CHANGERS FOREX PRIVATE LIMITED, MUMBAI V. INCOME TAX OFFICER WARD 9(2)(2), MUMBAI

ITA 1042/MUM/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6885 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 22-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: HEMANT BAHEDIA
• Keywords: Business income
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI , JM ITA NO. 1042 / MUM/20 18 ( ASSESSMENT YEAR : 2007 - 08 ) ITA NO. 1083 /MUM/20 18 ( ASSESSMENT YEAR : 2008 - 09 ) ITA NO. 1084 /MUM/20 18 ( ASSESSMENT YEAR : 2 009 - 10 ) M/S. CHANGERS FOREX PVT. LTD., 12 - B, SUNSHINE BUILDING SAMARTH NAGAR ANDHERI (W), MUMBAI - 400053 VS. INCOME TAX OFFICER WD 9(2)(2) MUMBAI PAN/GIR NO. AABCC4842J APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI PRAKASH JHUNJHUN WALA & SHRI HEMANT BAHEDIA REVENUE BY MS. N. HEMALATHA DATE OF HEARING 05 / 06 /201 8 DATE OF PRONOUNCEMENT 12 / 06 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 16,, MU MBAI DATED 15/09/2017 FOR A.Y.2007 - 08, 2008 - 09 & 2009 - 10 IN THE MATTER OF ORDER PASSED U/S.144 R.W.SECTION 147 OF THE IT ACT. 2. COMMON GRIEVANCE OF ASSESSEE IN ALL THE YEARS PERTAINS TO COMPUTING THE PROFIT FROM BUSINESS OF TOUR AND TRAVELS AT 50% OF THE GROSS RECEIPTS. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. ITA NO. 1042/MUM/2018 1083 & 1084/MUM/2018 M/S. CHANGERS FOREX PVT. LTD., 2 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY DID NOT FILE ITS RETURN OF INCOME FOR A.Y.2007 - 08. AS PER INDIVIDUAL TRANSACTION STATEMENT OF AIR & CIB INFORMATION ABOUT FINANCIAL ACTIVITIES, THE ASSESSEE HAD EARNED RS.10,31,670/ - AS COMMISSION / PROFESSIONAL INCOME IN A.Y.2007 - 08. AS PER AIR REPORT OF THE ASSESSEE, THE TOTAL TRANSACTIONS RECORDED WERE RS.10,31,676/ - . SINCE THE ASSESSEE DID NOT FILE ANY RETURN OF INCOME AN D ALSO FAILED TO SUBSTANTIATE THE SAID TRANSACTIONS, THE AO TREATED THE SAID RECEIPTS AS UNDISCLOSED INCOME OF THE ASSESSEE AND ASSESSED THE SAME TO TAX. 5. BEFORE THE CIT(A) IT WAS CONTENDED THAT AO WAS NOT JUSTIFIED IN TAKING ENTIRE RECEIPTS AS ITS INC OME. HOWEVER, AFTER MAKING ENQUIRY CIT(A) FOUND THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MONEY CHANGERS AND RELATED ACT IVI TIES. IN THE BANK ACCOUNTS VARIOUS PAYMENTS RECEIVED FROM ITS CUSTOMERS ON ACCOUNT OF MANAGEMENT OF THEIR TOURS AND TRA VELS AND HOTEL PAYMENTS WERE CREDITED. DETAILS REGARDING RECEIPTS AND EXPENSES WERE COLLECTED. FROM THE DETAILS COLLECTED IT WAS REVEALED THAT THE G ROSS RECEIPTS OF THE ASSESSEE TOR THE YEAR UNDER CONSIDERATION WERE RS.38,15,771 / - . THE RECEIPTS WERE DETERM INED AFTER GIVING CREDIT FOR ALL EXPENSES WHICH WERE INCURRED BY THE ASSESSEE THROUGH BANKING CHANNELS. THE A SSESSEE CLAIMED THAT THE ASSESSEE COMPANY HAD INCURRED MANY EXPENSES IN CASH ALSO. BUT A SSESSEE COULD NOT PRODUCE NECESSARY EVIDENCES . ITA NO. 1042/MUM/2018 1083 & 1084/MUM/2018 M/S. CHANGERS FOREX PVT. LTD., 3 6. VIDE ORDE R SHEET NOTING DATED 24.08.2017 THE ASSESSEE WAS INFORMED BY CIT(A) THAT FROM THE DETAILS OF BANK ACCOUNTS COLLECTED IT WAS SEEN THAT AFTER GIVING CREDIT OF ALL OUTGOING PAYMENTS THE GROSS RECEIPTS OF THE ASSESSEE WAS RS.38, 1 5,77 1 / - . IN SUPPORT OF ITS CL AI M IT COULD NOT PRODUCE THE COPY OF THE BILLS AND VOUCHERS. THE ASSESSEE HAD NOT MAINTA INED REGULAR BOOKS OF ACCOUNT. I T WAS CLAIMED THAT FOR CARRYING THE BUSINESS SOME OF THE EXPENSES HAVE TO BE INCURRED BY THE A SSESSEE . 7. IN VIEW OF THE ABOVE DISCUSSION AND IN ABSENCE OF ANY DOCUMENT INDICATING INCURRING OF EXPENDITURE , THE CIT(A) ESTIMATED NET INCOME OF 50% OF THE GROSS RECEIPTS AS BUSINESS INCOME AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. LEARNED AR APPEARING ON BEHALF OF THE ASSESSEE CITED VARIOUS JUDICIAL PRONOUNCEMENTS IN SUPPORT OF THE CONTENTION THAT 10% OF THE GROSS RECEIPTS IS REASONABLE EVEN WHILE REJECTING THE BOOKS OF ACCOUNTS AND ESTIMATING PROFIT. 8. LEARNED AR ALSO PLACED BEFORE US NET PROFIT RATE FOR THE A.Y.2007 - 08, 2008 - 09 AN D 2009 - 10 WHICH RANGES FROM 3.01% TO 25.10%. COPY OF PROFIT AND LOSS ACCOUNT WAS ALSO PLACED BEFORE US WHICH INDICATE VARIOUS EXPENDITURE INCURRED BY THE ASSESSEE, WHEREIN DURING THE YEAR ENDING ON 31/03/2007 ASSESSEE HAD SHOWN NET EARNING OF RS.1,14,891/ - OUT OF GROSS RECEIPTS OF RS.38,15,771 / - . ITA NO. 1042/MUM/2018 1083 & 1084/MUM/2018 M/S. CHANGERS FOREX PVT. LTD., 4 9. ON THE OTHER HAND, IT WAS CONTENDED BY LEARNED DR THAT A CLEAR FINDING HAS BEEN RECORDED BY CIT(A) TO THE EFFECT THAT GROSS RECEIPTS OF RS.38,15,771 / - WAS AFTER GIVING CREDIT FOR ALL OUTGOING PAYMENTS. SHE CONTE NDED THAT NO FURTHER RELIEF SHOULD BE GIVEN AND THE CIT(A) IS VERY REASONABLY ESTIMATED PROFIT AT 50% OF THE GROSS RECEIPTS. 10. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM THE RECORD WE FOUND THAT ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF TOURS AND TRAVELS INCLUDING BOOKING OF TRAIN / FLIGHT TICKETS, HOTEL BOOKING, ETC. IT WAS HAVING AN OFFICE IN THE RESIDENTIAL AREA OF LOKHANDWALA, ANDHERI WEST, WHEREIN VARIOUS CUSTOMERS WALK - IN DIRECTLY TO THE SHOP, BOOK THE TICKET / HOTEL, MAKE PAYMENT (MOSTLY BY CASH / CARD) AND RETURN WITH CONFIRMED TICKET / HOTEL BOOKING. ASSESSEE WAS HAVING CARD SWIPING MACHINES FROM CENTURIAN BANK, ICICI BANK AND HDFC BANK. SINCE THE NATURE OF BUSINESS IS SUCH THAT 100% OF THE AMOUNT IS TAKEN AS ADVANCE, ASSESSEE USED TO ACCEPT PAYMENTS EITHER BY CASH OR CARD (THOUGH SWIPE - MACHINE). FURTHER, ASSESSEE WAS ALSO REQUIRED TO MAKE THE PAYMENTS TO VENDORS IMMEDIATELY VIZ. SHREE SATI TRAVELS PRIVATE LTD, RIYA TRAVEL & TOUR S (I) PVT. LTD., ETC. WITHIN 3 - 7 DAYS FOR THE BOOKING DONE . IT IS ALSO A MATTER OF RECORD THAT ASSESSEE DID NOT APPEAR BEFORE THE AO, THEREFORE, ASSESSMENT WAS FRAMED U/S.144 OF THE IT ACT. WE ALSO OBSERVE THAT A CLEAR FINDING HAS BEEN RECORDED BY CIT(A) AT PARA 6.3 TO THE EFFECT THAT AFTER GIVING ITA NO. 1042/MUM/2018 1083 & 1084/MUM/2018 M/S. CHANGERS FOREX PVT. LTD., 5 CREDIT FOR ALL OUTGOING PAYMENTS, GROSS RECEIPTS OF THE ASSESSEE WAS TAKEN. THE CIT(A) ALSO OBSERVED THAT IN SUPPORT OF ITS C LAIM, ASSESSEE COULD NOT PRODUC E THE COPY OF BILLS, VOUCHERS, THEREFORE, CIT(A) TAKEN 5 0 % OF SUCH GROSS RECEIPTS AS NET PROFIT OF THE ASSESSEE. LEARNED AR HAS ALSO PLACED ON RECORD THE ORDER OF THE DELHI HIGH COURT IN THE CASE OF GALILEO NEDERLAND BV 51 TAXMANN.COM 419 WHEREIN IT WAS HELD THAT ASSESSEE IS ENGAGED IN TOURS AND TRAVEL BUSINESS , ESTIMATION OF PROFIT AT 15% WAS FOUND TO BE REASONABLE. HOWEVER, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE WHEREIN ASSESSEE DID NOT APPEAR BEFORE THE AO , VIS - - VIS A CLEAR FINDING BY THE CIT(A) WITH REGARD TO THE EXPENSES ALREADY GI VEN CREDIT, WE DIRECT THE AO TO RESTRICT THE ADDITION TO THE EXTENT OF 25% OF THE GROSS RECEIPTS, AS ARRIVED AT BY CIT(A) AFTER GIVING CREDIT FOR ALL OUTGOING PAYMENTS. WE DIRECT ACCORDINGLY. 11. FACTS AND CIRCUMSTANCES IN THE ASSESSMENT YEAR 2008 - 09 AND 2 009 - 10 ARE PARIM E TERIA, FOLLOWING THE REASONING GIVEN HEREINABOVE, WE DIRECT THE AO TO COMPUTE NET INCOME AT 25% OF GROSS RECEIPTS IN TERMS OF DIRECTIONS GIVEN HEREINABOVE. WE DIRECT ACCORDINGLY. 12. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED IN PA RT. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 / 06 /201 8 SD/ - ( RAM LAL NEGI ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 12 / 06 /201 8 KARUNA SR. PS ITA NO. 1042/MUM/2018 1083 & 1084/MUM/2018 M/S. CHANGERS FOREX PVT. LTD., 6 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//