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Income Tax Appellate Tribunal, DELHI “E” BENCH: NEW DELHI
Before: SHRI SUDHIR KUMAR & SHRI MANISH AGARWAL
Shri Ram Prakash Bhatia vs DCIT WZ-77, Sri Nagar, Shakur Basti Central Circle-05 North West Delhi, Delhi Delhi-110034. PAN-AERPB1045D APPELLANT RESPONDENT Appellant by Shri Amol Sinha, Adv. Respondent by Ms. Amisha S. Gupta, CIT DR Date of Hearing 27.10.2025 Date of 24.12.2025 Pronouncement ORDER
PER MANISH AGARWAL, AM :
The captioned appeals are filed by the assessee against the different orders, all dated 31.01.2024 of Ld. Commissioner of Income Tax (A)-24, New Delhi [“Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of separate orders pertaining to Assessment Years 2011-12 to 2015-16 respectively as tabulated below:- Sr. ITA Nos. Asstt. CIT(A) Order Assessment Order under section No. Year dated Order dated 1. 1477/Del/2024 2011-12 31.01.2024 28.03.2022 263 r.w.s. 147 of the Income Tax Act, 1961. 2. 1478/Del/2024 2012-12 -do- -do- -do- 3. 1479/Del/2024 2013-14 -do- -do- -do- 4. 1480/Del/2024 2014-15 -do- -do- -do- 5. 1480/Del/2024 2015-16 -do- -do- -do-
The issues raised by assessee in appeals for all the assessment years are common therefore, all these appeals by the assessee have been heard together and accordingly, adjudicated by a common order.
First, we take the appeal filed by the assessee in for AY 2011-12.
[Assessment Year 2011-12]
Briefly stated facts of the case are that assessee is an individual and filed his return of income on 31.03.2012, declaring total income of INR 1,59,800/-. A survey was carried out at the business premises of the assessee on 08.08.2014 and during the course of survey, assessee admitted of indulged into the business of providing bogus bills and accommodation entries. Based on the admission by the assessee, reassessment proceedings were initiated by the AO by issuing notice u/s 148 of the Act after recording the reasons. Thereafter, reassessment order was passed on 31.12.2018 at a total income of INR 12,04,750/-. Thereafter, Ld. PCIT, Central-1, Delhi passed an order u/s 263 of the Act and set aside the re-assessment order for reconsideration of following issues:- [i] computing the commission income if any, accruing to the assessee on account of debit transactions in the bank accounts; [ii] giving the assessee final opportunity to furnish information in respect of credit entries in the bank account and taking appropriate decision.
Thereafter, the AO proceeded with the present proceedings in terms of directions given by Ld. PCIT and order was passed u/s 263 r.w.s.147 of the Act dated 28.03.2022 wherein addition of INR 10,88,189/- is made on account of commission on all the debit and credit entries in the bank accounts. Besides this, AO also made the addition of INR 46,18,63,196/- regarding total credits/deposits in the bank accounts holding the same as unexplained credits u/s 68 of the Act.
Against the said order, assessee preferred an appeal before Ld. CIT(A) who dismissed the appeal of the assessee in terms of the impugned order dated 31.01.2024.
7. Aggrieved by the said order, assessee is in appeal before the Tribunal by taking following grounds of appeal:- 1. “That the Ld. AO has erred in passing an order u/s 147 r.w.s 263 of the Income Tax Act, 1961 (herein referred as 'the Act') by assessing a total income of Rs. 41,58,46,419/- in complete ignorance of facts on record and also in complete violation of principles of natural justice and Ld. CIT(A) has erred in upholding the same.
2. That the Ld. AO has erred in making the addition of Rs. 41,48,64,115/- as unexplained credit u/s 68 of the Act without appreciating the fact that the Assessee herein was merely an accommodation entry provider and Ld. CIT(A) has also erred in upholding the finding of the Ld. AO.
3. That on the facts and circumstances of the case and in law, it is reiterated that the Ld. A.O has grossly erred in adding the amount of income generated on accounts of third party namely Jain Trading Co., Surana Brothers & Vikas Surana superseding the previous order of Ld. CIT(A)-24 and as regard the following income added to the income of Assessee as per Para No, 7.4 of the Re-assessment Order under appeal for the A.Y. 2011-12.
4. That the Ld. AO has erred in making the addition of Rs. 5,66,002/- as commission income without appreciating the fact that for computing the commission income, the debit and credit entries cannot be added as without debit entries there cannot be credit entries and Ld. CIT(A) has erred in upholding the finding of the Ld. AΟ.
5. That the Ld. AO has erred in making the addition of Rs. 10,08,189/- as commission income without appreciating the fact that, for computing the commission income, the debit and credit entries cannot be added as without debit entries there cannot be credit entries and Ld. CIT(A) has erred in upholding the finding of the Ld. AO.
6. That the Ld. CIT (A) has erred in not appreciating the fact that the Hon'ble ITAT vide order dated 13.07.2022 and 22.01.2024 has held the Assessee herein as accommodation entry provider and hence, the only commission income could have been added in the hands of the Assessee.
That the Ld. PCIT has erred in giving directions u/s 263 of the Income Tax Act, 1961 to the Ld. AO for reassessment without affording reasonable opportunity of being heard as well as without appreciating the complete facts and materials on record in complete disregard of law and settled principles for invoking jurisdiction u/s 263 of the Act.
8. The appellant craves leave to add, alter, amend or vary any of the above grounds during the pendency of the appeal.”
Before us, Ld. AR of the assessee submits that Co-ordinate Bench of the Tribunal in the case of the assessee itself, has held that assessee is an entry provider and only commission income could be assessed for providing such entries in the hands of the assessee and the Co-ordinate Bench further directed to apply commission @ 0.15% on the amount credited in the bank accounts of assessee. The relevant observations of the Co-ordinate Bench in assessee’s own case in for AY 2011-12 vide order dated 13.07.2022 are reproduced as under:-
12. “We have gone through the statement of the assessee recorded u/s 131(1A), the bank accounts operated by him which are in his own name and which are in the name of others. Keeping in view, the entirety of the accommodation entries, we do not hesitate to hold that the commission earned by the assessee by using the bank accounts in the name of other persons also liable to be taxed in the hands of the assessee only as the assessee is the operator and the beneficiary of these accounts and these accounts standing in the name of other persons have also been undoubtedly used for giving accommodation entries. Thus, the plea of the assessee that the commission cannot be charged pertaining to the accounts doesn’t belong to the assessee is hereby dismissed. With regard to multiple routing of the amounts among various accounts, we are of the opinion that the percentage of commission charged @ 0.15% instead of the normal 1.5% takes care of such multiple routing of entries upto 10 times.”
8.1. Similarly in AY 2012-13 in the Co- ordinate Bench of ITAT, Delhi vide order dated 04.01.2024 has also admitted the fact that the assessee is an entry provider and further held that the assessee has only earned commission from such accommodation entries. The relevant observations are reproduced as under: 9. “We find that the similar issue has been ad judicated by this Tribunal in the assessee’s own case for the earlier and subsequent assessment years in to 189/Del/2020 wherein the Tribunal having treated the assessee as a Entry Operator determined commission @0 .15%, hence keeping in view the said order, we direct the AO charge commission @0.15% on the amount of Rs. 160,10,097/-.
10. The appeal of the assessee on this ground is partly allowed.
11. During the course of assessment proceedings, the assessee had admitted that the following bank account No. 9352320000547 of M/s Chaudhary & Co. registered in the name of his wife Smt. Saro j Bhatia was also operated by him for providing accommodation entries:
Account Number Cash deposit(Rs.) Total Toal Debit 09352320000547 22082091 534295846 534271324 with HDFC Bank
12. An amount of Rs. 2,20 ,82 ,091/- was deposited in cash in the above bank account of M/s. Chaudhary & Co. The same was treated as unexplained cash credit and addition of the same was made in the hands of the assessee on substantive basis and in the name of his wife Smt. Saro j Bhatia on protective basis. The ld. CIT(A) held that, there is apparently no justification for withdrawing from one account and deposition in other bank account. The ld. CIT(A) held that, it is also not known as to whether the same cash which was withdrawn from one bank account has been deposited in other bank account or was handed over to some other party as part of accommodation entry business.
13. In the statement recorded u/s 131(lA) of Income Tax Act during the survey on 08 .08.2014 the assessee had specifically mentioned that M/s Chaudhary & Co. is a concern of his wife but all these firms are being opera ted by the assessee only. Since the assessee has specifically admitted during the survey that the particular proprietorship firm is being operated by him only the credit of the cash deposited in M/s Chaudhary & Co.'s bank account should belong to the assessee. Therefore, it would be appropriate to consider that the cash deposited in this particular bank account o f M/s. Chaudhary & Co. actually pertains to the assessee and utilized for giving entries to various people. Since the assessee has been already treated as an Entry Operator, we direct the AO charge commission @ 0.15% on the amount of Rs. 2,20,82,091/-.
14. The appeal of the assessee on this ground is partly allowed.
15. The assessee is in the business of providing accommodation entries. The Assessing Officer calculated the total commission on the credit entries for these four accounts other than the cash credits and the commission is computed at Rs. 32,40 ,621/-. The Assessing Officer has added this amount of commission of Rs. 32,40,621/- to the income of the assessee. The ld. CIT(A) held that, the Assessing Officer did not commit any error in computing the commission income on credit entries in the bank and adding a commission income of Rs. 32,40,621/- and therefore there is no need to interfere with the order of the Assessing Officer. Owing through the orders of the earlier years and facts of this case we hold that the ld. CIT(A) has rightly confirmed the addition.
16. The appeal of the assessee on this ground is dismissed.”
Ld. AR submits that all these bank accounts of the assessee were examined and thereafter, the entries found noted in the said accounts were treated as accommodation entries and Bench has held that at the most commission @ 0.15% could be held as income of the assessee on such entries. Therefore, any further addition could not be made with respect to the debit entries as the same are nothing but application/rotation of the funds credited in the said accounts. It is further submitted by Ld. AR that once it is held, credit entries are related to the business of providing accommodation entries, same could not be held as unexplained in the hands of the assessee. He further submits that on such entries the coordinate bench has already confirmed the commission @ 0.15%. He thus prayed that the order passed by AO & Ld.CIT(A) in confirming the additions towards credit entries in the bank accounts deserves to be reduced to the commission only.
Ld.AR further submits that all the entries in the bank accounts were through RTGS and Ld. AR drew our attention to FAQs dated 31.10.2022 issued by Reserve Bank of India where in reply to Question No.8, it was advised that certain details need to be furnished to the bank for initiating RTGS remittance which include details of account No. of the persons in whose account the amount is to be debited and further bank details of beneficiary are also required to be filed alongwith name. He thus submits that all these information was available with the bank but no action was taken by the Ao to collect such information from the bank. He further submits that neither of the parties is related to the assessee and the assessee has already admitted that these entries pertained to the accommodation entries therefore, no addition should be made by holding the same as the income of the assessee u/s 68 of the Act.
On the other hand, Ld.CIT DR for the Revenue submits that assessee has failed to furnish details of the parties from whom credits were received nor had filed any details of debit entries in the bank accounts and therefore, in terms of directions given by Ld. PCIT in the order passed u/s 263 of the Act, AO has rightly computed the commission income on debit entries. He further submits that since the assessee has failed to explain the nature of credit entries in the bank accounts of the entities managed and controlled by him therefore, the entire credits is unexplained income of the assessee and the lower authorities has rightly made the additions which deserves to be uphold.
Heard the contentions of both the parties and perused the material available on record. In the instant case, since beginning of the proceedings, it was the claim of assessee that he is indulged in the business of providing accommodation entries and bogus bills and these activities were carried out through various proprietorship firms owned by him and certain other entities which are managed and operated by the assessee. The AO has made addition with respect to commission income on both debit and credit entries appearing in the bank accounts of the assessee’s own proprietorship firms and also with respect to the entries in bank accounts of various other firms managed and controlled by him. Besides this, AO has made the addition of entire credit entries appearing in the bank accounts by holding the same as unexplained.
Once it is established that assessee is engaged in the activities of providing accommodation entries and bogus bills etc. and further accepted that the entries appearing in the bank accounts are related to such activities, the same could not be held as the unexplained income of the assessee and commission income earned for providing such entries should only be considered as unexplained income of the assessee form such activities. Any further additions of the debit/ credit entries appearing in all the bank accounts by holding the same as unexplained credit is contrary to the view taken by the coordinate bench in assessee’s own case. As observed above, the Co- ordinate Bench in the case of assessee itself for year under appeal against the order passed u/s 147 vide its order dated 31.12.2018 in and also in for AY 2012-13, has confirmed the fact that assessee is an entry provider and credit entries appearing in the bank accounts operated by him of his own proprietorship firms name and in the name of others contained the accommodation entries on which commission @ 0.15% should be charged as the income of the assessee and no other addition could be made for such credit entries.
Accordingly, we direct the AO to compute the commission income @ 0.15% on the total credit entries appearing in the bank accounts owned by the assessee and in the name of other persons which are managed and operated by the assessee. Regarding the debit entries appearing in these bank accounts, we are of the view that these are application of funds credited in the said accounts on which commission income has already been uphold by us. Once the credit entries have been considered for computation of commission no further addition is required to made on the debit entries, accordingly the addition made towards the debit entries in the bank accounts as commission is hereby deleted.
Regarding the additions made u/s 68 towards the credit entries appearing in the bank accounts of the firms owned by the assessee and also in the name of other firms which are managed and operated by the assessee, it is already held by us herein above, that no further addition could be made for such credit entries once they are treated as accommodation entries and it is held that assessee has earned commission income on the same. Therefore, we direct the AO to delete the additions made u/s 68 of the Act towards all the credit entries appearing in the bank accounts owned by the assessee and also in the name of other firms which are managed and operated by the assessee.
With these observations, all the grounds of appeal raised by the assessee are partly allowed.
In the result appeal of the assessee is partly allowed. to 1481/Del/2024 [Assessment Year 2012-13 to 2015-16]
In all remaining appeals of the assessee, both parties fairly admitted that the facts and issues are identical to the facts of the case in for Assessment Year 2011-12. The respective sides have canvassed similar plea in all these appeals.
In view of the similarity of facts, our decision in for Assessment Year 2011-12 would apply Mutatis Mutandis in the captioned appeals also, filed by the assessee. Thus, all appeals filed by the assessee are partly allowed.
In the result, all captioned appeals of the assessee in to 1481/Del/2024 for Assessment Years from 2011-12 to 2015-16 respectively, are partly allowed.
Order pronounced in the open Court on 24.12.2025.