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TMI Blog2016 (6) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... input VAT and output VAT and pay the differential VAT. The difference between the cheque amount and net amount should also take care of all these nitty gritty of the accommodation transactions. In view of above facts we are of the view that ld CIT(A) has applied correct estimate of rate of commission income @2% which is reasonable and appropriate looking to the facts and circumstances of the case. In view of this we confirm the finding of the ld CIT(A) for all these years i.e. AY 2007-08, to 2009-10. Coming to cross objection filed by the assessee which is against the confirmation of addition by the ld CIT(A) of 2% of the commission on accommodation entries. While deciding the appeal of the revenue we have provided reasons that why CIT(A) is correct in estimating the commission income of the assessee @2% and thereafter granting deduction of 0.5% of the commission income as expenditure. For the same reasons we dismiss the cross objection filed by assessee for all the years. - Decided against assessee. - ITA No.1219, 1220, 1221/Del/2014, ITA No.381 to 383/Del/2014 - - - Dated:- 28-4-2016 - SHRI H.S.SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. On payment of this sum to those parties they sign various documents regarding accommodation entries. In the same statement assessee gave names of 10 proprietary concerns which are operated by different persons but controlled by the assessee. A further statement of assessee was recorded on 12.02.2013. Based on the above facts the LD Assessing Officer recorded statement of other persons too on similar lines. Based on documents provided it was found that transactions were made in various bank accounts of 11 firms and amount of ₹ 73,38,76,883/- was shown as accommodation entries for various years. The total credit entries shown in the bank accounts on the credit side were treated by ld Assessing Officer as accommodation entry and based on that assessee was asked to show the reason that why these entries should not be treated as accommodation entries to work out commission income of the assessee. Assessee submitted reply on 18.03.2013 submitting the corrected copy of the bank account and requested for correction. Ld AO based on this information issued a show cause notice on 12.03.2013 stating that commission charged by the assessee is ranging to 2% to 18%. In respons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable and directed the AO to adopt this percentage and further grant deduction of 0.5% on the same to calculate the net amount of commission. In view of this decision of CIT(A) revenue is in appeal before us contesting that ld CIT(A) has erred in law in reducing the percentage of commission income to 2% from 5.6% adopted by the AO. Assessee has also against the retention of the addition of 2% of the commission preferred cross objection for these years. 6. Despite notice none appeared before us on behalf of the assessee therefore the appeal is decided on the merits of the case considering the available material on record. 7. Ld DR submitted that ld CIT(A) has reduced the rate of commission applied by the ld Assessing Officer @5.67% which is based on seized material and it is backed by the evidence. The ld CIT(A) has also wrongly held that the commission income of the assessee is to be estimated @ 2% of the accommodation entries. Ld DR took us to the order of Ld. AO wherein ld AO has prepared a table which is backed by the annexures seized during the course of search and showing date wise entry including the name of the parties. She further submitted that on the same page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Against this ld Assessing Officer further tabulated the net written against those cheques and based on this worked out the commission at the average rate of 5.67% being income of the assessee. Ld CIT(A) has dealt with this issue as under:- 8. I have considered the-facts of the case and the written submissions of the appellant. I have also perused the case laws relied upon by the appellant. During the course of the search seizure operation, the appellant admitted that he was engaged in the business/activity of providing accommodation entries by way of purchase and sale bills to the needy parties by routing the entries through bank accounts of his own concern and also the bank accounts of the concerns operated in the names of his employees and relatives which were otherwise controlled by him. The appellant was using all these firms for the purpose of providing sale bills for which he was earning commission. In the statement recorded u/s 131 of the IT Act, 1961 during the course of the proceedings u/s 153A on 12.02.2013, the appellant though conclusively re-admitted his stand that he was engaged in the business/activity of providing accommodation entries, differed with rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the order, in my view, a rate of 2% commission is very reasonable. Accordingly, the Assessing Officer is directed to adopt the percentage of gross, commission at 2% and allow the expenses at 0.5% on the same to calculate the net commission for the year under consideration. 9. The ld CIT(A) has reduced the gross commission income determined by the ld AO @5.67 % of the accommodation entry to 2% as commission income for following reasons:- a. In the statement recorded u/ 131 the assessee has admitted the same rate of percentages as it was stated by him during the course of search. b. Vide submission 04.07.2013 the appellant further reiterated his stand that the gross margin of commission earned by the assessee varies from 0.25% to 0.50%. c. The letter dated 18.03.2013 the assessee has submitted various contentions, which were not accepted by the LD AO. Vide this letter assessee submitted as under:- Further as regards details of commission charged on these transactions by the assessee a detailed explanation along with a number of explanatory entries supported with following documentary evidences of a. Purchase/Sales Invoices / extracts of seized material portions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stify our claim. Workings of such several cases are resubmitted to your honour herewith for kind consideration in support of our above earlier submission (A copy of the above said documents, as submitted to the learned A.O., is enclosed in paper book on page no. from ___to __) Further the supporting documents of above said submission i.e. copies of relevant purchase/sale bills, extract of ledger accounts, extracts of stock ledger and relevant copies of seized documents are enclosed in paper book on page no. _____ for your ready reference. In this regard it is humbly submitted that all these documents were already available with the learned A.O. as submitted by the assessee during the course of assessment with books of account and other seized materials already with the learned A.O. seized at the time of search proceedings and hence submission of the same to your goodself does not amount to providing additional evidence. The above all cases were duly explained to the learned A.O. during the course of assessment It is to be noted that the learned A.O. has not objected authenticity and genuineness of any transaction of the submission of the assessee, based upon seized material/ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheque amount . It is not certain that this means net returned on the page against the cheque . Moreover, assessee is engaged in the business of issuing fictitious bills and it also purchases fictitious bills. For this the assessee has submitted the purchase ledger of the assessee and also given the name of one Shri Vaivab Jain which is also mentioned in para No.3.1 of the assessment order. Therefore it is apparent that assessee buys bogus purchase bills and also sales bogus purchase bills. As already stated by the assessee that he is earning commission from bogus entries of issuing sales bills and then he is also buying purchase bills from one Sh. Vaivab Jain therefore he may also be incurring some cost out of that. Further the assessee is also doing this business through many brokers as per para no 3.1 of the assessment order and there might be some cost of those brokers also. Further, in the statement assessee has also submitted the comparative rate of brokerage being charged by other brokers which is also in the range of 0.25% to 0.75%. Further assessee is issuing the bills of goods and also receiving the bills of those goods which are fictitious. As these bills are fictitiou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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