Ram Prakash Bhatia Vs ACIT (ITAT Delhi)
Introduction: Ram Prakash Bhatia has contested against the order of ld.CIT(A)-24 dated 11.01.2023 for the A.Y. 2012-13. The appeal challenges additions made by the Assessing Officer concerning commission income from accommodation entries.
Detailed Analysis: During a survey, Bhatia confessed to managing businesses involved in providing accommodation entries and issuing bogus bills. His statement established him as an entry provider, managing multiple concerns through family members.
The undisclosed bank accounts revealed significant cash deposits, totaling Rs. 1,60,10,097/-. Bhatia failed to explain the source of these funds, resulting in their classification as unexplained cash credits under section 68 of the Income Tax Act.
In defense, Bhatia claimed the cash deposits were earnings from his accommodation entry business. However, he couldn’t substantiate this claim with evidence. The CIT(A) upheld the addition, noting the lack of justification for cash transfers between accounts and the absence of evidence regarding the source of the funds.
The Tribunal referenced previous rulings, directing the AO to apply a commission rate of 0.15% to the unexplained cash credits. Similarly, cash deposits in M/s. Chaudhary & Co.’s account were treated as Bhatia’s income, subject to the same commission rate.
The Assessing Officer also calculated commission on credit entries, adding Rs. 32,40,621/- and Rs. 7,68,321/- respectively to Bhatia’s income from accommodation entry business. The CIT(A) affirmed these additions, concluding no errors in the computation.
Conclusion: In summary, the ITAT Delhi upheld additions on commission income earned from accommodation entries in the case of Ram Prakash Bhatia Vs ACIT. The decision reinforces the tax authority’s stance on unexplained cash credits and commission income, emphasizing the need for proper documentation and justification in business transactions.
FULL TEXT OF THE ORDER OF ITAT DELHI
The present appeal has been filed by the assessee against the order of ld.CIT( A)-24 dated 11.01.2023 for the A.Y. 2012 – 13.
2. The assessee has raised the following grounds of appeal are as under:-
1 . The CIT ( A) has erred in upholding the addition of Rs. 32, 40, 621 /- made by the Ld. Assessing Officer on account of being commission income earned by the assessee at the rate of Rs. 150 per Rs. 1 , 00 , 000 /-, on credits other than cash credits.
2. The CIT ( A); has erred in upholding the addition of Rs. 1, 60, 10, 097 /- made by the Ld. Assessing Officer, being cash credit as assessee could not explain source of cash deposit.
3. The CIT ( A) has erred in upholding the addition of Rs. 2, 20, 82, 091 /- made by the Ld. Assessing Officer, being unexplained cash credit in the bank account of M/ s Chaudhary and Co.
4. The CIT ( A) has erred in upholding the addition of Rs. 7, 68, 321 /- made by the Ld. Assessing Officer on account of being commission income earned by the assessee from transactions on account of M/ s Chaudhary and Co.
5. The CIT ( A) has erred in not considering that the Ld. Assessing Officer has not given the benefit of contra entries to the extent of 6, 95, 12, 000 /-.
6. The order of the CIT ( A) is confirming the order of the Assessing Officer is bad in law and contrary to the facts on record.
3. A survey u/s 133 (A) was carried out on Ram Prakash Bhatia on 08.08.2014. During the course of survey his statement was recorded u/s 131( lA) of Income Tax Act wherein he mentioned that he had been carried out the work of billing and was earning commission income. He stated that he has been doing the work of providing accommodation entries and bogus bills. As per his statement, the assessee categorically admitted that the concerns mentioned by him, registered at premises C-48 /3 A, 2d floor, Lawrence Road Industrial Area were either his proprietorship concerns or in the proprietorship of his family members but the work is being managed/operated by the assessee only. He further stated that he used to provide bills to various persons against the goods supplied by some other traders. As per the Assessing Officer, the allegations that Sh. Ram Prakash Bhatia is an entry provider have been clearly established by his statement. For the purpose of providing entries he was managing a number of concerns through his family members.
4. The Assessing Officer noticed that the details of the assessee’ s undisclosed bank account is as under:
