Protective assessment under Section 69A unsustainable against a mere facilitator receiving only commission income.

The assessee, an individual engaged in share trading, was subjected to a search operation on December 4, 2014, as part of an investigation into an accommodation entry provider group led by Shri Shirish C. Shah

Seized material suggested the assessee was a beneficiary of accommodation entries

Following the search, the assessee filed returns under Section 153A, declaring additional commission income but claiming a NIL total income after setting off business losses

The Assessing Officer (AO) made additions under Section 69A on a "protective basis" regarding the total transaction amounts and challenged the set-off of losses against commission income

The CIT (Appeals) deleted the protective additions and restricted the commission income addition to 2% of the transaction value

The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)’s order

The Revenue appealed to the High Court

1. Whether the Tribunal erred in deleting the addition made under Section 69A regarding unaccounted money when the assessee allegedly failed to provide the source of cash paid to Shri Shirish C. Shah on a protective basis?

2. Whether the Tribunal was perverse in restricting the addition for unaccounted commission receipts to 2% of the transaction value?

The Court applied Section 260A of the Income Tax Act, 1961, which limits High Court interference to cases involving "substantial questions of law"

It referred to Section 69A regarding unexplained money, noting that additions require the assessee to be the "owner" of the money

The Court also considered Section 115BE(2), noting it was not applicable retrospectively (i.e., prior to April 1, 2017) to restrict the set-off of losses against undisclosed income

Additionally, the presumption under Section 292C regarding seized documents was applied but balanced against the factual role of the assessee

The Court analyzed the concurrent findings of the CIT(A) and the Tribunal, which established that the assessee acted merely as a facilitator or broker between clients and the entry provider, Shirish Shah

Documents found at the premises of a third party (Shirish Shah) could not be attributed to the assessee as owner under Section 69A, especially since the assessee's role was limited to arranging meetings and earning brokerage

The Court noted the AO's attempt to apply Section 115BE(2) was legally flawed as the provision was prospective and did not apply to the assessment years in question

Regarding the valuation of commission, the Court found that since both the AO and the assessee had discrepancies in their calculations, the CIT(A)’s determination of a 2% commission rate was a reasonable factual finding based on the nature of the transactions

The Court upheld the deletion of additions under Section 69A on a protective basis, as the assessee was not the "owner" of the funds, and affirmed the determined commission rate of 2% as a valid factual estimate

No interference with the Tribunal's order was deemed necessary