2013 (3) TMI 708

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..../M/2007 (AY:1999-2000) 2. In this appeal, assessee raised the following grounds which read as under: "1. On the facts and in the circumstances of the case, the Ld CIT (A) erred in upholding the action of the Assessing Officer in taxing commission earned on providing various hawala entries of Rs. 41,55,926/- @ 4% of Rs. 10,39,48,162/- instead of @ 1.25% claimed by the appellant. 2. (a) On the facts and in the circumstances of the case, the Ld CIT (A) erred in confirming action of the Assessing Officer in taxing Rs. 5,64,406/- as unaccounted sales. (b) The lower authorities failed to appreciate the submissions made by the appellant that the transactions are duly accounted for in books of accounts. 3. The Ld CIT (A) erred in confirming the addition of Rs. 2,44,000/- on account of cash credit u/s 68 of IT Act, being the loan taken from Minalshree Chemicals Private Limited." 3. During the proceedings before us and at the outset, Ld Counsel for the assessee mentioned that ground nos. 2 and 3 are required to be set aside to the files of the AO for examining the issues afresh after admitting the additional evidences, originally rejected by the CIT ....

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....aking a statement in support of making commission 5% in place of 1.25% and the details of the retracted statements after gap of 17 months etc. CIT (A) extracted relevant submissions dated 16.1.2006 wherein, assessee went on record in stating that the details of earning of commission from 3 to 4% of the bill amount / cash deposited in the bank account. Para 3.1.2 of the impugned order is relevant in this regard. Para 3.1.2 also refers to the assessee's reliance on the decision of ITAT Mumbai Bench in the case of Shri Sumermal R. Jain in ITA No.1595/Mum/1995, wherein the ITAT confirmed the commission @ 0.5% as proper against the AO's finding @ 1% to 1.25% of the gross amount received. The CIT (A) considered the above and partly ignored the statement given by the assessee during survey operation and also considering the affidavit of the assessee dated 20.4.2000, wherein AO offered commission income @ 1.25% and relying on the assessment order for the assessment year 1998-1999, where 4% was confirmed the by the CIT (A) as a commission earned. The CIT (A) also confirmed 4% adopted by the AO in his order in this year too. Finally, he sustained the marginally enhanced addition of Rs. 41,55....

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....hand, Ld DR dutifully relied on the order of the AO / CIT (A). He is also of the opinion that Ld Counsel does not have any reply when Annexure-3 was brought to his attention especially with regard to the commission rates lesser than 4% are pointed out to him. 8. We have heard both the parties, perused the orders of the Revenue and the paper book filed before us. We have also gone through the decisions of the Tribunal in the assessee's own case for the assessment year 1998-1999 vide ITA Nos. 4042/M/02 (1997-98); 7958/M/04 (1998-99); 4584/M/06 (1994-95); 4585/M/06 (1996-97); 4043/M/02 (1997-98); 4954/M/03 (1996-97) and 4955/M/03 (1998-99) dated 29.11.2007 which essentially contains a direction of remanding the appeals to the files of the AO. Ld Counsel has made a statement at Bar mentioning that, while giving effect to the above said order of the Tribunal dated 29.11.2007, AO repeated the same addition and applied the commission rate of 4% which is presently the subject matter of appeal before the CIT (A). Further, we examined another decision of the coordinate Bench of this Tribunal in the case of Shri Sumermal R. Jain vs. ACIT, ITA No.1595/Mum/1999 and others dated 23.6.2005. We....

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....sha & Co. and Kiran & Co (surpa), the Tribunal has considered reasonableness of percentage of commission to be earned on turnover was at 0.1%. The assessee himself has offered the percentage of commission at 0.15%, which is more than the percentage of commission considered to be reasonable by the Tribunal in the case of Palresha & Co and Kiran & Co (supra) in similar type of transactions. The theory of Assessing 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 concerned 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 case of Palresha & Co 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." 9.1. Ld Counsel also brought to our attention yet another decision of the Tribunal, where the 0.1% is accepted as comm....

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.... the net commission income earned on the above turnover should be calculated applying the 'net commission rate' of (3.07% - 0.5%) 3.02%. AO is directed to give effect as per the above. Accordingly, ground no.1 raised in the appeals is allowed. 12. In the result, appeal of the assessee is partly allowed for statistical purposes. I.T.A. No.2427/M/2007 (AY: 1999 - 2000) (By Revenue) 13. This cross appeal filed by the Revenue on 27.3.2007 is against the order of CIT (A), Central VIII, Mumbai dated 19.1.2007 for the assessment year 1999-2000. In this appeal, Revenue raised the following grounds which read as under: "1. On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in deleting the addition of Rs. 15,32,800/- on account of unexplained cash credit on the basis of scrutiny of rough cash book maintained by the assessee. 2. On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in deleting the cash withdrawals of Rs. 13,57,427/- made by family members, without appreciating the fact that no satisfactory explanation for the above withdrawals were given by the assessee during the course of assessment proc....

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....sh withdrawals done by the family members of the assessee are from the cash received by the assessee, from various parties for providing hawala entries to Naptha dealers. Even after proper explanation in this regard, Assessing Officer erroneously invoked the provisions of section 68 of the Act. On appeal, CIT (A) deleted the addition vide para 4.2 of his order which reads as under: "4.2. I have considered the submissions of the appellant. The origin cash withdrawal by family members of the appellant is the cash received by the appellant from various parties for providing hawala entries to Naptha dealers. When the origin of the cash ie explained, assessing officer is not justified in invoking the provisions of section 68 of the Income Tax Act. The provisions of 68 of the Income Tax Act can be invoked only in those cases where source f cash is not explainable. There is nothing to disbelieve the explanation offered by the appellant. It is seen that on similar issue involved in the case of the appellant in the AY 1998-1999, addition made by the Assessing Officer in the assessment order on this ground was deleted by the CIT (A). The sources of withdrawal by the family members o....