ITO 29(2)(1), MUMBAI V. KIRAN ANIL BIST, MUMBAI

ITA 4874/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1205 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2013-2014
• Appeal Filed On: 13-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Accommodation entries; Sham transactions; Revised return
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI B. R. BASKARAN , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 4874 / MUM/ 201 7 ( / ASSESSMENT YEAR: 20 13 - 14 ) ITO 29(2)(1) BUILDING NO. C - 10, ROOM NO. 201, PRATYAKSHA KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI - 400051 . / VS. KIRAN ANIL BIST 202, B WING KAMAL PARK, NEAR MANGATRAM PETROL PUMP, BHANDUP (W), MUMBAI - 400078. ./ ./ PAN/GIR NO. : AJAPB 34 60 A ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 01 . 11 .201 8 / DATE OF PR ONOUNCEMENT : 27. 11 .2018 / O R D E R PER AMARJIT SINGH, J M: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 31 . 05.2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 40 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A) ] RELEVANT TO THE A.Y. 20 1 3 - 1 4 . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - 1. 'ON THE FACT AND IN THE CIRCU MSTANCES OF THE CASE AND IN LAW , THE LD. C I T(A) ERRED IN DIRECTING THE A.O TO ESTIMATE COMMISSION INCOME AT 0.1% OF THE SA LES TURNOVER WH ICH WORKS TO RS.5,25,871/ - (0.1% OF RS. 52,58,70 ,822/ - } AND THEREBY GIVING REVENUE BY : SHRI MANOJ KUMAR SINGH (DR) ASSESSEE BY: SHRI BHUPENDRA SHAH (AR) ITA. NO. 4874 /M/2017 A.Y. 2013 - 14 2 RELIEF TO THE ASSESSEE OF RS. 99,91,545/ - WITHOUT APPRECIATING THE DE TAILED FACTS NARRATED BY THE A.O IN THE ASSESSMENT ORDER. 2. 'ON THE FACTS AND THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE ASSESSEE'S APPEAL RELYING ON THE ASSESSMENT ORDER PASSED BY ANOTHER A.O IN THE CASE OF SMT. KALAWATI NEGI WHERE UNDER THE SIMILAR FACTS THAT A.O ESTIMATED THE COMMISSION INCOME @ 0.1% ACCORDINGLY THE S AME CANNOT BE ACCEPTED AS THE ESTIMATION OR DECISION TAKEN BY ANOTHER A,O IS NOT BINDING ON THE A.O IN THIS CASE BECAUSE THAT ESTIMATION BY THAT A.O IS NOT CHALLENGED BEFORE ANY APPELLATE AUTHORITY OR NOT CONFIRMED BY ANY APPELLATE AUTHORITY. 3. 'ON T HE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID CIT( A) ERR ED IN GIVING RELIEF OF RS. 99,91, 545/ - TO ASSESSEE ON ACCOUNT OF COMMISSION INCOME IGNORING THE FACT THAT THE ASSESSEE IS AN EMPLOYEE OF ASIS GROUP AND WORKING WITH ONE COMPANY SHIRDI INDUSTRIES LTD. THE ASSESSEE HAS SHOWN THE TRANSACTIONS OF SALE AND PURCHASE WITH THE GROUP COMPANIES /CONCERNS ONLY. THE AMOUNT OF SALE AND THE AMOUNT OF PURCHASE WAS EXACTLY THE SAME. NO PROFIT/LOSS RESULTED FROM THE SALE/PURCHA SE. THE ASSESSE E ADMITTED THAT T HE TR ANSACTIONS OF SALE/PURCHASE WERE WITHIN THE GROUP CONCERNS ONLY AND THE SAME WERE DONE AT THE INSTANCE OF EMPLOYER COMPANY TO INCREASE THE TURNOVER OF THE GROUP COMPANY. IT WAS FURTHER ADMITTED BY THE ASSESSEE THAT THER E WAS NO MO VEMENT OF GOODS AND T HE TRANSACTIONS WERE SHOWN FOR DOING CIRCULAR TRADING WITH IN THE GROUP. WHEREAS THE LD. CI T(A) HAS NOT APPRECIATED THE FACT THAT THESE WERE THE SHAM TRANSACTIONS AND THE ASSESSEE GIVEN ONLY ACCOMMODATION ENTRIES TO HER EMPLOYER AND IN RETURN MUST HAVE EARNED THE COMMISSION. 4 'THE APPELLANT CRAVES LEAVE TO ADD, TO AMEND, ALTER, SUBSTITUTE OR MODIFY ANY OF THE ABOVE GROUND OR ADD A FRESH GROUND AS AND WHEN FOUND NECESSARY EITHER BEFORE OR AT THE TIME OF HEARING.' 3 . THE BRIEF FA CTS OF THE CASE ARE THAT THE ASSESSEE FILED HER RETURN OF INCOME DECLARING TOTAL INCOME TO THE TUNE OF RS.1,94,040/ - ON 31.07.2013. THEREAFTER, THE ASSESSEE FILED HER REVISED RETURN OF INCOME ON 04.10.2013 DECLARING TOTAL INCOME TO THE TUNE OF RS.2,01,970/ - . THE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT , 1961. THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE WAS AN INDIVIDUAL AND HAVING SALARY INCOM E FROM M/S. SHIRDI INDUSTRIES LTD., AND ALSO CARRYING ITA. NO. 4874 /M/2017 A.Y. 2013 - 14 3 OUT BUSINESS ACTIVITIES IN TH E NAME OF M/S. HIRALAL PRINTING AND ASSESSEE ALSO ENGAGED IN THE TRADING ACTIVITY OF MDF BOARD & PLYWOOD . ON VERIFICATION, IT WAS FOUND THAT THE SALE AND PURCHASE OF THE ASS ESSEE WAS OF THE SAME AMOUNT I.E. TO THE TUNE OF RS.52,58,70,822/ - . THEREAFTER, THE NOTICE WAS GIVEN AND AFTER THE REPLY OF THE ASSESSEE , 2% AMOUNT OF THE TOTAL TURNOVER TO THE TUNE OF RS.52,58,70,822/ - I.E. TO THE TUNE OF RS.1,05,17,416/ - . ACCORDINGLY, TH E INCOME OF THE ASSESSEE WAS ASSESSED AS THE INCOME OF THE ASSESSEE AND ACCORDINGLY TAXED. FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED THE CLAIM OF THE ASSESSEE PARTLY , THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL B EFORE US. 4 . WE HAVE HEARD THE ARGUMENT AND ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. THE REVENUE HAS CHALLENGED THE ESTIMATE COMMISSION INCOME @ 0.1% OF THE SALES TURNOVER TO THE TUNE OF RS.52,58,70,822/ - I.E . TO THE TUNE O F RS.5,25,871 / - . THE CIT(A) HAS DECIDED THE MATTER OF THE CONTROVERSY ON THE BASIS OF THE DECISION OF HONBLE ITAT IN THE ASSESSEES OWN CASE FOR THE IMMEDIATE PROCEEDING A.Y. 2012 - 13 IN ITA. NO. 687/M/2017 DATED 20.06.2018. IT IS NECESSARY TO ADVERT THE FI NDING OF THE CIT(A) ON RECORD: - 6.2 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT. THE BRIEF FACTS AS EMERGED FROM THE RECORD ARE THAT THE APPELLANT IS AN EMPLOYEE GROUP & WORKING WITH ONE COMPANY SHIRDI INDUS TRIES LTD. THE APPELLANT HAS SHOWN THE TRANSACTIONS OF SALE AND PURCHASE WITH THE GROUP COMPANIES/CONCERNS. THE AMOUNT OF SALE AND THE AMOUNT OF PURCHASE WAS EXACTLY SAME. NO PROFIT/LOSS RESULTED FROM THE SALE/PURCHASE. THE APPELLANT ADMITTED THAT THE TRAN SACTIONS OF SALE PURCHASE WERE WITHIN THE GROUP CONCERNS ONLY AND THE SAME WERE DONE AT THE INSTANCE OF EMPLOYER COMPANY TO INCREASE THE TURNOVER OF THE GROUP COMPANY. IT WAS FURTHER ADMITTED THAT THERE WAS NO MOVEMENT OF GOODS AND THE TRANSACTIONS WERE SH OWN FOR DOING ITA. NO. 4874 /M/2017 A.Y. 2013 - 14 4 CIRCULAR TRADING WITHIN THE GROUP. THE LD. AO HAS ESTIMATED THE INCOME ON ACCOUNT OF COMMISSION @ 2% OF THE SALES TURNOVER SHOWN BY THE APPELLANT. THE APPELLANT SUBMITTED A COPY OF ASSESSMENT ORDER IN THE CASE OF SMT. KALAWATI NEGI PAN: AFRPN 4766Q WHERE UNDER THE SIMILAR FACTS THE AO ESTIMATED THE COMMISSION INCOME @0.1% OF THE SALES TURNOVER. IT WAS STATED THAT SMT. KALAWATI NEGI IS ALSO AN EMPLOYEE OF THE SAME GROUP AND THE SHE HAS ALSO SHOWN THE SIMILAR TRANSACTIONS TO JACK UP THE TURNOVER. THE APPELLANT HAS ALSO FILED COPY OF THE APPELLATE ORDER PASSED BY THE UNDERSIGNED IN THE CASE OF THE APPELLANT HERSELF FOR THE4 IMMEDIATELY PROCEEDING A.Y. 2012 - 13. WHEREIN THE LD. AO WAS DIRECTED TO ESTIMATE THE COMMISSION INCOME @ 0.1% OF THE TURNOVER . IN PARA 6.2 OF THE APPELLATE ORDER OF A.Y. 2012 - 13 IN THE CASE OF THE APPELLANT IT HAS BEEN HELD AS UNDER: - 6.2 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT. THE BRIEF FACTS AS EMERGED FROM THE RECORD ARE THAT THE APPELLANT IS AN EMPLOYEE OF ONE ASIAN GROUP & WORKING WITH ONE COMPANY SHRDI INDUSTRIES LTD. THE APPELLANT HAS SHOWN THE TRANSACTIONS OF SALE AND PURCHASE WITH THE GROUP COMPANIES CONCERNS. THE AMOUNT OF SALE AND THE AMOUNT OF P URCHASE WAS E XACTLY SAME. NO PROFIT/LOSS RESULTED FROM THE SALE/PURCHASE. THE APPELLANT ADMITTED THAT THE TRANSACTIONS OF SALE/PURCHASE WERE WITHIN THE G ROUP CONCERNS ONLY AND THE SAME WERE DONE AT THE INSTANCE OF EMPLOYER COMPANY TO INCREASE THE TURNOVER OF THE GR OUP COMPANY. IT WAS FURTHER ADMITTED THAT THERE WAS NO MOVEMENT OF GOODS AND THE TRANSACTIONS WERE SHOWN FOR DOING CIRCULAR TRADING WITHIN THE GROUP. THE LD. AO HAS ESTIMATED THE INCOME ON ACCOUNT OF COMMISSION @ 2% OF THE SALES TURNOVER SHOWN BY THE APPELLANT. THE APPELLANT SUBMITTED A COPY OF ASSESSMENT ORDER IN THE CASE OF SMT. KALAWATI NEGI PAN AFRPN4766Q WHERE UNDER THE SIMILAR FACTS THE AO. ESTIMATED THE COMMISSION INCOME @ 0.1% OF THE SALES TURNOVER. IT WAS STATED THAT SMT. KALAWATI NEGI IS ALSO AN EMPLOYEE OF THE SAME GROUP SHOWN THE SIMILAR TRANSACTIONS TO JACK UP THE TURNOVER. IT IS SEEN THAT THE FACTS OF THE CASE OF THE APPELLANT ARE IDENTICAL TO THE FACTS OF THAT CASE. IN MY OPINION THE ESTIMATION MADE BY THE LD. AO IS ON HIGHER SID E. I FIND FORCE IN THE AUGMENT OF THE APPELLANT THAT BEING AN EMPLOYEE SHE HAS SHOWN THESE TRANSACTION AT THE INSTANCE OF EMPLOYER AND SHE HAS NOT SHOWN THE ITA. NO. 4874 /M/2017 A.Y. 2013 - 14 5 TRANSACTIONS TO ANY THIRD PARTIES OUTSIDE THE GROUP FOR EARNING ANY INCOME. HOWEVER, TO MEET THE ENDS OF JUSTICE. I RESTRICT THE ESTIMATION OF INCME AT 0.1% OF THE SALES TURNOVER WHICH WORKS OUT TO RS.3,12,764/ - (0.1%). THEREFORE, I DIRECT THE AO TO ESTIMATE COMMISSION INCOME AT 0.1% IN THE TURN, WHICH WORKS OUT TO RS.3,12,764/ - 0.1% OF RS.32,27,64,17 0/ - AND RESTRICT THE ADDITION TO RS.3,12,764/ - . THE APPELLANT GET THE RELIEF FOR THE BALANCE AMOUNT OF RS.59,42,474/ - . GROUNDS NOS. 1 & 2 OF APPEAL ARE PARTLY ALLOWED TO THIS EXTENT IT IS SEEN THAT THE FACTS OF THE CASE OF THE APPELLANT FOR THIS ASSESSME NT YEAR 2013 - 14 ARE IDENTICAL AS TO THE FACTS OF THE CASE OF THE APPELLANT FOR ASSESSMENT YEAR 2012 - 13. THEREFORE, I FIND NO REASON TO DEVIATE FROM MY FINDING AND DECISION RENDERED THEREIN. IN THE FACTS AND CIRCUMSTANCES OF THE CASE. I AM OF THE CONSIDERED OPINION THAT THE ESTIMATION MADE BY THE LD. AO IS ON HIGHER SIDE. I FIND FORCE IN THE ARGUMENT OF THE APPELLANT THAT BEING AN EMPLOYEE SHE HAS SHOWN THESE TRANSACTIONS AT THE INSTANCE OF EMPLOYER AND SHE HAS NOT SHOWN THE TRANSACTIONS TO ANY THIRD PARTIES OUTSIDE THE GROUP FOR EARNING ANY INCOME. HOWEVER, TO MEET TRANSACTIONS TO ANY THIRD PARTIES OUTSIDE THE GROUP FOR EARNING ANY INCOME. HOWEVER , TO MEET THE ENDS OF JUSTICE. I RESTRICT THE ESTIMATION OF INCOME AT 0.1% OF THE SALES TURNOVER WHICH WORKS OUT TO RS.5,25,871/ - (0.1% OF 52,58,70,822/ - ). THEREFORE, I DIRECT THE LSD. AO TO ESTIMATE COMMISSION INCOME AT 0.1% OF THE SALES TURNOVER, WHICH WORKS OUT TO RS.5,25,871/ - (0.1% OF 52,58,70,822/ - ). THE APPELLANT GET THE RELIEF FOR THE BALANCE AMOUNT OF RS.99, 91,545/ - GROUND NOS 1 & 2 OF APPEAL ARE PARTLY ALLOWED TO THIS EXTENT. 5 . ON APPRAISAL OF THE ABOVE SAID FINDING, WE NOTICED THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY ON THE BASIS OF THE DECISION OF THE HONBLE ITAT IN THE ASSESSEES OWN CASE FOR THE A.Y. 2012 - 13 IN ITA. NO.687/M/2017 DATED 20.06.2018. SINCE THE MATTER OF CONTROVERSY HAS BEEN ADJUDICATED BY THE CIT(A) ON THE BASIS OF THE DECISION OF THE HONBLE ITAT IN THE ASSESSEES OWN CASE FOR THE A.Y. 2012 - 13 IN ITA. NO.687/M/2017 DATED 20 .06.2018 , THEREFORE, WE FOUND NO GROUND TO INTERFERE IN THE FINDING OF THE CIT(A). MOREOVER, NO CONTRARY DECISION IN SUPPORT OF THE CLAIM OF THE REVENUE HAS BEEN PRODUCED BEFORE US . WE FIND NO IRREGULARITY AND ITA. NO. 4874 /M/2017 A.Y. 2013 - 14 6 ILLEGALITY IN THE ORDER PASSED BY THE CIT(A) IN QUESTION. ACCORDINGLY, WE DECIDE ALL THE ISSUES IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 6 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HEREBY ORDERED TO BE D ISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 27. 11. 2018 SD/ - SD/ - ( B. R. BASKARAN) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 27. 11. 2018 VIJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI