Avance Technologies Limited Vs ACIT (ITAT Mumbai)
The appeal was decided by the Income Tax Appellate Tribunal against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2017–18. The assessee challenged multiple additions made during scrutiny assessment, primarily relating to estimated commission income on alleged accommodation entries, addition of cash deposits during the demonetisation period, denial of telescoping benefit, and application of enhanced tax rates under Section 115BBE of the Income-tax Act, 1961.
The Assessing Officer noted that the assessee was part of a group subjected to a search under Section 132 in earlier years and concluded that the assessee was engaged in providing accommodation entries through circular transactions among group entities. Treating sales and investments as non-genuine, the Assessing Officer estimated commission income at 1% on sales of ₹8.30 crore treated as made to a non-group entity and on new investments of ₹20.07 crore, aggregating to an addition of ₹28.37 lakh. Additionally, cash deposits of ₹47.51 lakh during the demonetisation period were treated as unexplained money under Section 69A. These additions were largely confirmed by the Commissioner (Appeals).
Before the Tribunal, the assessee relied on consistent findings in its own cases for earlier assessment years, where it had been held that no commission income could arise from intra-group circular transactions, as no one can earn profit from transactions within the same group. The Tribunal noted that Mobile Telecommunication Ltd., treated by the Assessing Officer as a non-group entity, had been accepted as a group company in the case of another group concern and in earlier years of the assessee itself. Following its own earlier orders, the Tribunal deleted the addition of ₹8.30 lakh being estimated commission on sales treated as intra-group transactions. However, the addition of commission income of ₹20.07 lakh on new investments was upheld.
