TMI Blog2018 (9) TMI 1989X X X X Extracts X X X X X X X X Extracts X X X X ..... erfere with the same. Estimating of income of the assessee @ 2% as against 10% made by A.O. on the aggregate unexplained cash deposits in the bank accounts - AY 2011-12 - HELD THAT:- We are of the view that the estimate adopted by the ld. CIT(A) @ 2% of total deposits is excessive and the contention of the ld. AR that income from these deposits is 0.15% is also on very lower side which is also not acceptable. Therefore, taking a balancing and reasonable approach, we direct the AO to estimate the commission income from these deposits which are mainly pertaining to the business of discounting of cheques/DD @ 0.50% of total deposits covering up all the possible leakages of Revenue in this regard. Conclusion drawn by the ld. CIT(A) is modified. - ITA No.2284/Ahd/2015/SRT & C.O No.167/Ahd/2015/SRT, ITA No.2285/Ahd/2015/SRT & C.O No.168/Ahd/2015/SRT - - - Dated:- 7-9-2018 - SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER For the Appellant : Shri Kiran K. Shah, C.A For the Revenue : Shri J.K.Chandnani, Sr. D.R ORDER PER C.M.GARG, JUDICIAL MEMBER: These two appeals have been filed by the Revenue and the Cross Objections (C.Os) have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in Law, the Ld CIT(A) has erred in applying the decision of the Hon'ble ITAT, Mumbai in the case of M/s. Gold Star Finvest (P) Ltd Vs ITO (reported in 57 SOT 0409) for the estimation of commission as the facts of instant case are different. 3. On the facts and circumstances of the case and in Law, the Ld. CIT (A) has not appreciated the facts that, the AO has rightly justified his estimation of commission @ 10% by rejecting books result u/s. 145(3) of the Act as the assessee failed to produce books of account, bills, vouchers as that accommodation entries can be of different types and the quantum of commission will depend on the nature of accommodation entries provided, the benefit derived therefrom and the logistics / paperwork etc., involved. 4. On the facts and circumstances of the case and in Law, the Ld CIT(A) ought to have upheld the order of the A.O. It is therefore, prayed that the order of the Ld. CIT (A) may be set- aside and that of the A.O. may be restored. 5. The grounds raised by the Assessee in C.O No.168/Ahd/2015/SRT read as follows: 1. The learned CIT '(A) grossly erred in confirming the addition to the extent of ₹ 24,37,400/- in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epted contentions of the assessee but reduce estimation of income to @ 2% of total amount of accommodation entries which was also not justified and the same may kindly be reduced to either 0.25% as per ratio of the order of ITAT, Surat dated 23.03.2018 in ITA No.2287/Ahd/2015 for AY 2011-12 and C.O of the assessee may kindly be allowed. 9. Placing rejoinder to the above, the ld. DR submitted that the facts and circumstances of the present case are quite distinct and dissimilar to the facts of the case of Shri Rameshchandra Rangildas Mehta order dated 23.03.2018 (supra) and the same cannot be applied blindly to the present case. 10. First of all, from the relevant part of the first appellate order, we observe that the ld. CIT(A) has granted relief to the assessee with following observations and conclusion: 7.2 At the outset, it needs to be mentioned that accommodation entries can be of different types and the quantum of commission, will depend on the nature of accommodation entries provided, the benefit derived therefrom and the logistics/ paperwork, etc involved, Accommodation entries are provided for bogus profit in ;the form of fictitious capital gain. Accommodation entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in this situation, the Revenue authorities has to estimate income on the alleged accommodation entries by way of considering the profit declared by the assessee itself in the previous and subsequent Assessment Years and by considering the comparable cases having similar line of business in the light of facts and circumstances of the instant case and such exercise has been properly done by the first appellate authority. 12. So far as conclusion drawn by the ld. CIT(A) is concerned, from the assessment order as well as first appellate order, we observe that the estimate provided by the appellant that from such alleged transactions of accommodation entries the assessee received @ .03% to 1% benefit was on very lower side looking into the activities and the risk undertaken by the assessee and thus, the same was rightly dismissed by the ld. first appellate authority. So far as estimation of commission of 2% of total accommodation entries are concerned, the ld. CIT(A) noted that the payer M/s. Rosy Royal Minerals derived benefit of 6.7% of total amount of alleged entries and taking a reasonable estimate of commission thereon, the ld. CIT(A) reduced and restricted the addition to 2% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of cheques @ 10% which was reduced to 2% by the ld. CIT(A) without any basis and cogent reason therefore, impugned order may kindly be set aside by restoring that of the AO. 15. Replying to the above and pressing into service cross objection No.2 of the assessee, the ld. AR submitted that the ld. CIT(A) in para 9.2 noted that in the case of money transfer activity, such benefit is difficult to compute, as in some cases, the clients might have availed only of the services of money transfer, while some clients might have availed the services of the appellant for their unaccounted purchases and sales and rate of commission would not be the same in these two categories. The ld. AR vehemently pointed out that despite these facts, the ld. CIT(A) estimated the commission income @ 2% which is very excessive therefore, the same may kindly be reduced to either 0.15% or 0.25% as the income in cheque discounting is not 2% of total deposits. The ld. AR also submitted that the assessee has not earned 2% from the cash deposits made for transfer of money on behalf of clients therefore, order of the first appellate authority may kindly be modified accordingly. 16. On careful consideration o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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