Case Law Details
Secunderabad Healthcare Ltd Vs CIT (ITAT Mumbai)
Introduction: The Income Tax Appellate Tribunal (ITAT) of Mumbai has recently delivered an important ruling in the case of Secunderabad Healthcare Ltd Vs CIT. The tribunal ruled that the commission earned from the provision of accommodation entries will be added to the total income of the assessee. This ruling can set a precedent for future cases concerning bogus transactions and income manipulation.
Analysis: In this case, Secunderabad Healthcare Ltd appealed against the order of the Commissioner of Income Tax (Appeals)–48, Mumbai, arguing against the inclusion of commission from accommodation entries in its total income. During the proceedings, the tribunal established that the company was associated with Shri Shirish C Shah, who was known for providing accommodation entries to various parties.
While Secunderabad Healthcare Ltd presented invoices, Ledger account of the vendors, and stock register as evidence of genuine transactions, they failed to produce confirmation from the parties involved in purchases or sales. This lack of confirmation led the tribunal to uphold the initial decision of including the commission from accommodation entries in the total income.
In an interesting development, the tribunal directed the Assessing Officer (AO) to consider 1% of the total sales declared during the year as net commission in the hands of the assessee for providing accommodation entry.
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