2016 (6) TMI 688 - AT - Income Tax

Commission income determination on the bogus bills issued - Estimation of commission income - Held that - We find that AO while framing the assessment order u/s.144 of the Act had estimated the commission income of 5% of the total bogus sales bills which was reduced to 1% by the ld.CIT(A). We find that the Coordinate Bench of Tribunal while deciding the issue in the case of Madanlal L.Chandak (2014 (5) TMI 191 - ITAT AHMEDABAD ), wherein additions for similar amounts were made, had restricted the addition at around 50% to the additions that were made by the ld.CIT(A) Considering the fact that the issue in the present case is identical that of Madanlal L.Chandak (Shah) supra and respectfully following the decision of Coordinate Bench and for similar reasons, we direct the addition made on account of commission income from issuance of bogus bills be restricted to ₹ 2 lacs as against ₹ 4,06,852/- that were sustained by the ld.CIT(A) for AY 2007-08. - Decided partly in favour of assessee

Summary

Issues:
- Determination of commission income on bogus bills issued by the assessee for assessment years 2007-08 & 2008-09.

Analysis:
1. The appeals by the Revenue were against the order of the Commissioner of Income Tax(Appeals) for the assessment years 2007-08 & 2008-09. The assessee did not appear, and the Senior DR submitted that the issues were identical for both years. The Assessing Officer (AO) found that the assessee had issued bogus bills and opened bank accounts for this purpose. The AO calculated commission income at 5% of total bills, similar to the method used for AY 2009-10. The CIT(A) granted partial relief, acknowledging the commission received by the assessee. The Revenue challenged this decision, arguing that the addition should not have been reduced to 1% without sufficient reason.

2. The assessee filed Cross Objections disputing the estimation of commission income at 1%. The Senior DR referenced a similar case where partial relief was granted to the assessee. The Tribunal considered the issue of commission income on bogus bills and noted that the CIT(A) had reduced the addition from 5% to 1%. Referring to a previous case, the Tribunal decided to restrict the addition to a specific amount based on the lack of incriminating material found during the search operation. Therefore, the addition for commission income was reduced to a fixed sum for each assessment year, following the precedent set in the referenced case.

3. The Tribunal found the issue to be identical to the previous case and decided to restrict the addition for commission income to a specific amount for each year, based on the lack of conclusive evidence found during the search operation. Consequently, the Revenue's appeals were dismissed, and the Cross Objections filed by the assessee were partly allowed. The Tribunal pronounced the order on 16/06/2016, maintaining the decision to restrict the commission income addition for both assessment years.