TaxTMI 
TaxTMI 
2023 (11) TMI 1390
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The revenue in this appeal has taken the following grounds of appeal: "1. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and facts of the case is restricted the addition (undisclosed commission income @ 2%) to 0.1% of the total turnover (both of buy and sell). Rest of the addition has been deleted by the Ld. CIT(A) based on the statement of Mr. Aurn Shah, director of Aryav Securities Pvt. Ltd. at the time of appellate stage. Whereas, in this case addition had been made on the basis of statement recorded from key person of the Ms Aryav Securities Pvt. Ltd. at the time Survey operation u/'s 133A of the income tax Act, 1961 as part of Project Falcon. 2. That the revenue reserves ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ash part of the transactions (the commissions involved). The AO has not contradicted the statement or shown it otherwise to be incorrect when it says that a total commission of 2% was received by Shri Anurag Jhunjhunwala and Shri Sanjay Jhunjhunwala upon the total turnover of the transactions. I find that the AO has accepted all parts and aspects of the statement of Shri Arun Shah and has made additions based only upon this statement. The only place where he has, however, diverged from the said statement is that while Shri Arun Shah in his statement has stated that it was Shri Anurag Jhunjhunwala and Shri Sanjay Jhunjhunwala who received 2°% in terms of Commission and of this the appellant received 0.1 % of the total turnover as commiss....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt received only 0.1%. This ignoring of only one part of the statement without offering any reasons for doing so is tantamount to a summary and arbitrary rejection of this part, without as much as raising any queries with regard to the major portion of the statement; and therefore cannot form a proper or acceptable procedure for lawful assessment. The second question takes us to the fundamental basis for making estimations. An estimate has to be based upon rational concrete material/evidence or reasoning. A basis for making an estimate has to be provided before making any such estimate. I find that the assessment order is also completely silent upon this matter. There is no basis whatsoever that has been provided for arriving at a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Assessing Officer Rate of commission Basis for Assuming the said rate 1 Giriraj Stock Broking Pvt. Ltd. 24.03.22 3.12.19 Same as that of present appellant Ad hoc Rs. 10,00,000/- Surrender by director of assessee 2 Lalit Kumar Tulshyan 29.03.22 3.12.19 Same as that of present appellant Ad hoc Rs. 50,000/- Surrender by assessee 3 Kayan Securities Pvt. Ltd. 21.3.22 3.12.19 Same as that of present appellant 0.15% Surrender by assessee 4 Vedica Vanijya Pvt. Ltd. 14.3.22 3.12.19 Same as that of present appellant 1% No basis mentioned 5 Present Appellant 7.2.22 3.12.19 Same as that in above cases 2% No basis mentioned The abo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ained clients for him with regard to the bogus trades. He has explained that it was these persons who made the dealings in cash with such clients. It was these persons who gave orders to the appellant on behalf of the clients. Therefore it stands to reasons that they Would also partake of the maximum piece from the commission obtained from these clients. It has been specified in the statement of Shri Arun Shah, and not contradicted by the AO, that it was the aforementioned two persons who received the commission in cash from the clients and this was @ 2% of the total transactions (both, buy and sell). The AO has nowhere contested these averments of Shri Arun Shah. Once it is accepted that the main persons who used to liaison with the client....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on a reasonable reasoning offered by Shri Arun Shah and has also not been controverted at any point by the AO. The AO is directed therefore to restrict the addition to 0.1% of the total turnover (both of buy and sell) as already calculated by him. The rest of the addition is to be deleted. These set of grounds are accordingly partly allowed subject to the above directions." A perusal of the above observation of the CIT(A) would reveal that the ld. CIT(A) has thoroughly discussed the statements of Shri Arun Shah which was recorded during the survey action and further has discussed the facts and circumstances of the case. The ld. CIT(A) has observed that the said Shri Arun Shah has specifically mentioned that the appellant had received com....