TaxTMI 
TaxTMI 
2023 (4) TMI 1337
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....explained before him. 'He ought to have held that the commission income would not be more that 0.05% of the deposits. Rs.52,74,144/- 2. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in upholding addition of Rs.3,21,730 made by the AO on account of cash deposit in the bank account. Having regard to facts of the case, the said addition ought to have been deleted. Rs.1,1 1,344/- 3. The appellant craves leave to add, alter, amend and/or to raise any ground as occasion may arise before the Hon'ble ITAT either during the course of the appellate hearing N.A. Total tax effect (including surcharge @ 12% and education cess @3%) Rs.53,85,488/- 3. The Department has taken the following grounds of appeal: Grounds of Appeal Tax effect relating to each Ground of appeal (see note below) 1. The CIT(A) has erred in law and on facts in deleting the commission income of Rs. 11,07,61,000/- by adopting commission rate @ 1% instead of 8% without properly appreciating the facts of the case and the material brought on record. Rs.3,83,32,167/- 2. The appellant craves leave to amend or alter any ground or add a new grou....
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....was the commission income of the assessee on the total turnover of Rs. 158 crores computed @8% of the credits appearing in the bank accounts held by the assessee. 5. In appeal before Ld. CIT(Appeals), the assessee submitted that the AO has not brought anything on record, including comparable evidences to prove that the commission income earned by the assessee is @8%. Further, the assessee placed reliance on several judicial precedents in support of the contention that a reasonable percentage of commission may be taken, looking into the facts of the case. However, the Ld. CIT(Appeals) observed that despite several opportunities being given by the assessing officer to the assessee to explain these transactions, the assessee has only submitted that he has earned commission at the rate of 0.05% without any supporting evidence. Accordingly, since the assessee has not maintained any books of accounts and in absence of any details whatsoever forthcoming from the assessee, the AO was left with no other option but to estimate the commission income. On the issue of appropriate percentage to be taken to calculate the commission income earned by the assessee, the Ld. CIT(Appeals) held that ....
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....e restricted to 0.1% to 0.15% of the total deposits/ credits in the bank account. Further, we observe that the assessee is not maintaining any books of accounts and has no supporting documents/evidence to prove that he is earning commission income and if so, at what rate the same is being earned. No such details were also submitted during the course of appellate proceedings before Ld. CIT(Appeals). In the case of Geetaben Dineshchandra Gupta v. ITO 129 taxmann.com 346 (Gujarat), the Gujarat High Court made the following observations: Thus, considering the totality of facts and the circumstances of the instant case vis-a-vis considering the settled legal position, it appears that there is direct nexus/live link between the material coming to the notice of the Assessing Officer and that for formation of his belief that there has been escapement of the income of the assessee from assessment in the year under consideration because of his failure to disclose fully and truly all material facts as from the inquiry/investigation by the Investigation Wing, some tangible material was found to substantiate the fact that the assessee was the provider of accommodation entries and that,....
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....ade on protective basis is directed to be deleted b) The commission to be charged @0.5% 7.3 In the case of Chintan Niketan Bhandari v. DCIT IT(SS)A Nos. 495, 496, 497, 498, 499, 500 & 1604/Ahd/2019, the jurisdictional Ahmedabad ITAT vide order dated 29-11-2022 held that since the assessee failed to provide complete details regarding the commission income, the commission income may be computed @ 0.25% in the hands of the assessee. While passing the order, the ITAT made the following observations: 8.2 Now coming to the instant facts, we observe that the assessee has been running several concerns in the name of himself and in the name of other persons who are engaged in the activities of taking cheques and cash and deposited the same in their bank accounts. The assessee's contention is that he is merely acted as a commission agent and hence only the commission amount should be subject to tax in its hands. However, the Department has observed that the assessee could not produce that complete details of beneficiaries with their names, complete addresses, PAN and other details of transactions. In the instant case, there are approximately more than 7000 beneficiaries ....
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....artment. However, the assessee has not maintained any books of accounts, has not maintained cash book and bank book, he has not submitted any details of parties from whom the commission income has been earned, the assessee has not given any supporting documents to corroborate the correct rate at which commission income may be computed and the assessee has also not provided details/ list of parties who have made deposits to the tune of 158 crores in the bank accounts held by the assessee. The assessee has not come up with any details to substantiate its stand that the commission income may be restricted to 0.1% to 0.15%. Accordingly, looking into the instant facts, in the interests of justice, it would be reasonable to restrict the net commission income @0.25% of the total deposits in the bank account held by the assessee. In the result, ground number 1 of the assessee's appeal is partly allowed. 8. In the result, ground number 1 of the assessee's appeal is partly allowed. Ground number 2: Ld. CIT(Appeals) has erred in upholding addition of Rs. 3,21,730/- made by the AO on account of cash deposit in the bank account 9. The brief facts in relation to this ground of app....