TALENT INFOWAY LTD, MUMBAI V. DCIT CC 46, MUMBAI

ITA 128/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9679 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 15-09-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 08-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MUKESH M CHOKSI
• Keywords: Search and seizure; Principle of natural justice
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 128 /MUM/2015 ASSESSMENT YEAR: 2010 - 11 TALENT INFOWAY LTD. BLOCK H, SHRI SADASHIV CHS LTD., 6 TH ROAD SANTACRUZ (E), MUMBAI - 400055 VS. DCIT - 46 ROOM NO. 659 , 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD MUMBAI - 400020. PAN NO. AA CCT9444L APPELLANT RESPONDENT ASSESSEE BY : SHRI MUKESH M. CHOKSI, AR REVENUE BY : SHRI SAURABH KUMAR RAI , DR DATE OF HEARING : 12 /06/2017 DATE OF PRONOUNCEMENT : 08/09/2017 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSE SSMENT YEAR IS 2010 - 11 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 38 , MUMBAI AND ARISES OUT OF THE PENALTY ORDER U/S 271(1)(C) OF THE INCOME TAX ACT 1961, ( T HE ACT). 2. THE GROUND OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: - 1. THE LD. APPELLATE COMMISSIONER HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER U/S 271(1)(C) OF THE ACT. ITA NO. 128/MUM/2015 2 2. THE LD. APPELLATE COMMISSIONER HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER WITHOUT COMPLYING WITH THE PRINCIPLES OF NATURAL JUSTICE . 3. THE LD. APPELLATE COMMISSIONER HAS ERRED IN LAW AND IN FACTS IN LEVYING PENALTY U/S 271(1)(C) OF THE ACT AT RS.21,67,000/ - . 3. BRIEFLY STATED, TH E FACTS OF THE CASE ARE THAT THE ASSESSEE - COMPANY M/S TALENT INFOWAYS LTD. (TIL) WAS COVERED BY THE SEARCH AND SEIZURE ACTION CONDUCTED BY THE D EPARTMENT U/S 132 ON THE ALAG GROUP OF COMPANIES. THE ASSESSING OFFICER (AO) NOTED THAT THE TOTAL RECEIPT OF TIL DURING THE FY 2009 - 10 WAS RS.28,88,63,776/ - . THE B REAK - UP IS AS UNDER: TOTAL RECEIPTS AS PER BANK ACCOUNTS MANAGED BY THE ASSESSEE RS.4,35,70,876/ - TOTAL RECEIPTS AS PER BANK ACCOUNTS MANAGED BY AGENTS RS.24,52,92,900/ - TOTAL RS.28,88,63,776/ - THE AO ESTIMATED THE NET COMMISSION OF TIL @ 2% ON THE TOTAL RECEIPTS OF RS.28,88,63,776/ - CONSIDERING THE FACTS THAT DURING THE COURSE OF SEARCH ENOUGH MATERIAL WAS FOUND AND SEIZED, WHICH PROVED BEYOND DOUBT THAT IT WAS CHARGING COMMISSION @ 1.5% TO 3.5% . THE AO THUS MADE AN ADDITION OF RS.57,77,280/ - . THEN THE AO LEVIED A MINIMUM PENALTY OF RS.17,33,184/ - U/S 271(1)(C) ON THE ABOVE AMOUNT OF RS.57,77,280/ - 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED A N APPEAL BEFORE THE LD. CIT(A). THE LD. C IT(A) HAS HELD THAT THOUGH THE DETERMINATION OF COMMISSION INCOME @ 2% IS AN ESTIMATE, BUT THE SAME IS BASED ON RELEVANT STATEMENTS AND SEIZED INCRIMINATING DOCUMENTS. ITA NO. 128/MUM/2015 3 SINCE THE CORRECT INCOME FROM COMMISSION WAS NOT DISCLOSED BY TIL IN THE RETURN OF INCOM E, THE LD. CIT(A) HELD THAT THE CONCEALMENT OF PARTICULARS OF INCOME WAS ESTABLISHED. THEREFORE, HE UPHELD THE ORDER OF THE AO. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMITS THAT THE QUANTUM APPEAL OF THE ASSESSEE HAS BEEN DECIDED IN ITS FAVOUR BY THE ITAT E BENCH, MUMBAI FOR THE IMPUGNED ASSESSMENT YEAR (ITA NO. 6389/MUM/2012) AND THEREFORE, THE PENALTY ORDER DOES NOT SURVIVE. 6. ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS A ND PERUSED THE RELEVANT MATERIALS ON RECORD. THE CO - ORDINATE BENCH IN QUANTUM APPEAL IN THE CASE OF TIL FOR THE IMPUGNED ASSESSMENT YEAR HAS FOLLOWED THE ORDER DATED 01.06.2016 OF TRIBUNAL IN A RELATED CASE OF GOLDSTAR FINVEST PVT. LTD. (ITA NO. 6114 - 6120/ M/2012) AND DIRECTED THE AO TO APPLY NET PROFIT @ 0.15% ON THE BANK DEPOSITS OF THE ASSESSEE. THUS THE COMMISSION INCOME ESTIMATED BY THE AO @ 2% WAS REDUCED BY THE TRIBUNAL TO 0.15% OF THE BANK DEPOSITS. FURTHER WE FIND SIMILAR PENALTY LEVIED BY THE AO HAS BEEN CANCELLED BY THE CO - ORDINATE BENCH IN THE CASE OF M/S MIHIR AGENCIES PVT. LTD. VS. DCIT FOR AY 2005 - 06 & 2007 - 08 (ITA NO. 7533 & 7535/MUM/2015) , MR. MUKESH CHOKSI VS. DCIT FOR AY 2005 - 06 (ITA NO. 996/MUM/2015), M/S WAVECOM BUILDERS PVT. LTD. VS. D CIT FOR AY 2008 - 09 (ITA NO. 685/MUM/2015). ITA NO. 128/MUM/2015 4 7.1 AS IS EVIDENT FROM ABOVE , THE ESTIMATION OF PROFIT @ 2% BY THE AO HAS BEEN REDUCED TO 0.15% BY THE TRIBUNAL. THEREFORE, THIS IS NOT A FIT CASE FOR IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. 7.2 WE FOLLOW THE ORDER S OF THE CO - ORDINATE BENCH ON SIMILAR ISSUE AS MENTIONED HERE - IN - ABOVE AND DELETE THE PENALTY OF RS.17,33,184/ - LEVIED BY THE AO. 8. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/09/2017. SD/ - SD/ - ( SAKTIJIT DEY ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 08/09/2017 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI