9911796707
TMI Blog2018 (4) TMI 1120X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission @ 2% and VAT @ 4 % totaling to 6 % . Further, the assessee has not shown any payment of VAT charged by him from the parties to whom the accommodation entries were provided, therefore the sum of 4 % VAT along with the commission of 2 % is chargeable to tax as income of the assessee. It is apparent that if assessee provides the bogus bill of ₹ 100/- then assessee charges 4% VAT thereon and receives the consideration of ₹ 104/-. The assessee is required to pay ₹ 4 to the state govt towards the VAT collected by him. During the course of search, no such evidences were found where the assessee has paid VAT to the state govt and no evidences have been produced during the assessment proceedings. No infirmity in the order of the lower authorities in not allowing the credit for VAT. To justify the addition of commission income for accommodation entry @6% the ld Assessing Officer and ld CIT (A) has correctly assumed the rate of 2% commission for providing bogus purchase bills and 4% for the VAT. In view of this we reject the ground of the assessee for granting deduction of VAT from his income. We also find no reason to reduce the commission income from 2%. With ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate failed to furnish any documentary evidence to show that infra transactions between the firms were not business transactions through which accommodation entries were provided. ii. Ld CIT(A) has wrongly confirmed that appellant has failed to file evidence that VAT charged @4% from the beneficiaries on accommodation bills were actually refunded to the beneficiaries or deposited with the trade tax department. iii. Ld CIT(A) fell in error in confirming the upscaling the rate of commission artificially from 1.5% to 2%. iv. Ld CIT(A) omitted too consider that actual rate of commission, based upon seized documents, workout to 1.26% and after reducing the expenses, it works out to 0.76%. 3. That the ld CIT(A) in confirming addition of ₹ 100000/- on account of unexplained investment. 3. The assessee has raised the following grounds of appeal in ITA No. 3771/Del/2014 for the Assessment Year 2007-08:- 1. That the order passed by the ld CIT(A)-XXXII is bad in law and on facts. 2. That the ld CIT(A) has grossly earned in confirming the addition of ₹ 186766002/- because. i. Ld CIT(A) has wrongly held appellate failed to furnish an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the firms were not business transactions through which accommodation entries were provided. ii. Ld CIT(A) has wrongly confirmed that appellant has failed to file evidence that VAT charged @4% from the beneficiaries on accommodation bills were actually refunded to the beneficiaries or deposited with the trade tax department. iii. Ld CIT(A) fell in error in confirming the upscaling the rate of commission artificially from 1.5% to 2%. iv. Ld CIT(A) omitted too consider that actual rate of commission, based upon seized documents, workout to 1.26% and after reducing the expenses, it works out to 0.76%. 3. That the ld CIT(A) in confirming addition of ₹ 7300200/- on account of unexplained investment. 6. The assessee has raised the following grounds of appeal in ITA No. 3774/Del/2014 for the Assessment Year 2010-11:- 1. That the order passed by the ld CIT(A)-XXXII is bad in law and on facts. 2. That the ld CIT(A) has grossly earned in confirming the addition of ₹ 45280273/- because. i. Ld CIT(A) has wrongly held appellate failed to furnish any documentary evidence to show that infra transactions between the firms were not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eafter we will apply our decision for AY 2006-07 to the appeals of the assessee for other years. 9. Search u/s 132 was conducted on 26.04.2010 in case of M/s. Vaibhav Jain and Navneet Kumar Jain group of cases. The notice u/s 153A of the Act was issued on 11.04.2011 and return was filed on 25.10.2012 at ₹ 482642/-. During the course of search it was found that assessee is engaged in the business of providing accommodation entries through bogus purchase bills from the various firms and entities owned and controlled by the assessee. The statement of the assessee was recorded during the search u/s 132, post search proceedings and in assessment proceedings wherein they confirmed that they are providing accommodation entries through bogus purchase bills issued from various entities. The ld Assessing Officer recorded the whole modus operandi of the assessee in paragraph no. 3.2 onwards which is important to understand the facts of the case:- 3.2 Modus operandi of the entry operators was as follows Sh. Vaibhav Jain and Sh.Navneet Jain were operating this business in close association with other operators. Vaibhav Jain and Navneet Jam were operating number of proprietar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hanuman Trading Co. Anjali Sharma 12 Laxami Traders Anjali Sharma 13 Vansh Impex Anjali Sharma 14 Bhavani Trading Co. Daizy 15 Shivam Metal Steel Daizy 16 Heer Internaional Renu Sharma 17 Shree Krishna International Renu Sharma 18 Jagdamba Enterprises Subhra 19 Vinayak Traders Subhra 20 Jain Metal Co. Pawan Kumar 21 Mahaveer Trading Co. Pawan Kumar 22 Gopal Trading Company Sanjay Gupta 23 Tirupati Tradex Pawan Kumar 24 Samayak Trade INC Sanjay Gupta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d your family members are interested. Ans. I am proprietor of firm M/s Vee Kay International- A-94/2, Wazirpur Inal. Area, New Delhi my father Sh. Navneet Jain is proprietor of M/s Navneet Kumar Jain Sons- A-94/2, Wazirpur Indl. Area, New Delhi. Q4. Please provide the details of all the bank accounts of M/s Veekay International. Ans. At present/there is only one bank of the concern in Karur Vysya Bank, Lav/rence Road, New Delhi- A/c No. 4102. Prior to this, the firm also had account with Punjab National Bank, New Delhi Rohtak Road, New Delhi A/c No. 51887 and with ABN Amro Bank, Rajouri Garden, New Delhi. Old branch name was Hansalya Building, Barakhamba Road, New Delhi. Account No. of ABN Amro Bank Branch, are 941803, 1313318 and 1453954. Q5 am showing you the copies of bank statement of M/s Vee Kay International A-94/2, Wazirpur Ind. Area, New Delhi A/c no.941803, 1313318 and 1453954 having customer ID 1037898 in ABN Amro Bank Rajouri Garden branch which total transaction of ₹ 6.82,crofflsftave been made-between April 2004 to Sep 2008. You are requested to explain the. nature of transaction in the bank statement shown. Ans. I have carefully s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been mostly with these concern. These transfer entries were made to facilitate high value of cash withdrawal for the purpose of returning back to the beneficiaries the amount in cash in lieu cheques from them. Q9. Please give the complete name and address of the persons/concerns alongwith the name and address of all its proprietors as stated by you to be engaged in the business of issuing paper bills/ accommodation bills. You are also requested- to state your relation with and role in these concerns. Ans. The name of the concern are as under: 1. M/s Heer International 2. M/s Supremo Trading Co. 3. Shree Balaji Trading Co. 4. M/s Shivam Metal Steel Traders 5. M/s Ramji Traders 6. M/s Saraswati Trading Co. 7. M/s vardhman Enterprises 8. M/s Hanuman Trading Co. 9. M/s Shubham Enterprises 10. M/s My Fair International 11 M/s Shree Krishna International 12. M.S Vansh Impex 13. Delhi Steel Agencies 14. Om Sai International 15. M/s Metal and Steel India 16. Shree Krishna Traders 17. M/s Samayak Traders 18. M/s Gopal Trading Co. 19. M/s Rajasthan Metal 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rur Vysya Bank and PAB New Rohtak Road, New Delhi. In whish the name and address of firm and its proprietor are given which are as under: Prop A/c 1. M/s Vardhman Himanshi Enterprises Himanshi Arora 4102-135-270 Karur Vysya Bank Lawrence Road Karur Vysya Bank Lawrence Road Karur Vysya Bank Lawrence Road 2. M/s. Navneet Kumar Jain sons Shri Navnnet Kumar Jain 4102-115-17787 3. 3M/s Om Sai Internationa Sai Himanshi Arora 4102-115-356 4. M/s. Vansh Impex Anjali Sharma 4102-115-12496 5. M/s Vardhamn Enterprises Raj Kumar Arora 4102-115-12496 6. M/s Hanuman Trading Co. Ms Neha 4102-115-13714 7. M/s. Vishnu Fabricator V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-115-16854 27. M/s. Subham Enterprises Sanjay Gupta 4102-135-268 28. Vee Vee Enterprise Girdhari lal Puri 1445459 29. M/s. Vee Vee Enterprise Girdhari lal Puri 1300390 30 Ess Mart Enterprises Raj Kumar 142868T ABN.. Amro bank 31 Shree Balaji Traders Himashi Arora 1291794 ABN Amro bank 32 Navneet Kumar Jain Sons Navneet Kumar Jain 1313320 ABN Amro bank 33 Vee Kay International Vaibhav Jain 1313318 ABN Amro bank 34 Samayak Trade INC * Sanjay 1429368 ABN Amro bank 35 Navneet Kumar Jain Sons, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rietor mentioned against the respective concern under your consideration your discussion and supervision. You are also requested that all *he above mentioned bank accounts were used by you or by the proprietor under your control and direction for the purpose of providing accommodation entries for purchases by beneficiaries. Ans. I have carefully gone through the above mentioned list of concern and their proprietor and bank accounts. I have also carefully gone through the account opening forms of all the bank accounts of list. I confirm that all the proprietors are known to me and have been engaged in business of providing accommodation entries for purchases/ sale of paper bills with me. I also confirm that in the operation of above mentioned bank account have work under my control and direction. I also confirm that the above mentioned bank account has been used for providing accommodation entries for purchases and issue of paper bills various beneficiaries. Q12. As you have admitted that, the above mentioned bank account either used you or under your direction or control, you are requested to produce the copies of the bills issued by above mentioned concern and details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of income? Ans. I am a commission agent, my main activity is. to provide entries to the different parties. Currently, l am trading in utensils of steels. Q8. Kindly explain in brief the procedure of your business of commission and giving entries to acommodates to the parties. Ans. We were accommodation entries of sale to the parties, in response to the entries parties issues a cheque in our company name. After the clearance of cheques we deduct part of our commission i.e.0 .5% to 1% and then again we return back to the balance money in the form of cheque/ cash to the same party. Q9. Since how long you are doing the work of accommodation entries? And z so give none of your concern in which you and your father involved trough which these accommodation entries are facilitated. Ans. I aiongwith my father through our various concerns, I am doing work of accommodation entries for the four- five years, following are the names of concerns in which me and my father are involved for providing accommodation entries. 1. Ess Mart Enterprises 2. Delhi Steel Agency 3. Gopal Trading Co. 4. Hanuman Trading Co. 5. Metal Steel (India) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her of the assesse, on 16.06.2010 which is as under:- Statement dated 16.06.2010 of Sh. Navneet Kumar Jain Q 11. Please state the nature of business activity of these concerns. Ans. As I have already stated in my statement these concerns are run by my son Shri Vaibhav Jain for issuing bogus bill without actual delivery of goods. My son Shri Vaibhav Jain take cheques from the parties against the bills issued and return the cash to them after deducting his commission. Q13. In your statement you have stated that you am the proprietor of M/s Navneet Kuamr Jain and sons. Whereas your son Sh Vaibhav Jain in his statement has admitted that M/s Navneet Kumar Jain and Sons was engaged in providing Bogus Bills under his control. Whar do you say in this regard. Ans. Yes I am the proprietor of M/s Navneet Kumai Jain and Sons. But the transactions in this forms was controlled by Shri Vaibh Jain. It is also true that the firm was engaged in providing bogus/ papers bills actual delivery of goods. 14. As you have admitted that you are the proprietor of M/s Navneet Kumar Jain and sons buy this concerns is controlled by Shu Vaibhav jain. Please state who operated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is annexure to it has and been issued to me as I have never applied for any PAN card. I want to clear that this account v/as opened by Sh. Navneet Kumar Jain S/o Recti Saram Jain r/o B-8/15-16 sector-11, Rohini New Delhi. Having office at A.94/2, Wazirpur Industrial Area New Delhi, by taking my signature and identify documents. Q10. Please state if you have not opened this account than how your documents and -the signed account opening form reached tosh. Navneet Kumar Jain as alleged by you have opened the account. Ans. Sh. Navneet Kumar Jain is known to one for 4(four) years He approached me and offered me son incentive in form of ₹ 500/- per month and ask me for my signature on the account opening form and copies of immediately documents for opening of bank account in my name. I admit that 1 was av/are that the bank a/s was opened in my name but for what purpose and transaction, the acclaim was used, 1 v/as never aware of that and never brought to my notice by SH. Navneet Kumar Jain. Q 11 Please state as your signature is an the designated of account opening form, how Sh. Navneet Kumar Jain make transaction in this account. Ans. Initially, Sh. Nav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k accounts in the name of his employees and other known, person like; met-and my son Sh. Tarun Kumar in good faith I had signed certain documents but how Sh. Navneet Kumar Jain used it. I don t know I also have no knowledge or nay interest in the bank a/c operator by Sh. Navneet Kumar Jain in my name. Q4.' Please state whether you are aware that Sh. Navneet Kumar Jain is operating the above mentioned or any other bank accounts in your name. Ans. I was aware of one bank account a/c no. 4102155000015291 M/s Supremo Trading Co. in karur Vysya Bank, Lawrence Road, New Delhi. In which I have been shown as proprietor this bank a/c was opened by Sh. Navneet Kumar Jain by offering me monitoring initiate of ₹ 500/- per month. Except this account, I was not aware of any other account operated by Sh. Navneet Kumar Jain in rny name as proprietor of various concern. Q5. Please state, if you were not aware the other bank accounts on them how your photo and document as well as are present in the account opening form of the above mentioned bank accounts. Ans. As I have already stated that Sh, Navneet Kumar Jain had taken my documents, photocopies and signature on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the turnover of inter firms transfer and transaction of saving bank accounts the total turnover of all the firms is ₹ 662.13 crores. He was requested to justify his submission with evidence that the inter unit transfer between the firms as claimed by him is not part of turnover. For deciding the income of the assessee on account of business of bogus entry operation by the 37 firms, three key factus which are to be decided are as under:- The ownership and control of the firms. (ii) The quantum of turnover. (iii) The rate of commission to be applied. 3.7 Ownership and control of the firms 3.7.1 The assessee in its pre-search statements, during search proceedings post search proceedings has accepted the ownership of all 37 proprietorship concerns as mentioned in para 3.3 above. In its submissions the assessee has accepted the control and management of all the firms. In statements recorded u/s 132(4) and 131 also it has been admitted that control and management of these firms lies with Sh. Vaibhav Jain, the assessee was confronted on the issue. The assessee s submission on the issue are reproduced as under:- 3.7.1.1 Reply Dated 08.03.2013 Tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revised lower turnover is not being disputed qua the earlier turnover, based on which, additional income was returned even prior to the date of search. 3.7.1.6 Reply dated 21.03.201 In this regard it is submitted that the above observation is based on factual submission and has been borne brought out n number of times before the investigation wing, prior to the search, during the course of search, during the post search investigations and also during the course of assessment proceedings, including but not limited to even the deposition of the assessee on oath before your goodself that he was engaged in the business of the providing accommodation/ paper bills. 3.7.1.7 In the last part of the instant point, your goodself has observed that the assessee has accepted the control management of these firms (37). In this regard it is submitted that the- assessee has no where stated that the control management of these firms vested' with him. Your goodself would appreciate that the assessee has merely contended that the turnover is being determined for the limited and sole purpose of determining the actual turnover of business which the assessee referred to these 37 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had used for providing accommodation entries. 3.7.2.7 This maze of thirty seven firms used because the assessee cannot withdraw more than the specified limit in particular day from bank secondly this layering and maze of thirty seven firm were used to hide the VAT collected from the beneficiaries without depositing with the appropriate VAT authorities. There by the assessee were earning extra money on account of VAT collected from the beneficiaries which was neither deposited with the appropriate statutory VAT authorities nor it was refunded to the beneficiaries. 3.8 Quantum of turnover 3.8.1 The assessee was confronted on the issue. The assessee submission on the issue are reproduce as under 3.8.1.2 Reply filed on 08.03.2013 that we have directed most respectfully that while determining the alleged turnover at ₹ 925,05,65,545/-, your goodself have omitted to consider the following facts:- a) That turnover has been estimated by taking the aggregate credits of the aggregate bank accounts of each of the accommodation firm. b) That the aggregate credits can't be said to be the turnover of the assessee, since the transfer entries/mutual en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .03.2013 That the herculious task of typing, identifying and lastly reconciling the credits of 37 firms, that is of 7 different years involving 100 bank accounts were completed by the assessee within a short span of 5 days i.e. between 03/2013 to 10/03/2013. It is submitted that the reconciliation of firm-wise, bank account wise and year wise reconciliation between the turnover as per revenue and as per assessee was submitted as part of reply dated 1 1/03/2013 only to find out that the assessee is being show cause again as to why the reconciled turnover as per the assessee version be not disregarded. Sir in this submission showing the detailed reconciliation, it has been contended that the inter party transfer between the accommodating firms, cheque bouncing are to be excluded out of the alleged turnover as per revenue, which is purely based, in the earnest humble of the assessee, on tire aggregate of bank credits as reflected in the bank statements. 3.8.1.7 Sir, while the above facts can be verified even from proprietors exercise the powers relating to summons, discovery and production availed would be appreciated that around 99.99% of these inter-parties transfer are multip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Anjali Sharma 4102155000083951 Ms . Himanshi Arora 4102155000081685 Ms . Himanshi Arora 4102155000083937 Ms . Neha Rani 4102155000088221 Ms . Neha Rani 4102155000082138 Sh . Pitamhor Jhn ' 4102155000083994 Ms . Poonam Sharma 4102155000082254 Ms . Renu Sharma 4102155000082621 Sh . Santosh 4102155000083982 Shree Shyam Traders 4102135000000185 Shree Balaji Trading Co . 1295020 The submission of the assessee was duly considered and is not acceptable. The aforesaid persons in their statements have categorically denied stating that all the transaction in the aforesaid accounts were controlled an operated by Sh. Vaibhav jain. In view of the aforesaid discussion the submission of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is submitted that assessee had already admitted vide statement on oath dated 26.01.2010 the fact that he is an entry provider and used to earn am d Yon from this business. It is submitted that, as informed to us, and as per the business practice followed by assessee, lie used to receive commission at the time when the entire bill amount was paid back to the entry receiver and as such at the time of final payment wrt the bill, payment was made after deducting due commission. It is further submitted that rate of commission varies with concerns and was between 50 paisa to 100 paisa per hundred rupee, as already a nit: b before search during search, post search investigation and also in assessment proceedings u/s 153A of the Act consistently. 3.9.1.3 It is submitted, and as staled in above Para also, wrt the entries specifically asked for justification by your goodself, commission was received only after full settlement of accommodation bill amount and as such commission shown as received on a particular page of Annexure A-3 represents commission received on total amount of entry provided to that respective concern instead of treating it as commission received on amount reflected on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has charged commission up to 3.85%. 3.9.2.2 As per the assessee own submission he destroys its books of account after work is over. In this circumstances the department will have to estimate the commission on the basis of material available with the department. 3.9.2.3 The seized accommodation bills indicates that the assessee has charged VAT @4% from the beneficiaries. The assessee has been unable to prove that the VAT charged on accommodation bills , have been refunded to the beneficiaries. 3.9.2.4 The assessee is using its tactics to route ns transactions through short duration firms so that trade tax department is unable to trace out the defaulters. 3.9.2.5 The assessee has not given any evidence regarding deposit of VAT charged on the accommodation entry bills with the trade tax departments. Therefore, it is be being held that the VAT charged on the accommodation entry bills has been retained by the assessee. 3.9.2.6 In view of the aforesaid facts and discussion the average rate of commission charge on the basis of annexure A-3 has been done which is reproduced as under: A B C D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Metal Ind 244080 Jain'Metal Ind 1.50- E-3 A-3 113 11.03.2010 13460 Global Overseas 1000000 Global Overseas 1.35 E A-3 113 11.03.2010 488 Victor Rubber 25578 Victor Rubber 1.91 E-3 A-3 113 11.03.2010 2880 Gautam Sales 149760 Gautam Sales 1.92 E-3 A-3 107 08.03.2010 22500 Ashna Overseas 1500000 Ashna Overseas 1.50 E-3 A-3 103 05.03.2010 2331 Victor Rubber 121214 Vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05.04.2010 7952 Garg Traders 530145 Garg Traders 1.50 E3 ' / A-4 12 05.04.2010 10001 Bharat Agencies 533450 Bharat Agencies 1.87 E/ A-4 12 05.04.2010 3357 Sen Traders 223808 Sen Traders 1.50 E-3 A-4 12 05.04.2010 7952 Garg Traders 530145 Garg Traders 1.50 E-3 ' A-4 , 12 05.04.2010 10001 Bharat Agencies 533450 Bharat Agencies 1.87 E-3 A-4 11 06.04.2010 7928 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome and furnished inaccurate particulars of income, penalty u/s 271(l)(c.) is being initiated. 4. Vide show cause dated 12.03.2013 the assessee was required to explain as to how the investment in the under mentioned companies have been accounted for. It has been found that the following companies were incorporated by you i. Ansh Exmim Pvt. Ltd Ar/103 to 106 Assessment Year 2009-10 company floated in 2005 has allotted 187700 shares at ₹ 50 )10+40) premium totaling of ₹ 9388000/-. ii. Myra Exim Pvt Ltd AR/103 to 106 Assessment Year 2009-10 Company floated in 2006 has allotted 10000 shares to Sh. Vaibhav Jain Smt Meenashi and received share application money of ₹ 1515000/-. iii. Myra Fashion Pvt Ltd AR/103 to 106 Assessment Year 2009-10 company registered in 2007. Please submit the complete details of share holding of the aforesaid companies for the period i.e. FY 2004-05 to 2010-11, along with the details of capital introduced in respective years. Please furnish the complete details about source of investment alongwith copy of bank statement and confirmations and copy of ITR s etc. Please furnish the present postal addresses of sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls and confirmation in respect to other share applicant have been filed it is presume that Sh. Vaibhav jain has made investment in the name of himself his family members and other bogus names. The facts gets further support from the nature of activities in which Sh. Vaibhav Jain is involved, i.e. providing of accommodation entries through 37 paper entities to the extent of ₹ 1000 crores. It is further notice the assessee deliberately delayed in submission of the returns of income, replies and confirmation etc. so as to ensure that the department does not get any opportunity to cross verify the information/investments. 4.3 In view of the aforesaid discussion and also keeping in view the fact that the assessee is constant offender of the law and is engaged in providing huge accommodation entries through paper entities therefore it is being held that the share capital of ₹ 1,00,000/- made in Myra j Exim Pvt. Ltd., share application money of ₹ 2,50,000/- in Myra Exim Pvt. Ltd. and share application money of ₹ 1,05,45,000/- in M/s Ansh Exim Pvt. Ltd. during A.Y. 2007-08 is bogus investment made in the name of different bogus identities. The assessee has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir salary. All the proprietors of the paper entities stated that the bank accounts and cheque books opened in their names were being used by Sh. Vaibhav Jain for giving accommodation entries without their knowledge. Further, Sh. Navneet Kumar Jain, father of the appellant, also admitted that his son Sh. Vaibhav Jain had a complete control over the 37 firms and the bank accounts in the names of the proprietors of the 37 paper entities, who were actually employees of the appellant, were being used for providing accommodation entries. 8.1 With regard to the appellant s contention that the intra transactions between the firms should not been included in the turnover, I find that the appellant failed to furnish any documentary evidence to show that these intra transactions between the firms were not business transactions through which the accommodation entries were provided. Further, the appellant also failed to file any evidence that the VAT charged @4% from the beneficiaries on the accommodation bills was actually refunded to the beneficiaries or for that matter the same was deposited with the trade tax department. Therefore, the Assessing Officer has rightly observed that VAT c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer should have reduced the profit of ₹ 5,82,642/- from providing accommodation entries which was already declared by the appellant in his return income. Hence, I agree with the submission of the appellant that income to extent of ₹ 5,82,642/- has been taxed twice. Therefore, the addition to the extent of ₹ 5,82,642/- out of total addition of ₹ 5,90,74,719/- deserves to be deleted as the same tantamount to double addition. Accordingly, the appellant gets a relief of ₹ 5,82,642/-. 18. Accordingly, he deleted the addition of ₹ 582642/- out of the total addition of ₹ 59074719/- and confirmed the balance addition. 19. On account of addition made of ₹ 1 lac for the investment in M/s. Ansh Exim Pvt. Ltd on account on unexplained investment he confirmed holding as under:- 9. Ground no. 3 relates to addition of ₹ 1,00,000/- made by the Assessing Officer on account of unexplained investment in M/s Ansh Exim Pvt. Ltd. 10. While making the impugned addition the Assessing Officer observed as under: 4 Vide show cause dated 12.03.2013 the assessee was required to explain as to how the investment in the under mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led the details of share capital invested vide letter dated 28.03.2013, without any confirmation or other supporting evidences. In this regard it is submitted that earlier a summon u/s 131 was issued form the investigation wing to Sh. Vineet Arora a share holder in M/sAnsh Exim Pvt. Ltd. Sh. Vineet Arora in its letter dated 13.08.2010 has denied and submitted that he had never applied or paid any sum towards share application money in Ansh Exim Pvt. Ltd. He had stated in its letter dated 13.08.2010 that a sum of ₹ 13,00,000/- was given premises Ansh Exim Pvt Ltd. for purchasing a plot at Kundli through a property dealer. However since the deal did not materialized therefore the money was received back. Considering the admission of the Sh. Vineet Arora and the fact that no details and confirmation in respect to other share applicant have been filed it is presume that Sh. Vaibhav jain has made investment in the name of himself his family members and other bogus names. The facts gets further support from the nature of activities in which Sh. Vaibhav Jain is involved, i.e. providing of accommodation entries through 37 paper entities to the extent of ₹ 1000 crores. It is fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 018 fixing date of hearing for 09/04/2018, assessee preferred to not to appear and represent his case. Therefore, we do not have any option but to decide the case on its merits as per information available on record. 21. The ld CIT DR submitted a written note for all the years stating the facts of the case and his arguments for respective additions for different years as under:- 1. In the above appeal, the Revenue wishes to submit as under in addition to oral arguments which may be made at the time of hearing. 2. There was a search in the case of assessee on 26.04.2010, wherein an evidence of accommodation entry racket of issue of bogus sale bills to beneficiaries was found. The cheque received from beneficiaries was deposited in the account concern issuing bogus bills. It was then transferred to another concern from where the cash was withdrawn and returned to the beneficiaries. The assessee had opened several proprietorship concerns in his name, in the name of his father and several employees, related persons etc. The statements of assessee, his father and also the so called proprietors of various paper concerns were recorded before the search, during the search and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has dealt with the issue from page 40 onwards. In his statement of 26.04.2010 (page 13 of assessment order for A.Y.2006-07) commission was stated to be from 0.5% to 1% and all the 37 concerns mentioned on page 3 of the order were started to be under the control and management of the assessee. The proprietors of these nnnrprns were nersons of meaere resources and ex-employees, employees, representation by the assessee. As discussed from page 40 onwards of the assessment order for A.Y. 2006-07, the assessee sought to disassociate himself from the concerns mentioned on page 3 of the assessment order excluding the concerns under his proprietorship and the proprietorship of his father/HUF . The figure of turnover was also disputed. The AO has summarised the assessee s submission on page 41 42 and has given his findings from page 42 onwards. As mentioned on page 43, the assessee accepted the total turnover of all the 37 concerns. Therefore, his contention that he had nothing to do with those concerns is without any basis. Moreover he had confirmed that all the concerns are under his control both in pre search enquiry and also at the time of search. After discussing various submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition of the same is justified. The Revenue also relies on the decision of the Apex Court in the case of Mukundray K Shah reported in 290 ITR 433 as the corresponding addition is consequent to an enquiry related to the evidence found during the search. The Revenue also relies on the decision of the Apex Court in the following two cases on merits of the case. 1. Rick Lunsford Trade Investment Ltd. v CIT 216-TIOL-207-SC-17 2. [2015] Navodaya Castle P.Ltd. v CIT Tavrnflnn mm 1 2. ITA No.3771, 3772 3775/D/2014 - A.Y. 2007-08, 2008-09 2011-12 Ground No.3 The facts are similar to ITA No.3770/D/2014. The corresponding reference in assessment order from page-4 onwards and in para 12 of the order of CIT(A). 3. ITA NO.3773/D/2014 - A.Y. 2009-10 Ground No.3 The AO has dealt with the issue from para 4 onwards. The addition is based on seized documents regarding unaccounted payment for land transaction. The AO made an addition for the entire amount mentioned in respect of the said land in seized documents. The CIT(A) hfas confirmed part of the addition. The corresponding appeal of the Revenue is ITA No.3681/D/2014 which is fixed on 11.04.2018. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue conclusively proves which is confessed by assessee and his father in various statements as well as statements of the other persons that assessee is providing bogus bills to beneficiaries, it is correctly held that commission income is chargeable to tax in the hands of the assessee. The only dispute is with respect to rates of commission charges. It is apparent that assessee is found to be engaged in issuing bogus bills to various parties. This shows that assessee is providing various bills of purchase of material and services to various beneficiaries by charging VAT there on @ 4 % to give it semblance of reality/ genuineness. Beneficiaries claimed these expenses as deduction while computing their income and also claimed VAT as set off while filing their income tax and VAT returns. Beneficiaries in turn paid cash to the assessee over and above the Bill + VAT amount his commission too. According to seized documents, the assessee is found charging commission income from 1.50 % to 3.85 %. The seized documents indicating commission rates are for a limited period. Therefore, it is apparent that assessee has minimum commission rates of 1.50% and also maximum amount of Commission is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to disagree with the order of the lower authorities and the order of the ld CIT(A) where the reasons given were adequate to confirm this addition. in the result ground No. 3 of the appeal of the assessee is dismissed. 24. Ground No. 1 is general in nature and therefore, same is dismissed. 25. In the result ITA No. 3770/Del/2014 for AY 2006-07 of the assessee is dismissed. ITA No. 3771/Del/23014 26. In ITA No. 3771/Del/23014 for Assessment Year 2007-08 ha similar grounds of appeal which are dealt with as under. 27. Ground No. 1 is general in nature and therefore same is dismissed. 28. Ground No. 2 is with respect to the confirmation of the addition of ₹ 186766002/- on account of commission from accommodation entries. For the reasons given by us in Assessment Year 2006-07 we confirm the order of the ld CIT(A). 29. With respect to Ground No. 3 of addition of ₹ 10895000/- on account of unexplained investment in various firms and entities owned by the assessee, we confirm the order of the ld CIT(A) for the reasons given by us in ground No. 3 for AY 2006-07. 30. In ITA No. 3772/Del/2014 for Assessment Year 2008-09 the assessee has challenged t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the properties. 41. The brief facts of the case shows that various seized documents were found during the course of search. In seized documents E-3/A-3, 9, 70 77 shows the cash payment receipt ₹ 5654000/- against sale of property No. 298, Manesar, Gurgaon. The assessee tried to explain the above document stating that it is difficult for him to explain this paper. He submitted that beneficiary party Sunbeam Hitech Medicare was coded by the assessee and from that party ₹ 565400/- was received on account of accommodation entry. The ld Assessing Officer after examining the page NO. 9, 70 and 77 which are dated made the addition of ₹ 5456000/-. The ld Assessing Officer stated that the seized documents clearly indicate that assessee has made an investment in Plot No. 298 at Manesar, Gurgaon. 42. Further, with respect to page No. 101, 103, 105 and 107 the ld Assessing Officer noted that payment of ₹ 48.60 lacs have been shown in March 2010 and assessee has coded M/s. Durga Engineering Works for plot No. A-34, Rohtak Road, Anand Parvat Project as the seized document showed the cash payment of ₹ 48.60 lacs the ld Assessing Officer made the addition i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issed. 51. In the result, appeal of the assessee is dismissed. 52. In the end before parting, we note that the ld Assessing Officer should not have stopped merely at making the addition in the hands of the assessee but should have alerted this scam to various authorities. Because looking to the magnitude of the fraud, it is impossible that it can be carried out if the bankers, VAT authorities, Income Tax Officers and Auditors of those entities have exercised due care in the performance of their duties. There are several bank accounts opened which were operated by the assessee and in all those bank accounts have huge transactions carried out without any substance for a fairly long period. Certain transactions in the names of persons are also carried out as alleged by putting fake signatures. Still the cheques have been passed for transfer of money. Even a layman could have visualized looking at the operation of the bank accounts that these transactions are suspicious, fraudulent and does not relate to any business, but surprisingly bankers have failed to notice it. The VAT authorities could not also notice that bogus billing issued by the assessee of such a huge magnitude wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the bank balance generated in the other parties account are used for further providing accommodation entries who need the share capital, bogus loans and other credits. The revenue has made only part enquiry and unearthed the bogus billing scam of ₹ 650 to 700 crores on search on this assessee. However, if the enquiry is further conducted then it may possibly also show another scam of converting black money‟ into so called white money‟. 53. Further, the various state governments have also lost the huge sum of 4% VAT collected by this assessee on total bogus billing of ₹ 700 crores which amounts to not less than ₹ 28 crores for which credit might already have been given by the respective VAT authorities of the various govts to the persons who are beneficiary of this bogus billing. We also direct the ld Assessing Officer to provide the information of the bogus entities floated by the assessee to the respective VAT authorities. 54. It is also to note there are 38 entities operated by the assessee and who were filing their return of income. The ld AO should have examined about the auditors of those company who conducted audits u/s 44AB of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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