MIHIR AGENCIES P. LTD, MUMBAI V. ACIT (OSD-1) CEN RG 7, MUMBAI

ITA 2692/MUM/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8626 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-02-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 08-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KUMAR
• Keywords: Search and seizure; Accommodation entries
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO.2692/M/2013 ASSESSMENT YEAR: 2002-03 M/S. MIHIR AGENCIES P. LTD., BLOCK H, SHRI SADASHIV CHS LTD., 6 TH ROAD, SANTACRUZ (E), MUMBAI 400 055 PAN: AAGFM0809D VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, OSD-1, CENTRAL RANGE-7, ROOM NO.413, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI MUKESH CHOKSHI, A.R. REVENUE BY : SHRI NARENDRA KUMAR, D.R. DATE OF HEARING : 01.11.2017 DATE OF PRONOUNCEMENT : 02.11.2017 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 30.01.2013 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2002-03. 2. DURING THE COURSE OF HEARING, AT THE OUTSET, THE LD. A.R. HAS SUBMITTED THAT SIMILAR ISSUE HAD ARISEN IN GROUP CO NCERNS OF THE ASSESSEE BEFORE THE TRIBUNAL WHEREIN THE RATE OF CO MMISSION HAS ITA NO.2692/M/2013 M/S. MIHIR AGENCIES P. LTD. 2 BEEN ACCEPTED AT 0.15%. THE LIST OF SOME OF THE IT AT DECISIONS FILED BEFORE US IS AS UNDER: (I) M/S GOLDSTAR FINVEST P LTD-ITAS 887 AND 2699/M /2013, ORDER DATED 30.11.2015; (II) M/S MIHIR AGENCIES PVT. LTD. IN ITAS 6435 TO 6 441/M/2012 VIDE ORDER DATED 06.01.2016; (III) ALLIANCE INTERMEDIATERIES AND NETWORKS P LTD. , IN ITAS 2700 TO 2702/M/2013 ORDER DATED 20.02.2016. (IV) ITA NO.833/M/2013 FOR A.Y.2004-05 AND ITA NO.834/M/2013 FOR A.Y. 2005-06 VIDE ORDER DATED 04. 05.2016 3. LD. D.R. ALSO ADMITTED THAT, THE ISSUE OF RATE OF COMMISSION HAS BEEN DECIDED BY THE TRIBUNAL IN VARIOUS CASES. 4. BRIEF FACTS QUA THE ISSUE INVOLVED IS THAT, A SEARCH AND SEIZURE ACTION UNDER SECTION 132(1) WAS CONDUCTED IN THE GR OUP COMPANIES OWNED AND FLOATED BY ASSESSEE, M/S. MIHIR AGENCIES PVT. LTD. ON 25.11.2009. THE ASSESSEE WAS ALSO COVERED UNDER THE SAME SEARCH AND CONSEQUENTLY ASSESSMENTS UNDER SECTION 143(3) R .W.S. 153C OF THE ACT WERE COMPLETED. THE ASSESSING OFFICER (HERE INAFTER REFERRED TO AS THE AO) IN THE ASSESSMENT ORDER HAS NOTED THA T, DURING THE COURSE OF THE SEARCH AND SEIZURE ACTION, IT WAS FOU ND THAT THE ASSESSEE AND THE GROUP COMPANIES OF THE ASSESSEE WERE ENGAGE D IN THE BUSINESS OF ACCOMMODATION ENTRIES AND LAUNDERING OF BLACK MONEY. THE MANAGING DIRECTOR MR. MUKESH CHOKSI HIMSELF WAS THE MASTERMIND BEHIND FORMATION OF ALL THESE COMPANIES. VARIOUS OTHER DETAILS AND MODUS OPERANDI HAVE BEEN NOTED BY HIM A LONG WITH THE ITA NO.2692/M/2013 M/S. MIHIR AGENCIES P. LTD. 3 STATEMENT ON OATH OF THE ASSESSEE AND THE SEIZED DO CUMENTS. THUS, ON THE BASIS OF HIS DETAIL DISCUSSIONS AND MATERIAL ON RECORD, THE AO HELD THAT, THE ASSESSEE AND THE GROUP COMPANIES RUN BY HIM WERE RECEIVING COMMISSION INCOME FROM FOR ALL THESE ACTI VITIES. SUCH A COMMISSION INCOME WAS RANGING BETWEEN 1.5% TO 3.5%. THE AO ACCORDINGLY REJECTED THE BOOKS OF ACCOUNT OF THE AS SESSEE AND ESTIMATED THE NET PROFIT RATE OF THE COMMISSION @ 2 %, WHICH ACCORDING TO THE ASSESSEE WAS 0.15%. 5. BEFORE THE CIT(A), THE ASSESSEE FILED VARIOUS DE CISIONS PASSED BY THE CIT(A) IN GROUP COMPANIES, WHEREIN, 0.15% OF THE COMMISSION RATE HAS BEEN ACCEPTED. HOWEVER, THE LD. CIT(A) DID NOT ACCEPT THE ASSESSEES CONTENTION AND CONFIRMED THE ESTIMATE MADE BY THE AO. 6. ON THE PERUSAL OF THE IMPUGNED ORDERS AND THE F INDING OF THE TRIBUNAL IN THE CASE OF M/S MIHIR AGENCIES PVT LTD (SUPRA) AND ON SIMILAR OTHER DECISIONS AS RELIED BEFORE US, WE FIN D THAT THE TRIBUNAL HAS UPHELD THE NET PROFIT RATE OF 0.15%. THE RELEVA NT OBSERVATION OF THE TRIBUNAL IN THE CASE OF M/S MIHIR AGENCIES PVT. LTD IS REPRODUCED HEREUNDER:- 7. WE FIND THAT IN THE CASE OF GOLD STAR FINVEST L TD, WHICH IS A SISTER CONCERN OF THE ASSESSEE, ON SIMILAR FACTS FOR THE ASSESSMENT YEAR 2003-04 AND 2004-05, THE TRIBUNAL AFTER REFERRING TO VARIOUS DECISIONS HAVE UPHELD THE PERCENTAGE OF COMMISSION ON NET PROFIT @ 0.15% WHICH WAS QUITE CO NSISTENT WITH THE STATEMENT RECORDED AT THE TIME OF SEARCH. ACCORDINGLY, FOLLOW ING THE JUDICIAL PRECEDENCE IN THE CASE OF THE ASSESSEES SISTER CONCERN (SUPRA), WE U PHOLD THE RATE OF COMMISSION / RATE OF NET PROFIT FROM SUCH ACTIVITIES AT 0.15%. A CCORDINGLY, GROUND NO. 4, 5 AS RAISED BY THE ASSESSEE ARE ALLOWED. ITA NO.2692/M/2013 M/S. MIHIR AGENCIES P. LTD. 4 THUS, CONSISTENT WITH THE VIEW TAKEN IN VARIOUS SIM ILAR MATTERS, WE ALSO UPHOLD THE RATE OF COMMISSION / NET PROFIT RATE FROM SUCH ACTIVITY AT 0.15%. ACCORDINGLY, THIS ISSUE IS DECID ED IN FAVOUR OF THE ASSESSEE. 7. DURING THE COURSE OF HEARING, THE LD. A.R. SUBM ITTED THAT REGARDING EXPENSES TO THE TUNE OF RS.10,550/- CLAIM ED BY THE ASSESSEE WAS ADJUDICATED BY THE LD. CIT(A) AND THE LD. CIT(A) HAS ALLOWED RS.2,110/- OUT OF RS.10,550/- OF TOTAL EXPE NSES. HENCE, THE APPEAL WAS PARTLY ALLOWED. 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. THE ASSESSEE HAS STATED BEFORE US THAT 50% OF THE EXPEN SES SHOULD BE ALLOWED. WE FIND THAT THE LD. CIT(A) HAS ALLOWED 20 % OF THE EXPENSES ON ESTIMATED BASIS AND THE ADDITION REMAIN S OF RS.8,440/-. HENCE, WE FURTHER ALLOW 25% OF EXPENSES WHICH COMES TO RS.2,637/-. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.11.2017. SD/- SD/- (MANOJ KUMAR AGGARWAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 02.11.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI ITA NO.2692/M/2013 M/S. MIHIR AGENCIES P. LTD. 5 THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.