2019 (2) TMI 641 - AT - Income Tax

Addition on account of commission income at the rate of 2% - accommodation entries given to the Mumbai based Companies in the form of commission income - addition made on protective basis - Held that - CIT(Appeals) did not await the outcome of the proceedings arising from the substantive assessment and since the said information was not forthcoming even after a considerable period from the concerned assessing officer, he proceeded to dispose of the appeals arising from the protective assessments by his impugned orders and deleted the addition made on protective basis without awaiting the final outcome of the proceedings arising from the substantive assessment. Keeping in view the decision of CIT vs. - Surendra Gulab Chand Modi 1981 (3) TMI 21 - GUJARAT HIGH COURT we hold that the CIT(Appeals) was not justified in deleting the additions made by the Assessing Officer on protective basis in all the three years under consideration without awaiting for the final outcome of the proceedings arising from this substantive assessment. We, therefore, set aside the impugned orders of the CIT(Appeals) on this issue and remit the matter back to him for keeping it alive and pending till the outcome of the proceedings arising from the substantive assessment. Additions made on account of commission income allegedly received by the assessee for giving accommodation entries, we find that this issue is consequential to the issue relating to the addition made on protective basis on account of accommodation entries allegedly given by the assessee-company to the Mumbai based companies. Since the said issue is remitted back by us to the CIT(Appeals), we also remit the consequential issue relating to addition on account of commission income back to the CIT(Appeals) for deciding the same afresh. - Decided in favour of revenue for statistical purposes.

Summary

Issues:
1. Addition made by the Assessing Officer on account of accommodation entries given to Mumbai based Companies on protective basis.
2. Addition made by the Assessing Officer on account of commission income allegedly received by the assessee for giving accommodation entries.

Analysis:
1. The appeals were against the Assessing Officer's orders for A.Ys. 2006-07, 2007-08, and 2008-09. The ld. CIT(Appeals) deleted the additions made by the Assessing Officer regarding alleged accommodation entries and commission income. The ld. CIT(Appeals) noted the lack of response from the AO and decided based on available material. Citing precedents and lack of response from the AO, the ld. CIT(Appeals) held the additions unsustainable and deleted them for all years.

2. At the hearing, as the assessee did not appear, the Tribunal disposed of the appeals ex-parte. The Tribunal noted common issues across the appeals related to the deletions by the ld. CIT(Appeals) of the additions made by the AO. The Tribunal discussed protective assessments and the need for substantive assessments to precede protective assessments. Citing legal precedents, the Tribunal found the ld. CIT(Appeals' actions premature in deleting the additions without awaiting the outcome of substantive assessments. The Tribunal remitted the matter back to the ld. CIT(Appeals) for further consideration.

3. Regarding the commission income issue, the Tribunal found it consequential to the accommodation entries matter. Since the accommodation entries issue was remitted back to the ld. CIT(Appeals), the Tribunal also remitted the commission income issue for fresh consideration. The Revenue's appeals were treated as allowed for statistical purposes for all three years under consideration.

In conclusion, the Tribunal set aside the ld. CIT(Appeals') orders on the accommodation entries issue, remitting the matter for further consideration. The Tribunal also remitted the commission income issue back for fresh evaluation. The appeals of the Revenue for the relevant years were treated as allowed for statistical purposes.