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Facts
The appeals by the revenue were against the orders of the CIT(A) for AY 2010-11 and 2013-14. The revenue raised grounds regarding the restriction of additions on account of alleged commission payments. The assessee did not appear, and the appeals were decided based on the material on record.
Held
The Tribunal noted that the AO had accepted the assessee as an entity used by a known entry provider and added the entire debit entry. The CIT(A) had restricted this to 1% of the debit entry. Following previous decisions by the Tribunal, the CIT(A)'s order was modified to treat 2% of the debit entry as income.
Key Issues
Whether the addition on account of commission for accommodation entries should be restricted to 1% or enhanced to 2% based on Tribunal precedents, considering the assessee was an accommodation entry provider.
Sections Cited
254(1), 132(4)
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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI PAWAN SINGH
These two appeals by revenue are directed against the separate orders of ld. CIT(A) dated 21.02.2025 & 14.02.2025 for A.Y. 2010-11 & 2013-14 respectively. In both the appeals, the revenue has raised similar ground of appeal except variation of additions on account of alleged commission payment. Therefore, both the appeals were clubbed and are decided by common order to avoid the conflicting decision. For appreciation of fact, appeal for A.Y. 2010-11 is treated as lead case. The revenue has raised following grounds of appeal:
“1. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in restricting the addition of commission @ 1% of total transactions at Rs. 1,35,65,115/- representing accommodation entry, against the addition of commission @2% of total transaction at Rs. 1,35,65,115/-
2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has considered that while calculating commission on accommodation entry, the AO has duly worked out the commission on accommodation transactions (@1% to 4% as per the statement recorded u/s 132(4) of the Act, of Shri VipulVidhur Bhatt.
On the facts and in the circumstances of the case, the Hon'ble ITAT is requested to entertain this appeal, though, the tax effect is below the monetary limit prescribed in the CBDT Circular No.5/2024 Dt. 15.03.2024 but the case falls within the exceptions laid down in clause (h) of Para 3.1 of the Board's Circular No.5/2024 Dt. 15.03.2024.
The appellant craves leave to amend or alter or add a new ground which may be necessary."
None, appeared on behalf of the assessee despite sending repeated notices on the address given on Form 36. The learned Senior Departmental Representative (ld. Sr. DR) for the revenue was also directed to serve the assessee through field staff/inspector. The ld. Sr. DR has furnished report of inspector that assessee is not available on the given address. However, the assessee were served through email as per latest email available in return of income for A.Y. 2023-24. On perusal of Form 35, copy of which is filed by assessing officer/revenue while filing first appellate is also bear the same email address, which is mentioned on report of Inspector, who has served the notice of present appeal i.e. vinditr69@gmail.com. Notice is also sent on email address provided on Form 36 i.e. at bhattshirish@yahoo.com. In the above circumstances, I decided to hear the submission of ld. Sr. DR for the revenue and to decide the appeal on the basis of material available on record.
3. The ld. Sr. DR for the revenue submits that a search action was carried out in case of Vipul Vidhur Bhatt who was a leading entry provider in Mumbai.
His statement was recorded under section 132(4) of Income Tax Act (Act).
Vipul Vidhur Bhatt provided accommodation entry to various beneficiaries on commission through various benami entities/concerns. On the basis of information gathered in the search action and subsequent investigation, the assessee was found to be associated of Vipul Vidhur Bhatt and also provided entry to various persons. The assessing officer found that assessee is one of the bogus entities out of 347 entities. The assessing officer accordingly made addition of unexplained cash credit as well as unexplained money aggregating of Rs. 5,12,560/-. The ld. CIT(A) restricted the addition to the extent of 1.00% of accommodation entry on debit side. The ld. Sr. DR for the revenue submits that in a similar case, Tribunal has directed/enhanced similar entry to 2.00 to 5.00% on debit transaction. To support his submission, the ld. Sr. DR relied upon the decision of Mumbai Tribunal in ITO vs Kanubhai PurshotamRaval (ITA Nos.
3052 & 3053/Mum/2023 dated 10.05.2024. In other decision, SMC Bench enhanced the similar addition on commission based to 5.00% in the case of ITO vs Amisha Sudhir Bhatt in & 6313/Mum/2024 dated 10.06.2025.
4. I have considered the submission of ld. Sr. DR for the revenue and perused the order of lower authorities carefully. On perusal of assessment order, I find that assessing officer in para 6 of assessment order has accepted that assessee is one person who was also used by Vipul Vidhur Bhatt out of 347 bogus entities for providing accommodation entry. The assessing officer added entire amount of debit entry. The ld. CIT(A) restricted the addition to the extent of 1.00% of the impugned debit entry. The ld. CIT(A) relied on the decision of ld. CIT(A) in case of Jay Vidhya M. Bhatt dated 28.11.2022 wherein similar addition was restricted to 1.00% of the accommodation entry. I find that division bench of Mumbai Tribunal in ITO vs Kanubhai Purshotam Raval (supra) in case of similar entry provider who was also associate/conduit of Vipul Vidhur Bhatt restricted/enhanced the addition to 2.00% of debit entry. Therefore, respectfully following the decision of division bench, the order of ld. CIT(A) is modified and the ld. AO is directed to treat 2.00% of debit entry as income of assessee. Thereby, the appeal of revenue is partly allowed. (A.Y. 2013-14)
In appeal for A.Y. 2013-14, the revenue has raised similar ground of appeal has raised in appeal for A.Y. 2010-11 which have partly allowed, thus, following the principle of consistency, the appeal for A.Y. 2013-14 is also allowed with similar direction.
In the result, both the appeals of the revenue are partly allowed.