2022 (7) TMI 1515 - AT - Income Tax

Addition of accommodation entries to various entities - assessee has disclosed commission of 0.15% i.e. @ Rs.150 per one lakh of accommodation entry provided - revenue authorities have accepted the percentage of commission and determined the commission @ 0.15% on all the credits appearing in the bank accounts through which the entries have been routed multiple times - contra entries have not been considered and certain accounts which do not belong to the assessee have also been considered for calculation of the commission amount - DR has argued that the commission of 0.15% has been determined after taking into consideration the multiple entries of the same amount routed through different accounts. It was argued that otherwise the normal commission rate determined by the Tribunals and High Courts in a number of cases ranged from 1.5% to 3% on the accommodation entries provided HELD THAT - We have gone through the statement of the assessee recorded u/s 131(1A) the bank accounts operated by him which are in his own name and which are in the name of others. Keeping in view the entirety of the accommodation entries we do not hesitate to hold that the commission earned by the assessee by using the bank accounts in the name of other persons also liable to be taxed in the hands of the assessee only as the assessee is the operator and the beneficiary of these accounts and these accounts standing in the name of other persons have also been undoubtedly used for giving accommodation entries. Thus the plea of the assessee that the commission cannot be charged pertaining to the accounts doesn t belong to the assessee is hereby dismissed. With regard to multiple routing of the amounts among various accounts we are of the opinion that the percentage of commission charged @ 0.15% instead of the normal 1.5% takes care of such multiple routing of entries upto 10 times. Keeping in view the entire facts of the case we hereby hold that the appeals of the assessee on this ground are liable to be dismissed.

Summary

Issues involved: Appeal against orders of ld. CIT(A)-24, New Delhi dated 03.09.2019 regarding additions made on basis of incorrect details, ownership of bank accounts, and commission charges.

Issue 1 - Incorrect additions: The assessee contended that the ld. CIT(A) passed an erroneous order confirming additions based on incorrect details and false information. The assessee disputed ownership of certain bank accounts and requested deletion of additions related to those transactions.

Issue 2 - Commission charges: A survey u/s 133A revealed that the assessee operated various entities providing accommodation entries. The assessee admitted to providing entries totaling significant amounts over multiple assessment years. The assessee disclosed a commission rate of 0.15% per lakh of entry provided, which the revenue authorities accepted. The commission was calculated on all credits in bank accounts used for routing entries.

Judgment: The ITAT Delhi bench heard the appeals collectively due to identical issues. The tribunal upheld the commission charged at 0.15% despite the assessee's argument that accounts not belonging to them should not be considered. The tribunal dismissed the plea, stating that the assessee, as the operator and beneficiary of the accounts, was liable for the commission earned. The tribunal also noted that the lower commission rate accounted for multiple routing of entries. Consequently, the appeals of the assessee were dismissed, affirming the orders of the revenue authorities.

Separate Judgment: No separate judgment was delivered by the judges.