TOLCHAND G. RANKA, MUMBAI V. ITO RG 20(1)(1), MUMBAI

ITA 3255/MUM/2015

• Counselvise Citation: 325519914 RSA 2015
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-08-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 28-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOURYA PRATAP
• Assessee Lawyers: TOLACAND G RANKA
• Section: 131; 143(3)

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND, SHRI LALIT KUMAR, JUDICIAL MEMBER . / ITA NO. 3255 / MUM/ 201 5 ( / ASSESSMENT YEAR : 2011 - 12 ) TOLCHAND G. RANKA, B - 204, PAWAPURI APARTMENT, 85 - 87, SETH MOTISHA LANE, LOVE LANE, MAZAGAON, MUMBAI - 400010 .. / APPELLANT V/S ITO RG 20 ( 1 )(1 ) , MUMBAI .... / RESPO NDENT . / PERMANENT ACCOUNT NUMBER AAAPR8510L APPELLANT BY : SHRI TOLACAND G. RANKA (AR) REVENUE BY : SHRI M OURYA PRATAP (DR) / DATE OF HEARING 1 2 .0 8 .201 5 / DATE OF ORDER 23.9.2015 / ORDER PER , LALIT KUMAR , J .M. THE PRESENT APPEAL IS ARISING OUT OF THE ORDER DATED 19.3.2015 PASSED BY COMMISSIONER OF INCOME TAX - 32 , MUMBAI IN APPEAL NO.CIT(A) - 32/IT - 250/20 (3)( 5 ) 201 3 - 1 4 AGAINST THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF T HE ACT FOR THE ASSESSMENT YEAR 20 11 - 12 . THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: TOLCHAND G RANKA 2 1. ON THE FACTS AND IN, THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DECISION OF THE ASSESSING OFFICER PASSING THE ORDER U/S 143(3) R.W.S. 147 OF THE' INCOME TAX ACT, 1961 BY ESTIMATING THE TOTAL COMMISSION INCOME ON CASH TRANSACTIONS @ 5.5% WITHOUT ANY BASIS UNDER THE PRETEXT OF MARKET INFORMATION WITHOUT CORROBORATIVE EVIDENCE AS AGAINST @.70% IRRESPECTIVE OF THE FACT AND SUBMISSION S MADE DURING THE ASSESSMENT AND APPELLATE PROCEEDINGS THAT THE ACTUAL COMMISSION CHARGED WAS ONLY 0.70% AND THE SAME WAS OFFERED TO TAX. 2. THE APPELLANT RESERVES THE RIGHT TO ADD, AMEND, MODIFY, OR SUBTRACT ANY GROUND OF APPEAL AT ANY STAGE OF HEARING. 3 . THE FACTS OF THE CASE ARE THAT AS PER ENQUIRY CONDUCTED BY AO , THE ASSESSEE HAD MADE AGGREGATE CASH DEPOSIT RS.1,24,20,302/ - IN THE BANK ACCOUNT OF THE ASSESSEE. A SWORN STATEMENT WAS RECORDED FROM THE ASSESSEE U/S 131 OF THE ACT BY THE DDIT(IN V) V(3), WHEREIN THE ASSESSEE EXPLAINED THAT THE VARIOUS PARTIES USED TO DEPOSIT CASH IN HIS BANK ACCOUNT AT LOCATIONS OUTSIDE MUMBAI AND HE USED TO WITHDRAW THE SAME IN MUMBAI AND HAND OVER TO THE DIRECTED PARTIES ON THEIR BEHALF IN MUMBAI. FOR PROVIDING SUCH SERVICE, HE SUBMITTED THAT HE HAS EARNED INCOME @ 0.70% WHICH HAS ALSO BEEN OFFERED FOR TAX IN HIS RETURN OF INCOME. THE AO ACCEPTED THE SAID EXPLANATIONS OF THE ASSESSEE WITH REGARD TO THE SOURCES OF DEPOSITS, BUT HE DID NOT AGREE WITH THE RATE OF C OMMISSION DECLARED BY THE ASSESSEE. ACCORDINGLY HE ESTIMATED THE COMMISSION AT 5.5% OF THE DEPOSITS AND ACCORDINGLY WORKED OUT THE DIFFERENCE IN COMMISSION INCOME AT RS.5,96,174/ - AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. THE LD CIT(A) ALSO CONFIRMED THE SAME. TOLCHAND G RANKA 3 4. WE HAVE HEARD BOTH THE PARTIES AND RELEVANT MATERIAL ON RECORD PRODUCED BEFORE US. WE NOTICE THAT THE LD. CIT(A) HAS OBSERVED THAT THE BUSINESS CARRIED ON BY THE APPELLANT IS NOT A LEGAL ACTIVITY AND THE SAME INVOLVES HIGH AMOUNT OF RISK . H OWEVER THE AO AND CIT(A) BOTH HAD QUANTIFIED AND ESTIMATED THE INCOME OF THE ASSESSEE IN THE ABSE NCE OF BOOKS OF ACCOUNT @5.5% OF THE AGGREGATE AMOUNT OF DEPOSITS . BEFORE US, THE LD A.R CONTENDED THAT THE ACTIVITY OF THE ASSESSEE IS MERE WIT HDRAWAL FROM THE BANK ACCOUNT AND HANDING OVER THE SAME TO THE CONCERNED PERSONS. ACCORDINGLY HE SUBMITTED THAT THE NO ONE WOULD GIVE COMMISSION AT 5.5% AS ESTIMATED BY THE TAX AUTHORITIES. HE FURTHER SUBMITTED THAT THE ASSESSEES ACTIVITY INVOLVES EXPEN DITURE ALSO AND HENCE THE RATE OF 0.70% DISCLOSED BY THE ASSESSEE IS REASONABLE. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE ASSESSEE IS CARRYING ON ILLEGAL ACTIVITY IN WHICH THE RATE OF COMMISSION IS USUALLY HIGH. 5. THOUGH THE REVENUE CONTENDS THAT THE ACTIVITY CARRIED ON BY THE ASSESSEE IS NOT A LEGAL ACTIVITY, YET THE POINT IS THAT THE INCOME TAX ACT IS NOT CONCERNED WITH THE LEGALITY OR OTHERWISE. THE ISSUE UNDER CONSIDERATION IS RELATED TO THE RATE OF COMMISSION THAT COULD HAVE BEEN RECEIV ED BY THE ASSESSEE. WE NOTICE THAT BOTH THE ASSESSEE AS WELL AS THE REVENUE COULD NOT SUBSTANTIATE THEIR RESPECTIVE CLAIM OF RATE OF COMMISSION. UNDER THESE SET OF FACTS, THE PRESENT ISSUE COULD BE RESOLVED BY FOLLOWING A VIA MEDIA APPROACH . ACCORDINGL Y, W E ARE OF THE VIEW THAT THIS ISSUE WOULD MEET THE ENDS OF JUSTICE, IF THE RATE OF COMMISSION EARNED BY THE ASSESSEE IS ESTIMATED AT 2.5% OF THE AGGREGATE AMOUNT OF CASH DEPOSITS. WE ORDER ACCORDINGLY. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) A ND DIRECT THE AO TO DETERMINE THE ADDITION BY TAKING THE RATE OF COMMISSION AT 2.5%. TOLCHAND G RANKA 4 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 23.9. 2015. SD - B.R. BASKARAN ACCOUNTANT MEMBER SD / - LALIT KUMAR JUDICIAL MEMBER MUMBAI, DATED : 23.9. 2015 PATEL / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER TRUE COPY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI