J.K. Ranka, J. - (1.) THIS appeal under s. 260A of the I.T. Act, 1961 (for short, "IT Act") has been preferred by the appellant -assessee against the order of the Tribunal dt. 24th May, 2013 passed in ITA No. 9/Jp/2008 by which the Tribunal has allowed the appeal filed by the respondent -Revenue against the order of the Commissioner of Income -tax (Appeals) -I. Jaipur [for short, the "CIT(A)"]. The brief facts, as emerging on the face of record, are that the appellant -assessee, a private limited company is carrying on the business of manufacturing of industrial chemicals. A search operation came to be carried out at Thakkar Group by the name of Ram Remedies (P.) Ltd. and its managing director Mr. Mayur M. Thakkar. While carrying out the search proceedings at Mayur M. Thakkar's business and residential premises, certain incriminating documents relating to the appellant -assessee were also found and on the basis of which a notice under s. 158BD was issued in pursuance to which the block assessment was carried out. It is the claim of the respondent -Revenue that Mr. Mayur M. Thakkar, in the name of his various companies and family members, had been obtaining delivery notes by fabricating documents in the name of various concerns namely, eight companies, the names of which are quoted here ad infra: 1. M/s. Apex Metchem (P.) Ltd. 2. M /s. A.R.A.R. Chemicals (P.) Ltd.M/s. Texol Chemicals 3. M /s. VIP Chem and Chemicals 4. M /s. Neelchal Chemicals Industries M/s. S.S. Chemicals 5. M /s. Thinner and Co. 6. M /s. Manu Points and Chemicals.
(2.) IT is a finding of fact as observed by the Tribunal in the impugned order wherein the addition was sustained working out commission @ 2 per cent that number of persons/concerns engaged in manufacturing, trading and dealership of petrochemical products were using accommodation entries by way of fictitious bills of paper concerns issued by Vora Group. Thakkar group is one such group engaged in the business of manufacturing, trading, dealership and transportation of bulk chemicals like kerosene, MTO, benzene, mineral turpentine, Solvent, NGL/Naphtha, LPG etc. Some of these chemicals such as naphtha are procured mainly from the public sector companies like. BPCL, HPCL, OICL, etc. There is a quota fixed by the public sector undertakings, supply of such chemicals for actual users which in turn are to be utilized by them in the manufacturing of various petro chemical products. These chemicals could however be used for many other illegal purposes and common among them is adulteration of petrol. Due to quota allocation system these chemicals command a premium in the market and are mostly sold at such high rate than the procurement price which are usually in cash and not recorded in the books of account. As the allotted chemicals are sold in cash by the quota holders instead of utilizing them for manufacturing process, certain bogus buyers of manufactured items, which in fact are not produced at all are required to be shown in record. Actually no manufacturing or distillation is done but invoices of bogus sale showing sale of manufactured item or by product of naphtha are made. For this purpose the concern of Vora group used to give accommodation entry for purchase of chemicals from such parties by issuing bogus purchase bills.
(3.) MODUS operandi followed by Vora group was to receive cash from various parties and the same were deposited in bank accounts maintained in the name of various fictitious, non -existing paper concerns. Thereafter, cheques/DD/pay orders were issued either directly from the said account or after transferring the deposited amount to another account held by Vora family only. The core issue before the AO was as to how the said transactions have to be treated in the hands of the assessee, particularly, in view of the overwhelming evidence that Mr. Sanjay Bhatia, director of the assessee -company had given to Mr. Mayur M. Thakkar the letter heads of the assessee so also the signed blank cheque books and it has been found as a fact that Mr. Mayur M. Thakkar was, in fact, operating even the bank account of the appellant with Union Bank of India. Obviously a person in the ordinary course of his business or any other person would keep letter heads, cheque books in safe custody and one would not allow a third person to operate a bank account and leave even the signed blank cheque books and if the above facts, which have been found admittedly correct, then there had to be some consideration having been received by Mr. Sanjay Bhatia, director of the appellant -company in allowing not only to operate the bank account but also in providing blank signed cheques. While the AO appeared to have treated all the credit balances i.e. deposits in the Union Bank of India in the account of the assessee as having not been proved, however, the Tribunal, after considering the connected case of Vora Group where commission of 3 per cent was assessed on the entire transaction but in the case of assessee, rate of 2 per cent was worked out on the basis that this could have been an adequate consideration. The above findings clearly indicate that the Thakkar family has acted as an active accomplice in this entire unaccounted trade undertaken by M/s. Apex Metchem (P.) Ltd. the appellant from its undisclosed bank account at Mumbai. Various evidences collected in this regard clearly indicate the involvement of Thakkar family. Some of the clinching evidences establishing nexus of Thakkar family with unaccounted operation of bank account in the name of M/s. Apex Metchem (P.) Ltd. the appellant are as under: (a) The Mumbai address of M/s. Apex Metchem (P.) Ltd. as per bank record is actually office address of Thakkar family. (b) Though Mr. Sunil Thakkar has denied that he has introduced the bank account of M/s. Apex Metchem (P.) Ltd. However, evidences in the bank records confirm Mr. Sunil Thakkar as introducer. (c) Telephone number of SCI and mobile numbers of Manoj M. Thakkar are recorded in the bank records; it was found that Mr. Vinod, who is the cashier of Sunil and Manoj Thakkar has received DD and PO on various occasions from M/s. Apex Metchem (P.) Ltd. account. ;