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TMI Blog2017 (10) TMI 1094X X X X Extracts X X X X X X X X Extracts X X X X ..... er to the file of the Assessing Officer for quantification of the additions in the case of the assessee in view of our observations made above. The assessee shall be afforded reasonable opportunity of being heard. Accordingly, grounds related to the addition of ₹ 126,28,85,990/- are allowed partly for statistical purposes. Assessment u/s 68 - Held that:- The assessee has not discharged its onus laid down under section 68 of the Act of explaining the nature and source of the entries either before the lower authorities or before us. The assessee has not furnished any confirmation from the parties as well as not provided there complete addresses. In view of the failure of the assessee to discharge its onus, we do not find any error in the finding of the learned CIT-(A) in confirming the additions - ITA Nos. 590 & 591/Del/2017 - - - Dated:- 25-10-2017 - SH. AMIT SHUKLA, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For The Appellant : Sh. Ruches Sinha, Adv. For The Respondent : Smt. Aparna Karan, CIT(DR) ORDER PER O.P. KANT, A.M.: These two appeals by the assessee are directed against two separate orders dated 18/11/2006 of the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns were found to be recorded in code word or abbreviated form. In statement recorded during the survey proceedings on 11/04/2011, the assessee did not disclose the modus operandi of the transactions recorded in pocket diaries, however, during the statement recorded under section 131 of the Act before the DDIT, Investigation, New Delhi on 20/05/2011, he admitted the fact that he might have arranged accommodation entries for the persons whose names were appearing in the pocket diaries. The assessee also admitted that the digits mentioned against the code-names are in lakhs of Rupees. The assessee did not provide name and address of the persons whose names were written in the code-word. The assessee stated that the client coming to his office for taking funds never provided exact name and address. 2.4 The assessee filed return of income for the assessment year under consideration on 30/03/2013 declaring total income of his ₹ 1,79,600/-. In the return of income filed, assessee did not disclose any commission income on account of providing or arranging accommodation entries on commission basis. The case was selected for scrutiny and notice under section 143(2) of the Act was is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are extracted as under: ( v) In the appellate proceedings, AR has stated that the A.O. has not correctly determined the total of undisclosed entries/ transactions recorded in the impounded diaries, for the following reasons:- ( a) The AO has not considered the + and signs, while calculating the amount of addition. It was duly stated at the time of recording of statement that, + denotes incoming of funds and denotes outgoing of funds. However, A.O. has wrongly made additions by adding + , as well as signs. ( b) There are calculation errors in Annexure-1, where the A.O. has added the figures brought forward and carried forward twice and the same is leading to cascading effect. ( c) For Annexure A-l, tax can be charged only at entry or exit level, since in order to give genuine color to an entry for alleged transaction, the same is routed via various layers, however commission is charged at one point of time only. ( d) Annexure A-4 is a rough working for advising these 3 persons for investment purposes, wherein assessee has recorded figure of ₹ 10,00,000/- each in the name of Ram Babu Gupta, Om Prakash Gupt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , on different dates are clearly different transactions, which are clearly noted for each date and appellant failed to substantiate that payments are made, out of that receipts noted on that date. It is also clear that no such income from commission on account of providing alleged accommodation entries, has been disclosed in the return of income for any of the assessment years. From the above, it is clear that the A.O. has not accepted but observed that assessee appears to have been providing accommodation entry on which commission @ 4.5% and 3.5% have been charged. However, in the statement and submission of the appellant, same has been claimed to have been charged @ 0.10, but no such alleged income from commission has been shown by the appellant suo moto in the return of income nor during the assessment proceedings. It is also clear that in the assessment proceedings no explanation and details were furnished for such claim and same is the position in the appellate proceedings. Therefore, it is clear that the appellant failed to substantiate its claim, since no such income has been shown by the appellant in the return of income nor any computation was provided to quantify su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /transactions appearing in the pocket diaries and lose papers in letter dated 15/03/2015 but which was not considered by the Assessing Officer. The Ld. counsel submitted that before the learned CIT-(A) the assessee raised issue of factual inaccuracies and mathematical errors in the addition of unexplained income of ₹ 126,28,55,990/- made by the Assessing Officer. 3.1 The Ld. counsel referred to the statement of the assessee made before the DDIT (Inv) and submitted that symbol + appearing before the codename of the parties represented incoming of funds and the symbol represented outgoing of funds. He submitted that the Assessing Officer for computing the addition of unexplained income has added both the amount which represented incoming of funds and outgoing of funds. He further submitted that the Assessing Officer has added certain cheque numbers mentioned in the diary as the amount of unexplained income. He further submitted that the Assessing Officer has added figures, which do not even pertain to the year under consideration. The learned counsel submitted that the assessee filed analysis and calculation of the entries in Annexure A-1 before the learned CIT-(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded on 20/05/2011 by the DDIT, the assessee in response to question No. 10 admitted that the amount of transactions were recorded in code form, wherein digit stands for lakhs. The relevant question and answer are reproduced as under: Q 10. I am showing you Page No. 3 of Annexure A-2 which is having some name codes in with date and some digits against the code name. What does it stands? A 10. These are transactions made through different persons which are recommended by different people of my friends circle. The digits against the code means are in fact such as on 13/09/2010 AKR5 stands for 5 lacs. The + stands for incoming of the funds and stands for outgoing of the funds. 3.8 Before us, the learned counsel of assessee stated that the assessee had explained all the entries and transaction before the Assessing Officer. 3.9 We do not agree with the above contention of the Ld. counsel. During the statement recorded by the DDIT (Investigation), the assessee only explained that digit of amount mentioned represented lakhs of rupees and symbol + represented incoming of fund and symbol - represented outgoing of funds. No name and address or any other informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not shown any evidence that he complied the above notice issued by the Assessing Officer, (v) Page 100 of the paper book is a notice under section 142(1) dated 30/01/2015 asking the assessee to produce information/documents/books of account as called for vide notice under section 142(1) dated 08/01/2014 and summon under section 131 dated 30/01/2014, on or before 10/02/2015. In response to the said notice, the assessee furnished a reply on 19/02/2015, in which particularly with reference to the entries in pages of the pocket diaries and loose papers inventorised, it was stated that no such pages exist for which explanation could be given, (vi) the Assessing Officer issued a final show cause notice on 11/03/2015 quantifying the unexplained income appearing in the entries/transactions recorded in pocket diaries and loose papers. This notice was served on the assessee on 12/03/2015. The Assessing Officer in para-4.1 of the assessment order has mentioned that on the date fixed for hearing none attended on behalf of the assessee nor and written communication in this regard had been received in the receipt counter of his office. The Ld. counsel of the assessee has stated before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and source of the fund. Though the assessee has explained the nature of the funds, however, the source of the fund has not been explained. 3.13 Thus, the contention of the Ld. counsel of the assessee that only commission income from the entries/transactions recorded should be assessed in the hands of the assessee, is rejected. 3.14 Another contention, which was raised by the Ld. counsel without prejudice to the contention of the commission income, is that only one side, either incoming fund or outgoing fund should only be assessed in the hands of the assessee and not both. This contention of the learned counsel is somewhat convincing. If the Assessing Officer has made addition for the incoming fund recorded in the entries/transactions, than fund is available for explaining the outgoing of fund and no addition for outgoing fund could have been made under section 69A of the Act as unexplained investments. The Assessing Officer was required to make a date wise fund flows statement for the entire relevant period and examine whether the incoming fund was sufficient enough to explain the outgoing of funds. If at any point of time no incoming fund is available, to explain the outgo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erverse, as the same is passed without considering the submissions of the Appellant, taking a holistic view of the matter and the ratio's of various case laws which have been relied by the Appellant. 3. That the CIT(A) has erred in law confirming the initiation of the reassessment proceedings initiated U/s 147/148 of the Act without considering that in this case the reassessment order have not been passed as per the dictum laid down by the Hon'ble Supreme Court in case of GKN Driveshaft. 4. That the CIT(A) has erred in law confirming the initiation of the reassessment proceedings without considering that in this case no order disposing the objections of the Appellant against the initiation of the reassessment proceedings has been passed by the AO and the additions has been made even on the aspects which were not part of the reasons recorded for reopening. 5. That the CIT(A) has erred in law and on facts in confirming the addition of 1,50,18,37,419/- on account of entries allegedly appearing in Annexure A-2 and Annexure A-3, treating the same to be unexplained income of the Appellant. 6. That the CIT(A) has erred in law and on facts in confirming the ..... 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