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Facts
The Department of Revenue appealed against the CIT(A)'s deletion of additions made for Assessment Years 2012-13 to 2016-17. These additions related to commission earned by providing accommodation entries and unexplained cash credits.
Held
The Tribunal upheld the CIT(A)'s deletion of additions related to unexplained cash credits (Section 68) by relying on previous judgments concerning similarly placed assessees. Regarding commission income, the Tribunal dismissed the Revenue's appeal after noting a corrigendum that clarified the CIT(A)'s order was correct.
Key Issues
Whether the CIT(A) was justified in deleting the additions made by the AO on account of unexplained cash credits and commission income earned from providing accommodation entries.
Sections Cited
68, 132
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Income Tax Appellate Tribunal, DELHI
Before: SHRI M. BALAGANESH & SH. YOGESH KUMAR U.S.
(A.Y. 2016-17) DCIT Vs. Groupone Informative Services Central Circle 26, Room Private Limited No. 323, 3rd Floor, 7B/11A, Sriniwaspuri New Delhi New Delhi PAN: AACCD3330M Appellant Respondent Assessee by Ms. Shilpi Jain, CA Revenue by Ms. Pooja Swaroop, CIT(DR) Date of Hearing 14/05/2025 Date of Pronouncement 15/05/2025 ORDER
PER YOGESH KUMAR, U.S. JM:
The above five captioned appeals are filed by the Department of Revenue against the orders of the Commissioner of Income Tax (Appeals) (‘Ld. CIT(A)’ for short)-Delhi, 29 dated 27/06/2023 pertaining to Assessment Years 2012-13 to 2016-17 respectively.
The Department of revenue has raised similar grounds of Appeal, for the sake of convenience grounds of Appeal for Assessment Year 2012-23 are reproduced as under:-
(A.Y. 2012-13) “1. Whether on the facts and in law, the Ld. CIT (A) is correct in deleting substantive addition made in the hands of the assessee company on account of commission earned by providing accommodation entries.
2ITA Nos. 2490 to 2494/Del/2023 DCIT Vs. Groupone Informative Services Pvt. Ltd.
2. Whether on the facts and in law, the Ld. CIT (A) is correct in deleting the addition ignoring the facts that the company is a separate, independent and legal entity on its own both as per provisions of the Income Tax Act as well as Companies Act and it needs to be taxed separately for the income earned by it by facilitation of accommodation entries.
3. That on the facts and in circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of Rs.5,20,12,440/- made on account of undisclosed sources u/s 68 for unexplained entries in the bank account ignoring the fact that the assessee has failed to produce any concrete and any additional evidences in support of this contention.
4. That on the facts and in the circumstances of the Ld. CIT (A) has erred in deleting the addition of Rs.1,30,030/- made on account of accounted commission ignoring the facts that the assessee has failed to disclose the commission earned from providing accommodation entries. 5. The order of Ld. CIT(A) is erroneous and is not tenable on facts and in law. 6. The grounds of appeal
are without prejudice to each other.
7. The appellant craves to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal.”
Brief facts of the case are that for Assessment Year 2012-13 are considered which are as follows:-The Assessee filed return of income declaring total income of Rs. 2,40,160/-. Subsequently, action u/s 132 of the Act was carried out at the residential premises of Kaushal Kumar employee of Sh. Anand Kumar Jain and Naresh Kumar Jain (Jain brothers) on 17/12/2015, wherein various documents/books of accounts were found and seized. It is found by the Department that the said Anand Kumar Jain and Naresh Kumar Jain are engaged in 3ITA Nos. 2490 to 2494/Del/2023 DCIT Vs. Groupone Informative Services Pvt. Ltd. the business of providing accommodation entries of various beneficiaries through the various dummy/paper companies including the Assessee Company controlled and managed by the said Jain Brothers to provide accommodation entries to such beneficiaries in lieu of cash received by them. An assessment order came to be passed on 24/12/2018 for Assessment Year 2012-13 by making an addition 3,64,85,345/- on protective basis as the addition of substantive basis will be made in the hands of the beneficiaries and an amount of Rs. 91,213/- has been made substantive basis on account of unaccounted commission. Similar additions have been also made for Assessment Year 2013-14 to 2016-17. Aggrieved by the assessment orders, the Assessee preferred Appeals before the Ld. CIT(A) and the Ld. CIT(A) vide impugned orders, dated 27/06/2023deleted the addition for Assessment Year 2012-13 to 2016-17. Aggrieved by the orders of the Ld. CIT(A), the Department of Revenue preferred the present Appeals.
The Ground No.1& 2 are general in nature, which requires no adjudication. The Ground No. 3 of the Revenue is against the deletion of the addition made on account of undisclosed source u/s 68 for unexplained entries in the bank account. The Ld. Departmental Representative vehemently submitted that the Assessee has acted as conduit concern for providing accommodation entries to the 4ITA Nos. 2490 to 2494/Del/2023 DCIT Vs. Groupone Informative Services Pvt. Ltd. beneficiaries, the Assessee has failed to discharge the onus to satisfy the conditions laid down u/s 68 of the Act however Ld. CIT(A) committed error in deleting the addition made by the A.O.
Per contra, the Ld. Assessee's Representative submitted that the similar issue pertaining to the identically placed Assessee has been decided in favour of the Assessee thereon by dismissing the Ground of the Revenue in the case of The ACIT Vs. M/s Holeon Traders Pvt. Ltd. to 4962/Del/2019 for Assessment Year 2012-13 to 2016-17 vide order dated 21/07/2023.
We have heard both the parties and perused the material available on record. The Co-ordinate Bench of the Tribunal in the case of Holeon Traders Pvt. Ltd. (supra) vide order dated 21/07/2023 upheld the order of the Ld. CIT(A) in deleting the protective addition made by the A.O. in following manners:-
“2. Since issues involved in revenue’s appeal to 4962/Del/2019 for AY’s 2012-13 to 2016-17 are identical and similar, they were heard together and being adjudicated by this common order. As agreed by the learned representatives of both the sides we are taking up for AY 2012- 13 as lead case, wherein the revenue has raised following two effective grounds of appeal:- 1. On the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and on facts in deleting the protective addition of Rs. 54,64,44,954/- made by the AO on account of unexplained cash credits, without considering the fact that the assessee has failed to discharged the onus to satisfy the conditions laid on u/s. 68 of the I.T Act 1961 with regard to the nature and source of credit entries in 5ITA Nos. 2490 to 2494/Del/2023 DCIT Vs. Groupone Informative Services Pvt. Ltd. respect of share capital/premium/unsecured loans and other credits in bank.
2. On the facts and in the circumstances of the case the Ld. CIT(A) has erred inlaw and on facts in deleting the substantive addition of Rs. 13,66,112/- made by the AO without considering the fact that the assessee that assessee being a conduit concern, would have earned commission income for the transactions.
3. The ld. CIT(DR) supporting the assessment orders submitted that the Assessing Officer was right in making addition on protective basis in the hands of assessee and it was also justified and correct in making addition of Rs. 9,28,129/- on substantive basis being commission @0.25% of total impugned credits under facts and circumstances of the case which have been deleted by the ld. CIT(A) without any basis therefore impugned first appellate order may kindly be set aside by restoring that of the Assessing Officer.
4. Replying to the above the learned counsel of assessee submitted that the addition cannot be made in the hands of the conduit companies once the beneficiaries and accommodation entry provider are identified and addition of commission income has already been made in the hands of the accommodation entry provider. Further placing reliance on the order of ITAT Delhi ‘A’ Bench dated 28.04.2023 the ld. counsel submitted that in the case of Shri Anand Kumar Jain vs. ACIT in and other connected appeals of revenue the deletion of addition made on protective basis by the Assessing Officer has been upheld by the Tribunal upholding the deletion of protective addition of credits therefore since facts and circumstances of present case are similar and identical therefore findings deleting the protective addition by the ld. CIT(A) may kindly be uphold.
5. Placing rejoinder to the above, the ld. CIT(DR) did not dispute the fact of deletion of protective addition by the CIT(A) and its confirmation by the Tribunal order dated 28.04.2023 in the case Shri Anand Kumar Jain (supra). The ld. CIT(DR) submitted that the ground no. 2 of revenue has been allowed under identical facts and circumstances and order of ld. CIT(A) directing the deletion of commission addition has been reversed by making addition @0.47% to the turnover of accommodation entries after elimination of circular transaction. Therefore ground no. 2 of revenue may kindly be allowed reversing the conclusion of ld. CIT(A).
6. On careful consideration of above, following the order of Tribunal in the case of Shri Anand Kumar Jain (supra) deletion of 6ITA Nos. 2490 to 2494/Del/2023 DCIT Vs. Groupone Informative Services Pvt. Ltd.
protective addition on account of unexplained cash credits is upheld and ground no. 1 of revenue is dismissed for AY 2012- 13.”
By respectfully following the order of the Co-ordinate bench of the Tribunal in the case of Holeon Traders Pvt. Ltd. (supra), the deletion of the protective addition made in the hands of Assessee is hereby upheld, accordingly, the Ground No. 3 of the Revenue is dismissed.
The Ground No. 4 is regarding deletion of addition made on account of unaccounted commission. The Ld. Department's Representative submitted that the similar issue of commission has been decided by the Coordinate bench of the Tribunal in the case of Holeon Traders Pvt. Ltd. vide order dated 21/07/2023 in to 4962/Del/2019, held that whole claim of expenses made in the P &L accounts towards earning of commission income shall be allowed and the net rate of commission earned by the Assessee i.e, @ 0.47% of total turnover of accommodation entries after elimination of circular transaction is required to be add as income of the Assessee from commission. Therefore, submitted that the Ground No. 4 of the Revenue may be allowed.
Per contra, the Ld. Assessee's Representative submitted that the order of the Tribunal dated 21/07/2023 in to 4962/Del/2019 referred by the Ld. Department's Representative has 7ITA Nos. 2490 to 2494/Del/2023 DCIT Vs. Groupone Informative Services Pvt. Ltd. been corrected by way of Corrigendum, wherein the Tribunal has dismissed the similar Ground No. 4 of the Revenue. The Ld. Assessee's Representative has also produced following orders of the Tribunals and contended that similar issue has been decided in favour of the Assessee who are placed similarly and sought for dismissal of Ground No.4.
i. AcitVs.Zed Enterprises Pvt. Ltd. in and connected matters, order dated 09/01/2024 for Assessment Year 2012-13 to 2016-17. ii) ACIT Vs. Shivji Garments Pvt. Ltd. in and connected maters, order dated 06/02/2024 for Assessment Year 2013-14 to 2016-17. (iii) The ACIT, Central Circle 26, New Delhi Vs. Zen Traces (P) Ltd., in ITA Nos. 371 to 374/Del/2022 order dated 13/09/2024 for Assessment Year 2012-13 to 2014-15 and 2017-18 iv) DCIT, central Circle-26, New Delhi vs. Third General Traders (P) Ltd. in ITA Nos. 2413 to 2418/del/2024, order dated 20/09/2024 for Assessment Year 2012-13 to 2017- 18 v) The DCIT, Central Circle-26, New Delhi Vs. Shivangi Garments P) Ltd. in ITA No.s 2186 to 2188/del/2024, order dated 16/10/2024 for Assessment Year 2013-14 to 2015-16. vi) The ACIT, Central Circle-26, New Delhi Vs. Round Square Exim (P) Ltd. in ITA Nos. 8834 to 8837/Del/2019, order dated 08/01/2025 for Assessment Year 2012-13 to 2015-16. vii) The ACIT, central Circle-26, New Delhi Vs. Nine Corporate Inception (P) Ltd. in ITA Nos. 189 to 191, 221/del/2022, order dated 22/01/2025 for Assessment Year 2013-14 to 2016-17. viii) The ACIT, Central Circle-26, New Delhi Vs. purus Marketing (P) Ltd. in ITA Nos. 221 to 225/del/2022, order dated 27/02/2025 for Assessment Year 2012-13 to 2016- 17.
8ITA Nos. 2490 to 2494/Del/2023 DCIT Vs. Groupone Informative Services Pvt. Ltd.
We have heard both the parties and perused the material available on record. It is the contention of the Ld. Assessee's Representative that the Co-ordinate Bench of the Tribunal vide order dated 21/07/2023 in 4958 to 4962/Del/2019 upheld the addition on account of commission income which was deleted by the Ld. CIT(A).
However, after passing the order on 21/07/2023, in to 4962/Del/2019, a corrigendum has been issued by the Tribunal on 31/07/2023, wherein the Co-ordinate Bench of the Tribunal held that the Ld. CIT(A) was right in deleting the addition on account of commission income. The relevant portion of the corrigendum is reproduced as under:-
“2. The order in revenue appeal to 4962/Del/2019 was pronounced on 21.07.2023 and on perusal of the same it was noticed that some factual inadvertent mistakes and omissions have been crept therein therefore, the earlier paras no. 7 & 8 of said order are being replaced with following modified paras:- 7. Regarding ground no. 2 of revenue we note that identical grievance/ground of revenue under identical facts and circumstance has been decided by the Tribunal in favour of the assessee and against the revenue reversing the first appellate order, Relevant paras 21 & 22 of Tribunal order (supra) are as follows:-
Therefore, as per the explanation and submissions of the assessee, whole of the expenses incurred in earning commission income shall be allowed and accordingly the net rate of commission earned by the assessee i.e. 0 .47% is the best which can be applied on the turnover of the accommodation entries after elimination of circular transactions. Thus the maximum addition which can be made in the hands o f the assessee on account of commission earned on turnover o f the accommodation entries worked out as under;
9ITA Nos. 2490 to 2494/Del/2023 DCIT Vs. Groupone Informative Services Pvt. Ltd.
Assessment Assessment Year Commission Commission Year turnover (after rate income elimination of circular transaction) A.Y 2010-11 115,610,968 0.47% 5,43,372/- 0.47% A.Y 2011-12 160,105,451 7,52,496/- 0.47% A.Y 2012-13 114,700,597 5,39,093/- A.Y 2013-14 262,717,480 0.47% 12,34,772/- A.Y 2014-15 245,616,875 0.47% 11,54,399/- A.Y 2015-16 260,228,180 0.47% 12,23,072/- A.Y 2016-17 717,246,284 0.47% 33,71,058/-
The AO is therefore directed to give effect to this order accordingly. Before parting we would like to clarify that the determination of expenses and the commission earned is based on the incriminating material specifically found and seized during the courses of search and hence the percentage of commission earned cannot be considered to be the same in other similar cases. 22. The A.o. is therefore, directed to give effect to this order accordingly. Before parting we would like to clarify that the determination of expenses and the commission earned is based on the incriminating material specifically found and seized during the courses of search and hence the percentage of commission earned cannot be considered to be the same in other similar cases. 8. Therefore, as per factual explanation and submissions of the Assessee coupled with orders of the Tribunal dated 28/04/2023 in the case of Shri Anand Kumar Jain and dated 25/05/2023 in the cases of Sh. N. K. Jain respectively the entire net commission income has already been taken into consideration and taxed in the hands of said two individuals. The Ld. CIT(A) in para 7.1 of his order also took note of this undisputed factual position while granting relief to the Assessee. This factual position has also not been controverted by the Ld. CIT(DR) during submission before this bench. Therefore, in view of above uncontroverted factual position we are of the view that the Ld. CIT(A) was right in deleting the addition on account of commission income. Ground No. 2 of Revenue is disposed of accordingly.”
The Ld. Departmental Representative though put her effort to distinguish the facts of the present case, however, no material has been placed before us in so far as reversing the findings made in the corrigendum dated 31/07/2023. Apart from the same, the similar grounds of Appeal of the Revenue has been dismissed by the Tribunal in the orders of the Tribunal relied by the Assessee's Representative, referred in the above para.
12. By respectfully following the order of the Co-ordinate Bench of to 4962/Del/2019 dated 21/07/2022 and the corrigendum dated 04/01/2024, we dismiss the Ground No. 4 of the Revenue. The Ground No. 5 to 7 being general in nature, requires no adjudication. Accordingly, dismissed.
Accordingly, appeal in 2491/Del/2023, 2492/Del/2023, 2493/Del/2023, 2494/Del/20234 are dismissed.
Order pronounced in the open court on 15th May , 2025