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TMI Blog2023 (4) TMI 1337X X X X Extracts X X X X X X X X Extracts X X X X ..... come and if so, at what rate the same is being earned. In the instant facts, we observe that the assessee has submitted that it has earned commission income, however, no details regarding the commission income earned by the assessee was furnished to the Department during the course of assessment or appellate proceedings. As held in various judicial precedents highlighted above, if the assessee is submitting that he is liable to be taxed only on the commission income so earned, then the onus is on the assessee to provide the basis as to how such commission income has been arrived at and also to provide list of beneficiaries and other details so that whether the correct amount of commission income has been offered to tax may be verified by the Department. As assessee has not maintained any books of accounts, has not maintained cash book and bank book, he has not submitted any details of parties from whom the commission income has been earned, the assessee has not given any supporting documents to corroborate the correct rate at which commission income may be computed and the assessee has also not provided details/ list of parties who have made deposits to the tune of 158 crores in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate hearing N.A. Total tax effect (including surcharge @ 12% and education cess @3%) Rs.53,85,488/- 3. The Department has taken the following grounds of appeal: Grounds of Appeal Tax effect relating to each Ground of appeal (see note below) 1. The CIT(A) has erred in law and on facts in deleting the commission income of Rs. 11,07,61,000/- by adopting commission rate @ 1% instead of 8% without properly appreciating the facts of the case and the material brought on record. Rs.3,83,32,167/- 2. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary. 3. It is therefore prayed that the order of the Ld.CIT(A) may be set aside and that of the order of the Assessing Officer be restored. Total tax effect (see note below) Rs.3,83,32,167/- We shall first take up the assessee s appeal Ground Number 1: Ld. CIT(Appeals) erred in holding that the assessee has earned commission income @ 1% of total receipts in bank account 4. The brief facts of the case are that the assessee filed return of income for assessment year 2006-17 declaring total income of ₹ 4,55,650/-. During the course of assessment, the Assessing officer observed that there are vol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veral opportunities being given by the assessing officer to the assessee to explain these transactions, the assessee has only submitted that he has earned commission at the rate of 0.05% without any supporting evidence. Accordingly, since the assessee has not maintained any books of accounts and in absence of any details whatsoever forthcoming from the assessee, the AO was left with no other option but to estimate the commission income. On the issue of appropriate percentage to be taken to calculate the commission income earned by the assessee, the Ld. CIT(Appeals) held that looking at the decisions rendered by various authorities, the appropriate rate of commission may be taken as 1% on such accommodation entries and directed the assessing officer to re-compute the income accordingly. 6. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals) restricting the addition to 1% of the total credits appearing in the bank account of the assessee. Before us, the counsel for the assessee primarily reiterated the submissions made before the Ld. CIT(Appeals) and the AO to the effect that the assessee is earning commission @₹ 50/- per lakh and accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant case vis-a-vis considering the settled legal position, it appears that there is direct nexus/live link between the material coming to the notice of the Assessing Officer and that for formation of his belief that there has been escapement of the income of the assessee from assessment in the year under consideration because of his failure to disclose fully and truly all material facts as from the inquiry/investigation by the Investigation Wing, some tangible material was found to substantiate the fact that the assessee was the provider of accommodation entries and that, the income from commission, ranging from 0.5 per cent to 1 per cent was not disclosed in return and thereby, the income chargeable to tax had escaped assessment for the year under consideration. As emerges from the record, the petitioner has filed Rol for the assessment year 2012-13 disclosing income of Rs. 1.42,694 despite showing a huge turnover of Rs. 24,10,82,501 in the audited books of account. Further, a detailed investigation is carried out by the Investigation Wing and the outcome of the same prima facie substantiates the case of the department. Thus, formation of belief by the Assessing Officer that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the activities of taking cheques and cash and deposited the same in their bank accounts. The assessee s contention is that he is merely acted as a commission agent and hence only the commission amount should be subject to tax in its hands. However, the Department has observed that the assessee could not produce that complete details of beneficiaries with their names, complete addresses, PAN and other details of transactions. In the instant case, there are approximately more than 7000 beneficiaries and only in the case of 116 beneficiaries, the PAN has been identified. For 2752 entries, PAN has not been identified. For balance entries, only part details are available. If the assessee is submitting that he is liable to be taxed only on the commission income so earned, then the onus is on the assessee to provide the basis as to how such commission income has been arrived at and list of beneficiaries and other details so that whether the correct amount of commission income has been offered to tax may be verified by the Department. The Department cannot be expected to find out the details of all beneficiaries itself and cannot accept whatever income or expenses are offered/claimed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be reasonable to restrict the net commission income @0.25% of the total deposits in the bank account held by the assessee. In the result, ground number 1 of the assessee s appeal is partly allowed. 8. In the result, ground number 1 of the assessee s appeal is partly allowed. Ground number 2: Ld. CIT(Appeals) has erred in upholding addition of ₹ 3,21,730/- made by the AO on account of cash deposit in the bank account 9. The brief facts in relation to this ground of appeal are that during the course of assessment proceedings, the AO observed that assessee had made total cash deposits of ₹ 3,21,730/- in one of the bank accounts held by the assessee. However, the assessee was unable to explain the source of such cash deposits. Accordingly, the AO added the aforesaid amount as unexplained income under section 68 of the Act in the hands of assessee. In appeal, Ld. CIT(Appeals) upheld addition made by the AO. 10. Before us, the submission of the counsel for the assessee is that the assessee has already declared income of ₹ 4,55,650/- in the return of income as income from other sources. Accordingly, if commission income is being added separately to the income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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