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2021 (1) TMI 903 - AT - Income TaxAssessment of income - whether only commission income could be assessed in the hands of the assessee being an accommodation entry provider? - Additional ground raised - HELD THAT - We are inclined to entertain the additional ground raised by the assessee in the present proceedings before us for all the assessment years under consideration. From the perusal of the various Tribunal and Hon ble Jurisdictional High Court orders and more so in the case of certain sister concerns of the assessee which was also covered as an offshoot of the same search operation of JIK Industries Ltd., as in the case of assessee herein, we hold that only commission income @0.15% could be added in the hands of the assessee on the total accommodation entries provided by it on the total credits available in the bank account being the accommodation entries for the respective assessment years.
Issues:
Identical issues in multiple appeals - Whether only commission income should be assessed in the hands of the assessee as an accommodation entry provider. Analysis: Issue 1: Identical issues in multiple appeals The appeals in question relate to the assessment years 2006-07, 2007-08, 2008-09, and 2009-10. They arose from the order of the Commissioner of Income Tax (Appeals) against the assessment passed under the Income Tax Act, 1961. The appeals were recalled matters and were taken up together for convenience. Issue 2: Assessment of commission income The main issue in these appeals was whether only commission income should be assessed in the hands of the assessee, who was an accommodation entry provider. A search and seizure action was conducted in the case of JIK Industries Ltd., leading to the issuance of a notice under section 153C of the Act to the assessee. The assessee, engaged in providing accommodation entries, had credits in its bank account, which were initially added as commission income by the assessing officer. However, the assessment was revised under section 263, directing the addition of the entire sum credited in the bank account as unexplained cash credit under section 68 of the Act. This decision was upheld by the Commissioner of Income Tax (Appeals). Issue 3: Legal precedent and alternate contentions The assessee argued that only commission income should be taxed, citing various legal precedents and tribunal decisions. The assessee had made an alternative contention during the original appellate proceedings, supported by decisions such as DCIT vs. Chaitali Sales Pvt. Ltd. and PCIT vs. Mihir Agencies Pvt. Ltd. The Tribunal considered the cases not dealt with previously and recalled the order, leading to the present proceedings. Issue 4: Decision and additional ground The Tribunal entertained an additional ground raised by the assessee, even though it was previously raised as an alternate contention. Considering the legal precedents and the unique circumstances of the case, the Tribunal held that only commission income at 0.15% should be added to the assessee's taxable income on the total accommodation entries provided. As a result, the appeals of the assessee were partly allowed. In conclusion, the Tribunal's judgment focused on the specific issue of whether only commission income should be assessed in the hands of the assessee as an accommodation entry provider, taking into account legal precedents and the unique facts of the case. The decision provided clarity on the taxation of such income and upheld the assessee's contention in this regard.
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