TMI Blog2008 (3) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of commission considered to be reasonable by the Tribunal in the cases of Palresha Co. (supra) and Kiran Co. (supra), in similar type of transactions. The theory of the Assessing Officer to treat the entire deposit as unexplained cash credits, cannot be accepted in the light of assessment orders in the case of beneficiaries and also in the light of the fact that assessee is only concern with the commission earned on providing accommodation entries. We, therefore, of the view that since the assessee itself has declared the commission on turnover at 0.15% which is more than the percentage considered to be reasonable by the Tribunal in the cases of Palresha Co. (supra) and Kiran Co. (supra), the same should be accepted. We, accordingly, accept the commission declared by the assessee and set aside the Order of the CIT (A) in this regard. Disallowance on loss - sale of assets - HELD THAT:- The assessee company was asked to submit the details of the same and in response thereto, it was stated that the company was taken over by the assessee with assets and liabilities. At the time of take over, it was decided that fixed assets and debtors were to be realized and out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt representing the amounts received from the customers and paid back to them through cheques. The identity and the address and other details in respect of each transactions could not be identified as the same pertain to their old period and the transactions were through brokers. It was submitted before the Assessing Officer that assessee has furnished the details to the best of his ability and since the matter was very old, it was extremely difficult for him to furnish names and addresses etc., of the parties from whom various amounts were received. As the assessee failed to submit the details called for, the Assessing Officer treated the cash deposits as well as deposit by way of transfer and clearing made into the accounts with the Bank of Baroda and Co-op. Bank of Ahmedabad, as the income of the assessee from undisclosed sources. He, accordingly, made an addition of ₹ 25,59,97,475/-. 3. The assessee preferred an appeal before the CIT (A) with the submissions that in the course of business various customers approached the assessee for obtaining adjustment bills. The customers made deposits in cash amounts and in turn they took cheques from the assessee for amounts sligh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere opened in the name of the above two companies. Accordingly, the signed cheque books of the above accounts were given to Shri TC Kothari, and he has used the said accounts for his own purpose. In consideration of the same, he has made certain payments which have been taken into account while determining the income of the above two companies... 4. With regard to inability of the assessee to furnish the details before the Assessing Officer, it was contended that considering the multitude of transactions that the appellant enters in normal course of its business, it becomes almost impossible not only to identify individual clients, but, also offer their details for scrutiny. It was submitted that most of the cheques had been issued through intermediaries and assessee did not have any direct contact with the ultimate beneficiary. At times, there may be a chain of 2 or 3 intermediaries between the assessee and the ultimate beneficiary. There are various other reasons also, such as, the number of customers are voluminous. Customers are not fixed regular and permanent. Further, it was stated that in the line of assessee's business, the customers come and go after achieving thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnover, as noted by the Assessing Officer himself in the impugned assessment year, the balance addition, shall be worked out by the Assessing Officer taking the total commission / brokerage of the 2% of the total turnover. He, accordingly, directed the Assessing Officer to compute the income of the assessee. These directions of the CIT (A) were not accepted by the assessee as well as the Revenue. They both have challenged the Order of the CIT (A) through their respective appeals before the Tribunal on following grounds : GROUNDS IN ITA. No. 4625/Mum/2005 (Assessee's Appeal) : 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in directing the Assessing Officer to estimate the commission income of the assessee in relation to the following credits in bank accounts adopting a rate of 2% of the turn over. (i) Cash deposit ₹ 4,22,99,900 (ii) Transfer/Clearing entries in Bank of Baroda accounts ₹ 18,71,73,703 (iii) Transfer/clearing entries in Citibank ₹ 3,21,50,500 (iv) Transfer/ Clearing entries in Co-op Bank of Ahmedabad ₹ 43,73,373 Total ₹ 26,59,97,476 2. On the facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel for the assessee has invited our attention to the Orders of the Tribunal in the case of ITO v. Palresha . Co. [ITA. No. 1640/Bom/82], Kiran Co. v. ITO [ITA. No. 3604/Bom/83], in which the Tribunal has considered these type of transactions and has held that the assessee is concern with respect to the commissions only on these accommodation entries and the normal rate of commission was Re. 1/- per thousand i.e. 0.1%. The assessee has also invited our attention to the assessment order and the Tribunal's Order in the case of Alembic Securities Pvt. Ltd. the another group concern of the assessee in which the assessee was engaged in similar type of activities and it was accepted by the Assessing Officer that the assessee has earned commission income @ % on long term capital gain entries and 0.25% on others. He further placed a reliance upon the Orders of the beneficiaries i.e., Mukesh Chandrakant Dagli and Shri Devji Ravshi Shah, in which beneficiaries have accepted that they got the accommodation bill from the assessee. Since similar type of transactions was examined and considered by the Tribunal and the CIT (A) and it was held in those cases that the assessee being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book results shown by the assessee were found to be unreasonable. The Tribunal, accordingly, accepted the commission at Re. 1/- per thousand and deleted the additions. 10. Similar was the position in the case of Kiran Co. (supra) in which the Tribunal has again examined the similar type of activities and observed that the nature of the business of the assessee is to only earn commission on these transactions. In that case also, assessee has offered commission at Re. 1/- per thousand and Assessing Officer applied at ₹ 4/- per thousand. Relying upon the earlier years order, the Tribunal has deleted the additions and accepted the rate of commission at Re. 1/- per thousand. 11. We have also examined the assessment order and the Tribunal's Order in the case of Alembic Securities Pvt. Ltd. an another group concern of the assessee in which the Tribunal did not approve the theory of cash credit developed by the Assessing Officer. He has accepted the stand of the assessee regarding the income on commission basis. We have also examined the Order of Adolf Patric Pinto in which the assessee has earned the income on similar type of activities and the Revenue has accepted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Order of the CIT (A) in this regard. 13. With regard to ground No. 3, we do not find any independent adjudication in this regard and more so no specific ground was raised before the CIT (A) on this issue. We, therefore, of the view that this ground does not arise out of the order of the CIT (A). Morever, nothing is stated during the course of hearing, as to how this ground arise out of the order of the lower authorities. We, therefore, decline to adjudicate this ground and reject the same. 14. With regard to ground No.4 it is noticed that assessee has debited to P L account loss on sale of assets at ₹ 6,49,708/ -. The assessee company was asked to submit the details of the same and in response thereto, it was stated that the company was taken over by the assessee with assets and liabilities. At the time of take over, it was decided that fixed assets and debtors were to be realized and out of such realization, the creditors were to be paid. During the course of this process, the company had suffered a loss of ₹ 6,49,788/ -, of which details are given in para 10 of the assessment order. The assessee company was asked to produce the supporting bills for repairs a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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