2020 (12) TMI 1399 - AT - Income Tax

Assessment of cash deposits found in the bank account of the assessee and commission earned at the rate of 3% on the said amount - assessee has been alleged to be an entry operator providing bills of purchase sales without any actual business transactions - amount of Rs.7.37 Crs. has been added on protective basis and information regarding the beneficiaries was passed on to the Assessing Officer having jurisdiction over the beneficiaries for substantive assessment AND commission has been added on substantive basis. HELD THAT - The Co-ordinate Bench of ITAT in 2020 (5) TMI 550 - ITAT DELHI has adjudicated on both the issues. The addition being protective in nature has been deleted by the order of the Tribunal. The commission charged @3% has been brought down to 0.5%. Since, the issues stands squarely covered by the earlier order of the Tribunal in the absence of any material change and the facts of the case except the amount involved, we hereby hold as under addition made on protective basis is directed to be deleted and commission to be charged @0.5% - Appeal of the assessee is allowed.

Summary

Issues involved: Assessment u/s 143(3) of the Act, protective addition of bank credits, commission earned, alleged entry operator providing bills without actual transactions.

Assessment u/s 143(3) of the Act: The appeal was filed against the order of the ld. CIT(A)-IV, Kanpur, completing and upholding the assessment u/s 143(3) of the Act at a total income of Rs. 7,60,81,463/- as against the returned income of Rs. 1,14,400/-. Various findings were based on incorrect appreciation of facts and assumptions.

Protective Addition of Bank Credits: The issue involved cash deposits of Rs. 7.37 Crs. in the assessee's bank account and commission earned at 3% on the same amount. The assessee was alleged to be an entry operator without actual business transactions. The amount was added on a protective basis, and information about beneficiaries was passed to the Assessing Officer for substantive assessment.

Commission Earned: The commission of Rs. 22.12 lacs was added on a substantive basis. A Co-ordinate Bench of ITAT adjudicated on both issues, deleting the protective addition and reducing the commission rate from 3% to 0.5%.

Judicial Precedents: The Tribunal referred to various decisions regarding commission rates for entry operators, directing the AO to adopt a commission rate of 0.5% instead of 3%. The Tribunal emphasized that protective additions should not be made without substantive assessments in other hands.

Conclusion: The Tribunal held that the addition made on a protective basis should be deleted, and the commission rate should be reduced to 0.5%. The decision was based on previous rulings and the absence of material changes in the current case. The Tribunal's order from an earlier year was cited for reference, and the appeal of the assessee was allowed, with the operative part of the order pronounced on 14/12/2020.