DILIP JAYANTILAL SHAH,MUMBAI vs. DCIT CEN CIR 31, MUMBAI

The brief facts of the case are that the assessee was an employee of M/s.Avon Corporation Ltd. and filed his return of income u/s.139(1) of the Income Tax Act, 1961( in short “the Act”) on 30.09.2010 declaring total income to the tune of Rs.2,75,250/-. Thereafter, search and seizure operation u/s.132 of the Act was carried out on 04.02.2011. The premise of the assessee was also covered during search. Some other premises of the M/s.Avon Corporation Ltd were also covered by the search simultaneously conducted u/s.133A of the Act. During the course of search and seizure and survey some documents were seized from the premises of the M/s.Avon Corporation Ltd and also from the premise of the assessee. The recovered material speaks that the assessee was engaged in providing accommodation entries of sale and purchase of various companies including M/s.Avon Corporation Ltd for which he was charging commission. The statement u/s.132(4) of the Act was recorded in which he stated that he was getting commission ranging from 0.02% to 0.10%. Subsequent to the search, a notice u/s.153A of the Act was issued to the assessee on 08.02.2012. Thereafter, the assessee filed the return of income on 27.02.2013, offering additional income of Rs.2,75,250/- from the business of providing accommodation entries. While completing the assessment, the Assessing Officer estimated the income @ 0.50% on the total transactions of Rs.47,91,31,428/- made by the assessee. The Assessing Officer 2 Assessment Year: 2010-11 estimated the income to the tune of Rs.23,95,657/- and the said amount was added to the income of the appellant. Thereafter, the assessment was completed by assessing the income to the tune of Rs.26,16,070/- vide order dated 25.03.2013 passed u/s.143(3) read with section 153A of the Act. The assessee was not satisfied, therefore filed an appeal raising the question of the commission but the CIT(A) dismissed the appeal of the assessee, therefore, the assessee has filed the present appeal before us.

We have heard the arguments advanced by the learned representative of the parties and perused the record. The sole ground which has been raised by the assessee is that the Assessing Officer has erred in estimating commission @ 0.50% instead of 0.10% adding income to the tune of Rs.23,95,657/-. The learned representative of the assessee has argued that the Hon’ble Income Tax Appellate Tribunal in assessee’s own case in for the A.Y.2009-10 has decided this issue in favour of assessee wherein the Tribunal restricted the commission to the tune of Rs.0.20% in place of 0.50% and requested to follow with the said order. However, the learned representative of the department has strongly relied upon the order passed by the CIT(A) in question. On appraisal of the assessment order it came into the notice that the appellant was asserting in connection with the getting the commission @ 0.10% to 0.20%. The contention of the appellant was not accepted by the Assessing Officer. However, the Assessing Officer relied upon the statement of Shri Pankaj Saraiya 3 Assessment Year: 2010-11 recorded u/s.132(4) of the Act during search proceeding where he stated that he was paying commission @ 50% to 60% per 100 rupees for bogus accommodation entries. Copy of order in ITA No.2867/Mum/2015 for the A.Y.2009-10 in the case of the case of the assessee has been perused in which Hon’ble ITAT has restricted the commission @0.20% in place of 0.50% assessed by the Assessing Officer. However, no cogent and convincing evidence on record by which the assessing officer was satisfied with the income of the assessee@ 0.50% from the accommodation entry. Anyhow in this regard the Hon’ble ITAT has decided the controversy of the assessee in connection with the last preceding year i.e.2009-10.

In view of the said circumstances and by following decision of co-ordinate bench, we restrict the addition to the extent of 0.20% in place of 0.50%. Therefore this issue is decided accordingly in favour of the assessee against the revenue.

In the result, the appeal of the Assessee is hereby partly allowed. .