LAUKIK PAPER INDUSTRIES P LTD, Pune V. DEPUTY COMMISSIONER OF INCOME TAX , CIRCLE 1 (2), Pune

ITA 507/PUN/2020

AI Insights

The case involves M/s. Laukik Paper Industries Pvt. Ltd., which faced scrutiny from the Income Tax Department regarding alleged bogus transactions and accommodation entries related to its dealings with Blue Bird India Ltd. (BBIL). The assessments for the years 2003-04 to 2006-07 were reopened based on findings from the Investigation Wing, which revealed substantial cash withdrawals and suspected sham transactions. The Assessing Officer (A.O.) made additions to the assessee's income, disallowing certain expenses under section 40A(3) and adding amounts related to bogus transactions. The CIT(A) upheld some of these additions but reduced the disallowance under section 40A(3). The Tribunal, referencing several judicial precedents, found that once the income was estimated based on turnover percentage, no further disallowances under section 40A(3) were warranted, leading to the setting aside of the CIT(A)'s decision on this issue.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124359 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 18-04-2023
• Assessment Year: 2003-2004
• Appeal Filed On: 19-08-2020
• Other Referred Cases: CIT Vs. Banwarilal Banshidhar, J.K. Construction Co. Vs. ITO, CIT Vs. Purshottamlal Tamrakar Uchehra, Pr. CIT Vs. Alag Securities Pvt. Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained cash credit; Rejection of books of accounts; Accommodation entries; Set aside
• Section: 131; 68; 145; 148; 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, PUNE BEFORE SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER AND SHRI G.D. PADMAHSHALI, ACCOUNTANT MEMBER ITA No. 507 to 510/PUN/2020 : A.Y. 2003-04 to 2006-07 M/s. Laukik Paper Industries Pvt. Ltd. 1-7 Shivanagari Society, S.No. 70/1, Kothrud, PUNE – 411 038 PAN: AAACL 9240 Q Appellant Vs. The Dy. C.I.T. Cir. 1(2) Pune Respondent ITA No. 301 to 303/PUN/2021 : A.Y. 2004-05 to 2006-07 The Dy. CIT Cir. 7 Pune. Appellant Vs. M/s. Laukik Paper Industries Pvt. Ltd. 1-7 Shivanagari Society, S.No. 70/1, Kothrud, PUNE – 411 038 PAN: AAACL 9240 Q Respondent Assessee by : S/Shri Kishor Phadke & Sharad A. Vaze Department by : Shri Keyur Patel CIT-DR Date of Hearing : 19-04-2023 Date of Pronouncement : 24-4-2023 ORDER PER BENCH: These cross appeals for A.Y. 2004-05 to 2006-07 preferred by the assessee and the revenue and the appeal for A.Y. 2003-04 preferred by the assessee emanates from separate orders of the CIT(A)-1 all dated 20-3-2020 as per the grounds of appeal appearing hereinafter. 2. At the outset, both the parties conceded that the facts and circumstances and the issues involved in all these matters are absolutely identical and similar and therefore, after hearing the submissions of the parties, 2 ITA No. 507 to 510 of 2020 & ITA N.301 to 303 of 2021 Laukik Paper Industries A.Y. 2003-04 to 2006-07 all these matters were heard together and disposed off vide this consolidated order. 3. We shall first adjudicate the appeals of the assessee. 4. The ld. Counsel for the assessee submitted that they would be taking ITA No. 507/PUN/2020 for A.Y. 2003-04 as the lead year in respect of the appeals preferred by the assessee. That further, he submitted that whatever grounds are not pressed in the lead year the same grounds are also not pressed for other years also. Similarly, the effective grounds as per the lead year are also the effective grounds for all other years of appeal by the assessee. In this background, the ld. Counsel for the assessee appraising this Bench regarding grounds of appeal in the lead year for A.Y. 2003-04 submitted that ground No. 1 is not pressed. After hearing the submissions of the ld. Counsel for the assessee, ground No. 1 is therefore, dismissed as not pressed. 5. The ld. Counsel for the assessee also submitted that ground No. 4 is general and that they have also raised additional grounds No. 5 and 6 which are also general in nature. That again, the assessee has taken one more additional ground No. 4 which also they are not pressing. After hearing the submissions of the ld. Counsel, ground No. 4 is also dismissed as not pressed. The only effective grounds are grounds No. 2 & 3 in the grounds of appeal of the assessee which are as follows: (2) On the basis of facts and circumstances of the case and as per law, the CIT(A)-1 Pune, has erred in making further disallowance u/s 40A(3) for Rs. 1,31,297/- even when the income is estimated as a percentage of turnover. (3) On the basis of facts and circumstances of the case and as per law, the CIT(A)-1, Pune, has erred in considering the commission of Rs. 19,82,466/- at the rate of 1% of the sales to Blue Bird India Ltd (BBIL) which is very high in the facts and circumstances of the case. Assessee prays to restrict the said commission on turnover to BBIL for alleged accommodation entries at a reasonable amount/per cent.” 3 ITA No. 507 to 510 of 2020 & ITA N.301 to 303 of 2021 Laukik Paper Industries A.Y. 2003-04 to 2006-07 6. In ground No. 2, the assessee is aggrieved by the decision of ld. CIT(A) in sustaining disallowance u/s 40A(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) for Rs. 1,31,297/- even when the income is estimated on a percentage of turnover. The relevant facts on this issue are that in the case of the assessee, the assessment was reopened by issue of notice u/s 148 on 02-02-2010 after recording the reasons for doing so and after taking prior approval from the appropriate authority. Accordingly, notices were issued to the assessee and in response to the queries raised during the course of re- assessment proceedings, the assessee had filed from time to time the books of accounts including P & L account and balance sheet before the Department. The reasons for reopening of the assessment have been triggered by an inquiry conducted by the Investigation Wing of the department where it was found that for F.Y. 2002-03 relevant to A.Y. 2003-04, the assessee had withdrawn cash of Rs. 2,92,05,000/- from Federal Bank, Pune, and the assessee is one of the alleged suppliers of paper and other materials to one of its group company i.e. Blue Bird India Ltd. (hereinafter referred to as „BBIL‟). The Investigation Wing of the department revealed that in case of group companies of BBIL one of which is also the assessee, information was received regarding huge cash withdrawal from the bank by these parties during the Financial Years 2005-06 and 2006-07. Enquiries were also made by Dy. CIT Cir. 6, Pune in February and March 2007. Further, it is emanating from the facts on record that the assessee had admitted before the Department for disallowance of expenses u/s 40A(3) of the Act for A.Y. 2006-07 and the full taxes thereon have been paid. However, in the year under consideration, no such payment was estimated nor reflected in the return of income despite the cash withdrawal of Rs. 2,92,05,000/- for F.Y. 2002-03 relevant to A.Y. 2003-04. That, in response to the summons issued u/s 131 of the Act, to the assessee 4 ITA No. 507 to 510 of 2020 & ITA N.301 to 303 of 2021 Laukik Paper Industries A.Y. 2003-04 to 2006-07 seeking information regarding cash withdrawal from assessee‟s account with Federal Bank, Pune, the assessee vide letter dated 22-08-2006 submitted that the cash withdrawn were utilised for making payment to its suppliers for supply at a reasonable/lower rates. It was admitted by the Director of the assessee in his sworn statement recorded u/s 131 of the Act that there was only one supplier viz. M/s. Innovative Print Forms Ltd., Mumbai to whom cash payments were made and that BBIL was only the bulk purchaser of the assessee- company. The assessee‟s sales comprised of 98% to BBIL. The A.O had completed assessment u/s 143(3) r.w.s. 147 of the Act. The re-assessment proceedings were initiated with the report of the Investigation Wing of the department and based on this inquiry further action was taken by the A.O for this year. 7. In the case of one of the suppliers of BBIL i.e. SDPL there was a survey action by the department wherein it was found that entire transactions of purchases from parties in Bombay by SDPL and subsequent sales to BBIL were merely on paper and it was sham transaction. Similarly, the assessee being another supplier to BBIL notice was issued by the A.O to file evidences proving the genuinity of purchases, details of purchases made, list of suppliers, etc. Inspite of reminders no reply was filed by the assessee and no details of purchases were submitted. The A.O even examined the suppliers of the assessee from whom alleged purchases were made and it was found by the A.O that they were all false, fabricated and bogus transactions. The assessee could not substantiate the genuinity of transactions by submitting any evidences except the list of suppliers and the amounts. No corroborative evidences have been furnished by the assessee to prove the genuineness of the transactions. The A.O had asked the assessee to furnish vouchers and 5 ITA No. 507 to 510 of 2020 & ITA N.301 to 303 of 2021 Laukik Paper Industries A.Y. 2003-04 to 2006-07 bills of various suppliers for verification. The assessee has not furnished the vouchers. The assessee has also not furnished details like PAN, TIN-VAT numbers, addresses, names, proprietors, directors etc. of the suppliers when called for. It was even verified by the A.O that majority of the suppliers do not have PAN. Therefore, the assessee was unable to furnish any evidences/documents regarding genuinity of the transaction of purchases from the suppliers and subsequent sales to BBIL. Therefore, it was concluded by the A.O that the assessee is a mere name lender providing accommodation entries for BBIL by way of bogus, fictitious and fabricated documents of purchases and sales and accordingly the ld. A.O made the addition of Rs. 44,31,659/- being bogus and added to the total income of the assessee. Further, at para 10.2 the A.O holds that it is conclusively proved that the assessee is a front company for BBIL and all the transactions are sham and bogus and are only paper transections without having any genuinity. Without prejudice to this finding, the ld. A.O goes a step further and holds if the claim of the assessee regarding purchase and sales are accepted then in that case it is observed that the assessee had made purchases of Rs. 86.37 lakhs in cash and these purchases were in excess of Rs. 20,000/- in contravention of section 40A(3) of the Act. The A.O disallowed 20% of the total cash purchases at Rs. 17,27,593/- and added to the income of the assessee u/s 40A(3) of the Act on protective basis. 8. The action of the A.O therefore, comprised of the addition made of Rs. 14,75,734/- for administration charges and also adding direct expenses of Rs. 29,55,925/- (comprising of wages and factory expenses of Rs. 17,23,719 + freight expenses Rs. 12,32,206/-). Therefore the A.O has made total addition of Rs. 44,31,659/- (Rs. 17,23,719 + Rs. 12,32,206/- + Rs. 14,75,734/-) on 6 ITA No. 507 to 510 of 2020 & ITA N.301 to 303 of 2021 Laukik Paper Industries A.Y. 2003-04 to 2006-07 account of bogus transactions. In addition to this, the A.O has also disallowed u/s 40A(3) of the Act on protective basis of Rs. 17,27,593/- during the year under consideration. 9. The matter travelled to the stage of first appellate authority and therein the ld. CIT(A) during the proceedings as per the reasons enshrined in his order held that the books of account of the assessee were not credible and therefore, rejecting the same u/s 145 of the Act estimated the net income of the assessee at 5% of the estimated genuine turnover of Rs. 1,62,37,163/-. Therefore, the net income was estimated at Rs. 8,11,858/- as profit on own business. Thereafter, the ld. CIT(A) also adjudicated on the addition made u/s 40A(3) of the Act by the A.O and therein he reduced the disallowance to 7.6% on substantive basis and retained the addition of Rs. 1,31,297/- partly allowing the ground raised by the assessee. The ld. CIT(A) also observed that for providing accommodation entry to BBIL and for showing bogus sales/purchases, the assessee must have received some commission. In this regard, the ld. CIT(A) estimated the commission received by the assessee @ 1% on the bogus sales turnover of Rs. 19,82,46,664/- i.e. Rs. 19,82,466/-. 10. The ld. Counsel for the assessee vehemently contended that when the A.O had made disallowance and added Rs. 44,31,659/- on account of bogus transactions and when it has been admitted that the entire purchases from suppliers and the corresponding sales to BBIL were only on paper and sham, bogus transactions, then in such scenario it was not permissible for the ld. A.O within the scope of Income-tax provisions to again assume the acceptance of sales and purchases by the assessee and examining them by applying section 40A(3) of the Act. The ld. Counsel further submitted that the ld. CIT(A) has 7 ITA No. 507 to 510 of 2020 & ITA N.301 to 303 of 2021 Laukik Paper Industries A.Y. 2003-04 to 2006-07 rejected the books of accounts and has arrived at net income of the assessee @ 5% of the estimated genuine turnover then in such a situation no further disallowance u/s 40A(3) of the Act or for that matter no disallowance of any expenses separately are called for. Once the income is determined estimating on a percentage rejecting the books of accounts of the assessee u/s 145 of the Act then no further disallowance can be made separately u/s 40A(3) of the Act. For this proposition, he placed strong reliance on the decision of the Hon‟ble Allahabad High Court in the case of CIT Vs. Banwarilal Banshidhar (1998) 229 ITR 0229. This decision of Hon‟ble Allahabad High Court (supra) was followed by Co-ordinate Bench of Jodhpur Tribunal in the case of J.K. Construction Co. Vs. ITO (2006) 100 TTJ 1101 and it was held that when the gross profit rate of 5% was applied by rejecting the books of accounts the A.O became powerless to again go through the books of accounts and make separate addition u/s 40A(3) of the Act. The Tribunal relied on the judgment of Hon‟ble Allahabad High Court in the case of Bhanwari Lal Bansidhar (supra) and observed that therein it was held categorically where the A.O has made trading addition rejecting the books of accounts and applied GP rate, no separate addition u/s 40A(3) of the Act can be made. The ld. Counsel also relied on the decision of Hon‟ble Madhya Pradesh High court in the case of CIT Vs. Purshottamlal Tamrakar Uchehra (2004) 270 ITR 0314 wherein the Hon‟ble Madhya Pradesh High Court observed that once the net profit rate is applied while determining the income of the assessee then section 40A(3) of the Act is not applicable. The ld. Counsel submitted that in the case of the assessee, the ld. CIT(A) while rejecting the books of accounts u/s 145 of the Act has determined the net income of the assessee @ 5% of the genuine turnover and this particular fact is accepted by the assessee and therefore, the ground raised before the Tribunal in respect of this issue has not been pressed by the assessee 8 ITA No. 507 to 510 of 2020 & ITA N.301 to 303 of 2021 Laukik Paper Industries A.Y. 2003-04 to 2006-07 accepting such determination of income @ 5% of the genuine turnover. Having said that as per the judicial pronouncements placed on record there is no scope for any further disallowance u/s 40A(3) of the Act or for that matter no other expenses can be disallowed separately. Therefore, the ld. CIT(A) instead of reducing the disallowance made by the A.O u/s 40A(3) from 20% to 7.6% and sustaining the addition of Rs. 1,31,297/- for the year under consideration, should have deleted the entire addition made by the A.O on protective basis after he having determined the income of the assessee @ 5% of the genuine turnover while rejecting the books of accounts. 11. Per contra, the ld. D.R supported the orders of the subordinate authorities and more specifically referring to the assessment order submitted that on the bogus part of the transaction, the A.O was right in disallowing and adding to the income of the assessee Rs. 44,31,659/- and further the A.O was also justified in making the addition on protective basis u/s 40A(3) of the Act of Rs. 17,27,593/- in respect of portion of genuine transaction. While supporting the findings of the A.O., the ld. .D.R contended that it is to safe-guard the interest of revenue. However, no evidences were placed on record to corroborate his arguments. 12. We have heard the rival contentions, analysed the facts and circumstances in this case and also considered the judicial pronouncements placed on record. That on examination of the facts, the action of the A.O comprised of disallowance of administrative expenses and direct expenses totalling to Rs. 44,31,659/- on account of bogus transactions. It has been established from the report of the Investigation Wing of the department that the assessee was one of the suppliers to BBIL providing accommodation entry and 9 ITA No. 507 to 510 of 2020 & ITA N.301 to 303 of 2021 Laukik Paper Industries A.Y. 2003-04 to 2006-07 facilitating the bogus purchases and sales to BBIL. Several opportunities were provided to the assessee by the A.O to submit evidences regarding genuineness of the transactions. But the assessee failed to furnish any evidences/documents in support proving genuineness of the transactions. In absence of any evidences it was conclusively held by the A.O that the purchases made by the assessee and corresponding sales were bogus transactions and therefore, Rs. 44,31,659/- was disallowed and added to total income of the assessee. We observe that when it has been conclusively proved that the sales made to BBIL and the purchase transactions vis-à-vis supplier of the assessee were bogus, fictitious, fabricated transactions and addition has been made disallowing administrative and direct expenses for bogus transactions, in such a scenario it was not permissible within the frame work of the Act for the A.O to further assume the acceptance of the sales and purchases and applying the provisions of section 40A(3) of the Act making separate addition on protective basis. Whatever additions are to be made are always based on facts and circumstances involving the relevant transactions and the Act does not support any addition based on mere assumption and hypothetical belief. Coming to the order of the ld. CIT(A), he had rejected the books of accounts of the assessee u/s 145 of the Act and arrived at net income of 5% of the estimated genuine turnover. Thereafter also, regarding the addition u/s 40A(3) he has reduced such addition to 7.6% on substantive basis and retained the disallowance of Rs. 1,31,297/- during the year under consideration. Before the ld. CIT(A) also inspite of opportunities provided the assessee could not submit any evidences or documents to justify and demonstrate genuinity of transaction of purchases and corresponding sales to BBIL. Thereafter, the ld. CIT(A) proceeded to reject the books of account of the assessee as not credible and arrived at the income as per percentage of the 10 ITA No. 507 to 510 of 2020 & ITA N.301 to 303 of 2021 Laukik Paper Industries A.Y. 2003-04 to 2006-07 turnover. We are of the considered view that once the books of accounts of the assessee are rejected u/s 145 of the Act and the net income is determined on the basis of percentage of the turnover then no further disallowance is permitted u/s 40A(3) of the Act. On this issue we are guided by the judgment of the Hon‟ble Allahabad High Court in the case of Banwarilal Banshidhar (supra), wherein it was observed and held as follows: “All the three questions, referred to this Court, revolve round the same controversy. The question for consideration is that when no deduction was sought and allowed u/s 40A(3), was there any need to go into sec. 40A(3) and r. 6DD(j). We see force in the view taken by the Tribunal that when income of the assessee was computed applying the gross profit rate and that when no deduction was allowed in regard to the purchases of the assessee, there was no need to look into the provisions of sec. 4A(3) and r. 6DD(j). No disallowance could have been made in view of the provisions of sec. 40A(3) r.w. rule 6DD(j) as no deduction was allowed to and claimed by the assessee in respect of the purchases. When gross profit rate is applied, that would take care of everything and there was no need for the AO to make scrutiny of the amount incurred on the purchases by the assessee. 13. Following this judgment the Co-ordinate Bench of the Tribunal Jodhpur (supra) has also held that when the income is determined through percentage of the turnover rejecting the books of accounts, the A.O becomes powerless to again go through the books of accounts and make separate addition u/s 40A(3) of the Act. Similarly, the Hon‟ble Madhya Pradesh High Court (supra) has held that when the income is determined by the A.O applying the net profit rate no further disallowance u/s 40A(3) of the Act is applicable. Reverting to the facts of the present case, ld. CIT(A) had arrived at percentage of income @ 5% of the genuine turnover and rejected the books of accounts of the assessee u/s 145 of the Act. This determination of income is not contested by the assessee and is accepted. Hence when the percentage of income is determined for the assessee while rejecting the books of accounts then that itself covers all other expenses disallowances and no further disallowance in such a case is called for u/s 40A(3) of the Act again separately as has already been held in several judicial aforestated pronouncements. In view thereof, we set aside the findings of the ld. CIT(A) on this issue and direct the A.O to delete the addition u/s 40A(3) of the Act from the hands of the assessee. Ground No. 2 of assessee’s appeal is allowed. 11 ITA No. 507 to 510 of 2020 & ITA N.301 to 303 of 2021 Laukik Paper Industries A.Y. 2003-04 to 2006-07 14. In ground No. 3, the assessee is aggrieved by the action of the ld. CIT(A) in considering the commission received @ 1% of the sales to BBIL. This issue of addition on receipt of commission is not emanating from the assessment order. The ld. CIT(A) in fact in his order has observed that the assessee being one of the suppliers to BBIL providing accommodation entry and showing bogus sales and purchases must be receiving some commission for the services to BBIL. Therefore, the ld. CIT(A) estimated the receipt of commission @ 1% on the bogus sales turnover and added to the income of the assessee. That, for adjudication of this issue, we take guidance from the decision of Hon‟ble Jurisdictional High Court in the case of Pr. CIT Vs. Alag Securities Pvt. Ltd. in Income-tax Appeal No. 1512 of 2017, order dated 12 th June 2020 on absolute similar and identical facts on the issue of accommodation entry. In this case, regarding the receipt of commission, it was observed and held by the Hon‟ble Jurisdictional High Court as follows: “18. Since Tribunal had relied upon its own decision in the case of M/s. Goldstar Finvest Pvt. Ltd., it would be useful to examine the same. In M/s. Goldstar Finvest Pvt. Ltd. which pertained to assessment year 2003-04, Tribunal noted that the same issue had arisen before it in the assessee's i.e., M/s. Goldstar Finvest Pvt. Ltd., own case for the assessment year 2002-03. In that case, Tribunal had observed that in these type of activities, brokers are only concerned with their commission on the value of transactions. Therefore, Tribunal posed the question to itself as to what would be the reasonable percentage of commission on the total turnover. Tribunal observed that in all similar cases the average percentage of commission was between 0.15% to 0.25%. In the cases of Palresha and Company and Kiran and Company, Tribunal had considered 0.1% as reasonable percentage of commission to be earned on such turnover. Assessee itself had offered the percentage of commission at 0.15% which was more than the percentage of commission considered to be reasonable by the Tribunal in the above two cases having similar type of transactions. Tribunal held that the action of the Assessing Officer in treating the entire deposits as unexplained cash credits could not be accepted in the light of assessment orders in the case of the beneficiaries and also in the light of the fact that the assessee was only concerned with the commission earned on providing accommodation entries. Therefore, Tribunal took the view that since the assessee had itself declared the commission on turnover at 0.15% which was more than the percentage considered to be reasonable by the Tribunal, Minal Parab ITXA1512_17.odt the same should be accepted. Accordingly, Tribunal accepted the commission declared by the assessee i.e., M/s. Goldstar Finvest Pvt. Ltd., and set aside the order of CIT (A). Tribunal further noticed that the above stand had been consistently followed by the Tribunal in various orders. No distinguishing feature could be brought on record by the Revenue. Therefore, Tribunal following the above orders including the order in the case of the assessee i.e., M/s. Goldstar Finvest Pvt. Ltd. in the immediately preceding year had upheld the order of the CIT (A). 19. As noticed above, Tribunal observed that this issue was present in all the appeals of the group of entities controlled by Mr. Mukesh Choksi. Be it stated that assessee was also part of the said group of entities. Therefore, maintaining uniformity Tribunal held that CIT (A) made no mistake in arriving at the impugned 12 ITA No. 507 to 510 of 2020 & ITA N.301 to 303 of 2021 Laukik Paper Industries A.Y. 2003-04 to 2006-07 decision which was in conformity with the position taken by the Tribunal in all the cases pertaining to the said group of entities. Thus, order of the CIT (A) was affirmed and appeal of the Revenue was dismissed. 20. We are in agreement with the view taken by the Tribunal. In a case of this nature Section 68 of the Act would not be attracted. Section 68 would come into play when any sum is found credited in the books of the assessee and the assessee offers no explanation about the nature and source thereof or the explanation offered by the assessee is not in the opinion of the Assessing Officer satisfactory. In such a situation the sum so credited may be charged to income tax as the income of the assessee of the relevant previous year. But that is not the position here. It has been the consistent stand of the assessee which has been accepted by the First Appellate Authority and affirmed by the Tribunal that the business of the assessee centered around customers / beneficiaries making deposits in cash amounts and in lieu thereof taking cheques from the assessee for amounts slightly lesser than the quantum of deposits, the difference representing the commission realized by the assessee. The cash amounts deposited by the customers i.e., the Minal Parab ITXA1512_17.odt beneficiaries had been accounted for in the assessment orders of these beneficiaries. Therefore, question of adding such cash credits to the income of the assessee, more so when the assessee was only concerned with the commission earned on providing accommodation entries does not arise. 21. Coming to the percentage of commission, Tribunal had already held 0.1% commission in similar type of transactions to be a reasonable percentage of commission. Therefore Tribunal accepted the percentage of commission at 0.15% disclosed by the assessee itself. This finding is a plausible one and it cannot be said that the rate of commission was arrived at in an arbitrary manner. The same does not suffer from any error or infirmity to warrant interference, that too, under Section 260-A of the Act. 15. In the aforestated decision, it was observed by the Hon‟ble Bombay High Court that the average percentage of commission was taken between 0.15% to 0.25% as noted by the Tribunal. Therefore, when the Tribunal accepted the percentage of commission at 0.15% disclosed by the assessee, it was held that this finding is plausible one and it cannot be said that rate of commission was arrived at in an arbitrary manner. We observe that the facts are absolutely identical and it is the case of providing accommodation entries to entry seekers . In such circumstances, the Hon‟ble High Court has upheld the view taken by the Tribunal in that case upholding the receipt of commission at 0.15%. With the same parity of reasoning, following the decision of Hon‟ble High Court (supra) we set aside the findings of the ld. CIT(A) on this issue and direct the A.O to reduce the rate of commission received on bogus sales turnover from 1% to 0.15%. Ground No. 3 of assessee’s appeal is partly allowed. 13 ITA No. 507 to 510 of 2020 & ITA N.301 to 303 of 2021 Laukik Paper Industries A.Y. 2003-04 to 2006-07 16. In the result, assessee‟s appeal in ITA No. 507/PUN/2020 for A.Y. 2003-04 is partly allowed. 17. At the very outset, the parties herein had conceded that the facts and circumstances in all these appeals are absolutely similar and identical and therefore, our decision in ITA No. 507/PUN/2020 for A.Y. 2003-04 shall apply mutatis mutandis to assessee‟s appeal in ITA No. 508/PUN/2020 to 510/PUN/2020 for A.Y. 2004-05 to A.Y. 2006-07. Therefore, these appeals are also partly allowed. 18. In the result all the appeals preferred by the assessee are partly allowed. 19. Now, we shall adjudicate the cross appeals preferred by the revenue in ITA No. 301/PUN/2021 to 303/PUN/2021 for A.Y. 2004-05 to A.Y. 2006-07. 20. It is observed at the outset that all these cross appeals filed by the revenue are time-barred by 308 days. This delay is covered during the period of covid pandemic and as per the decision of the Hon‟ble Supreme Court in Cognizance for Extension of Limitation, In re 438 ITR 296 (SC) read with judgment in Cognizance for Extension of Limitation, In re 432 ITR 206 (SC) dated 08-03-2021 and 421 ITR 314 the said delay is condoned and all these cross appeals are admitted for hearing and decided on merits. 21. The ld. D.R. submitted that ITA No. 301/PUN/2021 for A.Y. 2004-05 may be taken as the lead year in respect of these appeals filed by the revenue. In all these cross appeals, the revenue is aggrieved by the action of the ld. CIT(A) reducing the disallowance u/s 40A(3) of the Act. The revenue has also taken a ground that when the segregation of direct expenses of the assessee relate to genuine turnover and bogus turnover is not possible then, the corresponding expenses should have been disallowed and added to the total income of the assessee. We have observed and held in this regard while adjudicating the assessee‟s appeal, that when the income is determined on the basis of 14 ITA No. 507 to 510 of 2020 & ITA N.301 to 303 of 2021 Laukik Paper Industries A.Y. 2003-04 to 2006-07 percentage of turnover while rejecting the books of accounts of the assessee in such case no further disallowance u/s 40A(3) of the Act is permissible relying on the decisions of Banwarilal Banshidhar (supra) and other decisions (supra) and accordingly have directed the A.O to delete the addition u/s 40A(3) of the Act from the hands of the assessee. In such a scenario when the revenue is aggrieved with the decision of the ld. CIT(A) for reducing the disallowance u/s 40A(3) of the Act it does not have any further legal sustainability since it had already been held that in the given facts and circumstances no disallowance at all is mandated u/s 40A(3) of the Act nor any other separate disallowance of any expenses is permissible when already the income of the assessee has been determined on the percentage of turnover by the ld. CIT(A) and the books of accounts have been rejected u/s 145 of the Act. Therefore, all the grounds in cross appeals raised by the revenue becomes infructuous and are dismissed. 22. In the result, the cross appeal of the revenue in ITA No. 301/PUN/2021 for A.Y. 2004-05 is dismissed. Since the facts and circumstances in ITA No. 301/PUN/202 for A.Y. 2004-05 are absolutely identical and similar to ITA No. 302/PUN/2021 and 303/PUN/2021 for A.Y. 2005-06 and 2006-07 our decision in ITA No. 301/PUN/2021 for A.Y. 2004-05 shall apply mutatis mutandis to ITA No. 302/PUN/2021 and 303/PUN/2021 for A.Y. 2005-06 and 2006-07 and they are also dismissed. 23. In the result, all the cross appeals of the revenue are dismissed. 15 ITA No. 507 to 510 of 2020 & ITA N.301 to 303 of 2021 Laukik Paper Industries A.Y. 2003-04 to 2006-07 24. In the combined result, all the appeals of the assessee are partly allowed and all the cross appeals of the revenue are dismissed. Order pronounced in the open Court on this 24 th day of April 2023. Sd/- sd/- (G.D. PADMAHSHALI) (PARTHA SARATHI CHAUDHURY) ACCOUNTANT MEMBER JUDICIAL MEMBER Pune; Dated, the 24 th day of April 2023. Ankam Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 3. The NFAC Delhi 4. Pr. CIT concerned. 5. The D.R. ITAT „A Bench Pune. 6. Guard File BY ORDER, /// TRUE COPY /// Sr. Private Secretary ITAT, Pune. 16 ITA No. 507 to 510 of 2020 & ITA N.301 to 303 of 2021 Laukik Paper Industries A.Y. 2003-04 to 2006-07 Date 1 Draft dictated on 20-04-2023 Sr.PS/PS 2 Draft placed before author 21-04-2023 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on 24-04-2023 Sr.PS/PS 7 Date of uploading of order 24-04-2023 Sr.PS/PS 8 File sent to Bench Clerk 24-04-2023 Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order