GOLDSTAR FINVEST P. LTD, MUMBAI V. ACIT (OSD-1) CEN RG 7, MUMBAI

ITA 2699/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2120 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 13-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 08-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Principle of natural justice; Accommodation entries
• Section: 234B; 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE HONBLE S/SHRI SAKTIJIT DEY (JM) , AND ASHWANI TANEJA (AM) ./I.T.A. NO.887/MUM/2012 ( / ASSESSMENT YEAR:2003-08) DY.COMMISSIONER OF INCOME TAX, CC 46, ROOM NO.659, 6 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020 / VS. M/S GOLDSTAR FINVEST PVT LTD H BLOCK, SHRI SADASHIV CHAMBERS, 6 TH ROAD, SANTACRUZ(E), MUMBAI-400055. ( / APPELLANT) .. ( / RESPONDENT) ./I.T.A. NO.2699/MUM/2013 ( / ASSESSMENT YEAR:2004-05) M/S GOLDSTAR FINVEST PVT LTD H BLOCK, SHRI SADASHIV CHS LTD, 6 TH ROAD, SANTACRUZ(E), MUMBAI-400055. / VS. ASSTT. COMMISSIONER OF INCOME TAX (OSD) CENTRAL RANGE-7, ROOM NO.413, 4 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020 ( / APPELLANT) .. ( / RESPONDENT) ./ ./PAN. :AABCG3811B / REVENUE BY SHRI VACHASPATI TRIPATHI /ASSESSEE BY SHRI BHUPENDRA SHAH ! / DATE OF HEARING :13.10.2015 ! /DATE OF PRONOUNCEMENT:30.11.2015 ITA NO.887/M/12 AND ITA NO.2699/M/2013 2 / O R D E R PER ASHWANI TANEJA, AM: THESE ARE THE TWO APPEALS, ONE BY REVENUE AG AINST THE ORDER DATED 8.11.2011 PASSED BY THE LD.CIT(A)-37, MUMBAI FOR THE ASSESSMENT YEAR 2003-04 AND ANOTHER BY ASSESSEE DIRECTED AGAIN ST THE ORDER DATED 18.1.2013 PASSED BY THE LD.CIT(A)-36, MUMBAI FOR TH E ASSESSMENT YEAR 2004-05. SINCE, THESE APPEALS PERTAIN TO THE SAME ASSESSEE, FOR THE SAKE OF CONVENIENCE; THESE APPEALS WERE HEARD TOGETHER A ND DISPOSED OF BY THIS CONSOLIDATED ORDER. 2. I.T.A. NO.887/MUM/2012(BY REVENUE) GROUNDS TAKEN BY THE REVENUE IN THIS APPEAL READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) ERRED IN RESTRICTING THE ADDITION OF RS.370.69 LAKHS MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT TO 0.15% WITHOUT APPRECIATING THAT THE ASSESSEE HAD FA ILED TO FURNISH SATISFACTORY EXPLANATION WITH REGARD TO THE IDENTIT Y OF THE PARTIES AND THE SOURCES AND GENUINENESS OF THE TRANSACTIONS 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) ERRED IN RESTRICTING THE ADDITION TO THE COMMISSION INCOME AT 0.15% WITHOUT CONSIDERING THAT THE MATERI AL FOUND DURING THE COURSE OF SEARCH CLEARLY ESTABLISHED THAT THE N ET COMMISSION CHARGED BY THE ASSESSEE GROUP OF COMPANIES VARIED B ETWEEN 1.5% AND 3.6% AND THE FACT OF ITAT DECISION IN THE CASE OF M/S MIHIR AGENCIES PVT LTD FOR AY-2002-03 (ITA NO.4912/M/2005 ) AS RELIED UPON BY THE CIT(A) WERE CLEARLY DISTINGUISHABLE. 3. AT THE TIME OF HEARING, IT WAS STATED BY THE LD . COUNSEL APPEARING FOR THE ASSESSEE THAT THIS ISSUE HAS ALREADY BEEN DECIDED BY THE CO- ORDINATE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE I N M/S GOLD STAR FINVEST ITA NO.887/M/12 AND ITA NO.2699/M/2013 3 P LTD V/S ITO IN ITA NO.4625/MUM/2005 (AY-2002-03) AND ITA NO.5000/MUM/2005 DATED 28.3.2008. IT WAS FURTHER S UBMITTED THAT THIS ORDER HAS BEEN FOLLOWED IN OTHER ORDERS BY THE TRIB UNAL IN ITO V/S M/S ALPHA CHEMIC TRADE AGENCIES PVT.LTD IN ITA NO.4999 /MUM/2005 (AY- 2002-03) DATED 29.8.2008, M/S RICHMOND SECURITIES PVT LTD V/S ACIT (OSD-1) IN ITA NO.1330/MUM/2008 (AY-2001-02) DATED 8.6.2009 AND DCIT V/S ALEMBIC SECURITIES PVT LTD IN IT(SS)A NO.5 8/BOM/2001 (AY-1999- 2000) DATED 31.8.2004. IT WAS THUS SUBMITTED BY TH E LD.AR THAT THIS ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE. 4. ON THE OTHER HAND, THE LD. DR RELIED UPON THE OR DER OF AO. NOTHING HAS BEEN BROUGHT ON RECORD BY HIM TO DISTINGUISH TH E ORDERS RELIED UPON BY THE LD. COUNSEL. 5. WE HAVE GONE THROUGH THE ORDERS OF LOWER AUTHORI TIES AND THE ORDERS OF THE CO-ORDINATE BENCH OF TRIBUNAL IN AS SESSEES OWN CASE AND OTHER ORDERS RELIED UPON BY THE ASSESSEE. IT IS N OTED 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 W AS AT 0.1%. THE ASSESSEE HIMSELF HAS OFFERED THE PERCENTAGE OF COMMISSION AT ITA NO.887/M/12 AND ITA NO.2699/M/2013 4 0.15%, WHICH IS MORE THAN THE PERCENTAGE OF COMMISS ION CONSIDERED TO BE REASONABLE BY THE TRIBUNAL IN THE CASE OF PALRESHA & CO AND KIRAN & CO (SUPRA) IN SIMILAR TYPE OF TRAN SACTIONS. THE THEORY OF ASSESSING OFFICER TO TREAT THE ENTIRE DEP OSIT AS UNEXPLAINED CASH CREDITS, CANNOT BE ACCEPTED IN THE LIGHT OF AS SESSMENT ORDERS IN THE CASE OF BENEFICIARIES AND ALSO IN THE LIGHT OF THE FACT THAT ASSESSEE IS ONLY CONCERNED WITH THE COMMISSION EARN ED ON PROVIDING ACCOMMODATION ENTRIES. WE, THEREFORE, OF THE VIEW T HAT SINCE THE ASSESSEE ITSELF HAS DECLARED THE COMMISSION ON TURN OVER AT 0.15% WHICH IS MORE THAN THE PERCENTAGE CONSIDERED TO BE REASONABLE BY THE TRIBUNAL IN THE CASE OF PALRESHA & CO AND KIRAN & CO (SUPRA), THE SAME SHOULD BE ACCEPTED. WE, ACCORDINGLY, ACCEP T THE COMMISSION DECLARED BY THE ASSESSEE AND SET ASIDE T HE 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 HAVE BEEN GIVEN BY THE LD. COUNSEL, AS MENTIONED ABOVE. WE H AVE GONE THROUGH THE ORDERS AS ENCLOSED IN THE PAPER BOOK FILED BY THE A SSESSEE AND FIND THAT THE LD. AR HAS CORRECTLY STATED THAT THIS ISSUE HAS BEEN UNANIMOUSLY ACCEPTED BY THE TRIBUNAL IN VARIOUS CASES INCLUDIN G THE CASE OF ASSESSEE. NOTHING HAS BEEN BROUGHT ON RECORD BY THE LD. DR TO DISTINGUISH THESE CASES. THEREFORE, RESPECTFULLY FOLLOWING THE ORDER S OF THE TRIBUNAL INCLUDING THE ORDER OF TRIBUNAL IN ASSESSEES OWN C ASE IN THE IMMEDIATELY PRECEDING YEAR, WE FIND THAT THE LD. CIT(A) HAS RIG HTLY DELETED THE ADDITION, NO INTERFERENCE 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. 7. I.T.A. NO.2699/MUM/2013(BY THE ASSESSEE) FOLLOWING GROUNDS HAVE BEEN TAKEN IN THE APPEAL ME MO: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE L D.CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF AO; ITA NO.887/M/12 AND ITA NO.2699/M/2013 5 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE L D.CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ORDER OF AO WITHOUT COMPLYING WITH THE PRINCIPLES OF NATURAL JUSTICE; 3. THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN DETERMINING THE INCOME OF THE APPELLANT AT RS.1,77,530/-; 4. THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS IN G RANTING PART RELIEF OF RS.62,561/- ON ACCOUNT OF EXPENSES AMOUNT ING TO RS.3,12,807/-; 5. THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS IN O BSERVING THAT THE HONBLE TRIBUNAL HAS DIRECTED TO ASSESS THE TOT AL INCOME OF THE APPELLANT %0.15%. 6. THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE LEVY OF INTEREST U/S 234B AND 234C OF THE ACT. 8. GROUNDS OF APPEAL NO. 1, 2 AND 3 ARE GENERAL IN NATURE, AND THUS DISMISSED. 9. IN GROUND NO. 4 AND 5, THE ASSESSEE HAS CHALLENG ED THE ACTION OF LD. CIT(A) IN GRANTING PART RELIEF OF RS.62561/- ON AC COUNT OF EXPENSES AMOUNTING TO RS.3,12,807/- 10. AT THE TIME OF HEARING, IT WAS STATED BY THE L D. COUNSEL APPEARING FOR THE ASSESSEE THAT THIS ISSUE HAS ALREADY BEEN DECIDED BY THE CO- ORDINATE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE I N M/S GOLD STAR FINVEST P LTD V/S ACIT (OSD-1) IN ITA NOS2762 TO 2765/MUM/2 013 (AYS-2006-07, 2005-06, 2003-04 AND 2007-08) DATED 12.7.2013. A C OPY OF THE SAID ORDER HAS BEEN PLACED BEFORE US AND FORMING PART OF RECORD. 11. THE LD. DR RELIED UPON THE ORDERS OF AUTHORITIE S BELOW. ITA NO.887/M/12 AND ITA NO.2699/M/2013 6 12. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, PERUS ED THE MATERIAL ON RECORD AND ALSO GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE ORDERS OF CO-ORDINATE BENCH OF TRIBUNAL IN ASSESS EES OWN CASE. IT IS NOTED BY US THAT AN IDENTICAL ISSUE HAD CAME UP BEF ORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS MENTIO NED ABOVE. FOR THE SAKE OF CONVENIENCE, WE REPRODUCE THE RELEVANT PART OF THE ORDER CITED ABOVE: 9. ASSESSEE PREFERRED APPEALS BEFORE THE CIT(A) FO R ALL THESE YEARS. LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS CONFIRMED THE ADDITION MADE AT THE RATE OF 0.15% AS THE SAME WAS MADE ON THE DIRECTION OF THE- TRIBUNAL IN OTHER CASES. HOWE VER, LEARNED CIT(A) FOUND THAT THE EXPENSES CLAIMED BY THE ASSES SEE IN ITS PROFIT AND LOSS ACCOUNT WERE DISALLOWED ON AD HOC BASIS. T HEREFORE, HE ALLOWED 20% OF THE ABOVE EXPENSES IN-ALL THE YEARS AND IN THIS WAY THE APPEALS OF THE ASSESSEE WERE ALLOWED IN PART. N OW, THE ASSESSEE IS IN APPEALS HERE BEFORE THE TRIBUNAL. 10. AFTER CONSIDERING THE SUBMISSION, I FOUND THAT THE DISALLOWANCE ON THE TOTAL EXPENSES AT THE RATE OF 80% IS ON HIGH ER SIDE. HENCE, I AM OF THE VIEW THAT AT LEAST 50% OF THE DISALLOWANC E SHOULD BE ALLOWED. ACCORDINGLY I DIRECT THE AO TO ALLOW 50% O F EXPENSES AGAINST 80% RESTRICTED BY CIT(A) IN ALL THESE CASES. I ORDER ACCORDINGLY 13. SINCE, THE ISSUE RAISED HEREIN HAS ALREADY BEEN DECIDED BY THE TRIBUNAL AND NOTHING HAS BEEN BROUGHT ON RECORD BY THE LD. DR TO CONTRADICT THE FINDINGS OF THE TRIBUNAL, WE THEREFO RE, DIRECT THE AO TO FOLLOW THE ORDER OF TRIBUNAL FOR THIS YEAR ALSO. W E THEREFORE, HOLD THAT 50% OF THE EXPENSES SHOULD BE ALLOWED. THE AO IS D IRECTED TO GIVE RELIEF ACCORDINGLY. GROUNDS NO. 4 AND 5 ARE PARTLY ALLOWED . 14. GROUND NO.6, BEING CONSEQUENTIAL, IS DISMISSED. 15. GROUND NO.7 IS GENERAL IN NATURE, THEREFORE, DI SMISSED. ITA NO.887/M/12 AND ITA NO.2699/M/2013 7 16. IN THE RESULT, THE APPEAL FILED REVENUE STANDS DISMISSED AND APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED ACCORDINGLY ON 30 TH NOV, 2015. $ % & '( ) 30 TH NOV, 2015 SD/- SD/- (SAKTIJIT DEY) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER % MUMBAI: 30 TH NOV, 2015. . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. - ( ) / THE CIT(A)- CONCERNED 4. - / CIT CONCERNED 5. ./ 0 , ! 0 , % / DR, ITAT, MUMBAI CONCERNED 6. 1 / GUARD FILE. ( / BY ORDER, (ASSTT. REGISTRAR) ! 0 , % /ITAT, MUMBAI