TaxTMI 
TaxTMI 
2026 (6) TMI 1034
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....and heard together and are decided by the consolidated order for sake of convenience and brevity. We take the appeal in ITANo.912/Kol/2025 for AY.2013-14 as "lead" case. 2. The grounds of appeal raised by the assessee in ITA No.912/Kol/2025 for AY.2013-14are as under: "1(i) For that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in estimating the alleged commission income of the assessee at 0.15% of the alleged cash turnover from entry operation business and confirming the addition to the extent of Rs. 2,00,11,500/- in the hands of the assessee. (ii) For that the Ld. CIT(A) ought to have deleted the entire addition made by the Ld. AO, made on account of commission income @1.5% on the alleged cash turnover of the entry operation business. 2. For that on the facts in the circumstances of the case, the Ld. CIT(A) ought to have considered the objection raised by the assessee to the presumption raised under section 132(4A) of the Income Tax Act, 1961, in so far as the incriminating material found from the third-party search did not belong to the appellant assessee. 3. For that on the facts and in the circumstances of the ca....
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.... income of the assessee in the assessment framed u/s 144/147 of the Act dated 18.10.2024. 5. In the appellate proceedings, the Ld. CIT(A) partly allowed the appeal by directing the AO to estimate the income by way of commission @0.15% on the total amount of accommodation entries and thus, partly confirmed the addition to the tune of Rs. 2,00,11,500/- and deleted the addition to the tune of Rs. 19,82,33,691 by observing and holding as under: "7.2 Discussion and decision: 7.2.1. I have perused the assessment order and material filed by the appellant in the form of paper book along with the statements recorded of the appellant himself as well as his family members, the affidavit retracting the statement. On perusal of the same, it is observed that a search & seizure operation u/s 132 of the Act was conducted at assessee's residential/office premises/locker on 08.03.2022 and subsequent dates. During the course of post search & seizure operation, by analyzing of seized books of accounts/data and in view of assessee's sworn statement u/s 132(4) of the Act dated 08.03.2022, it was found by the AO that the assessee was indulging in providing/arranging accommoda....
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....ainst cash & providing bogus unsecured loans to different beneficiary entities. Further, during recording of his statement u/s 132(4) of the Act dated 08.03.2022, the assessee has also deposed that the various entities are controlled and managed by him which is on record. The cash trails of the transactions available in the books of "SGJN" have also been prepared during the analysis by the AO and the same is also available on record. Relevant portion of the recorded statements of the assessee is as under: "Q.7 Please state your sources of income. Ans. My sources of income are mainly from share trading and investment, financial consultancy, legal advisor and commission income Q.9 Please explain the nature of business done by you and the sources of funds, invested in your business. Ans. Sir as I have earlier said that I am involved in share trading in F&O, obligation and investment in quoted shares and unquoted shares. Besides. I also earn commission income by arranging accommodation entries in the form of unsecured loans/share capital/share premium to various parties The assessee had also deposed in his statement dated 08.03.2022 about th....
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....sidential office premises of the assessee several documents/data were found and seized as incorporated at para no.3 of the assessment order. From the said documents seized, quantum of accommodation entries provided by the assessee was found by the AO at Rs. 1334.10 crores for the current AY. Hence, the assessee was also show-caused by the AO as to why commission income @1.50% to the tune of Rs. 20,01,15,000/- [1.50% of Rs. 13,34,10,00,000/-] should not be treated as your undisclosed income and added to the total income for the AY 2013-14 as per the provisions of the Act. As the assessee had not replied to either the show-cause notice or the notice u/s 142(1) of the Act, the AO was left with no option but to pass exparte order u/s 144 of the Act based on the material available on records treating the commission income of Rs. 21.82.45,191/- (higher of Rs. 20,01,15,000/-) as the assessee's undisclosed income for the year under consideration. 7.2.5. In the appellate proceedings, the assessee had claimed that the tally data which was derived from the laptop seized from the Premises Todi Mansion, P-15, India Exchange Place, Unit No.1108, 11th Floor, Kolkata -700 073', on....
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.... 7.2.6. However, the claim of the assessee is not acceptable and totally vague. The assess 10.03.2022 by the investigation wing were retracted before the search party on 06.05.2022, however, any legible reason for such retraction was not submitted by the assessee both in the asst, proceedings and appellate proceedings. The aforesaid seized materials as mentioned at the para no. 3 of the asst, order was found in the business premises of the assessee against warrant issued. Then, the claim of the assessee that the seized data were from laptop of some third person is nothing but a concocted story prepared by the assessee. The assessee had further alleged that the statements were recorded by the investigation officers as per their desire and reply was dictated by them whether wrong or right. Furthermore, no documentary evidence was unearthed during search action or during post search enquiry that the appellant was involved in accommodation transactions apart from the statements of various other persons which was recorded at the back of the appellant. Therefore, the assessee had claimed that as the statements were recorded forcefully as dictated by the investigation officers and are n....
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....te to mention that such arbitrary retraction should not have any effect in the decisions of the case and should also not move the facts of the case in propinquity of the assessee. 7.2.8. Further, the claims of the assessee are completely without logic and misleading. If the aforesaid incriminating document in the form of tally data was really found from the premises of a third party, then why the assessee had replied in his statements on the said seized documents at the time of search. In both the search and asst. proceedings, nowhere the assessee had stated that these data were not at all associated with his activities. Only in the appellate proceedings, he has come with a different story to mislead the department. Further, the assessee himself had admitted that his main source of income was commission income from entry operation business during the search operation. The same fact was supported by the findings of the search where several bank accounts and cheque books have been found and inventorised as Anx-2 from his premises and also several stamps have been found from this premise. The name of the stamp holders along with the stamp impressions have Been inventorised as....
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....rnover of Rs. 1334.10 Crores. The appellant had placed reliance on the following judicial decisions in respect of the rate of commission income: a) The Hon'ble jurisdictional High Court of Calcutta in 'Principal Commissioner of Income, Central-2 v Safeco Projects Private Limited (ITAT No. 32 of 2019)' wherein it has been held the following: "No question of law is involved in this matter, let alone any substantia? question of law. The questions which have been raised! by the revenue are questions of act. After adducing some intelligible reasons, the Tribunal has come to its findings as follows. Heard both the parties and perused the record. We find that the Revenue has accepted the submission of assesses in the case of M/ s. Mercantile Pvt Ltd. in an identical situation that the commission of accommodation entries was Rs. 250 per lakh rupees and determined the tax @ 0.25%. Whereas in the present case the assessee itself offered profit rate at 0.26%, accepted by the revenue for the A.Y. 2011-12 and which is more than in the case of M/s. Mercantile Pvt. Ltd., which was also related to Badalia Group of cases. In view of the same, we find that the ....
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....39;D.C.LT., C.C-4(4), Kolkata Vs. M/s. Sakshi Trade Link Pvt. Ltd in I.T.A No. 2275/Kol/2014' has held as under: 7. Heard both the parties and perused the record. We find that there is no dispute that the We find that Shri Sumit Sharma, one the directors of the assessee company in his statement u/s. 131 of the Act admitted that the assessee company indulged in the activity of providing the accommodation entries. We find that the facts of the present case are similar to the facts in the case of Safeco Projects Pvt. Ltd in ITA No. 1948/Kol/2014 for the A.Y: 2010-11, since the net profit shown @0.26% was more than the 0.10% to 0.15%, which was admitted by the director of M/s. Safeco Projects Pvt. Ltd in its assessment and the AO accepted the same. Thus, the AO accepted the commission 0.26% We further find the A.Y involved in the case of assessee company is 2011-12 and the same as in the case of Safeco Projects Pvt. Ltd and the assessment u/s. 143(3) u/s 143(3) was made on 27.03.2014. In the present case, the AO estimated the commission @ 0.50%, which is not justified in the facts and circumstances of the case and, therefore, the order of CIT-A directing the AO to recalcul....
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..... 18. In the result, appeals of the assessee are partly allowed." f) In the case of 'PCIT vs. Alag Securities (ITA No. 1512 of 2017 order dated 12.06.2020)', where the Hon'ble Mumbai High Court had held the following: "Coming to the percentage of commission, Tribunal had already held 0.1% commission in similar type of transactions to be a reasonable percentage of commission. Therefore, Tribunal accepted the percentage of commission at 0.15% disclosed by the assessee itself. This finding is a plausible one and it cannot be said that the rate of commission was arrived at in an arbitrary manner. The same does not suffer from any error or infirmity to warrant interference, that too, under Section-260A of the Act." g) The Hon'ble ITAT Kolkata in the case of 'Saanvi Developers & Realtors Pvt. Vs. ITO, Ward-1(3), Kolkata Ltd. In I.T.A. No. 1330/Kol/2023' had held as under:- "8. I have also gone through the judgment passed by the Hon'ble Bombay High court in the case of PCIT vs Alag Securities Pvt. Ltd placed by the assessee where in the order passed by the ITAT Mumbai Bench "A" was upheld by observing thus-"Tribunal ....
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....g income by commission @ 0.20%. We are, therefore of the view that the AO is justified in allowing the expenses of 20% which gives the net commission income @ 0.20% especially when the assessee has not maintained any separate voucher for the claim of expenses." j) In the case of 'Shri Ramesh Kumar Jain -vs.- ACIT (ITA No. 3512/Mum/2013) (order dated 22.04.2015)', where the Hon'ble Mumbai ITAT had held the following: "The next common issue that arises in AY 2006-07 to 2010-11 relates to the estimation of commission income on providing accommodation bills. We earlier noticed that the assessee had declared the commission income @0.20% in the statement taken from him. We are of the view that the facts and circumstances of the case warrant that the rate of commission should be adopted @0.25%, in the absence of any other evidence to the contrary. Further the assessee stated that he has shared the commission income with two others. Further it cannot be denied that certain expenses are also required to be incurred. Accordingly, by considering all these relevant factors, we are of the view that the net commission income should be estimated at 0.10% and....
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....Income Tax Act, 1961 is wholly illegal, without jurisdictions. At the outset, it is respectfully submitted that the very assumption of jurisdiction and bad in law. No incriminating material whatsoever belonging to the Assessee wo found or seized during the course of search conducted on 08.03.2022. The sole basis on which the reassessment proceedings have been initiated is certain alleged parallel tally data maintained in the name of "SGJN", allegedly found in a laptop seized from Todi Mansion, 11th Floor, Room No.1108, P-15, India Exchange Place, Kolkata-700073. However, the said premises neither belongs to the Assessee nor was ever owned, occupied, possessed, or controlled by him. Similarly, the laptop from which the alleged tally data was recovered never belonged to the Assessee. The data admittedly pertains to one Shri Sonu Garg @ Sonu Agarwal. b) It is further pertinent to note that no incriminating material whatsoever was found or seized from any of the premises admittedly belonging to or occupied by the Assessee, namely, 5th Floor, Room No.501, Todi Mansion, P- 15, India Exchange Place, Kolkata-700073 (Office): Flat No.302, 3rd Floor, 71 Metcalfe Street, Esplanade, K....
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....udice to the aforesaid jurisdictional and legal submissions, it is respectfully submitted that even on merits the impugned additions are wholly arbitrary. unsubstantiated, and without evidentiary basis. No incriminating document belonging to the Assessee was found from any of the Assessee's own premises. The entire case of the Revenue is based solely upon alleged third-party electronic data, the authenticity. ownership, correctness, source, and evidentiary value whereof have never been independently established in accordance with law. Further, despite repeated and specific requests made during the course of assessment proceedings, neither the complete forensic analysis report nor the detailed tally ledgers allegedly relied upon by the Department were ever supplied to the Assessee. Thus, the additions have been made in gross violation of the principles of natural justice as the Assessee was denied a proper and effective opportunity to rebut the material relied upon against him. e) It is further submitted that the statements recorded under Section 132(4) on 08.03.2022, 09.03.2022 and 10.03.2022 were duly retracted by the Assessee on 06.05.2022 itself before the Investiga....
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....dation entries had allegedly been provided by the Assessee to the aforesaid companies through its controlled and managed companies. A detailed list, accordingly, of the total quantum allegedly provided in the garb of accommodation entries to the alleged end beneficiaries by the assessee was submitted in the form of a tabular representation in the said forensic report by the department. However, the contemporaneous records placed in the Paper Book themselves completely demolish and falsify the allegations contained in the said forensic report. In the said Paperbook, we have annexed copies of orders u/s. 147 & 148A(3) of such alleged end beneficiaries, wherein, reopening of assessments were initiated post the Search & Seizure operations at the premises of the assessee: however, it is important to point out that the Ld. Department has dropped the said reassessment proceedings in the cases of the abovementioned companies (alleged as the end beneficiaries) and made no addition on account of receiving any accommodation entries from the assessee or his allegedly controlled/ operated companies. i) From the assessment orders of such companies placed in the Paper Book, it is evident....
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....ctual errors, absence of corresponding banking entries, and contradictions pointed out hereinabove in the forensic and financial analysis report submitted by the Department. However, even in such eventuality and without conceding the validity of the allegations made therein, no addition beyond the rate of 0.15% as sustained by the Learned CIT(A) could in any circumstances survive, since the Learned CIT(A) himself, after considering the material on record, had already categorically held that the estimation made by the Assessing Officer at 1.5% was excessive, arbitrary, and unsustainable. Therefore, even if the matter is restored for limited re-computation purposes, the commission rate, if at all any addition is to survive, must necessarily remain restricted to 0.15% only and cannot under any circumstances be enhanced or restored to the rate originally adopted by the Assessing Officer. m) It is further respectfully submitted that the Learned CIT(A), despite substantially reducing the additions made by the Assessing Officer from 1.5% to 0.15%, nevertheless sustained additions aggregating to approximately 26,40,29,500 across the assessment years under appeal purely on....
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....clearly reveal that the year-wise commission income earned from the aforesaid activities has been computed at amounts that closely corroborate the findings and conclusions drawn by the Assessing Officer i.e. at the rate of 1.5%, in all the assessment orders passed for the ten consecutive Assessment Years: 2013-14 to 2022-23. The relevant amount for each and every year worked out by the A.O. has been reflected in ledger named "Commission Received in Tally data SGJN duly maintained by the appellant-assessee himself (inventoried during the course of search and seizure) and the desired reference path was KKPO-HD-I/INT HD 2/Partition 3/[root]/D DRIVE DATA/ Data/ALL DOC/ALL PEN-DRIVE BACKUP/PENDRIVE 21/19-20 new/tally/DATA (for the A.Y 2013-14) and year wise, so on......... However, it is respectfully submitted that a careful and thorough examination of the assessment orders with reference to the statements recorded u/s. 132(4) of the Act, it is palpable that the appellant has failed to complain before the higher authority against the recording of said statement as observed by the Hon'ble High Court of Madras in the case of Commissioner of Income-tax v. MAC Public Charitable....
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....or immediately after statement of assessee was recorded Held, yes Whether therefore, where retraction of statement recorded under section 132(4) and later confirmed in statement recorded under section 131 had been made by assessee after almost eight months to be precise, 237 days, same was to be discarded-Held, yes [Para 19] [In favor of revenue] Later the Hon'ble Apex Court also endorsed the aforesaid/above-mentioned decision by way of dismissing the SLP filed against the department, in the case of Roshan Lal Sanchiti v. Principal Commissioner of Income-tax [2023] 150 taxmann.com 228 (SC)/[2023] 292 Taxman 549 (SC)/ [2023] 452 ITR 229 (SC) [28-11-2022] while disposing SLP (Civil) Diary No. (s). 5812 of 2019 on NOVEMBER 28, 2022 has held categorically that SLP dismissed against order of High Court that retraction of statement recorded under section 132(4) has to be made within reasonable time or immediately after statement of assessee is recorded and, hence, where retraction of statement recorded u/s. 132(4) and later confirmed in statement recorded under section 131 had been made by assessee after almost eight months, same was to be discarded Section 132 of the Income....
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....et aside order passed by Commissioner (Appeals) and restored addition in hands of assessee-Held, yes [Paras 16 and 17] [In favor of revenue). unexplained undue Again, the appellant can't deny the statement recorded on oath was not based on incriminating material fact, as observed by the Hon'ble Madras High Court in the case of B. Kishore Kumar vs. Deputy Commissioner of Income-tax, Central Circle-IV (1), Chennai [2014] 52 taxmann.com 449 (Madras)/[2015] 229 Taxman 614 (Madras) while disposing the Tax Case (Appeal) Nos. 738 to 744 of 2014 on November 3, 2014 has held categorically that where assessee himself stated in sworn statement during search and seizure about his undisclosed income, same was to be levied tax on basis of admission without scrutinizing documents. Section 69A, read with sections 143, 153, 153A of the Income-tax Act, 1961 Unexplained moneys (Admission in sworn statement) Assessment years 2001-02 to 2007-08-Assessing Officer made additions undisclosed income on basis of sworn statements of assessee during search and seizure Assessee made out an issue that submissions of certain materials by him were not considered by Assessing Officer - Ho....
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....ssee. The AO estimated the income rate of 1.5% of the total amount of accommodation entries and added to the same to the income of the assessee whereas the ld. CIT(A) partly allowed the appeal of the assessee by directing the AO to apply rate of 0.15% only on the amount of total accommodation entries provided by the assessee. Now, the assessee as well as the revenue are in appeal before us, challenging the order of Ld. CIT(A). We have examined the records as placed before us and observe that the order passed by the Ld. CIT(A), so far as it relates to the direction given to the AO to apply the rate of 0.15% is concerned, is reasonable as the ld. CIT(A) has followed a series of decisions as extracted hereinabove. The assessee also relied on the following decisions to support the appellate order so far as the rate of commission is concerned: (i) PCIT-14, Mumbai vs. M/s Mihir Agencies Pvt. Ltd., Income Tax Appeal No.133 of 2017 (Bombay High Court) - commission rate of 0.15% upheld. (ii) Saanvi Developers & Realtors Pvt. Ltd. vs. ITO, Ward-1(3), Kolkata, I.T.A. No. 1330/Kol/2023 (ITAT Kolkata) - commission restricted to 0.15%. (iii) D.C.I.T., C.C-4(4). Kolkata....