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Facts
The appeals were preferred by the Assessee against the order of the Commissioner of Income Tax (Appeals) concerning Assessment Years 2010-11 and 2011-12. The core issue revolves around the addition made by the Assessing Officer for accommodation entries.
Held
The Tribunal, considering the facts and a High Court judgment, found that the Assessee had identified beneficiaries for accommodation entries, a point considered by the CIT(A) who restricted the addition to 1%. However, the Tribunal enhanced this addition to 5% to cut short litigation and for substantial justice.
Key Issues
Whether the addition made by the Assessing Officer for accommodation entries, restricted by the CIT(A), should be further enhanced to a reasonable percentage considering the identification of beneficiaries by the Assessee.
Sections Cited
250, 68
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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY
O R D E R Per: Narender Kumar Choudhry, Judicial Member: These appeals have been preferred by the Assessee against the even order dated 04.10.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the Assessment Year (A.Ys.) 2010-11 and 2011-12.
As both the appeal are having involved identical facts and issue and therefore for the sake of brevity, the same were heard together and are being dispose off by this composite order and by taking into consideration (AY: 2010-11) as a lead case.
& 6314/M/2024 Amisha Sudhir Bhatt 3. In though the Ld. DR. has relied on the judgment passed by the PCIT vs Buniyad Chemicals Ltd. (2025)172 Taxman.com 462 (Bombay), wherein the Hon’ble High court in para no. 20 has held that CIT(A) has adopted a fair approach by stating that if the respondent-Assessee identifies the beneficiaries, then the rate of commission adopted should 0.3% of such identified beneficiaries and if the respondent-Assessee fails to identify the beneficiaries, then in that case the sum credited in the books of account, would stand confirmed u/s 68 of the Act. Therefore, this judgment and particular finding of the Hon’ble High court favors the case of the Assessee, as in the Assessee’s case the Assessee has identified the beneficiaries and claimed to be a conduit for providing accommodation entries, as held by the Ld. Commissioner in the impugned order and therefore the Ld. Commissioner restricted the addition to the tune of @ 1% of the accommodation entries of Rs. 35,05,050/-.
The Ld. DR somehow praying for upholding the addition @ 100% of the accommodation entries or alternatively enhancement of addition to a reasonable percentage, as against @ 1% as restricted by the Ld. Commissioner.
On the contrary, the Ld. AR. of the Assessee though has prayed for affirmation of the impugned order, however alternatively prayed that the addition if any to be restored as made by the AO, can be enhanced at reasonable percentage of 3% to 5%.
Thus, in order to cut short, the litigation and for substantial justice, this court is inclined to enhance the addition restricted @ 1% by the Ld. Commissioner, to 5% of the accommodation entries amounting to Rs. 35,05,050/- and thus the AO is directed to made the addition @ 5% of the accommodation entries and recompute the Assessee’s tax liability accordingly.
In the result, in view of the judgment in ITA 6313/M/24, both the appeals are partly allowed in the same terms.
Order pronounced in the open court on 10.06.2025.