Sh. Navdeep Garg, Sirsa V. DCIT, Central Circle-2, Ludhiana

ITA 605/CHANDI/2022

AI Insights

Sh. Navdeep Garg appealed against the orders of the Commissioner of Income Tax (Appeals) -5, Ludhiana, which upheld the AO's decision of applying a 5% commission rate on alleged entries related to credit and debit transactions found during a search and seizure operation under Section 132 of the Income Tax Act, 1961. The Tribunal noted the lack of specific details regarding the nature of these transactions and the purpose of the entries, leading to the conclusion that the application of a higher commission rate was arbitrary. The Tribunal's decision was based on the principle that the commission income generally ranges from 0.3% to 0.8% for accommodation providers, and no addition was warranted in this case.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127876 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 21-03-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 23-08-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 201; 22

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, “B”, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर अपील सं./ ITA Nos. 605 to 607/ C H D / 2 0 2 2 नधा रण वष / Assessment Years : 2 0 1 7 - 1 8 t o 2 0 1 9 - 2 0 Sh. Navdeep Garg, House No. 25, Dawrkapuri, Sirsa, Haryana 125022 बनाम The DCIT, Central Circle-2, Ludhiana थायी लेखा सं./PAN NO: ABAPN4447K अपीलाथ /Appellant यथ /Respondent नधा रती क ओर से/Assessee by : Shri Tej Mohan Singh, Advocate. राज व क ओर से/ Revenue by : Shri Sarabjit Singh, CIT DR स ु नवाई क तार#ख/Date of Hearing : 22.03.2023 उदघोषणा क तार#ख/Date of Pronouncement : 23.03.2023 आदेश/Order P er Ben c h : T he c ap t i on e d a p p e a l s h av e be en pr e fe rr e d by t he a ss e s se e a ga i ns t t he s e p a r at e o rd e r s e a ch da t e d 28. 0 7. 202 2 o f t he C omm is s i on e r o f In c o m e T a x (A pp e a ls ) -5, Lu dh i a n a [ h e r ei na ft e r re fe rre d t o as ‘ CIT (A ) ’ ]. 2. S i nc e t h e f ac t s a n d is s u e in v ol ve d i n th e c a p t i on e d a p p ea ls ar e i de nt ic a l, h e nc e, t h e y w er e he a rd t o ge t he r a n d a r e b ei ng d is p o s ed o f f by t h is c o mm o n o rde r. IT A N o . 605 / C h d/ 20 2 2 for a s se ss me nt y e a r 20 17- 1 8 i s t a ke n as a l e ad ca s e f or t h e p ur p os e o f na r ra t i o n o f fa c ts . ITA No. 607 to 609-Chd-2022 Sh. Navdeep Garg, Sirsa 2 I TA N o. 605/ C h d /2 0 22 ( A . Y . 201 7 -1 8 ) 3. T he a s s e s se e in t hi s a pp e a l ha s ta ke n fo l l ow i ng g ro un ds of a pp e a l : - 1. T hat t h e l ea rn ed Co m m i s s i one r o f Inc om e T ax (A p pe al s ) ha s a ls o e r r ed b o t h in l a w a nd on f ac ts in up hol di ng an ad di t i on o f Rs . 1, 72, 30 5/ - by ad op t i n g an ar bi t r ar y r at e of 5 % o n th e a ll e ge d e n t r ie s al l eg ed p r ov id e d b y t h e a p p el l an t d i s r e gar di ng th e f ac t t ha t t h e b as i s of a d d i t i o n i t s e l f was i l le ga l , i nv al id a nd v oi d -a b -i n i t i o. 2. T hat t h e l ea rn ed Co m m i s s i one r o f Inc om e T ax (A p pe al s ) h as e r re d bo t h i n l a w a n d on f a c t s i n up hol di ng t h e l ev y of in te r e s t u / s u /s 23 4 A of t h e A ct w h ic h is no t l e vi a b l e o n t h e f a c t s of t he i ns t ant c as e . 4. T he b ri e f fa c ts o f t he c as e a r e t h at s e a rc h a n d s e i zu r e ac t io n w as c ar ri ed ou t at t h e pre mi s e s o f t h e A s s es s e e u /s 1 32 o f t he I n c o me T a x A ct , 19 61 ( h e re in a ft e r c al l ed 't h e A c t ') . D u ri n g th e s e a r c h a n d s e i z ur e op e r a t i o n, c er t a i n du m b d oc u m en ts c a rr y i ng i n ce rt ain c re di t an d de bi t e nt ri es w er e f ou nd . O n be i n g as k ed t o e x p l a i n t he a fo r e sa i d e n t r i es , t h e A s s es s e e de n i e d ha v i n g m ad e a ny tr a n s ac t i o ns . H ow ever , i n t he a lt e r na t iv e, it w as s t at e d t h at a t t h e m o s t t h e A O ma y a s se s s co mm is s i on @ 2% on t he t ot a l o f t h e d e b i t a n d cr edi t e n t r i es . T he A O a cc e p t e d th e c on t e n t i o n o f t he A s s e ss ee to a s s e ss t he co m mi s s i o n i nc o me on t h e t ot a l ITA No. 607 to 609-Chd-2022 Sh. Navdeep Garg, Sirsa 3 o f t he c r e di t a n d de bi t a mo u nt s , h ow ev er , he a p p li ed c o m mi s s i on ra t e @ 5%. 5. Be i ng ag gr i e v ed by t he a b o ve o r de rs o f t h e A O , the A s s e ss ee fi l ed a pp e a l be fo r e t h e L d. C I T (A ) , t h e L d. CI T (A ), h ow eve r, u phe ld t h e a pp l i ca ti on o f c o mm i ss i on r at e @ 5% on th e de bi t a nd c re di t e nt ri e s . 6. Be i ng a g gr ie ve d b y t he ab ov e or d e r o f th e C I T( A ), t h e A s ses s e e ha s co me in a p p e a l b e fo r e us . 7. We ha v e h e a r d t he ri va l s ub m is s i on s a nd ha v e a lso pe r us e d t h e m at er ia l o n r e c o r d. We f i n d t ha t b ot h t h e i m pu gn ed o r de r s o f t he lo w e r a ut ho ri t i es ar e va g ue or d e rs . T he r e i s n o me nt io n ab o u t t he n at ur e o f t ra ns a c t i o ns . T he r e i s no me nt i ons as t o fr o m w h o m t h e A s se ss e e re c ei ve d a n y a m ou n t an d t o w h o m t he A ss e s s ee pa i d an y a mo un t. W ha t w as t he b us i ne s s o f th e A s s es s e e a n d a s t o fo r w ha t pu r p o s e th e a m o u n ts w er e re c e i ve d or pa id . Th e A O s i mp l y a c c e p te d t he al te r n a t i v e c on t e n t i o n o f t h e A s s es s e e t ha t a t t he mos t , t he A O m a y t a ke t he s e de b i t s a n d c r e d i t e nt r i es a s a c c o mm o da t i o n e n t r i e s a n d m a y a p pl y 2 % c o mm i s si on o n t h e s a m e. T h er ea ft e r, t h e A O ha s n ot g i v e n a n y re a s o ni ng t o en ha n ce t h e c o mm i s si o n @ 5% w it ho u t dis c us s i n g t h e na t ur e o f t he t r a n s ac t i o ns a nd t h e p ur p os e o f s ai d a c co m mo da t i o n e nt ri es , i f a n y gi ve n by t h e A s s e ss ee . 8. T he L d . c o uns e l fo r t h e a s s es s e e h a s s u b mi t te d th a t i n t h e ca s e o f a cc o m mo d a t i on pr o vi d e rs , ge n e r a l l y t h e c o mm i ss i o n inc o m e ra ng es fr o m ITA No. 607 to 609-Chd-2022 Sh. Navdeep Garg, Sirsa 4 0. 3% t o 0 . 8 0%. Th e c ou n se l i n t hi s r e s pe c t ha s re l ie d o n v ar io u s c a s e l aw s . T he Ld . Co un s el h a s fu r t he r s ub m i tt e d t ha t eve n o th er w i s e n o a dd i t io n w a s w ar ra nt e d i n t hi s ca s e. 9. We n ot e th at t he A O ha s no t gi ve n a ny fi n di ng tha t th e a fo re s a i d c re di t a n d de b i t e n t r ie s w e r e r el a ti ng t o a n y u n a c co un t e d in c o m e o f t h e A s s es s e e . H e s i mp l y ac c e p t e d t he a l t e r na ti ve c o n t ent i on o f th e A s s ess e e t ha t a t t h e m os t t o a s s es s t he t ot a l o f t he s e e nt ri es @ 2 % a s c o mm is s i o n i nc o me . In t he a bs e n ce o f a ny o t h e r fa c t o n t h e fi l e t he re i s n o b a s is a s to w h y t h e A O w oul d a c ce pt th e c ont e n t i o n o f t he A s s ess e e i n p ar t i . e. t re a ti n g t he s a m e d e b i t a nd c re di t e nt r i e s a s ac c o mm oda t i o n e nt ri es bu t a p p l yi n g t he c o m mi s s i o n a t h i g he r ra t e o n ad ho c ba s is . The re fo r e , t he a c ti on o f t h e A O i n as s e s s i ng th e t ot a l o f t he d e bi t a n d c r e d i t e n t r i es a t h i g he r ra te o f 5 % w i t h o ut a n y re as o ni ng c a nn ot be h e l d t o b e j us t i f i e d. H ow ev er , s in ce t h e A ss e s se e hi ms el f h a s off e r ed t h e c o mm i s si on @ 2 % o f t he t ot al o f d eb i t an d c r e d i t e nt r i e s , t he re fo r e, th e a dd i t io n to t h a t e xt e nt is or de r e d t o b e s us t a in e d . T he a pp e a l o f th e A s s ess e e t re a t e d a s p ar tl y a l l ow e d. I TA N os. 606 & 60 7/ C h d / 20 2 2 (A . Y . s 2 0 18- 19 & 2 0 1 9- 20 ): 8. S i nc e t h e f ac t s a nd i s s ue i nv ol v ed i n bo th t h e s e c a se s ar e i de nt ic al , th e r e fo re , i n vi ew o f t h e fi n di n g s gi ve n ab ov e , t he a dd i t io n i n t he r e s pe c t o f t he d e bi t an d c r e d i t e nt r i es i s re s tri c t e d t o 2%, as off e r e d by t h e A s se ss e e du r i ng t he as s e s s me nt pro c e ed i n g s . ITA No. 607 to 609-Chd-2022 Sh. Navdeep Garg, Sirsa 5 In th e re s ul t , a l l t h e s e a ppe al s a re t r e a t e d a s part ly a l l o w e d. O r d e r p r o n o u n c e d o n 2 3 . 0 3 . 2 0 2 3 Sd/- Sd/- (VIKRAM SINGH YADAV) (SANJAY GARG) Accountant Member Judicial Member Dated : 23.03.2023 “आर.के .” आदेशक त*ल+पअ,े+षत/ Copy of the order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent 3. आयकरआय ु -त/ CIT 4. +वभागीय त न0ध, आयकरअपील#यआ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड फाईल/ Guard File आदेशान ु सार/ By order, सहायकपंजीकार/ Assistant Registrar