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2019 (5) TMI 428 - AT - Income TaxAccommodation of bogus transaction - entry operator - notional commission on unsecured loan - incriminating material has been found in the search proceedings and statement has been given under oath u/s 132(4) - presumption of statement made u/s 132(4A) - retraction of statement - HELD THAT:- The assessee, in statement on oath u/s 132(4) during search proceedings, categorically admitted to be engaged in providing accommodation entries of varied nature through two name-sake entities without carrying out any actual business activity. The modes-operandi adopted by the assessee has elaborately been enumerated in the impugned order as well as in the statement given by the assessee. The incriminating material in the shape of Annexure A-1 to Annexure A-5 in respect to parallel accounts containing details of cash transactions etc. was found from the possession of the assessee which unequivocally corroborated the aforesaid statement. AR has submitted that the statement was retracted but it is noted that the statement has been retracted after lapse of more than 10 months without any supporting facts to demonstrate that the same was given under any coercion or threat. Presumption of Section 132(4A) stood against the assessee and complete onus to negate the same was on assessee which has remain undischarged. All these factors do not inspire us to accept the submissions of Ld. AR that additions of the two entities were not justified in the hands of the assessee. Therefore, lower authorities, in our considered opinion, were quite right in making the impugned additions in the hands of the assessee, under the given circumstances. Estimation of rate of commission earned by the assessee on providing accommodation entries. - HELD THAT:- The chain of the transactions establishes that the assessee has received commission on three accounts viz. commission on import purchases made on behalf of other entities, commission on accommodation local sales bills provided to other entities and commission on entries of loans and advances being provided to certain beneficiaries. The commission on local purchases stated to be made by the two entities, under the circumstances could not be sustained. Nothing has been brought on record to suggest that the assessee has received commission on account of local purchases stated to be made by the two entities. The same is also not supported by the statement made u/s 132(4). Therefore, the addition on account of commission on local purchases, as made by lower authorities, in our opinion, could not be sustained. Therefore, we delete the same. The commission on account of accommodation entries of loans and advances has been estimated @2.4%. However, no material has been brought on record to justify the same. The assessee has also not indicated the same in the statement made u/s 132(4). Therefore, under the given circumstances, we estimate the same @0.5%. Ground No. 3 stand partly allowed. Commission on import has been estimated @0.275% whereas commission on sales has been estimated @0.075%. We estimate the commission on import @0.2% and commission on sales @0.05%. Ground Nos. 5, 7 & 8 stand partly allowed. Allowance for expenditure - CIT(A) has estimated the expenses as 25% of unaccounted commission. - HELD THAT:- The perusal of material on record reveal that the assessee had employed four persons during the year to carry out various transactions. One of the entities was a corporate entity for which additional expenditure has to be incurred to maintain the corporate personality. Keeping in view the same, we enhance the same to 50% of unaccounted commission. The income reflected by M/s Abhayaraj Gems Private Ltd. & the proprietor of M/s Rishabh Impex could not be termed as real income and therefore, the credit of the same shall be granted to the assessee. The assessee, in its own return of income, has reflected salary from M/s Abhayaraj Gems Private Ltd. which also, for the same reasons, could not be termed as real income and therefore, the same would stand deleted from the income of the assessee.
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