Addition of 1% Commission to ₹63L Income for Issuing Bogus Sales Bills: ITAT sustains Tax Computation due to No Plausible Explanation [Read Order]

The leading appeal of the batch pertained to the disallowance of ₹63,430 by the Assessing Officer (AO) on account of commission at 1% on undisclosed sale that was received by the Assessee.

The assessee, Sarthak Ispat Pvt. Ltd. is a private limited company engaged in the business of Iron and Steel. A Search & Seizure Action under section 132 of the Income Tax Act, 1961 was conducted on the business and residential premises of Sarthak Group of cases along with the assessee. Subsequently, assessment proceedings under section 153A were initiated by the issuance of a notice.

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In response, the assessee furnished necessary replies and submissions towards the queries raised by the AO. After deliberations, the assessment culminated in the AO assessing income with the addition of 1% commission, under the pretext that the assessee has been involved in providing bogus sale bills in lieu of commission.

The assessee had objected to the addition on account of commission at 1% (₹63,430) on the bogus sale bills of ₹63,43,003.

Aggrieved with the additions, the assessee unsuccessfully preferred an appeal before the CIT(A), leading to the present.

The contention of the revenue department on the issue of addition by the AO on account of the commission at 1% on bogus sales transacted by the assessee was that the assessee remained unresponsive before the First Appellate Authority, which was the case before the Tribunal as well.

The Departmental Representative further submitted that the assessee had no plausible explanation for the issue. Therefore, in the absence of any response by the assessee, CIT(A) had rightly decided the issue and deserved to be sustained.

The bench of RavishSood (Judicial Member) and Arun Khopdia (Accountant Member) observed that the assessee’s involvement in providing Bogus Sales bills in lieu of commission was never disputed by the assessee; “therefore, receipt of commission by the assessee on such bogus transactions cannot be doubted.”

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The Bench further noted that all such transactions were held to be bogus sale transactions based on incriminating material impounded during the search & seizure action conducted on the premises of the assessee, and a commission of 1% was added to the income of the assessee. Hence, the present appeal stood dismissed.

As the grounds in all six appeals are identical, the decision of the bench therein shall apply mutatis mutandis to all appeals. Therefore, all six appeals were dismissed.

S. L. Anuragi represented the appellant-revenue and no one registered appearance for the assessee.

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