SNW Smith Consultants Pvt. Ltd. Vs ACIT (ITAT Delhi)
No Incriminating Material Belonging to Assessee—153A Additions on Presumed Unbooked Commission Deleted for All AYs; ITSC Findings for Group Cannot Be Applied to Subsidiary
The Assessee, part of the Adam Smith Group (ASG), appealed against five assessments framed u/s 153A r.w.s. 143(3) for AYs 2012-13 to 2016-17. All these years were unabated assessments, and therefore additions could be made only if incriminating material belonging to the Assessee was found during search, as per the Supreme Court ruling in Abhisar Buildwell.
During the search on 28.11.2017, the Investigation Wing found parallel accounting systems (Tally for booked commission and LCBD/SQL for booked + unbooked commission) in the flagship company ASAPL, which handled over 95% of the group’s LC-discounting business. All documents relating to unbooked commission were seized from premises of ASAPL (Le Meridien & Thapar House) and were submitted before the ITSC by ASAPL in its application dated 13.12.2019. The ITSC passed an order u/s 245D(4) accepting the surrendered data and determining net commission at 0.075% (0.25% × 30%).
The AO, however, made additions in the present Assessee’s hands by applying an extrapolated commission rate of 1.28% (later reduced by CIT(A) to half of 0.075% following ITSC order), not on any seized material, but merely because the Assessee shared premises and had the same business model as ASAPL.
Before the Tribunal, the Assessee demonstrated that:
