TaxTMI 
TaxTMI 
2025 (12) TMI 406
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....ls are almost similar except variation of addition on account of accommodation entry and commission income for providing such entries either in the form of sale or purchases or loans. Thus, with the consent of parties, all appeals were clubbed, heard together and are decided by common order to avoid the conflicting decision. For appreciation of fact, facts in case of Lokesh Kumar Khabya in A.Y. 2016-17 is treated as lead case. The assessee has raised following grounds of appeal: "1. On the facts and circumstances of the case and in law, the Ld CIT(A) erred in confirming reassessment proceedings u/s 148 of the Income Tax Act, 1961 which is bad in law and required to be quashed. 2. On the facts and circumstances of the case and in law, the Id 2 CIT(A) failed to consider that, no other addition is permissible if no addition made on the basis of reasons recorded for reopening. 3. On the facts and circumstances of the case and in law, the Ld 3 CIT(A) failed to considered that additions cannot be made without any incriminating material in unabated assessment. 4. On the facts and circumstances of the case and in law, the Ld CIT(A) erred in treating the ....
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....red in confirming the action of Ld AO in initiating penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961. 14. Appellant craves leave to add further grounds OR to amend OR alter the existing grounds of appeal on or before the date of hearing." 2. Rival submissions of both the parties have been heard and record perused. The learned Authorised Representative (ld. AR) of the assessee that though the assessee has raised multiple grounds of appeal in all the appeals in all years. However, for adjudication of all the appeals, all appeals may be divided into two group i.e. first group of appeal wherein the reopening / reassessment was initiated on the basis of information gathered in search action and further information received on the basis of insight portal of department that assessee is a beneficiary of bogus accommodation entry of loans and advances and sale and purchase. However, no such addition on account of beneficiary, rather the assessee was treated as entry provider and income was estimated on the basis of nature of entry allegedly provided. Thus, admittedly, no addition was made on the basis of reasons recorded; therefore, the assessment orders in those c....
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....he statement of assessee or their main operator. The finding of assessing officer are contrary to the statement relied by him. Similarly, for addition of 3.00% of loan amount, the ld. AR of the assessee submits that addition of loan amount @ 3.00% is on higher side. The Income Tax Department in case of various other similar entry providers made addition ranging from 0.02% to 0.20% on transactions of sale and purchases @ 0.50% on the transaction of loans. Though against such addition those assessee filed appeal before Tribunal, however, no relief was granted neither such order was revised by department. To support his submission, the ld. AR relied upon the Surat Bench in Sanjay Kumar Choudhary (HUF) vs ACIT (2022) 136 taxmann.com 151 (Surat) & PCIT vs Alag Securities (P) Ltd. (2020) 117 taxmann.com 292 (Bombay). The ld. AR of the assessee submits that Hon'ble Bombay High Court in PCIT vs Alag Securities (P) Ltd. while referring the various other decision upheld the addition of commission income only @ 0.1% to 0.15%. The ld. AR of the assessee submits that in a recent decision Mumbai Tribunal in Buniyad Chemicals Ltd. vs ACIT in ITA No. 2421 & 2422/Ahd/2011 dated 18.10.2024 restricte....
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....rchase aggregating of Rs. 1.66 crore. We find that no such addition as a beneficiary of accommodation entry was made against the assessee. Rather, the assessee was treated as accommodation entry provider. His books of account were rejected and his income was estimated as commission income of Rs. 1.26 crore being 0.5% on total sale and purchase and Rs. 6.08 lacs being 3.00% of total loans and advances assumed by assessing officer. Thus, no additions were made on the basis of reasons recorded. 7. We find that similar reasons for A.Y. 2018-19 were recorded against the assessee that assessing officer was having information from insight portal through DDIT (Inv.), Surat wherein the assessee has made transaction with nine entities who were indulged in activities of routing funds in gems and Diamonds Company on multiple occasions. However, no such addition was made by assessing officer. Rather, additions were made on account of commission income for providing sale and purchase and loans and advances were made. 8. Similarly, in case of Rati Diamonds P Ltd. in A.Y. 2016-17 in ITA No. 5111/M/2025, the assessment was reopened on the basis of information that search and seizure action wa....
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....e necessary. Similar view was taken by Bombay High Court in PCIT vs Lark Chemicals (P) Ltd. and SLP before Supreme Court was dismissed vide (2018) 99 taxmann.com 312 (SC). 12. We find that similar view was taken by Hon'ble Gujarat High Court in CIT vs Mohmed Juned Dadani (supra). Thus, in view of the aforesaid factual and legal view taken by higher courts, we may safely conclude that assessing officer recorded reasons on a particular issue about escapement of income and no such additions were made, which were basis of such reasons recorded, however, the additions were made on different issue. Thus, no such addition is justified in the reassessment proceedings. Thus, all six appeals as mentioned in para-3 above are allowed on primary submission of ld. AR of the assessee. 13. So far as, other grounds of appeal in remaining other appeals are concerned, we find that pursuant to search action of Lokesh Kumar Khabya group on 05.07.2022. The case of all assesses were centralised and assessment was completed under section 147 r.w.s. 144B. The assessing officer made addition on account of sale and purchase entry @0.5% of such transaction and @ 3.00% of loan amount. We find that the as....
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....o identify the beneficiaries. The Ld. CIT(A) however noted that assessee was carrying out the activity of providing accommodation entries for commission varying to 0.25% to 0.5% and from the statement recorded for the year under consideration, it was noted by the Ld. CIT(A) rate of Commission was nothing less than 0.37%. 5.1 Before us, the Ld. AR vehemently relied on the decision of Co-ordinate Bench of the Tribunal in similar facts like that of assessee for Assessment Year 2008-09. This Tribunal rejected the contention of the Revenue to treat the entire deposit as unexplained cash credit. This Tribunal observed that: "The theory of Assessing Officer to treat the entire deposit as unexplained cash credits, cannot be accepted in the light of assessment orders in the case of beneficiaries and also in the light of the fact that assessee is only concerned with the commission earned on providing accommodation entries. We, therefore, of the view that since the assessee itself has declared the commission on turnover at 0.15% which is more than the percentage considered to be reasonable by the Tribunal in the case of Palresha & Co and Kiran & Co (supra), the same should be accepte....
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....sult, appeal filed by the assessee is partly allowed." 16. Thus, in view of aforesaid factual and legal discussion, we have independently examined the assessment order, order of ld CIT(A) and the nature of additions made by assessing officer. On considering all such material and by following the ratio order of Jurisdictional High Court in PCIT vs Alag Securities (P) Ltd. (supra) direct the assessing officer to restrict the addition of commission income on the transaction of loans to the extent of 0.50% on outstanding liability of loan at the end of financial year and in case of sale and purchase to the extent of 0.40% of such transaction. Thus, all the assesses are allowed part relief on estimation of commission income. 17. We, further, find that assessing officer while estimating commission income considered all intra group transaction. Therefore, considering the fact that no such commission income can be earned by assessee from its own transaction. The assessing officer is directed to exclude such transactions which are within group concern. Thus, the grounds of appeal with regard to rate of commission are allowed and the assessing officer is directed to exclude the transac....