MAHANIVESH STOCK AND SHARES PVT. LTD.,NEW DELHI vs. ITO, WARD- 16(1), NEW DELHI

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ITA 5334/DEL/2019Status: DisposedITAT Delhi03 August 2022AY 2010-119 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal, following the Delhi High Court's decision, dismissed the revenue's appeal. For the assessee's appeal, the Tribunal directed the AO to restrict the addition to commission income at 0.5% on accommodation entries given to parties outside the group.

What were the facts?

The Assessing Officer (AO) made an addition of Rs. 31.36 crores under Section 68 of the Income Tax Act, 1961, on account of huge deposits in the assessee's bank account. The assessee contended that it was in the business of providing accommodation entries and only commission earned should be added.

What were the issues?

Whether the entire unexplained deposits should be added as income under Section 68, or only the commission earned from providing accommodation entries.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI

Before: SH. N. K. BILLAIYA & SH. YOGESH KUMAR US

Hearing: 03/08/2022Pronounced: 03/08/2022

ORDER PER N.K. BILLAIYA, AM: and 5334/Del/2019 are cross appeals by revenue and the assessee preferred against the order of the CIT(A)- 37, New Delhi dated 29.03.2019 pertaining to A.Y.2010-11.

2.

The grievance of the revenue read as under :-

3.

The grievance of the assessee read as under :-

4.

The conspectus reading of grounds of both the appeals show that the underlying facts in the issues are identical, therefore, both the appeals are disposed of by this common order for the sake of convenience and brevity.

5.

As per information available the AO came to know that the Bank account of the assessee in Axis Bank reflects huge deposits amounting to Rs.33.47 crores are made. On analysis of the deposits the AO noticed that the account in Axis Bank was opened on 14.11.2009 and the assessee has following deposits during the period under consideration :-

6.

Invoking the provisions of section 68 of the Act and drawing support from various judicial decisions discussed in the assessment order the AO made addition of Rs.313650000/- u/s. 68 of the Act.

7.

Assessee agitated the matter before the CIT(A) it was strongly contended that the assessee is in the business of providing accommodation entries and, therefore, only commission earned from providing accommodation entries should be added.

8.

Strong reliance was placed in a group of cases which included Bhawani Portfolio Private Limited in and 6350/2016. The CIT(A) was convinced with the reliance on the decision of this Tribunal (supra) and held as under :-

9.

We find that the aforesaid order of this Tribunal was challenged by the revenue before the Hon’ble High Court of Delhi and the Hon’ble High Court of Delhi in ITA 158/2020 and CM APPL. 7946/2020 and ITA 163/2020 and CM APPL. 8018/2020 has considered the challenge of the revenue as under :-

10.

Respectfully following the decision of the Hon’ble High Court of Delhi (supra) we decline to interfere with the findings of the CIT(A). The appeal of the revenue is accordingly dismissed.

11.

In so far as the appeal of the assessee is concerned we are of the considered opinion that in line with the decision of this Tribunal (supra) we direct the AO to restrict the addition in respect of commission income @ 0.5% on the amount of accommodation entry given to parties outside the group after due verification and after affording a reasonable opportunity of being heard to the assessee.

12.

In the result, the appeal of the assessee is treated as allowed for statistical purpose and that of the revenue is dismissed.

13.

Decision announced in the open court on 03.08.2022.

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