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TMI Blog2023 (5) TMI 1186X X X X Extracts X X X X X X X X Extracts X X X X ..... the stamp duty valuation authority shall be taken as full value of the consideration and since the payment made by the assessee is as per the stamp value authorities determination, no addition is called for. Addition made on account of cost of construction CIT(A) held that there was no difference between the value in the cost of construction declared by the assessee and the value as considered by the AO, can be attributed owing to the variance being less than 10% of the accepted norms of variation. Having gone through the facts, we find no reason to interfere with the decision of the ld. CIT(A) who accepted the value of the land as per the circle rate and value of the construction within the acceptable range of variation. Protective Addition - As substantive addition has already been completed in the case of Sh. Naresh Kumar Jain and hence, no protective addition can be confirmed at this juncture in the case of the assessee. - ITA No. 1318/Del/2019, 1319/Del/2019, 1320/Del/2019, 1321/Del/2019, 1322/Del/2019 and other - - - Dated:- 28-4-2023 - ITA No. 1323/Del/2019, 1324/Del/2019, 2888/Del/2019, 2889/Del/2019, 2890/Del/2019, 2891/Del/2019, 2892/Del/2019, 2893/Del/2019, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the assessment order passed by the learned AO is bad in law as the same has been passed without application of his own mind. 8(i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in restricting the addition to Rs. 12,02,355/- made by the AO on account of commission income treating the assessee as an accommodation entry provider. (ii) That the addition has been confirmed by arbitrarily applying the commission rate of 1.04% of the alleged turnover. 9. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the action of AO in holding that the assessee is an accommodation entry provider. 10. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the action of AO despite the fact that the addition has been made on the basis of extraneous considerations grossly indulging into surmises and conjectures. 11. On the facts and circumstances of the case, the learned CIT(A) has erred, both on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the assessment order passed by the AO is barred by limitation having been passed beyond the statutory period prescribed in the Act. 5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the AO has erred in making the assessment without proper service of statutory notices. 6. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the proceedings initiated under Section 153A are bad in law in the absence of any incriminating material belonging to the assessee being found during the search. 7. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the assessment order passed by the learned AO is bad in law as the same has been passed without appl ication of his own mind. 8(i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by limitation. 4. In ITA No. 1324/Del/2019, the following grounds have been raised by the assessee: 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals)[CIT(A)] is bad both in the eye of law and on facts. 2(i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in restricting the addition to Rs.74,59,361/- made by the AO on account of commission income treating the assessee as an accommodation entry provider. (ii) That the addition has been confirmed by arbitrarily applying the commission rate of 1.04% of the alleged turnover. 3. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the action of AO in holding that the assessee is an accommodation entry provider. 4. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the action of AO despite the fact that the addition has been made on the basis of extraneous considerations grossly indulging into surmises and conjectures. 5. On the facts and circumstances of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions of commission were quantified @ 2% of total turnover. 2. On the facts and in the circumstances of the case, the Id.CIT (A) has erred in deleting the protective addition of Rs. 37,95,000/- made by the AO on account of unexplained cash credits without considering the fact that the assessee has failed to produce directors of the shell concern to verify the identity of the company, genuineness of the transactions and creditworthiness of the concern. 3. On the facts and in the circumstances of the case, the Id.CIT (A) has erred in deleting the addition of addition of Rs. 3,34,57,194/- on account of difference in the value of the immovable property purchased by the assessee and the value determined by the DVO and inspector report treating the same as unaccounted investment u/s 69 of the Act without considering the fact that Inspector's report was submitted after spot visit enquiries and after ascertaining the market value of this property through the property dealers of the area indicating the fair market value of the property. 6. In ITA No. 2894/Del/2019, the following grounds have been raised by the Revenue: 1. On the facts and in the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Name of Alleged Concerns 1.Ambarnuj Finance Investments Pvt. Ltd. 2.Chandra Buildcon Pvt. Ltd 3.Garima Jain 4.Jai Maa Bhawani Overseas Pvt. Ltd. 5.JKS Impex Pvt. 6.Kavita Buildcon 7.KCJ Buildtech 8.Reena Jain 9. Shivangi Garments Pvt. Ltd. 10. Shivaji Garments Pvt. Ltd. 11. Sukumar Buildwell Pvt. Ltd. 10. During the assessment proceedings, the assessee submitted that the total turnover calculated by the AO and the rate of commission charged by the AO was not correct. 11. It was also submitted by the assessee that the inclusion of banking transactions related one concern namely M/s Ambarnuj Finance Investments Ltd. in the working of turnover of accommodation entries is incorrect and it is evident from the fact that assessment proceedings of the said company have been completed under section 153A and 143(3) and no adverse inference had been drawn against M/s Ambarnuj Finance Investments Ltd. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Net commission income 6,92,64,043/- ix. It was submitted that the total turnover of alleged accommodation entries of the assessee and Sh. Naresh Kumar Jain. The computation is hereunder: Particulars Total Turnover Appearing in Tally(Jain Folder) 19,696,128,227 Less: Circular transactions among the shell company 4,842,477,767 Net Turnover as per Tally Data 14,853,650,460 x. that as per the above working the net rate of commission earned by the appellant comes to 6,92,64,043/14,85,36,50,460) *100 which at best can be applied on the turnover of accommodation entries after elimination of circular transactions. xi. The assessee also submitted a detailed working of the correct year wise turnover of the accommodation entries for the assessee which is also reproduced below: Particulars AY 2010-11 AY 2011-12 AY 2012-13 AY 2013-14 AY 2014-15 AY 2015-16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erations of M/s Ambarnuj Finance Investments Pvt. Ltd. are not in doubt in the year under consideration, therefore, it was not justified on the part of the AO to include Rs. 4,64,29,476/- being the aggregate of debit and credit bank transactions of M/s Ambarnuj Finance Investments Pvt. Ltd. in the working of the commission income, hence, the said figure of Rs. 4,64,29,476/- is reduced from the calculation of commission. With regard to calculation of turnover/quantum of accommodating entries after eliminating the impact of circular transactions and percentage of commission 9.11 From the above instances, I find that the AO has pointed out that the short excess account in the tally data means the commission received by the Jain Brothers. Further from the above quoted instance and other examples quoted by the AO in the assessment order, it is clear that the appellant and his brother use to maintain the data of providing accommodation entries including bank transfers, cash exchanged and commission charged in Jain Folder Tally data. Further the turnover analysis placed in the paper book also depicts that majority of credit entries in the bank statement of shell co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 985,521,370 1,606,886,770 - 4,842,477,767 Net Turnover as per Tally Data 439,586,944 1,010,599,831 1,780,997,609 2,881,699,244 4,317,531,350 4,423,235,481 - 14,853,650,460 The above table shows that the appellant has received commission of Rs. 22,06,16,047/- and made payments of Rs. 15,13,2,004/- in short and excess a/c over the period of six years for the total turnover of the six years for the total turnover of the six years of Rs. 1485,36,50,460/- The average rate of commission received on total turnover herein above comes to 1.49% (Rs. 22,06,16,047 / 1485,36,50,460*100). Whereas the average rate of commission paid comes to 1.02% (Rs. 15,13,52,004 / 1485,36,50,460*100). Thus, the net commission rate in the tally data seized is search comes to 0.47%. The appellant in this regard, submitted that receipts net off of payment/expenses should be taxed in its hands as commission only. In this regard, the appellant has pointed out that seized record is the best evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 597 262,717,480 245,616,875 260,228,180 717,246,284 1,876,225,835 9.14 In view of the above working the average rate of commission income of 1.04% will be charged in the hands of the appellant on the turnover of Rs. 11,56,10,968/- for the year under consideration. Accordingly, the AO is directed to restrict the addition at Rs. 12,02,355/-. 16. Aggrieved by the order of the CIT(A), the assessee and the Revenue filed an appeals before the Tribunal. 17. Heard the arguments of both the parties and perused the material available on record. 18. We find that the AO himself has given a finding that circular transactions should be eliminated while computing the turnover of accommodation entries. However, while arriving at the turnover of accommodation entries given by the assessee such elimination of circular transactions was left out to be made. The ld. CIT(A) has accepted the working of turnover furnished by the assessee after eliminating circular transactions or transactions on which income had already been offered. The ld. CIT(A) has rightly held that the turnover wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Turnover as per assessee accepted by CIT(A) Average Yearly Commission charged by the AO @2% on the total turnover on ad hoc basis Average Yearly Commission calculated by the CIT(A) @1.04% on the total turnover (by arbitrarily restricting expenses on earning commission to 30% of gross commission income) Average Yearly Commission which should have been considered @0.47% on the total turnover AY 2010-11 27,66,87,335 115,610,968 55,33,746 12,02,355 5,43,372 AY 2011-12 618,05,53,386 160,105,451 12,36,11,068 16,65,096 7,52,496 AY 2012-13 105,04,22,587 114,700,597 2,10,08,452 11,92,886 5,39,093 AY 2013-14 187,86,43,617 262,717,480 3,75,72,872 27,32,262 12,34,772 AY 2014-15 696,49,99,924 245,616,875 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw as it clearly amounts to cherry picking. 21. Therefore, as per the explanation and submissions of the assessee, whole of the expenses incurred in earning commission income shall be allowed and accordingly the net rate of commission earned by the assessee i.e. 0.47% is the best which can be applied on the turnover of the accommodation entries after elimination of circular transactions. Thus the maximum addition which can be made in the hands of the assessee on account of commission earned on turnover of the accommodation entries worked out as under: Assessment Year Turnover (after elimination of circular transactions) Commission rate Commission Income AY 2010-11 115,610,968 0.47% 5,43,372/- AY 2011-12 160,105,451 0.47% 7,52,496/- AY 2012-13 114,700,597 0.47% 5,39,093/- AY 2013-14 262,717,480 0.47% 12,34,772/- AY 2014-15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- on account of cost of land against the value declared by the assessee of Rs.24,10,000/-and cost of construction at Rs.98,05,300/- against the value declared of Rs.41,89,250/- (50% of the value determined by the DVO). The ld. CIT(A) deleted the addition on the grounds that the valuation cannot be more than the stamp duty valuation. Before us, the ld. DR relied on the order of the Assessing Officer. The ld. AR argued that the property of the land is as per the circle rate and the cost of construction of Rs.8,11,644/- has not been considered and there was no difference between the value in the cost of construction, the variance being less than 10% which is normal and bound to occur as no one can value the property accurately and to the point. 26. Heard the arguments of both the parties and perused the material available on record. 27. We have gone through order of the ld. CIT(A) in detail. The ld. CIT(A) concurrently considered the provisions of Section 56(2)(viib) and Section 50C, report of the DVO and the stamp duty valuation (circle rates). The ld. CIT(A) held that the value as per the stamp duty valuation authority shall be taken as full value of the consideration and s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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