Case Law Details
Manish Mansukhlal Maradiya Vs CIT (ITAT Mumbai)
Mumbai ITAT partly allowed the assessee’s appeal, holding that commission income from accommodation entries must be restricted to actual transactions and reasonable rate.
The Tribunal observed:
- AO estimated commission @ 5% on ₹4.60 crore, assuming involvement in 8 entities
- However, from the statement recorded u/s 131 (page 4–5):
- Assessee admitted involvement only in 3 entities
- Accepted accommodation entries of ₹1.20 crore only
- No material was brought to link assessee with remaining 5 entities
The ITAT held:
- Addition cannot be made on assumptions without evidence of involvement
- In similar cases, Tribunal consistently estimates commission between 0.2% to 1%
- Recent coordinate bench rulings support 0.5% as reasonable rate
Accordingly:
- AO directed to:
- Consider only ₹1.20 crore (actual admitted transactions)
- Apply 0.5% commission rate instead of 5%
Result:
- Addition substantially reduced
- Appeal partly allowed
The ruling reinforces:
In accommodation entry cases, both volume and rate must be backed by evidence-not arbitrary estimation.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
1. This appeal by assessee is directed against the order of Ld. CIT(A)- 51, Mumbai, dated 28.08.2025 for assessment year (A.Y.) 2011-12. The assessee has raised following grounds of appeal;
i. On the facts and circumstances of the case and in law, the Learned CIT(A) has erred in dismissing the appeal without actually going into the merits of the case.
ii. On the facts and circumstances of the case and in law, the learned CIT(A) has erred in upholding the Assessment Order passed under section 144 r. w. section 147 of the Act on the basis of unsigned Notice u/s 148 dated 28/03/2018 i.e. neither signed physically nor signed digitally by the Learned Assessing Officer in accordance with section 282A(1) of the Income Tax Ac., 1961 and therefore the impugned Assessment Order is liable to be quashed as invalid, wholly without jurisdiction and bad in law being completed on the basis of such invalid notice issued u/s 148 of the IT Act., 1961.
iii. Without prejudice to our other contentions, on the facts and circumstances of the case and in law, the Learned CIT(A) has failed to appreciate that since the Learned Assessing Officer has failed to provide to the Appellant. Copy of sanction received from the CIT for reopening the Assessment, the Asst. done under 144/147 is null and void.
iv. On the facts and circumstances of the case and in law, the Learned CIT(A) has erred in confirming the addition of Rs.23,02,517/- computed at 5% of Rs.4,60,50,345/- being the sum of the accommodation entries provided by the Appellant.
2. Perusal of record shows that there is a delay of 4 days in filing the appeal before the Tribunal. The learned authorised representative ( ld. AR) of the assessee submits that delay is due to miscalculation of time period for filing appeal. The delay is not intentional and may be condoned. The Ld. Senior departmental representative (Sr. DR) for the revenue not opposed such plea. Considering the submission of both the parties, the delay in filing the appeal is condoned.
3. Rival submissions of both the parties have been heard and record perused. Ground No. 1 is general and needs no adjudication, ground No. 2 & 3 relates to reopening under Section 147 and validity of notice under Section 148. At the outset of hearing, the Ld. AR of the assessee submits that he is not pressing these grounds of appeal. Considering the submission of assessee, ground No. 1, 2 & 3 of the appeals are dismissed as not pressed. Ground No. 4 relates to estimation of commission income of alleged entry of Rs. 4.60 Crore. The Ld. AR of the assessee submits that the Assessing Officer (in short ‘AO’) made addition in the assessment year solely on the basis of statement of assessee that the assessee is providing accommodation entry. The AO made addition of 5.00 % of total receipt of Rs. 4.60 Crore. The addition is made without any basis. The AO considered eight concerns belonging to assessee and estimated commission at the rate of 5.00 %, wherein in fact, he is having only three concern/entities and charge commission at the rate of .50%. In fact, the assessee owned M/s. Asit Traders, M/s. Mayur Corporation and Abhi Trading Co., he has no concern with other concern that is M/s. Ajanta Trading Company, M/s. Sourabh Enterprises, M/s. Deepak Trading Co., M/s. Kant Enterprises and Shah Trading corporation. The Ld. AR submits that the coordinate bench of Mumbai Tribunal in a series of decision in cases of accommodation entry provider has confirmed the addition to the extent of .50% of sale or purchase entries. He has placed on record certain following decisions; –
> Lokesh Kumar Khabya vs. DCIT in ITA Nos. 5100 to 5106/MUM/2025
> Nanak Motumal Pherwani vs. ITO in ITA No. 527/SRT/2024
> Shri Ramesh Kumar Jain vs. ACIT in ITA No. 3512 & 3513/MUM/2013
> Lalit Kumar M Sharma vs. DCIT in ITA Nos. 1974 & 1975/MUM/2017
4. On the other hand, the Ld. Sr. DR for the revenue supported the order of lower authorities. The Ld. Sr. DR submits that in case of Pravin Dayalal Shah, it was proved that he was providing accommodation. The assessee is a part of Pravin Dayalal Shah Group. The assessee was having eight entities and are working for Pravin Dayalal Shah. From the Statement of assessee, as referred in the assessment order, it is clear and unambiguous and proves that he is a part of syndicate. The AO made a reasonable estimation on the basis of statement of assessee.
5. I have considered the rival submission of both the parties and have gone through the orders of lower authorities carefully. I find that during the assessment, the AO noted that the statement of assessee was recorded under Section 131 on 30.09.2016. In the statement, the assessee has accepted that he is an entry operator and providing accommodation entry through various entities managed and controlled by him. The AO also recorded that assessee was charging commission @ 5.00% of bogus accommodation entry. I have perused the statement of assessee, recorded/scanned by AO on page No. 5 to 8 of assessment order. In response to question No. 7, the assessee stated that he is working as a key person for Pravin Dayalal Shah, and is proprietor of M/s. Asit Traders, M/s. Mayur Corporation and Abhi Trading Co. Further, in response to question No. 8, the assessee stated that M/s. Abhi Trading Co., M/s. Asit Traders and M/s. Mayur Corporation, are in the business of providing bogus entries and no actual work was done by these concerned. No names of other entities were confronted with the assessee, nor the assessee owned other entity controlled or belonging to him. However, the AO on page No. 2 of assessment order recorded that Pravin Dayalal Shah was doing the business of commission rooted through eight proprietary concerned namely / M/s. Asit Traders, M/s. Mayur Corporation and Abhi Trading Co., M/s. Ajanta Trading Company, M/s. Sourabh Enterprises, M/s. Deepak Trading Co., M/s. Kant Enterprises and Shah Trading corporation. It is noticed from bank accounts statements of the above concerns, during the FY 2010-11 relevant to A.Y. 2011-12, of various proprietary concerns that there is receipts of Rs. 4,60,50,345/-. The AO further recorded that statement of assessee was recorded on oath on 30.09.2016. The AO stated straightway without bringing any connection of assessee with five other entities straightway considered transaction of Rs. 4.60 Crore as entry provided through assessee. In fact, from the statement of assessee, it is clear that he was connected with three entities namely M/s. Abhi Trading, M/s. Asit Traders and M/s. Mayur Corporation. The assessee in his reply before lower authorities stated that accommodation entry through these three entities was only of Rs. 1.20 Crore. I also find that before Ld. CIT(A), the assessee specifically raised ground that he was only managing three proprietary concern namely Ms. Asik Traders, M/s. Mayur Corporation and M/s. Abhi Trading Company, as per his statement recorded before DDIT on 30.09.2016. I find that despite his specific submission and statement, the AO as well as Ld. CIT(A) estimated commission in response of transaction of 8 entities instead of three entities. No material was brought on record to indicate the role of assessee in respect of other five entities allegedly connected with Pravin Dayalal Shah. I find that coordinate Bench of Tribunal in series of decision against the assessee who are in the business of providing accommodation entry estimated commission income from .20% to 1.00% depending upon the facts and circumstances of the cases. I find that the Division Bench of Mumbai Tribunal, recently in Lokesh Kumar Khabya vs. DCIT & others cases (supra) who is also engaged in providing accommodation entry confirm the similar addition at the rate of .50% of the transaction. Thus, considering the peculiar facts of the case, when the AO and Ld. CIT(A) failed to bring any material about providing of entry of assessee to the extent of Rs.4.60 Crore, however, the assessee himself has accepted that he has provided accommodation entry to the extent of Rs. 1.20 Crore, therefore, AO is directed to restrict the addition at the rate of .50% of accommodation entry provided through assessee to the extent of Rs. 1.20 Crore. In the result, ground No. 4 of the appeal is partly allowed.
6. In the result, the appeal of the assessee is partly allowed.
Order was pronounced on 21/04/2026 in open Court.
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