2021 (8) TMI 1028 - AT - Income Tax

Tribunal affirms CIT(A)'s decision on IT Act section 69 addition, adjusting commission rate

The Tribunal upheld the CIT(A)'s decision to partly delete the addition under section 69 of the IT Act, emphasizing the assessee's engagement in the ... Assessment u/s 144 - Addition u/s 69 - assessee failed to provide details of credit entries in his bank accounts - HELD THAT:- We note that in assessee`s case an enquiry report was received from the Dy. Director of Income Tax (Inv.)-III, Surat regarding huge credits in the bank account of the assessee during the year under consideration. From the enquiry, the AO gathered that the assessee has four bank accounts and total credit entry in the bank accounts. AO treated as unexplained investment and treated income for the year under consideration by passing order u/s 144 r.w.s 147. On appeal, ld CIT(A) directed the assessing officer to calculate the commission @₹ 50 per lacs on the total turnover of ₹ 98,22,26,712/-. We note that investigation Wing, Surat, reported after examining the assessee and recording his statement on oath u/s 131 of the Act, that the assessee was engaged in the business of cheque discounting business and was using 18 bank accounts. The AO in the A.Y. 2009-10 had completed the assessment order dated 25.11.2016 holding that the assessee had earned commission income @₹ 50 per lacs on the turnover of ₹ 29,84,17,709/- and had made addition of ₹ 14,92,088/-. Therefore, we note that in previous year the Department has accepted the claim of the assessee that assessee had earned commission income @₹ 50 per lacs on the turnover of ₹ 29,84,17,709/-. It is a well settled legal position that factual matters which permeate through more than one assessment year, if the Revenue has accepted a particular's view or proposition in the past, it is not open for the Revenue to take a entirely contrary or different stand in a later year on the same issue, involving identical facts unless and until a cogent case is made out by the AO on the basis of change in facts. Assessee is engaged in cheque discounting business. However, considering the time value of money, we note that rate of @₹ 50 per lacs, is lower side, therefore we direct the assessing officer to compute the disallowance @ ₹ 75 per lacs. Principle of consistency are applicable to the assessee on cheque discounting business and not on the rate of ₹ 50 per lacs, therefore, considering the time value of money, we have directed the assessing officer to compute the disallowance @ ₹ 75 per lacs. Appeal of the Revenue is partly allowed. Issues involved:Appeal by Revenue against deletion of addition made under section 69 of the IT Act without providing details of credit entries in bank accounts.Detailed Analysis:1. The Revenue's appeal challenged the deletion of an addition of Rs. 98,22,26,712 made by the Assessing Officer under section 69 of the IT Act. The Assessing Officer found unexplained deposits in the assessee's bank accounts and treated them as undisclosed investment. The CIT(A) partly deleted the addition, considering the assessee's business of cheque discounting and commission income shown in returns.2. The Revenue argued that the CIT(A) erred in deleting the addition, as the assessee failed to provide proof of credit entries or turnover. They contended that each credit entry should be explained, especially when doubts exist. The Revenue disagreed with the CIT(A)'s calculation of commission income at Rs. 50 per lakh, stating that the entire turnover should be treated as undisclosed investment.3. The assessee defended their business of cheque discounting, where third-party cheques were discounted for a commission. They highlighted the previous year's assessment where the claim was accepted. The CIT(A) found that the assessing officer made an error in treating the entire turnover as undisclosed investment and directed a commission calculation at Rs. 50 per lakh.4. The Tribunal noted the investigation report confirming the cheque discounting business and previous acceptance of commission income. Citing the principle of consistency, the Tribunal upheld the assessee's engagement in cheque discounting but adjusted the commission rate to Rs. 75 per lakh due to the time value of money.5. The Tribunal clarified that the principle of consistency applied to the assessee's business activity, not the specific rate of commission. The Revenue's appeal was partly allowed, and the assessee's cross objections were dismissed as not pressed.6. In conclusion, the Tribunal upheld the CIT(A)'s decision to partly delete the addition, emphasizing the assessee's engagement in cheque discounting business and adjusting the commission rate. The appeal by the Revenue was partly allowed, and the cross objections by the assessee were dismissed.