KAYCEE SHARES BROKING P. LTD, MUMBAI V. DCIT CEN CIR 46, MUMBAI

ITA 20/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3201 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 01-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P MEENA
• Keywords: Unexplained cash credit; Business expenditure; Search and seizure; Opportunity of being heard; Accommodation entries
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI RAMLAL NEGI, JUDICIAL MEMBER ITA NO. 19/MUM/2013,(A.Y. 2007-08) ITA NO. 20/MUM/2013,(A.Y. 2008-09) ITA NO. 21/MUM/2013,(A.Y. 2009-10) ITA NO. 22/MUM/2013,(A.Y. 2010-11) M/S. KAYCEE SHARES BROKING PVT. LTD. BLOCK H, SHRI SADASHIV CHS LTD. 6 TH ROAD, SANTACRUZ (E), MUMBAI 400 055. PAN:AACCK 7839A ...... APPELLANT VS. THE DCIT, CEN. CIR.46, AAYKAR BHAVAN,M.K.ROAD, MUMBAI 400 020 .... RESPONDENT APPELLANT BY : SHRI MUKESH CHOKSI RESPONDENT BY : SHRI R.P.MEENA DATE OF HEARING : 06/09/2016 DATE OF PRONOUNCEMENT : 09/09/2016 ORDER PER G.S.PANNU,A.M: THESE FOUR APPEALS ARE FILED BY THE SAME ASSESSEE PERTAINING TO ASSESSMENT YEARS 2007-08 TO 2010-11 AND INVOLVE CER TAIN COMMON ISSUES. THEREFORE, THEY HAVE BEEN CLUBBED AND HEAR D TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2 ITA NO. 19/MUM/2013,(A.Y. 2007-08) ITA NO. 20/MUM/2013,(A.Y. 2008-09) ITA NO. 21/MUM/2013,(A.Y. 2009-10) ITA NO. 22/MUM/2013,(A.Y. 2010-11) 2. WE MAY REFER TO THE APPEAL FOR ASSESSMENT YEAR 2 007-08 IN ORDER TO APPRECIATE THE CONTROVERSY, AS THE FACTS AND CIR CUMSTANCES IN ALL THE YEARS ARE SIMILAR. ITA NO.19/MUM/2013 FOR ASSESSM ENT YEAR 2007-08 IS DIRECTED AGAINST AN ORDER PASSED BY CIT(A)-38, MUMBAI DATED 30/11/2012, WHICH IN TURN ARISES OUT OF AN ORDER P ASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S. 153C OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 08/12/2011. 3. IN THIS APPEAL, ASSESSEE HAS RAISED MULTIPLE GRO UNDS OF APPEAL, WHICH READ AS UNDER:- FOLLOWING GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE OR DER OF D.C.I.T, CENTRAL CIRCLE-46. 2. THE LEARNED. COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THE FACT THAT THE ORDE R IS PASSED BY THE ASSESSING OFFICER WITHOUT PROVIDING SUFFICIENT OPPORTUNITY OF HEARING TO THE APPELLANT. 3. THE LEARNED. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THE FACT THAT NO EVIDE NCE OF THE VALID SATISFACTION HAS BEEN BROUGHT ON RECORD BEFORE THE ISSUE OF NOTI CE U/S 153C OF THE ACT. 4. THE LEARNED, COMMISSION OF INCOME TAX (APPEALS) HAVE ERRED IN LAW AND IN FACTS IN CONFIRMING THE ADDITIONS MADE UNDER THE AC T AMOUNTING TO RS.8,43,125/- 5. THE LEARNED. COMMISSIONER OF INCOME TAX (APPEALS ) HAVE ERRED IN LAW AND IN FACTS IN CONFIRMING THE INCOME ON GROSS RECEIPTS WITHOUT REDUCING THE TRANSFER ENTRIES AMOUNT IN BANK ACCOUNT MANAGED BY AGENTS FROM WHICH NO INCOME IS EARNED. 6. THE LEARNED. COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AND IN FACTS CONFIRMING THE ADDITIONS MADE BY ASSESSING OFFICER AT 2% ON THE GROSS DEPOSITS AS AGAINST 0.15% OFFERED BY THE APPE LLANT 7. THE LEARNED. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACT OF ASSESSING OFFICER OF APPLICATION OF THE RATE OF 3 ITA NO. 19/MUM/2013,(A.Y. 2007-08) ITA NO. 20/MUM/2013,(A.Y. 2008-09) ITA NO. 21/MUM/2013,(A.Y. 2009-10) ITA NO. 22/MUM/2013,(A.Y. 2010-11) 2% INCOME ON ENTIRE BANK DEPOSITS MANAGED BY AGENTS AS AGAINST 0.03% OFFERED BY THE APPELLANT. 8. THE LEARNED. COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AND IN FACTS BY CONFIRMING THE ASSESSMENT MADE U/S. 153 C MADE BY THE ASSESSING OFFICER WITHOUT APPRECIATING THE FACT THAT ONLY THE INCOME WHICH IS BASED ,ON THE EVIDENCES FOUND AS A RESULT OF SEARCH CAN BE AS SESSED IN THE PRESENT ASSESSMENT. 9. THE LEARNED. COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AND IN FACTS BY CONFIRMING THE ASSESSMENT MADE BY ASSES SING OFFICER BY IGNORING THE FACTS THAT NO NEW ASSETS HAVE BEEN GENERATED OR EMERGED OUT OF THE INCOME DURING THE LAST 10 YEARS EVEN AFTER THE DETA ILED SEARCH CARRIED OUT BY THE INCOME TAX DEPARTMENT. 10. THE LEARNED. COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACT OF ASSESSING OFFICER OF THE DISALLOWANCE OF BUSINESS EXPENSES AGAINST THE INCOME ESTIMATED. 11. THE LEARNED. COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACT OF ASSESSING OFFICER OF LEVYING INTEREST U/S. 234B AND 234C OF THE ACT.. 4. AT THE TIME OF HEARING, IT WAS STATED BY THE LD. REPRESENTATIVE FOR THE ASSESSEE THAT THE ISSUES RAISED IN THE CAPTIONE D APPEALS HAVE ALREADY BEEN DECIDED BY THE TRIBUNAL IN THE CASES O F THE SISTER CONCERNS OF ASSESSEE COMPANY AND IN THIS CONTEXT, R EFERENCE HAS BEEN MADE TO THE FOLLOWING DECISIONS:- (I) GOLDSTAR FINVEST PVT. LTD. ITA NOS.887/MUM/201 2 & 2699/MUM/2013 ORDER DATED 30/11/2015. (II) M/S. MIHIR AGENCIES PVT. LTD., ITA NOS.6114-6 120/MUM/2012 ORDER DATED 6/1/2016. (III) ALLIANCE INTERMEDIATERIES AND NETWORK PVT. LT D., ITA NOS. 2700,2702&2701/MUM/2013 ORDER DATED 24/2/2016. 4 ITA NO. 19/MUM/2013,(A.Y. 2007-08) ITA NO. 20/MUM/2013,(A.Y. 2008-09) ITA NO. 21/MUM/2013,(A.Y. 2009-10) ITA NO. 22/MUM/2013,(A.Y. 2010-11) (IV) MR. MUKESH CHOKSI ITA NOS.833 -839/MUM/2013 OR DER DATED 04/05/2016. 5. IN BRIEF, THE BACKGROUND OF THE DISPUTE IS THAT A SEARCH AND SEIZURE ACTION UNDER SECTION 132(1) OF THE ACT WAS CONDUCTED IN THE CASE OF SEVERAL COMPANIES, WHOSE KINGPIN IS IDENTIF IED AS ONE MR. MUKESH CHOKSI. IT WAS FOUND IN THE COURSE OF SEARC H THAT SUCH ENTITIES WERE PROVIDING ACCOMMODATION ENTRIES BY WAY OF SH ARE TRADING/ LOANS, ETC. AS THE ASSESSEE HEREIN ALSO WAS COVERED IN THE SEARCH, AN ASSESSMENT UNDER SECTION 143(3) R.W.S. 153C OF THE ACT DATED 8/12/2011 WAS MADE FOR ASSESSMENT YEAR 2009-10, WHE REIN THE TOTAL INCOME WAS ASSESSED AT RS.8,18,870/- AS AGAINST THE RETURNED LOSS OF RS.24,261/- SUCH ASSESSMENT OF INCOME HAS BEEN FUR THER AFFIRMED BY THE CIT(A), AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 5.1 DURING THE COURSE OF SEARCH PROCEEDINGS, THE RE VENUE HAD NOTED THAT FOR PROVIDING ACCOMMODATION ENTRIES, THE ENTI TIES LIKE THE ASSESSEE, WHICH WERE CONTROLLED BY MR. MUKESH CHOKS I WERE EARNING COMMISSION INCOME. IN VIEW OF SUCH MODUS OPERAND I NOTED AND THE STATEMENTS OF MR. MUKESH CHOKSI, RECORDED AT THE TI ME OF SEARCH, THE ASSESSING OFFICER NOTES THAT THE GROUP WAS EARNING COMMISSION RANGING FROM 1.5% TO 3.5% AND ACCORDINGLY HE ESTIM ATED THE NET COMMISSION INCOME @2%. ACCORDINGLY, BASED ON THE TOTAL RECEIPTS REFLECTED IN THE BANK ACCOUNT, THE ASSESSING OFFICE R ESTIMATED THE COMMISSION INCOME @2% AT RS. 8,43,125/- THIS ACTIO N OF THE ASSESSING OFFICER HAS SINCE BEEN UPHELD BY THE CIT(A). 5 ITA NO. 19/MUM/2013,(A.Y. 2007-08) ITA NO. 20/MUM/2013,(A.Y. 2008-09) ITA NO. 21/MUM/2013,(A.Y. 2009-10) ITA NO. 22/MUM/2013,(A.Y. 2010-11) 6. BEFORE US, THE LD. REPRESENTATIVE FOR THE ASSESS EE SUBMITTED THAT SIMILAR ADDITIONS WERE MADE BY THE ASSESSING OFFICE R IN THE CASES OF OTHER GROUP CONCERNS ALSO, WHICH WERE COVERED BY TH E SEARCH ACTION CARRIED OUT BY THE DEPARTMENT ON 25/11/2009. IT IS POINTED OUT THAT IN THE AFORESAID DECISIONS, THE TRIBUNAL HAS ACCEPTED THE STAND OF THE ASSESSEE THAT COMMISSION INCOME WAS LIABLE TO BE AS SESSED @0.15% OF THE TOTAL RECEIPTS AND ALSO THE FACT THAT THE NET I NCOME WAS TO BE ASSESSED AFTER ALLOWING 50% OF THE EXPENSES CLAIMED . IT WAS, THEREFORE, CONTENDED THAT FOLLOWING THE DECISIONS OF THE CO-OR DINATE BENCHES RENDERED IN THE GROUP CONCERNS OF SHRI MUKESH CH OKSI REFERRED ABOVE UNDER SIMILAR CIRCUMSTANCES, THE ASSESSED INCOME IN THIS CASE ALSO BE DIRECTED TO BE COMPUTED ACCORDINGLY. 7. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE WHILE NOT DISPUTING THE AFORESAID PRECEDENTS, SOUGHT TO POINT OUT THAT THE OTHER CASES WERE ASSESSED ON THE BASIS OF THE SURVEYS CON DUCTED, WHEREAS THE INSTANT ASSESSEE WAS COVERED BY THE SEARCH ACTION U NDER SECTION. 132(1) OF THE ACT. 8. IN REPLY, LD. REPRESENTATIVE FOR THE ASSESSEE PO INTED OUT THAT EVEN THE GROUP CONCERN CASES, RELIED UPON BY HIM, WERE COVERED BY THE SEARCH ACTION AND THERE IS COMPLETE IDENTITY O N FACTS. THEREFORE, IT WAS CONTENDED THAT THE SAID ISSUE HAS ALREADY BEEN DECIDED IN THE AFORESAID DECISIONS, AND THE SAME RATIO IS APPLICAB LE IN THE CAPTIONED APPEALS ALSO. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. WE HAVE ALSO PERUSED THE RESPECTIVE ORDERS OF THE AUTHORITI ES BELOW AND FIND 6 ITA NO. 19/MUM/2013,(A.Y. 2007-08) ITA NO. 20/MUM/2013,(A.Y. 2008-09) ITA NO. 21/MUM/2013,(A.Y. 2009-10) ITA NO. 22/MUM/2013,(A.Y. 2010-11) THAT SIMILAR ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASES OF GOLDSTAR FINVEST PVT. LTD.(SUPRA), M/S. MIHIR AGENC IES PVT. LTD.(SUPRA), ALLIANCE INTERMEDIATERIES AND NETWORK PVT. LTD.(SUP RA) AND MR. MUKESH CHOKSI(SUPRA), WHICH HAVE BEEN RELIED UPON BY THE ASSESSEE BEFORE US. ON PERUSAL OF THE AFORESAID DECISIONS WE FIND THAT THE TRIBUNAL HAD DIRECTED THAT THE INCOME BY WAY OF COMMISSION FROM THE BUSINESS OF ACCOMMODATION ENTRIES BEING CARRIED OUT BY MUKESH CHOKSI GROUP WAS LIABLE TO BE ASSESSED AT 0.15% INSTEAD OF 2% APPLIE D BY THE ASSESSING OFFICER. IN THIS CONTEXT, WE REPRODUCE HEREINAFTER PARAS 5 & 6 OF THE ORDER OF THE TRIBUNAL IN THE CASE OF GOLDSTAR FINVE ST PVT. LTD.(SUPRA), WHEREIN EARLIER PRECEDENTS HAVE BEEN RELIED UPON AN D THE ISSUE DECIDED ACCORDINGLY:- 5. WE HAVE GONE THROUGH THE ORDERS OF LOWER AUTHORI TIES AND THE ORDERS OF THE CO-ORDINATE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE AND OTHER ORDERS RELIED UPON BY THE ASSESSEE. IT IS NOTED BY US THAT IDENTICAL ISSUE HAD CAME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2002-03. THE RELEVANT OBSERVATIONS FROM THE TRIBUNALS ORDER ARE REPRODUCED BELOW: '12. HAVING, CAREFULLY EXAMINED THE VARIOUS ORDERS IN THE CASE OF DIFFERENT ASSESSEES' IT HAS BECOME AMPLY CLEAR THAT IN THESE TYPES OF ACTIVITIES, BROKERS ARE ONLY CONCERNED WITH THEIR C OMMISSION ON THE VALUE OF TRANSACTIONS. NOW THE QUESTION COMES WHAT WOULD BE THE REASONABLE PERCENTAGE TO THE COMMISSION ON THE TOTA L TURNOVER? THE ASSESSEE HAS ALSO MADE OUT A CASE THAT THE CUSTOMER S DO NOT COME DIRECTLY TO HIM AND THEY COME THROUGH A SUB- BROKER WHO ALSO CHARGES A PARTICULAR SHARE OF COMMISSION. IN ALL TH E JUDGMENTS WHAT HAS BEEN STATED IS THAT AN AVERAGE PERCENTAGE OF CO MMISSION IS BETWEEN 0.15% TO 0.25%. IN THE CASE OF PALRESHA & C O. AND KIRAN & CO (SURPA), THE TRIBUNAL HAS CONSIDERED REASONABLEN ESS OF PERCENTAGE OF COMMISSION TO BE EARNED ON TURNOVER WAS AT 0.1%. THE ASSESSEE HIMSELF HAS OFFERED THE PERCENTAGE OF COMMISSION AT 0.15%, WHICH IS MORE THAN THE PERCENTAGE OF COMMISSION CONSIDERED T O BE REASONABLE BY THE TRIBUNAL IN THE CASE OF PALRESHA & CO AND KIRAN & CO (SUPRA) IN SIMILAR TYPE OF TRANSACTIONS. THE THE ORY OF ASSESSING OFFICER TO TREAT THE ENTIRE DEPOSIT AS UNEXPLAINED CASH CREDITS, CANNOT BE ACCEPTED IN THE LIGHT OF ASSESSMENT ORDERS IN TH E CASE OF 7 ITA NO. 19/MUM/2013,(A.Y. 2007-08) ITA NO. 20/MUM/2013,(A.Y. 2008-09) ITA NO. 21/MUM/2013,(A.Y. 2009-10) ITA NO. 22/MUM/2013,(A.Y. 2010-11) BENEFICIARIES AND ALSO IN THE LIGHT OF THE FACT THA T ASSESSEE IS ONLY CONCERNED WITH THE COMMISSION EARNED ON PROVIDING A CCOMMODATION ENTRIES. WE, THEREFORE, OF THE VIEW THAT SINCE THE ASSESSEE ITSELF HAS DECLARED THE COMMISSION ON TURNOVER AT 0.15% WHICH IS MORE THAN THE PERCENTAGE CONSIDERED TO BE REASONABLE BY THE T RIBUNAL IN THE CASE OF PALRESHA & CO AND KIRAN & CO (SUPRA), THE S AME SHOULD BE ACCEPTED. WE, ACCORDINGLY, ACCEPT THE COMMISSION DE CLARED BY THE ASSESSEE AND SET ASIDE THE ORDER OF THE CIT (A) IN THIS REGARD.' 6. IT IS FURTHER NOTICED BY US THAT THIS STAND HAS BEEN CONSTANTLY ACCEPTED BY THE TRIBUNAL IN VARIOUS ORDERS, DETAILS OF WHICH HA VE BEEN GIVEN BY THE LD. COUNSEL, AS MENTIONED ABOVE. WE HAVE GONE THROUGH T HE ORDERS AS ENCLOSED IN THE PAPER BOOK FILED BY THE ASSESSEE AND FIND TH AT THE LD. AR HAS CORRECTLY STATED THAT THIS ISSUE HAS BEEN UNANIMOUSLY ACCEPTE D BY THE TRIBUNAL IN VARIOUS CASES INCLUDING THE CASE OF ASSESSEE. NOTHI NG HAS BEEN BROUGHT ON RECORD BY THE LD. DR TO DISTINGUISH THESE CASES. TH EREFORE, RESPECTFULLY FOLLOWING THE ORDERS OF THE TRIBUNAL INCLUDING THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING YE AR, WE FIND THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION, NO INTERFE RENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A), THEREFORE, THE SAME IS UPHELD. GROUNDS NO.1 AND 2 TAKEN BY THE REVENUE STAND DISMISSED. 9.1 SINCE IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE APPELLANT COMPANY BEFORE US IS ALSO A PART OF THE ENTITIES CONTROLLED BY MR. MUKESH CHOKSI, IN OUR VIEW, THE AFORESAID DECIS IONS ARE RELEVANT TO ASSESS THE INCOME OF THE ASSESSEE. IN THIS VIEW OF THE MATTER, WE, THEREFORE, SET-ASIDE THE ORDER OF THE CIT(A) AND DI RECT THE ASSESSING OFFICER TO RECOMPUTE THE COMMISSION INCOME FROM TH E BUSINESS OF PROVIDING ACCOMMODATION ENTRY IN CONFORMITY WITH TH E AFORESAID PRECEDENTS. 9.2 BEFORE PARTING WE MAY ALSO STATE THAT WHILE RE COMPUTING THE TOTAL INCOME, THE ASSESSING OFFICER SHALL ALSO GIVE EFFECT TO THE DIRECTIONS OF THE TRIBUNAL IN THE PRECEDENTS REGARD ING THE ALLOWABILITY OF EXPENDITURE CLAIMED. 8 ITA NO. 19/MUM/2013,(A.Y. 2007-08) ITA NO. 20/MUM/2013,(A.Y. 2008-09) ITA NO. 21/MUM/2013,(A.Y. 2009-10) ITA NO. 22/MUM/2013,(A.Y. 2010-11) 9.3 IN CONCLUSION, WE, THEREFORE, SET-ASIDE THE ORD ER OF THE CIT(A) AND RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OF FICER TO REDETERMINE THE TOTAL INCOME AS PER AFORESAID DIRECTIONS. NEED LESS TO MENTION, THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASON ABLE OPPORTUNITY OF BEING HEARD BEFORE RECOMPUTING THE INCOME AS PER LA W. 10. IN THE RESULT, APPEAL OF THE ASSESSEE FOR ASSES SMENT YEAR 2009-10 IS ALLOWED, AS ABOVE. 11. IT WAS A COMMON POINT BETWEEN THE PARTIES THA T THE FACTS AND CIRCUMSTANCES IN ITA NOS. 20 TO 22/MUM/2013, F OR ASSESSMENT YEARS 2008-09 2010-11 ARE PARI-MATERIA TO THOSE CONSIDERED BY US IN ITA NO. 19/MUM/2013, FOR ASSESSMENT YEAR 2007-08,THUS, OUR DECISION THEREIN SHALL APPLY MUTATIS MUTANDIS IN THESE APPEALS ALSO. ORDER PRONOUNCED IN THE OPEN COURT ON 09/09/2016 SD/- SD/- (RAMLAL NEGI) (G.S. PANNU) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI, DATED 09/09/2016 VM , SR. PS 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