2016 (11) TMI 1668

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....under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short 'the Act'). 2. In this appeal, Revenue has raised the following Grounds of appeal :- "1. On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in restricting the addition of Rs. 478.94 lakhs made on account of unexplained cash credits u/s 68 of the Act to 0.15% without appreciating that the assessee had failed to furnish satisfactory explanation with regard to the identity of the parties and the source and genuineness of the transactions. 2. On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in restricting the addition to the commission income @ 0.15% without considering that the material found during the....

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....ompanies Act, 1956, which is a part of group of concerns, whose kingpin is identified as one Mr. Mukesh Choksi. In the course of search action u/s 132(1) of the Act, it was found that the entities of the group were involved in providing accommodation entries by way of share trading/loans etc. Since the assessee-company was also covered in such search operation, the impugned assessment was completed u/s 143(3) r.w.s. 147 of the Act dated 31.12.2010. Notably, this reassessment was as a result of reopening of original assessment completed u/s 143(3) r.w.s. 153C of the Act on 26.12.2008. In the impugned assessment, the Assessing Officer held that there were various deposits in cash as well as other credits appearing in the bank account which th....

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....lso covered by the search action carried out by the Department on 25.11.2009, the Tribunal has accepted the stand of the assessee that commission income was liable to be assessed in the hands of the entities @ 0.15% of the total receipts. It has also been pointed out that in the case of M/s. Richmond Securities Pvt. Ltd., ITA Nos. 4624 & 5099/Mum/2005 dated 29.8.2008, the Tribunal found that the provisions of Sec. 68 of the Act could not be invoked in view of the accepted modus operandi that such entities were only earning income by way of commission for providing accommodation entries. 6. At the time of hearing, the ld. DR has not disputed the aforesaid precedents which clearly support the findings of CIT(A). However, the ld. DR pointed....

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....amply clear that in these types of activities, brokers are only concerned with their commission on the value of transactions. Now the question comes what would be the reasonable percentage to the commission on the total turnover? The assessee has also made out a case that the customers do not come directly to him and they come through a sub- broker who also charges a particular share of commission. In all the judgments what has been stated is that an average percentage of commission is between 0.15% to 0.25%. In the case of Palresha & 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%, ....