ACIT CENTRAL CIRCLE 3(2), MUMBAI vs. SAMNIK GENERAL TRADING COMPANY PRIVATE LIMITED, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI MAKARAND VASANT MAHADEOKARACIT, Central Circle 3(2), Mumbai - 400051
Per Saktijit Dey, Vice President:
Captioned appeal by the Revenue arises out of order dated 09.10.2025 passed by Commissioner of Income Tax (Appeal), [CIT(A)] Mumbai for the Assessment
Year (AY) 2013-14. 2. The dispute in the present appeal is confined to the solitary issue of deletion of addition of Rs.36,35,979/-, being alleged commission received by the assessee while providing accommodation entries.
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Samnik General Trading Co. P. Ltd.
Briefly the facts are, the assessee is a resident corporate entity stated to be engaged in the business as scrap dealer. For the assessment year under dispute, assessee filed its return of income on 30.09.2011, declaring loss of Rs.13,97,956/-. Assessee’s case was selected for scrutiny. In course of assessment proceeding, the Assessing Officer found that as per information received by Director General of Income Tax (Inv.) from Sales Tax Department, the assessee is one of the parties, which has entered into transactions with beneficiaries availing accommodation entries. He observed that in the year under consideration, the assessee had effected sales amounting to Rs.105,98,88,640/- to some parties. Based on such information, to verify the genuineness of the transactions, the Assessing Officer issued notices under section (u/s.) 133(6) of the Income Tax Act, 1961 (in short the ‘Act’). However, as observed by the Assessing Officer, the notices returned back unserved. He further found that out of the sales turnover declared by the assessee more than 90% sales were made to a party, named, Viraj Profiles Limited, which allegedly received Hawala entries. Thus, the Assessing Officer was of the view that the sales effected by the assessee were non-genuine. Meaning thereby, the assessee has provided accommodation entries upon receiving commission. He further opined, since sales are non-genuine, the corresponding purchases of Rs.36,35,97,993/- cannot be genuine. Therefore, on the aggregate value of purchase and sales turnover of Rs.142,34,86,633/-, the Assessing Officer estimated commission income at 1% and added back an amount of Rs.1,42,34,866/-. Contesting the addition, the assessee preferred an appeal before learned First Appellate Authority. While deciding the 3 Samnik General Trading Co. P. Ltd.
appeal, learned First Appellate Authority held that the Assessing Officer cannot estimate commission both on purchase and sales turnover. Therefore, he deleted the estimation of commission of 1% on the purchase turnover.
4. So far as the estimation of commission on sales turnover, the First Appellate
Authority found that for in very same assessment year, assessee was subjected to assessment u/s. 143(3) r.w.s. 153A of the Act, wherein the Assessing Officer had added commission income on estimate basis applying the rate of 2% on the very same sales turnover. He further noticed, the dispute was ultimately settled under ‘Vivad Se Vishwas Scheme’ (VSVS). Thus, he held that the commission income having already suffered tax under the VSVS, no further addition on account of commission income can be made at the hands of the assessee. Accordingly, he deleted the addition made by the Assessing Officer.
5. We have considered rival submissions and perused the materials on record.
Undisputedly, the Assessing Officer has estimated commission income both on purchase and sales turnover declared by the assessee. Even assuming that the assessee has provided accommodation entries, the assessee can be expected to have received commission only from the beneficiaries availing accommodation entries through sales invoices issued by the assessee. The party who sold the goods to the assessee cannot be expected to have paid commission to the assessee as the assessee can be said to have availed the accommodation entries from the selling party. Thus, in our view, the First Appellate Authority was justified in deleting the addition made
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Samnik General Trading Co. P. Ltd.
on account of estimated commission income on purchase turnover of Rs.36,35,97,993/-. Accordingly, upholding the decision of the First Appellate
Authority, we dismiss the grounds raised by the Department.
6. In the result, appeal is dismissed.
Order pronounced in the open court on 16 /03/2026. (Makarand Vasant Mahadeokar) (Saktijit Dey)
Accountant Member Vice President
Mumbai; Dated : 16/03/2026
Aks/-
Copy of the Order forwarded to :
The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER,
(Dy./Asstt.