9911796707
TMI Blog2016 (2) TMI 888X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/9/2008 declaring total income of ₹ 5,91,912/-. The return was processed under section 143(1) of the Income Tax Act, 1961 ( in short the Act ) and the case was subsequently taken up for scrutiny. 2.2 A survey under section 133A of the Act was conducted in this case by the ADIT (Inv), Unit IV(i), Mumbai on 12/12/2007 on the basis of information/verification of bank data under the Banking Cash Transaction Act that M/s. Shraddha Saburi Merchants Ltd. and M/s. Sai Kripa Metallic Tradecom Ltd.and other concern promoted by Shri Pravin Agarwal had indulged in suspicious transactions but admitted that no actual business of sale and purchase was carried out by them and that these transactions were all accommodation entries in respect of which the assessee and others were beneficiaries. In this survey it was found that in the period relevant to assessment year 2007-08, the assessee had purchased materials worth ₹ 2,27,60,254/- from M/s. Shraddha Saburi Merchants Ltd. and ₹ 1,55,09,505/- from M/s. Sai Kripa Metallic Tradecom Ltd., for which payments made by the assessee were credited in the aforesaid two parties bank accounts and the same was withdrawn in cash on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee were already dealt with in the course of survey, post survey investigations. The Assessing Officer was of the view that as per the facts on record the transactions entered into by the assesee with M/s. Shraddha Saburi Merchants Ltd., M/s. Sai Kripa Metallic Tradecom Ltd. (purchase parties), M/s. Rajasthan Alluminium and M/s. D.C. Metals (sale parties) were only accommodation entries rendered by Shri Pravin T. Agarwal and accepted by Shri Prakash J. Shah of the assessee firm and not real sale/purchase transactions as presently claimed by the assessee. In this view of the matter, the Assessing Officer at para 10 to 12 of the order of assessment held that since the assessee could not substantiate the purchases made from the aforesaid two concerns, the entire alleged purchases of ₹ 3,82,69,759/- shown by the assessee from M/s. Shraddha Saburi Merchants Ltd. and M/s. Sai Kripa Metallic Tradecom Ltd. as bogus and brought the entire amount to tax in the assessee s hands. The assessment was accordingly completed under section 143(3) of the Act vide order dated 31/12/2009 wherein, the income of the assessee was determined at ₹ 3,87,89,670/-. 3.1 Aggrieved by the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fference between the concerned sales and purchase transactions) or which is normally declared in this business at 1 to 2% according to the assessee. Following the ratio of the decision of the ITAT, Ahmedabad bench, in the case of Vijay Proteins Ltd. (15 ITD 428), the CIT(Appeals) estimated the commission earned by the assessee at 5% of the said purchase of ₹ 3,82,69,759/- in the peculiar facts and circumstances of the case on hand. 4. Aggrieved by the order of the CIT(Appeals) -31, Mumbai dated 17/8/2012 for assessment year 2007-08, both Revenue and the assessee have preferred appeals before the Tribunal in respect of the issues held against them. 4.1.1 The grounds raised in the assessee s appeal are as under:- I 1.The Commissioner of Income Tax ( CIT(A) ) erred in making confirming addition of ₹ 18,48,429/-, being estimating the additional commission income on the accommodation bills of bogus purchases made from M/s. Sai Kripa Mettalic Tradecom Pvt. Ltd., and M/s Shardhha Saburi Merchants Ltd @ 5% of the total purchase amount from the above two parties, after deducting the net commission income of ₹ 65,0591- shown in the books of account. 2. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n income earned by the assessee on accommodation bills of bogus purchases made from M/s. Shraddha Saburi Merchants Ltd. and M/s. Sai Kripa Metallic Tradecom Ltd. @5% of the total purchases of ₹ 3,82,69,759/- from these two parties. 5.2 In Grounds No.1 to 4 of Revenue s appeal, it is contended that CIT(Appeals) erred in directing the Assessing Officer to delete the addition of ₹ 3,82,89,579/- held by the Assessing Officer as income of the assessee arising out of bogus purchases from the aforesaid two parties and in assuming that the assessee has merely earned commission in respect of the aforesaid purchases. 5.3 The assessee s Grounds I(1) and Revenue s Grounds (1 to 4)(supra) being both in respect of the contrary findings of the Assessing Officer and the CIT(Appeals) on the same issue of determination of the income earned by the assessee from out of the transactions of bogus purchases amounting to ₹ 3,82,69,759/- made by the assessee from the two parties M/s. Shraddha Saburi Merchants Ltd. and M/s. Sai Kripa Metallic Tradecom Ltd., these issues being inter connected and arising from the grounds raised by both sides in respect of the same set of transactions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee s income from commission @ 0.17% of purchases should be accepted as such and not at 5% determined by the CIT(Appeals), the Ld. Departmental Representative submitted that, without prejudice to Revenue s stand that the entire bogus purchases amounting to ₹ 3,82,69,759/- made by the assessee from the aforesaid two parties ought to be brought to tax in the assessee s hands as held by the Assessing Officer, the claim of the Ld. Representative for the assessee is contradictory as before the CIT(Appeals) the claim was that commission in such type of business would be 1 to 2% thereof. In these circumstances, since the averments of the assessee are bereft of any corroborative material evidence, the assessee s appeal ought to be dismissed. 5.6.1 We have heard the rival contentions, in respect of both the assessee s as well as Revenue s cross appeals, and perused and carefully considered the material on record. The facts of the matter, from the assessment to the first appellate proceedings, leading to the present appeal have been briefly narrated at para 2.1 to 3.2 of this order (supra). On a perusal of the impugned order, we find that the CIT(Appeals) has made a detailed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the submissions of the AR. I have also gone through the various remand reports and its rebuttals including the various details filed by the AR and the report of DDIT(Inv)Unit-V, Mumbai as discussed above. I have also gone through the various statements recorded by the AO during the remand proceedings i.e. statements of Shri Prakash J. Shah dated 21.07.2011 and statements of Shri Raju Bhansali Shri Chanduprakash Bhansali dated 19.07.2011 and the affidavit of Shri Prakash J. Shah dated 06.01.2012 as well as the affidavits of Shri Raju Bhansali Shri Chanduprakash Bhansali dated 14.05.2010 and the affidavit of Shri Pravin T. Agarwal dated 19.05.2010 as discussed above. Besides, I have also gone through the statement of Shri Prakash J. Shah partner of the appellant firm recorded during the course of survey u/s 133A of the Act as well as the statement of Shri Pravin T. Agarwal recorded u/s 131 of the Act dated 24.03.2008 and his written confession submitted vide letter dated 02.11.2007 before the ADIT (Inv). On perusal thereof I find the appellant has shown purchases of alluminium and copper rods of ₹ 3,82,69,759/- from M/s Shraddha Saburi Merchants Ltd and M/s Sai Kripa Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter was remanded to the AO on various occasions as discussed above. The matter was also referred to the concerned DDIT(Inv) for making further enquiries and investigations as discussed above. However, in spite thereof no fruitful or logical details and evidences are brought on record so as to hold that the entire purchases shown by the appellant from M/s Shraddha Saburi Merchants Ltd and M/s Sai Kripa Metallic Tradecom Ltd are to be considered as its unaccounted or unexplained income. The AO herself vide para-4 of her remand report dated 19.09.2011 has confirmed the submissions of the appellant that the source of payments made to M/s Shraddha Saburi Merchants Ltd and M/s Sai Kripa Metallic Tradecom Ltd through banking channels are originating out of the payments received from M/s D.C. Metal and M/s Rajasthan Aluminum by the appellant. From the same as well as from the details and evidences brought on record it is seen that the appellant has been acting only as an conduit oran agent to facilitate the bogus transactions of purchases and sale of aluminum sheets and copper wires rods taken place between M/s Shraddha Saburi Merchants Ltd and Mls Sai Kripa Metallic Tradecom Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash withdrawn from the bank accounts of M/s.Shraddha Saburi Merchants Ltd and M/s Sai Kripa Metallic Tradecom Ltd were given to the appellant. Therefore, it is seen that no such material is sold by the appellant to M/s. D.C. Metals and M/s Rajasthan Aluminum except for the issue of bogus bills in consonance with the movement of funds as discussed above. No material or evidence is produced by the AO or by the DDIT that these goods were procured by the appellant from grey market in cash and thereafter sold to M/s D.C. Metals and M/s Rajasthan Aluminum. On the other hand from the affidavits of the Shri Chandra Prakash Bhansali and Raju Bhansali dated 14.05.2010, the material purchased is directly delivered by the concerned manufacturers or suppliers to their godowns without any involvement of the appellant. It was also stated that these suppliers I manufacturers are having their godowns situated outside Mumbai, Check Naka, where M/s D C Metals and Rajasthan Alluminium are also having their godowns I warehouses. On account of these facts and evidences placed on record, I find sufficient merits in the submissions of the AR that the appellant has only facilitated the concerned purchase a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Shri Pravin T Agarwal and allowing him to be cross-examined by the appellant, so as to ascertain the correct facts of the case in hand. In the absence of such a statement and further corroborative documentary evidences brought on record, to my considered opinion, it is unjustified on the part of the AO to hold that the entire purchases shown by the appellant are to be considered as its unexplained income. It is patently incorrect conclusion on the part of the AO that the purchases are not genuine but at the same time the corresponding sales shown are genuine sales. If the purchases are bogus without proving that the appellant has purchased the same items in grey market in cash it cannot be held that the corresponding sales are genuine. However, nothing is brought on record either by the AO or by the DDIT even though the matter was specifically remanded for this purpose. Therefore, I find sufficient merits in the submissions of the AR that if the purchases are found bogus, the corresponding sales of the same item as shown by the appellant in its books of accounts cannot be considered as genuine sales. Nevertheless, no details of whatsoever nature about the parties from whom, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in these accommodation bills issued. Further, the appellant has no facility or warehousing to store the material purchased, which is admitted by the partners of M/s.Rajasthan Alluminium and M/s. D.C. Metals in their affidavits dated 14-05-2012, contending that the material purchased was directly delivered by manufacturers / suppliers in their own delivery vans / handcarts from their godowns situated outside Mumbai Check Naka, where M/s. D.C. Metals/ M/s. Rajasthan Alluminium were also having their godowns /warehousing facilities. Further, it is also noticed that the entire amount of Maharashtra-VAT on these transactions is paid by M/s DC Metals / M/s. Rajasthan Alluminium. 2.4.3. Therefore, on account of these facts available in the case of the appellant, as discussed above and further in the absence of any new facts and evidences brought on record by the AO as well as in the absence of any corroborative evidences placed on record in spite of remanding the matter on various occasions, I find it cannot be held that the entire purchases made by the appellant are out of Its unaccounted sources or the same is to be considered as its unexplained income. Even otherwise, even if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods produced and sold by them. This may also be one of the factors due to which the seller may be willing to charge lower rates for unaccounted goods as compared to accounted for goods. The AR has not filed the details of commission earned on this bogus transaction separately. However, from the P L account it is seen that it has shown total commission of ₹ 85,948.70 on total purchases of ₹ 5,0l,02,850/- which is inclusive of the bogus sales made to M/s. Rajasthan Alluminium and M/s. D.C. Metals. The same works out to 0.17% of the total purchases. The bogus purchases made from M/s. Shraddha Saburi Merchants Ltd. and M/s. Sai Kripa Metallic Tradecom Ltd is of ₹ 3,82,69,759/- for the relevant accounting year. The AR has consistently argued that the rate of commission allowed in this line of business normally does not exceed more than 1% to 2% of the sale value. However, to my considered opinion the same cannot be taken on its face value, particularly in view of the lack of evidences and the clandestine nature of business carried out by the appellant. And also considering to the fact that the appellant itself has shown such commission of 0.17%( as discussed above) wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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