TaxTMI 
TaxTMI 
2025 (5) TMI 954
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....transactions of commission were quantified @2% of total turnover. 2. 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. 3,00,000/- 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. 2. In this case, AO levied the addition of Rs. 12,52,91,288/- on account of 2% commission income from accommodation entry business and deleted the protective addition of Rs. 3,00,000/- on account of unexplained cash credit in the form of unsecured loan. In appeal, Ld. CIT(A) restricted the addition at Rs. 2,37,66,799/- (@1.04% of turnover of Rs. 228,52,69,083) as against the addition of Rs. 12,52,91,288/- levied by the AO. Against the above, Revenue is in appeal before us. 3. At the time of hearing, Ld. DR relied upon the order of the Assessing Officer. Per contra, Ld. AR for the assesee submitted that the appeals for AY 2010-11 to 2016-17 filed by the assessee and appeals for AY 2010-11 to 2015-16 filed b....
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....e further note that in the appeal filed by the Revenue, there are two grounds. The finding in respect of Ground No. 1 is in Para 11 to 12 of the ITAT Order dated 24.05.2023 reads as under:- "11. Upon careful consideration, we note that identical issue was considered by the coordinate Bench of the Tribunal in the case of the brother of the assessee, Anand Kumar Jain in ITA Nos.1318 to 1324/Del/2019 and ITA Nos.2888 to 2894/Del/2019 vide order dated 28.04.2023. The adjudication of the ITAT is as under :- "7. The moot issue involved in this case pertain to determination of the commission income of the proven accommodation entry operator. 8. Brief facts of the case are that the assessee is an individual and derives income under head house property, business and profession and other sources. A search and seizure operation was carried out on business and residential premises of the Anand Jain and Naresh Jain group on 17.12.2015 and subsequently, notice u/s 153A dated 27.10.2017 was issued to the assessee. 9. The AO held that assessee manages and controls shell companies and routes money through such concerns for providing accommodation entries. The list of such alleged concerns i....
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....ission earned by the assessee and Sh. Naresh Kumar Jain and also the correct amount of accommodation entries given by the assessee and Sh. Naresh Kumar Jain. vii. The short and excess a/c clearly depicts the consolidated commission income earned on the accommodation entries by the assessee and Sh. Naresh Kumar Jain and the expenditure incurred with the respect to the earning of said income. Accordingly, actual commission can be computed based on the data appearing in short and excess account and the same may at best be charged in the hands of the assessee as commission income on the turnover. viii. The working for the consolidated net commission rate is as under: Short and excess A/c Total (in Rs. ) Receipts(Credit side) 220,616,047/- Less: Expenses(Debit side) 151,352,004/- Net commission income 6,92,64,043/- ix. It was submitted that the total turnover of alleged accommodation entries of the assessee and Sh. Naresh Kumar Jain. The computation is hereunder: Particulars Total Turnover Appearing in Tally(Jain Folder) 19,696,128,227 Less: Circular transactions among the shell company 4,842,477,767 Net Turnover as per Tally Data 14,853,650,460 x. that a....
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.... the year under consideration, therefore, it was not justified on the part of the AO to include Rs. 4,64,29,476/- being the aggregate of debit and credit bank transactions of M/s Ambarnuj Finance & Investments Pvt. Ltd. in the working of the commission income, hence, the said figure of Rs. 4,64,29,476/- is reduced from the calculation of commission. With regard to calculation of turnover/quantum of accommodating entries after eliminating the impact of circular transactions and percentage of commission 9.11 From the above instances, I find that the AO has pointed out that the "short & excess account" in the tally data means the commission received by the Jain Brothers. Further from the above quoted instance and other examples quoted by the AO in the assessment order, it is clear that the appellant and his brother use to maintain the data of providing accommodation entries including bank transfers, cash exchanged and commission charged in Jain Folder Tally data. Further the turnover analysis placed in the paper book also depicts that majority of credit entries in the bank statement of shell companies matches with the entries posted in the Jain folder tall data. Accordingly, it be....
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....nly. In this regard, the appellant has pointed out that seized record is the best evidence and when income is being considered on the basis of seized record, the expenses as recorded in the seized document also need to be reduced. It is only the net income, which is to be considered. I have examined the seized tally data. On going through the same, the contention of the appellant that expenses side represents the expense incurred by the appellant in arranging accommodation entries is found to be correct. However, in the facts and circumstances of the case, it will not be appropriate to allow deduction of entire expenses. Accordingly, taking a holistic view, I consider that 30% of the gross commission receipts (@1.49%) are the expenditure incurred for earning commission income. Accordingly, I find it appropriate to take rate of 1.04% (1.49% - 0.45%) for charging of commission income on the turnover of accommodation entries in the hands of the appellant." 9.13 Since, the facts in the case of the appellant are same as that of his brother Sh. Naresh Kumar Jain, therefore, I am inclined to adopt rate of commission at 1.04% as worked in the case of bother of the appellant. The total tu....
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....f ld. CIT(A)'s Order for AY 2010-11 has stated that, "the contention of the appellant that expenses side represent the expense incurred by the appellant in arranging accommodation entries is found to be correct. However, in the facts and circumstances of the case, it will not be appropriate to allow deduction of entire expenses. Accordingly, taking a holistic view, I consider that 30% of the gross commission receipts (@1.49%) are the expenditure incurred for earning commission income." 19. Thereafter the ld. CIT(A) proceeded to compute commission income by applying a rate of 1.04% (i.e. gross commission receipts @1.49% less 30% of gross commission receipts i.e. 0.45%) on the turnover offered and accepted by ld. CIT(A). The ld. CIT(A) has not brought anything on record but rejected the expenses incurred on earning the commission income and allowed 30% of commission income as expenses incurred for earning such income. The decision of ld. CIT(A) to restrict the expenses is purely on ad-hoc basis. While the commission income appearing in Short & excess A/c in Tally Data of Jain Folder is accepted, rejection of expenses appearing in the same short & excess A/c in Tally Data of Jain ....
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....t the principle underlying the rule of practice exemplified in Burnell v British Transport Commission [1956] 1 QB 187 is that where a party is deploying in court material which would otherwise be privileged, the opposite party and the court must have an opportunity of satisfying themselves that what the party has chosen to release from privilege represents the whole of the material relevant to the issue in question. To allow an individual item to be plucked out of context would be to risk injustice through its real weight or meaning being misunderstood." The aforesaid principle is often referred to as the 'Cherrypicking' principle. 58. In the case at hand, SEBI could not have claimed privilege over certain parts of the documents and at the same time, agreeing to disclose some part. Such selective disclosure cannot be countenanced in law as it clearly amounts to cherry picking." 21. Therefore, as per the explanation and submissions of the assessee, whole of the expenses incurred in earning commission income shall be allowed and accordingly the net rate of commission earned by the assessee i.e. 0.47% is the best which can be applied on the turnover of the accommodation entries ....