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2025 (4) TMI 845 - AT - Income TaxAddition made on account of commission on turnover transaction - HELD THAT - The entry was corroborated with the bank accounts enclosed with such submissions. AO failed to point out any infirmity or incorrectness in such specific explanation provided by the assessee with regard to such noting. AO could not point out any unrecorded/cash payment transaction with regard to receipt of commission on the impugned document. In the letter dated 29/11/2018 at Para (a) addressed to the AO we find that assessee did mentioned that detailed enquiries were made by the Investigating Officer with the officer/Director of the company. The details of BCL were available with the authorities however nothing is on record as to whether BCL has been examined on this issue and definitely there was no document or confirmation from BCL brought on record that they paid commission to the assessee. In the absence of such evidence of payment of commission by BCL or anybody else and we are of the considered opinion that there is no income in the nature of commission received by the assessee. We direct the AO to delete the addition. Thus the grounds raised by the assessee are allowed. Addition on account of commission on turnover transaction - HELD THAT - We find that identical issue has been raised by the assessee in its appeal being for the assessment year 2011-12 we have decided this issue in favour of the assessee and against the Revenue in Para-10 11 and 12 of this order. Addition on account of commission on loan transaction - addition is made by AO on earning income of commission income @ 0.25% on the basis of sworn statement of the assessee - We find that in the statement recorded during search on 26/07/2016 extract of which are reproduced of the assessment order the assessee agreed about the earning of commission and indicated that the commission charged ranges between 0.1% and 0.25%. There was no evidence found about the actual earning from commission and in such circumstances the AO adopted the rate of 0.25% for determination of income. Thus according to us the average of both the rates would meet the end of justice. Consequently we direct the AO to adopt rate of 0.15% for determining the income earned on account of commission. Thus in view thereof the commission income earned applying the rate of 0.15% would be restricted to Rs. 7, 595 and the addition to that extent is confirmed. Thus ground raised by the assessee is partly allowed. Addition on account of unsecured loan u/s 68 - On a careful analysis of judgements of Ambe Tradecorp. Pvt. Ltd. 2022 (7) TMI 902 - GUJARAT HIGH COURT and in Merrygold Games Pvt. Ltd. 2024 (6) TMI 1371 - GUJARAT HIGH COURT wherein we find that the Hon ble Gujrat High Court has concluded that when the repayment of loan is accepted by the department in assessee s case the addition made u/s 68 of the Act is unjustified and unsustainable. As respectfully following the decision in Vibrant Global Capital Ltd. 2024 (11) TMI 312 - ITAT NAGPUR and detailed legal position discussed therein we are of the considered opinion that the addition made in assessee s case u/s 68 is unjustified and unsustainable on facts and in law. In assessee s case the confirmation financial statement Bank Statement Master Data from MCA Portal and ITR of the lender have been placed on record. The assessee has discharged his onus to explain the credit by adducing legal evidence on record. Accordingly we set aside the impugned order passed by the learned CIT(A) on this issue and the addition made u/s 68 is hereby directed to be deleted. Additional income offered in Return - Telescoping - CIT(A) accepted the jewellery inherited by the assessee after the demise of his family members and also the explanation with regard to jewellery purchased for which bills and voucher ledger and cashbook were submitted. In the impugned order passed by the CIT(A) addition of Rs. 75 lakh has been already deleted. As regards the additional income of Rs. 75 lakh offered by the assessee in his return of income CIT(A) of the impugned order held that the surrendered income covers any unexplained portion of gold jewellery and silver articles or cash found during the search operation. Thus we find that the CIT(A) has already allowed the telescoping of other addition from the amount remaining out of surrendered income. We have also examined the issue of chargeability of income u/s 115BBE and found that a separate ground has been raised before the CIT(A) on which there is no specific findings given in the CIT(A) order. Considering the application of the assessee and after examining the issue of surrender of income we find that the assessee surrendered income in the return of income without specifying any item and without taking credit of such income in the books of accounts. We hold that the provisions of section 115BBE cannot be applied in the instant case and the surrendered income is chargeable to tax at normal rates. Consequently we set aside the impugned order passed by the AO on this issue by allowing grounds raised by the assessee. Legality of notice issued u/s 148 and proceedings or re-opening u/s 147 - invalid approval granted u/s 151 - Approval/sanction granted under section 151 by writing - Yes I am satisfied cannot be held to be a valid approval/sanction. The impugned notice issued under section 148 of the Act and proceedings or re-opening under section 147 of the Act are not sustainable and are thus hereby quashed. Consequently ground no. 1 raised by the assessee is allowed. Addition on account of amount received in Bank - The assessee fairly considered that the enquiry was made in the year 2017 while the transactions were in the financial year 2009-10. As discussed in the order for the assessment year 2011-12 wherein we have already noted that the address of the company was known to the Department however there was no enquiry with such company by the AO. AO while making addition mentioned that the assessee could not furnish the return of income of his father or his own so that the shareholding declared could be verified. The return of income according to our knowledge for the year 2008-09 and 2009-10 did not have any such requirement of disclosure of shareholding. Further in a closely held company the share certificate is required to be surrendered along with share transfer form at the time of its transfer to the transferee. We hold that the credit in Bank Account is on account of realisation of opening balance in asset account viz. shares and the name of the payer is identifiable and therefore it cannot be a treated as unexplained income as the Revenue has miserably failed to point out the any incorrectness in the information provided in spite of the search action. Thus considering the above factual aspects we direct the AO to delete the addition.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS Addition on Account of Commission Income The Tribunal addressed the issue of additions made by the Assessing Officer based on an impounded Excel sheet during a search, alleging commission income earned by the assessee. The Tribunal noted that the Excel sheet was found in the premises of M/s. SNJ & Associates and pertained to transactions of M/s. Base Corporation Ltd., for whom the assessee was an internal auditor. The Tribunal found that the evidence provided by the assessee, including ledger accounts and bank statements, sufficiently explained the nature of the transactions, and no incriminating evidence was found to substantiate the commission income. Consequently, the Tribunal directed the deletion of the addition. Reopening and Notice under Section 147/148 The Tribunal scrutinized the reopening of assessments under section 147 and the issuance of notices under section 148. It found that the reasons recorded for reopening were mechanical and lacked application of mind by the approving authority. The Tribunal emphasized that the provisions of the first proviso to section 147 were incorrectly applied, as there was no prior assessment under section 143(3). The Tribunal relied on various judicial precedents and concluded that the reopening was invalid, leading to the quashing of the proceedings. Addition under Section 68 for Unsecured Loans The Tribunal examined the addition made under section 68 concerning unsecured loans received by the assessee. It found that the assessee had furnished comprehensive evidence, including confirmations, bank statements, and financial statements, to establish the identity, creditworthiness, and genuineness of the transactions. The Tribunal noted that the statements relied upon by the Assessing Officer were general and not specific to the assessee's transactions. Consequently, the Tribunal directed the deletion of the addition under section 68. Interest under Sections 234A and 234B The Tribunal addressed the issue of interest charged under sections 234A and 234B. It noted that the assessee had not specifically contested the calculation of interest before the Tribunal. Therefore, the Tribunal dismissed the grounds related to the interest charged. Application of Section 115BBE The Tribunal considered the applicability of section 115BBE concerning the additional income offered by the assessee in the return of income. It found that the surrendered income was not linked to any specific asset and was offered under "Income From Other Sources." The Tribunal concluded that section 115BBE was not applicable, and the surrendered income should be taxed at normal rates. SIGNIFICANT HOLDINGS The Tribunal's significant holdings include:
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