GENESIS DEVELOPERS AND HOLDINGS LIMITED,NEW DELHI vs. ITO,WARD 12(1), NEW DELHI

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ITA 3662/DEL/2023Status: DisposedITAT Delhi16 May 2025AY 2012-134 pages
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What did the Tribunal hold?

The Tribunal, while acknowledging that the assessee did not press its initial grounds concerning the validity of reopening and natural justice, focused on the substantive issue of the commission addition. The assessee's sole argument was based on a previous decision of the Tribunal in ITA No. 953/Del/2020, Mekaster Finlease Limited Vs. DCIT, which dealt with the same search operation and identical accommodation entries. In that case, the Tribunal had directed the AO to assess the commission at 0.5%. The Revenue did not offer any counter-arguments or rebuttals to this submission. Adopting judicial consistency and in the given facts and circumstances, the Tribunal found it just and proper to assess the commission on the accommodation entries at 0.5% for the assessee. Consequently, the addition was adjusted to reflect this rate. No other grounds or arguments were pressed by the assessee.

What were the facts?

The assessee, M/s. Genesis Developers and Holdings Ltd., filed an appeal before the Income Tax Appellate Tribunal (ITAT), Delhi Bench, against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC). The appeal pertains to Assessment Year 2012-13 and challenges proceedings under section 147 read with section 143(3) of the Income-tax Act, 1961. The dispute involves an addition of Rs. 62.06 lakhs made by the Assessing Officer (AO) and upheld by the CIT(A)/NFAC. This addition represented a commission component on alleged accommodation entries totaling Rs. 31,03,00,000/-. The AO's action was based on information received from a search and seizure operation conducted on the Sh. Virendra Kumar Jain and Sh. Surendra Kumar Jain group of companies on 14.09.2010, which allegedly unearthed accommodation entries through shell entities. The commission was assessed at 2% of the accommodation entries.

What were the issues?

1. Whether the addition of Rs. 62.06 lakhs on account of commission on alleged accommodation entries, amounting to Rs. 31,03,00,000/-, is justified, and if so, at what rate? The assessee initially raised grounds challenging the validity of reopening under section 147 and violation of natural justice, but these were not pressed. The substantive issue before the Tribunal was the addition of Rs. 62.06 lakhs as commission on accommodation entries. The assessee argued that in a connected case, ITA No. 953/Del/2020, Mekaster Finlease Limited Vs. DCIT, decided on 06.02.2023, which pertained to the same search operation, the Tribunal had directed the AO to assess identical commission at a rate of 0.5% only. The Revenue did not present any rebuttal to the assessee's submission regarding the precedent set in the Mekaster Finlease Limited case.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3),Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI

Before: SHRI SATBEER SINGH GODARA & SHRI MANISH AGARWAL

For Appellant: Adv. Sh. Ankit Kumar, Adv
For Respondent: DR Ms. Neha Chaudhary, CIT(DR)
Hearing: 24.04.2025Pronounced: 16.05.2025
1.

This assessee’s appeal for assessment year 2012-13, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2023-24/1056303801 (1), dated 20.09.2023 involving proceedings under section 147 r.w.s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).

2.

Heard both the parties. Case files perused.

3.

Learned counsel submits at the outset that the assessee does not wish to press its former three substantive grounds raising the legal/technical issues of validity of the impugned reopening u/s 147 and violation of principles of natural justice. Rejected in very terms.

4.

Next comes the assessee’s fourth substantive ground challenging both the learned lower authorities’ action adding section 68 unexplained cash credits amounting to Rs.62.06 lakhs alleging the same as representing commission component of various accommodation entries totaling to Rs. 31,03,00,000/- in the relevant previous year, in the course of assessment framed on 20.12.2019 and upheld in the lower appellate discussion. 5. We next note with the able assistance coming from both the parties that the learned lower authorities had received an information/letter dated 18.03.2019 to the effect that a search and seizure operation had been carried out in Sh. Virendra Kumar Jain and Sh. Surendra Kumar Jain group of companies on 14.09.2010 unearthing alleged accommodation entries through various shell entities. And that it is on the basis of the said information and 2 | P a g e seized materials that the impugned commission @ 2% has been assessed in the assessee’s hands resulting in addition of Rs.62.06 lakhs. 6. Faced with this situation, learned counsel’s sole substantive argument that the tribunal in the connected case Mekaster Finlease Limited Vs. DCIT decided on 06.02.2023, pertaining to the very search, has directed the Assessing Officer concerned to assess identical commission from accommodation entries @ 0.5% only. All these intervening developments have gone un-rebutted from the Revenue side.

7.

That being the case, we hereby adopt judicial consistency and conclude that the assessment of the assessee’s above accommodation entries @ 0.5% only would be just and proper in the given facts and circumstances. Ordered accordingly. No other ground or argument has been pressed before us.

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