M/s. Aries Crafts Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 2208/DEL/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7826 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 15-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Assessee Lawyers: V P GUPTA SHRI ANUNAV KUMAR
• Keywords: Search and seizure; Document seized; Opportunity of being heard; Accommodation entries; Documents seized; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.2208/DEL./2015 (ASSESSMENT YEAR : 2010-11) M/S. ARIES CRAFTS PVT. LTD., VS. DCIT, CENTRAL CIR CLE 4, 13/34, W.E.A. KAROL BAGH, NEW DELHI. NEW DELHI 110 005. (PAN : AADCA5439P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.P. GUPTA, ADVOCATE SHRI ANUNAV KUMAR, ADVOCATE REVENUE BY : MS. NIDHI SRIVASTAVA, CIT DR DATE OF HEARING : 15.07.2019 DATE OF ORDER : 22.07.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. ARIES CRAFTS PVT. LTD. (HEREINAFTE R REFERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 31.12.2014 PASSED BY THE COMMI SSIONER OF INCOME - TAX (APPEALS)-XXX, NEW DELHI QUA THE ASSE SSMENT YEAR 2010-11 ON THE GROUNDS INTER ALIA THAT :- 1. THAT THE CIT(A) ERRED IN UPHOLDING COMMISSION INCOME OF RS.37,35,000/- CALCULATED BY THE ASSESSING OFFIC ER AT 2.25% ON THE TOTAL AMOUNT OF RS.16.60 CRORES CONSIDERED AS ACCOMMODATION ENTRIES WITHOUT APPRECIATING THAT AMO UNT OF RS.10.95 CRORES HAD BEEN PAID FOR PURCHASE OF SHARE S OF PRAKASH ITA NO.2208/DEL./2015 2 INDUSTRIES AND AMOUNT OF RS.5.45 CRORES REPRESENTS TRANSFER TO OTHER GROUP COMPANIES AND PAYMENT TO OUTSIDE PARTIE S WAS ONLY OF RS.20 LACS AS LOAN. 2. THAT THE CIT(A) ERRED IN NOT ACCEPTING PAYMENT O F RS.10.95 CRORES MADE FOR PURCHASE OF SHARES OF PRAK ASH INDUSTRIES AS GENUINE WITHOUT APPRECIATING THAT SHA RES HAD ALSO BEEN SOLD DURING THE YEAR FOR TOTAL CONSIDERATION O F RS.10,97,47,565/- AND THE APPELLANT COMPANY HAD SUB MITTED BEFORE HIM NECESSARY EVIDENCE IN REGARD TO SALE OF THE SHARES AND, THEREFORE, GENUINENESS OF THE SAME COULD NOT B E DOUBTED. 3. THAT THE EN (A) ALSO TAILED TO APPRECIATE THAT T RANSFER TO RUNES TO OTHER GROUP COMPANIES AMOUNTING TO RS. 5.4 5 CRORES COULD NOT BE CONSIDERED AS ACCOMMODATION ENTRIES IN THE CASE OF APPELLANT AND ACCORDINGLY, COMMISSION INCOME COULD NOT BE DETERMINED WITH REFERENCE TO THE SAME. 4. THAT THE CIT(A) ERRED IN NOT FOLLOWING THE DIREC TIONS OF THE HON'BLE TRIBUNAL GIVEN VIDE ORDER DATED 18.10.2 013 IN ACCORDANCE WITH WHICH THE RATE OF COMMISSION WAS TO BE DETERMINED TAKING INTO CONSIDERATION PRECEDENCE ON THE ISSUE AND THE APPELLANT HAD DULY SUBMITTED NUMBER OF PREC EDENCE BEFORE THE CIT(A) IN ACCORDANCE WITH WHICH THE RATE OF COMMISSION IN THE BUSINESS OF PROVIDING ACCOMMODATI ON ENTRIES WAS RANGING 0.25% TO 0.5%. 5. THAT THE CIT(A) ERRED IN UPHOLDING ADDITION MADE BY ASSESSING OFFICER AS PER THE INFORMATION AVAILABLE ON AIR OF TRANSACTIONS OF SALE OF SHARES OF MIS PRAKASH INDUS TRIES WITHOUT APPRECIATING THAT THE APPELLANT HAD GIVEN EVIDENCE FOR PURCHASE AND SALE OF ABOVE SHARES AND PROFIT ON TRANSACTIONS OF PURCHASE AND SALE OF SHARES OF RS.54,064/-HAD ALSO BEEN ACCO UNTED FOR IN THE BOOKS OF THE COMPANY. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE COMPANY BELONGS TO TARUN GOYAL GROUP OF CASES WHICH IS ENGAGED IN PROVIDING ENTRIE S IN SHARE CAPITAL, LOANS ETC.. ON THE BASIS OF SEARCH AND SEIZURE OPE RATION CARRIED OUT BY THE INVESTIGATION WING OF THE INCOME-TAX ON 15.09.2 008, IT WAS FOUND THAT THE ASSESSEE COMPANY HAD TRANSFERRED FUNDS AND HAD GIVEN ACCOMMODATION ENTRIES TO PARTIES CONNECTED WITH TAR UN GOYAL GROUP ITA NO.2208/DEL./2015 3 AND OUTSIDERS THROUGH ITS ACCOUNT NO.01792090007427 AND 03142340000152 MAINTAINED WITH KOTAK MAHINDRA BANK AND HDFC BANK RESPECTIVELY AND TOTAL FUNDS TRANSFERRED TO TH E OUTSIDE PARTIES DURING THE YEAR UNDER ASSESSMENT WERE RS.16.60 CROR ES. ASSESSING OFFICER (AO) REACHED THE CONCLUSION THAT THE ASSESS EE COMPANY HAS BEEN PROVIDING ACCOMMODATION ENTRIES TO THE BENEFICIARIE S FOR EARNING COMMISSION INCOME AND FOLLOWING THE AY 2009-10 ESTI MATED COMMISSION @ 2.25% FOR PROVIDING ACCOMMODATION ENTR IES WHICH WAS ADOPTED ON THE BASIS OF SEIZED DOCUMENTS AND THEREB Y MADE AN ADDITION OF RS.37,35,000/- I.E. COMMISSION @ 2.25% ON THE FU NDS AMOUNTING TO RS.16.60 CRORES. 3. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS DISMISSED THE APPEAL. FEELING AGGR IEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING TH E PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UP ON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF TH E FACTS AND CIRCUMSTANCES OF THE CASE. 5. LD. AR FOR THE ASSESSEE CHALLENGING THE IMPUGNED ORDER CONTENDED THAT IN CERTAIN APPEALS PERTAINING TO TAR UN GOYAL GROUP OF COMPANIES FOR AYS 2006-07, 2007-08 & 2008-09, COMMI SSION INCOME QUA ACCOMMODATION ENTRIES HAS BEEN DETERMINED @ 0.5 0%. IT IS FURTHER CONTENDED THAT THE COMMISSION INCOME IS TO BE DETER MINED ONLY QUA THE ITA NO.2208/DEL./2015 4 ENTRIES PROVIDED OUTSIDE THE BOOKS AND NOT IN CASE OF INTRA-GROUP TRANSACTIONS. HOWEVER, ON THE OTHER HAND, LD. DR F OR THE REVENUE RELIED UPON THE ORDER PASSED BY THE AO AS WELL AS LD. CIT (A). 6. COORDINATE BENCH OF THE TRIBUNAL IN THE GROUP CA SES BEING M/S. DWARKA IMPEX PVT. LTD. VS. ITO IN ITA NO.1565/DEL/2 017 & OTHER CASES ORDER DATED 26.04.2019 DECIDED THE ISSUE AS TO DETERMINING THE COMMISSION ON TRANSACTIONS OF PROVIDING ACCOMMODATI ON ENTRIES BY RETURNING FOLLOWING FINDINGS :- 22. SO FAR AS QUESTION OF APPLYING THE RATE OF COM MISSION AT THE RATE OF 2.25 % BY THE AO AND REDUCED TO 2% BY THE LD. CIT(A) IS CONCERNED, THIS ISSUE HAS ALREADY BEE N DECIDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE GROU P CASES OF TARUN GOYAL VIDE ORDER DATED 23.01.2019 PASSED I N ITA NO.6507/DEL/2015 & ORS., THEREBY AO HAS BEEN DIRECT ED TO ADOPT THE RATE OF COMMISSION @ 0.50% OR 50 PAISE AN D COMPUTED THE PROFIT ACCORDINGLY BY RETURNING FOLLOW ING FINDINGS :- 14. THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED HEAVILY ON VARIOUS DECISIONS OF THE CO-ORDINATE BEN CH WHEREIN THE TRIBUNAL HAS ADOPTED RATE RANGING FROM 0.15 PAISE TO 0.50 PAISE I.E 0.15% TO 0.50%. 15. AS MENTIONED ELSEWHERE, IN SUCH ILLEGAL ACTIVITIES, THERE CANNOT BE ANY PRECEDENCE AND THE RATE VARIES FROM FACTS OF EACH CASE. 16. TO PUT AN END TO THE LITIGATION AND IN THE INTEREST OF JUSTICE AND FAIR PLAY, IN OUR CONSIDERE D OPINION, 0.50 PAISE OR 0.50% SHOULD BE TAKEN AS THE REASONABLE RATE OF PROFIT/COMMISSION IN SUCH CLANDESTINE ACTIVITIES. WE, ACCORDINGLY, DIRECT THE ASSESSING OFFICERS TO ADOPT 0.50% OR 0.50 PAISE AND COMPUTE THE PROFIT ACCORDINGLY. 23. FOLLOWING THE DECISION RENDERED BY THE COORDINA TE BENCH OF THE TRIBUNAL, AO IS DIRECTED TO ADOPT THE DECISION ITA NO.2208/DEL./2015 5 OF GROUP CASES OF TARUN GOYAL (SUPRA) AND COMPUTED THE PROFIT ACCORDINGLY IN THESE CASES ALSO. 24. SO FAR AS APPEALS BEARING ITA NOS.484/DEL./2015 , 6516/DEL./2015 & 6710/DEL./2016 FILED BY THE ASSESS EES ARE CONCERNED, ONE OF THE ISSUE IS AS TO UPHOLDING THE COMMISSION INCOME @ 2.25% IN CASE OF BHAWANI PORTFO LIO PVT. LTD. AND GEEFCEE FINANCE LTD. AND @ 2% IN CASE OF TEJASVI INVESTMENTS (P) LTD. BY THE LD. CIT (A). TH IS ISSUE IS ALSO DECIDED IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION RENDERED BY TRIBUNAL VIDE ORDER DATED 23.0 1.2019 (SUPRA) AND THE AO IS DIRECTED TO ADOPT THE DECISIO N OF GROUP CASES OF TARUN GOYAL (SUPRA) AND COMPUTED THE PROFIT ACCORDINGLY IN THESE CASES ALSO. 25. SECOND ISSUE IN CASE OF BHAWANI PORTFOLIO PVT. LTD. AND GEEFCEE FINANCE LTD., WHICH ARE OF NOIDA CHARGE , IS AS TO WHETHER DETERMINATION OF COMMISSION INCOME WITH REFERENCE TO THE ENTRIES GIVEN OUTSIDE THE GROUP. IT IS THE CASE OF THE ASSESSEE THAT THE AO HAS CALCULATED THE COMMISSION INCOME @ 2.25% ON THE TOTAL OF ALL CREDI T ENTRIES IN THE BANK ACCOUNT WITHOUT APPRECIATING TH E FACT THAT ALL THE ENTRIES HAVE BEEN DULY EXPLAINED BY TH E ASSESSEE AND INTER-GROUP ENTRIES WERE TO BE EXCLUDED. PERUSA L OF REMAND ORDER DATED 18.10.2013 PASSED BY THE TRIBUNA L WAS REQUIRED TO EXCLUDE THE INTER-GROUP ENTRIES IN THE BANK ACCOUNT IN ORDER TO CALCULATE THE COMMISSION INCOME . SO, THE AO IS DIRECTED TO EXCLUDE ALL INTER-GROUP ENTRI ES IN THE BANK ACCOUNT AS PER DIRECTIONS OF THE TRIBUNAL AND THEN CALCULATE THE COMMISSION INCOME @ 0.50%. CONSEQUEN TLY, THIS ISSUE IN THE CASE OF BHAWANI PORTFOLIO PVT. LT D. AND GEEFCEE FINANCE LTD. IS DETERMINED IN FAVOUR OF ASS ESSEE FOR STATISTICAL PURPOSES. 7. SO, WE ARE OF THE CONSIDERED VIEW THAT THE FIRST ISSUE AS TO WHAT SHOULD BE THE RATE OF COMMISSION ON AMOUNTS PROVIDE D AS ACCOMMODATION ENTRIES IS REQUIRED TO BE DECIDED FOL LOWING THE DECISION RENDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN CASE OF DWARKA IMPEX PVT. LTD. (SUPRA) OF TARUN GOYAL GROUP OF CAS ES. SO, AO IS DIRECTED TO DETERMINE THE RATE OF COMMISSION BY ADO PTING THE DECISION OF ITA NO.2208/DEL./2015 6 TARUN GOYAL GROUP OF CASES. AO IS ALSO DIRECTED TO EXCLUDE ALL INTRA- GROUP ENTRIES IN THE BANK ACCOUNT AS PER DIRECTIONS OF THE TRIBUNAL, AS DISCUSSED IN PARA 25 ABOVE, AND THEN COMPUTE THE CO MMISSION INCOME @ 0.50%. SINCE THE ASSESSEE HAS NOT GIVEN ANY SEGR EGATION OF THE ACCOMMODATION ENTRIES PROVIDED OUTSIDE THE GROUP AN D ACCOMMODATION ENTRIES PERTAINING TO INTRA-GROUP TRANSACTIONS, THE ISSUE IS REMANDED BACK TO THE AO TO DECIDE AFRESH AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, IN THE LIGHT OF THE FINDINGS RETURNED HEREIN ABOVE. CONSEQUENTLY, APPEAL FILED BY THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 22 ND DAY OF JULY, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 22 ND DAY OF JULY, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXX, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.