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2019 (4) TMI 1749 - AT - Income TaxAddition u/s 68 - Commission income on credit entries appearing in the bank statement - HELD THAT - AO has exceeded his powers during remand proceedings, made by the Tribunal by making addition under section 68 of the Act on account of credit entries appearing in the bank statement and as such, the addition made by the AO is not sustainable, hence the ld. CIT(A) has rightly deleted the addition. Consequently, question framed is answered in the negative. 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 2019 (1) TMI 1266 - ITAT DELHI thereby AO has been directed to adopt the rate of commission @ 0.50% or 50 paise and computed the profit accordingly
Issues Involved:
1. Addition on account of commission income. 2. Addition under Section 68 of the Income-tax Act, 1961. 3. Determination of the rate of commission. 4. Exclusion of intergroup entries for commission calculation. Detailed Analysis: 1. Addition on account of commission income: The assessee challenged the addition upheld by the CIT(A) related to commission income, arguing that the CIT(A) erred by not examining the facts and contentions properly. The CIT(A) maintained the addition of commission income at 2%, which was contested by the assessee, citing that the rate should be 0.25% as per the directions of the Hon'ble ITAT in its order dated 18.10.2013. The Tribunal found that the CIT(A) had reduced the commission rate from 2.25% to 2%, which was under challenge by both the assessee and the revenue. 2. Addition under Section 68 of the Income-tax Act, 1961: The Revenue's appeal included the issue of the CIT(A) deleting the addition made by the AO under Section 68, amounting to various sums across different assessment years. The Tribunal noted that in the first round of litigation, the only issue was commission income, and no addition under Section 68 was made or challenged. The Tribunal held that on remand, the AO exceeded his powers by making new additions under Section 68, which was not the subject matter of the first round of litigation. Citing precedents, the Tribunal concluded that the AO could not introduce new sources of income on remand and upheld the CIT(A)'s deletion of the additions under Section 68. 3. Determination of the rate of commission: The Tribunal referred to a coordinate Bench's decision in the Group cases of Tarun Goyal, which directed the AO to adopt a commission rate of 0.50%. The Tribunal applied this decision to the current cases, directing the AO to compute the profit using a commission rate of 0.50% instead of the previously applied 2.25% or 2%. 4. Exclusion of intergroup entries for commission calculation: In the cases of Bhawani Portfolio Pvt. Ltd. and Geefcee Finance Ltd., the assessees argued that the AO calculated the commission income on the total of all credit entries without excluding intergroup entries, as directed by the Tribunal. The Tribunal directed the AO to exclude all intergroup entries in the bank accounts and then calculate the commission income at 0.50%, as per the Tribunal's earlier directions. Conclusion: The Tribunal allowed the appeals filed by M/s. Dwarka Impex Pvt. Ltd. for the assessment years 2004-05 to 2008-09, dismissed the Revenue's appeals for the same years, and directed the AO to adopt a commission rate of 0.50% as decided in the Group cases of Tarun Goyal. The appeals filed by Tejasvi Investment (P) Ltd., Bhawani Portfolio Pvt. Ltd., and Geefcee Finance Ltd. were allowed for statistical purposes, with directions to the AO to exclude intergroup entries and apply the 0.50% commission rate. Order Pronouncement: The order was pronounced in open court on 26th April 2019.
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