Assessee claiming accommodation entries cannot selectively treat some transactions as genuine while others as tainted

The ITAT Mumbai held that the assessee, who voluntarily offered commission income claiming involvement in accommodation entries, cannot selectively treat only Rs. 87 lakhs as tainted while asserting other transactions as genuine. Since the assessee failed to prove genuineness of unsecured loans beyond book entries, all transactions were deemed accommodation entries rather than legitimate share trading. The tribunal directed that commission income should be estimated based only on debit entries (outward remittances) not credit entries, as credits represent layered funds while debits represent actual accommodation provided. The matter was remanded to AO for quantification based on bank statements, with directions that if higher commission income is determined or bank statements aren't provided, the original assessment stands confirmed.

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Issues:
The judgment involves the confirmation of addition made by way of undisclosed commission income in multiple assessment years.

Issue 1: Addition of undisclosed commission income
The assessee, a private limited company, filed its return of income for AY 2012-13 declaring total income of Rs. 770/-. The AO gathered that the assessee had availed accommodation entries from certain entities, leading to the reopening of assessment. The assessee claimed to be engaged in share trading but failed to provide details to substantiate transactions. The AO concluded that the assessee provided accommodation entries instead of engaging in genuine share trading, estimating commission income at Rs. 2,84,00,000/-. The CIT(A) confirmed the AO's action. The Tribunal upheld the lower authorities' decision, noting the lack of evidence supporting the nature of transactions and affirming the assessee's role as an accommodation entry provider.

Issue 2: Estimation of commission income
The AR argued that only debit entries in the bank statement should be considered for estimating commission income, as they represent funds layered by the assessee to provide accommodation entries. The Tribunal agreed in principle with this argument but highlighted the absence of the bank statement as a hindrance. The issue of quantification of commission income was remanded back to the AO with directions for the assessee to furnish the bank statement for verification. The Tribunal allowed the appeal for AY 2012-13 for statistical purposes, with similar decisions applying to AYs 2013-14 & 2017-18.

Separate Judgement:
The judgment was delivered by SHRI ABY T. VARKEY, JM.

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