2018 (3) TMI 667

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....cts of the case in reducing the commission income earned by providing accommodation entries to 2% from 5.6% on the total turnover taken by the A.O. 2. (a) The order of the CIT(Appeals is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal. 2.2 Cross objection raised in C.O. No. 388/Del/2014 are as under: 1. The Ld. CIT (A) erred both in law and on facts in confirming the addition of Rs. 40,66,051/- to the returned income based on the estimated commission income @ 2% of the aggregate transactions after allowing deduction @ 0.50% there from for expenses, resultant addition @1.99% ignoring the fact that there is no material on record to support such higher estimation. 2. The Ld. CIT(A) has erred both on facts and in law in not providing for the expenses incurred for arranging the accommodation entries by way of corresponding purchases, ignoring the fact that the evidence of arrangement of accommodation entries by the appellant. 3. The authorities below have erred on facts in not reducing the returned income from the estimated additi....

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....ell as Sh. Rakesh Gupta in their books of account for computing amount of the commission earned on providing accommodation entries. The assessee accepted the control and management of the concerns operated by him and also accepted the total turnover including VAT of concerns operated by him for financial years 2005-06 to 2009-10 at Rs. 81,93,43,067/- as appearing in their books of accounts. According to the books of account of those concerns, the assessee admitted accommodation entry provided during financial year 2007-08 i.e. corresponding to the assessment year under consideration at Rs. 20,43,24,135/-. The Assessing Officer applied the weighted average rate of commission of 5.67% as reflected in documents seized during the course of search as against the claim of the assessee of rate of commission from 0.25% to 0.50 % and computed the commission income earned by the assessee during the year under consideration of Rs. 1,15,85,178/- from providing accommodation entries to various beneficiaries. Further, the Assessing Officer allowed establishment expenses of Rs. 10,21,621/- at the rate of 0.5% of the profit and computed the net addition to the income of Rs. 1,05,63,557/- (Rs.1,15,....

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....ng the percentage of commission at the rate of 5.67% on the total transactions of accommodation entries provided by the appellant, the Assessing Officer issued a show- cause notice dated 12.03.2013. In response to the same, the letter dated 18.03.2013 filed by the appellant was not accepted by the Assessing Officer. On perusal of the said reply dated 18.03.2013, I find that the appellant did not furnish any documentary evidence to substantiate that the rate of commission charged by him at 0.25% to 0.50% and as claimed by him was correct and that the percentage of commission worked out by the Assessing Officer on the basis of the seized documents in the individual cases given in the chart incorporated in the order was incorrect and exorbitant. There is no set formula or fixed rate of commission while conducting such transactions in providing accommodation entries. Such business/activity is based on the practices prevalent in the market and on the basis of needy. There are several people who are engaged in the activity of providing accommodation entries, and would normally charge 2% as commission on the amount that is transacted in providing such accommodation entries. The Assessing ....

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....rd. In our opinion, the dispute is only in respect of the rate of commission on accommodation entries issued by the assessee. There is no dispute as regard to the fact that the assessee was engaged in issuing accommodation entry bills through proprietary concerns of the assessee as well as concerns of relative and employees, as mentioned by the Assessing Officer in the impugned assessment order. According to the assessee, the Assessing Officer has not considered seized documents relating to transactions where no commission was charged. The assessee has also contended that commission paid corresponding to the purchases has also not been reduced out of the commission earned corresponding to the accommodation entry of sale bills issued. The assessee has also contended that income already declared by the assessee has also not been considered. On the other hand, the Ld. CIT(DR) has submitted that finding of the Ld. CIT(A) is not based on any documentary evidences. 7. In our opinion, the Ld. CIT(A) has restricted the rate of commission at 2% on the basis of his own knowledge without supporting any documentary evidences or relying on any documentary evidences found during the course of s....