During the course of search and seizure action conducted by the Investigation Wing in the case of three group concerns, it came to light that they were operating and managing benami concerns in the names of their employees through which they provided accommodation entries of unsecured loans and bogus purchases to various beneficiaries. The assessee however, could not produce the parties or intermediaries for verification nor could the assessee produce sufficient evidence to prove the genuineness of purchases. Even the payments through account payee cheques were not found sacrosanct and the same had been admitted in the statements recorded by the Investigation Wing. Moreover, cash was returned to these beneficiary parties through a after deducting commission. Therefore the unverifiable purchases were brought to tax and addition on account of bogus purchases was confirmed.

The very nature of business of the accommodation entry provider was to earn commission income from the beneficiaries, such as the assessee, the Assessing Officer had reasonably estimated the commission of Rs. 10,000 for two bogus bills obtained by the assessee at Rs. 5,000 per bill. (AY. 2013-14, 2014-15)