2023 (3) TMI 197 - AT - Income Tax

Assessment Reopened Based on Cash Deposits Upheld by Tribunal

The Assessing Officer reopened the assessment under section 147 of the Act based on cash deposits. The Commissioner of Income Tax (Appeals) upheld the ... Commision in respect of hawala entries - Estimation of income - accommodation entries - commission income to be computed at 2% of the total receipt - HELD THAT:- CIT(A) after considering the submissions of the assessee has given a finding that the main activity of the assessee was providing accommodation entries and assessee has failed to justify the rate of commission shown by him. He has further noted that in the case of Pratibha Finvest Pvt. Ltd. [2012 (12) TMI 575 - DELHI HIGH COURT] has upheld the commission rate @ 2% in respect of hawala entries. Before us, no material has been placed by assessee to point out any fallacy in the findings of CIT(A). We therefore, find no reason to interfere with the order of CIT(A) and thus the grounds of assessee are dismissed. Issues:1. Reopening of assessment u/s 147 of the Act.2. Estimation of commission income in respect of accommodation entries.3. Failure of the assessee to justify the rate of commission.4. Appeal before the Tribunal challenging the CIT(A) order.5. Non-appearance of the assessee during the appeal hearings.Reopening of Assessment u/s 147 of the Act:The Assessing Officer (AO) reopened the assessment under section 147 of the Act based on information received regarding cash deposits made by the assessee. The Commissioner of Income Tax (Appeals) upheld the reopening, stating that the AO had sufficient material to believe that income had escaped assessment, leading to the dismissal of the ground related to the reopening.Estimation of Commission Income in Respect of Accommodation Entries:The AO estimated the commission income earned by the assessee at 2.5% of the total turnover, which was challenged by the assessee before the CIT(A). The CIT(A) directed the commission income to be computed at 2% of the total receipts, considering the nature of the activities conducted by the assessee. The CIT(A) relied on the decision of the Delhi High Court in a similar case involving accommodation entries and money laundering.Failure of the Assessee to Justify the Rate of Commission:The assessee failed to provide supporting documents to justify the commission rate claimed, leading to the rejection of the books of account by the AO. The CIT(A) emphasized that the appellant could not substantiate the commission rate of 0.40% to 0.45% initially shown, resulting in the estimation of commission income at 2% based on the precedents and the nature of the activities undertaken.Appeal Before the Tribunal Challenging the CIT(A) Order:The assessee appealed before the Tribunal, disputing the CIT(A) order that upheld the estimation of commission income at 2%. The Tribunal noted the absence of any material presented by the assessee to challenge the CIT(A)'s findings. Consequently, the Tribunal dismissed the grounds raised by the assessee, affirming the decision of the CIT(A) regarding the computation of commission income.Non-Appearance of the Assessee During the Appeal Hearings:Despite multiple hearing dates and notices issued, the assessee did not appear before the Tribunal, leading to the disposal of the appeal based on the submissions of the Revenue. The Tribunal considered the submissions of the Revenue and upheld the decision of the CIT(A) regarding the estimation of commission income, ultimately dismissing the appeal of the assessee.This detailed analysis of the judgment covers the issues involved comprehensively, highlighting the key aspects of each issue and the subsequent decisions made by the authorities and the Tribunal.