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TMI Blog2022 (12) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... the books of accounts for AY. 2011-12 which action has been confirmed by the CIT(A) cannot be faulted since we completely agree with the reasoning given by AO to have rejected the books. So no separate reasons of our own are not given (refer Hon ble Supreme Court order in CIT Banglore Vs. K. Y. Pilliah and Sons [ 1966 (10) TMI 35 - SUPREME COURT ]. Therefore, ground no. 1 of the assessee s (CO) fails. Coming to the action of the CIT(A) restricting the commission at 0.15% of the sales rather than 1% of the total purchases we find the action to be a plausible view and so we uphold the same. Therefore, the ground no. 1 of the revenue fails and ground no. 2 of the assessee to further restrict the commission at 0.10% is rejected. Addition by estimating the commission earned @ 1% on purchase and sales of investment transaction made during the year by treating the said transaction as accommodation entry - HELD THAT:- CIT(A) noted that the assessee failed to prove the correctness of the transactions in the purchases and sale of shares. So he confirmed the action of AO. Before us even though the assessee has filed the CO, it has not been filed any material to take a different view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on charged by the assessee group of companies varied between 1.5% and 3.6%. 3. Whether on the facts and in the circumstances of the case and in law, the learned CIT(A) was correct in relying on the decision in the case of Gold Star Finvest Pvt. Ltd. which has not been accepted by the Department on merits for assessment year 2003-04 and is pending before the High Court for adjudication. 4. The appellant prays that the order of the CIT (A) on the above grounds be set aside and the of the A.O. be restored. 3. The grounds of appeal preferred by assessee in its cross-objection (CO) is as under: - 1. The CIT(A)-18, Mumbai erred in upholding the action of the Income tax Officer-8(3)(3), Mumbai (now Income tax Officer 11(1)(2), Mumbai) in rejecting the books of account under section 145(3) of the Act. The cross-objection contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action of the Assessing Officer in rejecting the books of account inasmuch as the CIT(A) has not appreciated the facts of the case in its entirety. 2. The CIT(A) erred in upholding the action of the Assessing Officer in making an addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection of books (ii) against action of Ld. CIT(A) restricting the addition @ 0.15% of sale whereas according to assessee it should be @ 0.10% of sales (alternate ground). 5. Brief facts, the assessee had filed the return of income on 24.09.2011 declaring total income at Rs.12,55,210/-. Later, the return of income was selected for scrutiny. The AO took note of an information received by the Sales Tax Authorities through DGIT(Inv.) from which it revealed that director of the Group companies of the assessee Shri Abhishek Morarka had given statement in the capacity of director of M/s. Utkantha Trading Company that his concerns namely M/s. Realstone Exports Ltd. (assessee) and other two concerns were not involved in carrying out any actual purchase or sale activity which mean that director accepted/admitted that they were providing accommodation entry to beneficiaries for commission. Therefore, the AO doubted the books maintained by the assessee. And therefore, taking note of the discrepancies/infirmities which the AO have elaborated in his assessment order, he concluded that the assessee was not maintaining proper records/books. And therefore, he invoked the provisions u/s 145(3) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he beneficiaries. In the facts of the case, it would be fair to estimate the net commission income @ 1% (which would also take care of the other expenses, which might have incurred to earn the commission income). Thus on an aggregate amount of bogus/accommodation entries of Rs.115,91,34,598/- shown as Purchases Sales of goods with the outside parties [Purchases of Rs.66,79,50,560/- and Sales of Rs.49,11,84,038/-] the commission income of the assessee for the A.Y. 2011-12 is determined at Rs.1,15,91,346/-. 42. Similarly with regard to the Purchase and Sale of Shares of Pvt. Ltd. companies viz. Rs.3,49,69,186/- and Rs.3,36,77,400/- respectively, the net commission income earned by the Assessee for providing these accommodation entries is estimated at 1% of purchase and sale transactions of shares. Accordingly, the same is computed at Rs.6,86,466/- [I.e. 1% of Rs.6,86,46,586/- (Rs.3,49,69,186/- and Rs.3,36,77,400/-. 43. Thus, total commission income earned by the Assessee from providing accommodation entries in respect of the Purchase/Sale transactions of goods and shares is computed Rs.1,22,77,812/- [Rs.1,15,91,346/- (+) 6,86,466/]. 7. Thus, it can be seen that AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the net profit on providing accommodation entry was only to the tune of Rs.0.5% of turnover, the Ld. CIT(A) on the basis of this Tribunal s decision in the case of M/s. Goldstar Finvest Pvt. Ltd. (ITA. No.887 and 2699/M/2013) has restricted the commission at 0.15% of the turn-over. So, the Ld. CIT(A) following the decision of the Tribunal in M/s. Goldstar Finvest Pvt. Ltd. (supra) estimated the net profit of the assessee at 0.15% on turn-over instead of 1% of both purchase and sale. Aggrieved, both the revenue as well as assessee is before us. 10. We have heard the Ld. DR and perused the records. We note that the main grievance of the revenue is against the action of the Ld. CIT(A) restricting the net profit of the assessee at 0.15% of the sales (turn-over) whereas the AO had made addition of 1% on both purchase as well as sale. Whereas, the assessee s grievance is that even though it was pleaded before Ld. CIT(A) that net profit should be only 0.10% and not 0.15% of has not been heeded to. So it has preferred Cross Objection against the impugned order to get further relief of 0.05% of turn over. We note in this regard that one of the director of the assessee (Shri Abhishek ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year, the assessee company had invested in the shares of around thirty eight (38) unlisted companies. The AO notes that assessee after purchasing and selling shares to the tune of Rs.20,20,06,686/- has shown as Investment toward Share Application money/shares . The AO noted that no income under the head capital gains was computed and offered to tax in the return of income. So he gave notice to the assessee as to why no capital gain on purchase/sale of unlisted shares had been shown in the return of income. The AO also asked the assessee details of valuation of share premium, basis of determination of purchases/sale price of these unlisted shares etc. The AO found that even though shares transactions are reflected to show that the assessee has purchased unquoted shares of Rs.3,49,69,186/- and the sale proceeds thereof amounted to Rs.3,36,77,400/-, no income or loss has been shown by assessee under the head capital gain. The AO also noted that the assessee did not furnish any evidence regarding the method adopted for the valuation of the purchases and sale price of these shares; and as such, failed to corroborate with evidence the source of these credits. The AO further not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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