2023 (2) TMI 266 - AT - Income Tax

Estimation of income - bogus accommodation entries - Estimation of commission - assessee’s claim is that assessee is earning 0.5% commission as against 1.8% taxed by the authorities below - HELD THAT:- AO himself has estimated 0.5% rate of commission in some cases. Similarly, ITAT in the case of Adonis Financial Services Pvt. Ltd.[2019 (1) TMI 1266 - ITAT DELHI] held 0.50 paise or 0.50% should be taken as the reasonable rate of profit/commission in such clandestine activities. Also see M/S. BHAWANI PORTFOLIO PVT. LTD. [2021 (7) TMI 601 - DELHI HIGH COURT]

We note that in several cases, ITAT has estimated the earning of commission @ 0.5% in the bogus accommodation entry business. Several ITAT orders have been referred above. It is not the case that any of them has been reversed by Hon’ble jurisdictional High Court. Rather we have an example in the case of DCIT vs. Bhawani Portfolio Pvt. Ltd. (supra) wherein Hon’ble Delhi High Court has approved the ITAT order of estimating the commission of 0.15% to 0.50% in such cases. Accordingly we direct the AO to estimate the commission in this case @ 0.5% as against 1.80% as made by the authorities below. Appeal of the assessee is partly allowed.