2024 (1) TMI 422 - AT - Income Tax

Estimation of commission income - Entitlement to enhanced estimated expenditure - During the course of survey, it was found that the assessee was providing bogus bills of purchase / sales and accommodation loan entries on commission basis - HELD THAT - As assessee has not been given set off against the amount mentioned in column F in the table, for the amount mentioned in column D and E respectively and Assessing Officer has computed the balance irreconcilable amount, which is wrong. Therefore, assessee is entitled to claim enhanced estimated expenditure from 20% to 50%. Hence, we find merit in the submissions of the ld Counsel to the effect that deduction on account of estimated expenditure @ 20% of the gross commission, should be increased to @ 50% of the gross commission. Therefore, we direct the assessing officer to allow estimated expenditure @ 50% of the gross commission. Therefore, ground No.2 raised by the assessee is allowed partly. Difference in interest income between interest as per Form 26AS and interest income shown in the Return of Income - Whether it will tantamount to double addition? - HELD THAT - We find merit in the propositions canvassed by assessee that addition on account of difference in interest income between interest as per Form 26AS and interest income shown in the Return of Income, treated as alleged undisclosed interest income from alleged accommodation loan entries of loans to various parties, which is not acceptable. Since the alleged accommodation loan was treated as bogus and assessing officer made estimation addition, hence addition on account of difference in interest income, is tantamount to double addition, hence the same is hereby deleted. Decided in favour of assessee.

Summary

Issues Involved:
The judgment involves appeals filed by the assessee against separate orders passed by the Ld. Commissioner of Income Tax (Appeals)-4, Surat, arising from assessment orders passed by the Income Tax Officer Ward-1(3)(7), Surat, under section 143(3) r.w.s 147 of the Income Tax Act, 1961.

Issue 1 - Re-opening of Assessment:
The Ld. CIT(A) confirmed the action of the Assessing Officer in re-opening the assessment u/s 147 of the Act and issuing notice u/s 148 of the Income Tax Act. The grounds of appeal raised by the assessee in this regard were dismissed as not pressed or not argued.

Issue 2 - Addition of Commission Income:
The Assessing Officer made an addition of Rs. 10,06,251/- on account of alleged estimation of commission income. The assessee was found providing bogus bills and accommodation loan entries, leading to the quantification of total accommodation entries provided by the assessee at Rs. 25,15,62,886/-. The Ld. CIT(A) allowed deduction on account of estimated expenditure @ 20% of gross commission, resulting in a net income chargeable to tax of Rs. 10,06,251.

Issue 3 - Difference in Interest Income:
An addition of Rs. 2,47,004/- was made on account of difference in interest income between interest as per Form 26AS and interest income shown in the Return of Income, treated as alleged undisclosed interest income from accommodation loan entries. The assessing officer's addition was deemed double, and hence, the same was deleted by the Tribunal.

The Tribunal directed the assessing officer to allow estimated expenditure @ 50% of the gross commission, increasing it from the earlier 20%. The addition of Rs. 2,47,004/- on account of difference in interest income was deleted as it was considered a double addition. Consequently, the assessee's appeals were partly allowed in the above terms.