ITO, WARD - 25(1), KOLKATA , KOLKATA vs. SMT. MANJU DEVI , KOLKATA

order : October 23rd, 2019 O R D E R Per J. Sudhakar Reddy, AM :- This appeal filed by the revenue is directed against the order of the Learned Commissioner of Income Tax (Appeals) – 7, Kolkata, (hereinafter the “ld.CIT(A)”), passed u/s. 250 of the Income Tax Act, 1961 (the ‘Act’), dt. 26/12/2017, for the Assessment Year 2014-15.

“6. I have considered the submission made by the assessee and perused the “6. I have considered the submission made by the assessee and perused the “6. I have considered the submission made by the assessee and perused the assessment order passed by the A.O. In the first instance, the addition made by assessment order passed by the A.O. In the first instance, the addition made by assessment order passed by the A.O. In the first instance, the addition made by the A.O of bogus sundry creditors is on protective basis, the ultimate the A.O of bogus sundry creditors is on protective basis, the ultimate the A.O of bogus sundry creditors is on protective basis, the ultimate beneficiary of which is M/s. MS beneficiary of which is M/s. MSP Metalics Ltd. 6.1 The A.O. has made the addition of Sundry Creditors of Rs.45,40,23,753 6.1 The A.O. has made the addition of Sundry Creditors of Rs.45,40,23,753 6.1 The A.O. has made the addition of Sundry Creditors of Rs.45,40,23,753/- alleging them to be bogus. However, the A.O. has not rejected the books of alleging them to be bogus. However, the A.O. has not rejected the books of alleging them to be bogus. However, the A.O. has not rejected the books of accounts of the assessee and has accepted the purchases and sales made by the accounts of the assessee and has accepted the purchases and sales made by the accounts of the assessee and has accepted the purchases and sales made by the assessee and also accepted the profit / loss on the sales & purchase of the assessee and also accepted the profit / loss on the sales & purchase of the assessee and also accepted the profit / loss on the sales & purchase of the goods. Hence it is a contrary stand taken by the A.O. trary stand taken by the A.O. The A.O. held that the creditor is not available at its address. But the A/R The A.O. held that the creditor is not available at its address. But the A/R The A.O. held that the creditor is not available at its address. But the A/R submitted that Smt. Santosh Devi, proprietor of M/s. Shree Shyam Enterprises submitted that Smt. Santosh Devi, proprietor of M/s. Shree Shyam Enterprises submitted that Smt. Santosh Devi, proprietor of M/s. Shree Shyam Enterprises is also assessed by the same A.O., where he has accepted the sales, hen is also assessed by the same A.O., where he has accepted the sales, hen is also assessed by the same A.O., where he has accepted the sales, hence it is inconsistent stand taken by the A.O by making protective addition. inconsistent stand taken by the A.O by making protective addition. 6.2 It is also evident from the assessment order, 6.2 It is also evident from the assessment order, that the purchase and sales that the purchase and sales transactions were made on credit by the assessee and the closing balance of transactions were made on credit by the assessee and the closing balance of transactions were made on credit by the assessee and the closing balance of the sundry debtors and su the sundry debtors and sundry creditors were standing in the books of the ndry creditors were standing in the books of the assessee. Also no payments were made or received out of these balances. assessee. Also no payments were made or received out of these balances. assessee. Also no payments were made or received out of these balances. 6.3 Thus, from the above, it looks like that the transactions of purchases and 6.3 Thus, from the above, it looks like that the transactions of purchases and 6.3 Thus, from the above, it looks like that the transactions of purchases and sales entered into by the assessee are of the paper tran sales entered into by the assessee are of the paper transaction only to provide saction only to provide accommodation entry. As such, it is a fit case to reject the books of the assessee accommodation entry. As such, it is a fit case to reject the books of the assessee accommodation entry. As such, it is a fit case to reject the books of the assessee as well as the purchase/sales, debtors/creditors. It is seen that in these kinds of as well as the purchase/sales, debtors/creditors. It is seen that in these kinds of as well as the purchase/sales, debtors/creditors. It is seen that in these kinds of transactions, only commission amount is charged in lieu of the en transactions, only commission amount is charged in lieu of the en transactions, only commission amount is charged in lieu of the entries provided. The transaction entered by the assessee is also one of these types provided. The transaction entered by the assessee is also one of these types provided. The transaction entered by the assessee is also one of these types only. Therefore, only commission amount must be the amount of income only. Therefore, only commission amount must be the amount of income only. Therefore, only commission amount must be the amount of income earned here. 6.4 I further find that the addition of entire sundry creditors made by the A.O. 6.4 I further find that the addition of entire sundry creditors made by the A.O. 6.4 I further find that the addition of entire sundry creditors made by the A.O. cannot be sustained since the A.O. has accepted both the purchases & sales sustained since the A.O. has accepted both the purchases & sales sustained since the A.O. has accepted both the purchases & sales made by the assessee. If the purchases are accepted, the sundry, creditors made by the assessee. If the purchases are accepted, the sundry, creditors made by the assessee. If the purchases are accepted, the sundry, creditors cannot be treated as bogus as they are counterparts of the same transaction. cannot be treated as bogus as they are counterparts of the same transaction. cannot be treated as bogus as they are counterparts of the same transaction. Also, the party from which the purc Also, the party from which the purchases have been made is also assessed by es have been made is also assessed by him only where he has accepted the sales. Thus, the addition of Sundry him only where he has accepted the sales. Thus, the addition of Sundry him only where he has accepted the sales. Thus, the addition of Sundry Creditors cannot be sustained. Creditors cannot be sustained. 6.5. However, the fact that the authenticity of these transactions were not However, the fact that the authenticity of these transactions were not However, the fact that the authenticity of these transactions were not proved cannot be denied. The assessee in proved cannot be denied. The assessee indulged in providing accommodation dulged in providing accommodation entries of purchases & sales, must have charged certain percentage as entries of purchases & sales, must have charged certain percentage as entries of purchases & sales, must have charged certain percentage as commission. The said commission income earned by the assessee is to be added commission. The said commission income earned by the assessee is to be added commission. The said commission income earned by the assessee is to be added in the hands of the assessee. Generally, the basic percentage of commission in the hands of the assessee. Generally, the basic percentage of commission in the hands of the assessee. Generally, the basic percentage of commission charged in these kind of transactions, ranges between charged in these kind of transactions, ranges between 0.15% to 0.25% of the 0.15% to 0.25% of the Assessment Year: 2014-15 Smt. Manju Devi transaction value. Thus, commission income @ 0.25% of Rs.45,40,23,753/ transaction value. Thus, commission income @ 0.25% of Rs.45,40,23,753/ transaction value. Thus, commission income @ 0.25% of Rs.45,40,23,753/- i.e., Rs.11,35,059/- is treated as the income earned by the assessee. is treated as the income earned by the assessee. 6.6. Therefore, the addition is restr Therefore, the addition is restricted to Rs.11,35,059/- The appeal on this ground is partly allowed.” 6.7. The appeal on this ground is 3.2. On the issue of addition on account of commodity income treaded as On the issue of addition on account of commodity income treaded as On the issue of addition on account of commodity income treaded as undisclosed income, the ld. CIT(A) held as follows: undisclosed income, the ld. CIT(A) held as follows:- “8. I have considered the submission of the assessee and “8. I have considered the submission of the assessee and perused assessment order. perused assessment order. The A.O. made the disallowance of the commodity income earned by the assessee The A.O. made the disallowance of the commodity income earned by the assessee The A.O. made the disallowance of the commodity income earned by the assessee of Rs.1,05,77,862/-. From the asst. order, it is evident that the A.O has made the . From the asst. order, it is evident that the A.O has made the . From the asst. order, it is evident that the A.O has made the addition treating the common income to be undisclosed income of the addition treating the common income to be undisclosed income of the assessee. assessee. 8.1 The assessee in her written submission has submitted that the said income has 8.1 The assessee in her written submission has submitted that the said income has 8.1 The assessee in her written submission has submitted that the said income has been accounted in the profit & loss etc of the assessee and was thus included in the been accounted in the profit & loss etc of the assessee and was thus included in the been accounted in the profit & loss etc of the assessee and was thus included in the return of income. Copies of Balance Sheet, Profit & Loss and ITR return filed return of income. Copies of Balance Sheet, Profit & Loss and ITR return filed return of income. Copies of Balance Sheet, Profit & Loss and ITR return filed were submitted by the assessee. Further, the assessee submitted contract notes and submitted by the assessee. Further, the assessee submitted contract notes and submitted by the assessee. Further, the assessee submitted contract notes and accounts confirmation relating to commodity income earned. accounts confirmation relating to commodity income earned. 8.2 On perusal of the Balance Sheet, I find that the claim of A/R is correct. I find 8.2 On perusal of the Balance Sheet, I find that the claim of A/R is correct. I find 8.2 On perusal of the Balance Sheet, I find that the claim of A/R is correct. I find that the addition made by th that the addition made by the A.O. of commodity income treating the e A.O. of commodity income treating the same to be undisclosed income is unsustainable since the said income was duly accounted for undisclosed income is unsustainable since the said income was duly accounted for undisclosed income is unsustainable since the said income was duly accounted for by the assessee in her return of income. The said fact has been mentioned by the by the assessee in her return of income. The said fact has been mentioned by the by the assessee in her return of income. The said fact has been mentioned by the AO in his assessment order. Also, the AO h AO in his assessment order. Also, the AO has started its computation from the as started its computation from the income declared by the assessee. Thus, it leads to double addition, therefore, I hold income declared by the assessee. Thus, it leads to double addition, therefore, I hold income declared by the assessee. Thus, it leads to double addition, therefore, I hold that the addition made of commodity income of Rs.1,05,77,862/ that the addition made of commodity income of Rs.1,05,77,862/- treating it to be treating it to be undisclosed is already disclosed income of the assess undisclosed is already disclosed income of the assessee and included in the return ee and included in the return of income furnished. Therefore, on this ground, the addition made by the AO is of income furnished. Therefore, on this ground, the addition made by the AO is of income furnished. Therefore, on this ground, the addition made by the AO is directed to be deleted. Appeal on this ground is allowed.” directed to be deleted. Appeal on this ground is allowed.”

Assessment Year: 2014-15 Smt. Manju Devi has made the addition of Sundry Creditors of Rs. 18,03,16,081/ has made the addition of Sundry Creditors of Rs. 18,03,16,081/- alleging them alleging them to be bogus. However, the A.O. has not rejected the books of the assessee and has to be bogus. However, the A.O. has not rejected the books of the assessee and has to be bogus. However, the A.O. has not rejected the books of the assessee and has accepted the profit / loss on the sales & pur accepted the profit / loss on the sales & purchase of the goods. Hence it is a chase of the goods. Hence it is a contrary stand taken by the A.O. We note that during the appellate contrary stand taken by the A.O. We note that during the appellate contrary stand taken by the A.O. We note that during the appellate proceedings, the assessee submitted that Shri Arun Kumar Tekriwal, the proceedings, the assessee submitted that Shri Arun Kumar Tekriwal, the proceedings, the assessee submitted that Shri Arun Kumar Tekriwal, the proprietor of M/s Amit Enterprise is also assessed under section 143(3), where proprietor of M/s Amit Enterprise is also assessed under section 143(3), where proprietor of M/s Amit Enterprise is also assessed under section 143(3), where the A.O has accepted the Sales, hence it is conflicting stand taken by the A.O by e A.O has accepted the Sales, hence it is conflicting stand taken by the A.O by e A.O has accepted the Sales, hence it is conflicting stand taken by the A.O by making protective addition. We note that it is also evident from the assessment making protective addition. We note that it is also evident from the assessment making protective addition. We note that it is also evident from the assessment order, that the purchase and sales transactions were made on credit by the order, that the purchase and sales transactions were made on credit by the order, that the purchase and sales transactions were made on credit by the assessee and the closing balance of the sundry debtors and sundry creditors ing balance of the sundry debtors and sundry creditors ing balance of the sundry debtors and sundry creditors were standing in the books of the assessee. Also no payments were made or were standing in the books of the assessee. Also no payments were made or were standing in the books of the assessee. Also no payments were made or received out of these balances. We note that ld. CIT(A) has rejected the books of received out of these balances. We note that ld. CIT(A) has rejected the books of received out of these balances. We note that ld. CIT(A) has rejected the books of accounts of the assessee observing the follo accounts of the assessee observing the following: 5.3 Thus, from the above, it looks like that the transactions of purchases and sales 5.3 Thus, from the above, it looks like that the transactions of purchases and sales 5.3 Thus, from the above, it looks like that the transactions of purchases and sales entered into by the assessee are of the paper transaction only to provide accommodation entered into by the assessee are of the paper transaction only to provide accommodation entered into by the assessee are of the paper transaction only to provide accommodation entry. As such, it is a fit case to reject the books of the assessee as well as the entry. As such, it is a fit case to reject the books of the assessee as well as the entry. As such, it is a fit case to reject the books of the assessee as well as the purchase/sales, debtors/creditors. It is seen that in these kinds of transactions, only purchase/sales, debtors/creditors. It is seen that in these kinds of transactions, only purchase/sales, debtors/creditors. It is seen that in these kinds of transactions, only commission amount is charged in lieu of the entries provided. The transaction entered by commission amount is charged in lieu of the entries provided. The transaction entered by commission amount is charged in lieu of the entries provided. The transaction entered by the assessee is also one of these types only. Therefore, only commission amoun the assessee is also one of these types only. Therefore, only commission amoun the assessee is also one of these types only. Therefore, only commission amount must be the amount of income earned here. the amount of income earned here. We note that the addition of entire sundry creditors made by the A.O cannot be We note that the addition of entire sundry creditors made by the A.O cannot be We note that the addition of entire sundry creditors made by the A.O cannot be sustained since the A.O has accepted both the purchases & sustained since the A.O has accepted both the purchases & sales made by the sales made by the assessee. If the purchases are accepted, the sundry creditors cannot be treated as assessee. If the purchases are accepted, the sundry creditors cannot be treated as assessee. If the purchases are accepted, the sundry creditors cannot be treated as bogus as they are counterparts of the same transaction. Also, the party from bogus as they are counterparts of the same transaction. Also, the party from bogus as they are counterparts of the same transaction. Also, the party from which the purchases have been made is also assessed by him only where he has which the purchases have been made is also assessed by him only where he has which the purchases have been made is also assessed by him only where he has accepted the sales. Thus, the addition of Sundry Creditors cannot be sustained. accepted the sales. Thus, the addition of Sundry Creditors cannot be sustained. accepted the sales. Thus, the addition of Sundry Creditors cannot be sustained. However we note that the fact that the authenticity of these transactions were However we note that the fact that the authenticity of these transactions were However we note that the fact that the authenticity of these transactions were not proved cannot be denied. The assessee indulged in providing not proved cannot be denied. The assessee indulged in providing not proved cannot be denied. The assessee indulged in providing accommodation entries of purchase accommodation entries of purchases & sales, must have charged certain s & sales, must have charged certain percentage as commission. The said commission income earned by the assessee percentage as commission. The said commission income earned by the assessee percentage as commission. The said commission income earned by the assessee is to be added in the hands of the assessee. Generally, the basic percentage of is to be added in the hands of the assessee. Generally, the basic percentage of is to be added in the hands of the assessee. Generally, the basic percentage of commission charged in these kind of transactions, ranges betwee commission charged in these kind of transactions, ranges between 0.15% to n 0.15% to 0.25% of the transaction value. Thus, commission income @ 0.25% of Rs. 18, 0.25% of the transaction value. Thus, commission income @ 0.25% of Rs. 18, 0.25% of the transaction value. Thus, commission income @ 0.25% of Rs. 18, 03,16,081/- i.e. Rs. 4,50,790/ i.e. Rs. 4,50,790/- is treated as the income earned by the assessee. is treated as the income earned by the assessee. Therefore, the addition is restricted to Rs. 4,50,790/ Therefore, the addition is restricted to Rs. 4,50,790/-. In these peculiar facts and . In these peculiar facts and circumstances, we note that there is no infirmity in the order passed by ld. umstances, we note that there is no infirmity in the order passed by ld. umstances, we note that there is no infirmity in the order passed by ld. CIT(A), hence we dismis CIT(A), hence we dismiss the ground raised by Revenue.”

7. Consistent with the view taken therein, we find no infirmity in the order Consistent with the view taken therein, we find no infirmity in the order Consistent with the view taken therein, we find no infirmity in the order of the ld. CIT(A) and delete the addition. Hence, of the ld. CIT(A) and delete the addition. Hence, Ground No. 1 & 2 of the revenue Ground No. 1 & 2 of the revenue are dismissed.

Assessment Year: 2014-15 Smt. Manju Devi 9. Ground No. 4 is general in nature. Ground No. 4 is general in nature.