TaxTMI 
TaxTMI 
2022 (9) TMI 695
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....llant at Rs.1,12,12,150/-. 2. The learned Assessing Officer and the learned CIT (A) has erred in law and in facts in passing the order without complying with the principals of natural justice. 3. The learned Assessing Officer and the learned (A) has erred in law and in facts ignoring the Bombay High Court judgments which has been decided in favour of the applicant and according to the Bombay High Court judgments the income should be taken @0.15% of the turnover and 50% expenses should be allowed of the expenses claimed against the income. 4. The learned Assessing Officer and the learned CIT (A) has erred in law and in facts in applying 2% income on entire bank deposit as against 0.15% offered by the appellant. 5. The learned Assessing Officer and the learned CIT (A) has erred in law and in facts by ignoring the direction given by Honorable ITAT that income should be calculated @0.15% of the net turnover (after deducting transfer entries). 6. The learned Assessing Officer and the learned CIT (A) has erred in law and in facts in estimating the income on gross receipts without reducing the transfer entries amount in bank account on which no....
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....g Officer also disallowed the claim of the assessee seeking exclusion of certain transfer entries in the bank account for the purpose of invoking commission @ 2%. According to the Assessing Officer, no evidence in support of the claim was filed. Further, the Assessing Officer also rejected the claim for allowance of the 50% of the expenses as held in other group cases. On further appeal, the Ld. CIT(A) rejected the contention of the assessee and dismissed the appeal. 4. Aggrieved, the assessee is before the Tribunal raising the grounds as reproduced above. 5. The ground No. 1 & 2 are general in nature and therefore, we are not required to adjudicate the same. The ground No. 3 to 5 are in respect of estimation of commission income on the receipts debited in bank account of the assessee. The contention of the assessee is that Hon'ble Bombay High Court for assessment year 2003-04 has restricted the commission income @ 0.15% of the turnover and therefore, facts of assessment year under consideration being identical to assessment year 2003-04, the rate of commission should be applied @ 0.15% on the turnover. 6. On the other hand, the Ld. DR relied on the order of the lower auth....
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....f transactions. Tribunal held that the action of the Assessing Officer in treating the entire deposits as unexplained cash credits could not be accepted in the light of assessment orders in the case of the beneficiaries and also in the light of the fact that the assessee was only concerned with the commission earned on providing accommodation entries. Therefore, Tribunal took the view that since the assessee had itself declared the commission on turnover at 0.15% which was more than the percentage considered to be reasonable by the Tribunal, Minal Parab ITXA1512_17.odt the same should be accepted. Accordingly, Tribunal accepted the commission declared by the assessee i.e., M/s. Goldstar Finvest Pvt. Ltd., and set aside the order of CIT (A). Tribunal further noticed that the above stand had been consistently followed by the Tribunal in various orders. No distinguishing feature could be brought on record by the Revenue. Therefore, Tribunal following the above orders including the order in the case of the assessee i.e., M/s. Goldstar Finvest Pvt. Ltd. in the immediately preceding year had upheld the order of the CIT (A)." 7.1 Accordingly, respectfully following the finding of the H....
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....med expenses against the revenue shown from the business income. According to the Assessing Officer, commission income has been estimated separately and therefore expenses claimed against the business income cannot be allowed against the commission income. According to him, the commission income was estimated on net basis and therefore, further allowing the business expenses would result income Nil income or little income in the hands of the assessee. The relevant findings of the Assessing Officer are reproduced as under: "5.3 In respect of expenses to the tune of Rs. 872,664/- claimed against the commission income as assessed in assessment order, the assessee company has filed only a list of such expenses. As reproduced herein above the director of assessee company Mr. Mukesh Choksi was asked to submit evidences in support of such claims and in response only a chart giving break up of such expenses was submitted. Further, it was stated by the assessee that all the expenses were claimed in the original assessment proceedings and therefore should be allowed. In support of such argument copy of letters filed before the DCIT Central Circle 46, Mumbai in the block assessment p....
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.... Business/Other income -- Total Income (A) 472,589/- Expenses claimed 872,664/- Taxable Income (A-B) (-) 400,075/- 5.4 As shown above if claim of expenses so made by the assessee is genuine and is actually incurred over and above the expenses claimed in the return of income, the result will be loss of Rs. (-)400,075/-. In other words the assessee company forgoes its claim to the extent of 50% only in order to show some income and not losses which would otherwise create suspicion and therefore such claim of expenses are not allowable. As discussed above, the claim for allowance of further expenses against commission income is not acceptable and the income of the assessee is computed as per the original assessment order dated 08.12.2011." 9.1 However, we find that the Tribunal in the case of M/s Goldstar Finvest Private Limited v. DCIT [ITA No. 6114 to 6120/M/2012] which is a group concern of the assessee group has allowed the claim of 50% expenses following finding in other group cases. The relevant part of the decision in the case of Goldstar Finvest Pvt. Ltd. (supra) reproduced as under: "4. In all these cases of the Group concerns of Sri ....
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....r referring to various decisions have upheld the percentage of commission on net profit @ 0.15% which was quite consistent with the statement recorded at the time of search. Accordingly, following the judicial precedence in the case of the assessee's sister concern (supra), we uphold the rate of commission / rate of net profit from such activities at 0.15%. Accordingly, ground no. 4 & 5 as raised by the assessee are allowed. 8. As regards the disallowance of business expenses, the Ld. CIT(A) has directed the AO not to allow any expenses against the net income of 2% determined. We find that the Tribunal in the case of Gold Star Finvest Ltd have disallowed only 50% of the business expenses. Accordingly, following the judicial precedence, which is applicable mutatis mutandis in the case of the assessee also, we direct the AO to allow the business expenses to the extent of 50%. Accordingly, ground no.8 is treated as partly allowed. 9. In the result, appeal of the assessee is partly allowed" In assessee's own case also, this issue has been decided. in the following manner: "4. On the other hand, the ld. DR relied upon the order of AO. Nothing ....
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....oned above. We have gone through the orders as enclosed in the paper book filed by the assessee and find that the ld. AR has correctly stated that this issue has been unanimously accepted by the Tribunal in various cases including the case of assessee. Nothing has been brought on record by the ld. DR to distinguish these cases. Therefore, respectfully following the orders of the Tribunal including the order of Tribunal in assessee's own case in the immediately preceding year, we find that the ld. CIT(A) has rightly deleted the addition, no interference is called for in the order of ld. CIT(A), therefore, the same is upheld. Grounds No.1 and 2 taken by the Revenue stand dismissed". Thus, following the judicial precedence in cases of various Groups concerns as well as that of assessee decided by the Tribunal, we hold that net profit rate / commission should be taken at 0.15% and the expenditure claimed should be allowed to the extent of 50% from such income. Accordingly, these two issues are decided in favour of the assessee. As regards the other grounds taken, the same have not been argued before us on the ground that they will become purely academic. Accordingly, the a....