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Facts
The Revenue Department appealed against the order of the Addl./Joint Commissioner concerning reassessment proceedings initiated based on information about a search and seizure action. The Assessing Officer treated certain transactions as accommodation entries and made an addition for commission income.
Held
The Tribunal observed that the Addl./Joint Commissioner's decision to restrict the addition was based on the peculiar facts of the case. Finding no material to contradict the lower authority's decision, the Tribunal sustained the order.
Key Issues
Whether the restriction of addition by the Ld. Addl./Joint Commissioner was justified based on the facts and circumstances of the case, and if the impugned order suffers from any illegality or perversity.
Sections Cited
250, 132, 132(4), 147, 148, 144
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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY
Per : Narender Kumar Choudhry, Judicial Member:
These appeals have been preferred by the Revenue Department against the order even dated 27.09.2024, impugned herein, passed by the Ld. Addl/Joint Commissioner of Income Tax (Appeals) (in short “Ld. Addl./Joint Commissioner”) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2011-12.
Both the appeals are based on the identical facts except variation in amounts and having involved identical issues; therefore for the sake of brevity, the same were heard together and are being disposed of by this composite order by considering the facts and circumstances and issue involved in as a lead case and result of the same, would be applicable mutatis mutandis to both the appeals under consideration. this case, the Assessing Officer had received the information from DDIT, Investigation wing-7(4), Mumbai to the effect that a search and seizure action u/s 132 of the Act, was carried out in case of Mr. Vipul Vidhur Bhat and his other related entities on dated 05.02.2016. Mr. Vipul Vidhur Bhat in his statement recorded on 09.02.2016 u/s 132(4) of the Act has accepted himself as an entry operator, who operated 347 bogus entities for providing accommodation entries to various beneficiaries for commission. M/s. Madhusudan M Jani HUF, is one of the entities controlled by Mr. Vipul Vidhur Bhat. The Assessee has also carried out transactions to the extent of Rs.42,23,300/- (Rs.31,69,500/- debit entries +Rs.10,53,800/- credit entries) which are in nature of accommodation entries carried out through the entity controlled by Mr. Vipul Vidhur Bhat.
On the aforesaid information, reasons for reopening of assessment were recorded u/s 147 of the Act and the case of the Assessee was reopened by issuing a notice dated 30.03.2017 u/s 148 of the Act, in response to which the Assessee filed his return of income on dated 23.09.2017 declaring total income at Rs.2,00,460/-, as originally declared by filing return of income on dated 26.09.2012.
Thereafter, statutory notices were issued to the Assessee, in response to which the Assessee filed details, according to which, the Assessee has carried out the transactions of Rs.60,84,049/- (Rs.32,88,100/- in debit side + Rs.27,95,949/- in credit side) after netting of interest income and bank charges etc.
Thereafter, the AO show caused the Assessee, who somehow neither attended the assessment proceedings nor filed any further details. The AO therefore, in the constrained circumstances, completed the assessment proceedings as ex-parte u/s 144 of the Act and ultimately treated the amount of Rs.60,84,049/- as accommodation entry and made the addition of Rs.1,21,680/- being 2% of Rs.60,84,049/- as commission income and added the same in the income of the Assessee.
The Assessee, being aggrieved, challenged the said addition on merit, by filling 1st appeal before the Ld. Addl./Joint Commissioner, however, at last claimed as under:
“That debit entries represent repayment of loan, therefore need not to be considered as a turnover of accommodation entries. A turnover of accommodation entries is Rs.32,91,230/- and therefore if any addition is to be made then the said amount only to be considered instead of Rs.60,84,049/- as considered by the AO for addition”.
The Ld. Addl./Joint Commissioner by considering the details of 8. payment of the accommodation entries, ultimately accepted aforesaid contention of the Assessee and consequently reduced the addition @2% on account of commission, on the accommodation entries of Rs.32,91,230/- only and in effect, sustained the addition to Rs.65,824/- and deleted the remaining addition of Rs.55,856/-.
Having heard the Ld. DR and perused the material available on record, it is observed that decision of the Ld. Addl. Commissioner in restricting the addition, is based on the peculiar facts and circumstances of the case. Even otherwise, this Court neither found any material or reason to contradict the decision of the Ld. Addl./Joint Commissioner nor the same suffers from any impropriety, perversity and/or illegality. Thus, the impugned order is sustained and the appeal filed by the Revenue Department is dismissed.
In view of the decision in both the appeals of the Revenue under consideration are dismissed.
Order pronounced in the open court on 28.04.2025.