2024 (10) TMI 1089 - AT - Income Tax

Unexplained deposits - Estimation of the rate of commission - HELD THAT - These appeals pertains to very old Assessment Years no purpose would be served by remanding to the AO to adjudicate these issues afresh as due to the time lapse there will be lot of documents and personal verification which could not be made available. Respectfully following view taken in case of M/s Goldstar Finvest Pvt. 2019 (4) TMI 1936 - BOMBAY HIGH COURT we restrict the addition to 0.15% of the deposits made in the bank account of the assessee.

Issues:
1. Validity of order passed under section 250 of the Act
2. Compliance with provisions of sections 148 and 151 of the Act
3. Addition on account of unexplained deposits and shifting of onus
4. Determination of commission income at 0.37% instead of 0.15%

Analysis:

Validity of Order Passed under Section 250 of the Act:
The appeals filed by the assessee challenged the order passed by the Ld. CIT(A) for Assessment Years 2003-04 and 2008-09. The assessee contended that the Ld. Commissioner of Income Tax (Appeals) erred in law and in facts in passing the order under section 250 of the Act. The issues raised by the assessee included the validity of the order passed under section 143(3)(3) read with section 147 of the Act, compliance with provisions of sections 148 and 151 of the Act, and the shifting of onus regarding unexplained deposits. The assessee also contested the determination of commission income at 0.37% instead of the claimed 0.15%.

Compliance with Provisions of Sections 148 and 151 of the Act:
The assessee raised concerns regarding the compliance with the provisions of sections 148 and 151 of the Act while issuing the notice under section 148. The Ld. Commissioner of Income Tax (Appeals) was urged to appreciate that the notice issued under section 148 was not in accordance with the Act. The tribunal admitted additional grounds raised by the assessee based on existing facts and legal precedents, including decisions of the Supreme Court and High Courts, allowing for the consideration of additional arguments.

Addition on Account of Unexplained Deposits and Shifting of Onus:
The case involved unexplained deposits in the bank accounts of the assessee, arising from providing accommodation entries for commission. The Ld. AO added the entire credit entries as unexplained under section 68 of the Act as the necessary criteria were not fulfilled. The Ld. CIT(A) upheld the addition as the assessee failed to identify the beneficiaries. However, the tribunal, following legal precedents and the principle of commission income, restricted the addition to 0.15% of the deposits, considering the nature of the activities and the time lapse of the assessment years.

Determination of Commission Income at 0.37% Instead of 0.15%:
The Ld. CIT(A) noted that the assessee was engaged in providing accommodation entries for commission, with rates varying from 0.25% to 0.5%. The tribunal, based on previous decisions and the nature of the activities, accepted the commission declared by the assessee at 0.15% and set aside the order of the CIT(A) in this regard. The tribunal considered the view taken by the Hon'ble High Court in a similar case and restricted the addition to 0.15% of the deposits made in the bank account of the assessee.

In conclusion, the tribunal partially allowed the appeal filed by the assessee, restricting the addition on account of unexplained deposits to 0.15% of the deposits made in the bank account. The tribunal's decision was based on legal precedents, the nature of the activities, and the time lapse of the assessment years.

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