2025 (2) TMI 605 - AT - Income Tax

Undisclosed commission for providing accommodation entries - Addition on account of commission at the rate of 1% on the total turnover which ought to have been made / reduced by the ld. CIT (A) to 0.10% to 0.15% of the total turnover - HELD THAT - After perusal of the decision of the co-ordinate Bench in assessee s own case for A.Y. 2010-11 2024 (12) TMI 1533 - ITAT KOLKATA under similar facts has decided the appeal by directing the ld. AO to applying the profit rate of 0.15% as against 1% made by the ld. AO. We set aside the order of the CIT (A) and direct the ld. AO to make the addition at the rate of 0.15%. The appeal of the assessee is allowed.

Summary

The issues presented and considered in the legal judgment are as follows:1. Whether the addition of commission at the rate of 1% on the total turnover by the assessing officer was justified, or should it have been reduced to 0.10% to 0.15% based on the facts of the case and relevant legal precedents?Detailed Analysis:The only issue raised by the assessee in the appeal was against the confirmation of the addition of commission at the rate of 1% on the total turnover. The assessee argued that the issue was similar to a previous decision in their favor by a co-ordinate Bench in a previous assessment year. The Departmental Representative (DR) acknowledged the previous decision but relied on the orders of the lower authorities. The Tribunal noted that the assessee was engaged in providing accommodation entries on a commission basis. The assessing officer had made an addition of 22,93,619 on account of undisclosed commission at the rate of 1% for providing accommodation entries. The Tribunal considered the decision of the co-ordinate Bench in the assessee's own case for a previous assessment year, which directed the assessing officer to apply a profit rate of 0.15% instead of 1%. The Tribunal referred to a judgment of the Hon'ble Bombay High Court and directed the assessing officer to compute the commission at the rate of 0.15% instead of 1%. Consequently, the Tribunal allowed the appeal of the assessee.Significant Holdings:The Tribunal, following the precedent set by the co-ordinate Bench and the judgment of the Hon'ble Bombay High Court, held that the assessing officer should compute the commission at the rate of 0.15% instead of 1%. As a result, the appeals of the assessee were allowed in both cases.In conclusion, the Tribunal found in favor of the assessee based on the interpretation of relevant legal precedents and the application of the law to the facts of the case. The Tribunal's decision was guided by the principle that the commission rate should be reasonable and in line with industry standards, as established in previous judgments.