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2016 (9) TMI 1243 - ITAT MUMBAI

2016 (9) TMI 1243 - ITAT MUMBAI - TMI - Determination/estimation of commission income u/s. 144 r.w.s. 148 and 145 - Held that:- Assessee had already offered the same for taxation purpose but with rider of allowability of certain expense against same. Hence, the rate of 6% adopted by Assessing Officer was highly one. Hence, the commission income was to be taken @ 0.6% of sales turnover - Allowability of the deduction of rebate u/s.88 - additional ground - Held that:- According to assessee, as .....

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to allow the same as per fact and law. - Allowability of deduction u/s.24(b) of the Act on account of interest paid on housing loan - Held that:- This issue has been raised by way of addition ground before us. As stated above, this issue was taken before Assessing Officer who escaped the above deduction while computing the total income of assessee and even not given any comment for the same on merit. Being legal issue, it can be raised before us. It is maintainable, so, same is entertained .....

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ciples in computing profits. Once it was found that heroin seized formed part of stock-in-trade of assessee, it followed that the seizure and confiscation of such stock-in-trade had to be allowed as a business loss. Loss of stock-in-trade has to be considered as a trading loss. Thus we hold that addition is unjustified. Same should be allowed as business loss - Disallowance of long term capital gain - Held that:- Revenue authorities held that assessee failed to file the details. Hence, Asses .....

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ard speculation loss - Held that:- . Assessing Officer held that assessee failed to file the details. So, he treated the speculative income as normal income. During year, assessee earned the speculative profit of ₹ 10,073/-. Assessee has not given details, so, Revenue authorities were justified in disallowing the claim of assessee - not allowing the short term capital loss - Held that:- Assessee filed the details. Assessee stated that loss was taken place which is not in dispute, but, .....

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be assessed as short term capital gain. Being legal issue raised before us in the light of CBDT Circular, we admit this ground and restore this issue to the file of Assessing Officer to decide the same as per fact and law - Addition on account of claim of housing loan interest - Held that:- Assessee claimed interest on house loan u/s.24(b) which is already disallowed by Assessing Officer, hence, by disallowing the interest debited in capital account lead to double taxation which is against .....

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nts the details which were already in his possession. According to Revenue authorities, one thing is clear that assessee had invested in shares and securities which were not in dispute and all the shares were listed shares of company. Hence, it cannot be imagined that dividend received from Indian company was taxable. Therefore, it was requested to allow the exemption u/s.10(33) of the Act and treated the dividend income as exempt.In this background, we are of the view that this issue needs to b .....

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tive orders of Commissioner of Income-Tax (Appeals)-25, Mumbai. Since, all these appeals pertain to same group and on similar issue, so they are being disposed of by common order for the sake of convenience. 2. In ITA No.5029/Mum/2014 for A.Y. 2002-03, in case of Rakeshkumar M. Gupta, assessee has filed appeal on following grounds: ― 1. Addition of commission of ₹ 34,22,868/- on sales (a) The ld. Commissioner of Income Tax (Appeals) erred in facts and law in confirming the action of .....

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ely based on surmises and conjectures and without bringing on record any material to show that the appellant had infact earned such a commission at alleged higher rate of 6%. (c) The ld. Commissioner of Income Tax (Appeals) erred in facts and law in confirming the action of the Assessing Officer assuming the base of billing at ₹ 5,70,47,800/- against billing of ₹ 5,52,51,947/- recorded in the books of accounts and in not making any reference to bank book and statements impounded duri .....

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nstead of genuine business. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the rejection of books of account u/s.145. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing the deduction of expenses on ad-hoc basis instead of actual basis claimed by the appellant. 8. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not allowing the deduction of rebate u/s 88 claimed by the appellant in .....

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ct dated 18.03.2009 and other statutory notices u/s.142(1) from time to time, which were duly served on the assessee. During reassessment proceedings, Assessing Officer observed that assessee had not carried out any trading business of textiles, and was only engaged in the activity of issuing sales bills (Accommodation Bills). Considering the facts and circumstances of the case, books of accounts of assessee were rejected and assessment was completed on best judgment working out the net commissi .....

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ritten submissions, wherein CIT(A) observed that in the original appeal filed by assessee, assessee had raised several grounds, effectively only two points for determination of appeal i.e. (i) Reopening of assessment u/s. 147, (ii) determination/estimation of commission income of ₹ 32,51,725/- u/s. 144 r.w.s. 148 and 145 of the Act. The first appeal of assessee was dismissed by CIT(A) on both these points. In second round, during appellate proceedings, assessee has chosen not to press poin .....

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d as under: ―27. The discussion made in the preceding paras establishes the following facts: (i) Assessee has not carried out any Trading Business in Textiles (ii) Assessee has only been engaged in the activity of issuing Sales Bills (Accommodation Bills) whoever approaches him. (iii) For record purpose, assessee himself prepared purchase Bills by using the bills books got printed and kept with him from year to year or get generated from his computer. (iv) Assessee has operated several ban .....

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so called customers and retained commission there also. (vi) Assessee has also categorically stated in his statement recorded u/s. 131 on 23.2.2009 that he has not paid any brokerage or commission as all purchase bills are made by him. (vii) From the statement/documents found during the course of survey action and impounded, that commission earned varies from 2 to 4% and assessee has accounted only 1.15% in the form of G.P. in the accounts furnished with the return. However, the commission earne .....

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abrics activities on power looms in and around Bhiwandi. (ix) Assessee has not furnished details and proved that the debits made in the form of purchases, stock, expenses and Credits - sales, closing stock are genuine business transactions with documentary evidences. It is on record that nothing has been furnished inspite of giving number of opportunities. (x) The details furnished and accepted during the course of original assessment made on 29.3.2005 cannot be accepted as correct, genuine and .....

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3A and in statement u/s. 131 on 23.2.2009 do not amount to proving that assessee is carrying on business in textiles. (xii) Action u/s.133A at assessees premises were legally and properly carried out. Hence, assessee is bound by the finding and admission made in statement and reaffirmed on oath u/s.131 as discussed above. (xiii) Assessee has not proved the genuineness of debits in P & L A/c. such as opening stock, purchases and various expenses and credits such as sales, closing stock with v .....

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(xv) The huge cash balance as per Books and no actual cash found during the survey also goes to prove that cash withdrawn is given to sales parties after deducting commission which has been reaffirmed in the statement u/s.131 dt. 23.2.2009. (xvi) It is seen from the impounded documents/bills that sales bills issued are to the extent of ₹ 5,70,47,800/- as show caused in the notice/letter dt.12.6.2009. (xvii) In view of the facts unearthed during the course of Survey and confirmed on 23.3.20 .....

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vit and filing some ledger- account computer sheets of some parties (most of them are unsigned) through an Affidavit cannot be treated as a compliance to the notice u/s.142(1). (xix) The validity and correctness of old confirmation is 'Zero' on account of facts noticed and admitted during the course of Survey and the question of verification arises only when assessee furnish fresh evidences/confirmations and details. (xx) The assessee has himself admitted that all creditors in balance sh .....

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proprietory concerns, as discussed above. This also shows that assessee earned income in three places viz. (i) in Proprietory concern M/s. Manoj Mills, declared in the return (ii) commission retained while cash is given to so called customers and (iii) profit earned in fictitious proprietory concerns discussed above. (xxii) In the letter dt. 6.4.2009, assessee made statements that he purchases from Bhiwandi parties and payments are either through discounted cheques or cash. During the course of .....

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Assessee has made substantial investments in immovable properties. If assessee claims that his commission is only 1%, how he can make such huge investments. This fact also goes to show that asscssee's commission is much more than the so called 1%." 4.2 Based on above findings, Assessing Officer rejected the book results of assessee, and assessee's total commission income from (i) Accommodation bills issued in the name of proprietary concern M/s. Manoj Mills, & (ii) Commission ea .....

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3 = ₹ 32,51,725/-. 4.3 During previous appellate proceedings, assessee had questioned the estimates of Assessing Officer on two counts, (i) Estimation of turnover at ₹ 5,70,47,800/- by Assessing Officer based on sale bills found during survey, as against turnover of ₹ 5,52,51,947/- declared by the assessee; (ii) Rate of estimation of gross commission @7% by taking 4% on giving sales bills and 3% on purchase bills, though Assessing Officer had finally assessed such gross commiss .....

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e Department nor the assessee could actually support these claims objectively on the basis of any documents, and therefore the then Assessing Officer acted bonafidely on the basis of best of her judgment formed upon the reliable market information and adopted the rate of commission charged by assessee @7% which was quite fair and justified. The predecessors of CIT(A) after considering the arguments of assessee as well the Assessing Officer, and also the rates of presumptive taxation under variou .....

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as provided opportunity to appear and present its case. Accordingly, assessee appeared on 19.03.2014 and filed written submissions, along with paper book containing copy of ITAT order dated 14.08.2013, copy of assessment order, copy of acknowledgement of return of income, copy of financial statement with tax audit report, statement recorded u/s. 133A of the Act dated 13.02.2009 and statement recorded u/s. 131 of the Act dated 23.02.2009. The written submissions made by assessee are reproduced be .....

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's appeal. 4. The H'ble ITAT "H" Bench Mumbai vide order dated 14-08-2013 set aside the matter to the record of your honour [CIT (A)] with the directions as given by the Tribunal in the case of assessee's wife Smt. Hema R. Gupta. (Copy of the ITA T order is enclosed herewith as page no. 08 to 11 of the paper book.) Attentions is invited to page 3 para 3 of the said ITAT order which states as under: "3.. We have carefully perused the order of the Ld. CIT(A) and the copi .....

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assessee will represent its case before the Ld. CIT (A) without seeking any further adjournment. In our humble opinion, the issues deserves to be restored back to the file of the Ld. CIT (A). The assessee is directed to appear before the Ld. CIT (A) on 4th July, 2013. The Ld. CIT (A) is expected to give fair hearing to the assessee to present its case." 4.5 In this 'set aside' proceeding, it was submitted on behalf of assessee as under: ―2.1 At the outset, it is submitted tha .....

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petition of the entire 'write up' [pages 12 to 25 of the CIT(A) order], I am not narrating the entire scenario, but at the same time, without going into legality, stating the crucial facts for your honour's kind consideration. 3.1 I am an individual and has furnished the return of income declaring the total income of ₹ 1,93,070/-. The assessment was originally completed u/s 143 (3) at ₹ 2,05,080/-. Based on the subsequent survey action u/s 133A on 13-02-2009, the assessme .....

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-) Business Income determined 32,51,725/- Add: Income from other sources Undisputed 2,43,299/-* Less: Deduction under Chapter VIA (6,396/-) Taxable Income 34,88,617/- *treated as business income in the return of income 3.2 The A.O's application of 6% is totally incorrect in view of the following facts, which are specifically agreed upon/confessed by the Ld. A.O in para 27 of the assessment order. [your honour is requested to refer first 3 lines of the page 14 of the CIT (A) order] (i) 27 (i) .....

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#39;s Order) (Page 36. of the paper book) (iv) "4. That means you and your family concern did not have any 'trading' activities from the year 2000 onwards...... [page 2 of point no 4 of the statement recorded on 23-2-2009] (page 94. of the paper book) (v) "7. How do you generate income from these accommodation bills. Ans: I receive 1% commission on the gross amount of sales bills from the parties, which I am offering for taxation every year after deducting nominal expenses.&quo .....

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the impounded documents/bills that the sales bills issued are to the extent of ₹ 5, 70, 47,800 as show caused notice/letter dated 12-6-2009. [para xvi on page 37 of the ASSESMNET ORDEER]. (page 48 of the paper book) It means the AO himself has agreed that there was no actual business but the said amount represents only accommodation bills. 3.4. The A.O.'s estimation of 6% (proposed 7% based on commission of 4% on sales and 3% on purchases) is also factually incorrect since commission .....

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see is broadly on two points i.e (1) Estimating the Turnover and (ii) estimating the Gross profit rate on issuing Hawala Bills. 3.6 The turnover assessed by the A. 0. is ₹ 5, 70,47,800 as against the audited turnover of ₹ 5,51,51,947. The AO has stated nothing in the order as to now he has worked out the said figure except that the bills of the said amounts were found during survey. It is submitted that there is nothing on records that the bills so found were actually has been used b .....

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d herein above also indicate that I was earning only 1% commission on the amount of accommodation bills. 4. If the basis as discussed above is applied, my business income would be computed under: 1% of accommodation bills of ₹ 5,52,51947 = ₹ 5,52,619/- Less : Bank interest (indisputably for above activities) (Rs. 1,54,655/-) Less : 5% of total commission allowed by A0 (Rs. 27,626/-) Business income ₹ 3,70,3381- 5. It is therefore, requested to kindly consider the above facts in .....

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bate while making the tax working. I am making the necessary application before the A.O. Your honour's direction in this regard will help me getting justice on this issue as well. 7. I am confident that your honour will accede to my above requests which are purely on facts. In case your honour feels otherwise or any need for support of judicial pronouncements, I will be most happy to submit the same on hearing from your honour. 4.6 A remand report was also called from the Assessing Officer a .....

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by the A.O. in the assessment order for A. Y. 2002-03 to 2008-09, the facts in briefjust,5'ing as to why the rate of estimation is taken at 4% on gross vales and 3% on purchases by the A.O.is as under: Findings in the course of survey: In the course of survey on 13-2-2009 the assesse stated that he has not done any trading business in textiles from the year 2000 onwards but only issued accommodation sales bills. It was found and established that the modus operandi of the assessee's busi .....

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e of survey that for record purposes he has prepared purchase bills printed and prepared or generated in computer: Further it was also stated that the bills kept blank in between in the bill books are for the purposes of issuing back dated bills All these facts and statements were reaffirmed again by the assessee on oath on 23-2-2009 in the statement recorded u/s. 131 of the IT Act. Similarly, statements were recorded on oath u/s. 131 of Shri Mohit Gupta, son of the assessee and Prop. M/s. Astha .....

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the assessee had charged commission from 1 to 40% on the sales bills issued. It was also affirmed by the assessee that there are no expenses including commission expenses. Even though the assessee has admitted that he receives 1% commission, the survey team had found that the assessee is in the habit of issuing back dated bills for which the percentage of commission is very high. It was also found that many accommodation bills were issued to different parties having the same bill number. The as .....

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ent in the premises and even he was not able to provide with any documents which prove that the assessee was having any ―trading activity Further, in the course of survey, bill books which were used by the assessee for preparing havala purchases were found and impounded in respect of the following concerns namely (1) M/s. N.M. Corporation; (2) M/s. Payal Industries; (3) M/s. Deep Enterprises; (4) M/s. Rich Fabrics, (5) M/s. Kajol Impex; (6) M/s. Ash Overseas, (7) M/s. Shiv Textiles; (8) M/ .....

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. Basis of rate of estimation: Most importantly it is mentioned here that assessee has himself admitted that he is in the business of giving accommodation entries to various entities as stated in the order. To issue the said accommodation entries he used to charge commission for the same. The rate of commission varies from party to party and as per the needs of the party. For the same, assessee used to get 4 to 7% of the bill amount as accommodating charges. This amount he used to receive in cas .....

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s ₹ 5, 70,47,800/- and for the A. Y. 2007-08, the turnover offered was ₹ 7,41,82,3461- whereas the actual turnover was ₹ 10,57,05,852/-. The assessee was given ample opportunity to submit all the details for completing assessment proceedings, but he has not availed the opportunities. Further, the assessee has made substantial investment in immovable properties and by claiming that his commission is only 1%, such huge investments cannot be made which fact also goes to show that .....

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se of survey proceedings at the assessee's premises. It is pertinent to mention here that in the course of re-opened assessment proceedings for the A.Ys. 2003-04 to 2006-07 and A.Y. 2008-09 before the undersigned, the assessee totally failed to appear except for entering into correspondences which has been the constant practice of the assessee as noted in the past as well wherein instead of complying with the legal notices the assessee files various applications having no substance in that. .....

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ted as conclusive proof of the partial sales and purchases purported to have been made by the assessee as the sales and purchases purported to have been made as affirmed in the affidavit have not been substantiated by supplementary evidences. The filing of affidavit can only be taken as an afterthought to circumvent the proceedings initiated against the assessee. The Ld CIT(A) will appreciate that the assessee has himself admitted that he is in the business of giving accommodation entries and re .....

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ng accommodation entries but still he has done the same to make huge profit in a short period of time and at the same time also used his family members and their name lending in issuing the accommodation entries. The assessee was operating in the name of various fictitious firms and has also opened various accounts with various banks and many branches to transfer fund from one bank to another bank. For doing all these thing he was trying to avoid the eyes of law. Therefore, in my view, the Asses .....

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nse to our written submission before your honour received from the A.O. At the outset, the major dispute raised in the written submission was in respect of the determination/estimation of the income by: i) estimating the higher turnover (based on bills found at the time of survey,) rather than on the basis of books. ii) estimating the income 4%, 6% and 7% of the sales bills. iii) estimating income @ 3% on the purchases turnover routed through the accounts operated by family concerns by treating .....

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bmission, the remand report from Ld. A.O. is only on following two points: 1) Finding of survey action that the appellant had been engaged in issuing accommodation bills in page 1 to 3 of the remand report. 2) Basis of rate of estimation in page 3 to 6 of the remand report. The Ld. A. 0. failed to appreciate that the point no (1) above was no more disputed. At the outset, it is submitted that the Ld. A.O. just narrated the same facts which had already been elaborated in the assessment orders and .....

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ting summary of the figures considered in assessment viz-a viz book figures for the ready reference.). The Ld. A.O. in remand report has only mentioned the assessment of higher turnover for AY 2002-03 and AY 2007-08 and kept silent for other years. It is humbly submitted that the income in issuing accommodation bills occurred only in case payment against the bills are received and the bills so issued are used by the buyer of said bills. The books of accounts duly audited are the conclusive evide .....

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sales turnover as against 1% admitted by the appellant. The Ld. A.O. has applied different rates on sales turnover for assessing commission income on accommodation bills @ 6% for AY.2002-03, 7% on A.Y.2007-08 and 4% for rest of the years without putting on records the basis why different approach have been adopted. The Ld. A.O. mentioned that that it was found from records that commission ranging from 4% to 7% have been earned, but no documentary evidence was provided in respect of said alleged .....

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pellate authority and also directed to allow certain administrative expenses. However, the matter again reached before the Tribunal on the grounds of reducing the turnover made among the sister concern but the appeal dismissed since the ground was raised first time before the ITAT. It is submitted that the rate of commission always higher in steel products where the taxes like sales tax are involved and there always be compliance cost. In our case the appellant was dealing in textiles fabrics wh .....

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to show purchases. The AO has treated those accounts as fictitious concerns and also applied 3% rate as commission. It is submitted that it is undisputed fact that the Sales from the fictitious accounts are shown as purchase in Manoj Mills (principal proprietory concern) and that the purchases bills in the principal concerns are made by the appellant himself Therefore, if any commission income is estimated on sales from fictitious concerns, it should be allowed principal concerns. There cannot .....

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actions as business (transaction detailed whereof were seized department and not shares with the appellant despite request). It is submitted that the appellant though has shown the same in the return of income as capital loss, yet the s should be assessed as business loss in view of rejection of books of accounts. In A Y 2009-10, the assessee also made loss of ₹ 99,78,290 in share business (shown in return as business loss), details whereof were attached with the written submission a1og wi .....

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as forced to obtain the credit facilities from banks in view of withholding the amount of cheques given for, discounting of 1.40 crores by Mr. Madanlal Bagecha. Therefore, the amount obtained from banks/institution was used in business to run the show. The respective records were seized by the department at the time of survey and in the custody of the department. Therefore the interest on unsecured loans from banks and other certain administrative expenses should be allowed to assess the fair in .....

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. We have already enclosed the evidence of housing loans obtained with the written submission. Therefore, It is humbly requested to either allow the housing loans interest since the statutory provisions being incentive in nature or to direct the AO to allow the same after due verification. It is also worthwhile to note that the Ld. A.O. not only not allowed the interest paid on housing loan to the extent of ₹ 150000/- but also added back in the income from the other sources by ₹ 422, .....

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ll known fact that the shares are held in 'd'mat form' and dividends were directly credited to designated bank account showing the name of the company in bank statement. The said statement were already in the possession of the A. 0. but he did not try to ascertain the same which he could have simply verify from the observation of the bank account. Therefore, it is requested to allow the dividend income as exempt income u/s 10. (A Y 2006-07 ₹ 10841/-) ix) treating the amount of .....

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39;A' enclosed. It is also worthwhile to submit that the assessment of income in the case of appellant and family members were made at the substantial higher amount, which was not reciprocated by the wealth/undisclosed expenses. The A.O. only observed that the appellant has accumulated of immovable properties, but failed to appreciate the fact that these properties were obtained with housing loans. As of now the loans are more than the value of properties. Thus the income so assessed are err .....

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sion and submitted that finally the dispute between the AO and the appellant is broadly on two points i.e. (i) Estimating the Turnover at ₹ 5,70,47,800/- on the basis of sale bills found during survey as against audited turnover of ₹ 5,5 1,51,947/- and (ii) estimating the Gross profit rate on issuing Hawala Bills @ 6% as against 1% claimed as earned by the appellant. Accordingly, the appellant has submitted revised computation of his income at ₹ 3,70,338/-. Here it is pertinent .....

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bills, and not on account of any genuine trading turnover as claimed in his own retraction of the statements u/s 133A/131. It also shows that the appellant is changing his statement again and again, and hence the appellant's present submissions cannot be accepted on the face of it. Further, there is no documentary evidence submitted by the appellant to prove that his commission on accommodation bills was not more than 1%. Therefore, the appellant's present submission seems to be nothing .....

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ents found during the course of survey, and the commission earned in cash while handing over the money to customers and in fictitious supplier's accounts were never accounted for. The AO had proposed to assess the gross commission @7% of turnover in the show cause notices, but finally assessed the gross commission only @6%. In this regard, it is an established fact that the appellant himself used to prepare the purchase bills of his various fictitious entities corresponding to the accommodat .....

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e Court in the case of CST vs. H.M. Esufali H.M. Abdulali [1973] 90 ITR 271 (SC), in case of estimation, some guess work is necessary and inevitable and which cannot be substituted by any other authority, if the estimation is based on some rational facts. The Hon'ble Supreme Court has also held in said case that "The assessee cannot be permitted to take advantage of his own illegal acts. It was his duty to place all facts truthfully before the assessing authority. If he fails to do his .....

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anctity. In these circumstances, the best judgment assessment made by the AO cannot be questioned. The Hon'ble Supreme Court has further held in aforesaid case that "If the estimate made by the assessing authority is a bonafide estimate and is based on a rational basis, the fact that there is no good proof in support of that estimate is immaterial. Prima facie, the assessing authority is the best judge of the situation. It is his "best judgment" and not of anyone else". I .....

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y commands higher profit margin than legal activities, as the risks involved to the person engaged in such illegal activity are manifold. In this context, the I.T. Act, 1961 itself provides presumptive rates of tax for small businessman carrying on legal activities but not required to maintain books, ranging between 5 to 10% under various provisions of the Act, as shown in the previous appellate order of my predecessor. The fact that the assessee has made substantial investments in immovable pro .....

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ainst turnover of ₹ 5,52,51,947/- declared by the appellant; I am of the opinion, that once the books of accounts of appellant are rejected, the entries made in the books do not have any sanctity and the AO was justified in estimating the turnover on the basis of material in her possession. 5. In the result, the appeal is dismissed. 5. Before us, it was submitted on behalf of assessee that CIT(A) erred in confirming the action of Assessing officer in computing the commission @ 6% on billin .....

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o show that assessee had in fact earned such a commission at alleged higher rate of 6%. Further, CIT(A) erred in confirming the action of Assessing Officer assuming the base of billing at ₹ 5,70,47,800/- against billing of ₹ 5,52,51,947/- recorded in the books of accounts and not making any reference to bank book and statements impounded during course of survey. 5.1 Regarding turnover, stand of assessee has been that in accommodation business turnover to be computed on receipts basis .....

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only on making the cash payment to party after receipt of cheque. If the amount of cheque not realize, then no commission income will be earned. Hence, turnover recorded in books of account and bank statement is to be treated as turnover. Hence, turnover reported by assessee required to be considering for determining the commission income. The issue of determination of turnover in case of accommodation transaction comes before the ITAT in case of Sanjay Kumar Garg vs. ACIT [2011] 12 taxmann.com .....

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Therefore, we do not find any infirmity in the order passed by the ld. CIT (A) that the amount deposited in the account of dummy concerns cannot be treated as income of the assessee. Therefore, the ld. CIT (A), in our considered opinion, is justified in treating the cash deposited in various bank accounts controlled and operated by the assessee as the turnover of the accommodation entry business and commission income has to be estimated thereon. 5.2 In this background, ld. Authorized Representa .....

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rate of presumptive profit referred by the CIT(A) could not be considered in case of accommodation business. Assessee in his statement dated 13/02/2009 & 23/02/2009 stated that commission income is earned @ 1% on the sales also claimed certain expense threon. The rate mentioned by assessee is the rate which is prevailing in this line. In this regard, ld. Authorized Representative submitted that this issue of determination of rate of commission in case of accommodation transaction arose befo .....

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mission earned was l0p i.e., 0.10 per cent. The ld. CIT (A) had taken the commission at 1 per cent as against 1.75 per cent applied by the Assessing Officer for which no evidence during the course of survey was found. The ld. CIT(A) has also noted that there was no clear standard rate of commission for accommodation activities. According to him the people who are engaged in this type of business would not charge less than 1 per cent on the bill amount as done in the case of brokerage on real est .....

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ted parties, negotiations of rates, registration of sale deeds etc. whereas in case of bogus entries providers no such activities are involved. Interested party gives cash to entry provider which is deposited in bank account and the entry provider issues cheque. Hence the transactions of bogus entry providers cannot be compared with the transactions of real estate business transactions. He has to ensure the nature of the property and has to satisfy both seller and purchaser. The services rendere .....

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neither the ld. CIT(A) nor the Assessing Officer had given any comparable case wherein commission at the rate of 1.75 per cent as taken by the Assessing Officer or 1 per cent adopted by the ld. CIT(A) has been admitted by other assessees engaged in business of bogus provider. Therefore, in the absence of any such material on record, the statement given by the assessee on oath during the course of survey proceedings has to be given credence. The assessee has floated the bogus concerns and has co .....

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re has to be incurred which has been stated to be 5p during the course of survey. Therefore, credit of 5p out of 25p received as commission has to be allowed. Therefore, the Assessing Officer is directed to estimate commission income by applying 0.2 per cent net commission on turnover determined by the Ld. CIT (A) for both the assessment years as against 1 per cent taken by him. 6.1 We find that Tribunal in case of Sanjay Kumar Garg vs. ACIT (supra) held that rate of commission cannot be more th .....

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ly examined the various Orders in the case of different assessees' it has become amply clear that in these type of activities brokers are only concerned with their commission on the value of the transactions. Now the question comes what would be the reasonable percentage of the commission on the total turnover ? The assessee has also made out a case that the customers do not come directly to him and they come through a sub-broker who also charge a particular share of commission. In all the j .....

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p; 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 co .....

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ission to be earned on turnover is reasonable at 0.6%. We hold so. 6.3 Assessing Officer has allowed only ad hoc expenses @ 5% of commission income, without prejudice to merit of issue, we are not inclined to interfere in the finding of Assessing Officer on this issue. 7. Next issue is raised by way of additional ground. The issue is with regard to allowability of the deduction of rebate u/s.88 of the Act claimed by assessee in return of income. According to assessee, as per Section 88, assessee .....

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per fact and law. 8. As a result, appeal filed by assessee is partly allowed. 9. In ITA No.5030/Mum/2014 for A.Y. 2003-04 in case of Rakeshkumar M. Gupta, all grounds are similar to that of A.Y.2002-03. It is only stated that only difference instead of commission of 6% on sale, Assessing Officer computed the commission income @4% on sale and 3% on purchase. Learned Authorized Representative submitted that following the submission in A.Y. 2002-03 issue should be decided. We have discussed and de .....

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e has been taken by way of additional ground regarding deduction u/s.88 of the Act. Similar issue has been restored by us to Assessing Officer in A.Y. 2002-03 vide para 7. Facts being similar, so following same reasoning, this issue is restored to Assessing Officer with similar directions. 11. As a result, appeal filed by assessee is partly allowed. 12. In ITA No.5031/Mum/2014 for A.Y. 2004-05 in case of Rakeshkumar M. Gupta, the issue of commission income on turnover, we find that we have discu .....

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ional ground regarding deduction u/s.88 of the Act. Similar issue has been restored by us to Assessing Officer in A.Y. 2002-03 vide para 7. Facts being similar, so following same reasoning, this issue is restored to Assessing Officer with similar directions. 14. As a result, appeal filed by assessee is partly allowed. 15. In ITA No.5032/Mum/2014 for A.Y. 2005-06 in case of Rakeshkumar M. Gupta, the issue of commission income on turnover, we find that we have discussed and decided this issue in p .....

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duction u/s.24(b) of the Act on account of interest paid on housing loan. During the year, assessee obtained home loan from Standard Chartered Bank and GE Money Housing Finance and paid interest of ₹ 1,47,679/- thereon claimed the deduction of same on account of interest on housing loan u/s.24(b) of the Act. However, Assessing Officer escaped the above deduction while computing the total income of assessee and even not given any comment for disallowing the same. Assessee had obtained the f .....

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entertained at this stage. Since on facts there is no finding of lower authorities, so, this issue is restored to Assessing Officer with direction to decide the same as per fact and law after giving opportunity of hearing to assessee. 17. As a result, appeal filed by assessee is partly allowed. 18. In ITA No.5033/Mum/2014 for A.Y. 2006-07 in case of Rakeshkumar M. Gupta, the issue of commission income on turnover, we find that we have discussed and decided this issue in para 6 of this order whe .....

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,00,000/- advance given to Madanlal Begrecha. Learned Authorized Representative submitted that Assessing Officer has disallowed the deduction on ground that assessee had not substantiated the claim. But, Assessing Officer failed to consider that loans are opening balance which were accepted in 2005-06 and further to substantiate the claim assessee vide submission dated 06.12.2010 stated as under (Refer Page No.98 of paper book of A.Y.2006-07): ― 8. I had taken home loan from Standard Chart .....

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lowed. 19.1 Assessee submitted that assessee had provided all the details available with him and also the details are lying with Assessing Officer. Hence, Assessing Officer cannot state that assessee failed to substantiate the claim. So, the deduction claimed by assessee is requested to be allowed. In fact, this issue is with regard to deduction of ₹ 1,40,00,000/- advance given to Madanlal Bagrecha to substantiate same. The stand of assessee has been that assessee had given cheques of S .....

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essee which required to be allowed to assessee. Assessing Officer and CIT(A) observed that assessee had given cash loan of ₹ 1,40,00,000/- to Shri Madanlal Bagrecha and source of same was unexplained. Hence, they made addition of ₹ 1,40,00,000/- u/s.69A of the Act. The stand of assessee has been that it is a business loss and required to be allowed and same should not be added because assessee had given advances in normal business practice which was lost. Hence, it was submitted to t .....

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trade i.e. land. Even if, it is assumed that assessee needs this cash for accommodation business, then also it is allowable expenditure as it is directly linked with the business activity even though the business activity is illegal. Learned Authorized Representative also relied on the decision of Dr. T. A. Quereshi vs. CIT [2006] 157 taxman 514 (SC), wherein heroin formed part of stick-in-trade of assessee. In view of said finding, the Tribunal allowed assessee's claim of deducting the loss .....

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ection 37 of the Act has really nothing to do with the instant case as it was not a case of business expenditure, but of business loss. Business losses were allowable on ordinary commercial principles in computing profits. Once it was found that heroin seized formed part of stock-in-trade of assessee, it followed that the seizure and confiscation of such stock-in-trade had to be allowed as a business loss. Loss of stock-in-trade has to be considered as a trading loss. Consequently, the impugned .....

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milar issue arose in A.Y.2005-06, which has been discussed and restored to Assessing Officer by us vide para 16 of this order. Facts being similar, so following same reasoning, this issue restored to Assessing Officer with similar direction. 21. As a result, appeal filed by assessee is partly allowed. 22. In 5034/Mum/2014 for A.Y.2007-08 in case of Rakeshkumar M. Gupta, the issue of commission income on turnover, we find that we have discussed and decided this issue in para 6 of this order where .....

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lar issue arose in A.Y.2005-06, which has been discussed and restored to Assessing Officer by us vide para 16 of this order. Facts being similar, so following same reasoning, this issue restored to Assessing Officer with similar direction. 23. Next issue is with regard to disallowance of long term capital gain. Revenue authorities held that assessee failed to file the details. Hence, Assessing Officer treated gain as trading business income. In this regard, the stand of assessee has been that al .....

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fficer held that assessee failed to file the details. So, he treated the speculative income as normal income. During year, assessee earned the speculative profit of ₹ 10,073/-. Assessee has not given details, so, Revenue authorities were justified in disallowing the claim of assessee. Same is upheld. 26. Next issue as raised by way of additional ground is with regard to not allowing the short term capital loss of ₹ 8,94,016/-. Assessee filed the details. Assessee stated that loss was .....

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2016 investment in short term capital gain be assessed as short term capital gain. Being legal issue raised before us in the light of CBDT Circular, we admit this ground and restore this issue to the file of Assessing Officer to decide the same as per fact and law after providing due opportunity of being heard to assessee. 27. As a result, appeal filed by assessee is partly allowed. 28. In ITA No.5035/Mum/2014 for A.Y.2008-09 in case of Rakeshkumar M. Gupta, the issue of commission income on tur .....

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ue is with regard to disallowance of interest of housing loans of ₹ 1,50,000/-. Similar issue arose in A.Y.2005-06, which has been restored to Assessing Officer by us vide para 16 of this order. Facts being similar, so following same reasoning, these issues are restored to Assessing Officer with similar direction. 30. Next issue in this year is with regard to treating the speculative income as normal income and accordingly not giving the set off of carry forward speculation loss. Assessing .....

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to Assessing Officer with similar direction. 32. Ground no.4 in A.Y. 2008-09 is with regard to addition of ₹ 4,22,432/- made on account of claim of housing loan interest. According to Revenue authorities, assessee failed to file the details. Hence, amount debited in capital account amounting to ₹ 4,22,432/- is not allowable expenditure and accordingly same was added. According to assessee, Assessing Officer made addition on assumption that assessee had claimed interest payment on ho .....

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mere assumption. Now, the assessee had claimed house loan interest. Assessee claimed interest on house loan u/s.24(b) of the Act amounting to ₹ 1,50,000/- which is already disallowed by Assessing Officer, hence, by disallowing the interest debited in capital account lead to double taxation which is against the law of taxation. Hence, requested that disallowance made by Assessing Officer be deleted. According to the contention of assessee, when expenses were not claimed at all, then same co .....

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no.13 in this year is with regard to treating the dividend income of ₹ 18,400/- as taxable income. Revenue authorities observed that assessee failed to filed the details. Hence, dividend is taxable under the head ‗other source . The stand of assessee is that as per Section 10(33) of the Act dividend income cannot be taxable. In present case, Assessing Officer has not disputed that the income was dividend. He just wants the details which were already in his possession. According to Re .....

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the matter is restored to Assessing Officer with direction to decide the same as per fact and law after providing due opportunity of being heard to assessee. 34. As a result, appeal filed by assessee is partly allowed. 35. In ITA No.5036/Mum/2014 for A.Y. 2009-10 in case of Rakeshkumar M. Gupta, the issue of commission income on turnover, we find that we have discussed and decided this issue in para 6 of this order wherein we held that 0.6% commission on turnover is reasonable. Facts being simil .....

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8,478/- respectively and now the loss was ₹ 99,78,290/-. Similar issue arose in A.Y. 2007-08, which has been restored to Assessing Officer by us vide para 26 of this order. Facts being similar, so following same reasoning, these issues are restored to Assessing Officer with similar direction. 37. Next issue is with regard to disallowance of interest of housing loans of ₹ 1,50,000/-. Similar issue arose in A.Y.2005-06, which has been restored to Assessing Officer by us vide para 16 of .....

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ase of Rakeshkumar M. Gupta (HUF), the issue of commission income on turnover, we find that we have discussed and decided this issue in para 6 of this order wherein we held that 0.6% commission on turnover is reasonable. Facts being similar, so following same reasoning, issue is decided accordingly. 39.1 Next issue is with regard to ad hoc disallowance of expenses. We have discussed and decided this issue against assessee in A.Y.2002-03 vide para 6.3 of this order. Facts being similar, so follow .....

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keshkumar Gupta, the issue of commission income on turnover, we find that we have discussed and decided this issue in para 6 of this order wherein we held that 0.6% commission on turnover is reasonable. Facts being similar, so following same reasoning, issue is decided accordingly. 42.1 Next issue is with regard to ad hoc disallowance of expenses. We have discussed and decided this issue against assessee in A.Y.2002-03 vide para 6.3 of this order. Facts being similar, so following same reasoning .....

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ue of commission income on turnover, we find that we have discussed and decided this issue in para 6 of this order wherein we held that 0.6% commission on turnover is reasonable. Facts being similar, so following same reasoning, issue is decided accordingly. 45.1 Next issue is with regard to ad hoc disallowance of expenses. We have discussed and decided this issue against assessee in A.Y.2002-03 vide para 6.3 of this order. Facts being similar, so following same reasoning, this issue is decided .....

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come on turnover, we find that we have discussed and decided this issue in para 6 of this order wherein we held that 0.6% commission on turnover is reasonable. Facts being similar, so following same reasoning, issue is decided accordingly. 48.1 Next issue is with regard to ad hoc disallowance of expenses. We have discussed and decided this issue against assessee in A.Y.2002-03 vide para 6.3 of this order. Facts being similar, so following same reasoning, this issue is decided against assessee. 4 .....

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we have discussed and decided this issue in para 6 of this order wherein we held that 0.6% commission on turnover is reasonable. Facts being similar, so following same reasoning, issue is decided accordingly. 51.1 Next issue is with regard to ad hoc disallowance of expenses. We have discussed and decided this issue against assessee in A.Y.2002-03 vide para 6.3 of this order. Facts being similar, so following same reasoning, this issue is decided against assessee. 52. Next issue has been taken b .....

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this issue in para 6 of this order wherein we held that 0.6% commission on turnover is reasonable. Facts being similar, so following same reasoning, issue is decided accordingly. 54.1 Next issue is with regard to ad hoc disallowance of expenses. We have discussed and decided this issue against assessee in A.Y.2002-03 vide para 6.3 of this order. Facts being similar, so following same reasoning, this issue is decided against assessee. 55. Next issue has been taken by way of additional ground reg .....

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order wherein we held that 0.6% commission on turnover is reasonable. Facts being similar, so following same reasoning, issue is decided accordingly. 57.1 Next issue is with regard to ad hoc disallowance of expenses. We have discussed and decided this issue against assessee in A.Y.2002-03 vide para 6.3 of this order. Facts being similar, so following same reasoning, this issue is decided against assessee. 58. Next issue has been taken by way of additional ground regarding deduction u/s.88 of the .....

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% commission on turnover is reasonable. Facts being similar, so following same reasoning, issue is decided accordingly. 60.1 Next issue is with regard to ad hoc disallowance of expenses. We have discussed and decided this issue against assessee in A.Y.2002-03 vide para 6.3 of this order. Facts being similar, so following same reasoning, this issue is decided against assessee. 61. Next issue has been taken by way of additional ground regarding deduction u/s.80C of the Act. Similar issue has been .....

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peal filed by assessee is partly allowed. 64. In ITA No.5026/Mum/2014 for A.Y.2007-08 in case of Mohit Rakeshkumar Gupta, the issue of commission income on turnover, we find that we have discussed and decided this issue in para 6 of this order wherein we held that 0.6% commission on turnover is reasonable. Facts being similar, so following same reasoning, issue is decided accordingly. 64.1 Next issue is with regard to ad hoc disallowance of expenses. We have discussed and decided this issue agai .....

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ound is with regard to treating the dividend income of ₹ 26,391/- as taxable income. Similar issue arose in A.Y. 08-09 vide para no.30.1. Facts being similar, so following same reasoning we are of the view that this issue needs to be analysed in the facts of the case as prayed by assessee. So, the matter is restored to Assessing Officer with direction to decide the same as per fact and law after providing due opportunity of being heard to assessee. 67. Next issue has been taken by way of a .....

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ue in para 6 of this order wherein we held that 0.6% commission on turnover is reasonable. Facts being similar, so following same reasoning, issue is decided accordingly. 69.1 Next issue is with regard to ad hoc disallowance of expenses. We have discussed and decided this issue against assessee in A.Y.2002-03 vide para 6.3 of this order. Facts being similar, so following same reasoning, this issue is decided against assessee. 70. Next issue is with regard to disallowance of interest of housing l .....

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ng same reasoning, this issue restored to Assessing Officer with similar direction. 72. Next issue has been taken by way of additional ground regarding deduction u/s.80C & 80D of the Act. Similar issue has been restored by us to Assessing Officer in A.Y. 2002-03 vide para 7. Facts being similar, so following same reasoning, this issue is restored to Assessing Officer with similar directions. 73. As a result, appeal filed by assessee is partly allowed. 74. In ITA No.5028/Mum/2014 for A.Y.2009 .....

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ollowing same reasoning, this issue is decided against assessee. 75. Next issue has been taken by way of additional ground regarding deduction u/s.80C of the Act. Similar issue has been restored by us to Assessing Officer in A.Y. 2002-03 vide para 7. Facts being similar, so following same reasoning, this issue is restored to Assessing Officer with similar directions. 76. As a result, appeal filed by assessee is partly allowed. 77. In ITA No.5011/Mum/2014 for A.Y.2002-03 in case of Hema Rakeshkum .....

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issue is decided against assessee. 78. Next issue has been taken by way of additional ground regarding deduction u/s.88 & 88B of the Act. Similar issue has been restored by us to Assessing Officer in A.Y. 2002-03 vide para 7. Facts being similar, so following same reasoning, this issue is restored to Assessing Officer with similar directions. 79. As a result, appeal filed by assessee is partly allowed. 80. In ITA No.5013/Mum/2014 for A.Y.2003-04 in case of Hema Rakeshkumar Gupta, the issue o .....

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nst assessee. 81. Next issue has been taken by way of additional ground regarding deduction u/s.88 & 88C of the Act. Similar issue has been restored by us to Assessing Officer in A.Y. 2002-03 vide para 7. Facts being similar, so following same reasoning, this issue is restored to Assessing Officer with similar directions. 82. As a result, appeal filed by assessee is partly allowed. 83. In ITA No.5012/Mum/2014 for A.Y.2004-05 in case of Hema Rakeshkumar Gupta, the issue of commission income o .....

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t issue has been taken by way of additional ground regarding deduction u/s.88 & 88C of the Act. Similar issue has been restored by us to Assessing Officer in A.Y. 2002-03 vide para 7. Facts being similar, so following same reasoning, this issue is restored to Assessing Officer with similar directions. 85. As a result, appeal filed by assessee is partly allowed. 86. In ITA No.5014/Mum/2014 for A.Y.2005-06 in case of Hema Rakeshkumar Gupta, the issue of commission income on turnover, we find t .....

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n by way of additional ground regarding deduction u/s.88 & 88C of the Act. Similar issue has been restored by us to Assessing Officer in A.Y. 2002-03 vide para 7. Facts being similar, so following same reasoning, this issue is restored to Assessing Officer with similar directions. 88. As a result, appeal filed by assessee is partly allowed. 89. In ITA No.5015/Mum/2014 for A.Y.2006-07 in case of Hema Rakeshkumar Gupta, the issue of commission income on turnover, we find that we have discussed .....

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l ground regarding deduction u/s.80C & 80D of the Act. Similar issue has been restored by us to Assessing Officer in A.Y. 2002-03 vide para 7. Facts being similar, so following same reasoning, this issue is restored to Assessing Officer with similar directions. 91. As a result, appeal filed by assessee is partly allowed. 92. In ITA No.5016/Mum/2014 for A.Y.2007-08 in case of Hema Rakeshkumar Gupta, the issue of commission income on turnover, we find that we have discussed and decided this is .....

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eduction u/s.80C & 80D of the Act. Similar issue has been restored by us to Assessing Officer in A.Y. 2002-03 vide para 7. Facts being similar, so following same reasoning, this issue is restored to Assessing Officer with similar directions. 94. As a result, appeal filed by assessee is partly allowed. 95. In ITA No.5017/Mum/2014 for A.Y.2008-09 in case of Hema Rakeshkumar Gupta, the issue of commission income on turnover, we find that we have discussed and decided this issue in para 6 of thi .....

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