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TMI Blog2017 (5) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... ile the document seized during the search speaks loudly of commission to the tune of 1.5% to 2.45% being paid on these accommodation entries. In-any case , learned CIT(A) has factored for expenses to be allowed for meeting various expenses which are likely to had been incurred by the assessee in undertaking these clandestine activities of being facilitator of accommodation entries. We donot find any infirmity in the appellate order of the learned CIT(A) which we are inclined to affirm/sustain. The assessee fails in this appeal. - I.T.A. No.3653/Mum/2016, I.T.A. No.3654/Mum/2016, & I.T.A. No.3655/Mum/2016 - - - Dated:- 11-5-2017 - SHRI C.N. PRASAD, JUDICIAL MEMBER, AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Assessee : Shri Prakash G. Jhunjhunwala and Shri Abhishek Jhunjhunwala For The Revenue : Shri Rahul Raman, CIT-DR ORDER PER RAMIT KOCHAR, Accountant Member These three appeals by the assessee are directed against common order dated 22nd September, 2015 passed by the learned Commissioner of Income Tax(Appeals)- 48, Mumbai (Hereinafter called the CIT (A) ) pertaining to the assessment year s 2009-10 to 2011-12. Since identical issues are involved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee averred and deposed in the said affidavit that the appeal could not be filed in time as the assessee was terribly disturbed due to serious medical illness of his father Sh. Lekraj Singhvi who is residing in Jaipur. In his above stated affidavit dated 07-03-2017 filed by the assessee, it is stated that his father suffered a brain stroke resulting into loss of eye-vision and paralysis and was hospitalized several times. It is deposed in the said affidavit that due to the above compelling circumstances he had to go to Jaipur frequently for a substantial period of time to attend his father s illness. Thereafter, his father suffered from lung cancer and due to all these problems, the assessee could not concentrate on his business and other tax matters , are the deposition and averments of the assessee in the said affidavit dated 07-03-2017. The assessee has also placed on record documents by way of hospital and doctor records concerning medical illness of his father which are placed in file. The affidavit along with other hospital/medical records are filed by the assessee and is placed on record vide page No. 1 to 20 in file. Thus, the assessee prayed that the delay of 167 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arate adjudication by us. We order accordingly. 6. With respect to the ground No. 3 and 4, the brief facts of the case are that the assessee was searched u/s 132 of the Act on 17th February, 2012 by the DDIT (Inv.), Bhavnagar along with ship breakers group of Bhavnagar viz Bansal sub-group and Lelea sub-group. The DDIT (Inv.), Bhavnagar recorded the statement of the assessee u/s 131 of the Act and thereafter on various dates , whereby the assessee had admitted that he used to receive cash from Komalkant Sharma and in turn provide RTGS/cheque entries to Leela subgroup and Bansal group in the guise of share capital and share premium from fictitious companies. In his statement , he also stated that Mr Tejash J. Shah ran the fictitious companies and engaged few persons of no means as Directors of these companies. The assessee further admitted that he received 0.1% as commission for arranging bogus entries by way of cheque against the cash for Bansal Group and Leela Group. In his statement recorded on oath u/s 131 of the Act on 13th March, 2012, Sh Tejash J. Shah had admitted that he had floated various companies for this scheme of conversion of cash into cheque through these bogu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angement of movement of unaccounted cash as admitted by Shri Tejash J Shah and assessee is in the following style:- Generation of unaccounted cash income from sale of ship-breaking material at Alang ship breaking yard collection and deposition of cash at office premises at Bhavnagar depositing the cash at Anagdia office at Bhavnagar Transfer of cash to Anagdia office at Mumbai Providing cash amount to Rahul Singhvi/Tejash Shah at Mumbai for conversion of cash into cheque in the guise of share capital/share premium Deposition of cheques through fictitious companies in the bank account of Leela sub-group concerns. It was also admitted by the assessee and Shri Tejash J Shah that the cash received from Leela and Bansal group was reinvested in their group companies as share capital after routing the same through fictitious companies of Shri Tejas J. Shah and in many cases the cash was deposited in some individual shroff s account and the same was routed through few layers of other bank accounts and ultimately the money was transferred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee as a finance broker had arranged funds to certain parties. His role was merely to introduce the investor (having funds) and /or brokers of such investors with the companies who were interested in obtaining share capital money from such investor parties. Such transactions had been routed mainly through companies managed, operated and floated by Mr. Tejas Shah and others. The assessee, personally, did not handle the cash funds as cash payments were made directly by and between the parties. The recipient company paid the gross brokerage ranging from 1.50% to 2.45% whose major portion was handed over to cheques issuing parties and their brokers and the assessee s share of brokerage was only @0.10% of the transacted value; The assessee had not taken any risk of funds and did not handle the movement of cash funds. Further, the assessee has not routed any transactions to /from his own bank accounts, thus the brokerage margin earned by the assessee is nominal of around 0.10% of the transaction value. It is only in exceptional cases, its staff Mr. Vilas Wankhede accompanied with either of the parties to ensure that the funds are handed over to proper hands. As the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee has received commission ranging from 1.5% to 2.45% on various transaction. The A.O. accordingly took the average of 2.45% and 1.5% as 2% on the total amount of ₹ 8,70,80,000/- which worked out to commission of ₹ 17,41,600/- which was added to the total income of the assessee by the AO vide assessment order dated 31-03-2014 u/s 153A r.w.s. 143(3) of the 1961 Act. 7. Aggrieved by the assessment order dated 31-03-2014 passed by the A.O. u/s 143(3) r.w.s. 153A of the 1961 Act, the assessee filed an appeal before the ld. CIT(A). 8.The assessee reiterated its submissions as were made before the AO and assailed the assessment order dated 31-03-2014 passed by the AO u/s 143(3) r.w.s. 153A of the 1961 Act. The ld. CIT(A) observed that the assessee has not disputed to have acted as middleman for arranging the accommodation entries of share capital and share premium for Bansal Group and Leela Group through fictitious companies floated by Mr Tejash J Shah. It was also observed by learned CIT(A) that the assessee has not disputed the quantum of transaction on which undisclosed commission income had been computed by the AO . The learned CIT(A) observed that o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sh. Tejash J. Shah. It was submitted that in the statement recorded u/s 131 of the Act, the assessee also admitted that he had received 0.10% commission for arranging the bogus entries by way of cheque against the cash for both the Bansal group and Leela group. In the statement recorded u/s 131, Shri Tejash J Shah also stated that the assessee is merely a middleman and normal commission earned in accommodation entries was of 0.30% to 0.40%. It is submitted that adequate opportunity was not provided to the assessee as the notices were issued at fag end on 14-03-2014 while the assessment was getting time barred on 31-03-2014. It was submitted that sufficient time was not granted by the AO to the assessee for filing return of income u/s 153A of the 1961 Act. It was submitted that sufficient time was not granted by the AO to reply to SCN which was issued on 26-03-2014 while the assessment was getting time barred on 31-03-2014. The A.O. adopted commission @2% on transaction amount of these accommodation entries while the ld. CIT(A) reduced the same to 1%. It is submitted that during course of search document marked as 101(pb/page1) was found and seized by Revenue which reflects commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash J Shah who was mastermind of these clandestine activities. 12. On being asked by Bench, it could not be brought on record both by learned counsel for the assessee as well by learned CIT-DR as to the fact whether Revenue has filed any appeal before the tribunal against the order of learned CIT(A) granting part relief to the assessee.The learned counsel for the assessee stated before the bench that no notice has been received from tribunal/Revenue intimating that appeal has been filed by Revenue against the appellate order of learned CIT(A). 13. We have considered rival contentions and also perused the material available on record including case laws relied upon by the rival parties. We have observed that assessee is a Chartered Accountant by profession and having income from profession and other sources. The assessee was searched u/s 132 of the Act on 17th February, 2012 by the DDIT (Inv.), Bhavnagar along with ship breakers group of Bhavnagar viz. Bansal sub-group and Lelea sub-group. The DDIT (Inv.), Bhavnagar recorded the statement of the assessee u/s 131 of the Act and thereafter on various dates , whereby the assessee had admitted that he used to receive cash from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that this practice of providing cheques-inexchange- of cash amount is prevalent across Mumbai and the place Kalbadevi in Mumbai is hub of such financial transactions. Several persons based in Kalbadevi area of Mumbai are doing business of providing cheques in exchange of cash amount. It is also submitted that this is a voluminous nature of cheque-cash transfer business done on daily basis and several parties bank accounts/cheques/share transfer forms/stamp pads/signatures are used for multi-layering. Sir in this business brokerage/commission income @0.30-0.40 paisa per hundred rupees (Rs. 30,000 ₹ 40,000 per Crore) is earned/given on every transfer of cash/cheque amount. The modus operandi for this arrangement of movement of unaccounted cash as admitted by Shri Tejash J Shah and assessee is in the following style:- Generation of unaccounted cash income from sale of ship-breaking material at Alang ship breaking yard collection and deposition of cash at office premises at Bhavnagar depositing the cash at Anagdia office at Bhavnagar Transfer of cash to Anagdia office at Mumbai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the learned CIT(A) while partly allowing the relief to the assessee . Thus, the assessee was granted part relief by the learned CIT(A) . It is not brought on record by both the rival parties that Revenue has filed any appeal against the orders of learned CIT(A) granting part relief to the assessee. The activities of arranging accommodation entries which are hawala transactions in various modes and forms to generate or convert black money and/or evasion of taxes is rampant in Indian Economy which is destroying the economic fabric of the country by creating a parallel economy . Several laudable measures are taken by Government of India to curb this menace which included the latest move of the GOI to demonetize currency notes of ₹ 500 and ₹ 1000 on 8th November 2016. Such types of clandestine activities of engaging in hawala/accommodation entries are hampering national growth and prosperity and needs to be discouraged at all levels. Conspiracies are hatched in secrecy and executed in dark. Several persons form a chain in the ring of conspiracy to convert or generate black money through accommodation entries with objective to defraud revenue to evade taxes which are o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preceding para s which we have gone through and we are afraid that said case laws cannot come to rescue of the assessee as it is purely a factual matter and every case is to be decided on facts and circumstances of the said case. In the instant case there is a finding supported by document seized during the searches conducted by Revenue u/s 132(1) wherein it is mentioned that commission ranging from 1.5%- 2.45% on transaction value is paid on accommodation entries . The assessee has admitted to be involved in these clandestine activities. The assessee may be a part of the chain of persons who are beneficiary of these clandestine activities but since the document is seized from the assessee , the assessee has to demonstrate that the entire income as is reflected in the seized document marked as 101 ( pb/page 1) is brought to tax albeit in the hands of other persons who were part of common conspiracy in these clandestine activities and the entire income suffered taxation. No such cogent material and evidences has been brought on record by the assessee. Mere statement recorded of Sh. Tejas J Shah u/s 131 is not sufficient as it is merely material obtained during search, while the doc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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