AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2008 (3) TMI 687
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....s made into the bank accounts of the assessee as its income from undisclosed sources. While disallowing the claim of the assessee, the Assessing Officer noted from the P&L account that the assessee has shown income by way of commission and brokerage of Rs. 4,99,000/- and professional fees at Rs. 55,000/-. From the details furnished by the assessee, the Assessing Officer noted that assessee calculated commission @ 0.15% on transactions done through bank. The assessee was asked to furnish the details and in response thereto, the assessee furnished the receipts and payments reflected in the bank account representing the amounts received from the customers and paid back to them through cheques. The identity and the address and other details in respect of each transactions could not be identified as the same pertain to their old period and the transactions were through brokers. It was submitted before the Assessing Officer that assessee has furnished the details to the best of his ability and since the matter was very old, it was extremely difficult for him to furnish names and addresses etc., of the parties from whom various amounts were received. As the assessee failed to submit the d....
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....on has touched the bottom. Further, the said two companies were not having any direct customers and they used to come through agents only. Accordingly, the said two companies were getting 0.15% as its commission in the above transactions. I would like to further clarify that the bank accounts with the Citibank of the above two companies were given to one Shri T.C. Kothari, who is responsible for the deposits and withdrawals of the above bank accounts. I say that Shri T.C. Kothari is also engaged in the similar kind of activity and requested for allowing him to use the bank account which were opened in the name of the above two companies. Accordingly, the signed cheque books of the above accounts were given to Shri TC Kothari, and he has used the said accounts for his own purpose. In consideration of the same, he has made certain payments which have been taken into account while determining the income of the above two companies..." 4. With regard to inability of the assessee to furnish the details before the Assessing Officer, it was contended that considering the multitude of transactions that the appellant enters in normal course of its business, it becomes almost impossible not ....
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....and he did not approve the assessment order of the Assessing Officer, treating the entire amounts of credit in the bank account as undisclosed income of the assessee. Relying upon his order in the case of Richmond Securities for the assessment year 2002-2003, the CIT (A) directed the estimation of income in relation to similar credits in bank accounts @ 2% of the turnover. The CIT (A), accordingly, held that since in this case, the assessee itself admitted the income by way of commission or brokerage in relation to the bank deposits in question working out the rate of 0.15% of the turnover, as noted by the Assessing Officer himself in the impugned assessment year, the balance addition, shall be worked out by the Assessing Officer taking the total commission / brokerage of the 2% of the total turnover. He, accordingly, directed the Assessing Officer to compute the income of the assessee. These directions of the CIT (A) were not accepted by the assessee as well as the Revenue. They both have challenged the Order of the CIT (A) through their respective appeals before the Tribunal on following grounds : GROUNDS IN ITA. No. 4625/Mum/2005 (Assessee's Appeal) : 1."On the facts and i....
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.... in the circumstances of the case as well as in law, the Ld .CIT (A) erred in directing the Assessing Officer to re-compute the income of the assessee taking the total commission/brokerage at 2% of the total turnover with reference to the credits reflected in the bank statement, instead, of treating the entire amount of credits as the income of the assessee from undisclosed sources u/s. 68 of the IT Act. 3. The appellant prays that the Order of the CIT (A) on the above grounds be set aside and that of the ITO/AC/DC be restored." 7. With regard to ground Nos. 1 and 2 of assessee's appeal and sole ground of the Revenue's appeal, the learned counsel for the assessee has invited our attention to the Orders of the Tribunal in the case of ITO v. Palresha &. Co. [ITA. No. 1640/Bom/82], Kiran & Co. v. ITO [ITA. No. 3604/Bom/83], in which the Tribunal has considered these type of transactions and has held that the assessee is concern with respect to the commissions only on these accommodation entries and the normal rate of commission was Re. 1/- per thousand i.e. 0.1%. The assessee has also invited our attention to the assessment order and the Tribunal's Order in the case of A....
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....mmissions on the value of transactions. In the case of Palesha & Co. (supra) the Assessing Officer has accepted that assessee was earning commission on providing accommodation entries. In that case, a total of Rs. 11.86 crores of cheques and drafts were discounted. According to the assessee, he was only entitled to commission of Re. 1/- per thousand. On account of non-furnishing of complete details, the Assessing Officer has rejected the books of account and has applied rate of Re. 1/- per thousand. The matter travelled to the Tribunal and the Tribunal has held that even after the books are to be rejected, an estimation can be made only if the book results shown by the assessee were found to be unreasonable. The Tribunal, accordingly, accepted the commission at Re. 1/- per thousand and deleted the additions. 10. Similar was the position in the case of Kiran & Co. (supra) in which the Tribunal has again examined the similar type of activities and observed that the nature of the business of the assessee is to only earn commission on these transactions. In that case also, assessee has offered commission at Re. 1/- per thousand and Assessing Officer applied at Rs. 4/- per thousand. Re....
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....sessing Officer to treat the entire deposit as "unexplained cash credits, cannot be accepted in the light of assessment orders in the case of beneficiaries and also in the light of the fact that assessee is only concern with the commission earned on providing accommodation entries. We, therefore, of the view that since the assessee itself has declared the commission on turnover at 0.15% which is more than the percentage considered to be reasonable by the Tribunal in the cases of Palresha & Co. (supra) and Kiran & Co. (supra), the same should be accepted. We, accordingly, accept the commission declared by the assessee and set aside the Order of the CIT (A) in this regard. 13. With regard to ground No. 3, we do not find any independent adjudication in this regard and more so no specific ground was raised before the CIT (A) on this issue. We, therefore, of the view that this ground does not arise out of the order of the CIT (A). Morever, nothing is stated during the course of hearing, as to how this ground arise out of the order of the lower authorities. We, therefore, decline to adjudicate this ground and reject the same. 14. With regard to ground No.4 it is noticed that assessee h....