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2023 (1) TMI 1004 - AT - Income TaxUnexplained Hawala Transactions - commission income from hawala business - incriminating documents found and seized which divulged that the assessee was engaged courier/transfer of money from one place/person to another place/person which was termed by revenue-authorities as Hawala business - HELD THAT - Firstly, the revenue-authorities have loudly and unambiguously identified, found and understood the nature of activity done by assessee which is just a courier/transfer of money for earning a commission of Rs. 100/- to Rs. 200/- per lac. This activity remains same in all transactions. Secondly, all transactions have been retrieved/decoded from the same set of evidences, namely the same mobile phones. Thirdly, the details of all transactions as retrieved/decoded, such as names/mobile numbers of senders/receivers, serial numbers of currency notes, amount of money transacted in code words like Kg , @ , P , Peti , etc. and in some cases the full amounts itself or in lacs or after omitting zeros, were exactly identical. Fourthly, the assessee had provided complete postal addresses, phone numbers and PANs of the persons of all transactions which is clearly evident from Para No. 10.2 and 10.3 of the assessment-order. However, the only difference is such that out of 79 transactions, the persons of 43 transactions did not turn up and persons of 36 transactions only responded. It is highly probable that those persons have actually availed services of assessee for courier/transfer of money but when it comes to enquiry by income-tax department, they did not respond to avoid hassles of tax authorities. Be that as it may, the activity of assessee in all transactions is clearly manifest from the details of transactions retrieved/decoded from the mobile phones seized during search-proceeding, which is one single activity i.e. courier/transfer of money on behalf of clients with an objective to earn commission. Therefore, there is no reason to distinguish the two categories of transactions merely on the basis of responsive/non-responsive attitude of those persons. We feel that the taxation-authorities must assess the income of assessee in a proper and judicious manner so as to charge a proper amount of tax, neither a penny less nor a penny more. We also observe that there is no evidence on record brought by revenue, despite search-proceeding, that the impugned unexplained transactions of 43 persons were different in any manner or structure than the explained transactions of 36 persons. We observe that the various reasons cited in the beginning of this paragraph clearly reveal that all transactions were at par. Being so, we do not find any merit in the claim of revenue that the so-called unexplained transactions should be accorded a different treatment than the explained transactions . We observe that the Ld. CIT(A) has given a careful thought to the facts of case and validly held that the assessee must have earned only commission of Rs. 36,71,832/- on all transactions of Rs. 15,29,93,132/-. Having said so, Ld. CIT(A) was justified in applying a commission-rate of Rs. 200/- per lac on 8,25,03,772/- which results in estimated commission-income of Rs. 1,65,007/- for 1 month and extrapolating the same for 12 months arriving at commission of Rs. 19,80,088/- for the whole year. Finally, Ld. CIT(A) has rightly ordered the Ld. AO to assess commission-income of Rs. 19,80,088/- and thereby granted a relief of Rs. 8,05,23,676/- (Rs. 8,25,03,764/- minus Rs. 19,80,088/-) to the assessee. Addition on account of explained-transactions - We find that the Ld. CIT(A) has allowed telescoping benefit of the whole addition of Rs. 36,71,872/- (which of course includes the alleged addition of Rs. 16,91,744/-) against the cash balance of Rs. 98,09,930/- seized during search and surrendered by assessee but that ground is neither raised before us nor pleaded/argued during the course of hearing. Therefore, we are not called upon to adjudicate the same. Thus, Revenue s Ground No. 2 is also devoid of merit.
Issues Involved:
1. Deletion of addition on account of unexplained Hawala Transactions. 2. Deletion of addition on account of estimated commission earned from Hawala Business. Detailed Analysis: 1. Deletion of Addition on Account of Unexplained Hawala Transactions: The Revenue challenged the deletion of an addition of Rs. 8,25,03,772/- made by the Assessing Officer (AO) on account of unexplained Hawala transactions. The assessee, part of the "Tanya Jewellers Group," was searched under section 132, revealing documents and mobile messages indicating involvement in Hawala business. The AO assessed the total income at Rs. 11,65,45,918/- by adding Rs. 8,25,03,772/- for unexplained transactions and Rs. 16,91,736/- as commission income. The Commissioner of Income-Tax (Appeals) [CIT(A)] provided substantial relief to the assessee, leading to the Revenue's appeal. The Tribunal noted that the transactions were identified via seized mobile data, detailing coded messages and amounts. The AO found 79 persons involved, with 36 confirming transactions worth Rs. 7,04,89,360/- and 43 denying or not responding, leading to the addition of Rs. 8,25,03,772/- for unexplained transactions. The CIT(A) observed that the AO used a "pick and choose" method, treating similar transactions differently without justification. The CIT(A) held that the assessee provided detailed information about the 43 persons and that the AO could not arbitrarily treat the transactions differently. The CIT(A) emphasized that the entire amount should not be added as income, only the commission earned should be considered. The CIT(A) estimated the commission income at Rs. 200 per lakh, resulting in a commission income of Rs. 36,71,832/- for the entire year, granting relief of Rs. 8,05,23,676/-. The Tribunal upheld the CIT(A)'s decision, agreeing that the transactions were identical and should be treated uniformly. The Tribunal found no merit in the Revenue's claim and dismissed the ground. 2. Deletion of Addition on Account of Estimated Commission Earned from Hawala Business: The Revenue also contested the deletion of Rs. 16,91,736/- added by the AO as commission income from Hawala business. The CIT(A) upheld the AO's estimation of commission income at Rs. 200 per lakh for transactions worth Rs. 7,04,89,360/-. The CIT(A) calculated the total commission income for the year to be Rs. 36,71,832/-, including the addition of Rs. 16,91,744/-. The Tribunal noted that the CIT(A) did not delete the addition but upheld it, confirming the commission income estimation. The Tribunal found no merit in the Revenue's ground, as the CIT(A) had already ruled in favor of the Revenue on this issue. Conclusion: The Tribunal dismissed both grounds raised by the Revenue, upholding the CIT(A)'s order. The appeal of the Revenue was dismissed, confirming the relief granted to the assessee and the estimation of commission income. The order was pronounced on 01/12/2022.
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