RAMESH KUMAR BAGRI,GURUGRAM V. ITO WARD 2(1), FARIDABAD

ITA 45/DEL/2025

AI Insights

The case involves Sh. Ramesh Kumar Bagri, who appealed against the orders of the Income Tax Officer and the CIT(A)/NFAC, which treated him as an accommodation entry provider and assessed his credits at 0.5% of the total entries amounting to Rs. 55,17,27,090 for the assessment years 2013-14 to 2017-18. The Tribunal examined the submissions, evidence, and the remand report from the Assessing Officer, which supported the view that the assessee was an entry operator. However, the Tribunal found that a commission rate of 0.4% was more appropriate than the 0.5% proposed by the lower authorities, leading to the partial allowance of the appeals.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772751 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: Sanjay Kumar Choudhary (HUF) Vs ACIT, PCIT Vs Alag Securities, Uday Shankar Mahwar vs ACIT, Mukesh Choksi Vs ACIT, DCIT Vs Sagarmal Nahta
• Laws Referred To: Section 147 r.w.s. 144 of the Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANURAG S. DARIA
• Assessee Lawyers: AKASH OJHA
• Keywords: Accommodation entries; Bogus
• Section: 147; 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘A’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA Nos.41 to 45/Del/2025 Assessment Years: 2013-14 to 2017-18 Sh. Ramesh Kumar Bagri, Shop No. 1, Near Hamilton Court, DLF Phase-IV, Gurugram, Haryana Vs. Income Tax Officer/NFAC, Delhi PAN: AAIPB2718E (Appellant) (Respondent) ORDER PER SATBEER SINGH GODARA, JM: The instant batch of five appeals pertains to the single assessee herein Sh. Ramesh Kumar Bagri. All other relevant details, assessment year-wise, read as under: Sl. No. Appeal No. Appellant Respondent Order Appealed against 1. 41/Del/2025 for AY: 2013-14 Sh. Ramesh Kumar Bagri ITO, Ward-2(1), Faridabad CIT(A)/NFAC, Delhi’s order dated 28.08.2024 having DIN & Order No. ITBA/NFAC/S/250/2024- 25/1068073741(1) involving proceedings under Section 147 r.w.s. 144 of the Act. 2. 42/Del/2025 for AY: 2014-15 Sh. Ramesh Kumar Bagri ITO, Ward-2(1), CIT(A)/NFAC, Delhi’s order dated 29.08.2024 having DIN & Order Assessee by Sh. Akash Ojha, Adv. Department by Sh. Anurag S. Daria, Sr. DR Date of hearing 21.08.2025 Date of pronouncement 29.08.2025 Printed from counselvise.com ITA Nos. 41 to 45/Del/2025 2 | P a g e Faridabad No. ITBA/NFAC/S/250/2024- 25/1068124334(1) involving proceedings under Section 147 r.w.s. 144 of the Act. 3. 43/Del/2025 for AY: 2015-16 Sh. Ramesh Kumar Bagri ITO, Ward-2(1), Faridabad CIT(A)/NFAC, Delhi’s order dated 29.08.2024 having DIN & Order No. ITBA/NFAC/S/250/2024- 25/1068124993(1) involving proceedings under Section 147 r.w.s. 144 of the Act. 4. 44/Del/2025 for AY: 2016-17 Sh. Ramesh Kumar Bagri ITO, Ward-2(1), Faridabad CIT(A)/NFAC, Delhi’s order dated 29.08.2024 having DIN & Order No. ITBA/NFAC/S/250/2024- 25/1068125669(1) involving proceedings under Section 147 r.w.s. 144 of the Act. 5. 45/Del/2025 for AY: 2016-17 Sh. Ramesh Kumar Bagri ITO, Ward-2(1), Faridabad CIT(A)/NFAC, Delhi’s order dated 29.08.2024 having DIN & Order No. ITBA/NFAC/S/250/2024- 25/1068125669(1) involving proceedings under Section 147 r.w.s. 144 of the Act. Heard both the parties at length. Case files perused. 2. It emerges during the course of hearing that the assessee/appellant herein is aggrieved against both the learned lower authorities’ action inter alia treating him as an accommodation entry provider thereby assessing @ 0.5% of the corresponding credit entries totaling to Rs. 55,17,27,090/- in the “lead” assessment year AY: 2013-14 before us. 3. Learned counsel vehemently argues in this factual backdrop that both the lower authorities have erred in law and on facts in not only treating the assessee/appellant as accommodation entry provider but also assessing his entire credits at an exorbitant rate of 0.5% in question. The Revenue places strong reliance on the Printed from counselvise.com ITA Nos. 41 to 45/Del/2025 3 | P a g e CIT(A)’s lower appellate discussion partly upholding the impugned addition under challenge in above terms. 4. We have given our thoughtful consideration to the assessee’s and the Revenue’s vehement rival submissions. Going to the basic relevant facts, a perusal of the assessment order dated 24th March, 2022 reveals that the Assessing Officer had proceeded in section 147 r.w.s. 144 proceedings against the assessee for the purpose of assessing his entire credits of Rs.55,17,27,091/- as unexplained for want of his explanation which has been partly extracted to 0.5% in the lower appellate discussion, reading as under: “1. 1. Ground nos.1 Ground number 1 is generic in nature and does not command a separate decision on the same 1. 1. Ground No. 2 Ground number 2 is the material ground which stems from the action of the AO in adding the credit entries appearing in assessee's books as he found them unsubstantiated, more so on account of the fact that no compliances were made at any point of time during the assessment proceedings by the appellant which could aid him to make a more meaningful assessment of total income. In fact, for want of any other information, the AO was not missing in reason in making the addition of the entire credit entries of Rs. 55,17,27,091 as arising from undisclosed sources. It is only during the appellate proceedings that the appellant has submitted any evidences at all. The submission consisted of written arguments, copies of ledger, bank statements, copies of VAT returns etc. and a copy of the information report lodged with the police regarding loss of documents related to the appellant's proprietorship firm on 23.11.2017. The submissions of the appellant were forwarded to the Assessing Officer for further enquiry and comments which has already been discussed in the preceding paras. Printed from counselvise.com ITA Nos. 41 to 45/Del/2025 4 | P a g e It must be mentioned that the remand report received from the AO is not a passive document. In fact, the AO went through the submissions, and made enquiries with the parties listed therein in order to ascertain the veracity of the appellant's claims. The pertinent findings from the Remand Report are as follows 1. There are no details provided by the appellant regarding purchases made amounting to Rs. 6,63,98,125 2. One of the parties, M/s Gayatri Udyog, stated to be a supplier of the appellant, stated in its response to notice u/s 133(6) that it had made purchases from the buyer, thus standing in absolute contrast to the stand of the assessee. 3. Another party, M/s Nikunj Udyog did not provide any details regarding the purchases effected from them except a copy of ledger, which as per the AO did not match with the books of the assessee. Pertinent be it to mention that no other details were submitted which could enhance the credibility of the transactions. 4. Regarding the sell side, Unitech Ltd acknowledged merely that they used to buy steel from the assessee but the ledger did not match with the one provided by the assessee. 5. The assessee claimed that it had received advance of Rs. 3,00,00,000 from M/s S.V.S Buildcon Private Ltd. The AO issued 133(6) during the remand proceedings but no compliance was made by the entity until the date of submission of the remand report. 6. The AO has also regarded the Police report about loss of documents filed with incredulity and commented that it is not an FIR but just a report. I agree with the observation of the AO as the report does not mention the date on which the report was filed. 7. The AO has finally concluded that \"on considering the above facts in totality, it appears that the assessee is an entry operator who provided bogus entry to various individuals/entities. Or providing entries, assessee has received commission from the beneficiaries. It can be said that credits amounting to Rs. 55,17,27,090 in the bank account of the assessee are not on account of any genuine business activity. It is settled position that in the case of an entry provider a certain percentage of the total amount of entries may be the commission income of the assessee. Therefore, it is proposed that, it will be reasonable if 5% of the total credits of Rs 55,17,27,090 which comes to Rs 2,75,86,355 may be considered as the commission income of the assessee. At the time of the assessment, in absence of any details AO was forced to treat all bank credits as unexplained income. However, having done proper analysis of the matter, it is proposed that assessee may be treated as an entry provider and commission income may be held to be assessed income\" Printed from counselvise.com ITA Nos. 41 to 45/Del/2025 5 | P a g e I have gone through the submissions made by the appellant, the evidences adduced to his defense and the findings of the enquiry during the remand proceedings. The paucity of material documents amplify the conclusion that the assessee is in fact an entry provider. Even if one assumes that the documents were lost, it is inconceivable that the appellant did not have any access to other supporting documents like way bills, stock register, payment advice etc. The capital base of the assessee is indeed meagre when compared to the turnover. The bank accounts reflect the classic pattern of money and money out. Thus in view of the above the averments of the appellant as being a genuine enterprise do not hold much credence. Furthermore, there was a letter from the DDIT (Inv) Faridabad to the AO during the year 2020-21 in which it was shared that the assessee was an entry provider. The investigation wing was in possession of information relating to the assessee's bank account and the transactions there in and their analysis pointed to the fact that there was no actual business whatsoever being carried out by the assessee. Hence, I agree with the view of the AO that the Assessee is merely an entry operator. PA Now, the AO, in his remand report has come to the conclusion that considering all the facts, and holding the assessee to be an entry provider, instead of all the credits, only the commission that he may have earned on the transactions should be treated as his income. I agree with AO's perspective. However, the AO has proposed to estimate the commission income at 5% of the total entries. Estimation of commission income is at best, an estimation and there are several judgments on this issue. The following are a couple of cases in which the rate of commission was directly or indirectly discussed Citation Name of the case Bench Rate 136 taxmann.com 151 Sanjay Kuamr Choudhary (HUF) Vs ACIT ITAT Surat 0.2-0.5 117 taxmann.com 292 PCIT Vs Alag Securities Mumbai 0.15 117 taxmann.com 396 Uday Shankar Mahwar vs ACIT Kolkata 0.3-0.8 103 taxmann.com 25 Mukesh Choksi Vs ACIT Mumbai 0.15 82 taxmann.com 344 DCIT Vs Sagarmal Nahta Kolkata 0.2-0.55 It can be seen that the rate varies from 0.15 at the lowest to 0.8 at the highest. In general, the rates for loans carry higher rates and those for the bogus bills etc carry the lower rates. In view of the above, I believe that a rate of 0.5% of the turnover shall be a fair indicator of the appellant's income. The AO nis directed to estimate the income at 0.5% of the turnover. Thus the appeal of the assessee on ground no. 2 is partly allowed.” Printed from counselvise.com ITA Nos. 41 to 45/Del/2025 6 | P a g e 5. It is sufficiently clear that what all the assessee’s accounts have witnessed is a continuous flow of credits and debits wherein he has been found to be a mere accommodation entry provider on account of his failure in filing the supportive evidence claiming any genuine business activity. We thus see no reason to interfere with the learned CIT(A) detailed discussion holding the assessee to be an accommodation entry provider in principle. The assessee fails in his first and foremost argument in very terms therefore. 6. Next comes equally important aspect of quantification of the assessee’s impugned accommodation entry commission income which has been estimated @ 0.5% after treating his credit entries as part of turnover only. Both the parties could hardly dispute that this tribunal’s various decisions have held such accommodation entries as assessable at varying profit rates ranging between 0.15% to 0.8% of the turnover in various instances. And also that possibility of some errors in such a pure estimation exercise could not be altogether ruled out as well. Be that as it may, we deem it appropriate in this factual backdrop that the assessee deserves part relief to the extent that his above accommodation entry turnover deserves to be assessed @ 0.4% than 0.5% to be followed Printed from counselvise.com ITA Nos. 41 to 45/Del/2025 7 | P a g e by the learned Assessing Officer’s consequential computation as per law. The assessee’s instant “lead” appeal ITA No. 41/Del/2024 for assessment year 2013-14 is partly allowed. 7. Same order to follow in the assessee’s remaining four appeals ITA Nos. 42 to 45/Del/2025 since involving identical set of facts and issues. We reiterate before parting that the learned Assessing Officer’s consequential computation shall assess the assessee’s corresponding credits @ 0.4% subject to a rider that the same shall not be treated as a precedent since based on peculiar set of facts involved herein. 8. These assessee’s five appeals ITA Nos.41 to 45/Del/2025 are partly allowed. A copy of this common order be placed in the respective case files. Order pronounced in the open court on 29th August, 2025 Sd/- sd/- (NAVEEN CHANDRA) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 29th August, 2025. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Printed from counselvise.com "