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Facts
A search and seizure action under section 132 of the Income-tax Act was conducted at the assessee's registered office. Subsequently, a notice under section 153A was issued. The assessee filed an application before the Income-tax Settlement Commission, which was rejected. The Assessing Officer then completed the assessment. The Assessing Officer recorded that the assessee provided accommodation entries of bogus bills to certain group companies, and therefore, the assessee must have also obtained bogus purchase bills. Accordingly, a notice under section 153C was issued, and an addition was made under section 69C for commission income.
Held
The CIT(A) deleted the addition, holding that the addition was not based on any incriminating material found during the search and that the addition on account of commission income had already been made in the order under section 153A, with the section 153C addition being a mere rectification. The Tribunal found that the Assessing Officer had already considered the information regarding accommodation entries while completing the assessment under section 153A and was therefore not justified in initiating proceedings under section 153C for the difference amount.
Key Issues
Whether the addition made by the Assessing Officer under section 69C for commission income, based on information from a search under section 132 and proceedings under section 153C, was justified when similar issues were already addressed in the assessment order under section 153A.
Sections Cited
132, 153A, 153C, 144, 69C, 245(4)
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Income Tax Appellate Tribunal, MUMBAI BENCH “B” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SANDEEP SINGH KARHAIL
This appeal by the Revenue is directed against order dated 29.11.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – 50, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following grounds:
"On the facts and in the circumstances of the case and in law, the Ld. "On the facts and in the circumstances of the case and in law, the Ld. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting addition of Rs. CIT(A) erred in deleting addition of Rs. 28,21,44,903/- made under made under Section 69C of the Income Tax Act, 1961 on account of commission Section 69C of the Income Tax Act, 1961 on account of commission Section 69C of the Income Tax Act, 1961 on account of commission income, by holding that the addition was not made on the basis of any income, by holding that the addition was not made on the basis of any income, by holding that the addition was not made on the basis of any incriminating material found during the course of search proceedings in incriminating material found during the course of search proceedings in incriminating material found during the course of search proceedings in the case of Oneworld gr the case of Oneworld group, without appreciating the fact that addition oup, without appreciating the fact that addition on the issue of commission income was already made in the order u/s on the issue of commission income was already made in the order u/s on the issue of commission income was already made in the order u/s 153A of the Act, and the addition made u/s 153C of the Act was merely 153A of the Act, and the addition made u/s 153C of the Act was merely 153A of the Act, and the addition made u/s 153C of the Act was merely rectification of mistake apparent from record". rectification of mistake apparent from record".
Briefly stated, fa Briefly stated, facts of the case are that a search and seizure cts of the case are that a search and seizure action u/s 132 of the Income action u/s 132 of the Income-tax Act, 1961 (in short ‘the Act’) was tax Act, 1961 (in short ‘the Act’) was carried out at the registered office of the assessee on 22.08.2017. carried out at the registered office of the assessee on 22.08.2017. carried out at the registered office of the assessee on 22.08.2017. Consequently, notice u/s 153A of the Act was issued to the Consequently, notice u/s 153A of the Act was issued to the Consequently, notice u/s 153A of the Act was issued to the assessee. The assessee filed an application before the Income ssessee filed an application before the Income ssessee filed an application before the Income-tax Settlement Commission Settlement Commission (ITSC) on 14.10.2019, however, same was however, same was rejected by way of order dated 14.12.2020 u/s 245(4) of the Act. rejected by way of order dated 14.12.2020 u/s 245(4) of the Act. rejected by way of order dated 14.12.2020 u/s 245(4) of the Act. Therefore, again the jurisdiction came to the Assessing Officer and Therefore, again the jurisdiction came to the Assessing Officer and Therefore, again the jurisdiction came to the Assessing Officer and the assessment was completed for the year under consideration u/s ment was completed for the year under consideration u/s ment was completed for the year under consideration u/s 153A r.w.s. 144 of the Act. 153A r.w.s. 144 of the Act.
2.1 Thereafter, the Assessing Officer recorded a satisfaction note Thereafter, the Assessing Officer recorded a satisfaction note Thereafter, the Assessing Officer recorded a satisfaction note that in the course of search and seizure action u/s 132 of the Act that in the course of search and seizure action u/s 132 of the Act that in the course of search and seizure action u/s 132 of the Act carried out on M/s Oneworld Industrie carried out on M/s Oneworld Industries Pvt. Ltd. and others on Ltd. and others on 06.11.2019, it was found that assessee provided accommodation t was found that assessee provided accommodation t was found that assessee provided accommodation entries of bogus bills to M/s Oneworld Group companies and entries of bogus bills to M/s Oneworld Group companies and entries of bogus bills to M/s Oneworld Group companies and therefore, assessee also must have obtained bogus purchase bills. therefore, assessee also must have obtained bogus purchase bills. therefore, assessee also must have obtained bogus purchase bills. Accordingly, notice u/s 153C of the Act was Accordingly, notice u/s 153C of the Act was issued for the assessment year corresponding to the search period including the assessment year corresponding to the search period including the assessment year corresponding to the search period including the assessment year under consideration. The Assessing Officer in the assessment year under consideration. The Assessing Officer in the assessment year under consideration. The Assessing Officer in the assessment order passed u/s 153C r.w.s. 153A of the Act made assessment order passed u/s 153C r.w.s. 153A of the Act made assessment order passed u/s 153C r.w.s. 153A of the Act made addition for the amount of Rs.28,21,44,903/ addition for the amount of Rs.28,21,44,903/- u/s 69C of the Act on 69C of the Act on account of commission paid on accommodation sales and purchase account of commission paid on accommodation sales and purchase account of commission paid on accommodation sales and purchase of fabric etc.
On further appeal, the Ld. CIT(A) deleted the addition On further appeal, the Ld. CIT(A) deleted the addition On further appeal, the Ld. CIT(A) deleted the addition observing as under:
“6.5 I have perused the assessment order passed u/s 144ws 153A I have perused the assessment order passed u/s 144ws 153A I have perused the assessment order passed u/s 144ws 153A dated 01.03.2021 01.03.2021 for AY 2017-18. Para 13.6 of this assessment order is 18. Para 13.6 of this assessment order is reproduced as under: reproduced as under:- "13.6 Additionally, information has been received from DCIT (CC) 7(2) "13.6 Additionally, information has been received from DCIT (CC) 7(2) "13.6 Additionally, information has been received from DCIT (CC) 7(2) vide email dated 10.12.2020 and 19.02.2021 that certain sales and vide email dated 10.12.2020 and 19.02.2021 that certain sales and vide email dated 10.12.2020 and 19.02.2021 that certain sales and purchases were made by the assessee from ent purchases were made by the assessee from entities engaged in providing ities engaged in providing accommodation entries for purchases and sales. accommodation entries for purchases and sales. 13.6.1 The summary of sale transactions undertaken by the assessee 13.6.1 The summary of sale transactions undertaken by the assessee 13.6.1 The summary of sale transactions undertaken by the assessee and the difference between the amount disclosed by the assessee before and the difference between the amount disclosed by the assessee before and the difference between the amount disclosed by the assessee before the Settlement Commission and the amount sta the Settlement Commission and the amount stated in the information ted in the information provided by the DCIT (CC) is as follows: provided by the DCIT (CC) is as follows: Name of AY Name of Name of Amount Total Amount Amount Difference the the Party the Party disclosed in disclosed in Assessee settlement settlement commission commission Platinum 2017-18 One world One world 95,12,61,248 4,29,31,05,333 42,81,76,041 52,30,85,207 42,81,76,041 Textile Ltd. Industries Industries Pvt Ltd. Pvt Ltd.
Thereafter, the A noted that in absence of sufficient details provided by Thereafter, the A noted that in absence of sufficient details provided by Thereafter, the A noted that in absence of sufficient details provided by the assessee in this regard an amount of 3% of total sales and purchases the assessee in this regard an amount of 3% of total sales and purchases the assessee in this regard an amount of 3% of total sales and purchases amounting to Rs. 15,52,77,08,281/ amounting to Rs. 15,52,77,08,281/- i.e. 3 % of Rs. 15,52,77,08,281/ 15,52,77,08,281/- being the total of 59,51,69,896/ being the total of 59,51,69,896/- as per the preceding paragraph and Rs. as per the preceding paragraph and Rs. 1493,25,38,385/ 1493,25,38,385/- which is the total amount of sales and purchases which is the total amount of sales and purchases undertaken undertaken undertaken by by by the the the assessee assessee assessee during during during the the the year) year) year) amounting amounting amounting to to to Rs.46,58,31,248/ Rs.46,58,31,248/- is added back to the total income. 6.5.2 Thus, it is evident that, the AO while completing the assessment 6.5.2 Thus, it is evident that, the AO while completing the assessment 6.5.2 Thus, it is evident that, the AO while completing the assessment u/s 153A of the IT Act has considered the information received wherein u/s 153A of the IT Act has considered the information received wherein u/s 153A of the IT Act has considered the information received wherein the search u/s 132 of the IT Act was conducted in case of One World the search u/s 132 of the IT Act was conducted in case of One World the search u/s 132 of the IT Act was conducted in case of One World Group of 06.11.2019. The AO has al Group of 06.11.2019. The AO has also made the addition of commission so made the addition of commission income @ of 3% on the transactions made with the One World Group income @ of 3% on the transactions made with the One World Group income @ of 3% on the transactions made with the One World Group companies. Thus, from the facts it is evident that the documents companies. Thus, from the facts it is evident that the documents companies. Thus, from the facts it is evident that the documents found/transactions found in the search conducted on One World Group found/transactions found in the search conducted on One World Group found/transactions found in the search conducted on One World Group entities on 06.11.2019 entities on 06.11.2019 which are pertaining to the appellant have which are pertaining to the appellant have already been considered while framing the assessment u/s 153A of the already been considered while framing the assessment u/s 153A of the already been considered while framing the assessment u/s 153A of the IT Act. 6.6 It is also seen from the assessment order passed u/s 153C dated 6.6 It is also seen from the assessment order passed u/s 153C dated 6.6 It is also seen from the assessment order passed u/s 153C dated 15.03.2002 that the AO has not made any addition on the basis of any that the AO has not made any addition on the basis of any that the AO has not made any addition on the basis of any incriminating material found/seized during the search of One World incriminating material found/seized during the search of One World incriminating material found/seized during the search of One World Group which are pertaining to the appellant. From the Para 6 and 6.1 of Group which are pertaining to the appellant. From the Para 6 and 6.1 of Group which are pertaining to the appellant. From the Para 6 and 6.1 of the assessment order it is clear that there was the assessment order it is clear that there was a factual mistake in the a factual mistake in the earlier assessment order passed u/s 153A ws earlier assessment order passed u/s 153A ws 144 dated 01.03.2021 144 dated 01.03.2021 wherein the total purchases and sales transactions on which the income wherein the total purchases and sales transactions on which the income wherein the total purchases and sales transactions on which the income @ of 3 % is to be estimated was taken at Rs. 1552,77,08,281/ @ of 3 % is to be estimated was taken at Rs. 1552,77,08,281/ @ of 3 % is to be estimated was taken at Rs. 1552,77,08,281/- instead of Rs. 2493,25,38,385/ Rs. 2493,25,38,385/-. The AO has made addition only to the extent of . The AO has made addition only to the extent of difference amount of difference amount of Rs.940,48,30,104/-. Thus, no addition has been made on the basis of any incriminating Thus, no addition has been made on the basis of any incriminating Thus, no addition has been made on the basis of any incriminating material/ document found /seized in the search conducted on one world material/ document found /seized in the search conducted on one world material/ document found /seized in the search conducted on one world group entities which are pertaining to the appellant. The assessment u/s group entities which are pertaining to the appellant. The assessment u/s group entities which are pertaining to the appellant. The assessment u/s 153A ws 144 was already 153A ws 144 was already completed in this case. Accordingly the completed in this case. Accordingly the addition made by the A.O is deleted. Appeal on this ground is addition made by the A.O is deleted. Appeal on this ground is addition made by the A.O is deleted. Appeal on this ground is ALLOWED.”
We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. The Ld. CIT(A) has deleted the addition relevant material on record. The Ld. CIT(A) has deleted the addition relevant material on record. The Ld. CIT(A) has deleted the addition mainly for the reason that according to him, the Assessing Officer mainly for the reason that according to him, the Assessing Officer mainly for the reason that according to him, the Assessing Officer had already made addition addition in respect of alleged accommodat in respect of alleged accommodation entries issued M/s Oneworld Group entities M/s Oneworld Group entities, in the assessment in the assessment order passed u/s 153A r.w.s. 144 dated 01.03.2021 and in the order passed u/s 153A r.w.s. 144 dated 01.03.2021 and in the order passed u/s 153A r.w.s. 144 dated 01.03.2021 and in the impugned assessment order dated 11.03.2022 impugned assessment order dated 11.03.2022, he has rectified the has rectified the quantum of accommodation entry transactions and made additions quantum of accommodation entry transactions and made additions quantum of accommodation entry transactions and made additions for the balance amount of balance amount of commission income @ 3% commission income @ 3% on Rs. 940,48,30,104/-, which has been worked out to Rs.28,21,44,903/ which has been worked out to Rs.28,21,44,903/-. which has been worked out to Rs.28,21,44,903/ In view of the Ld. CIT(A) carrying out rectification proceedings u/s In view of the Ld. CIT(A) carrying out rectification proceedings u/s In view of the Ld. CIT(A) carrying out rectification proceedings u/s 153C of the Act is beyond the mandate of section 153C of the Act 153C of the Act is beyond the mandate of section 153C of the Act 153C of the Act is beyond the mandate of section 153C of the Act and therefore, he deleted the addition. The Ld. CIT(A) also observed nd therefore, he deleted the addition. The Ld. CIT(A) also observed nd therefore, he deleted the addition. The Ld. CIT(A) also observed that the addition made by the Assessing Officer was not based on that the addition made by the Assessing Officer was not based on that the addition made by the Assessing Officer was not based on incriminating material found seized during the course of search of incriminating material found seized during the course of search of incriminating material found seized during the course of search of M/s Oneworld Group entities. We find that the Ld. CIT(A) has M/s Oneworld Group entities. We find that the Ld. CIT(A) M/s Oneworld Group entities. We find that the Ld. CIT(A) reproduced the relevant part of the assessment order wherein he reproduced the relevant part of the assessment order wherein he reproduced the relevant part of the assessment order wherein he has made the addition for the difference amount of accommodation has made the addition for the difference amount of accommodation has made the addition for the difference amount of accommodation transactions which were inadvertently not included while passing transactions which were inadvertently not included while passing transactions which were inadvertently not included while passing order u/s 153A dated 26.02.2021 (however order u/s 153A dated 26.02.2021 (however DIN of same was same was issued on 01.03.2021). Evidently vidently, once the Assessing Officer has already once the Assessing Officer has already considered the information of providing accommodation entries to considered the information of providing accommodation entries to considered the information of providing accommodation entries to M/s Oneworld group companies while completing the assessment M/s Oneworld group companies while completing the assessment M/s Oneworld group companies while completing the assessment u/s 153A of the Act u/s 153A of the Act, he is not justified in further ini not justified in further initiating the proceedings u/s153C of the Act and making addition only for the proceedings u/s153C of the Act and making addition only for the proceedings u/s153C of the Act and making addition only for the difference amount. Accordingly difference amount. Accordingly, we do not find any infirmity in the we do not find any infirmity in the order of the Ld. CIT(A) on the issue in dispute and we uphold the order of the Ld. CIT(A) on the issue in dispute and we uphold the order of the Ld. CIT(A) on the issue in dispute and we uphold the same. We further note that t We further note that the Ld. CIT(A) has already directed the already directed the Assessing Officer to consider rectification of the order passed u/s Assessing Officer to consider rectification of the order passed u/s Assessing Officer to consider rectification of the order passed u/s 153A of the Act and the Revenue has not challenged this direction 153A of the Act and the Revenue has not challenged this direction 153A of the Act and the Revenue has not challenged this direction of the Ld. CIT(A). In such circumstances the of the Ld. CIT(A). In such circumstances the AO is not justified in is not justified in taking parallel action of conside action of considering rectification as well as ring rectification as well as contesting the order of ld CIT(A) before the Tribunal. The ground of contesting the order of ld CIT(A) before the Tribunal. contesting the order of ld CIT(A) before the Tribunal. the appeal of the Revenue is accordingly dismissed. the appeal of the Revenue is accordingly dismissed.
In the result, the appeal of the Revenue is dismissed. In the result, the appeal of the Revenue is dismissed. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open Court on nounced in the open Court on 20/09/2024. /09/2024.