ACIT.CENTRAL CIRCLE 41, KOLKATA V. RITU KEJRIWAL, KOLKATA

ITSSA 134/KOL/2024

AI Insights

The case involves appeals by the revenue against the orders of the CIT(A), Kolkata, concerning the assessment years 2013-2014 to 2017-2018. The appeals were based on the income assessed from accommodation entries provided by Shri Sanjeev Kejriwal and others. During a search operation, Shri Sanjeev Kejriwal admitted to providing accommodation entries and receiving commissions ranging from 0.25% to 0.5%. The Assessing Officer initially assessed the income at 0.45%, which was later reduced to 0.15% by the CIT(A) based on a precedent. However, the Tribunal found this reduction inappropriate and adjusted the commission rate to 0.35%. The case highlights issues related to the assessment of income from accommodation entries and the appropriate percentage of commission to be considered for such entries.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314017 (ITAT-KOLKATA)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 06-05-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: misc
• Other Referred Cases: Alag Securities Pvt. Ltd. vs. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P.N. BARNWAL
• Keywords: Unexplained cash credit; Accommodation entries; Bogus

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER आयकर अपील (तलाशियाां और अशिग्रहण)सं/ITA Nos.130 & 134/KOL/2024 (निर्धारण वर्ा /A.Ys.2017-18 & 2016-2017:) ACIT, Central Circle-4(1), Kolkata Vs Ritu Kejriwal, 33D, Sarat Bose Road, West Bengal-700020 PAN No. :AFMPK 8907 R AND आयकर अपील (तलाशियाां और अशिग्रहण)सं/ITA Nos.131-133 & 135/KOL/2024 (निर्धारण वर्ा /A.Ys.2013-2014, 2014-2015 & 2016-2017) ACIT, Central Circle-4(1), Kolkata Vs Nirmal Kumar Kejriwal, 6/1B, Palm Avenue West Bengal-700019 PAN No. :AFTPK 0465 J (अपीलधर्थी /Appellant) .. (प्रत्यर्थी / Respondent) रधजस्व की ओर से /Revenue by : Shri Shri P.N.Barnwal, CIT-DR, Shri Nicholas Murmu, Sr. DR & Shri Manas Mondal, Sr.DR निर्धाररती की ओर से /Assessee by : None सुनवाई की तारीख / Date of Hearing : 06/05/2025 घोषणा की तारीख/Date of Pronouncement : 06/05/2025 आदेश / O R D E R Per Bench : These are the appeals filed by the revenue against the separate orders dated 28.06.2024 & 12.07.2024, passed in the case of the above two assessees by the CIT(A), Kolkata-27, for the assessment years 2013- 2014, 2014-2015, 2015-2016, 2016-2017 & 2017-2018, respectively. 2. Shri Shri P.N.Barnwal, CIT-DR, Shri Nicholas Murmu, Sr. DR & Shri Manas Mondal, Sr.DR, appeared on behalf of the revenue in their respective appeals. None appeared on behalf of the assessee. IT(SS)A Nos.130-135/KOL/2024 2 3. These appeals have been posted on multiple occasions and no one has represented on behalf of the assessee even though repeated notices have been issued through RPAD and email. Consequently, these appeals are being disposed off ex-parte qua the assessee. 4. It was submitted by the ld. CIT-DR that out of the six appeals, appeal in IT(SS)A No.130/Kol/2024 is delayed by 27 days and IT(SS)A No.131/Kol/2024 is delayed by 70 days for which the revenue has filed the applications for condonation of delay, wherein the revenue has provided the details of the dates in which the appeals were processed. The revenue has provided the reasons and the reasons having been found to be plausible reasons, thus, the respective delay in filing of above two appeals by the revenue stands condoned and the appeals are being disposed off on merits along with other connected appeals also. 6. It was submitted by the ld. CIT-DR that there was a search on one Shri Sanjeev Kejriwal on 24.10.2017. It was the submission that a statement u/s.132(4) of the Act was recorded from said Sanjeev Kejriwal on 26.10.2017 in the course of search wherein Shri Sanjeev Kejriwal has specifically admitted that he is providing accommodation entries to various persons and companies and the said entries were provided through bank accounts maintained by Shri Sanjeev Kejriwal, his wife Reetu Kejriwal, his father Shri Nirmal Kumar Kejriwal and a company under the name of Rajputana General Commercial Corporation (P) Ltd. It was the submission that in the statement Shri Sanjeev Kejriwal has specifically admitted that he charges a commission ranging from 0.25% to 0.50% in respect of the IT(SS)A Nos.130-135/KOL/2024 3 accommodation entries. He had clarified that the cash was received and bogus bills, accommodation entries and payments through RTGS and cheques were made through the said bank accounts maintained/controlled by Shri Sanjeev Kejriwal to the persons providing the cash. It was the submission that consequently the Assessing Officer in the course of assessment estimated the income of the assessee at 0.45%. It was the submission that the said income was assessed in the hands of each persons protectively and the substantive addition was made in the hands of Shri Sanjiv Kejriwal. It was the submission that on appeal before the ld. CIT(A), the ld. CIT(A) relied upon the decision of the Hon’ble Bombay High Court in the case of Alag Securities Pvt. Ltd., reported in 315 CTR 905 (Bom-HC) and held that in the case of an assessee engaged in providing accommodation entries, the entire deposits cannot be assessed as unexplained cash credits and only the commission at the rate of 0.15% earned in providing accommodation entries can be assessed as income. Consequently, the ld. CIT(A) had directed the Assessing Officer to assess the income of the assessees as 0.15% instead of 0.45% adopted by the Assessing Officer. It was the submission that Shri Sanjeev Kejriwal having himself admitted and the incriminating documents and statements recorded in the course of search having categorically shown that the income varied from 0.25% to 0.5%, the estimation of income of the assessee at 0.15% was not permissible, insofar as the said estimate went far below even the lower percentage as admitted by the entry operator/accommodation entry IT(SS)A Nos.130-135/KOL/2024 4 provider, Shri Sanjeev Kejriwal. It was the submission that the order of the ld. CIT(A) is liable to be reversed. 7. We have considered the rival submissions and also perused the records and orders of the authorities below. The facts in the present case clearly show that Shri Sanjeev Kejriwal has admitted in his statement u/s.132(4) of the Act that he is earning commission income of 0.25% to 0.5% on the accommodation entries provided by him through the bank accounts of his wife, father and the company in which he is having control. Shri Sanjeev Kejriwal having admitted to a commission percentage of 0.25% to 0.5%, then obviously the rate below 0.25% is arbitrary and against the basic principles of the statement given by him in the course of search. This being so, we are of the view that the percentage of 0.15% as directed by the ld. CIT(A) is erroneous, considering the fact that Shri Sanjeev Kejriwal has himself admitted to a commission percentage of 0.25% to 0.5%, we are of the view that the commission income of the assessees from the accommodation entries is liable to be adopted as 0.35% and we do so. The reliance on the decision of the Hon’ble Bombay High Court in the case of Alag Securities Pvt. Ltd., referred to supra, used by the ld. CIT(A) to adopt percentage @0.15% is not a standard fixed by the Hon’ble High Court. The percentage fixed by the Hon’ble Bombay High Court is on the basis of the facts before the Hon’ble High Court. The facts and the evidence in respect of appeals before us clearly show that the percentage is varying between 0.25% to 0.5%. Accordingly, we partly allow the appeals of the revenue and the order of the ld. CIT(A) stands modified for all the years IT(SS)A Nos.130-135/KOL/2024 5 under consideration and the Assessing Officer is directed to compute the income of the assessee by fixing the rate of 0.35% in respect of sums representing accommodation entries provided. 8. Here we must mention that these appeals are in respect of protective addition made by the Assessing Officer and modified by the ld. CIT(A). The Assessing Officer while giving effect to this order shall verify as to whether the substantive addition made in the hands of Shri Sanjeev Kejriwal has been deleted from the file of Shri Sanjeev Kejriwal and if so then this protective addition would become substantive. 8. Thus, all the appeals of the revenue are partly allowed. Order dictated and pronounced in the open court on 06/05/2025. Sd/- (SANJAY AWASTHI) Sd/- (GEORGE MATHAN) लेखा सदस्य/ ACCOUNTANT MEMBER न्यधनयक सदस्य / JUDICIAL MEMBER कोलकाता Kolkata; ददनाांक Dated 06/05/2025 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : आदेशधिुसधर/ BY ORDER, (Assistant Registrar) Income Tax Appellate Tribunal, Kolkata 1. अपीलार्थी / The Appellant- 2. प्रत्यर्थी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कोलकाता / DR, ITAT, Kolkata 6. गार्ड फाईल / Guard file. सत्यापपत प्रतत //True Copy// "