STANDARD FISCAL MARKETS PRIVATE LIMITED,MUMBAI vs. DCIT-CENTRAL CIRCLE-8(2), MUMBAI

PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the separate orders of ld. CIT(A)/ADDL/JCIT(A) – 2, Bengaluru dated 03.03.2026 for Assessment Year (AY) 2023-24. The assessee has raised following grounds of appeal: “1. On the facts and in the circumstances of the case and in law the Commissioner of Income-tax (Appeals)-48 Mumbai has erred in passing the appeal order by confirming the addition of Rs. 2,09,250/- as estimated income earned. 2. The learned CIT Appeal has not given Importance to fact, documents or proper reason on that basis this extra income is earned by the appellant. 3. The learned CIT Appeal has not considered submission submitted during proceeding with all the relevant documents which were submitted during assessment proceeding by the authorized representative of appellant. 4. The learned CIT Appeal failed to appreciate fact that money given by M/s Trimax IT Infrastructure Services Ltd. (TITISL) which has received back by

Standard Fiscal Markets Private Limited ITA No. 4034/Mum/2026 (AY: 2016-17) Trimax IT Trough appellant (a major shareholder) how there can be extra income on internal transaction. 5. The appellant submit that under IT act there is no scope for assumption and presumptions nor anything can be implied. Such addition cannot be sustained on the basis of preponderance of probabilities, Suspicion. The addition cannot be made merely on suspicion surmises and conjectures in the hands of the Appellant 6. Appellant therefore pray that assessing officer may be directed to delete the addition of Rs.2,09,250/- 7. The appellant craves leave to amend, alter or delete any of the above grounds of appeal.” 2. Brief facts of the case are that the assessment in the case of the assessee was completed pursuant to a search action carried out under Section 132 on assessee group on 08.12.2017. The assessee company is a major shareholder company of Trimax IT Infrastructure and Services Limited. In the search action, it was found that Trimax IT Infrastructure and Services Limited was indulging in providing accommodation entries and the assessee was also used as a conduit. While passing the assessment order under section 153C on 13.12.2019, the Assessing Officer (AO) made an addition under Section 68 of Rs. 13.95 crore on account of unexplained credit. The AO made addition of the entire credit (amount routed through the assessee). On further appeal before the learned CIT(A), the addition was confirmed. However, on appeal before the Tribunal, the matter was restored back to the file of the AO in ITA No. 1469/Mumbai/2023 dated 03.11.2023. The case was restored to the AO on the contention of the assessee that it had acted merely as a conduit and the actual money belonged to Trimax IT Infrastructure and Services Limited, 2

Standard Fiscal Markets Private Limited ITA No. 4034/Mum/2026 (AY: 2016-17) through various layers and ultimately transferred to Trimax IT Infrastructure and Services Limited. The AO completed fresh assessment order on 06.02.2025 under Section 254 read with Section 153C. The AO, while passing the assessment order, noted that in the said assessment proceedings, the assessee furnished fund trail from Trimax IT Infrastructure and Services Limited to the assessee, which was received through one or two intermediary conduit parties and ultimately routed to Trimax IT Infrastructure and Services Limited. In para 6.2 of the assessment order, the AO noted that money was paid by Trimax IT Infrastructure and Services Limited through various intermediary conduit parties. These parties returned their commission and routed the funds to the assessee, which was again used for the ultimate beneficiary, which is Trimax IT Infrastructure and Services Limited. The AO concluded that the identity, genuineness and fund utilised for the beneficiary, which is Trimax IT Infrastructure and Services Limited, is established. Therefore, no addition under Section 68 was sustained. However, on perusal of the record (computation of income) the AO found that the assessee has not offered any commission income for facilitating as a conduit party to provide entry of the fund in its books of account, whereas the other conduits has offered such income. Accordingly, a fresh show-cause notice dated 28.01.2025 was served upon the assessee. In the show-cause notice, the AO asked the assessee as to why commission income on the aggregate entry of Rs. 13.95 crore should not be determined. The AO recorded that the assessee

Standard Fiscal Markets Private Limited ITA No. 4034/Mum/2026 (AY: 2016-17) filed its reply on 29.01.2025. The reply of the assessee is recorded on pages 5 and 6 of the assessment order. 3. In the reply, the assessee accepted that it has acted as a conduit party to provide funds of Trimax IT Infrastructure and Services Limited. The assessee also tried to impress upon the AO that the assessee is one of the promoters of Trimax IT Infrastructure and Services Limited. Therefore, it is not required to pay any commission on this transaction. The transaction is nothing but a circular transaction. The assessee has not received any commission on the transaction of Rs. 13.95 crore. The assessee also furnished the transactions of Trimax IT Infrastructure and Services Limited during financial years 2011- 12 to 2017-18 and reiterated that the assessee was a simple promoter conducting promotion of Trimax Group and had not received any commission income from any of the parties outside the books. However, without any prejudice to the above, the assessee also stated that in the case of Buniyad Chemicals Ltd. vs. ACIT in ITA No. 2421/Ahd/2011, the Mumbai Tribunal restricted the addition to the extent of 0.15% of the deposits in the bank account of that assessee. The assessee also relied on another decision of the jurisdictional High Court in PCIT vs. Goldstar Finvest Pvt. Ltd. in Tax Appeal No. 1729 of 2016, wherein the commission income at the rate of 0.15% of such kind of activities was upheld and the appeal of the Revenue was dismissed. The assessee also relied on another decision of the Calcutta Tribunal in Saanvi Developers & Realtors Pvt. Ltd. vs. ITO in ITA No.

Standard Fiscal Markets Private Limited ITA No. 4034/Mum/2026 (AY: 2016-17) 1330/Kolkata/2023 and PCIT vs. Alag Securities (P) Ltd. of the Mumbai High Court in Tax Appeal No. 1512 of 2017 dated 12.06.2020, wherein commission income was upheld at the rate of 0.1%. The AO concluded that on the one hand, the assessee claimed that it had not earned any commission income for facilitating as one of the conduits for the transaction of Rs. 13.95 crore and at the same time, the assessee has relied on various case laws wherein, on similar accommodation entries, commission income at the rate of 0.15% was claimed as justified. The AO thus estimated commission income at the rate of 0.15% on the transaction amount of Rs. 13.95 crore, thereby worked out the addition of Rs. 2,09,250/- in the assessment order passed under Section 254 read with Section 153C dated 06.02.2025. 4. On appeal before the learned CIT(A), the assessee raised a similar plea as raised before the AO that it had not charged any commission income for the transaction facilitated through it, being a promoter company of Trimax IT Infrastructure and Services Limited. The learned CIT(A), after considering the submissions of the assessee, noted that during the set-aside proceedings, the assessee accepted that it has acted as a conduit to escape the rigours of Section 68. The funds were routed from Trimax IT Infrastructure and Services Limited through layered transactions, which is a classic example of providing accommodation entries. The assessee argued that, being a promoter, it has not charged any commission. Such argument lacks commercial merit and legal substance. The assessee is a separate legal entity

Standard Fiscal Markets Private Limited ITA No. 4034/Mum/2026 (AY: 2016-17) from Trimax IT Infrastructure and Services Limited. In the real world of commercial business practices, no entity would allow its bank account and books of account to be used for routing massive amounts without receiving compensation. The usage of banking channels involves cost, compliance, risk and administrative efforts. Thus, providing such free services violates the principle of commercial expediency. The AO has recorded a crucial finding that, in this specific chain of transactions, another conduit had offered commission income. The assessee is a part of the same chain. Thus, it is illogical to presume that while other links in the chain were compensated for their services as conduits, the assessee has done so gratuitously. The learned CIT(A), by referring to the decision of the PCIT vs. Goldstar Finvest Pvt. Ltd. and Saanvi Developers & Realtors Pvt. Ltd., held that a commission rate of 0.15% was reasonable for providing accommodation entries upheld the action of the AO. Further aggrieved, the assessee has filed the present appeal before the Tribunal. 5. We have heard the submissions of the learned authorised representative (AR) of the assessee and the learned Senior departmental representative (DR) for the Revenue. The learned AR of the assessee submits that, in the said proceedings, the AO accepted the transaction as genuine and deleted the addition under section 68. However, he has made a fresh and impermissible addition on account of commission income, which is beyond the scope of the directions issued by the Tribunal and, therefore, unsustainable in the eyes of

Standard Fiscal Markets Private Limited ITA No. 4034/Mum/2026 (AY: 2016-17) law. The Tribunal, while remitting the matter back to the AO on the question of fact, particularly on the contention as to where the funds originated from Trimax IT Infrastructure and Services Limited and were routed through various entities, including the assessee, found that the assessee merely acted as a conduit. The addition was not upheld by the Tribunal, which restored the matter to the file of the AO with a specific and limited direction to trace each transaction from its origin to its ultimate destination. The direction of the Tribunal was clear and unequivocal. The AO accepted the foundation of the assessee's case. However, he introduced a completely new issue that the assessee must have earned commission income for acting as a conduit. Thus, the addition made by the AO is not justifiable. To support his submission, he relied upon the following decision.  ACIT vs Sri Ranganatha Traders (2005) 94 ITD 227 (Hyd)  Bhagwandas Associates vs ITO (2009) 119 ITD 1 (Pune)  Jaya Prakash vs ITO (2021) 133 taxmann.com 189 (Bangalore Trib.) 6. On the other hand, the learned ld. DR for the Revenue supported the order of the lower authority. The learned Senior DR for the revenue submits that the assessee itself has pleaded that the assessee acted as a conduit and the assessee neither offered commission income nor business in come for such transaction, the other entities have offered commission income. No specific commission income for acting as a conduit was offered by the assessee. Thus, there is no infirmity in taxing the commission income on such transactions, as per the stand of the assessee.

Standard Fiscal Markets Private Limited ITA No. 4034/Mum/2026 (AY: 2016-17) 7. We have considered the rival submissions of both the parties and have gone through the orders of the lower authorities carefully. We have also deliberated on the various case laws relied upon by the assessee before the AO and other decisions referred to and relied upon before us. We have already recorded the findings of the AO and the learned CIT(A) in the preceding paragraphs of this order. We find that, before the AO in the set- aside proceedings, the assessee raised two-fold contentions: first, that being a holding company, the assessee has not earned any commission for facilitating the conduit and that other conduit companies has already offered commission income on the funds facilitated through them; and in alternative in second submissions that on similar transactions, the commission was charged or restricted to the extent of 0.15% or 0.1% in cases of other entry provider. 8. We find that the lower authorities have not accepted the contention of the assessee that no commission was charged for acting as a conduit, particularly when, as per the assessee's own stand that other conduits has earned commission income. The AO, on the basis of the assessee's own stand, estimated commission income @ 0.15% on transactions of Rs. 13.95 crore. On independent appreciation of the facts, we find that the estimation of commission income is more than reasonable one. The assessee has not shown any commission income or business income from such huge transactions in its return of income. Thus, we do not find any reason to

Standard Fiscal Markets Private Limited ITA No. 4034/Mum/2026 (AY: 2016-17) interfere with the findings of the lower authorities. So far as the contention of the learned AR of the assessee that, once the addition under section 68 is deleted, no new issue should have been examined by the AO, in our view, the contention of the learned AR of the assessee is misconceived. Once the assessee has accepted that it has acted as a conduit, in our view, the AO has rightly estimated the commission income on such transactions. The decisions relied upon by the learned AR of the assessee have no application to the specific transaction which is the subject matter of appeal before us. In the result, all the grounds of appeal raised by the assessee are rejected. 9. In the result, the appeal of the assessee is dismissed. Order was pronounced in the open Court on 23/09/2026. /- /- Sd/- /- Sd/- Sd/- OM PRAKASH KANT PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 23/09/2026 Biswajit Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order

Assistant Registrar ITAT, Mumbai