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TMI Blog2013 (8) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... d assessment of profit @ 0.5%. Assessee has not been able to substantiate the rate of income from accommodation entries except making a general assertion that the profit charged on accommodation entries transactions is generally 0.5%. The providing of accommodation entries amounts to running a parallel economy and is a sort of money laundering, which is against public policy. Therefore, assessee in any case cannot get any deduction for any estimated expenses in this behalf. Since assessee could not substantiate the rate of providing accommodation entries, the assessing officer is well within his rights to estimate the income of the assessee. This estimate in ordinary circumstances cannot be interfered with unless the assessee makes out a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y material as against the returned income as under: Asstt. Yr. Returned income Assessed Income 2001-02 ₹ 6,233/- ₹ 44,569/- 2002-03 Rs.12,368/- ₹ 23,727/- 2003-04 ₹ 2,438/- ₹ 46,020/- 2004-05 Rs.18,669/- ₹ 58,956/- 6. Brief facts are: On 12-12-2006, search and seizure operations were carried out at business and residential premises of one Shri S.K. Gupta along with various concerns operated by him and his family members. From ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to substantiate its return and undisclosed income mentioned therein. (iii) There were various discrepancies relevant to accommodation entries business in respect of entries provided and the expenses claimed. The assessee s business was treated as sham and undisclosed income was computed @ 2% net income on dummy sale and turn over and investment relying on assessee s statement, prevalent market condition and the inconsistencies in the books of account. 6.4. According to assessing officer, the assessee estimated his income @ 0.5% on the accommodation turn over 2% was the reasonable estimate of income from accommodation turnover, which the assessee has earned from indulging in these accommodation entries. Accordingly, the additions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it to say that the AO has estimated and applied a net rate of 2% and therefore there was no reason to allow any expenses out of it. This contention is also, therefore, rejected. 2.3.5. Taking into consideration the totality of facts and circumstances of the case as discussed hereinabove, it is held that the addition made by the AO on account of net income earned from accommodation entry business to the tune of ₹ 44,569/- is justified and is, therefore, confirmed. Since the AO has given a categorical finding that the appellant had only indulged in accommodation entries business and had not done any genuine business and rejected the book results on that ground, the net profit shown in the return has lost its relevance and should no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a faire estimate, as no arbitrariness has been demonstrated. (iii) The assessee s account remained engaged in nepharious activities of providing accommodation entries on one hand and claims to be assessed at his desired rate of profit on the other hand. (iv) Neither before the assessing officer nor before the CIT(A) nor before the ITAT, the assessee has filed any evidence to substantiate its income. (v) When the income is estimated by assessing officer in the absence of assessee s substantiation, the same should generally be not interfered with, unless the assessee demonstrates arbitrariness in arriving at the estimate. In this case the assessing officer has arrived at fair and reasonable method and estimate by adopting 2% p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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