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2016 (6) TMI 519 - AT - Income TaxRate of commission on accommodation entries - Held 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 fictitious to prove their genuineness before VAT authorities assessee need to make payment of VAT or CST. For this assessee submitted the purchase ledger as well as the bank book. Accordingly to the VAT laws it was submitted by the assessee that he has to calculate 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.
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