TaxTMI 
TaxTMI 
2023 (5) TMI 1216
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....d. CIT (A) of the rate of commission income at 1.04%. We may refer to grounds of appeal, which are common in all the assessee's appeals, from AY 2016-17 which read as under :- "1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals)[CIT(A)] is bad both in the eye of law and on facts. 2. (i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in restricting the addition to Rs.2,37,66,799/- made by the AO on account of commission income treating the assessee as an accommodation entry provider. (ii) That the addition has been confirmed by arbitrarily applying the commission rate of 1.04% of the alleged turnover. 3. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the action of AO in holding that the assessee is an accommodation entry provider. 4. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the action of AO despite the fact that the addition has been made on the basis of extraneous considerations grossl....
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...."ITA No.1749/Del./2019 (AY: 2010-11) "On the facts and in the circumstances of the case, the ld.CIT (A) has erred in law and on facts in deleting the protective addition of Rs.6,85,000/- made by the AO on account of unexplained cash credits without considering the fact that the assessee has failed to produce directors of the shell concern to verify the identity of the company, genuineness of the transactions and creditworthiness of the concern." ITA No.1750/Del./2019 (AY: 2011-12) "On the facts and in the circumstances of the case, the ld.CIT (A) has erred in law and on facts in deleting the protective addition of Rs.74,50,000/- made by the AO on account of unexplained cash credits without considering the fact that the assessee has failed to produce directors of the shell concern to verify the identity of the company, genuineness of the transactions and creditworthiness of the concern." ITA No.1751/Del./2019 (AY: 2012-13) "On the facts and in the circumstances of the case, the ld.CIT (A) has erred in law and on facts in deleting the protective addition of Rs.43,60,000/- made by the AO on account of unexplained cash credits without consid....
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....hort 'the Act') was carried out on 17.12.2015 on Sh. Anand Kumar Jain and Sh, Naresh Kumar Jain (assessee) alongwith their various associates. The allegation on the assessee and his brother is that both of them use to maintain and operate various shell companies to provide accommodation entries and charge commission in respect of the same. Extensive enquiry / investigation was carried out during the course of search, post search investigation and assessment proceedings. The search operation was conducted at various premises including the office and residence of the assessee and his brother, residence of the partners / employees of the assessee and his brother. During the course of search various documentary evidences were found and seized by the department. The evidences and material found during the course of search includes documentary evidences in the form of cheque books, financial statements, bank statements, share certificates, acknowledgements of ITR, bank account opening and closing letters, authorization letters for attending the assessment proceedings, books of accounts in Tally format, copy of ledger accounts / confirmations. Further various statements of postman....
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....e hands of the appellant. Here, it is also noticed that there are some additional credit entries in the AD's data which are not appearing in the Jain folder tally data, accordingly it is logical to apply average rate of commission of 1.04% on the said additional credit entries as well. The. total turnover of the appellant will be as follows:- 8.15 In view of the above working the average rate of commission income of 1.04% will be charged in the hands of the appellant on the turnover of Rs.228,52,69,083/- for the year under consideration. Accordingly, the AO is directed to restrict addition at Rs.2,37,66,799/-." 8. Against the above order, assessee and Revenue are in cross appeals before us. We have heard both the parties and perused the records. 9. Ld. Counsel of the assessee submitted that on identical issue of commission on accommodation entries, this ITAT in the case of brother of the assessee, namely, Anand Kumar Jain has considered similar facts and passed an order whereby rate of commission on the accommodation entry has been determined as 0.47%. He submitted that his submissions shall be the same as in these appeals and he submitted that rate of commission....
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....e basis of seized material and post search investigations, held that assessee is an accommodation entry provider and therefore completed the assessment order computing the commission income @2% on the turnover of the amounts rotated/routed. 13. Aggrieved by the order of the AO, the assessee filed appeal before CIT(A). 14. During the appellate proceedings before the ld. CIT(A), the assessee filed written submissions pleading that, i. The working of the total turnover of the concerns by the AO is incorrect ii. The AO has taken and added both credit and debit side which is incorrect as only credit side transactions of the alleged shell concerns should be taken instead of both debit and credit. iii. Circular transactions among the concerns have not been eliminated by the AO while computing income iv. Turnover with respect to M/s Ambarnuj Finance Investment Pvt. Ltd. should be eliminated as no adverse inference can be drawn on the transactions of the entities. v. Ad-hoc rate of 2% should be rejected and average rate of commission as coming out of seized material should be applied. vi. The AO has ignored the 'short and excess....
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.... 262,717,480 245,616,875 260,228,180 717,246,284 1,876,225,835 15. Thereafter, considering the detailed submission and explanation furnished by the assessee, the ld. CIT(A) restricted the rate of commission to 1.04% as against 2% computed by the AO by holding as under in AY 2010-11. A similar finding has been given for all the assessment years. For the sake of ready reference, the relevant part of the order of the ld. CIT(A) is reproduced as under: "With regard to M/s Ambarnuj Finance & Investments Ltd. 9.7 Further on going through the replies filed before the AO during the course of assessment proceedings under section 153A, it is noticed that the company has submitted the details of loans given, repayment of the same and interest income shown on the same during the year under consideration. The AO has not drawn any adverse inference in this regard in the assessment order. From the above facts, it is evident that in year under consideration, the company was engaged in the business of financing and investment activities which are not doubted by the AO in the assessment order. Further, the returned loss of the company has been accepted and th....
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....,546 17,996,407 22,794,455 31,921,772 31,792,231 - 151,352,004 9.13 Further the turnover as per tally data after eliminating circular transactions or the aforesaid six years for which details are available are as under:- Particulars AY 2010-11 AY 2011-12 AY 2012-13 AY 2013-14 AY 2014-15 AY 2015-16 AY 2016-17 Total Turnover Appearing In Tally (Jain Folder) 523,137,544 1,463,935,931 2,694,686,090 3,681,193,690 5,303,052,720 6,030,122,251 - 19,696,128,227 Less: Circular transactions among the shell company 83,550,600 453,336,100 913,688,481 799,494,446 985,521,370 1,606,886,770 - 4,842,477,767 Net Turnover as per Tally Data 439,586,944 1,010,599,831 1,780,997,609 2,881,699,244 4,317,531,350 4,423,235,481 - 14,853,650,460 The above table shows that the appellant has received commission of Rs. 22,06,16,047/- and made payments of Rs. 15,13,2,004/- in short and excess a/c over the period of six years for the total turnover of the six years for the total turnover of the six years of Rs. 1485,36,50,460/- The average rate of commission received on to....
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.... 9.14 In view of the above working the average rate of commission income of 1.04% will be charged in the hands of the appellant on the turnover of Rs. 11,56,10,968/- for the year under consideration. Accordingly, the AO is directed to restrict the addition at Rs. 12,02,355/." 16. Aggrieved by the order of the CIT(A), the assessee and the Revenue filed an appeals before the Tribunal. 17. Heard the arguments of both the parties and perused the material available on record. 18. We find that the AO himself has given a finding that circular transactions should be eliminated while computing the turnover of accommodation entries. However, while arriving at the turnover of accommodation entries given by the assessee such elimination of circular transactions was left out to be made. The ld. CIT(A) has accepted the working of turnover furnished by the assessee after eliminating circular transactions or transactions on which income had already been offered. The ld. CIT(A) has rightly held that the turnover with respect to M/s Ambarnuj Finance Investment Pvt. Ltd. should be eliminated as the assessment proceedings of M/s Ambarnuj Finance Investment Pvt. ....
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....culated by the CIT(A) @1.04% on the total turnover (by arbitrarily restricting expenses on earning commission to 30% of gross commission income) Average Yearly Commission which should have been considered @0.47% on the total turnover AY 2010-11 27,66,87,335 115,610,968 55,33,746 12,02,355 5,43,372 AY 2011-12 618,05,53,386 160,105,451 12,36,11,068 16,65,096 7,52,496 AY 2012-13 105,04,22,587 114,700,597 2,10,08,452 11,92,886 5,39,093 AY 2013-14 187,86,43,617 262,717,480 3,75,72,872 27,32,262 12,34,772 AY 2014-15 696,49,99,924 245,616,875 13,92,99,999 25,54,416 11,54,399 AY 2015-16 109,26,08,571 260,228,180 2,18,52,171 27,06,373 12,23,072 AY 2016-17 180,12,05,658 717,246,284 3,60,24,113 74,59,361 33,71,058 Total 1924,51,21,078 187,62,25,835 38,49,02,421 1,95,12,749 88,18,262 20. Reliance is being placed on the judgment of Hon'ble Supreme Court in the case of Reliance Industries Limited Vs. SEBI, 2022 (8) TMI 423 - dated August 5, 2022 wherein it was held that, "57. Before we part with the present appeal, another disconcert....
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.... AY 2013-14 262,717,480 0.47% 12,34,772/- AY 2014-15 245,616,875 0.47% 11,54,399/- AY 2015-16 260,228,180 0.47% 12,23,072/- AY 2016-17 717,246,284 0.47% 33,71,058/- 22. The AO is therefore directed to give effect to this order accordingly. Before parting we would like to clarify that the determination of expenses and the commission earned is based on the incriminating material specifically found and seized during the courses of search and hence the percentage of commission earned cannot be considered to be the same in other similar cases." 12. Since facts are identical and same search was conducted on both the brothers, we follow the principle of stare decisis and follow the aforesaid order. Hence, the rate of commission in the present cases is determined at 0.47%. AO is accordingly directed to follow the direction in the aforesaid ITAT order. 13. Our above order applies mutatis mutandis to all the appeals filed by the assessee and Revenue in relation to rate of commission. ITA Nos.1749 to 1754/Del/2019 (AYs 2010-11 to 2015-16) 14. Apropos protective addition : Since facts are identical we are referring to the facts ....
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....ount of Rs.72,15,210/-, the amount of Rs.13,00,000/- was received from the appellant own HUF, for which there is no specific allegation of the AO in the assessment order doubting the source of funds its bank statement neither it has been held as a shell concern, hence no adverse inference can be drawn in this regard. Further the remaining amount of Rs.59,15,210/- was received by the appellant from Mahadev Investments, Next Generation Exim Pvt. Ltd., Pragaya Multitraders Pvt. Ltd., Gomati Consultants Pvt. Ltd., Group one Informative Pvt. Ltd., Maha Laxmi Trading Co. and Next Generation Exim Pvt. Ltd. These companies from whom funds were received by the appellant have already been treated as shell companies operated and managed by the appellant and his brother. From the operation and management of these shell companies the appellant and his brother had earned undisclosed commission in lieu of providing accommodation entries to the various beneficiaries which is the substantive addition made by the AO. With regard to the said earning of undisclosed commission substantive addition to the extent of Rs.4,90,35,779/- has already been confirmed in the hands of the appellant. The amount of ....
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....operty in question during the year under consideration along with his wife as co-owner for a consideration of Rs. 75,79,100/-. The appellant in support of his contention has submitted a copy of sale deed which is placed at PB Pg. 56-67. On perusal of the same, it is noticed that the circle rate / the stamp valuation rate of the property is Rs. 71,42,400/- and the appellant has sold the property for a consideration of Rs.71,50,000/- + Stamp duty of Rs. 3,57,500/-. The report of the DVO is placed at PB Pg.298. On perusal of the same, it is noticed that the DVO has only mentioned that the appellant has not cooperated with him and accordingly he could not make the inspection / visit of the property for the valuation. He has not mentioned anything on the merits of the case. From the report of the DVO, it is also noticed that he has nowhere mentioned anything regarding the underreporting of the sale consideration showed by the appellant. As far as the issue of non cooperation of the appellant is concerned, the appellant has duly discharged his onus by submitting reply before the DVO along with the copy of sale deed and intimating the DO regarding the sale of the property by him. Accordin....
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....on no addition can be made in the hands of the appellant estimating the value of the property. Therefore, the AO is directed to delete the addition." 20. Against the above order, the Revenue is in appeal before us. 21. Heard the parties. We note that the on identical issue, the Tribunal in ITA No.2889, 2890 and 2891/Del/2019, vide order dated 28.04.2023 has adjudicated the issue as under:- "27. We have gone through order of the ld. CIT(A) in detail. The ld. CIT(A) concurrently considered the provisions of Section 56(2)(viib) and Section 50C, report of the DVO and the stamp duty valuation (circle rates). The ld. CIT(A) held that the value as per the stamp duty valuation authority shall be taken as full value of the consideration and since the payment made by the assessee is as per the stamp value authorities determination no addition is called for. With regard to the addition made on account of cost of construction, the ld. CIT(A) held that there was no difference between the value in the cost of construction declared by the assessee and the value as considered by the AO, can be attributed owing to the variance being less than 10% of the accepted norms of variation. H....