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Income Tax Appellate Tribunal, MUMBAI BENCHES “SMC”, MUMBAI
Before: Shri Joginder Singh,
आदेश / O R D E R
The assessee is aggrieved by the impugned order dated 31/10/2014 of the Ld. First Appellate Authority, Mumbai. The first ground raised by the assessee pertains to addition of Rs.15,07,758/- as undisclosed commission and not allowing the claim of expenses ignoring the income already disclosed in the return of income.
During hearing, the ld. counsel for the assessee, Shri Jeetendra Singh along with Ms. Neha Paranjape, broadly contended that adoption of rate of commission at the rate of 3% is highly excessive as normally in such type of cases, the commission is 1 to 1.5% of the sales. However, the ld. DR, Shri Sumit Kumar defended the adoption at the rate of 3%.
2.1. I have considered the rival submissions and perused the material available on record. The facts, in brief, are that a survey action 133A of the Act was carried out on 28/01/2011 at the business premises of the assessee. During survey proceedings, the statement of proprietor of M/s Rinku Steel Corporation was recorded on oath u/s 131 of the Act, wherein, the assessee admitted to have taken accommodation entries in the nature of purchase from certain parties. The facts has been mentioned in para 4.1.1 of the impugned order along with breakup of purchases made by the assessee from various parties by way of accommodation entries. The crux of the facts is that these were fictitious entries/bogus purchase bills. The ld. Assessing Officer adopted the commission at the rate of 3% of the total sales, which worked out to Rs.15,07,758/-. Considering the totality of facts, submissions of the assessee as well as of the ld. DR, no basis has been made for such adoption by the Ld. Commissioner of Income Tax (Appeal) as well as by the ld. Assessing Officer. If the statement of the assessee is to be considered as correct, therein, the rate has been mentioned as 1.5%. Thus, by taking a justified view, the rate is adopted at 2% of the total sales (as agreed by the ld. counsel for the assessee also) in place of 3% adopted/affirmed by the Ld. Commissioner of Income Tax (Appeal), consequently, this ground of the assessee is partly allowed. It is made clear that this adoption is based upon the peculiar facts of the present appeal and may not be quoted as a reference.
The next ground raised by the assessee pertains to treating the deposit of Rs.28,31,733/- as unexplained money u/s 69 of the Income Tax Act, 1961 (hereinafter the Act). The crux of argument is that entire deposit was considered as unexplained by the ld. Assessing Officer. On the other hand, the ld. DR strongly defended the addition made by the Assessing Officer and confirmed by the Ld. Commissioner of Income Tax (Appeal).
3.1. I have considered the rival submissions and perused the material available on record. It is noted that an addition of Rs.28,31,733/- was made by the Assessing Officer u/s 69A of the Act, being unexplained money as the assessee could not explain the nature and source of deposit appearing in his bank account maintained with Standard Chartered Bank. It is also noted that the assessee while tendering the statement u/s 131, on oath, on 28/01/2011 categorically admitted that the transactions of the bank account were not reflected in the regular books of accounts and further the said bank account was used for making transaction for purposes of accommodation entries. It is also noted that neither before the Assessing Officer nor before the Ld. Commissioner of Income Tax (Appeal), the assessee did not explain the source of deposit. Before this Tribunal also, nothing was explained by the assessee with respect to source of the deposits. It is further noted that the statement tendered u/s 131 of the Act was never contradicted by the assessee and it is also not the case that the statement was recorded under duress and threat. In view of this factual matrix, the conclusion drawn in the impugned order cannot be interfered with, thus, affirmed. This ground of the assessee is dismissed.
Finally, the appeal of the assessee is partly allowed.
This order was pronounced in the open in the presence of ld. representative from both sides at the conclusion of the hearing on 07/09/2016.