DCIT, CENTRAL CIRCLE - 4(4), KOLKATA, KOLKATA vs. ODYSSEY SECURITIES PRIVATE LIMITED, KOLKATA

4. In the appellate proceedings, ld. CIT(A) partly allowed the appeal of the assessee by sustaining the addition in respect of commission @0.10% of the total turnover of the assessee of Rs.392,67,03,378/-, which comes to Rs.39,26,703/-, thereby deleting the addition to the tune of Rs.7,46,07,365/-. While passing the appellate order the ld.CIT(A) observed and held as under :- 6.2. Discussion and decision: 6.2.1. I have perused the assessment order, remand report, submission of the a well as the rejoinder to the remand report submitted by the assessee. On pe same, it is observed that during the year under consideration, the appellant company acted as a registered share broker. The appellant company has income from trading in securities. In the present case, information was received by the AO from the Investigation wing. Mumbai that the assessee was involved in providing accommodation entry to the beneficiaries in the form of awarding bogus LTCG or Bogus trading loss in BSE in lieu of commission. On account of the said fact, the investigation wing. Mumbai conducted a survey under Section 133A of the Act on the office premises of the assessee on 03.12.2019. On the same date similar surveys were also conducted upon several other stock brokers. 6.2.2. It is observed that at the time of the said survey, the statement of one Mr Sanjay Bansal, the director of the appellant company, was recorded u/s 131 of the Act. In the statements recorded, Shri Bansal and Shri. Yadav had explained the details of the modus operandi followed by the appellant company for creating bogus transactions and accepted to have provided accommodation entries through these transactions. They had admitted the fact that they all have provided accommodation entry of profit/loss to various entities, in lieu of unaccounted cash commission at the rate of 2% of net premium in this kind of arrangement of trade. On the basis of the same, the assessing officer had applied 2% commission on the net premium of Rs.392,67,03,378/- while calculating the undisclosed commission income and made the addition of Rs.7,85,34,068/-. 6.2.3. However, it is observed from record that the said statement was later retracted by Shri. Sanjay Bansal. On perusal of the appellant's submission, it is observed that the appellant contended that the commission on the premium received from transactions was duly recorded in the books of accounts. Therefore, any further addition would result in double taxation. Additionally, the appellant argued that the commission rate of 2% charged is arbitrary. Accordingly, a remand report was sought from the AO on 27.11.2024. In response, the AO submitted the remand report on 09.12.2024, stating that the appellant had failed to respond to the show-cause notices and notices issued under Section 142(1) of the Income Tax Act. The AO further justified the addition based on the recorded statements. Subsequently, on 10.01.2025, the appellant filed a rejoinder to the remand report, alleging that the AO did not address the explanations provided in the appellant's submissions. Instead, the AO reached a conclusion in a generalized manner, asserting that the addition was made based on the facts of the case, without addressing the specific details presented. 6.2.4. The appellant in the rejoinder to the remand report also stated that if the AO wants to make addition based on the statement recorded during the survey, then the same should not be made fully as per the statement. However, in the recorded statement, Mr. Bansal had stated that they used to earn commission at the range of 0.05% to 0.15%. Relevant portion of the statement is reproduced as under: "Q.23 Please state how much commission was eamed by you in the transaction discussed above.

A.23 Sir, in these transaction we used to earn commission @ 5 to 15 paisa per 100 Rupees and all this commission was paid by our client through banking channel to the account of the broking company M/s Odyssey Securities Pvt Ltd." 6.2.5. The assessee had further relied on the case of 'DCIT, Central Cir-4(4), Kolkata vs. Aryav Securities Pvt. Ltd., wherein the same AO initially charged commission income at 2%. However, this rate was subsequently reduced by the CIT(Appeal) to 0.10% based on the statement of the deponent of M/s Aryav Securities Pvt Ltd. This was later upheld by the ITAT Kolkata Bench-B. Relevant portion of the pronouncement is as under. "A perusal of the above observation of the CIT(A) would reveal that the id. CIT(A) has thoroughly discussed the statements of Shri Arun Shah which was recorded during the survey action and further has discussed the facts and circumstances of the case. The Id. CIT(A) has observed that the said Shri Arun Shah has specifically mentioned that the appellant had received commission of 0.1% only. The Id. CIT(A) has brought on record that in case of other parties, the Assessing Officer has assessed the commission income at different rates. He has further observed that the estimation made by the Assessing Officer was not based on any relevant material. He has further observed that the assessee had given details of entire modus operandi followed by him and pointed out names of key persons who obtained clients from him with regard to bogus trades. That the Assessing Officer has accepted every part of the statement of Shri Arun Shah recorded in survey action but ignored the statement, wherein, he had stated that the assessee had received commission income @ 0.1% only.

raised by the assessee are partly allowed.

5. After hearing the rival submissions of the parties and perusing the material available on record, we find that the ld. CIT(A) called for remand AO and also confronted the same with the assessee, who filed rejoinder to the said remand report. The ld. CIT(A) upon perusal of the remand report as well as rejoinder noted that in the statement recorded during the course of Mr. Sanjay Bansal had stated that they used to receive commission in the range of 0.05% to 0.15% which is extracted in para 6.2 of the appellate order. Ld. CIT(A) relied on the decision of the coordinate bench of the Tribunal in the case of Aryav Securities Pvt. Ltd., passed in wherein the AO initially charged the commission @2% but it was reduced to by the ld.CIT(A) to 0.01% on the basis of statement of deponent of M/s Aryav Securities Pvt. Ltd. (supra). Considering the facts and circumstances of the case, we do not find any infirmity in the appellate order which is a very reasoned and speaking order. Accordingly, we uphold the same by dismissing the revenue’s appeal.

6. In the result, appeal of the revenue is dismissed. Order pronounced in the open court on 26/08/2025. Sd/- Sd/- (RAJESH KUMAR) (PRADIP KUMAR CHOUBEY) न्यधनयक सदस्य / JUDICIAL MEMBER लेखा सदस्य/ ACCOUNTANT MEMBER कोलकाता Kolkata; ददनाांक Dated 26/08/2025 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant- 2. प्रत्यर्थी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कोलकाता / DR, ITAT, Kolkata