2024 (12) TMI 1533 - AT - Income Tax

Undisclosed commission for providing accommodation entries - AO on account of non-response from the assessee has held that undisclosed commission income on such accommodation entries @ 1.0% as per the prevailing market rate - main contention of the assessee is that it should be 0.15% - HELD THAT - We have gone through the order passed by the NFAC for AY 2011-112 against the same assessee and fined that in the said assessment year the Ld. CIT(A) has directed the AO to take the percentage @ 0.15% and not @ 1% as admitted by him. In the present case Director of the appellant company has admitted to have been providing accommodation entries in lieu of admitted commission@ 0.10% to 0.15% of the turnover. The statement given by the Director has been accepted by the AO. Going over the facts of the case order passed by the CIT (A) in the A.Y.11-12 we are in this view that rate of commission should be 0.15% and not @ 1%. accordingly the case of assessee is allowed and the AO is directed to compute the rate the commission @0.15% and not 1%. Appeal of the assessee is allowed.

Summary

The appeal in this case was filed by the assessee against the order of the Commissioner of Income Tax (Appeal)-NFAC, Delhi for the assessment year 2010-11. The main issue was the delay of 71 days in filing the appeal, which the court condoned based on the principle that cases should be decided on merit rather than technicalities.The brief facts of the case involved a private limited company declaring total income for AY 2010-11 at Rs. 26,90,090. The case was selected for reassessment, and undisclosed commission income on accommodation entries was added back to the total income of the assessee. The assessee challenged the order before the Ld. CIT(A), who partly allowed the appeal by considering 1% commission rate reasonable. The assessee then appealed, arguing that the rate should be 0.10-0.15% based on previous acceptance by the Investigation Wing.The court considered the arguments of both parties and noted that the assessee had declared income at Rs. 26,90,090, but the AO added undisclosed commission income at 1%. The court referenced a previous order for AY 2011-12 where the commission rate was set at 0.15% instead of 1%. Additionally, the court cited a judgment from the Bombay High Court in a similar case where the tribunal accepted a commission rate declared by the assessee.Based on the evidence and precedents, the court concluded that the commission rate should be 0.15% and not 1%. Therefore, the appeal of the assessee was allowed, and the AO was directed to compute the commission rate at 0.15%. The final decision was pronounced on 31st December 2024.In summary, the key issue in this case was the computation of the commission rate on accommodation entries, with the court ultimately determining the rate to be 0.15% in favor of the assessee.