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2018 (4) TMI 1120 - AT - Income TaxAddition On account of commission income on providing accommodation entries - rates of commission charges - Appellant has failed to file evidence that VAT charged @4% from the beneficiaries on accommodation bills were actually refunded to the beneficiaries or deposited with the trade tax department - Held that:- Beneficiaries claimed these expenses as deduction while computing their income and also claimed VAT as set off while filing their income tax and VAT returns. Beneficiaries in turn paid cash to the assessee over and above the Bill + VAT amount his commission too. According to seized documents, the assessee is found charging commission income from 1.50 % to 3.85 %. The seized documents indicating commission rates are for a limited period. Assessee has minimum commission rates of 1.50% and also maximum amount of Commission is 3.85%. Rates of commission also varies as per the period in which the bogus bills are required. Rates are generally higher in the last months of closing of the year. No infirmity in the order of the ld CIT(A) in confirming the addition adopting rates of commission @ 2% and VAT @ 4 % totaling to 6 % . Further, the assessee has not shown any payment of VAT charged by him from the parties to whom the accommodation entries were provided, therefore the sum of 4 % VAT along with the commission of 2 % is chargeable to tax as income of the assessee. It is apparent that if assessee provides the bogus bill of ₹ 100/- then assessee charges 4% VAT thereon and receives the consideration of ₹ 104/-. The assessee is required to pay ₹ 4 to the state govt towards the VAT collected by him. During the course of search, no such evidences were found where the assessee has paid VAT to the state govt and no evidences have been produced during the assessment proceedings. No infirmity in the order of the lower authorities in not allowing the credit for VAT. To justify the addition of commission income for accommodation entry @6% the ld Assessing Officer and ld CIT (A) has correctly assumed the rate of 2% commission for providing bogus purchase bills and 4% for the VAT. In view of this we reject the ground of the assessee for granting deduction of VAT from his income. We also find no reason to reduce the commission income from 2%. With respect to the claim of the assessee that there is an expenditure also involved in these business and therefore, the commission income is required to be computed only at 0.76% also deserves to be rejected. The assessee has not shown any proof of such expenditure and no such proof were found in search proceedings. It was also not shown that what kind of expenditure assessee was incurring and to whom he was paying such expenditure. We confirm the order of the ld CIT(A) in confirming the addition on account of commission income on providing accommodation entries. In view of this, we reject ground No. 2 of the appeal of the assessee. Unexplained investment - Held that:- No reason to disagree with the order of the lower authorities and the order of the ld CIT(A) where the reasons given were adequate to confirm this addition. in the result ground No. 3 of the appeal of the assessee is dismissed. Unexplained investment in the immovable properties - Held that:- The seized papers during the course of search which are incorporated by the AO in his assessment order clearly shows about the investment made by the assessee in the immovable properties. In view of this we do not find any reason to interfere in the order of the lower authorities and confirm the order of the ld CIT(A) in confirming the addition on account of unexplained investment in immovable properties by the assessee. In the result ground of the appeal of the assessee is dismissed.
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