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Facts
The revenue filed an appeal against the deletion of additions made under Section 68 and on account of commission. The assessee filed a cross objection challenging the initiation of proceedings under Section 153C.
Held
The Tribunal decided that the issues were covered by its earlier decision in the assessee's own case for earlier assessment years. The appeal of the revenue regarding the deletion of additions under Section 68 was dismissed, and the addition on account of commission was to be calculated at a net rate of 0.47% on turnover.
Key Issues
Whether the deletion of additions made under Section 68 and on account of commission by the CIT(A) was justified, and if the proceedings under Section 153C were validly initiated.
Sections Cited
68, 153C
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Income Tax Appellate Tribunal, DELHI BENCH, ‘A’: NEW DELHI
Before: SHRI C.N. PRASAD & SHRI M. BALAGANESH
ORDER
PER C.N. PRASAD, JM,
This appeal and cross objection are filed by the revenue and assessee respectively against the order of the learned CIT(A), Dehi-110029 dated 28.06.2023 for the A.Y. 2017-18.
The revenue filed appeal against the order of the Ld. CIT(A) in deleting the addition made u/s. 68 of the Act and also the addition made on account of commission and the cross objection is filed by the assessee against the order of the Ld. CIT(A) in rejecting the contention of the assessee that there is no incriminating material belonging/pertaining to the assessee found during the course of search and, therefore, initiation of proceedings u/s. 153C by the AO is without jurisdiction.
At the time of hearing the learned Counsel for the assessee stated that the issue in Revenue’s appeal is squarely covered by the decision of this Tribunal in the assessee’s own case for A.Y.2012-13 to 2016-17 in to 4962/Del/2019 and cross objections Nos. 95 to 99/Del/2022 for the assessment years 2012-13 to 2016-17 dated 21.07.2023 read with corrigendum order dated 31.07.2023. Referring to these orders the learned Counsel for the assessee stated that in so far as ground No.3 is concerned the Tribunal decided identical ground following the order of this Tribunal in the case of Sh. Anand Kumar Jain dated 28.04.2023 in ITA No. 2808/Del/2019. The learned Counsel stated that the addition was deleted by the Tribunal dismissing the revenue’s Page | 2 ground. Ld. Counsel pleaded that following the order of the Tribunal ground no.-3 for the A.Y. 2017-18 may be dismissed.
Similarly regarding ground No.4 i.e. in respect of commission income the learned Counsel for the assessee referring to the corrigendum order dated 31.07.2023 stated that the Tribunal dismissed the grounds of appeal
raised by the Revenue in para-8 by observing that the entire commission income had already been taken into consideration in the hands of Sh. Anand Kumar Jain and N.K. Jain. Ld. Counsel pleaded that following the corrigendum order ground No.4 may be dismissed.
5. Coming to cross objection filed by the assessee the learned Counsel for the assessee stated that the cross objection is not pressed.
6. On the other hand the learned DR fairly accepts this position.
7. Heard rival contentions and perused the orders of the authorities below and the order of the Tribunal in to 4962/Del/2019 and Cross Objections Nos. 95 to 99/Del/2022 dated 21.07.2023 alongwith corrigendum order passed by the Tribunal dated 31.07.2023 and find that the issues in appeal of the revenue were decided by the Tribunal in favour of the assessee by observing as under :- 2. Since issues involved in revenue's appeal to 4962/Del/2019 for AY's 2012-13 to 2016-17 are identical and similar, they were heard together and being adjudicated by this common order. As agreed by the learned representatives Page | 3 of both the sides we are taking up for AY 2012-13 as lead case, wherein the revenue has raised following two effective grounds of appeal:-
1. On the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and on facts in deleting the protective addition of Rs. 54,64,44,954/- made by the AO on account of unexplained cash credits, without considering the fact that the assessee has failed to discharged the onus to satisfy the conditions laid on u/s. 68 of the I.T Act 1961 with regard to the nature and source of credit entries in respect of share capital/premium/unsecured loans and other credits in bank.
2. On the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and on facts in deleting the substantive addition of Rs. 13,66,112/- made by the AO without considering the fact that the assessee that assessee being a conduit concern, would have earned commission income for the transactions.
3. The Id. CIT(DR) supporting the assessment orders submitted that the Assessing Officer was right in making addition on protective basis in the hands of assessee and It was also justified and correct in making addition of Rs. 9,28,129/- on substantive basis being commission @0.25% of total impugned credits under facts and circumstances of the case which have been deleted by the Id. CIT(A) without any basis therefore impugned first appellate order may kindly be set aside by restoring that of the Assessing Officer.
4. Replying to the above the learned counsel of assessee submitted that the addition cannot be made in the hands of the conduit companies once the beneficiaries and accommodation entry provider are identified and addition of commission income has already been made in the hands of the accommodation entry provider. Further placing reliance on the order of ITAT Delhi 'A' Bench dated 28.04.2023 the Id, counsel submitted that in the case of Shri Anand Kumar Jain vs. ACIT in and other connected appeals of revenue the deletion of addition made on protective basis by the Assessing Officer has been upheld by the Tribunal upholding the deletion of protective addition of credits therefore since facts and circumstances of present case are similar and Identical therefore findings deleting the protective addition by the Id. CT(A) may kindly be uphold.
5. Placing rejoinder to the above, the Id. CIT(DR) did not dispute the fact of deletion of protective addition by the CIT(A) and its confirmation by the Tribunal order dated 28.04.2023 in the case Shri Anand Kumar Jain (supra). The Id. CIT(DR) submitted that the ground no.2 of revenue has been allowed under identical facts and circumstances and order of Id. CIT(A) directing the deletion of commission addition has been reversed by making addition @0.47% to the turnover of accommodation entries after elimination of circular transaction. Therefore ground no. 2 of revenue may kindly be allowed reversing the conclusion of Id. CIT(A).
6 On careful consideration of above, following the order of Tribunal in the case of Shri Anand Kumar Jain (supra) deletion of protective addition on account of unexplained cash credits is upheld and ground no. 1 of revenue is dismissed for AY 2012-13.
7 Regarding ground no. 2 of revenue we note that identical grievance/ground of revenue under identical facts and circumstance has been decided by the Tribunal in favour of the revenue and against the assessee reversing the first appellate order. Relevant paras 21 & 22 of Tribunal order (supra) are as follows:-
“21. Therefore, as per the explanation and submissions of the assessee, whole of the expenses incurred in earning commission income shall be allowed and accordingly the net rate of commission earned by the assessee i.e. 0.47% is the best which can be applied on the turnover of the accommodation entries after elimination of circular transactions. Thus the maximum addition which can be made in the hands of the assessee on account of commission earned on turnover of the accommodation entries worked out as under: 22. The AO is therefore directed to give effect to this order accordingly. Before parting we would like to clarify that the determination of expenses and the commission: earned is based on m Page | 5
Incriminating material specifically found and seized during the courses of search and hence the percentage of commission earned cannot be considered to be the same in other similar cases.”
Therefore, as per explanation and submissions of assessee, whole claim of expenses made in the P&L accounts towards earning of commission income shall be allowed and the net rate of commission earned by the assessee i.e., @0.47% of total turnover of accommodation entries after elimination of circular transaction is required to be add as income of assessee from commission. The Assessing Officer is therefore directed to give effect to the above order. Accordingly, ground no, 2 of revenue is allowed reversing the first appellate order.
Since facts and circumstances of remaining four appeals pertaining to AYs 2013-14 to 2016-17 are similar and identical therefore our conclusion drawn in the earlier part of this order for AY 2012-13 would apply mutatis mutandis to the other four appeals. Accordingly, ground no. 1 of revenue is dismissed and ground no. 2 of revenue is allowed.
10, The Id. counsel submitted that the assessee does not want to press its cross objection for all five years therefore cross objections of assessee for 2012-13 to 2016-17 are dismissed as not pressed.
In the result, the appeals of revenue are partly allowed and cross objections of assessee are dismissed.
Order pronounced in the open court on 21.07.2023.
8. The corrigendum order passed by the Tribunal is as under :-
9. As could we seen from the above orders of the Tribunal there in ground No.1 is identical to ground Nos.3 raised by the revenue for the assessment year under consideration, where in addition made u/s. 68 is deleted and ground is decided against the revenue by the Tribunal.
Similarly identical ground No.2 to the ground raised by the revenue in its grounds of appeal No.4 in respect of commission income was also decided against the revenue by the Tribunal in the corrigendum order passed on 31.03.2023.
11. The facts being identical, respectfully following the orders of the Tribunal for the A.Y.2012-13 to 2016-17 we reject the grounds raised
by the revenue in its appeal for A.Y. 2017-18.
12. In view of the submission of the learned Counsel for the assessee that the assessee is not pressing cross objection, the same is dismissed.
13. In the result, the appeal of the revenue is dismissed and cross objection of the assessee is also dismissed as not pressed. Order pronounced in the open court on 28.11.2025