ITO 19(3)(5), MUMBAI V. USHMA KETAN MORAKHIA, MUMBAI

ITA 3357/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0533 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 12-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: RAJESH CHAMARIA
• Keywords: Bogus purchase; Search and seizure; Accommodation entries; Tax effect
• Section: 143(3); 132

Judgement Text

P A G E | 1 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI B.R BASKARAN , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO. 3357 /MUM/2016 ( / ASSESSMENT YEAR: 2007 - 08 ) ITO - 1 9(3)( 5 ), MATRU MANDIR, 2 ND FLOOR, R.NO. 2016, TARDEO ROAD, MUMBAI - 400 0 07 / VS. USHMA KETAN MORAKHIA 36 CIGARETWALA BLDG, 364 S.V.P ROAD, PARATANA SAMAJ, MUMBAI. ./ ./ PAN/GIR NO. AENPM4387D ( / REVENUE ) : ( / ASSESSEE) / REVENUE BY : SHRI M.C OMININGSHEN, S.R. D.R / ASSESSEE BY : SHRI RAJESH CHAMARIA / DATE OF HEARING : 0 2 /0 8 /2017 / DATE OF PRONOUNCEMENT : 0 2 /0 8 /2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER T HE CAPTIONED APPEAL FILED BY THE REVENUE PERTAINING TO ASSESSMENT YEAR 2007 - 08 IS DIRECTED AGAINST THE ORDER PASSED BY P A G E | 2 CIT(A) - 30 , MUMBAI, DATED 08/02/2016 , WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), DATED 26/03/2014 . THE REVENUE ASSAILING THE ORDER OF THE CIT(A) HAD THEREIN R AISED THE FOLLOWING GROUNDS OF APPEAL BEFORE US: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 31,92,484/ - ON ACCOUNT OF BOGUS PURCHASES (ACCOMMODATION ENTRIES)?. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LEARNED CIT(A) ON THE ABOVE GROUND E SET ASIDE AND THAT OF HE A.O BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED HER RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 2,71,833 , WHICH WAS PROCESSED AS SUCH U/S 143(1) OF THE ACT. THAT SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT UNDER SEC. 132 ON TH E MAHASAGAR GROUP ON 25/11/2009, AND THE DIRECTORS OF THE GROUP COMPANIES, VIZ. S/SH. MUKESH CHOKSI & JAYESH K. S A MPAT, WHICH AS PER THE INFORMATION RECEIVED BY THE A.O FROM THE INVESTIGATION WING OF THE INCOME - TAX DEPARTMENT REVEALED THAT THE ASSESSEE AS A BENEFICIARY HAD TAKEN ACCOMMODATION ENTRIES OF RS. 31,92,484/ - . THE CASE OF THE ASSESSEE WAS REOPENED BY THE A.O ON THE BASIS OF THE AFORESAID INFORMATION AND AN ADDITION OF RS. 31,92,484/ - (SUPRA) WAS MADE IN THE HANDS OF THE ASSESSEE. 3. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE A.O CARRIED THE SAME IN APPEAL BEFORE THE CIT(A) . THE CIT(A) AFTER DELIBERATING ON THE FACTS OF THE CASE IN THE BACKDROP OF THE CONTENTIONS RAISED BY THE ASSESSEE BEFORE HIM , DELETED THE ADDITION OF RS. 31,92,484/ - (SUP RA) AND ALLOWED THE APPEAL OF THE ASSESSEE . - P A G E | 3 4. THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD ASSAILED THE ORDER OF THE CIT(A) BEFORE US. IT WAS AT THE VERY OUTSET POINTED OUT BY THE LD. AUTHORIZED REPRESENTATIVES (FOR SHORT A.R.) FOR THE AS SESSEE THAT THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL WAS LESS THAN RS.10 LAC AS PRESCRIBED IN THE CBDT CIRCULAR NO. 21/2015, DATED 10/12/2015, AS PER WHICH THE MONETARY LIMIT FOR FILING OF THE APPEAL BY THE DEPARTMENT BEFORE THE INCOME TAX APPELLATE TRIBUNAL HAD BEEN REVISED RETROSPECTIVELY. THE LD. A.R IN ORDER TO DRIVE HOME HIS AFORESAID CONTENTION, THEREIN FILED A CHART REFLECTING THE CALCULATION OF THE TAX EFFECT , WHICH READS AS UND ER: INCOME RETURNED ASSESSED AMOUNT IN DISPUTE TOTAL INCOME 2,71,833 34,64,320 31,92,487 TAX 13,683 9,38,177 9,24,494 SURCHARGE 93,818 93,818 E.CESS 274 20,640 20,366 13,957 10,52,635 10,38,678 PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R.) SUBMITTED THAT AS AFTER INCLUDING THE SURCHARGE INVOLVED IN THE PRESENT APPEAL, THE TAX EFFECT WAS MORE THAN THE CUT OFF LIMIT OF RS.10 LAC CONTEMPLATED IN THE AFORESAID CIRCULAR NO. 21/2 015 (SUPRA), THEREFORE, THE CASE OF THE ASSESSEE WAS NOT COVERED BY THE AFORESAID CIRCULAR OF THE CBDT. 5. WE HAVE HEARD THE A UTHORIZED R EPRESENTATIVES FOR THE BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PRODUCED BEFORE U S. WE FIND THAT THE TAX EFFECT EXCLUDING THE SURCHARGE IN THE PRESENT APPEAL STANDS COMPUTED AT RS. 9,24,494/ - . P A G E | 4 WE ARE OF THE CONSIDERED VIEW THAT FOR THE PURPOSE OF CONSIDERING THE AMOUNT OF TAX EFFECT AS ENVISAGED IN CBDT CIRCULAR NO. 21/2015, DATED 1 0/12/2015, WHAT HAS TO BE CONSIDERED IS THE AMOUNT OF TAX EXCLUDING THE AMOUNT OF SURCHARGE AND EDUCATION CESS. WE FIND THAT OUR AFORESAID VIEW STANDS FORTIFIED BY AN ORDER PASSED BY A COORDINATE BENCH OF THE TRIBUNAL , IN THE CASE OF THE DCIT, CENTRAL CIRC LE - 1(1), MUMBAI VS. M/S. TILAKNAGAR INDUSTRIES LTD. (ITA NO. 2506/MUM/2015, DATED 31.05.2015), WHEREIN IT WAS OBSERVED AS UNDER: - THE TAX EFFECT ON THIS DISPUTED INCOME COMES TO RS.9,86,391/ - ,EXCLUDING THE SURCHARGE AND EDUCATION CESS OF RS.1,31,190/ - OU R CO - ORDINATE BENCH IN THE CASE OF DCIT VS. M/S. DOME BELL ELECTRONICS INDIA LTD., IN ITA NO.2480/MUM/2012 DATED 22/07/2016 HAS HELD THAT FOR THE PURPOSES OF CONSIDERING THE AMOUNT OF TAX EFFECT AS ENVISAGED IN CBDT CIRCULAR DATED 10/12/2015 (SUPRA), WHAT HAS TO BE CONSIDERED IS THE AMOUNT OF TAX EXCLUDING THE AMOUNT OF SURCHARGE AND EDUCATION CESS. THEREFORE, IN THIS VIEW OF THE MATTER, THE TAX EFFECT IN DISPUTE IN THE CAPTIONED APPEAL IS STATED TO BE BELOW THE MONETARY LIMIT OF RS.10.00 LACS SPECIFIED IN THE CBDT CIRCULAR DATED 10/12/2015 (SUPRA), THE SAME IS DISMISSED AS NOT MAINTAINABLE. WE THUS FINDING OURSELVES TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE TRIBUNAL IN THE AFOREMENTIONED CASE, THUS ARE OF T HE CONSIDERED VIEW THAT AS THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL IS BELOW THE MONETARY CEILING CONTEMPLATED IN THE CBDT CIRCULAR NO. 21/2015, DATED 10/12/2015, THEREFORE, THE APPEAL OF THE DEPARTMENT IS NOT MAINTAINABLE. 6. IN THE RESULT, THE APP EAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.08.2017 SD/ - ( B.R. BASKARAN ) SD/ - (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI , DATED 02 /0 8 /2017 P A G E | 5 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A) - 52 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI