TMI Blog2014 (11) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... ee was engaged in providing accommodation entries - there is no material in place to prove that the assessee was engaged in providing accommodation entries in respect of credits in the bank account, it was justified on the part of CIT(A) to convert the protective addition of Rs.,36,05,233/- into substantive addition - the addition should have been restricted to a sum of ₹ 10 lacs for entries referred to in the reasons recorded by the AO u/s 148 - the total addition of ₹ 36,05,233/- is set aside and restrict the addition only to the extent of ₹ 10 lacs being the accommodation entries noted in the reasons recorded by the AO – thus, the matter is remitted back to the AO for fresh adjudication - as no detailed inquiry or investigation has either been made by the AO or CIT(A) in respect of these two entries aggregating to ₹ 10 lacs - Decided partly in favour of revenue. - I.T.A. No.2776 /Del/2010, I.T.A. No.1938 /Del/2010 - - - Dated:- 15-10-2014 - Shri I. C. Sudhir And Shri T. S. Kapoor,JJ. For the Appellant : Shri Gagan Sood, Sr. DR For the Respondent : Shri R. S. Singhvi, CA ORDER Per T. S. Kapoor, AM: These are cross appeals fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer to make the addition of ₹ 36,05,233/- in the hands of the assessee on substantive basis against the A.O. s action by which he had made the addition on protective basis. 3. The brief facts of the case are that the case of the assessee was reopened u/s 147 of the Act on the basis of some information from investigation wing of the department. The department was of the view that assessee was indulging into the business of providing accommodation entries. During reassessment proceedings, assessee did not participate and therefore, assessment was completed u/s 144 of the Act. The Assessing Officer in his order dated 26.12.2007 had made three additions one of which being estimated commission income from accommodation entries amounting to ₹ 1,23,110/-. The Assessing Officer held that the total credit in the bank account of the assessee was ₹ 44,24,396/- and by applying 2.5% commission on this amount, he arrived at commission income of ₹ 1,23,110/-. The 2nd addition was made by the Assessing Officer u/s 68 of the Act on account of unexplained cash credit in the form of share capital/share application money. The Assessing Officer made the 3rd addition amounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gupta Vs CIT 304 ITR 145. 4. As regards the addition on account of commission income from providing accommodation entries, Ld. CIT(A) deleted the same by holding as under: I have considered the submissions made by the authorized representative of the appellant company. I think, the addition made by the Assessing Officer is without any basis and any such like ad-hoc addition cannot be sustained in the eyes of law. Being ad-hoc addition, I also do not subscribe to the view point of the Ld. A.R. that the addition can be reworked by applying rate 0.5% to 0.75% instead of 2.5% as adopted by the Assessing Officer while passing the impugned order. It is seen that there is no evidence on the basis of which it can be said that s the Assessing Officer or the appellant is right to say that it indulged in providing accommodation entries. Accordingly, the Assessing Officer is directed to delete addition of ₹ 1,23,110/- as the same is not based on any documentary evidences. The ground of appeal is taken as allowed to the appellant. 5. Aggrieved, both the parties are in appeal before us. 6. Ld. A.R. argued his appeal s ground No.3 in I.T.A.No. 1938/Del/2010 and submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r deletion of addition u/s 68, the Ld. D.R. submitted that identity of share applicants was not established and since it is the case of entry provider, the ratio of Lovely Exports as decided by Hon'ble Supreme Court, cannot be applied. 9. Regarding deletion of commission income, the Ld. D.R. submitted that even the assessee had agreed that it was indulging into business of accommodation entries therefore, Ld. CIT(A) s action in deleting the same was not based upon the facts. Ld. A.R. replying the revenue s appeal, argued that the share application money was received from Mrs. Manisha Gupta, Sudha Gupta and Shri Sandeep Gupta amounting in all to ₹ 5,71,244/-. He further argued that the allegation of Ld. D.R. that existence of share applicants was not proved, is not correct as Sandeep Gupta is Director of the Company and Manisha Gupta is wife of Sandeep therefore, identity was proved and Ld. CIT(A) on the basis of confirmations of share applicants and on the basis of balance sheets of the applicants had deleted the additions. 10. We have heard rival parties and have gone through the material placed on record. We first take up the appeal filed by the Revenue in I.T.A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and cash deposit of ₹ 16,55,000/- which is not justified specifically keeping in view the fact that the addition should have been restricted to a sum of ₹ 10 lacs for entries referred to in the reasons recorded by the Assessing Officer u/s 148. We, therefore, delete the total addition of ₹ 36,05,233/- and restrict the addition only to the extent of ₹ 10 lacs being the accommodation entries noted in the reasons recorded by the Assessing Officer. However, as no detailed inquiry or investigation has either been made by the Assessing Officer or Ld. CIT(A) in respect of these two entries aggregating to ₹ 10 lacs, we restore the mater back to the file of the Assessing Officer for his fresh adjudication in so far as the sum ofRs.10 lacs on account of accommodation entries are concerned. Therefore, the addition of ₹ 36,05,233/- is restricted to ₹ 10 lacs which is restored back to the file of the Assessing Officer for his fresh adjudication who will readjudicate after providing a reasonable opportunity of being heard to the assessee. The Assessing Officer shall provide fresh opportunity to the assessee to cross examine the respective persons so that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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