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2016 (9) TMI 1637 - AT - Income TaxEstimation of income by way of commission from the business of accommodation entries - HELD THAT - Similar issue had come up before the Tribunal in the cases of Goldstar Finvest Pvt. Ltd. 2008 (3) TMI 687 - ITAT MUMBAI ,Alliance Intermediateries and Network Pvt. Ltd. 2016 (2) TMI 1113 - ITAT MUMBAI and Mr. Mukesh Choksi 2016 (5) TMI 1408 - ITAT, MUMBAI wherein as find that the Tribunal had directed that the income by way of commission from the business of accommodation entries being carried out by Mukesh Choksi group was liable to be assessed at 0.15% instead of 2% applied by the Assessing Officer. Since it was a common point between the parties that the appellant company before us is also a part of the entities controlled by Mr. Mukesh Choksi, in our view, the aforesaid decisions are relevant to assess the income of the assessee. In this view of the matter, we, therefore, set-aside the order of the CIT(A) and direct the Assessing Officer to recompute the commission income from the business of providing accommodation entry in conformity with the aforesaid precedents. We set-aside the order of the CIT(A) and restore the matter back to the file of Assessing Officer to redetermine the total income as per aforesaid directions. Needless to mention, the Assessing Officer shall allow the assessee a reasonable opportunity of being heard before recomputing the income as per law.
Issues Involved:
Assessment years 2009-10 and 2010-11 - Common issues in two appeals. Analysis: Issue 1: Assessment Year 2009-10 - Grounds of Appeal The appellant raised multiple grounds of appeal challenging the order of the Assessing Officer and CIT(A). The grounds included issues related to the lack of opportunity for a hearing, validity of satisfaction for issuing notice under section 153C, application of incorrect income rates, confirmation of additions made, and errors in assessing income and expenses. Issue 2: Background of the Dispute A search and seizure action revealed that companies, including the assessee, controlled by Mr. Mukesh Choksi, were providing accommodation entries. The Assessing Officer assessed the total income at a higher amount than the returned loss, based on commission income earned by the group. The CIT(A) affirmed this assessment, leading to the appeal. Issue 3: Commission Income Assessment The Assessing Officer estimated commission income at 2% of total receipts, which was upheld by the CIT(A). The appellant argued for a lower rate based on precedents from other group concerns, citing a commission rate of 0.15% and the allowance of expenses. The Departmental Representative highlighted the search action distinction. Issue 4: Tribunal's Decision The Tribunal considered previous decisions involving similar issues and directed the income to be assessed at 0.15% instead of 2%, in line with the precedents. The Tribunal emphasized the reasonableness of the commission rate and the need to allow expenses. The decision was based on the uniformity of facts across cases and the relevance of prior judgments to the present appeal. Issue 5: Outcome and Directions The Tribunal set aside the CIT(A) order and instructed the Assessing Officer to recompute the income based on the 0.15% commission rate and the allowance of claimed expenses. The parties agreed that the decision for 2009-10 would apply to the 2010-11 assessment. The matter was remanded for proper computation, ensuring the appellant's right to a fair hearing. In conclusion, the Tribunal allowed the appeal for the assessment year 2009-10, directing a reassessment based on the established precedents. The decision for 2009-10 was extended to the assessment year 2010-11.
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