TaxTMI 
TaxTMI 
2014 (9) TMI 56
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....ellant-assessee was indulging in money laundering as majority of the sale and purchase transactions recorded in the books were mere accommodation entries. 2. The Assessing Officer vide assessment order dated 27th November, 2002, held that the assessee had earned commission @ 1.5% from the said transactions on the turnover of Rs. 1,04,76,94,004/-. Undisclosed income of Rs. 1.57 crores as commission earned was assessed. In the first appeal, Commissioner of Income Tax (Appeals) upheld the factual finding that the appellant had entered into and settled bogus transactions to provide accommodation entries, through several bank accounts including dummy and feeder bank accounts in the name of third parties. He observed that the total quantum of credit in various bank accounts was Rs. 1,04,76,94,004/-, which was the total turnover/transactions relating to accommodation entries. Before the Commissioner of Income Tax (Appeals), the primary contention of the appellant-assessee was that the computation of commission @ 1.5% was highly excessive and in similar cases, income by way of brokerage had been computed @ 0.5%. The said argument was, however, rejected by the Commissioner of Income Tax (A....
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....counts describing as dummy/feeder/main accounts used to carry on fictitious and ostensible business of share dealing, leave no amount of doubt that the assessee was involved in earning undisclosed income on a very large scale. It is therefore, not possible accept that the assessee did not earn any undisclosed income and that income in it's (sic) case was to be computed on the basis of books produced by the assessee. We reject the arguments of the assessee." (emphasis supplied) 4. Thereafter, in paragraph 18, the Tribunal observed as under:- "18. We now face the question as to what should be reasonable rate of commission in this case having regard to material available on record. The assessee did not dispute that quantum of turnover for providing the accommodationn entries to various clients during the year as computed by the AO at Rs. 1,04,76,94,004/- is not correct. The commission stated to have been charged and admitted by the assessee ranged from .25% to .5%. The rate as evident from the seized material which has been referred to by the lower authorities, does reflect that the assessee had charged a rare (sic) as high as 1%. As against this, the revenue authorities have a....
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....e, 2005, stating (i) that the gross rate of commission had been computed without allowing expenditure incurred to earn such commission; (ii) though in the appraisal report by the Investigation Wing, the turnover was shown as Rs. 91,48,97,000/-, but as per the assessment order the turnover was Rs. 104,76,94,004/-; (iii) the figure of turnover should be reduced or exclude; (a) the funds transferred from one bank account to another resulting in calculation of turnover twice; (b) credit entries in bank statements regarding margin imposed by SEBI, which were in regular course of business and were not connected with the business of earning brokerage; and (c) the amounts representing dishonoured cheques on account of insufficient funds. Thereafter, another application dated 11th May, 2006 for rectification under Section 154 was filed on 30th August, 2006. On request for supply of copy of bank statements, these were furnished on 1st October, 2008. On 2nd December, 2008, the appellant-assessee wrote a letter that there were debit/credit entries of bounced cheques aggregating Rs. 8.06 crores in the bank statements. Cheques transferred from one bank, to another, for Rs. 4.40 crores, and, Rs. ....
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....om self-evident, it ceases to be an apparent error. It is no doubt true that a mistake capable of being rectified u/s 154 is not confined to clerical or arithmetical mistakes. On the other hand, it does not cover any mistake which may be discovered by a complicated process of investigation, argument or proof. As observed by the Supreme Court in Master Construction Co. (P) Ltd. vs. State of Orissa [1996] 17 STC 360, an error which is apparent on the face of the record should be one which is not an error which depends for its discovery on elaborate arguments on questions of fact or law. A similar view was also expressed in Satyanarayan Laxinarayan Hege vs. Mallikarjun Bhavanappa Tirumale AIR 1960 SC137. It is to be noted that the language used in Order 47, Rule 1 of the Code of Civil Procedure, 1908 is different from the language used in sec. 154 of the Act. Power is given to various authorities to rectify any "mistake apparent from the record" is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of "an error apparent on the face of the record". Mistake is an ordinary word, but in taxation laws, it has a special significance. It is not an arit....
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....hat the turnover was not a subject matter of challenge in the appeal preferred against the original assessment order under Section 143(3), which had resulted in order dated 30th November, 2004. He submits that in view of the aforesaid position, Section 154(1A) would be applicable, as turnover was not an issue which was considered and decided by way of appeal or revision. We have already referred to the order dated 30th November, 2004 and quoted the relevant paragraphs wherein the figure of Rs. 104 crores has been specifically mentioned and accepted as correct. We have noted that the Tribunal has observed that the aforesaid figure represents genuine as well as fictitious turnover. It is apparent that at that time, the appellant-assessee had not challenged the said turnover and had accepted the same as true and correct. This was the basis on which the entire appellate proceedings were heard and decided. Therefore, there is merit in the submission of the Revenue, which was accepted by the Tribunal that the subject matter of appeal at that time included in its ambit the question of turnover involved and the observations of the Tribunal cannot be read in isolation, but meaningfully with....