee has shown profit has been accepted. As submitted by 15 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others the ld. Counsel, assessee is engaged in screen based electronic trading wherein it is not possible to chose or even know the counter party involved in any trade and the identities of the counter parties are not displayed on the screen at the time of the trading. Unlike in the case of stock market that the SEBI has circuit breakers limits (10%, 15% and 20%), however, no such limits are there in derivative markets and therefore, derivative markets are more volatile than the traditional stock market. Further, assessee had produced all the relevant information in respect of all the trades carried out in the united stock exchange to prove the genuineness of the transaction, however, ld. AO has even failed to take note of such contract notes. Further, assessee had submitted that since the trade was executed through sister concern M/s. Abans Securities Pvt. Ltd., there was no question of paying the commission to its own entity. Further, ld. Counsel submitted that there was an action u/s.133A in the office premises of group companies on 03/09/2019. However, in the comprehensive survey action not a single evidence relating to any manipulation of his alleged trades or unaccounted cash commission, the payments were found in the course of such actions.
14. On the other hand, ld. DR strongly relied upon the order of the ld. AO submitted that there was a specific report that they were manipulating reversal trading by the parties to book fictitious and non-genuine losses and few of the trades of the 16 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others assessee were also highlighted by the AO and accordingly, the order of the ld. AO should be sustained.
15. From the perusal of the assessment order it is seen that, the entire basis of the ld. AO is based on 'Project Falcon' report passed on by the Investigation wing which admittedly pertains to stock option trading carried out on the Bombay Stock Exchange, which has no connection with the assessee as assessee trading was in currency options in United Stock Exchange and it has carried out various opportunities in which assessee had shown profit. All those trades in which assessee disclosed profit has not been disturbed or adversely viewed except for few transactions of losses. For instance in A.Y.2014-15 there were 11 trades in United Exchange segment, some in futures and some in options, out of which only two trades of currency options have been alleged by the ld. AO. Similarly, in A.Y.2015-16, the alleged trades in question which were executed in April 2014. The assessee had declared trading profit of Rs.6,72,64,310/- in A.Y.2014-15 and the alleged non-genuine loss which has been picked up by the ld. AO is only Rs.7,20,400/-. Similarly, in A.Y.2015-16 assessee had declared trading profit of Rs.2,50,52,106/- and alleged non-genuine trading loss is of Rs.12,47,500/-. Over and above assessee had declared total income of Rs.1,61,99,415/- in A.Y.2014-15 and Rs.1,84,72,074/- in A.Y.2015-16. Thus, on these facts it cannot be inferred that assessee was engaged in booking of loss through dubious devise only for two transactions when all the transaction 17 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others were done in same manner in currency options have been held to be genuine. Ld. AO should have at least analysed all the transactions and how come only two transactions are fictitious and rest all the other transactions conducted in which assessee had declared profit from the same stock exchange conducted in the same manner are genuine and only two transactions in which assessee had incurred minor loss are non-genuine. This shows that AO has just misinterpreted the Report to apply in assessee's case without independent analyzing the transactions. At least ld. AO should have conducted some enquiry qua these transactions on which assessee had claimed loss instead of blindly relying upon the 'Project Falcon' report which has nothing to do with trades in USE. Once the transactions are based on screen based electronic trading and the identities of the buyers and sellers are not displayed, then to presume that the transactions have been manipulated are non-genuine cannot be upheld. Thus, prima facie, there is no material that trade transactions in which assessee had incurred losses (that is, in two transactions) is non-genuine especially when assessee had declared huge profit and income from such trade in similar transactions, which has not been doubted. There has to be basis and inquiry to arrive to any conclusion that out of many transactions, few were manipulated to show fictitious loss and were non-genuine. Accordingly, the additions on account of non- genuine loss and illiquid options are deleted.
18 ITA No.3315/Mum/2024 and othersM/s. Abans Commodities (I) Pvt. Ltd. and others
16. Now coming to the notional addition of commission u/s.69C for non-genuine losses, it is seen that same is based on statement of Shri Arun Shah of M/s. Aryav Securities allegedly recorded in the course of 'Porject Falcom'. However, nowhere in such statement there is any reference of the trade carried out by the assessee or involvement of the assessee. Further, if such statement was to be relied, then law provides that same should have been confronted with the assessee to rebut or cross examine. Ultimately, the addition has been sustained by applying adhoc commission rate of 2% which has been scaled down to 0.25% by the ld. CIT(A) that assessee might have incurred such expenditure in cash. There is no evidence brought on record that assessee had actually paid such expenses outside the books and the entire addition is based on conjecture. In any case we have already held that the transactions in which assessee has incurred loss are genuine, therefore, there is no question of imputing any kind of adhoc commission. Accordingly, addition of Rs.4,718/- in A.Y.2014-15 and addition of Rs.4,881/- in A.Y.2015-16 is deleted.
Accordingly, appeal for the A.Y.2014-15 is allowed.
17. Coming to the appeal for the A.Y.2015-16, in so far as the issue relating to non-genuine loss in illiquid options and commission of such non-genuine trading, we have already deleted the addition after detail discussion in appeal for A.Y.2014-15. Accordingly, these two additions are deleted.
19 ITA No.3315/Mum/2024 and othersM/s. Abans Commodities (I) Pvt. Ltd. and others
18. The other issue which has been raised in A.Y. 2015-16 which is also therein A.Ys. 2016-17, 2017-18 and 2020-21 relates to purchases made from entities which were held to be non-genuine and addition had been made on adhoc percentage of commission on such purchases. The ld. AO noted that the survey u/s.133A was conducted of Abans group on 03/12/2019 and it was found that there were certain entities from whom purchases have been made were found to be non-genuine parties. The list of such six entities from which assessee had made purchases were as under:-
Name of Entity Amount (Rs.) Aavim Trading Services Private 28,98,700 Limited Mavaiya Marketing Pvt. Ltd. 22,24,37,313 Manmish Ventures Private Limited 4,55,97,900
Yogdarshan Commercial Trading Pvt. 20,17,06,000 Ltd.
Trishna Trading Services Private 1,72,95,000 Limited LM Tradecom Pvt. Ltd 6,44,31,280 Total 55,43,66,19
19. The ld. AO for all the six entities has held that the source of the funds /capital is less when compared to the turnovers; email has been handled by Abans group; ITRs filed from the premises of Abans group from same IP address; shareholders are not men of means; there was no response received to the summons issued 20 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others to the Directors; books of accounts were found in the data recovered from the premises. In some other cases, he has alleged that company does not have any employees or negligible number of employees and summons were issued to the Directors and in some of the cases enquiry was conducted and the Inspector reported that there was no business activity happening at this premises and statement of shareholders and Directors were reported and they were not aware of most of the times. Based on this analysis, the ld. AO stated that these purchases were not genuine and accordingly, he disallowed 0.25% as alleged commission on total purchases from the above mentioned non- genuine entities which worked out to Rs.13,85,915/-. The ld. CIT (A) too has confirmed the said addition holding that ld. AO has pointed out various discrepancies in his orders and also the financials and pointed out that most of these entities have a very poor financials and low profit margin.
20. Before us, ld. Counsel submitted that the assessee had given detailed explanation for each and every entity which has been though incorporated in the order of ld. CIT(A) but has not been dealt with. In a summarized manner, the assessee has given its rebuttal on the various allegations made by the ld. AO which are as under:-
Sr. Allegations made Assessee's Rebuttal/ Submissions No. by the AO A. Common Allegations for all six entities
1. Source of funds / The assessing officer has 21 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others Capital is less compared turnover with share compared to the capital as the only source of turnover funds. However trading does not require only large own capital.
Based on the information received from the supplier, the source of funds can be traced to inter corporate loans taken from various business associates purely for working capital requirements. Further, in trading businesses, there is no requirement of high source of funds. In any event, the profit is commensurate to the funds invested.
2. E-mail was No evidence that email was being handled actually being handled by Abans by Abans group group. The AO has not brought on record any evidence to support the basis on which this allegation is made. He has not mentioned who was operating such email nor provided evidence for the same. E mail by its very nature can be operated from anywhere. It is vehemently contended that the email and ITR of the company was not operated from the office of Abans Group.
3. ITRs filed from This is factually incorrect. Based premises of Abans on the information received from group from IP the six suppliers, the ITR has not address been filed from IP mentioned in 103.207.9.67. the order but from some other IP address. The assessing officer has not indicated the location where the IP address was found nor has he provided any evidence to prove that. Further, there is no 22 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others indication of compliance with the requirements of Section 65B of the Indian Evidence Act.
4. The shareholders The shareholders have regularly are not men of filed their returns of income.
means There returns of income are sufficient to make the investment in share capital. In any event, this by itself does not render the transactions as non-genuine.
5. No response Summons were issued on received to 09.09.2020, i.e., during peak the summons COVID-19 lockdown. The issued to the Directors had actually responded Directors stating inability to attend due to lockdown, however, the same is completely ignored. The assessing officer has merely reproduced the investigation report prepared during COVID, but failed to verify and conduct any investigation during assessment proceedings. It is noteworthy, that all the directors were available at the premises verified and that the assessing officer had the powers to compel attendance and duty to verify the same in assessment proceedings, but failed to do so 6 Books of accounts The assessing officer did not were found in data provide the evidence in support of recovered from this allegation. He did not even premises provide the details of content of data, the period to which it pertained, the location where was found. Further, there is no indication of compliance with the requirements of Section 65B of the Indian Evidence Act.
23 ITA No.3315/Mum/2024 and othersM/s. Abans Commodities (I) Pvt. Ltd. and others B. Specific Allegations for Mavaiya
1. The company does not Based on the information have any employees or provided by the supplier, there negligible number of was considerable amount of employees employee benefit expenses such as Rs. 23.79 lakhs for AY 2015- 16, Rs. 66 lakhs for AY 2016-17, Rs. 66 lakhs for AY 2018-19.
C. Specific Allegations for Manmish
1. Summons were issued Based on the information to Mr. Vinod provided by the supplier, Mansukhlal Vadhaiya there was no such director directors. in the company, thus, the information is factually incorrect.
Also based on the
information received from
company the actual director of
the company, Mr. Hardik
Gandhi, attended the
summons proceedings, thus
the information is factually
incorrect. This fact is not
commented upon by
investigation wing. The
assessing officer did not carry
out any investigation or
reverification.
D. Specific Allegations for Yogdarshan 24 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others
1. Inquiry was conducted Based on the information in this case at the provided by the supplier, address of the the inquiry was conducted registered office. The during peak Covid period at Inspector reported that Mumbai premise, whereas there was no the transactions are done from business activity premises situated in Gujarat.
happening at this Interestingly, the Inspectors premises. report in all cases is identical. It says that the office is small, is dilapidated and is closed. It further says it is unused for a long time. It further refers to enquiries from staff of another premise, but fails to even mention the name of such office or any staff. This clearly shows it to be a prejudiced report.
2. The statements of AO has not shared the Shareholders & Directors complete statement. The were recorded. They inferences drawn are not were not aware of supported by the extracts most of the things. reproduced in the assessment order. The directors had given details of brokers, sales, purchase parties, transport etc., therefore the above observation is not correct. Extracts show that they had asked for time to provide details. They did inform that stocks are maintained in Gujarat. No details of accounting details found was provided to the directors. Nor are copy of such documents shared in the assessment proceedings. The assessing officer conducted no verification during assessment 25 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others proceedings. No opportunity of cross examination was provided.
3. Books of accounts were The assessing officer did not found in data recovered provide the evidence in support from premises of this allegation. He did not even provide the details of content of data, the location where was found. It is alleged that some data of some earlier years, not current, was found. In the absence of specific details and sharing of actual data, it cannot be commented upon. Further, there is no indication of compliance with the requirements of Section 65B of the Indian Evidence Act.
E. Alleged allegations for Aavim
1. Office was closed The inspectors report mentions and no operations were the office was closed. Yet, he carried out. states that the office is very small and is not used for long time, when he could not have seen that. This indicates biased reporting.
2. Director did not attend Inspector report makes sweeping summons comment that looking at size of residence, director Brijesh Mehta is not men of means. He has attached only a picture of door of the Flat. In Mumbai, size of residence is not an indicator to judge means. Merely on the basis of address at Rajasthan, it is concluded that Daksh Soni, a director is not men of means. Further, the director sought adjournment to 26 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others another date, but no fresh date was given by the investigation wing during COVID. AO also did not seek his attendance in assessment proceedings.
F. Alleged allegations for Trishna 1 Based on returns The income shown in return does filed and addresses not prove the allegation made of directors, it is by the investigation wing. It concluded that they are is prejudged inference not men of means. irrespective of evidence.
2 The shareholder does With a share capital of Rs 1 not have means to hold lakhs, it is clear that the the shares of the allegation levelled in the company. investigation wing report is unwarranted and has been accepted without any application of mind by assessing officer. Shri Pulkit Mehta with returned income of about Rs 4 lakhs is capable of making this investment.
Further, source need not be current income alone. It is biased inference.
G. Alleged allegations for L M Tradecom 1 Directors are not men of The details of return of means income narrated and their addresses do not justify such inference.
27 ITA No.3315/Mum/2024 and othersM/s. Abans Commodities (I) Pvt. Ltd. and others 2 IP address The extract of the 112,196.138.237 for statement reproduced in the filing return of income is assessment order in Answer to at Abans Group offices Q22 does not mention this IP as per Q22 of address. It is learnt that the statement of Shiv IP address was Shankar Singh 112.196.129.164. This shows that allegations made in the investigation report is false and the assessing officer failed to verify and draw correct inferences.
21. All these submissions which were given before the ld. AO and ld. CIT (A) has not been considered at all. Most of these inferences have been drawn from the Investigation report and did not even verify the various allegations made in the report while assessee brought on record all the details and evidences. Ld. counsel further submitted that investigations were carried out during the peak Covid period and verifications were made in Mumbai when the operations were in Gujarat, thus, there was basic fallacy in the investigation and this fact was duly highlighted before the ld. AO and ld. CIT (A). He further submitted that there is neither evidence nor any allegation that these entities are involved in bogus sales/purchase or accommodation entry. All the transactions are supported by GST returns of the parties. Further Abans entities came up for examination by CGST Mumbai and Gujarat, but no adverse inference was drawn in relation to sales and purchase transaction with said entities. It has been informed that CGST 28 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others Gujarat conducted audit in case of Yogdarshan and transaction of sales and purchase were found to be in order CGST Mumbai conducted audit in the cases of Abans Broking Services Private Limited and Abans Securities Private Limited which had transactions with these very companies alleged to be non- genuine in the assessment order, but did not draw any adverse inference. There is no evidence of any underlying flow of cash was found even during the 55 extensive survey operations under section 133A carried out in December 2019. No evidence for considering rate of 0.25% as alleged commission
22. Ld. Counsel further submitted that sales for the year under consideration have not been disputed and making any such kind of adhoc addition of 0.25% on such sales is uncalled for.
23. On the other hand, ld. DR relying upon the various facts brought on record by the ld. AO pointed out that detailed enquiry was carried out by the Investigation wing and it was found that either these parties were not existing at their address and these entities did not have any infrastructure for supplying such goods nor any credence. Accordingly, he strongly relied upon the findings and observations of the ld. AO and ld. CIT (A).
24. We have heard the rival submissions and also perused the materials placed on record. It is seen that the ld. AO had treated the purchases from 6 entities as non-genuine and has applied profit rate of commission on such purchases @0.25%. He has accepted that these purchases are duly recorded in the books of 29 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others accounts, and has not disturbed the purchases. However, according to him as per market practice there is commission rate of obtaining such entry at @ 0.25% which needs to be added. First of all in so far as the transactions of purchases from these parties are concerned, the same had not been doubted for the reason that ultimately the ld. AO's allegation is that assessee might have earned commission on such purchases as these are non genuine parties with no credentials and on inquiry by the investigation wing various facts have emerged about their credibility. If the purchases are from the books and source of purchases are not in doubt and assessee has produced all the evidences to prove the purchases then how can on such purchases adhoc addition on account of commission can be made. Before the AO assessee has submitted following details to prove the purchases:
(i) Purchase invoices;
(ii) Warehouse receipts showing physical receipt of the goods in the warehouse;
(iii) Delivery Orders;
(iv) Bank statements demonstrating payment towards the purchases;
(v) GST returns showing receipt of the goods and availment of input tax credit on such purchases.
If these documents have not been doubted then where is the question of making adhoc addition of commission on such purchases.
30 ITA No.3315/Mum/2024 and othersM/s. Abans Commodities (I) Pvt. Ltd. and others
25. Coming to the various allegations made by the AO and the rebuttal given by the assessee before the AO as well as before the CIT(A), it is seen that one of the allegations of the AO was that the source of funds in capital of these entities are less compared to the turn over. What was required to be seen is whether there was actual trading or not as trading does not require large own capital but what are the source of funds in their balance sheet. Another allegation regarding e-mail was only by the Abans group. There was nothing which has been brought on record by the ld. AO that e-mail was actually being handled by the Abans group nor he has mentioned who was operating the said e-mail. Assessee had already countered that e-mail and ITR of the company was not operated from the office of the Abans group and had given detailed explanation before the ld. CIT(A) also which was not even being committed upon. In so far as ITR filed from the premises of Abans group from a particular IP address, assessee has categorically denied that it is incorrect and no such ITR has been filed from the IP mentioned in the order but from some other IP address which was provided before the ld. CIT (A). This has not been rebutted by the department when assessee brought on record that the IP address which has been mentioned by the ld. AO were different. In so far as the shareholders were not men of means, already it has been brought on record that they were filing their regular income tax returns and have shown investment of share capital from their own sources. In any case, this cannot be the ground for treating the transaction as non- genuine.
31 ITA No.3315/Mum/2024 and othersM/s. Abans Commodities (I) Pvt. Ltd. and others 25.1 Now, coming to the summons issued to the Directors, it has been stated that the summons were issued during the peak Covid 19 lockdown period and directors had actually responded their inability to attend due to lockdown which has been ignored. If the ld. AO has simply relying upon the comments of the investigation wing and he did not ask the assessee during the course of assessment proceedings to file their confirmations and he could have independently verified once the assessee had stated that all the Directors were available at the premises and ld. AO can ask for their attendance which ld. AO had failed to do so. In so far as books of accounts found in the audit report from the premises, the assessee's contention was that neither, the Investigation Wing nor the ld. AO had provided the evidence in support of such allegation nor any details of content of date and period to which it pertain was provided or found. Thus, such ground cannot be adversely viewed. Similarly, with regard to every allegation, counter submissions as noted above has not been dealt by the ld. CIT (A) specifically when they were duly explained through various documents and facts. Once these facts were brought on record, ld. AO should have at least himself carried out any enquiry or verification rather than blindly apply and relying upon the investigation report. Thus, in view of the aforesaid submissions given by the assessee and rebuttal given against various allegations of the AO are liable to be accepted. In any case, the case of the ld. AO is that assessee might have earned commission from such purchases of 0.25% which cannot be sustained as ld. AO has applied commission of 2% and 32 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others reduced to 0.25% by CIT (A) are on mere conjecture. It is not a case where the entire purchases have been added, albeit ld. AO has presumed that assessee might have earned commission on such purchases made from non-genuine parties. Accordingly, such adhoc application of commission of 0.25% is deleted.
26. Similar issue of application of commission of 0.25% has been applied for the A.Y.2016-17, 2018-19 and 2020-21, therefore, in view of the finding given hereinabove, such addition on account of adhoc commission are deleted. Accordingly, appeal for A.Y.2015-16, 2016-17, 2018-19 and 2020-21 are allowed.
Abans Broking Services Pvt.Ltd.
27. In various years following additions / disallowances have been challenged by the assessee:-
Sr. AY Appeal No. Commi Non- Total
No. ssion genuine Addition
on non- purchases
genuine
trades
in
illiquid
options
1. 2014-15 3437/M/2024 10,950 - 10,950
2. 2018-19 3438/M/2024 - 81,38,223 81,38,223
3. 2020-21 3439/M/2024 - 1,73,41,900 1,73,41900
Total 10,950 2,54,80,123 2,54,91,073
33
ITA No.3315/Mum/2024 and others
M/s. Abans Commodities (I) Pvt. Ltd. and others
27. In the appeal for A.Y.2014-15 the only issue is commission of non-genuine trades in liquid options of Rs.10,950/-. Since the facts are similar in the case of Abans Commodities (I) Pvt. Ltd., therefore, in the above finding given therein, the addition of Rs.10,950/- is deleted.
28. In so far as the appeal for A.Y.2018-19 and 2020-21, the addition has been made by the ld. AO by taking 0.25% of purchases made from alleged non-genuine entities. Here in this case, in these years by and large entities are same which were involved in appeal for Abans Commodities (I) Pvt. Ltd., except for one or two entities. The allegation of the ld. AO is purely based on the Investigation report. From the records, it is seen that assessee had purchased agricultural commodities such as guar seed, guar gum, jeera, etc and precious metals like gold bars, silver etc from the five entities. Before the ld. AO assessee had submitted the following documents proving the genuineness of the subject purchases:
(i) Purchase invoices
(ii) Warehouse receipts showing physical receipt of the goods in the warehouse
(iii) Delivery Orders
(iv) Bank statements demonstrating payment towards the purchases
(v) GST returns showing receipt of the goods and availment of input tax credit on such purchases 34 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others
29. For this year also assessee had given similar rebuttal for all the allegations made by the ld.AO which for the sake of ready reference reproduced hereunder:-
Sr. No. Allegations Appellant's Submissions A. Common Allegations for all six entities
1. Source of funds / The assessing officer has compared Capital is less turnover with share capital as the compared to the only source of funds. However turnover trading does not require only large own capital.
Based on the information received from the supplier, the source of funds can be traced to inter corporate loans taken from various business associates purely for working capital requirements.
Further, in trading businesses, there is no requirement of high source of funds. In any event, the profit is commensurate to the funds invested.
2. E-mail was No evidence that email was actually being handled being handled by Abans group. The by Abans group AO has not brought on record any evidence to support the basis on which this allegation is made. He has not mentioned who was operating such email nor provided evidence for the same. E mail by its very nature can be operated from anywhere. It is vehemently contended that the email of the company was not operated from the office of Abans Group.
3. ITRs filed from This is factually incorrect. Based premises of Abans on the information received from 35 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others group from IP the five suppliers, the ITR has not address been filed from IP mentioned in the 103.207.9.67. order but from some other IP address. The assessing officer has not indicated the location where the IP address was found nor has he provided any evidence to prove that. Further, there is no indication of compliance with the requirements of Section 65B of the Indian Evidence Act.
4. The shareholders The shareholders have regularly are not men of filed their returns of income. There means returns of income are sufficient to make the investment in share capital. In any event, this by itself does not render the transactions as non-genuine.
5. No response Summons were issued on received to 09.09.2020, i.e., during peak the summons COVID-19 lockdown. The Directors issued to the had actually responded stating Directors inability to attend due to lockdown, however, the same is completely ignored. The assessing officer has merely reproduced the investigation report prepared during COVID, but failed to verify and conduct any investigation during assessment proceedings. It is noteworthy, that all the directors were available at the premises verified and that the assessing officer had the powers to compel attendance and duty to verify the same in assessment proceedings, but failed to do so 6 Books of accounts The assessing officer did not were found in data provide the evidence in support of recovered from this allegation. He did not even premises provide the details of content of 36 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others data, the period to which it pertained, the location where was found. Further, there is no indication of compliance with the requirements of Section 65B of the Indian Evidence Act.
B. Specific Allegations for Mavaiya
1. The company does not Based on the information provided have any employees or by the supplier, there was negligible number of considerable amount of employee employees benefit expenses such as Rs. 66 lakhs for AY 2018-19.
C. Specific Allegations for Manmish
1. Summons were issued Based on the information provided to Mr. Vinod by the supplier, there was Mansukhlal Vadhaiya no such director in the directors. company, thus, the information is factually incorrect. Also based on the information received from company the actual director of the company, Mr. Hardik Gandhi, attended the summons proceedings, thus the information is factually incorrect. This fact is not commented upon by investigation wing.
D. Specific Allegations for Yogdarshan 37 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others
1. Inquiry was conducted Based on the information provided in this case at the by the supplier, the address of the inquiry was conducted during registered office. The peak Covid period at Mumbai Inspector reported that premise, whereas the there was no transactions are done from business activity premises situated in Gujarat.
happening at this Interestingly, the Inspectors
premises. report in all cases is
identical. It says that the
office is small, is dilapidated and
is closed. It further says it is
unused for a long time. It
further refers to enquiries from
staff of another premise, but fails
to even mention the name of
such office or any staff. This
clearly shows it to be a prejudiced
report.
2. The statements of AO has not shared the
Shareholders & Directors complete statement. The
were recorded. They inferences drawn are not
were not aware of supported by the extracts
most of the things. reproduced in the assessment
order. The directors had given
details of brokers, sales, purchase parties, transport etc., therefore the above observation is not correct. Extracts show that they had asked for time to provide details. They did inform that stocks are maintained in Gujarat.
No details of accounting details found was provided to the directors. Nor are copy of such documents shared in the assessment proceedings. The assessing officer conducted no verification during assessment 38 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others proceedings. No opportunity of cross examination was provided.
3. Books of accounts were The assessing officer did not found in data recovered provide the evidence in support of from premises this allegation. He did not even provide the details of content of data, the location where was found. It is alleged that some data of some earlier years, not current, was found. In the absence of specific details and sharing of actual data, it cannot be commented upon. Further, there is no indication of compliance with the requirements of Section 65B of the Indian Evidence Act.
E. Alleged allegations for Trishna 1 Based on returns The income shown in return does filed and addresses not prove the allegation made of directors, it is by the investigation wing. It concluded that they are is prejudged inference not men of means. irrespective of evidence.
2 The shareholder does With a share capital of Rs 1 lakhs, not have means to hold it is clear that the allegation the shares of the levelled in the investigation company. wing report is unwarranted and has been accepted without any application of mind by assessing officer. Shri Pulkit Mehta with returned income of about Rs 4 lakhs is capable of making this investment.
Further, source need not be current income alone. It is biased inference.
39 ITA No.3315/Mum/2024 and othersM/s. Abans Commodities (I) Pvt. Ltd. and others
30. Since we have already dealt with the similar issue in the case of Abans Commodities (I) Pvt. Ltd. and also looking to the fact that these transactions are duly supported by GST returns and there was no adverse inference by the CGST authority, therefore, it cannot be held that these transactions are non- genuine, in any case addition has been made by applying adhoc commission rate of 0.25% which has no basis and therefore, the additions made in A.Y.2018-19 and 2020-21 of Rs. 81,38,223 and Rs.173,41,900/- in A.Y.2020-21 are deleted.
31. In the result all the three appeals of the assessee are allowed.
Abans Enterprises Ltd
32. In A.Y.2020-21, following additions / disallowances have been challenged by the assessee:-
Sr. AY Appeal No. Non- Total
No. genuine Addition
purchases
1. 2020-21 3499/M/2024 73,17,784 73,17,784
Total 73,17,784 73,17,784
33. Here in this case, the primary issue involved is addition on account of 0.25% of commission on alleged non-genuine purchases of Rs.73,17,784/-. In this appeal the ld. AO has made reference to the purchases made by three entities which were also involved in other appeals also, mainly, Manmish Traders 40 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others Pvt. Ltd., Yogdarshan Commercial Trading Private Limited and Trishna Trading Services Pvt. Ltd., Here also assessee had submitted all the documents and AO has made similar allegations based on investigation report to which assessee has given similar counter submissions which is not reproduced here. Thus, in view of the finding given in the above appeals, adhoc addition on account of commission @0.25% is deleted.
Abans Securities Pvt. Ltd.
34. In various years following additions / disallowances have been challenged by the assessee:-
Sr. AY Appeal No. Commissi Non- Total No. on genuine Addition on non- purchase genuine s trades in illiquid options
1. 2013-14 3666/M/2024 6,30,433 - 6,30,433
2. 2014-15 3667/M/2024 5,96,173 - 5,96,173
3. 2015-16 3668/M/2024 11,44,234 - 11,44,234
4. 2018-19 3669/M/2024 - 1,26,000 1,26,000
5. 2020-21 3670/M/2024 - 5,17,919 5,17,919 Total 23,70,840 6,43,919 30,14,759
35. In these appeals two additions have been challenged firstly, commission on non-genuine trades in liquid options and non-
41 ITA No.3315/Mum/2024 and othersM/s. Abans Commodities (I) Pvt. Ltd. and others genuine purchases. In so far as addition on account of non- genuine trades in illiquid options, admittedly the facts are similar to the appeals of Aban Commodities, where we have deleted the said addition after detail discussion. In so far purchases are concerned similar explanations have been given which are which are as under:-
SR. Alleged Allegations Appellant's Submissions No. 1 Source of funds / The assessing officer has compared Capital is less turnover with share capital as the compared to the only source of funds. However turnover trading does not require only large own capital. Based on the information received from the supplier, the source of funds can be traced to inter corporate loans taken from various business associates purely for working capital requirements. Further, in trading businesses, there is no requirement of high source of funds. In any event, the profit is commensurate to the funds invested.
2 E-mail was being No evidence that email was actually handled by Abans being handled by Abans group. The group AO has not brought on record any evidence to support the basis on which this allegation is made. He has not mentioned who was operating such email nor provided evidence for the same. E mail by its very nature can be operated from anywhere. It is vehemently contended that the email of the 42 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others company was not operated from the office of Abans Group.
3 ITRs filed from This is factually incorrect. Based on premises of Abans the information received from the group from IP supplier, the ITR has not been filed address from IP mentioned in the order but 103.207.9.67. from some other IP address. The assessing officer has not indicated the location where the IP address was found nor has he provided any evidence to prove that. Further, there is no indication of compliance with the requirements of Section 65B of the Indian Evidence Act.
4 The shareholders The shareholders have regularly are not men of filed their returns of income. There means. returns of income are sufficient to make the investment in share capital. In any event, this by itself does not render the transactions as non-genuine.
5 No response Summons were issued on received to the 09.09,2020, i.e., during peak summons issued to COVID-19 lockdown. The Directors the Directors. had actually responded stating inability to attend due to lockdown, however, the same is completely ignored. The assessing officer has merely reproduced the investigation report prepared during COVID, but failed to verify and conduct any investigation during assessment proceedings. It is noteworthy, that all the directors were available at the premises verified and that the assessing officer had the powers to compel attendance and duty to 43 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others verify the same in assessment proceedings, but failed to do so.
6 Books of accounts The assessing officer did not were found in data provide the evidence in ta support recovered from of this allegation. He did not even premises. provide the m details of content of data, the period to which it pertained, the location where was found. Further, there is no indication of compliance with the requirements of Section 65B of the Indian Evidence Act.
36. Here in this case also the allegation of the ld. AO is that assessee was indulged in reversal trades in illiquid stock option resulting in non-genuine loss / gains to the beneficiary clients and also assessee has earned some cash income @0.25% on buy and sale turn over. The entire basis of the ld. AO is against the information received from 'project falcon'. We have already dealt this issue of adhoc commission in the earlier appeals, which was based on statement of one Shri Arun Shah of M/s. Aryav Securities. Since we have already deleted this addition, therefore, even the addition on account of adhoc commission and non- genuine trades are deleted. Accordingly, all the appeals of Abans Securities are allowed.
Abans Metals:-
37. In the A.Y.2020-21 following additions / disallowances have been challenged by the assessee:-
44 ITA No.3315/Mum/2024 and othersM/s. Abans Commodities (I) Pvt. Ltd. and others Sr. AY Appeal No. Non- Total No. genuine Addition purchases
1. 2020-21 45 45,74,595 45,74,595 Total 45,74,595 45,74,595
38. Here in this case purchases have been made by two entities namely Manmish Traders Private Limited and Yogdarshan Commercial Trading Private Limited. In this case also ld.AO has made adhoc percentage of commission of 0.25% from purchases made from these parties.
39. Assessee in this case also had provided similar documents proving evidence of the purchases like purchase invoices, warehouse receipts, delivery orders, bank statements demonstrating payment towards the purchases and GST returns showing receipt of the goods and availment of input tax credit on such purchases. Ld. AO had made similar allegations based on investigation report for which assessee has given details rebuttal which is by and large on the same reasons. Accordingly, in view of the finding given in the above appeals, the addition is deleted.
40. In the result, appeal of the assessee is allowed.
Abhishek Pradeepkumar Bansal
41. In various years following additions / disallowances have been challenged by the assessee:-
45 ITA No.3315/Mum/2024 and othersM/s. Abans Commodities (I) Pvt. Ltd. and others Sr. AY Appeal No. Non- Commissi Non- Total No. genuine on genuine Addition loss in on non- purchases illiquid genuine options trades in illiquid options
1. 2013-14 3521/M/2024 1,52,82,150 73,665 - 1,53,55,815
2. 2015-16 3522/M/2024 1,55,50,000 1,28,875 - 1,56,78,875
3. 2018-19 3523/M/2024 - - 20,27,758 20,27,758 Total 3,08,32,150 2,02,540 20,27,758 3,30,62,448
42. Here again, the addition has been made on account of losses and paid of currency options and futures and addition on account of adhoc commission u/s.69C. Here in this case also similar facts are permeating wherein the ld. AO has only picked up the few transactions in which assessee has incurred losses and all other similar transactions where assessee had earned profit has not been disturbed. Accordingly, our finding given in the appeal for Abans Commodities Ltd., the addition on account of non-genuine losses and commission is deleted.
43. In A.Y.2018-19, ld. AO has made addition of non-genuine purchases of rs.20,27758/- by imputing adhoc commission of 0.25%. Here also, the facts are same as applicable in the other appeals wherein purchases from two entities have been doubted on which commission rate of 0.25% has been applied. Here in 46 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others this case also assessee had filed documents to prove the genuineness of the purchases like purchase invoices, warehouse receipts, delivery orders, bank statements and GST returns. Ld. AO's allegation is based on similar lines and the reasons given by the assessee are also the same, therefore, in view of the finding given in the earlier years, adhoc addition of Rs.0.25% of non- genuine purchases are deleted.
44. In the result, appeal of the assessee is allowed.
Abans Jewels Ltd.
45. In various years following additions / disallowances have been challenged by the assessee:-
Sr. AY Appeal No. Non-genuine Total No. purchases Addition 1. 2018-19 3516/M/2024 49,07,630 49,07,630 2. 2020-21 3517/M/2024 1,52,88,087 1,52,88,087 3. 2021-22 3518/M/2024 74,39,867 74,39,867 Total 2,76,35,584 2,76,35,584
46. Here again the addition has been made from purchases made from five entities namely, Asterpetal Trade & Services Pvt. Ltd., Mavaiya Enterprises Pvt. Ltd., Manmish Traders Pvt. Ltd. Yogdarshan Commercial Trading Pvt. Ltd. and Trishna Trading Services Pvt. Ltd., and assessee had submitted all those 47 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others documents proving the evidence of the purchases which are as under:-
(i) Purchase invoices
(ii) Warehouse receipts showing physical receipt of the goods in the warehouse
(iii) Delivery Orders
(iv) Bank statements demonstrating payment towards the purchases
(v) GST returns showing receipt of the goods and availment of input tax credit on such purchases
47. Again, ld. AO has made some allegations with regard to all the entities which has been dealt earlier. Accordingly, in view of our finding given in the other appeals, addition on account of alleged commission of 0.25% of such purchases are deleted.
Abans Fintrade Pvt. Ltd.
48. In various years following additions / disallowances have been challenged by the assessee:-
Sr. AY Appeal No. Addition of 0.25% ad hoc No. commission on total purchase and sale
1. 2018-19 3664/M/2024 1,52,09,702
2. 2020-21 3665/M/2024 5,67,09,975/-
Total 7,19,19,677/-
49. In all these cases only addition is on account of 0.25% of purchases. Again assessee before the ld. AO had filed the 48 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others following documents in support of genuineness of its manufacturing activities:-
(i)Purchase invoices. Bills of Entry, Import Waybilis, Other Import Documents
(ii) Electricity Bills proving activity at the Appellant's manufacturing unit
(iii) Export Invoices, Shipping Bills, Export Waybills, Other Export Documents
(iv) Bank statements demonstrating payments and receipts towards the purchases and sales
(v) GST returns showing purchases and sales
50. The allegation of the ld. AO is based on same report of investigation authorities. Before us detailed submissions have been filed in respect of every allegation which has been stated as under:-
21. The purported evidence relied upon by the department in support of the allegation of non-genuineness of the activities of the Appellant and the Appellant's submissions thereto are summarised as under
(i) On analysis of the Profit & Loss A/c, it is seen that most of the purchases made are sold directly with a major chunk of the turnover being purchases. The purchases as a percentage of turnover are 94.64%, 94.46%, 97.52% and 98.8% for FY 2016-17, 2017-18, 2018-19 and 2019-20, respectively. This is reflective of a trading activity rather than a manufacturing activity:
In case of a manufacturing concern, cost of goods sold is relevant and not purchase figures. Appellant imported cut and polished diamonds and silver mounting which was then processed at our unit at Surat to manufacture Silver and diamond jewellery. During all the years, the Appellant had earned a margin ranging from 4.5% to 5.50% which is a normal margin range for units engaged 49 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others in this business in SEZ after deducting all direct expenses and employee benefit expenses and before adding foreign exchange fluctuation gain.
(ii) The profits earned here are also meagre. The profits for the four years i.e.. FY 2016-17, 2017-18, 2018-19 and 2019-20 are 0%, 0.097%, 0.085%, and 0.14% respectively.
There is substantial amount of profit out of the manufacturing activities which get heavily reduced because of large finance and other costs incidental to this business. The actual results show substantial profit from manufacturing activities. The Appellant has been doing the manufacturing activities from year to year and has been exporting manufactured jewellery
(iii) As per report of spot verification dated 12.08.2021 received from DDIT(Inv.)-1, Surat, the premises of the Appellant at Surat was found to be closed for a long period of time and the size of the premises did not support the claim of having a huge production capacity The said spot verification was carried out in FY 2021-22, whereas the assessment is related to FY 2017-18 and FY 2019-20 and hence cannot be applied, ie., the assessment years in this appeal. In the FY 2021-22, the said unit was not operational at all, due to the 2nd Wave of COVID- 19 pandemic which had hit the country in March 2021, badly There was mandatory lock down notified by the Government and particularly industrial sites were closed due to this reason. Hence, manufacturing activity was closed in Surat unit during FY 2021-22. As has been admitted by the ITI, several units in the same industrial complex were closed, thus going by the same conclusion of AO/ Investigation Wing Officer other units were also not engaged in genuine business activity since premises were closed from almost 1 year which was confirmed by Unit No. 358 as well. The last export from our Surat unit was done in November 2020. Due to the prolonged covid pandemic the staff at Surat unit had been reduced and we had only 1-2 staff at the time of inquiry conducted at Surat unit.
50 ITA No.3315/Mum/2024 and othersM/s. Abans Commodities (I) Pvt. Ltd. and others However, during the so called on spot enquiry, the Appellant's staff was absent and the Appellant contacted the Department on the next day. A summons was also issued dated 10.08 2021 by Surat DDIT requesting the Appellant to attend the office personally or through authorized representative against which the authorized representatives visited the Surat Office at 20.08.2021 with all the data required such as electricity bills, APR data, employee data etc. (Paperbook reference: Pg No. 240 to 301) for the period 01.04.2017 to 31.03.2020 which clearly substantiated the genuineness of working at Surat office at that time However, a holiday was declared on 20.08.2021 at Surat hence the concerned officer was not present at office, therefore the Appellant submitted all the data online on the income tax portal/via mail and asked the concerned officer if he requires any further clarification against which no further query was raised by the learned AO There was sufficient compliance with the requirements of the Department. Documents such as electricity bills. APRs submitted to SEZ authorities, details of employees handling the manufacturing operation during the period 01.04 2017 to 31.03.2020, are already submitted to AO, CIT(A) and ITAT paperbook. It clearly establishes that the unit was functional. Further, it is submitted that for AY 2020-21, the unit located at Sursez, Surat has consumed 3,000(approx) electricity units. Therefore, the question of unit not operational during the said period cannot be sufficient reason to draw any adverse inference against us. We would also like to submit that the report of investigation officer for the financial Year 2021-22 cannot be applied retrospectively for the pending assessment proceedings of the earlier years.
It is pertinent to note that, a survey u/s 133A was conducted in a sister concern in December 2019 and only after 20 months the summon u/s 131(1)(d) was issued to DDIT(Inv), Surat. The changed circumstances and COVID period was not considered Further, it is submitted that the product manufactured by the Appellant, Le., Silver & Diamond jewellery is a high price product and an individual export invoice was of around Rs 5 crores Also the stock lying with the Appellant at any given point of time was significantly low since purchase was done only after receipt of order for jewellery, thus the size of the Appellant's premises was 51 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others sufficient to handle such an operation. The size of premise was good enough for the manufacturing activity conducted by the Appellant. All the units involved in production of silver & diamond jewellery have such size premises only since they do not require very big plant & machinery for its manufacturing
22. It is submitted that, for AY 2020-21, the Appellant has also operated from Rudrapur unit. About 40% of total sales were made from Rudrapur unit which amounts to approximately Rs. 468 crores, for which no survey was conducted However, the sales & purchases from the said unit also have been treated as non- genuine.
23. In view of the above, it is submitted that the allegation that the Appellant was not carrying out any manufacturing activity is factually incorrect and based on assumptions.
24. Further, it is submitted that the learned CIT(A) has erred in summarily upholding the allegation of transactions with non- genuine entities.
25. For AY 2018-19, it is alleged that the Appellant has entered into purchase and sales transactions with four non genuine entities, namely, Rising Star General Trading FZE ("Rising Star"), Multiscason HK Limited ("Multiseason"), Forever Trading FZE ("Forever") and Vista Trading FZE ("Vista").
26. Similarly, for AY 2020-21, it is alleged that the Appellant has entered into purchase and sales transactions with nine non genuine entities, namely, Rising Star, Multiseason, Abans Jewels Pvt. Ltd., Astro Gems & Jewellery Pvt. Ltd. ("Astro Gems"), Gewinner Tradex Pvt. Ltd. ("Gewinner"), Panaqua Tradecom Pvt. Ltd ("Panaqua"), Yogdarshan Commercial Trading Pvt. Ltd. ("Yogdarshan"), Mavaiya Enterprises Pvt. Ltd. ("Mavaiya") and Trishna Trading Services Pvt. Ltd. ("Trishna")
27. At the outset, it is submitted that the learned AO has given a table of transactions with alleged non-genuine entities with which purchases and sales have been made by the Appellant. However while computing commission the learned AO has added total 52 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others purchases and sales instead of the amounts mentioned in the table, even when the party is not included in the above mentioned table, which is without any basis since the learned AO himself is saying in the table heading that these are the Transactions which are with non-genuine entities. We would like to clarify that the observations and the findings of the Investigation Wing of the Department is not correct. The figures given in the table are incorrect and there is a mismatch. For instance, despite submitting all details for all the years, the assessing officer without verifying the same has repeated the figures from some external report which is not shared with us.
28. In any event, it is submitted that for AY 2018-19, the Appellant has not entered into any domestic sales and purchases transactions. Thus, the observations pertaining to the domestic parties are not applicable to AY 2018- 19. The fact that it is even incorporated in the assessment order for AY2018- 19 clearly indicates lack of application of mind evidenced in not even checking the facts of the year in question. It is a simple copy paste of investigation wing report and its conclusions.
29. In any event, it is submitted that the purchases and sales of the Appellant are genuine and are proved to be so by the voluminous documents furnished by the Appellant
30. As stated above, the Appellant has sufficiently proved the genuineness of the import and export transactions by submitting documents such as the invoices. Bills of Entry, Shipping Bills, import and export waybills, etc.
31. In any event, the purported evidence relied upon by the department in support of the allegation of non-genuineness of the transactions of the Appellant with the foreign entities and the Appellant's submissions thereto are summarised as under:
(1)Vista Trading Fac Vista Trading FZE was a company incorporated in Dubai, UAE engaged in trading of various commodities. However the company has been closed in the year 2019. The Ld AO has not done any 53 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others investigation herself & merely repeated the investigation report post survey action with respect to the director Mr Utkarsh Phanse director of the company and mentioned that he is men of no means based on size of his house and returned income in India. However, Mr. Utkarsh Panse is a director of UAE based entity thus checking his return of income and accommodation in India will not be evidence enough to conclude that he is a men of no means. It is learned that Mr. Utkarsh Panse has working experience of more than 18 years and is based in Dubai, UAE. The size of a person's house in India cannot be a deciding factor to consider a person's financial capabilities/means. Both Mr. Utkarsh Phanse and Mr. Ankit Joshi are based in UAE. Thus local enquiry in India would not yield the desired results. There is no evidence mentioned in the assessment order and it is apparent that the AO has not examined or made any direct enquiry with Shri Utkarsh Phanse and Shri Ankit Joshi.
AO has himself mentioned that few documents were found which are part of KYC documents and since he was our client such KYC documents would obviously be available with us. On the basis of such documents it cannot be constitute that the entity was managed by us. Further AO has mentioned that manager & director of Vista Trading FZE is Ankit Joshi who was not present at his premises during spot verification. Since the director is a UAE entity director it should not be expected that he would be found at an Indian address. AO has mentioned about some Board Resolution but the extract of the same is not clean and thus we cannot comment on the same.
(ii) M/s Multiseason HK Ltd AO has not carried out any investigation herself and merely repeated the investigation report post survey action with respect to 'Multiseason HK Limited' a Hongkong based company, the principal activities of the Company are trading of jewellery and diamonds. The company also acts as agents for facilitating sales and marketing of diamonds studded silver and gold jewellery. It is learnt that the turnover of the company was approx US dollar 7.4 million for the year ending 31.03.2020 The accounts of the company are audited by independent auditors. It is learned that 54 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others Mr. Ravindra Dhuri is the director of the company who is based outside India and therefore local enquiry in India would not yield the desired results. As mentioned by the Ld AO Mr. Ravindra Dhuri being the employee of Abans group is incorrect. He had left Abans group more than 4 years ago. After achieving the relevant skills from the current industry during his employment with us, he got into the bullion industry, and after years of experience in the local market he planned on to enter the international market and started its operations by setting up a company in Hong Kong. There is no evidence mentioned in the assessment order and it is apparent that neither the investigation wing nor the AO has examined or made any direct enquiry with Shri Ravindra Dhuri
(iii) Rising Star Trading General Fze AO has not carried out any investigation herself and merely repeated the investigation report post survey action with respect to Rising Star Trading FZE' is a UAE based company engaged in trading in Ferrous and non-ferrous metal, import and export of pearis, precious stones, gold and diamond etc. The accounts of the company are audited by independent auditors. It is a registered entity with the Govt of UAE since 2013 and operates from the free trade zone of Ajman, in UAE. The director who controls the company le. Mr Kaushik Tikaria is based in UAE and therefore local enquiry in India would not yield the desired results. It is learnt that Mr. Kaushik Tikariya aged 35 years is a Director of Rising Star Trading FZE and has got vast experience in Gems and Jewellery sector. At a young age of around 24, he started trading in Gold, Silver and gold silver jewellery. There is no evidence mentioned in the assessment order and it is apparent that neither the investigation wing nor the AO has examined or made any direct enquiry with Shri Kaushik Tikaria.
32. It pertinent to state that the AO has made some incorrect observations. It is mentioned that company made most of its imports from Rising Star General Trading FZE and Exillian General Trading LLC both based in UAE and the company has made most of its exports to Vista Trading FZE and Forever Trading FZE both based in UAE. This statement is incorrect since during the financial year 2017-18 imports have not been done from Exillian 55 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others General Trading LLC at all. Also the exports have not been done to Forever Trading FZE at all. This clearly indicates a biased approach of the assessing officer as well as a failure of duty expected from such authority in assessment proceedings.
. Further, the purported evidence relied upon by the department in support of the allegation of non-genuineness of the transactions of the Appellant with the domestic entities are applicable only to AY 2020-21 for which normal assessment order is passed u/s 143(3) on 17.3.2022. The domestic entities treated as non-genuine by the assessing officer are Abans Jewels P. Ltd. Astrogems Jewelry P Ltd, Gewinner Tradex P Ltd., Panqua Tradecom P Ltd., Yogdarshan Commercial Trading P Ltd, Mavaiya Enterprise P Ltd., and Trishna Trading Services P Ltd. The assessing officer has treated purchases from and sales, as applicable, to these entities as non-genuine.
34. Even though 7 domestic entities are listed in the table, the discussion in the assessment order is only in respect of 3 entities viz Yogdarshan. Mavaiya and Trishna. There is nothing mentioned about the other entities. It is pointed out that Abans Jewels P. Ltd is a sister concern and belongs to Abans Group and in none of the assessments has it been treated as a non genuine company. Despite this, the assessing officer has treated the entire purchase and sales as non-genuine including the exports and imports,
35. The assessing officers observations and our comments in respect of overseas entities have been discussed earlier The Appellant's submissions in respect of the 3 domestic entities referred to in the assessment order thereto are summarised as under:
(i) During the survey proceedings in the case of Abans Securities Ltd.. it was found that the Books of Account of these entities were found in Tally in the data recovered from the Survey premises The Appellant does not have information how was tally data of client found at the premises of Abans group nor has the learned AO shared the details of such information & period to which that the books of accounts is pertains. Ld AO did not even provide the 56 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others details of content of data, the period to which it pertained, the location where was found. Further, there is no indication of compliance with the requirements of Section 65B of the Indian Evidence Act. It is possible that tally back up might have been send by client for some reason in the past to any of our employees and it was stored in our system. The data was old, incomplete and not reliable.
(ii) The company does not have sufficient source of fund to support such huge turnover with very low percentage of profit The assessing officer has compared turnover with share capital as the only source of funds. However trading does not require only large own capital. Based on the information received from the above supplier we would like to state that, the source of funds can be traced to inter corporate loans taken from various business associates purely for the working capital requirement. Further the business of commodities is volatile and highly voluminous. Any bullion or commodities trader will have high turnovers and low margins as there is no value addition in this business. It is a pure trading activity. Thus the conclusion as regards low profit as compared with turnover is misconceived and displays lack of understanding of the nature of business of the assessee.
(iii) The Shareholders and the Directors of these entities are not men of means. The Shareholders and the Directors are not aware of the basic activities of business conducted in the company.
On the basis of information received from the entity the directors have been filing their Return of income regularly and looking at the returned income of the company, the income returned by the directors are in sync with the earnings of the company The Appellant is not provided with the details upon which the Assessing Officer has made this conclusion Based on the information received from the entity the directors had given details of brokers, sales, purchase parties, transport etc., therefore the above observation is not correct.
(iv) Despite having huge turnover, the company does not have any employees or negligible number of employees 57 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others With respect to the observation in relation to the employees of the company, it is submitted that the learned AO has not provided the supporting evidence However in the case of Mavaiya Enterprises Pvt Ltd, on the basis of information received from the entity, the company has incurred employee benefit expenses aggregating to approximately Rs. 80 Lakhs for both the years. Hence the allegation that the company does not have any employees is not valid For other entities on the basis of information received from them, the compliance burden of the company has been outsourced. The books of accounts, handling of emails and all the tax related filings are completed by them. Hence there is no need to hire employees. Almost all the delivery related operations are also outsourced as they use external warehousing storage. After competing in such an environment, the business cannot afford more employees
(v) In case of Yogdarshan commercial trading pvt ltd -The premises from where they have stated to function are unused and dilapidated for a long time. There is no business activity happening from these places Based on information received from above entity we would like to state that, spot enquiry was conducted on 02.09.2020 at the above addresses, the said period was under Covid 19 pandemic and both the directors were operating directly from home Therefore the allegations in the inspector report are not valid. Further the spot enquiry was done at the business premises in Mumbai whereas the trading activity was done from the premises in Gujarat.
vi) The books of accounts are not maintained at the stated office of the company On the basis of information received from the entity, the compliance burden of the company has been outsourced. The books of accounts, handling of emails and all the tax related filings are completed by them.
58 ITA No.3315/Mum/2024 and othersM/s. Abans Commodities (I) Pvt. Ltd. and others
(vii) The activities like filing of ITR and even the handling of emails is being done from the premises of Abans Group of companies.
No evidence that email was actually being handled by Abans group. The AO has not brought on record any evidence to support the basis on which this allegation is made. He has not mentioned who was operating such email nor provided evidence for the same. E-mail by its very nature can be operated from anywhere. It is vehemently contend that the email and ITR of the company was not operated by Abans Group. Further with regards to the observation of filing of ITR, based on the information received from above supplier, it is submitted that the observation is factually incorrect since the ITR has not been filed by Abans Group. The assessing officer has not indicated the location where the IP address was found nor has he provided any evidence to prove that. Further, there is no indication of compliance with the requirements of Section 65B of the Indian Evidence Act.
36. It is pertinent to state that, for AY 2020-21, certain allegations and extracts based on which such allegations were made were never provided to the appellant during the assessment proceedings and in the show cause notice. The appellant was not given opportunities to rebut the allegations. The Ld. AO has issued an assessment order without giving us a proper opportunity of being heard and explaining the transactions
37. It is pertinent to note that the data and annexures submitted by the appellant clarify that the business activity undertaken by the assessee are genuine and therefore the company cannot be regarded as a paper company not doing any genuine business. The assessing officer has ignored that another government organisation viz Customs authorities and commerce ministry dealing with SEZ have not ever questioned the import, export and manufacture. The assessing officer has summarily, treating the investigation report and its untenable biased inference, as evidence treated our genuine business as bogus and treated as an entry provider. The assessing officer then proceeded to estimate likely commission earned as an entry provider @0.25% 59 ITA No.3315/Mum/2024 and others M/s. Abans Commodities (I) Pvt. Ltd. and others
51. Now here in this case, the assessee had given all the details to prove the genuineness of the purchases and however, the ld. AO without examining these documents has solely gone on the investigation report. Once the assessee has given the aforesaid explanation and the reasons countering each and every allegation by the ld. AO then, onus shifted upon department to prove that such an explanation is not acceptable. The aforesaid explanation should have been rejected on a cogent ground or by carrying out independent enquiry by the ld. AO based on such explanation. Thus, the aforesaid explanation filed by the assessee are liable to be accepted and purchases are held to be genuine.
52. Since this issue is almost similar to the issue which has been discussed in the earlier cases and moreover the explanations given on each and every allegation of the ld. AO is countered by the evidence filed on record and was also there before the authorities below which has not been rebutted. Ultimately the notional commission on such purchases of 0.25% has no basis and accordingly, same is deleted.
53. In all the cases assessee has raised validity of reopening u/s.147/148 of various grounds, however, we have deleted all the additions on merits therefore, the legal issues raised before us had been rendered academic and are kept open.
54. In the result, all the appeals are allowed.
60 ITA No.3315/Mum/2024 and othersM/s. Abans Commodities (I) Pvt. Ltd. and others
55. In the result, all the appeals of the assessees are allowed.
Order pronounced on 30th September, 2024.
Sd/- Sd/-
(RENU JAUHRI) (AMIT SHUKLA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai; Dated 30/09/2024
KARUNA, sr.ps
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
//True Copy//
BY ORDER,
(Asstt. Registrar)
ITAT, Mumbai