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TMI Blog2023 (11) TMI 1360X X X X Extracts X X X X X X X X Extracts X X X X ..... obal Jewels Pvt. Ltd. This way, the assessee's appeal is partly allowed in above terms. X X X X Extracts X X X X X X X X Extracts X X X X ..... deration, the assessee was engaged in the business of trading and export & import of diamonds. The Assessing Officer was in the receipt of information from the Investigation Wing, Surat. As per the information available with Assessing Officer's office, it was noticed by the Assessing Officer that the assessee company, Antique Exim PVT Ltd was under the investigation of Directorate of Revenue Intelligence (DRI) for importing cheap diamonds at inflated rate and thereby sending large outward remittance. The inquiry conducted by the DRI has revealed that the assessee company has imported overvalued rough diamonds from three suppliers namely Maviya Impex, Mafii Impex and Diamond field Trading Ltd, which belonged to Girish Kadel. The rough diamond imported by the assessee company having declared value of Rs. 64,59,14,875/- were valued by a panel of 4 members at Rs. 45,12,589/- on 11.07.2018. In the report, it was also mentioned that the average rate of Rough Diamond at the time of import into Hong Kong as per Import KPC Nos. 1611374 dated 03.10.2016 was US$ 1.2 per carat and that as per Import KPC No. HK1611107 dated 05.08.2016 was US$ 3 per carat whereas the import o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted rates and thereby sending large outward remittances. The rough diamonds imported by the appellant with declared value of Rs. 64,59,14,875/- were valued by a penal of 4 members at just Rs. 45,12,589/- on 11.07.2018, which showed that the imports were excessively priced in the range of US$ 424 to 2368 per carat. On page 2 and 3 of the assessment order, the AO has given the exact details of the imports with import bills, dates of imports and how the imports were overvalued. During the investigation, it was observed that the appellant routed the transactions through various shell companies for routing money and for camouflaging the unaccounted money as accounted. The summons issued to the Directors of these companies for ascertaining the beneficiaries of the transactions were either unserved or in some cases the summons were served but none appeared in response to the said summons. During investigation, 117 companies were identified which were involved in importing overvalued diamonds and making outward remittances of Indian currency to foreign countries which, included bringing unaccounted money into banking system. The AO from page 6 to 12 of the assessment order, has r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tries. The AO issued notices u/s 133(6) of the Act to various entities from whom the appellant had claimed sales/purchases. In only 2 cases out of 15 cases, the AO received reply as most of the other notices were returned unserved as the parties were not available at the given addresses and in other cases no replies were received. Hence, the AO held that the transactions in the books of accounts of the appellant were merely paper entries and no real business was carried by the appellant. As regards the 2 replies from M/s Vasupujya Exim and M/s Tanman Gems Pvt. Ltd., the AO has given a finding that the said companies though admitted having done turnover of Rs. 114 Cr. but had fixed assets of only Rs. 1,512/- and office and salary expenses of Rs. 5,80,000/-. Hence, the AO came to the conclusion that though the said 2 parties confirmed the sales / purchases shown by the appellant but on the basis of the details furnished, it could be reasonably be presumed that the said 2 concerns had no real business activities and were in the business of providing accommodation entries. Accordingly, the AO rejected the books of accounts of the appellant as provided in Section 145(3) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revailing rates for such services and reasonable expenses incurred to earn such commission also be allowed. 7.10 The AR of the appellant relied upon 3 decisions of Hon'ble ITAT, Surat and ITAT, Mumbai having identical facts of providing accommodation entries of purchases and sales and also accommodation entries for loans and advances. The gist of commission finally upheld by the Hon'ble ITAT in the said cases is given in the turnover below: Name of the assessees Sales Turnover Purchase Turnover Loans and advances a) Rajendra Sohanlal Jain ITAT Surat dt. 26.11.2021 (7 appeals) IT(SS)A No. 294 to 299/SRT/2017 0.02% NIL 0.5% b) Bhanwarlal M Jain ITAT Mumbai dt. 06.08.2021 (16 appeals) ITA No. 108 to 114/MUM/2018 0.05% NIL 0.75% c) Rajendra P Jain ITAT Mumbai dt. 03.05.2019 (3 appeals) ITA No. 296 to 298/MUM/2018 0.05% NIL 0.5% 7.11 Thus considering the decisions of various Benches of Hon'ble ITAT, I am of the opinion that 0.05% of the total purchase and sales turnover (the Hon'ble ITAT has held that the commission to be in the range of 0.02% to 0.05%) can be estimated as the gross commission earned by the appellant in the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re treated to have been partly allowed." 9. Aggrieved by the order of ld. CIT(A), the Revenue as well as Assessee, both are in appeal before us. 10. The Ld. Counsel for the assessee at the outset stated that assessee has raised the additional grounds of appeal which may be adjudicated first. The additional ground so raised by the assessee is reproduced below: "1.0 On facts and circumstances of the case and in law, the assessment order passed u/s. 143(3) dated 30/03/2022 is bad in law, since had been passed beyond the limitation period prescribed u/s. 153(1) read with Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 expired on 30/09/2021." 11. In respect of above additional ground, the Ld. Counsel argued that assessee filed the return of income under section 139(1) of the Act on 24.10.2018. The notice under section 143(3) of the Act, was served on the assessee on 22.09.2019. The Ld. Counsel pointed out that time limit for completion of the assessment under section 153(1) was on 30.09.2020 (that is, within the eighteen months from end of assessment year in which the income was first assessable). The Ld. Counsel stated that as per last notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limitation had been extended as per TOLA, Notification S.O. 2580(E) [No.74/2021/F.N(C)0370142/35/2020-TPL] for completing the assessment which was expiring on 30.09.2021. (iii) Thereafter, during the course of assessment proceedings, from the submission of the assessee, it was revealed that the assessee had executed transactions/import/sales in A.Y. 2018-19 with foreign entity based at Belgium, (iv) Therefore, in order to carry out verification of above transactions, certain information was required to be obtained from the above foreign entity. Hence by virtue of Sect. 90 of the I.T Act reference was made by the then A.O. to the Foreign Taxation & Tax Research (FT&TR) (copy of acknowledgement dtd. 16.05.2021 by Competent Authority enclosed for kind reference) for obtaining the transactions related information. (v) In the light of reference made to FT&TR, the period of limitation for completion of assessment was to be computed by excluding the period mentioned in explanation 1(x) of the Sect. 153 of the Act, For the sake of ready reference the relevant explanation 1(x) is reproduced below :- "Explanation 1. - For the purpose of this section, in computing the period of li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er rejection of books of accounts at the rate of 0.5% of total sales and purchases of Rs. 1827,14,01,611/- which comes to Rs. 9,13,57,008/-. However, on appeal by the assessee, the ld. CIT (A) has reduced this addition by referring the case of jurisdictional Tribunal of ITAT, Surat and ITAT, Mumbai to 0.05% of the total purchases and sales (turnover) which is not acceptable. Further, the Assessing Officer made the addition on account of loans and advances to the tune of Rs. 7,19,60,390/-, however, the ld. CIT (A) reduced it at the rate of 0.75% of the loans and advances outstanding as on last date of the financial year of Rs. 81,91,61,303/- which is not acceptable. The ld. CIT-DR also pointed out that in addition to this, the ld. CIT (A) has provided the relief in respect of estimated expenditure at the rate of 25% of gross commission which comes to Rs. 38,19,853/-, therefore the order of the ld. CIT (A) is on commercial principles that the assessee was earning commission on purchase and sale and therefore the addition made by the Assessing Officer ought to be upheld. 15. On the other hand, on merit, Ld. Counsel for the assessee submitted that Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal. We see no reasons to take any other view of the matter than the view so taken by the Division Bench of this Tribunal in assessee's own group case, vide order dated 26.11.2021. In this order, the Tribunal has inter alia observed as follows: "10. We have heard the submissions of the learned authorised representative (ld. AR) of the assessee and the learned Commissioner of Income Tax departmental representative (ld. CIT-DR) for the revenue and have gone through the entire record carefully. The Ld. AR for the assessee submits that investigation team was recorded the statement of assessee by pressurizing him. The assessee has already retracted the statement by filing retraction statement dated 21.10.2013 and 09.01.2014, before the assessing officer on 31.03.2014. When search was conducted the assessment for 2008-09 to 2012-13 were not pending and were already concluded either under section 143(3) or 143(1) and hence no income can be assessed unless there is incriminating material found during the course of search action. The A.O. merely relied on the fact that no stock of the diamonds was found at the time of search. The goods were given for approval to customers for sales. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its that during search action sufficient incriminating evidence was unearthed. The statement of assessee and his associates were recorded under section 132(4). The assessee in his statement disclosed the modus operandi of the operation of accommodation entry. During the search action the assessee confessed in his statement recorded under oath that he along with his other associate, employees and family members are operating through a number of business concern of three natures i.e. Proprietorship firm, partnership firm as well as companies in the name of various persons including his employees. For all practical purposes, he himself ensures the chain of entire business network on profit sharing basis. During the search on business premises as well as residential premises and survey on their employee it was admitted by all the person and family members and relatives that they were working for the assessee. Not a single piece of diamond was found from any of the business or residential premises of the assessee. The ld. CIT-DR for the revenue further submits that while recording statement of the assessee, he was confronted with various emails extracted from his computers. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the search action the statement of Rajinder Jain, Dharmi Chand Jain and Sanjay Chowdhary was recorded. Consequent on the search action and evidences gathered during search and post search action, notice under section 153A was served on the assessee to file return of income. The assessee filed return in response to the said notice, but no additional income was offered. The assessing officer after serving statutory notices proceeded for assessment. During the assessment the assessing officer referred relevant part of the statement of assessee and diagram of modus operandi of business operation which was prepared during the search action, as followed by assessee and his group while making the business of accommodation entry. The assessing officer further noted that the statement of Sachin Pariekh proprietor of Arihant Export, director of Karnawat Impex Pvt. Ltd & Moulimani Impex, Manish Jain (prop of Kalash Enterprises, Director of Kriya Impex Pvt. Ltd and Karnawat Impex Pvt. Ltd.) and Anoop Jain (Prop of Adi Impex) was recorded during search. The Assessing Officer (AO) on the basis of statement of Sachin Parikh, Manish Jain and Anoop Jain in wherein they admitted that all they were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Income Assessed 18,40,602/- 14. Though, the AO also made various protective additions of income assessed in assessee's group concern, however, all those protective additions were deleted by the ld. CIT(A). No further appeal is filed by revenue against such order in deleting the protective additions. 15. The Ld. CIT (A) confirmed the additions of commission income on export as well as on unsecured loan. The ld. CIT (A) while confirming the order of the assessing officer recorded that that the basic objection of the assessee that his admissions of doing only paper business of trading of diamonds, in providing accommodation entry; is not correct and not based on incriminating document recovered in search action. The ld. CIT (A) noted that assessee is Director in various companies/partners in various firms and also proprietor of a firm, the business of all firms and companies are controlled by the assessee. During the search no physical stock of diamonds was found, there were numerous e-mails including some e-mail found and seized during search clearly proved that the real beneficiary of importer of diamonds were different then the books, there were also e-mails which prove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of search and that the assessee retracted from his statement recorded by the search party and the assessee was doing real business and not engaged in providing accommodation entry. We find that during the search action more than sufficient incriminating evidence was found, which is also supported with the corroborative evidence found in the form of e-mails and other evidence in the form of books of account recovered from the pen drive, which itself is incriminating evidence against the assessee. We further noted the assessee in his retraction statement has not explained the material evidence found in the form of e-mail, from his e-mail account, his background history as to how he entered in the this particular business of providing entry, which he himself disclosed during the search action that he learnt all this business module of providing accommodation entry from his ex-employer namely Ratanlal Jain. The said retraction is filed for the first time before AO after gap of 12 months period. The reliance in case Manoj Begani Vs ACIT (supra), passed by Kolkata Tribunal which is case of beneficiary of the alleged accommodation entry from Rajendra Jain, is not helpful to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he commission income added by the AO. Thus, the alternative ground of appeal is also rejected. 18. Ground No. 7 relates to rejection of books of accounts and ground No. 8 relates to expenses including foreign exchanges expenses, we find that the grievances of the assessee raised in these grounds of appeal has already been discussed in ground No. 3 to 5, therefore, needs no further adjudication. In the result all the grounds of appeal raised by the assessee are rejected. 19. In the result, the appeal of the assessee for AY 2008-09 in ITA No. 294/SRT/2021 is dismissed. 20. Considering the fact that we have dismissed the appeal for AY 2008-09, the remaining appeals for AY 2009- 10 to 2014-15, are also dismissed with similar observation. No order as to cost." 18. As the issue is squarely covered against the assessee by the decision of the Division Bench, in the case of Shri Rajendra Sohan Lal Jain (supra) and there is no change in facts and law and the ld. Counsel is unable to produce any material to controvert the aforesaid findings of the Division Bench (supra). We find no reason to interfere in the said order of the Division Bench, therefore, respectfu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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