TMI Blog2019 (6) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... re involved in providing the accommodation entries and are not involved in actual bullion business. Commission income which can be brought to tax in hands of the assessee in relation to its two paper concerns which are involved in providing the accommodation entries, it may be true that the margins in gemstones business may vary with that of the bullion business but the same cannot be a basis to hold that an entry provider in gemstones and an entry provider in bullion business is to be treated differently so far as determination of their commission income is concerned. No empirical data has been submitted to support the aforesaid contention and in absence thereof and given the fact that in both businesses, the role of the entry provider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee and making addition of ₹ 23,03,773/- on the basis of estimated gross profit by invoking the provisions of section 145(3) of the Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of ₹ 23,03,773/-. 2. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of the ld. AO, in making disallowance of salary and wages amounting to ₹ 36,83,887/-. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the disallowance of ₹ 36,83,887/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer who has in turned placed reliance on a decision relied upon by the assessee during the assessment proceedings. It was submitted by the ld. AR that when the assessee concern has been held to be a paper concern/entry provider, in that case, GP rate as applicable to a person who is actually involved in a bullion business cannot be applied. It was submitted that the AO has applied GP rate of 0.15% by comparing the assessee s case with that of M/s Mohan Lal Mahendra Kumar Jeweller who is the bullion trader. As against that, as per the finding of the ld. CIT(A) wherein he has held that one of the concerns of the assessee is a paper concern/entry provider, in such a scenario, profit rate as applicable to an entry provider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the majority of the sales made by the assessee were in cash and in the absence of proper verification, the books of accounts were rejected. Regarding the estimation of GP rate, it was submitted by the ld DR that the AO has applied the comparable case of M/s Mohan Lal Mahendra Kumar Jeweller which were brought to the notice of the Assessing Officer by the assessee himself and therefore, in the present proceedings, the assessee cannot be allowed to plead that the gross profit rate has been wrongly applied by the AO. It was further submitted that the ld CIT(A) while upholding the findings of the AO has also noticed that one of the concerns of the assessee is a paper concern which further substantiate the reasoning of the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made with another paper concern/entry provider. We agree with the said contention as commission income of an entry provider cannot be equated with the trading results of businessman who is actually carrying out bullion business and the right comparison would have been of another entry provider involved in bullion business. 8. For the purposes, the ld. AR has submitted that in case of Mahesh Khandelwal who was an entry provider for gemstones business, the Coordinate Bench (supra) has upheld the NP rate of 0.10% i.e, the estimate of net income @ 10 paisa per hundred. It was submitted that the gemstones business is a high margin business as compared to bullion business and therefore, entry provider in bullion business is accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foresaid contention and in absence thereof and given the fact that in both businesses, the role of the entry provider is largely similar in terms of providing accommodation entries in lieu of commission, we are unable to accept the aforesaid contention of the ld AR regarding scaling down or determining the commission income differently. 10. In the instant case, if we look at the net income so determined by the AO after making trading addition and disallowance of salary expense, it comes to ₹ 66,31,966 which gives a net profit rate of 0.12% which is comparable to another case of the entry provider, Mahesh Khandelwal wherein the Co-ordinate Bench has upheld estimate of net profit @ 0.10%. Besides, there is other income of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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