Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI ‘D’ BENCH,
Before: SHRI BHAVNESH SAINI, & SHRI T.S. KAPOOR,
PER T. S. KAPOOR, ACCOUNTANT MEMBER,
This is an appeal filed by the assessee against the order of Ld.
CIT(A)-IX, dated 27/09/2013. The grounds of appeal taken by the assessee are reproduced below:-
1. That having regard to the facts and circumstances of the case Ld. CIT(A) has erred in law and on facts in confirming the action of the Ld. AO in treating the amount of Rs. 1,31,11,119/- as accommodation amount that too without any basis and has further erred in confirming the addition of Rs.3,87,675/- (i.e. 1.5% of 1,31,11,119/-) being the amount of alleged commission earned from undisclosed source and has further erred in holding that assessee was engaged in the business of providing accommodation entries.
2. That having regard to the facts and circumstances of the case Ld. CIT(A) has erred in law and on facts in confirming the action of the Ld. AO in treating the amounted' Rs.2,58,44,990/- as accommodation amount that too without any basis and has further erred in confirming the addition of Rs.3,87,675/- (i.e. 1.5% of 2,58,44,990/-) being the amount of alleged commission earned from undisclosed source and has further erred in holding that assessee was engaged in the business of providing accommodation entries.
3. That in any case and in any view of the matter action of the Ld. CTT(A) in confirming the action of the Ld. AO in making the aggregate addition of Rs.5,84,342/- and in framing the impugned assessment order which is bad in law and against the facts and circumstances of the case.
4. That in any case and in any view of the matter action of the Ld. CIT(A) in confirming the action of the Ld. AO in making the impugned addition and framing the impugned assessment order which is contrary to law, void ab initio, beyond jurisdiction and the same is not sustainable on various legal and factual grounds.
5. That having regard to the facts and circumstances of the case the Ld. CIT(A) has erred in law and on facts in confirming the action of the Ld. AO in framing the assessment in violation of principles of natural justice, by recording incorrect facts and findings and without providing adequate opportunity of hearing and without cross examination and in any case and in any view of the matter the impugned order is not sustainable on various legal and factual grounds.
6. That having regard to the facts and circumstances of the case the Ld. CIT(A) has erred in law and on facts in not reversing the action of the Ld. AO in charging interest u/s 234B of the Income Tax Act, 1961.
7. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal
at the time of hearing and all the above grounds are without prejudice to each other.
2. At the outset, the Ld. AR submitted that the assessee was engaged in providing accommodation entries and was earning commission from such activities and the Assessing Officer has estimated the income from commission on such accommodation entries @1.5% of the amount of accommodation entries. The ld. AR submitted that the amount of income estimated by the Assessing Officer is on higher side as various Benches of the Tribunal has been estimating the income from such activities @ 0.5% and in this respect filed a copy of order of the Tribunal dated 22/07/2019. The ld. AR further stated that in a number of cases, the Hon’ble Tribunal had estimated the income @ 0.35% also and therefore it was prayed that the Assessing Officer be directed to estimate the income of the assessee ranging from 0.35% to 0.5%.
The Ld. DR, on the other hand, stated that the authorities below has already taken a lenient view and has already estimated the income @ 1.5% which should be sustained.
We have heard the rival parties and have gone through the placed on record. We find that it is an undisputed fact that the assessee was engaged in providing accommodation entries. The Assessing Officer has estimated the income of the assessee by estimating commission income @ 1.5% on these transactions. We find that the Hon’ble Tribunal in vide order dated 22/07/2019 has estimated the income from such accommodation entries @ 0.5%. While holding so the Tribunal has relied on a number of case laws. For the sake of completeness, the findings of the Hon’ble Tribunal are reproduced hereunder:-
4. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
5. Ld. AR for the assessee challenging the impugned order contended that in certain appeals pertaining to Tarun Goyal Group of companies for AYs 2006-07, 2007-08 & 2008-09, commission income qua accommodation entries has been determined @ 0.50%. It is further contended that the commission income is to be determined only qua the entries provided outside the books and not in case of intra-group transactions. However, on the other hand, ld. DR for the Revenue relied upon the order passed by the AO as well as ld. CIT (A).
6. Coordinate Bench of the Tribunal in the group cases being M/s. Dwarka Impex Pvt. Ltd. vs. ITO in & other cases order dated 26.04.2019 decided the issue as to determining the commission on transactions of providing accommodation entries by returning following findings :- “22. So far as question of applying the rate of commission at “the rate of 2.25 % by the AO and reduced to 2% by the ld. CIT(A) is concerned, this issue has already been decided by the coordinate Bench of the Tribunal in the Group cases of Tarun Goyal vide order dated 23.01.2019 passed in ITA No.6507/Del/2015 & Ors., thereby AO has been directed to adopt the rate of commission @ 0.50% or 50 paise and computed the profit accordingly by returning following findings :- “14. The ld. counsel for the assessee also relied heavily on various decisions of the co-ordinate bench wherein the Tribunal has adopted rate ranging from 0.15 paise to 0.50 paise i.e 0.15% to 0.50%.
As mentioned elsewhere, in such illegal activities, there cannot be any precedence and the rate varies from facts of each case.
To put an end to the litigation and in the interest of justice and fair play, in our considered opinion, 0.50 paise or 0.50% should be taken as the reasonable rate of profit/commission in such clandestine activities. We, accordingly, direct the Assessing Officers to adopt 0.50% or 0.50 paise and compute the profit accordingly.”
Following the decision rendered by the coordinate Bench of the Tribunal, AO is directed to adopt the decision of Group cases of Tarun Goyal (supra) and computed the profit accordingly in these cases also.
So far as appeals bearing ITA Nos.484/Del./2015, 6516/Del./2015 & 6710/Del./2016 filed by the assessees are concerned, one of the issue is as to upholding the commission income @ 2.25% in case of Bhawani Portfolio Pvt. Ltd. and Geefcee Finance Ltd. and @ 2% in case of Tejasvi Investments (P) Ltd. by the ld. CIT (A). This issue is also decided in favour of the assessee by following the decision rendered by Tribunal vide order dated 23.01.2019 (supra) and the AO is directed to adopt the decision of Group cases of Tarun Goyal (supra) and computed the profit accordingly in these cases also.
Second issue in case of Bhawani Portfolio Pvt. Ltd. and Geefcee Finance Ltd., which are of Noida charge, is as to whether determination of commission income with reference to the entries given outside the group. It is the case of the assessee that the AO has calculated the commission income @ 2.25% on the total of all credit entries in the bank account without appreciating the fact that all the entries have been duly explained by the assessee and inter-group entries were to be excluded. Perusal of remand order dated 18.10.2013 passed by the Tribunal was required to exclude the inter-group entries in the bank account in order to calculate the commission income. So, the AO is directed to exclude all inter- group entries in the bank account as per directions of the Tribunal and then calculate the commission income @ 0.50%. Consequently, this issue in the case of Bhawani Portfolio Pvt. Ltd. and Geefcee Finance Ltd. is determined in favour of assessee for statistical purposes.”
So, we are of the considered view that the first issue as to what should be the rate of commission on amounts provided as accommodation entries is required to be decided following the decision rendered by the coordinate Bench of the Tribunal in case of Dwarka Impex Pvt. Ltd. (supra) of Tarun Goyal Group of Cases. So, AO is directed to determine the rate of commission by adopting the decision of Tarun Goyal Group of Cases. AO is also directed to exclude all intragroup entries in the bank account as per directions of the Tribunal, as discussed in para 25 above, and then compute the commission income @ 0.50%. Since the assessee has not given any segregation of the accommodation entries provided outside the group and accommodation entries pertaining to intra-group transactions, the issue is remanded back to the AO to decide afresh after providing adequate opportunity of being heard to the assessee, in the light of the findings returned herein above. Consequently, appeal filed by the assessee is allowed for statistical purposes.
In the above findings, the Hon’ble Tribunal has clearly held that income from providing such accommodation entries is to be estimated @0.50% of the transactions. In the above findings, the Tribunal has remitted the matter back to the Assessing Officer with directions to calculate the commission income @0.50% and has further directed the AO to segregate the accommodation entries provided outside the group and accommodation entries pertaining to intra-group transactions. In the present case, the assessee has not raised any issue regarding segregation of accommodation entries relating to intra group transactions and transaction with outside persons. Therefore, without directing the Assessing Officer on this count, we direct the AO to estimate the income of the assessee @ 0.5% of accommodation entries. In view of the above, the appeal filed by the assessee is partly allowed.
Finally, the appeal of the assessee is partly allowed.
The order is pronounced in the open court on 08/08/2019.