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Facts
The assessee was engaged in providing accommodation entries for commission. The Assessing Officer made additions based on bogus sales receipts. The CIT(A) found that the assessee was in the business of providing accommodation entries and estimated income at 5% of gross receipts for AY 2012-13 and applied the same logic for AY 2013-14.
Held
The Tribunal agreed with the CIT(A)'s decision to estimate the commission income at 5% of the credit entries in the bank account. Both the assessee's and Revenue's appeals were dismissed.
Key Issues
Whether the estimation of income at 5% of turnover by the CIT(A) was justified, and whether the same should be applied to both the assessee and Revenue's appeals.
Sections Cited
143(3), 147, 148
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Income Tax Appellate Tribunal, DELHI ‘G’ BENCH,
Before: SHRI SATBEER SINGH GODARA, & SHRI NAVEEN CHANDRA
The above captioned four cross appeals by the assessee and the Revenue are directed against four separate orders of the CIT/NFAC dated 11.09.2024 and 12.09.2014 for A.Ys 2012-13 and 2013-14 respectively.
Since these appeals pertain to same assessee and involve common issues, they were heard together and are disposed of by this common order for the sake of convenience and brevity. [A.Y 2012-13](Assesse appeal)
[A.Y 2012-13](Revenue appeal)
At the very outset, we find that the Assessing Officer has made addition in all these appeals considering the sales receipts as bogus entries and has assessed the income at Rs 8,14,63,008/- u/s 143(3) r.w.
147 as against RoI filed in response to notice u/s 148 declaring income of Rs 4,41,150/- for AY 2012-13. On appeal, the CIT(A) found that the assessee is in the business of providing accommodation entries, without delivery of goods, for a commission. The CIT(A), further found that the AO for AY 2011-12, on identical facts, had assessed the income of the assessee on estimate basis @ 8% of the total credit entries in the bank Page 2 of 6
ITA No. 5121/DEL/2024 [A.Y 2012-13] [A.Y 2013-14] [A.Y 2012-13] ITA No. 5065/DEL/2024 [A.Y 2013-14] Suresh Kumar account and the CIT(A) for AY 2011-12, had computed the estimate income @ 5% of the credit entries in the bank account. Following the decision of CIT(A) for AY 2011-12, the CIT(A)/NFAC, estimated the income @ 5% of gross receipt considering the same as undisclosed turnover for AY 2012-13.
Now both the assessee and the Revenue are aggrieved by the part relief given by the ld. CIT(A). The Revenue has challenged the estimation of 5% of turnover as income instead of entire receipts while the assessee has disputed the estimation of 5% as excessive and have come in appeal before us.
We have heard the rival submissions and have perused the relevant material on record. We find that the ld. CIT(A) has given a categorical finding at page 30 of his order which reads as under:
“I have gone through the submission and same has been perused. It is pertinent to note that the appellate do the work for receipt entry of commission and get the commission for accommodation entry without delivered any goods. It is also noted that the appellant had deposited total credit entry in the OBC Bank account of Rs. 19,43,22,158/- against the turnover of Rs. 11,36,54,514/- for the said year. Since, the appellant being the director of the above company and doing similar nature of transaction in Bank Accounts which has been shown in the books of accounts as receipt of payment
ITA No. 5121/DEL/2024 [A.Y 2012-13] [A.Y 2013-14] [A.Y 2012-13] ITA No. 5065/DEL/2024 [A.Y 2013-14] Suresh Kumar on commission account for the said year. It is also noted that the said company has been strike off and no business activity was carried out as on date. There are dummy directors in the company and all has been quit. However, it is also noted that A.Y. 2011-12 on the same ground of ADIT (Investigation) New Delhi report the case was re-open u/s 148 of the Income Tax Act and on the unexplained credit entry of Rs. 2,88,89,733/- in the bank account then the AO assessed the income estimated basis @8% income of Rs. 23,11,178/-. Further, the appellant filed the appeal before the CIT(A) against the said assessment order. In respect of the same, the CIT (A), Ghaziabad passed the appellate order dated 30.09.2019 and reduced @ 5% of undisclosed turnover instead of 8%. I am also agree with the lenient view of the CIT(A) and pertinent to note that the appellant failed to substantiate the genuineness of appellant's claim of receiving commission. No prudent person will work for such low commission as has been claimed by the appellant. Considering the nature of appellants' business and claimed commission income, the AO is directed to re-compute the income of the appellant at the rate of 5% of undisclosed turnover. Accordingly, this ground of appeal is partly allowed.
6. In the factual matrix of the instant case as narrated above, we are of the considered view, that the CIT(A) has taken a well reasoned decision and we find no reason to interfere with the same. We are Page 4 of 6
ITA No. 5121/DEL/2024 [A.Y 2012-13] [A.Y 2013-14] [A.Y 2012-13] ITA No. 5065/DEL/2024 [A.Y 2013-14] Suresh Kumar inclined to agree with the decision of the CIT(A) to estimate the commission income at 5% of the credit entries in the bank account of the assessee. Accordingly, the appeals of the assessee as well as the appeals of the Revenue stand dismissed.
[A.Y 2013-14](Assesse appeal)
[A.Y 2013-14](Revenue appeal)
As the facts of the AY 2013-14, and the grounds taken by the Revenue and the Assessee are identical, the decision for AY 2012-13 will apply mutatis mutandis to the facts for AY 2013-14.
In the result, all the appeals of the Assessee in:
[A.Y 2012-13] - Dismissed [A.Y 2013-14] - Dismissed Revenue in: [A.Y 2012-13] - Dismissed [A.Y 2013-14] - Dismissed
Order pronounced in open court on 30.11.2025.