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TMI Blog2019 (2) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... lain its case in proper perspective with cogent evidences and thereafter learned CIT(A) can pass fresh appellate order in accordance with law on merits after considering the contentions of the assessee. It is not denied by the assessee that Shri J G Parmar was his advocate. It is the assessee who has furnished the address of the advocate Mr J G Parmar before Revenue including learned CIT(A) for communication purposes as also it is admitted by the assessee that said address of Mr J G Parmar, advocate was used by the assessee for his operations also. The Revenue cannot be faulted if the assessee has not received notices of hearing of appeal issued by learned CIT(A) and it is the assessee who is to be blamed for its woes. The learned counsel for the assessee has conceded and prayed that the issues under appeal may be restored to the file of learned CIT(A) for granting one more opportunity as high pitched assessment is framed against the assessee and the assessee owing to fault of his own advocate did not got opportunity to present its case before learned CIT(A) while otherwise it has a strong case and request is made to take liberal view in the interest of justice. The amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirming addition of ₹ 25,87,01,299/- u/s. 68 made by learned Assessing Officer without appreciating that the cash credits did not belong to the assessee and hence, addition of ₹ 25,87,01,299/- may be deleted. 4. The learned CIT(A) erred in confirming order of learned Assessing Officer alternatively making addition of ₹ 25,87,013/- being 1% commission on ₹ 25,87,013/- without appreciating that rate of commission of 1% is very high and said rate of commission is adopted without any basis and hence the addition may be deleted. 5. The appellant craves leave to add, amend , alter or delete any of the above grounds of appeal. 3. The brief facts of the case are that the assessee had claimed to be engaged in the business of packing of clothes. The assessee filed return of income with Revenue u/s 139(1) on 18.06.2009 declaring total income of ₹ 1,10,850/-. The said return of income was revised by the assessee on 19.12.2011 declaring an increased income of ₹ 1,62,560/-. 3.2. Information was received by the AO from ACIT Cir 23(3), Mumbai vide letter dated 14.12.2011 that during the course of investigation in the case of one Shri Vinay G. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee on 31.01.2011 before the CBI. The said statement is placed in paper book filed by the assessee at page 22-23. The AO observed from the said statement that the assessee had stated that on the advice from his maternal brother(Mausi‟s son) Shri Rajendra Jain , who is involved in diamond brokerage, an bank account was opened in the name of M/s Navkar Trading Company with Axis Bank, New Marine Lines, Mumbai which was to be operated by Shri Rajesh Pamecha, who works in the diamond market for cheque discount work. It was affirmed by the assessee in the said statement recorded before CBI that the assessee was promised 1% brokerage on every cheque and accordingly assessee claimed to have signed cheque book of the account opened with Axis Bank, New Marine Lines Branch which was handed over to Shri Rajesh Pamecha through Shri Rajendra Jain. The AO observed that the assessee is changing its stand time and again. The assessee had also filed revised return of income with revenue on 19.12.2011 , after the AO received the information from ACIT, Circle 23(3),Mumbai , wherein the assessee stated the nature of its business as from M/s Navkar and Grih Udyog etc. and the assessee increased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cha to said summons. Thus, the AO was unable to verify the veracity of declaration purportedly executed by Mr Rajesh Pamecha. 3.8 The AO was of the view that the assessee has not been able to discharge its onus of proving the debit and credit entries are appearing in bank account of Navkar Trading Company of which the assessee is proprietor maintained with Axis Bank, New Marine Lines, Mumbai nor sources or destination of such funds were established. The AO relied upon large number of judicial decisions of Superior Courts as found mentioned in assessment order and also on provisions of Section 68 of the 1961 Act , which led AO to conclude that the assessee is not able to offer plausible explanation to the sources of the amount found credited in the bank account amounting to ₹ 25,87,01,299/- which were treated by the AO as an unexplained cash credit and added back to the income of the assessee vide assessment order dated 28.03.2015 passed by the AO u/s 143(3) r.w.s. 147 of the 1961 Act. Without prejudice to the above additions, the AO made addition @1% being commission of the sum found credited in the said bank account based on statement given by the assessee before CBI, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring but on the last occasion the learned CIT(A) issued notice dated 24.07.2017 fixing the date of hearing to be 14.09.2017, but the said notice dated 24.07.2017 was not forwarded by the said advocate Mr J G Parmar to the assessee which led to non appearance of the assessee before learned CIT(A) on 14.09.2017 which finally led to an ex-parte appellate order passed by learned CIT(A) dated 15.09.2017. The assessee has also claimed that infact the chartered accountant of the assessee M/s Puneet Singhavi Associates had earlier filed an early hearing application dated 20.01.2017 with CCIT-7 , Mumbai for getting its first appeal with learned CIT(A) fixed for early hearing. The said application for early hearing filed before CCIT-7,Mumbai dated 20.01.2017 is placed in paper book/page 8-9. Coming back to the Early Hearing Application bearing E.H. No. 139/Mum/2018 arising out of ITA no. 1127/Mum/2018 filed by the assessee before the tribunal, this application was heard by the Bench of the tribunal on 27th July 2018 wherein the request for early hearing was acceded by the Bench vide order passed on 27th July 2018 , in which, inter-alia, Bench also noted that learned counsel for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) vide PAN No. AFNPJ6760J and AADPJ5133E. Our attention was drawn to page 21 wherein letter written by ITO-12(1)(2),Mumbai dated 15.12.2011 to ACIT-23(3), Mumbai is placed which contained all details of these two PAN‟s and filing of income-tax return by the assessee with respect to only one PAN i.e. AFNPJ6706J. The assessee had used another PAN AAPJ5133E for opening bank account with Axis Bank, New Marine Lines, Mumbai and no return of income was filed with respect to this PAN held by the assessee (page 19/pb). It was submitted that return of income originally filed by the assessee under PAN AFNPJ6706J was processed u/s 143(1) of the 1961 Act. It was submitted that the case of the assessee was reopened by the AO for reassessment for carrying out further investigations. Our attention was drawn to reasons recorded for reopening of the concluded assessment u/s 147 which are placed in paper book/page 19-20. Our attention was also drawn to page 27/paper book wherein declaration dated 23.03.2015 by Mr Rajesh Pamecha is placed. Our attention was drawn to page 120/paper book wherein Aadhar Card of Mr Rajesh Kumar Pamecha is placed . Our attention is also drawn to page number 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t get proper opportunity of being heard before learned CIT(A) mainly due to non furnishing of notices by its advocate Mr J G Parmar and it is an ex-parte order, the matter may be restored to the file of learned CIT(A) wherein the assessee would be able to explain its case with cogent evidences. It was submitted that high pitched assessment is framed against the assessee wherein all credits in the bank account maintained with Axis Bank, New Marine Lines , Mumbai were added to the income of the assessee. It was prayed that in the interest of justice a liberal view may be taken and the all the issues may be restored to the file of learned CIT(A) for framing fresh appellate order after providing opportunity to the assessee. 5.2 The learned DR submitted that the assessee did not even appeared properly before the AO and the assessee was changing its stand time and again. The learned DR submitted that the assessee did not asked for the reasons for reopening of the concluded assessment u/s 147 earlier and no evidence is placed on record to contend that the reasons for reopening of the concluded assessment u/s 147 were asked by the assessee prior to its letter dated 27.02.2018 and 23. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing of return under PAN AADPJ5133E , wherein the assessee filed revised return of income on 19.12.2011 under PAN AFNPJ6760J while request was simultaneously made vide letter dated 19.12.2011 filed before the AO to cancel PAN AADPJ5133E . The assessee had filed return of income which was revised later on 19.12.2011 wherein it was found by the AO that income declared therein was not commensurate with the magnitude of amount found credited in this bank account of the assessee maintained with Axis Bank and the said tangible incriminating information so received by the AO led to reopening of the concluded assessment by the AO u/s 147 by issuance of notice dated 28.10.2013 u/s 148 of the 1961 Act, which was done within four years from the end of the assessment year and also originally no scrutiny assessment u/s 143(3) was framed by the Revenue while processing return of income originally filed u/s 139(1) which was later revised on 19.12.2011. The assessee in response to notice dated 28.10.2013 issued by the AO u/s 148 of the 1961 Act submitted vide letter filed on 22.11.2013 that revised return of income filed by the assessee on 19.12.2011 may be treated as return of income filed in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee‟s advocate Mr. J G Parmar. The assessee during the course of reassessment proceedings did not asked before the AO for reasons recorded for re-opening of the concluded assessment u/s 147 of the 1961 Act and consequently the AO did not supplied such reasons for reopening of the concluded assessment to the assessee. The said reasons for reopening of the concluded assessment u/s 147 were later sought by the assessee vide letters dated 27.02.2018 and 23.05.2018, which were supplied by Revenue on 27.08.2018. There is no evidence on record that the assessee sought reasons for reopening of concluded assessment during the course of reassessment proceedings or any time prior to filing of letter dated 27.02.2018. The assessee was asked by the AO during the course of reassessment proceedings to submit details of all debit and credit entries as were appearing in the said bank account of the assessee with Axis Bank , New Marine Lines, Mumbai but the assessee did not submit any details before the AO. The assessee vide letter dated 15.05.2014 filed before the AO denied having any concern with the said bank account as well with the said concern M/s Navkar Trading Company. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO u/s 142(1), after the AO received the information from ACIT, Circle 23(3),Mumbai , wherein the assessee stated the nature of its business as from M/s Navkar and Grih Udyog etc. and the assessee increased its income by an amount of ₹ 51,710/- from Navkar Trading Company. The AO observed that from the date of filing of revised return of income on 19.12.2011 , the assessee had admitted to be the owner of the bank account with Axis Bank, New Marine Lines, Mumbai. The assessee filed also declaration on 19.12.2011 with AO stating he was not having any malafide intention to do business in the name of M/s Navkar Trading Company. It was stated in said declaration ( which is placed in paper book/page 3 )that the assesse was lured by his cousin to clear financial crisis.The assessee claimed in said declaration dated 19.12.2011 that the assessee is middle class person who was misguided and mistrusted by his nearest person and was not having any wrong track in life. The said declaration is placed in paper book/page 3. The assessee during the course of reassessment proceedings before the AO kept on stating that he does not have any information with respect to Navkar Trading Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount found credited in Axis Bank, New Marine Lines, Mumbai , in case the assessee is able to prove the sources and destination of amount found debited and credited in the said Axis bank account. The assessee filed first appeal before learned CIT(A) which was decided exparte against assessee both legal as well on merits, thus in nutshell learned CIT(A) dismissed the appeal of the assessee. As we have seen in preceding para‟s of this order , the main line of arguments of the assessee was that he did not get the notices issued by learned CIT(A) as his advocate Mr J G Parmar did not handed over the notices to the assessee which led to his non appearances before the learned CIT(A). The assessee had given the address of said advocate as his communication address before Revenue authorities as the assessee has claimed that he was operating from said premises of the advocate. The assessee has filed an affidavit dated 19-07-2018 to that effect explaining the sequence of events as happened during the course of hearings before learned CIT(A) leading to his non appearance, which is discussed in preceding para‟s of this order in detail. The said affidavit is placed in file. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the question involved concerns the treatment of 'accommodation entries'. Basically, what an accommodation entry provider does is to accept cash from an Assessee and arranges to have a cheque issued from his own account or some other account, usually of 'paper' or fake entities, to make it appear to be a loan or an investment in share capital. The accommodation entry provider usually charges a commission which is deducted upfront. Where the Assessee is unable to explain the source of such credit in his account - i.e. by demonstrating the identity of the provider of the credit, the creditworthiness of such entity, and the genuineness of the transaction - the credit entry is treated as unexplained and the income is treated under Section 68 of the Act as the income of the Assessee. 14. In cases where the Assessee discharges the initial onus of establishing the identity and creditworthiness of the credit provider and the genuineness of the transaction, be it one of loan or subscribing to share capital, the onus shifts to the revenue to show the contrary. Where, for instance, an Assessee furnishes the complete details of the entity like its certificate of incorpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in a case of different depositors where there has been no transaction of deposits and repayment between a particular depositor and the assessee. On the facts of that case it was held that peak credit could be applied only in the case of squared up accounts. In other words, where an Assessee was unable to explain the sources of deposits and the corresponding payments then he would not get the benefit of 'peak credit'. 19. The legal position in respect of an accommodation entry provider seeking the benefit of 'peak credit' appears to have been totally overlooked by the ITAT in the present case. Indeed, if the Assessee as a self-confessed accommodation entry provider wanted to avail the benefit of the 'peak credit', he had to make a clean breast of all the facts within his knowledge concerning the credit entries in the accounts. He has to explain with sufficient detail the source of all the deposits in his accounts as well as the corresponding destination of all payments from the accounts. The Assessee should be able to show that money has been transferred through banking channels from the bank account of creditors to the bank account of the Assessee, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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