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2026 (5) TMI 39
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....pting rate of 2% which was reduced to 0.5% by the Learned CIT(A). Therefore, the Revenue is in appeal before the Tribunal. Since the appeals involve common issues the same were heard together and are being disposed off by way of a common order. [Assessment Year 2010-2011] ITA No.6258/Mum/2024 & Cross Objection No.286/Mum/2025 2. First we would take up appeal preferred by the Revenue and Cross Objection preferred by the Assessee for the Assessment Year 2010- 2011 against the Order, dated 15/10/2024, passed by the Commissioner of Income Tax (Appeals) - 51, Mumbai [hereinafter referred to as the 'CIT(A)'], whereby the Ld. CIT(A) had partly allowed the appeal of the Assessee against the Assessment Order, dated 21/12/2017, passed under Section 144 read with Section 147 of the Act. 3. The Revenue has raised following grounds of appeal in ITA No.6258/Mum/2024 [Assessment Year 2010-2011] : "1. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in restricting the addition of commission @0.5% of total transactions at Rs. 22,40,292/- representing accommodation entry, against the addition of commission @2% of total transaction at Rs. 22,40,292/-. ....
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....ormation, the case of the Assessee was reopened under Section 147 of the Act and a notice under Section 148 of the Act was issued to the Assessee on 31/03/2017. In response, the Assessee filed return of income on 25/04/2017 declaring total income at INR.1,75,452/- [same as declared in return filed under Section 139 of the Act]. Subsequently, notices under Section 143(2) and 142(1) of the Act were issued and duly served on the Assessee. The order passed by the Assessing Officer and the Learned CIT(A) clearly record that a copy of the reasons recorded for reopening assessment were also provided to the Assessee. However, no objections were filed by the Assessee against the same. The Assessing Officer noted that during the course of assessment proceedings, the Assessee had only filed part details in response to various statutory notices. Therefore, a final Show-Cause Notice, dated 05/02/2017, was issued and served upon the Assessee requiring him to explain why accommodation entries taken/provided by the Assessee for entities/concerns related to Mr. Vipul Vidur Bhatt amounting to INR.22,40,292/- should not be treated as undisclosed transactions. Since no response was received from the A....
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....1 above. Cross Objection No.286/Mum/2025 10. We would first take up the Cross Objection filed by the Assessee since the Assessee has raised the issue of validity of re-assessment proceedings for the first time before the Tribunal. 11. It has been contended on behalf of the Assessee that the reassessment proceedings were initiated solely on the basis of incriminating material found during the course of the search conducted in the case of VVB Group and therefore, the Assessing Officer should have exercise jurisdiction under Section 153C of the Act in the case of the Assessee. It was submitted by the Learned Authorised Representative for the Assessee that for the aforesaid reasons, the Assessing Officer was precluded from initiating proceedings under Section 147 of the Act. 12. The issue that arises for consideration is whether in the facts and circumstances of the present case the Cross Objection raised by the Assessee can be entertained by the Tribunal since it has been raised for the first time in the appellate proceedings before the Tribunal. It is admitted position that the Assessee had not raised any jurisdictional issue in the appeal preferred before the Learned CIT....
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....by the Assessing Officer of the Other Person under Section 153C of the Act shall stand vitiated. Bare perusal of Section 153C of the Act make it is clear that the Assessing Officer of the Other Person comes into action only after satisfaction note and the material unearthed during the course of searched in received from the Assessing Officer of the searched person. In the present case, re-assessment proceedings have been initiated on the basis of information received from the Investigation Wing and not on the basis of satisfaction note and material received from the Assessing Officer of the searched person. It is not a case where the Assessing Officer of the searched person (i.e. VVB Group) had handed over the incriminating material unearthed during the course of search to the Assessing Officer of the Assessee. There is nothing on record to suggest that any satisfaction note was drawn by the Assessing Officer of the searched person to the effect that any incriminating material found during the course of search pertained/related to the Assessee. On the contrary, the Assessing Officer as well as the Learned CIT(A) has recorded that the reasons were recorded for reopening after receip....
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....on raised by the Assessee challenging the validity of the reassessment proceedings by way of cross-objection form part of the material on record. We are of the view, in order to answer the disputed question of fact & law raised by the Assessee for the first time in the present appellate proceedings, this Tribunal would be required to inquire into new facts and material not forming part of record. We have already noted that the material on record supports the stand of the Revenue and there is nothing on record to support the contentions of the Assessee. 15. In view of above, we hold that the additional contention raised by the Assessee for the first time before this Tribunal by way of cross-objection cannot be entertained. 16. In the submission, the Learned Authorized Representative had placed reliance upon the judgment of the Hon'ble High Court of Rajasthan in the case of Shyam Sunder Khandelwal vs. Assistant Commissioner of Income-tax [2024] 161 taxmann.com 255 (Rajasthan)[19-03-2024]. On perusal of the said judgment, we find that the same is not applicable to the facts of the present case. In that case the Revenue had not even set up a case that reassessment proceedings wer....
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.... of search and that there were no post search enquiry by the Assessing Officer. We have concluded hereinabove that to adjudicate the issue raised by the Assessee for the first time as a cross objection, the Tribunal would be required to examination of assessment records of searched persons as well as that of the Assessee. This would amount to inquiring into fresh material/facts not forming part of the record and therefore, this Tribunal is precluded from entertaining the additional ground raised by the Assessee as a cross-objection. Further, on perusal of the said judgment we find that the in that case the Hon'ble Bombay High Court has, in exercise of writ jurisdictional under Article 226 of the Constitution, quashed the proceedings initiated under reassessment proceedings initiated under Section 147 of the Act. We deem it appropriate to refer to Paragraph 22 & 23 of the aforesaid judgment of the Hon'ble Bombay High Court which are set out hereinunder: "22. Applying the principles of law as discussed hereinabove, we are of the clear opinion that the foundation of the present case was certainly a search action which was undertaken by the Revenue against one Shilpi Jewellers....
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....Emphasis Supplied) 18. The Hon'ble Bombay High Court has returned a finding in favour of the Assessee based upon the material on record to the effect that the assessment proceedings were initiated only on the basis of material found during the course of search and seizure action under Section 132 of the Act. As noted hereinabove, we have already concluded that the material on record is not sufficient to return the aforesaid findings in the present case. Further, the scope of powers of the Hon'ble High Court to summon and examine records in writ/supervisory jurisdiction is much wider that the limited scope available to this Tribunal in appellate jurisdiction. This Tribunal cannot entertain additional plea raised by the Assessee for the first time before the Tribunal in case the adjudication of such plea requires inquiry into fresh material/facts not forming part of the record. Therefore, the judgment of the Hon'ble Bombay High Court in the case of Sejal Jewellary (Supra) is not applicable to the case of Assessee. 19. In view the above, we hold that the judicial precedents relied upon by the Learned Authorised Representative for the Assessee do not come to the aid of the Assess....
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....rate of commission from 2% to 0.5%. The Assessing Officer had no basis to estimate the rate of commission at 2%. 26. We have given thoughtful considered the rival submissions and have perused the material on record. On perusal of the impugned order, we find that the Learned CIT(A) granted relief to the Assessee holding as under: "6.3.2. In view of the fact that it is not possible to ascertain the exact commission percentage accruing to one of the conduit, the contention of the appellant that he had received 0.5% as commission and also looking into the quantum involved, the contention of the appellant is accepted and it is held that the commission be taxed @ 0.5% of the accommodation entries provided through the conduit. Thus, the addition of the Assessing Officer is restricted to an amount of INR.11,201/- and the balance addition of INR.33,605/- is deleted. This ground of appeal is partly allowed." (Emphasis Supplied) 27. We note that the Assessing Officer had framed best judgement assessment on the Assessee under Section 144 of the Act after taking into consideration the material on record since during the assessment proceedings the Assessee did not file any details....
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....IT(A) has not considered that while calculating commission on accommodation entry, the AO has duly worked out the commission on accommodation transactions @2% as per the statement recorded u/s 132(4) of the Act, of Shri Vipul Vidhur Bhatt." 31. The Assessee has raised following Grounds of Appeal in the Cross Objection: "1. Action u/s. 147 not justified when material found during search of another person is sole basis for reopening of another person, the appropriate course of action is to proceed under Section 153C, and not under Section 147. Accordingly, Reassessment proceedings u/s. 147 quashed." 32. During the course of hearing both the sides made submissions identical to those made in relation to grounds raised in appeal for the Assessment Year 2010-2011. Both the sides had agreed that our finding/adjudication on the grounds/cross objections raised in appeal for the Assessment Year 2010-2011 shall apply mutatis mutandis to the corresponding grounds/cross objections raised in appeal for the Assessment Year 2014-2015. Therefore, keeping in view identical facts and circumstances, and adopting the reasoning given while adjudicating ITA No.6258/Mum/2024 and Cross Objec....
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....elow the monetary limit prescribed in the CBDT Circular No.5/2024 Dt.15.03.2024 but the case falls within the exceptions laid down in clause (h) of Para 3.1 of the Board's Circular No.5/2024 Dt. 15.03.2024." 38. The Assessee has raised following Grounds of Appeal in the Cross Objection: "1. Action u/s. 147 not justified when material found during search of another person is sole basis for reopening of another person, the appropriate course of action is to proceed under Section 153C, and not under Section 147. Accordingly, Reassessment proceedings u/s. 147 quashed." 39. During the course of hearing both the sides made submissions identical to those made in relation to grounds raised in appeal for the Assessment Year 2010-2011. Both the sides had agreed that our finding/adjudication on the grounds/cross objections raised in appeal for the Assessment Year 2010-2011 shall apply mutatis mutandis to the corresponding grounds/cross objections raised in appeal for the Assessment Year 2015-2016. Therefore, keeping in view identical facts and circumstances, and adopting the reasoning given while adjudicating ITA No.6258/Mum/2024 and Cross Objections No. 268/MUM/2025 herein....