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Facts
The assessee company, Nakshatra Business Pvt. Ltd., was treated as a conduit entity facilitating accommodation entries. The Assessing Officer made an addition of 3% as commission on purchase and sale in the assessee's hands, which was upheld by the CIT(A).
Held
The Tribunal observed that the same commission income had already been added on a substantive basis and confirmed by a Co-ordinate Bench of ITAT in the hands of the operator, Sh. Praveen Jain. Therefore, taxing the same income again in the assessee's hands would constitute double taxation, and the addition made in the assessee's hands was deleted.
Key Issues
Whether commission income from accommodation entries, already taxed in the hands of the operator, can also be taxed in the hands of the conduit assessee company.
Sections Cited
Section 145(3)
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Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
Before: Dr. B. R. R. Kumar, Sh. Sudhir Kumar
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeals have been filed by the assessee against the orders of ld. CIT(A)-29, New Delhi dated 26.09.2023.
Since, the issue involved in all these appeals are similar, they were heard together and being adjudicated by a common order. In following grounds have been raised by the assessee:
“i. The learned Commissioner of income Tax (Appeal) has erred in not allowing the appellant company’s appeal for disapproving the learned Assessing officer’s view of rejecting the Books of Accounts and Income of appellant by invoking the provision of section 145 (3) of the income tax Act, 196.
2 3363 & 3364/Del/2023 Nakshatra Business Pvt. Ltd. ii. The learned Commissioner of Income Tax (Appeal) has again erred in upholding the action of learned assessing officer of treating all the business activities as accommodation entry without appreciating the submission / documentary evidence provided to prove the genuineness of all the transaction of Income, Expenses, Business Losses, Capital Gain / Loss, purchase, sales, loans and advances and Investments etc submitted by appellant company. iii. The Learned Commissioner of Income Tax (Appeal) has again erred in upholding the addition made by the learned Dy. Commissioner of Income Tax by estimating addition at the rate of alleged commission income @ 3% for Loans & Advances, Share Application money (Investments) and Purchase and Sales (Trading Activities) made during the year.”
Heard the arguments of both the parties and perused the material available on record.
The undisputed facts as accepted by both the parties are that an addition @ 3% as the commission received on purchase & sale has been added in the hands of the company. The company is conduit entity which was used for facilitating accommodation entries. It was submitted that the said commission was also added to the income of the operator Sh. Praveen Jain for Assessment Years in question on substantive basis and the Co-ordinate Bench of ITAT has confirmed the addition made. Hence, we hold that the addition of the commission made in the assessee company is akin to the taxation of the commission income earned twice, once in the hands of the assessee once in the hands of the operator. Since, the addition has already been confirmed in the hands of operator Sh. Praveen Jain, we hold that the addition made in the hands of the assessee is liable to be deleted.