Aditya Kumar Jha vs Deputy Commissioner Of Income Tax

ITA No. 6531/Del/2025 (Assessee’s Appeal) and ITA No. 7055/Del/2025 (Revenue’s Appeal) for Assessment Year 2020-21

“9.5.

Reference is invited to the statement of the Assessee recorded during the time of search operation. Relevant Q No. 12 of his statement is deiced below:

9.6

Reference is invited to the statement of the assessee recorded during the time of search operation. Relevant Q.No. 13 of his statement is depicted below:

“Further, reference is invited to Q No. 41,45,52,55,59 and 60 of the statement of the Assessee recorded, the same is questions and answer of the Assessee are reproduced as under:

“9.9

From the above statement, it can easily be seen that the assessee is are actively involved in the foreign remittance and hawala operation activity and also associated with the hawala operator. It is an established fact that assessee work was not to confine paper work but he was actively involved in wrongdoings of these companies. Apart from the involvement of the above activity, it is also established that he is also in the business providing entry in lieu of cash.

10.

From the above statement it can be noted that there are a number of shell entities in whose bank accounts RTGS were transferred by the entities managed and operated by Sunny Khurana, Manoj Gupta, Ashutosh etc. and subsequently the same was sent by way of foreign remittance to the entities based abroad. The assessee has also admitted that no actual work is being done in these companies. These entities were used for sending outward foreign remittance only.

10.1

Accordingly, financial year wise total foreign remittance of the companies which was used by the assessee for foreign remittances as per available 15CA/15CB/15CC for FY 2019-20 relevant to AY 2020-21 is as under:

Name of the entity	PAN	Form No.	Foreign Remittances
Borneo LogisticsPvt. Ltd.	AAICB7637F	15CB	50,92,16,078/-

10.2.

During the year under consideration, it may be seen that the assessee has made foreign remittance of Rs. 50,92,16,078/- as per highest value among 15CA/CB/15CC data of the company used by the assessee. During the course recording of statement u/s 132(4) of the Income-tax Act, 1961, the assessee has submitted that he was earning commission of Rs.0.10/- paisa per USD. However, thesame was found very less as compared to the prevailing market rate of 2.00/-to 2.5% paisa per USD. Further, on perusal of one of the Excel Sheets found in his mobile phone, it was noted that an additional amount has been written with + sign with the rate of USD. On perusal of the data in column "D" there is exchange rate and there is also an amount with +sign. The same is resulted into that the assessee was charging the + amount as his commission per USD for sending outward foreign remittance. The facts of the case has already been discussed in above therefore, there is no need to discuss again. Further, on calculation of the + amount with per USD, the assessee was earning commission @ 2.50%.

10.3

However, the assessee has applied the commission rate at a very lower side instead of actual commission rate prevalent in the said business. The assessee has not furnished any details on which basis he has applied the commission rate Rs.0.10/- paisa per USD on the foreign remittance made by him. It can be seen that the assessee has applied meager rate of commission which is not the correct rate of commission earned by the assessee sending foreign remittance. Further, the assessee has not made any plausible explanation on this aspect. In a lot of cases commission income on hawala transaction is taxed at the rate of exceeding 2.50%. The assessee is involved in sending foreign remittances. In the absence of any logical/genuine rate of commission prevalent in the market, it is concluded that the assessee has earned commission income @ 2.50% of the foreign remittance which comes to Rs. 1,27,30,402/-(being 2.50% of 50,92,16,078/-/-). Therefore, addition of Rs. 1,27,30,402/- u/s 69A of IT Act, 1961 is made to the total income of assessee and tax is charged u/s 115BBE of IT Act, 1961.

(Addition of Rs. 1,27,30,402/-)

The penalty u/s 271AAC of the I.T.Act, 1961 is initiated.

“11.

During the course of post search investigation, the assessee's statement was recorded on oath u/s 131(1A) of the Income-tax Act, 1961. On analyzing of the data available in the mobile you phone Iphone X, an excel sheet was found wherein the following cash entries were recorded with different names. The same is produced below:

11.1.

The said excel sheet as Exhibit -V was confronted to the assessee and was asked to explain the contents about it. In response to the same, the assessee has stated that he wanted to enter into the business therefore in order to make relations with various businessmen he provided RTGS entry in lieu of cash. The assessee was requested to vide notice dated 15.01.2024 and show cause notice dated 20.03.2024 the assessee was requested to provide the details of the parties to whom cash was received and RTGS was made but no details of the parties and PAN no. have been provided by the assessee therefore the case of the assessee is covered under the provision of section 69A of the Income Tax Act, 1961. The section 69A is reproduced as under:

69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and thevalue of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.

11.2

Having regard to the provision of section 69A of the Income Tax Act, 1961 the amount of Rs.7,50,37,000/- remains unexplained in the hands of the assessee against which he has accepted cash in lieu of RTGS. Accordingly, addition of Rs.7,50,37,000/- is made u/s 69A of the Income-tax Act, 1961.

(Addition of Rs.7,50,37,000/-)

The penalty u/s 271AAC of the I.T.Act, 1961 is initiated.”

“6.

Ground No. 5: pertain to the addition of Rs. 1,27,30,402/-on account of commission income under section 69A of the Act.

6.1

I have considered the facts and circumstances of the case. The aforesaid addition of Rs. 1,27,30,402/-on account of undisclosed commission income has been made on the ground that the appellant was facilitating certain accommodation entries outside India, on the basis of certain incriminating documents and digital data found in the course of search conducted upon the appellant u/s 132 of the Act, and admission made by him with respect to his involvement al the time of recording statement u/s 132(4) of the Act.

6.2

In the course of search, certain excel sheets containing name of certain companies in whose accounts certain amounts were deposited and foreign remittances were made along with the dollar conversion rate with certain markup amount was mentioned. The aforesaid seized data has already been reproduced as part of body of the assessment order supra. While the appellant in the course of statement recorded u/s 132(4) admitted that the aforesaid companies were engaged in providing accommodation entries outside India, however, the appellant was not owner or operator of these companies but was only having the limited role of preparing documentation at the behest of other persons i.e. Mr. S. Khurana and Mr. Manoj Garg etc. who were real operators of these companies.

6.3

In the said statement, the appellant admitted that his commission income from the aforesaid activity was only to the tunc of 10 paise per dollar of remittance made. The relevant portion of the aforesaid statement, more particularly reply to query no.5 of the statement recorded on 10.10.2021 is reproduced in the body of the assessment order reproduced above.

6.4

In the assessment proceedings, the AO Look cognizance of both the seized material and the admissions made by the appellant in the statements recorded u/s 132(4) and came to the conclusion, by partly admitting thestatement, that the appellant was engaged in accommodation entry vis-a-viz the companies mentioned in the seized papers, but ignored/rejected the other part of the statement with respect to his limited role and involvement in only facilitating documentation work with respect to such foreign remittances as also the amount of commission earned by him 10 paise per dollar of the remittance.

6.5

The AO worked out the rate of commission @2.5% of the amount of remittance on the basis of certain working in the loose sheets in the form of digital excel sheet found in the course of search.

6.6

Further, with regard to the amount of remittances made by each company, the AO picked up the amount of remittances as per Form-15CA issued by CA and uploaded on the portal while making such foreign remittances by the company involved, in A.Y. 2020-21 and 2021-22, whereas in A.Y. 2022-23, the AO adopted the amount as per the remittances found Irum the bank statement.

6.7

The appellant strongly disputed the aforesaid contradictory approach adopted by the AO in relying upon the statement on piecemeal basis, i.e., approach of the AO relying upon his to the extent of admission of his engagement as an accommodation entry provider and ignoring the other portion of the statement, which did not suited the AO of the rate of commission and the limited role of the appellant in such activity.

6.8

The appellant also strongly disputed the amount of foreign remittances adopted by the AO by unilaterally picking up the total amount of foreign remittances made by the companies as per Form-15CA (in A.Y. 2020 21 and 2021-22), on the ground that the total foreign remittances made by the relevant companies cannot solely be attributed to the appellant; and on the ground that the AO did not follow a uniform approach of picking the amounts as per bank statements or Form 15CA, in as much as, in A.Y. 2020-21 and 2021-22, the AO adopted the amounts as per Form 15CA, whereas in A.Y. 2022-23, the AO adopted the amount as per Bank Statements.

6.9

it is observed that while the appellant has objected to the action of AO in adopting the amount as per Form-15CA but never rebutted the same or brought any other evidence on record suggesting the actual amount that should have been adopted to compute the amount of commission income. The appellant further raised objections on the action of the AO in adopting the rate of commission @ 2.5% of the foreign remittances and prayed for the same to be restricted to 10 Paisa per dollar, which effectively worked out to 0.135%, assuming the rate of dollar to be Rs. 74.61 as on 1.7.2021, (as per the rate adopted by the AO in the assessment order) on the ground that (i) he had admitted in his statement the rate of commission @ 10 Paisa per dollar and if the AO was relying upon his statement then the said statement should be relying upon entirety and not on piece meal basis; (ii)having regard to the limited scope of work carried out by the assessee, which stood proved through his statement recorded at the time of search and subsequently by the fact that no other incriminating material was found at the time of search or post search investigation or assessment that the appellant was in any manner in control of the said companies or its respective bank accounts.

6.10

in support of the above, the appellant also brought on record the reports from Chartered Accountant to substantiate that the appellant was neither a director nor a shareholder in any of the companies in question.

6.11

have considered the aforesaid contention of the appellant and find merits in the same. I find that there is no basis for the AO to arrive at the rate of commission income of 2.5% which in any case appears to be too high. I am persuaded by the recent decision of Delhi High Court in the case of Hon'ble Delhi High Court in the case of PCIT vs. Third Generation Traders Private Limited ITA No. 137/2025 wherein the court upheld the order of Hon'ble ITAT that in case of accommodation entry provider only commission income could be added and the rate of commission at 0.25% was upheld. The relevant portion of the aforesaid order is reproduced hereunder:

12.

It is the Revenue's case that the Jain Brothers were, at the material time, the accommodation entry operators who had introduced the funds and routed the same through banking channels to the ultimatebeneficiaries. Apparently, the Juin Brothers also had done so on certain commission.

13.

It is clear from the above, the commission for providing entries to beneficiaries would be the real income of Jain Brothers and there is no material to indicate that the Assessee had earned any commission income. This is so because, according to the AO, the Assessee company was a conduit operated by Jain Brothers.

14.

It is also apparent that there was income in the hands of the Assessee and it was merely a conduit. The credit, which has been introduced in the books of the Assessee was matched by a debit to the other entities used to route the funds to the ultimate beneficiaries. In the aforesaid context the CIT(A) and the learned ITAT had held that the unexplained credits were liable to be taxed in the hands of the beneficiaries. And, since the same had been done, there is no occasion of taxing the channels through which the amounts were routed."

6.12

The appellant has also referred to certain other decision of Tribunals where again the rate of commission has broadly been accepted in the range of 0.15% to 0.25%. Having regard to the aforesaid decisions the rate of commission @ 2.5%, that too on the basis of loose sheets which was in the nature of dumb document, appears to be unreasonable.

6.13

Further, in the facts of the present case it is seen that the appellant had itself admitted his commission income to be @ 10 paisa per dollar, which works out to 0.135%, if the dollar exchange rate is adopted at Rs. 74.61. There is further no evidence on record to suggest that the appellant was doing work more than facilitating the accommodation entry in the form of documentation work, which was admitted by him at the time of recording his statement u/s 132(4) of the Act.

6.14

For the aforesaid cumulative reasons, to meet the ends of justice and following the aforesaid jurisdictional Hon'ble Delhi High Court judgment in the case of PCIT vs. Third Generation Traders Private Limited, I hold that the rate of commission income 20.25% in the facts of the present case, to be justified.

6.15

In the year under consideration, the AO has adopted the total amount of foreign remittances from the underlying company at Rs. 50,92,16,078/- as per Form-15CA which although has been disputed by the appellant, but the said amount remain uncontroverted with any acceptable documentary evidences. Accordingly, the said amount of foreign remittances adopted by the AO is upheld, but the amount of commission income thereon is reduced from 2.50% amounting to 1,27,30,402 of 0.25% of the said amount which works out to Rs. 12,73,040/-. In view of the same, the addition to the extent of Rs. 1,14,57,362/- is deleted and to the extent of Rs. 12,73,040/- is hereby sustained.”

“6.16

The appellant has also challenged the action of AO in making the addition of the aforesaid commission income u/s 69A and applying the rate of tax thereon rate prescribed under section 115BBE of the Act.

6.17

find that the provision of section 69A are applicable when the source of asset found to be in possession of assessee is not explained. Firstly, here is not a case of any unexplained asset but a case of unreported income. The source of said unreported income stands explained by the assessee which have been admitted by the AO to be commission income from facilitating accommodation entries.

6.18

The income, thus, cases to be income from unexplained sources but income from business/professional operations, to which section 69A cannot be applied. When section 69A is not applicable the aforesaid addition is to be sustained under the head of business or profession to which the higher rate of tax u/s 115BBA cannot be applied.

6.19

I am persuaded for the aforesaid view from the decision of Hon'ble Nagpur Bench of Tribunal in the case of DCIT vs. Shri Biharilal ShaduramChhabriya Kirana Oil ITA No. 106/Nag/2023 wherein it has been observed as under:

12.

When the assessee has disclosed the brokerage income from cash loans in the return of income under section 153C of the Act and the same having been accepted, it cannot be inferred that theassessee had introduced his own money in giving loans. Thus, the Revenue cannot take diametric opposite stand in same set of transactions. The learned CIT(A) had cogently arrived at his conclusions which cannot be summarily dismissed. Moreover, we are in consonance with the reasoning that same documents cannot be interpreted differently for similar transactions. Moreover, the Assessing Officer had simply kept his hands shut and did notconduct any enquiry to examine the veracity of the seized documents. It is not the case that the Assessing Officer did not have the particulars of lenders before him. He did not understand the trite fact that an individual lender cannot earn brokerage from himself which is an impossible situation when the assessee had denied that his own funds were involved in cash loans, the Assessing Officer needed to controvert the same by unearthing some corroborative evidences which he had miserably failed to do so. There are absolutely no credible and reliable evidences to establish that entire loans in cash were from the undisclosed funds whereas loan in cheques were accepted to be that of person other assessee and his role as a conduit or a mere intermediary was established. It is quite natural that the assessee is in a vantage position to mediate for loans in cash also. We further infer that-

A document seized in the search should be read as a whole.

ii) No party can pick and choose one part of document for its advantage.

(iii)

if an explanation relating to a transaction is found in the seized material, the same has to be considered. The onus will shift on to the Department to adduce further material to support its contention that ostensible as appearing from the document is not real.

(iv)

The initial burden lying on the assessee to explain the transactions fin this case, outgoings) can be discharged either from the statement recorded under s. 132(1) or from other documents found and seized in the search. Once onus shifted from the assessee, it is for the Department to prove by adducing additional material that the statement so given was false or not true or that corroborative entries from other documents arefalse or not reliable. There is another aspect of the case. It is not always desirable to reject the explanation furnished by the assessee. Totality of circumstances and preponderance of probability has to be taken into account before rejecting the explanation furnished by the assessee. If, as in the present case, the sources of income of the assessee are not such that it would yield large scale profits or there is no evidence of large scale hidden or secret wealth, then the plausibility of explanation of the assessee that outgoings are not his money but are the money of the lenders, is required to be accepted. In this context, following observation of Hon'ble Supreme Court is relevant (headnotes): CIT vs. Smt. P.K.Noorjahan (supra): In the corresponding clause of the Bill which was introduced in Parliament, while inserting s. 69 in the IT Act, 1961, the word "shall" had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word "may". This clearly indicates that the intention of Parliament in enacting s. 69 was to confer a discretion on the ITO in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the ITO is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. The question whether the source of the investment should be treated as income or not under s. 69 has to be considered in the light of the facts of each case. In other words, a discretion has been conferred on the ITO under s. 69 of the Act to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be exercised keeping in view the facts and circumstances of the particular case. "Held, dismissing discretion had not been properly exercised by the ITO and the AAC takingthe appeal, that in the instant case, the Tribunal had held that the discretion has been properly exercised by the ITO and the AAC taking into account the circumstances in which the assessee was placed and the Tribunal had found that the investments could not be treated as income of the assessee The High Court had agreed with the said view ofthe Tribunal. There was no error in the finding recorded by the Tribunal. Sec. 69 could not be invoked in respect of the investments of the assessee."

6.20

In view of the above, I direct the AO to charge commission income under the head of profits and gains from business or profession, instead of treating it as unexplained income u/s 69A of the Act and consequently compute the tax as per normal rate as against rate of tax as per section 115BBE applied in the assessment order.

6.21

In terms of the above, the present ground of appeal no. 5 is partly allowed.”

“7.

Ground No. 6: pertain to the addition of Rs. 7,50,37,000/- un account of alleged cash receipts in lieu of alleged RTGS made by the appellant.

7.1

The aforesaid addition has been made by the AO u/s 69A holding the appellant to be owner of unexplained money on the basis of excel sheet marked as Exhibit-V found from his Mobile during search and reproduced in the assessment order, which has been reproduced above. As can be seen from the said excel sheets, name of certain beneficiaries of cash payments were mentioned in the said excel sheet, aggregating to Rs. 7,50,37,000/-which has been added by the AO u/s 69A in the present order. In the statement recorded by the appellant u/s 132(4), he again explained the same to be accommodation entries facilitated by him.

7.2

In the appeal proceedings, the appellant has challenged the addition of the aforesaid entire amount in the hands of the appellant, simply on the basis of amounts mentioned in the excel sheet, without any corroborative evidence of the appellant to be receiving the entire said amount as undisclosed income and also the action of the AO in ignoring his statement, where his admission was only restricted to his role as facilitator of accommodation entries.

7.3

It is seen that the AO has also not made any further attempt post search either in the investigation proceedings or assessment proceedings to find any corroborative material suggesting that the assessee was the beneficiary of the entire amount mentioned in the excel sheet or the same reflected hisunaccounted income. While the excel sheet is a loose sheet, which is strictly not in the nature of account and, therefore, lacked evidentiary value, however, assuming the case of AO to be correct even then it can be seen that the name of the appellant is not mentioned therein as the recipient of the amount of cash, but carry name of certain third parties, who can be assumed to be beneficiaries of the corresponding amounts, on bare reading of the excel sheet. Under these circumstances, due credence can be given to the statement of the assessee recorded at the time of search where he has admitted his role to be facilitating accommodation entries, akin to his role in relation to accommodation entries provided outside India, where I have upheld the undisclosed income of the appellant only to the extent of commission income earned therefrom @ 0.25%, following the decisions of Hon'ble Delhi Iligh Court in the case of PCIT vs. Third Generation Traders Private Limited ITA No. 137/2025

7.4

In view of the aforesaid decision, and following my decision rendered in Ground of appeal No. 5 above, I hold that the entire amount of Rs. 7,50,37,000/- could not be treated as entire undisclosed income of the appellant simply on the basis of single loose sheet found from his Mobile and the addition on account of undisclosed income is restricted to 0.25% thereof as income in the nature of commission amounting to Rs. 1,87,593/- (Rs. 7,50,37,000-0.25%). In view of the same, the addition to the extent of Rs. 7,48,49,407/-stands deleted and the addition to the extent of Rs. 1,87,593/-is hereby sustained.”

4.

That the Ld. CIT(A) erred in law and on facts, in not deleting the entire addition of Rs. 1,27,30,402/- made by the AO and restricting the same to Rs. 12,73,040/- on alleged foreign remittances made by third parties.

4.1

That the Ld. CIT(A) erred on facts and in law, in confirming the addition made by the AO on the basis of statement of the appellant, in the absence of any corroborative evidence.

Without prejudice to the above:

4.2.

That the Ld. CIT(A) erred in law in not appreciating the facts that the entire amount of foreign remittances as reflected in the Form 15CA/CB of various companies was wrongly attributed to the appellant, despite the appellant neither being a director nor a shareholder in those companies.

4.3.

That the Ld. CIT(A) has erred in law by applying a commission rate of 0.25% on the alleged foreign remittances facilitated by the appellant, instead the rate of 1.10 paise per USD Dollar as stated by the appellant in his statement.”

“1.

On facts and in law, the Ld. CIT(A) has erred in restricting the addition of Rs. Rs. 1,27,30,402/- made u/s 69A of the Income-tax Act, 1961 to Rs. 12,73,040/-, by applying a commission rate of 0.25% as against 2.5% applied by the Assessing Officer, ignoring the incriminating seized material and the assessee's admission recorded u/s 132(4).”

Working of Commissioner Rate of 0.135%

Calculation of percentage

“7.

Ground No. 6: pertain to the addition of Rs. 7,50,37,000/- un account of alleged cash receipts in lieu of alleged RTGS made by the appellant.

7.1

The aforesaid addition has been made by the AO u/s 69A holding the appellant to be owner of unexplained money on the basis of excel sheet marked as Exhibit-V found from his Mobile during search and reproduced in the assessment order, which has been reproduced above. As can be seen from the said excel sheets, name of certain beneficiaries of cash payments were mentioned in the said excel sheet, aggregating to Rs. 7,50,37,000/-which has been added by the AO u/s 69A in the present order. In the statement recorded by the appellant u/s 132(4), he again explained the same to be accommodation entries facilitated by him.

7.2

In the appeal proceedings, the appellant has challenged the addition of the aforesaid entire amount in the hands of the appellant, simply on the basis of amounts mentioned in the excel sheet, without any corroborative evidence of the appellant to be receiving the entire said amount as undisclosed income and also the action of the AO in ignoring his statement, where his admission was only restricted to his role as facilitator of accommodation entries.

7.3

It is seen that the AO has also not made any further attempt post search either in the investigation proceedings or assessment proceedings to find any corroborative material suggesting that the assessee was the beneficiary of the entire amount mentioned in the excel sheet or the same reflected hisunaccounted income. While the excel sheet is a loose sheet, which is strictly not in the nature of account and, therefore, lacked evidentiary value, however, assuming the case of AO to be correct even then it can be seen that the name of the appellant is not mentioned therein as the recipient of the amount of cash, but carry name of certain third parties, who can be assumed to be beneficiaries of the corresponding amounts, on bare reading of the excel sheet. Under these circumstances, due credence can be given to the statement of the assessee recorded at the time of search where he has admitted his role to be facilitating accommodation entries, akin to his role in relation to accommodation entries provided outside India, where I have upheld the undisclosed income of the appellant only to the extent of commission income earned therefrom @ 0.25%, following the decisions of Hon'ble Delhi Iligh Court in the case of PCIT vs. Third Generation Traders Private Limited ITA No. 137/2025

7.4

In view of the aforesaid decision, and following my decision rendered in Ground of appeal No. 5 above, I hold that the entire amount of Rs. 7,50,37,000/- could not be treated as entire undisclosed income of the appellant simply on the basis of single loose sheet found from his Mobile and the addition on account of undisclosed income is restricted to 0.25% thereof as income in the nature of commission amounting to Rs. 1,87,593/- (Rs. 7,50,37,000-0.25%). In view of the same, the addition to the extent of Rs. 7,48,49,407/-stands deleted and the addition to the extent of Rs. 1,87,593/-is hereby sustained.”

“18.

Further, on perusal of ITR for A.Y. 2021-22, it is noticed that the assessee has shown proprietor capital of Rs.86,82,248/- and in the ITR for A.Y. 2020-21, the assessee has shown proprietor capital of Rs.66,90,067/-. It can be seen that the assessee has increased the capital of Rs. 19,92,181/-(86,82,248-66,90,067) in the year under consideration. However, the assessee has shown net taxable income of Rs. 10,13,740/- onlyfor the A.Y. 2021-22 and paid tax thereon. The same is resulted into excess addition of Rs.9,78,441/-(86,82,248-66,90,067) in proprietor capital.

Further, the assessee has not furnished any reply to the notices issued to him. Therefore, the provisions of section 68 of the Income-tax Act, 1961 shall apply and the addition to capital is held as the income of the assessee from undisclosed sources.

18.1

In view of the provisions of section 68 of the Income-tax Act, 1961, the excess addition amount in proprietor capital to the extent of Rs. 9,78,441/- is added to the income of the assesseeand tax is charged u/s 115BBE of IT Act, 1961.

(Addition:-9,78,441/-) I am satisfied that it is a fit case to initiate penalty u/s 271AAC of the I.T.Act, 1961 is initiated.”

“8.

Ground No. 6: pertain to the addition of Rs. 9,78,441/ on account of receipt of excess amount in proprietor's capital u/s 68 of the Act.

8.1

The AO upon reviewing the Income Tax Return, observed that the appellant's capital increased by Rs. 19,92 181/-(Closing balance: 86,82,248 minus opening balance: 66,90,067). However, since the appellant has shown net taxable income of Rs. 10,13,740/- for the A.Y. 2021-22 and paid tax thereon. Accordingly, the AO considered the excess increase in capital to the tune of Rs. 9,78,441/- (19,92,181 -10,13,740) as unexplained, and accordingly, addition of the said amount was made u/s 68 of the Act..

8.2

In response, the appellant submitted the summary of capital account:

8.3

Upon examining the summary, it is evident that the increase in the capital was primarily by business income, short-term capital gains and agricultural income and all of which were duly disclosed in the appellant return's and taxed accordingly.

8.4

Further, the AO had separately made an addition in respect of agricultural income of the appellant amounting to Rs. 14,78,000/- which also contributed towards increase in capital. Since the appellant had already disclosed the agricultural income in the ITR, the addition of 9.78 lakhs would effectively lead to double taxation of the same income, which is impermissible under the law.

8.5

Considering the facts and circumstances of the case, I find that the addition of Rs. 9,78,441/ of increase in capital is unsustainable. Therefore, the addition of Rs. 9,78,441/ made in the assessment order is hereby deleted.

8.6

in terms of the above, the present ground of appeal no. 6 is allowed.”

“19.

Further, on perusal of ITR for A.Y. 2021-22, it is noticed that the assessee has shown sundry creditors of Rs.13,13,860/- and in the ITR for A.Y. 2020-21, the assessee has shown Nil creditor. However, in the absence of any reply from the assessee, it is held that the assessee has shown bogus liability in its books of account. Therefore, provisions of section 41(1) of the Income-tax Act, 1961 attracts in this case. Therefore, an amount of Rs.13,13,860/- is added u/s 41(1) of IT Act, 1961.

(Addition:- Rs. 13,13,860/-) I am satisfied that the assessee has under reported his income by mis-reporting of facts. Therefore, penalty proceedings under Section 270A of the Act is big initiated separately on this issue.”

“9.

Ground No. 7: pertain to the addition of Rs. 13,13,860/- on account of liability towards creditors u/s 41(1) of the Act.

9.1

The AO upon reviewing the Income Tax Return, observed that the appellant's had shown sundry creditors amounting to Rs. 13,13,860/-, while the I'Te for the previous AY indicated NIL creditors. Since the appellant failed to provide any explanation regarding the change in the creditor balance, it was concluded that he has recorded a bogus liability in its financial statements. As a result, an amount of Rs. 13,13,860/ is being added u/s 41(1) of the Act.

9.2

The appellant contended that the impugned addition of Rs. 13,13,860/-was made based on erroneous facts. The actual closing balance of trade creditors in the books of appellant was Rs. 8,58,560/- against the closing balance of Rs. 13,13,860/-assumed by the Ld. AO.

9.3

While the opening balance of trade creditors were Nil, the closing balance of Rs. 8,58,560/- is contributed by:

Particulars	Amount
Opening balance	--
Provisions	2,96,100/-
Amount payable for the purchase of agricultural land	2,31,742/-
Outstanding expense payable (net)	3,10,418/-
Salary payable to employees	20,000/-
Closing Balance	8,58,560/-

9.4

Further, the appellant referred section 11(1) of the Act under which the impugned addition of Rs. 13,13,860/ has been made by the Ld. AO, section 41(1) shows that it applies when an assessee has claimed an allowance or deduction for a loss, expenditure or trading liability and subsequently, during a fiscal year, is not required to pay such liability either due to remission or cessation. In short, if a liability is no longer payable and is waived, it is deemed to be the income of the assessee under section 41(1).

9.5

In the present case, section 41(1) is not applicable, as the trading liability has not been reduced but has increased from nil to Rs. 8.58 lakhs. Further, a review of the creditor/trade payable ledger (placed at page 27 of the APB) shows no instance of creditors being written back or any liabilities from previous year being waived. Therefore, the addition of Rs. 13,13,860/-made u/s 41(1) is unsustainable. Therefore, the addition of Rs. 13,13,860/-made in the assessment order is hereby deleted.”

“20.

From the ITR of the assessee for A.Y. 2021-22, it is found that the assessee has claimed agriculture income of Rs. 14,78,000/-. In response to the query raised in respect of agriculture income earned by the assessee, no reply has been furnished. The assessee has failed to produce the details of agriculture land, details of agriculture production, seeds bills, fertilizers bills, watering bill, electricity bills and labour bill. Further, the assessee has also failed to produce the details of party to whom agriculture product was sold by him. In the absence of any reply from the assessee with respect to agriculture income, the same is held to be bogus agriculture income. The same is liable to be added back in the income of the assessee. Hence, the addition of Rs.14,78,000/-is made to the total income of the assessee. I am satisfied that the assessee has under reported his income by mis-reporting of facts. Therefore, penalty proceedings u/s 270A r.w.s 274 of the Act is being initiated separately on this issue. (Addition:- Rs. 14,78,000/-)"

“11.

Ground No. 8, pertain to the addition of Rs. 14,78,000/-on account of agriculture income.

11.1

The AO upon reviewing the Income Tax Return, observed that the appellant declared agriculture income of Rs. 14,78,000/-. During the assessment proceedings, the appellant failed to produce the details of agriculture land, details of agriculture production, seeds bills, fertilizers bills, watering bill, electricity bills and labour bill in response to queries raised during the course of assessment proceedings. Additionally, the appellant also failed to produce the details of party to whom agriculture product was sold by him and hence the agricultural income of Rs. 14,78,000/- was held to be bogus agriculture income. In the present appeal proceedings, it is observed that the appellant could not bring anything new to support the original stand of agricultural income.

11.2

However, the appellant. principally argued that since the appellant is being independently assessed at additional business income on account of accommodation entries by way of commission income or otherwise, the aforesaid amount of agricultural income originally declared in the Return should be telescoped to such income, in order to avoid double taxation of income. In other words, the appellant sought for benefit of telescoping of additional income brought to tax by the AO to the impugned agricultural income. The appellant, in this regard, relied upon following, case-laws wherethe theory of telescoping has been unequivocal valid for tax laws:

(1)

In the cause CIT S. Nellioppan (1967) 66 ITR 722 (SC), the Hon'ble Supreme Court held that even in the absence of direct evidence of any connection between the cash credit entries and the income withheld from the books of account by the assessee if the Tribunal inferred that there was a connection between the profits withheld from the books and the cash credit entries, then the said conclusion must be upheld and it cannot be said that the conclusion is based upon speculation.

(ii)

In the case of CIT v. K.S.M. Guruswamy Nadar and Sons (1984) 149 ITR 127 (Mad), it was act by the Madras High Court that when there are two separate additions, on account of suppression of profit and another on account of cash credit, it is open to the assessee to explain that the suppressed profits had been brought in as cash credits and one has to be telescoped into the other resulting only in one addition. It was, therefore, held that the Tribunal was right in its view in telescoping the additions made towards the cash credits.

11.3

I have considered the assessment order and arguments of the appellant. I find that the theory of telescoping is well-established in Income Tax Laws and the principle is avoidance of double taxation of same income under multiple heads. Further, I also fired that, no other incriminating material or evidence has been found with regard to the agricultural income declared in the return of income. The only basis of addition is the self-declaration of such exempt agricultural income by the appellant in the return of income, which has been denied by the AO for want of valid documentation of providing its source to agricultural activities which has not been satisfied by the appellant. Thus, it is reasonable to assume that the aforesaid income reflected by the appellant is attributable to other undisclosed income which has been assessed, basis incriminating material found in the course of search, or on other words telescoping agricultural income to undisclosed income found and assessed independently. In view of the same, considering that the AO has admitted that the appellant had earned undisclosed income with respect to the activity of accommodation entries which has even been upheld by me,while deciding appeal filed by the appellant against assessment order for A.Y. 2020-21 and also disposing ground of appeal no. 8 of the present appeal, I find that the benelit of telescoping of other assessed undisclosed incomes cau be given against impugned agricultural income declared as exempt income by the assessee in the return of income.

11.4

For the purposes of the above telescoping, the additional incomes assessed in appeal for A.Y. 2020 21 and the present appeal, arc clubbed together hereinbelow:

11.5

In view of the above table, it can be seen that total undisclosed income aggregating to Rs. 57,04,284/- was sufficient enough to telescope to impugned income of Rs. 14,78,000/- for which no other evidence was either found in search or has been referred by the AO apart from the self-declaration of exempt agricultural income made by the appellant in the Return, which remain unsubstantiated.

11.6

For the aforesaid reason, the present addition of Rs. Rs. 14,78,000/- is hereby deleted. Ground of appeal no. 8 is allowed.”

“8.

Ground No. 4, pertain to the addition of Rs. 21,08,400/-on account of cash found during the search u/s 69A of the Act.

8.1

During the course of search proceedings, the total cash of Rs. 21,08,400/- was found out of which cash of Rs. 19,00,000/- was seized by the tax officials. In his statement during the search, the appellant explained that the cash of Rs. 18,00,000/- was received as advance against the sale of shop in Ghaziabad and while the balance of Rs. 3,08,400/- was sourced from his own income and savings. In the assessment order, the AO however added the entire amount of Rs. 21,08,400/- to the income of the Appellent under section 69A of the Act.

8.2

in the present appeal, the appellant could not bring sufficient evidences to prove the source of the aforesaid cash, but, alternatively, argued that the source of said cash need to be telescoped to other undisclosed income added by the AO, in order to avoid double taxation of income. In other words, theappellant sought for benefit of telescoping of additional income brought to tax by the AO to the cash found.

8.3

I have considered the assessment order and arguments of the appellant. I find that the appellant has not been able to successfully establish the source of cash to any declared sources of income and, therefore, the action of the AO in not accepting the same stands accepted. However, I have already upheld the theory of telescoping while deciding ground of appcal no. 8 in A.Y. 2021-22, which can be applied to the lacts of the present transaction also, as both the appellant and the AO have not been able to trace the source of impugned cash with any other undeclared source. Thus, the appellant is entitled to the benefit of telescoping to trace the source of impugned cash to undisclosed income on account of commission income and other incomes assessed and to the extent upheld by me in appeals for A.Υ. 2020-21 & A.Y. 2021-22 and preceding grounds of the present appeal for A.Y. 2022-23.

8.4

For the purposes of the above telescoping, the additional incomes assessed in appeal for A.Y. 2020-21 & Α.Υ. 2021-22 and the present appeal, are clubbed together hereinbelow:

8.5

In view of the above table, it can be scer that total undisclosed income aggregating to Rs. 1,99,91,704/ was sufficient enough to telescope to cash found of Rs. 21,08,400/ for which no other evidence was either found in search or has been referred by the AO apart from the statement of cash found, which remain unsubstantiated.”

“13.

During the course of search proceedings, jewellery amounting to Rs. 1,02,01,286/- was found from the possession of the assessee. The assessee was requested to submit the source of acquisition of mixed gold jewellery, silver and Gold Bullion as mentioned above. The asessee was also requested to furnish the bills/invoices in respect of the above mentioned mixed gold jewellery, silver and Gold Bullion. Despiting providing various opportunities, no documentary evidence vis-à-vis source of acquisition the above valuable items furnished by the assessee. Accordingly, addition of Rs. 1,02,01,286/- is made u/s 69B of the Income-tax Act, 1961. (Addition of Rs.1,02,01,286/-) The penalty u/s 271AAC of the I.T.Act, 1961 is initiated.”

“9.

Ground No. 6, pertain to the addition of Rs. 1,02,01,286/ on the ground that the gold jewellery/bullion found during the search on the appellant regarded as his unexplained investment u/s 69A of the Act.

9.1

During the search operation, a locker was discovered at the Contral Bank of India, Chanakyapuri, Delhi, registerer in the names of the appellant and his wife, Ms. Sambhavi Jha. Upon accessing the locker, the following assets were found:

S. No.	Descriptions	Total Value
1	Mix Gold Jewellery	2,64,686/-
2	Silver	36,600/-
3	Gold Bullion	99,00,000/-

9.2

in his statement recorded during the search, the appellant explained that the Jewellery and Silver pertains to the wife of the appellant, Ms. Sambhavi Jha while the bullion of Rs. 99,00,000/- was received a gift from his mother. In the assessment order, the AO however added the entire amount of Rs. 1,02,01,286/- to the income of the appellant u/s 69A of the Act.

9.3

In the present uppeal, the appellant was unable to furnish bill or wucher to substantiate the source of the jewellery, but, alternatively, negued that the total jewellery of Rs. 3,01,686/-belongs to the wife of the appellant which is well within the limit prescribed by CBDT Instruction No. 1916 dated 11.05.1994 which states that the source of guldjewelleryupto 500 grams for a married lady required no explanation. As regards the bullion of Rs. 09,00,000/-, it was alternatively argued that, the same need to be telescoped to other undisclosed income added by the AO, in order to avoid double taxation of income. In other words, the appellant sought for benefit of telescoping of additional income brought to tax by the AO to the cash found.

9.4

I have considered the facts and circumstances of the present issue. I find that the appellant has not been able to successfully establish the source of subject assets to any declared sources of income and, therefore, the action of the AO in not accepting the same stands accepted. However, I find that, in so far as, the addition to the extent of Rs. 3,01,686/-towards jewellery is concerned, the same is squarely covered by the CBDT instruction No. 1916, which provides that jewellery within prescribed limits need not be proved hy the appellant. The jewellery to the aforesaid extent can be agreed to be belonging to wife and fall within the prescribed limits. The appellant should, therefore, get relief to that extent, following the aforesaid binding CBDT Circular. In view of the same, addition to the extent of Rs. 3,01,685/- is deleted.

9.5

As regards the bullion of Rs. 99,00,000/-, the same is not found to be bought from declared sources of income, nor the appellant has brought any cogent evidences for the same. The action of the AO in rejecting arguments of the appellant in that regard arc, therefore, found to be in order. However, 1 find that the appellant should get the benefit of telescoping, which I have principally upheld while disposing other grounds in the present appeed and in appeal for the earlier years, more so when the AO has also not been able to trace acquisition of the impugned bullion to any other undisclosed sources of income of the appellant. Accordingly, it needs to be presumed and telescoped to the undisclosed income assessed in the impugned assessment orders, to the extent upheld by me.

9.6

in view of the above, for the purposes of the telescoping, the additional incomes assessed in appeal for A.Y. 2020-21 8 Λ.Υ. 2021-22 and the present appeal after reducing the cash found, are clubbed together hereinbelow:

9.7.

In view of the above table, it can be seen that total undisclosed income aggregating to Rs. 1,78,83,304/- was sufficient enough to telescope to bullion found of Rs. 99,00,000/- and is therefore deleted. In view of the same, the entire addition of Rs. 1,02,01,286/- made by the AO stands deleted. Ground of Appeal No. 5 is allowed.”