Tribunal Rules Invalid Approval for Tax Reassessment; Upholds Reduced Commission Addition for Assessee's Favor.

The Tribunal annulled the assessment made by the AO under sections 143(3)/147 of the Income Tax Act, 1961, due to invalid mechanical approval for reopening. Additionally, the Tribunal favored the assessee regarding the addition of income from commission on accommodation entries, upholding the reduction by Ld. CIT(A) from 1% to 0.5%, and ultimately ruling in favor of the assessee.

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Issues:
1. Validity of assessment made by the AO u/s 143(3)/147 of the Act.
2. Addition of income earned by the assessee from commission on accommodation entries.

Analysis:
Issue 1: Validity of assessment
The appeal was filed against the order of Ld. CIT(A)-6, Kolkata challenging the assessment made by the AO u/s 143(3)/147 of the Income Tax Act, 1961. The AO reopened the assessment based on information regarding substantial deposits in the assessee's undisclosed bank account. The approval for reopening the assessment was challenged by the assessee, citing a similar case where the Tribunal held such mechanical approvals as invalid. The Tribunal agreed with the assessee, canceling the assessment as the reopening itself was deemed bad in law.

Issue 2: Addition of income from commission
The AO had added Rs. 21,20,256/- to the assessee's income as commission earned from providing accommodation entries at a rate of 1%. The Ld. CIT(A) found the rate to be on the higher side and reduced it to 0.5%, limiting the addition to Rs. 10,60,128/-. The assessee appealed this decision before the Tribunal. After hearing both sides, the Tribunal allowed the appeal, holding in favor of the assessee.

The Tribunal's decision was based on the invalidity of the assessment due to the mechanical approval for reopening. The addition of income was also revised downwards by the Ld. CIT(A) but was further contested by the assessee, leading to the Tribunal's final decision in favor of the assessee.

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