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TMI Blog2023 (5) TMI 1186X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the order passed by the learned AO u/s 153A is bad and liable to be quashed as the same has been framed consequent to a search which itself was unlawful and invalid in the eyes of law. 3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the assessment framed under Section 153A/143(3) are in violation of the statutory conditions of the Act and the procedure prescribed under the law and as such the same is bad in the eye of law and liable to be quashed. 4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the assessment order passed by the AO is barred by limitation having been passed beyond the statutory period prescribed in the Act. 5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the AO has erred in making the assessment without proper service of statuto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and in law, in confirming the action of AO despite the fact that the addition has been made by drawing adverse inference against the assessee on the basis of statement recorded without giving assessee an opportunity to cross examine the same. 15. Without prejudice to the above and in the alternative, the rate of commission applied by Ld. CIT(A) is too high and without any basis." 3. Since, the issue involved in ITA Nos. 1319, 1320 & 1321/Del/2019 are similar, they were heard together and being adjudicated by a common order. In ITA No. 1319/Del/2019, the following grounds have been raised by the assessee: "1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals)[CIT(A)] is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the order passed by the learned AO u/s 153A is bad and liable to be quashed as the same has been framed consequent to a search which itself was unlawful and invalid in the eyes of law. 3. On the facts and circumstances of the case, the learned CIT(A) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the action of AO despite the fact that the addition has been made by misinterpreting the statement of the assessee recorded on the oath. 12. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the action of AO despite the fact that the addition has been made by drawing adverse inference, without taking the investigation, initiated by AO, to a logical end. 13. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the action of AO despite the fact that the addition has been made on the basis of material collected at the back of assessee without giving him an opportunity to rebut same. 14. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the action of AO despite the fact that the addition has been made by drawing adverse inference against the assessee on the basis of statement recorded without giving assessee an opportunity to cross examine the same. 15. Without prejudice to the above and in the alternative, the rate of commission applied by Ld. CIT(A) is too high and without any basis. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espite the fact that the addition has been made by drawing adverse inference against the assessee on the basis of statement recorded without giving assessee an opportunity to cross examine the same. 9. Without prejudice to the above and in the alternative, the rate of commission applied by Ld. CIT(A) is too high and without any basis. 10. (i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the addition of Rs. 3,22,950/- made by the AO on account of gift received from Uncle. (ii) That the addition has been confirmed rejecting the submissions and explanations made by the assessee in this regard." 5. Since, the issue involved in ITA Nos. 2888/Del/2019 to 2893/Del/2019 are similar, they were heard together and being adjudicated by a common order. In ITA No. 2889/Del/2019, the following grounds have been raised by the Revenue: "1. On the facts and in the circumstances of the case, the Id.CIT(A) has erred in restrict addition at Rs. 16,65,096/- as against the addition of Rs. 12,36,11,068/- made in the assessment order on account of commission income from the accommodation entry business by taking the rate of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rought to give the assessee but assessee failed to explain the reason as to why he received cash from Sh. Arvind Jain. Also, the assessee has failed to explain why he has received cash of Rs.1,00,00,000/- and Rs.1,37,50,000/- plus Rs.2,50,000/- to D-Mall which refers to Sh. Anand Kumar Jain as he has office in D Mall. 3. On the facts and in the circumstances of the case, the Id.CIT (A) has erred in deleting the protective addition of Rs. 5,00,000/- made by the AO on account of unexplained cash credits without- considering the fact that the assessee has failed to produce directors of the shell concern to verify the identity of the company, genuineness of the transactions and creditworthiness of the concern." 7. The moot issue involved in this case pertain to determination of the commission income of the proven accommodation entry operator. 8. Brief facts of the case are that the assessee is an individual and derives income under head house property, business and profession and other sources. A search and seizure operation was carried out on business and residential premises of the Anand Jain and Naresh Jain group on 17.12.2015 and subsequently, notice u/s 153A dated 27.10.2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of commission as coming out of seized material should be applied. vi. The AO has ignored the 'short and excess account' in the Tally Data which represents the total actual commission earned by the assessee and Sh. Naresh Kumar Jain and also the correct amount of accommodation entries given by the assessee and Sh. Naresh Kumar Jain. vii. The short and excess a/c clearly depicts the consolidated commission income earned on the accommodation entries by the assessee and Sh. Naresh Kumar Jain and the expenditure incurred with the respect to the earning of said income. Accordingly, actual commission can be computed based on the data appearing in short and excess account and the same may at best be charged in the hands of the assessee as commission income on the turnover. viii. The working for the consolidated net commission rate is as under: Short and excess A/c Total (in Rs.) Receipts(Credit side) 220,616,047/- Less: Expenses(Debit side) 151,352,004/- Net commission income 6,92,64,043/- ix. It was submitted that the total turnover of alleged accommodation entries of the assessee and Sh. Naresh Kumar Jain. The computation is hereunder: Particulars Total Turn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o adverse inference/finding of the AO that the company was involved in providing any accommodation entry. In view of these facts, I am of the view that since the business operations of M/s Ambarnuj Finance & Investments Pvt. Ltd. are not in doubt in the year under consideration, therefore, it was not justified on the part of the AO to include Rs. 4,64,29,476/- being the aggregate of debit and credit bank transactions of M/s Ambarnuj Finance & Investments Pvt. Ltd. in the working of the commission income, hence, the said figure of Rs. 4,64,29,476/- is reduced from the calculation of commission. With regard to calculation of turnover/quantum of accommodating entries after eliminating the impact of circular transactions and percentage of commission 9.11 From the above instances, I find that the AO has pointed out that the "short & excess account" in the tally data means the commission received by the Jain Brothers. Further from the above quoted instance and other examples quoted by the AO in the assessment order, it is clear that the appellant and his brother use to maintain the data of providing accommodation entries including bank transfers, cash exchanged and commission charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00). Whereas the average rate of commission paid comes to 1.02% (Rs. 15,13,52,004 / 1485,36,50,460*100). Thus, the net commission rate in the tally data seized is search comes to 0.47%. The appellant in this regard, submitted that receipts net off of payment/expenses should be taxed in its hands as commission only. In this regard, the appellant has pointed out that seized record is the best evidence and when income is being considered on the basis of seized record, the expenses as recorded in the seized document also need to be reduced. It is only the net income, which is to be considered. I have examined the seized tally data. On going through the same, the contention of the appellant that expenses side represents the expense incurred by the appellant in arranging accommodation entries is found to be correct. However, in the facts and circumstances of the case, it will not be appropriate to allow deduction of entire expenses. Accordingly, taking a holistic view, I consider that 30% of the gross commission receipts (@1.49%) are the expenditure incurred for earning commission income. Accordingly, I find it appropriate to take rate of 1.04% (1.49% - 0.45%) for charging of commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion income as appearing in short & excess A/c in Tally Data of Jain Folder. However, what has not been accepted by the ld. CIT(A) is the expenses incurred in earning such commission income which was also duly reflected in the same short & excess A/c in the Tally Data of Jain Folder which is a part of the seized material. The ld. CIT(A) in Para 9.4 of Pg. 20 of ld. CIT(A)'s Order for AY 2010-11 has stated that, "the contention of the appellant that expenses side represent the expense incurred by the appellant in arranging accommodation entries is found to be correct. However, in the facts and circumstances of the case, it will not be appropriate to allow deduction of entire expenses. Accordingly, taking a holistic view, I consider that 30% of the gross commission receipts (@1.49%) are the expenditure incurred for earning commission income." 19. Thereafter the ld. CIT(A) proceeded to compute commission income by applying a rate of 1.04% (i.e. gross commission receipts @1.49% less 30% of gross commission receipts i.e. 0.45%) on the turnover offered and accepted by ld. CIT(A). The ld. CIT(A) has not brought anything on record but rejected the expenses incurred on earning the comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is the allegation of the appellant that while the parts which were disclosed, vaguely point to the culpability of the appellant, SEBI is refusing to divulge the information which exonerate it. Such cherrypicking by SEBI only derogates the commitment to a fair trial. In Nea Karteria Maritime Co Ltd v. Atlantic and Great Lakes Steamship Corporation, [1981] Com LR 138 at 139, Mustill J. held as under: "I believe that the principle underlying the rule of practice exemplified in Burnell v British Transport Commission [1956] 1 QB 187 is that where a party is deploying in court material which would otherwise be privileged, the opposite party and the court must have an opportunity of satisfying themselves that what the party has chosen to release from privilege represents the whole of the material relevant to the issue in question. To allow an individual item to be plucked out of context would be to risk injustice through its real weight or meaning being misunderstood." The aforesaid principle is often referred to as the 'Cherrypicking' principle. 58. In the case at hand, SEBI could not have claimed privilege over certain parts of the documents and at the same time, agreeing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in. Since, it was the purchase of an immovable property, for the purpose of estimating the correct value of the property and expenses incurred thereon, the AO made a reference to the DVO on 17.11.2017. The AO provided the addresses of the assessee vide letter dated 08.12.2017. The ld. AR argued that the DVO report has been received after 6 months after the reference and hence is null and void. Since, the assessment has been passed within the time framed al lowed u/s 153(1), we hold that the receipt of the valuation report of the DVO cannot be fatal to the assessment. 25. Coming to the facts of the case, the assessee owns 50% of the property. The said property has been valued by the DVO at Rs.3,00,14,000/- on account of cost of land against the value declared by the assessee of Rs.24,10,000/-and cost of construction at Rs.98,05,300/- against the value declared of Rs.41,89,250/- (50% of the value determined by the DVO). The ld. CIT(A) deleted the addition on the grounds that the valuation cannot be more than the stamp duty valuation. Before us, the ld. DR relied on the order of the Assessing Officer. The ld. AR argued that the property of the land is as per the circle rate and the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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