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Facts
The assessee's appeal is against the order of the NFAC, Delhi, which upheld the additions made by the Assessing Officer. The additions were based on estimated profit at 10% of receipts from discounting cheques/DD/RTGS, amounting to Rs. 35,42,855. The assessee argued that a rate of 0.15% is accepted by appellate forums for such business.
Held
The Tribunal noted that the CIT(A) had confirmed the addition in an ex parte order despite the assessee being given multiple opportunities. The Tribunal also considered the assessee's reliance on a High Court decision where a similar addition was deleted for AY 2011-12. However, the Revenue argued that the facts for the current year were different as the assessee admitted to providing accommodation entries.
Key Issues
Whether the addition of Rs. 35,42,855/- made by the Assessing Officer, based on an estimated profit of 10% on receipts from discounting of cheques/DD/RTGS business, is justified, is justified, considering the assessee's submission regarding a lower accepted rate of 0.15% and a previous High Court decision for a different AY.
Sections Cited
143(3), 147, 271(1)(c), 250(6)
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आयकर अपीलीय अिधकरण, सूरत "ायपीठ, सूरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 97/SRT/2024 (AY 2010-11) (Physical hearing) Rameshchandra Rangildas Mehta Assistant Commissioner of 82, Tribhuvan Society, Ved Road, Income-tax (OSD), बनाम Surat-395 004 Ward-3(2)(3), Surat, Vs [PAN : ABJPM 8972 H] Aayakar Bhavan, Majura Gate, Surat-395 001 अपीलाथ"/Appellant ""थ" /Respondent
िनधा"रती की ओर से /Assessee by Shri Yogesh B Shah, AR राज" की ओर से /Revenue by Shri Mukesh Jain– Sr-DR सुनवाई की तारीख/Date of hearing 13.01.2025 उद्घोषणा की तारीख/Date of 16.01.2025 pronouncement Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of National Faceless Appeal Centre, Delhi [for short to as “NFAC/Ld.CIT(A)] dated 22.12.2023 for assessment year (AY) 2010-11, which in turn arises out of assessment order passed by Assessing Officer under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 22.12.2017. The assessee has raised following grounds of appeal:- “1). The learned CIT(A), NFAC, Delhi has erred in confirming the additions of Rs.35,42,855/- made by the Assessing Officer, considering profit @ 10% of receipts of Rs.3,54,28,550/- received by him for discounting of cheques/DD/RTGS business though the rate of 0.15% is accepted by appellate forum like ITAT for such business activities. On the facts and in the circumstances of the case addition of Rs.35,42,855 be deleted. Rameshchandra R Mehta
2)Interest u/s 243A, 234B, 234C is wrongly charged and should be deleted keeping in view facts and circumstances of the case. 3) On the facts and in the circumstances of the case, penal action u/s 271(1)(c) should not be initiated. 4) The appellant craves leave to alter, delete, amend the grounds duly raised or to withdraw any ground of appeal.” 2. Rival submission of both the parties heard and record perused. The Ld. Authorized Representative (Ld.AR) of the assessee submits. The Ld. AR of the assessee submits that grounds of appeal raised by assessee is covered in favour of assessee by the decision of Hon’ble jurisdictional High Court in assessee’s own case for assessment year 2011-12 in R/Tax Appeal No.1203 of 2018 dated 15.07.2019. In assessment year 2011-12, similar income was estimated on total receipt of assessee @ 10%, however, on further appeal before Tribunal, the addition was restricted @ 2.00 % and on further appeal before Hon’ble jurisdictional High Court, entire addition was deleted. Thus, grounds of appeal raised by assessee is squarely covered in favour of assessee. The Ld. AR of the assessee also relied upon the decision of this co- ordinate Bench of this Tribunal, in ITA No.2119/Ahd/2015 in the case of Shri Naman Yagnik (HUF), vs. ITO dated 12.01.2018 and would submit that on similar set of fact, addition @ 2.00 % on similar accommodation entries/nature of business was restricted and same was upheld by Tribunal. 3. On the other hand, Ld. Sr-DR for the Revenue supported the order of lower authorities. Ld. Sr-DR for the Revenue vehemently argued the contention of Ld.AR of the assesse that assessee himself admitted that he is engaged in providing accommodation entries. The assessee provided detailed accommodation entries to various entities as recorded in para-6 of assessment 2 Rameshchandra R Mehta
order. The Assessing Officer in a reasonable manner, estimated 10% of profit on such addition. Before Ld.CIT(A), there was delay of 19 days in filing appeal. The Ld. CIT(A) graciously condoned such delay. The Ld. Sr-DR for the Revenue submits to decide the appeal on merit, Ld.CIT(A) issued six show causes notices in para-5.1 in impugned order. However, assessee despite availing ample opportunities has not given any details. The Ld.CIT(A) has left no option but to decide the appeal on merits. Since no details furnished by assessee, Ld. CIT(A) upheld the addition made by Assessing Officer. So far as reliance placed by Ld. AR of the assessee regarding decision of Hon’ble jurisdictional High Court in assessee’s own case (supra) for assessment year 2011-12. The Ld. Sr. DR for the Revenue submits that Hon’ble jurisdictional High Court has categorically recorded that lower authorities have proceeded on guise and estimated the addition the facts of the year under consideration are absolutely on different fact, the assessee himself accepted about providing accommodation entries. This Bench relied on the decision of Vijay Protein Ltd. (1996) 58 ITD 528 (Ahd) has estimated 25% addition on accommodation entries. Yet, the Assessing Officer has estimated only 10% of amount of accommodation entries. Since the order of Assessing Officer was confirmed by Ld.CIT(A) in ex parte order. Therefore, in case, this Bench is of the view that assessee deserves any leniency and matter may be restored back to the file of Assessing Officer otherwise it is a fit case to sustain the addition made by Assessing Officer. 4. We have considered the rival submissions of both the parties and have gone through order of lower authorities carefully. We have deliberated the decision
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of Hon’ble jurisdictional High Court relied by Ld. AR of the assessee. We find that Assessing Officer made addition of Rs.35,42,855/- being 10% of total transaction/accommodation entry provided by assessee. The ld. CIT(A) confirmed the action of Assessing Officer in ex parte order by taking view that the assessee was provided five opportunities to make submission to substantiate various grounds of appeal. No reasonable and plausible explanation for non-appearance before the ld. CIT(A) is explained before us by ld. AR of the assessee, except raising the plea that the Hon’ble Jurisdictional High Court deleted similar addition in appeal for A.Y. 2011-12. Considering the fact that the ld. CIT(A) upheld the order of Assessing Officer in ex parte proceeding, therefore, we are of the view that firstly, the assessee must explain and substantiate the grounds of appeal raised before First Appellate Authority. Therefore, the matter is restored back to the file of ld. CIT(A) to pass the order on merit as per mandate of Section 250(6) of the Income Tax Act, 1961. In the result, the grounds of appeal raised by the assessee are allowed for statistical purpose. 5. In the result, the appeal of the assessee is allowed for statistical purposes only. Order pronounced in the open court on 16/01/2025. (BIJAYANANDA PRUSETH) (PAWAN SINGH) लेखा सद"/Accountant Member "ाियक सद"/Judicial Member सूरत / Surat Dated: 16/01/2025 Dkp Outsourcing Sr.P.S*
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आदेश की "ितिलिप अ"ेिषत/ Copy of the order forwarded to : अपीलाथ"/ The Appellant ""थ"/ The Respondent आयकर आयु"/ CIT िवभागीय "ितिनिध, आयकर अपीलीय आिधकरण, सूरत/ DR, ITAT, SURAT गाड" फाईल/ Guard File //// By order/आदेश से,
सहायक पंजीकार आयकर अपीलीय अिधकरण, सूरत