2022 (12) TMI 1375 - AT - Income Tax

Addition u/s 68 - protective addition made on account of providing accommodation entries of exempt LTCG - protective addition made on account of commission earned for providing accommodation entries - assessee submitted that the entire transaction of the assessee i.e. Pawansut Holding Ltd. has been controlled by Mr. Pradeep Kumar Jindal and Mr. Pradeep Kumar Jindal has accepted that commission earned on accommodation entries given by the assessee as a part of taxable income of Mr. Pradeep Kumar Jindal in respect of the year under consideration - HELD THAT - By considering the statement made by the Ld. A.R and also the letter of Sh. Pradeep Kumar Jindal filed by the Ld. A.R, wherein Shri. Pradeep Kumar Jindal has accepted that the commission earned on accommodation entries given by the assessee as a part of his income in respect of the year under consideration and the issue will be adjudicated in the appeals filed by Shri Pradeep Kumar Jindal we inclined to dismiss the appeal filed by the Revenue. Accordingly, the appeals filed by the Revenue are dismissed. However, in the event of any deletion in the hands of Shri Pradeep Kumar Jindal, wherein the substantial addition were made, the Revenue shall have liberty to take further steps against the assessee herein in accordance with law.

Summary

Issues Involved:
- Protective additions made on obtaining accommodation entries
- Commission earned for providing accommodation entries
- Unexplained investment in shares
- Exempt LTCG entries

Analysis:
1. Protective Additions on Accommodation Entries: The Revenue challenged the deletion of protective additions in three appeals concerning assessment years 2012-13, 2013-14, and 2014-15. The CIT (Appeals) had deleted various protective additions related to obtaining accommodation entries and commission earned for providing such entries. The AR for the assessee argued that the transactions were controlled by an individual who accepted the commission earned on accommodation entries as part of his taxable income. The Tribunal considered this argument and the letter from the individual, leading to the dismissal of the Revenue's appeals.

2. Unexplained Investment in Shares: The Revenue was aggrieved by the deletion of protective additions on account of unexplained investment in shares. The Tribunal noted the submission made by the AR and the letter from the individual controlling the transactions. As the individual accepted the commission earned on accommodation entries as part of his income, the Tribunal dismissed the Revenue's appeals, providing the Revenue with the liberty to take further steps if substantial additions were made in the individual's hands.

3. Exempt LTCG Entries: Another issue raised was the deletion of protective additions made on providing accommodation entries of exempt LTCG. The Tribunal's decision to dismiss the Revenue's appeals was based on the acceptance of commission income by the individual controlling the transactions. The Tribunal directed the registry to place relevant documents in the file of appeals filed by the individual, emphasizing the connection between the transactions and the individual's income.

4. Final Decision: The Tribunal dismissed all three appeals filed by the Revenue, citing the acceptance of commission income by the individual controlling the transactions as a determining factor. The Tribunal emphasized that any deletion in the individual's hands could lead to further action against the assessee. The order was pronounced in open court on 14.12.2022, concluding the case.