ASST CIT CC 43, MUMBAI V. WASHIGTON SOFTWARE LTD, PUNE

ITA 5311/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2271 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 21-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANU KRISHA AGGARWAL
• Keywords: Search and seizure
• Section: 131; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI . . , , BEFORE S/SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI SANDEEP GOS AIN, JUDICIAL MEMBER ./ I.T.A. NO. 932 /MUM/ 2014 , ITAS NO.5306 TO 5308/MUM/2014 AND ITAS NO. 5310 TO 5312/MUM/2014 ( / ASSESSMENT YEAR : 2004 - 05 , 2005 - 06 TO 2007 - 08 & 2009 - 10 TO 2011 - 12 ) ASSTT. C OMMISSIONER OF INCOME TAX - CENTRAL CIRCLE - 43, ROOM NO.659, 6 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 / VS. M/S WASHINGTON SOFTWARE LTD., 3 RD FLOOR,L - 5, MANTRI PARK, NEAR TEJAS SOC, KOTHRUD, PUNE - 411028 ./ PAN : ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : AACCS3502Q / REVENUE BY : MS.ANU KRISHA AGGARWAL / ASSESSEE BY : SHRI PRAKASH JOTWANI / DAT E OF HEARING : 10 .12. 2015 / DATE OF PRONOUNCEMENT : 10.1 2 . 2015 O R D E R PER BENCH: - THE REVENUE HAS FILED THESE APPEALS CHALLENGING THE ORDERS PASSED BY LD CIT(A) - 38, MUMBAI AND THEY RELATE TO THE ASSESSMENT YEA RS 2004 - 05 TO 2007 - 08 AND 2009 - 10 TO 2011 - 12, WHEREIN THE LD CIT(A) HAD REDUCED THE INCOME ESTIMATED BY THE ASSESSING OFFICER FROM 5% OF THE TURNOVER TO 1% OF THE TURNOVER IN ALL THE ABOVE SAID YEARS. ITA NO. 932/ MUM/ 2014 & 6 OTHERS APPEALS 2 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE A SSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT. THE REVENUE CARRIED OUT SEARCH AND SEIZURE OPERATIONS IN THE HANDS OF A PERSON NAMED SHRI PARAG MEHTA ON 22.3.2011 AND DURING THE COURSE OF SEARCH SEVERAL TRANSACTIONS PERTAINING TO THE AS SESSEE WERE FOUND OUT. FROM THE SAID DOCUMENTS IT WAS NOTICED THAT THE ASSESSEE HEREIN WAS INDULGING IN ISSUING BOGUS BILLS. IT WAS NOTICED THAT THE ASSESSEE HAS NOT FILED RETURN OF INCOME FOR AY 2004 - 05 AND HENCE THE ASSESSMENT OF THE SAID YEAR WAS REOP ENED BY ISSUING NOTICE U/S 148 OF THE ACT. OTHER YEARS ASSESSMENTS WERE REOPENED U/S 153C OF THE ACT. THE ASSESSEE FILED RETURNS OF INCOME OF ALL THE YEARS DECLARING NIL INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE DID NOT FURNISH T HE DETAILS THAT WERE CALLED FOR BY THE ASSESSING OFFICER. THE AO NOTICED THAT THE DDIT (INV.) HAS RECORDED A STATEMENT FROM THE CHAIRMAN OF THE ASSESSEE COMPANY NAMED SHRI SANJAY D SONAWANI U/S 131 OF THE ACT ON 12.04.2011, WHEREIN HE HAD ADMITTED THAT TH E BILLS RELATING TO NON - GENUINE SALES WERE ISSUED BY CHARGING A COMMISSION @ 1% OF THE BILL VALUE. THE AO PRIMA FACIE AGREED THAT THE ASSESSEE HAS ISSUED BILLS ON RECEIPT OF COMMISSION, BUT HE DID NOT ACCEPT THAT THE COMMISSION WAS CHARGED @ 1%. THE ASS ESSING OFFICER, HOWEVER, OBSERVED THAT THE MARKET ENQUIRIES MADE BY HIM REVEALED THAT THE RATE OF COMMISSION INVOLVED IN SUCH KIND OF TRANSACTIONS IS NOT LESS THAN 5%. THE AO ALSO TOOK THE VIEW THAT THE ASSESSEE HAS HELPED THE OTHER PERSONS TO SAVE TAX @ 3 3% AND HENCE THE RATE OF COMMISSION COULD NOT BE 1%. ACCORDINGLY HE PROCEEDED TO COMPUTE THE INCOME BY ESTIMATING THE RATE OF COMMISSION @ 5% OF THE TURNOVER AND ACCORDINGLY DETERMINED THE TOTAL INCOME OF THE ASSESSEE FOR ALL THE YEARS UNDER CONSIDERATIO N. THE LD . CIT(A), HOWEVER, TOOK THE VIEW THAT THE ASSESSING OFFICER HAD ESTIMATED THE RATE OF COMMISSION @ 5% ON THE BASIS OF SUSPICION, SURMISES AND CONJECTURES, WITHOUT BRINGING ANY MATERIAL ON RECORD. HE FURTHER NOTED THAT THE ASSESSEE HAS ADMITTED CO MMISSION ITA NO. 932/ MUM/ 2014 & 6 OTHERS APPEALS 3 INCOME @ 1% ONLY AND ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO COMPUTE THE INCOME BY ADOPTING THE RATE OF COMMISSION @ 1%. AGGRIEVED BY THE DECISION OF LD CIT(A), THE REVENUE HAS FILED THESE APPEALS BEFORE US. 3. THE LD D.R SUBMITTED THAT T HE ASSESSEE DID NOT COOPERATE WITH THE ASSESSING OFFICER AND HENCE THE AO WAS CONSTRAINED TO PASS THE ORDERS TO THE BEST OF HIS JUDGMENT . FURTHER THE AO HAS MADE MARKET ENQUIRIES AND ACCORDINGLY ESTIMATED THE COMMISSION INCOME AT 5%. THE LD D.R FURTHER S UBMITTED THAT THE ASSESSEE HAS HELPED OTHER PERSONS TO SAVE TAX @ 33% AND HENCE THE COMMISSION COULD NOT BE AT 1%. ON THE CONTRARY, THE LD A.R SUBMITTED THAT THE DIRECTOR, IN THE SWORN STATEMENT, HAS ADMITTED THAT THE RATE OF COMMISSION WAS 1% ONLY. THE LD A.R FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE RATE OF COMMISSION FOR ISSUING NON - GENUINE BILLS WAS 5%. 4. HAVING HEARD RIVAL CONTENTIONS, WE ARE OF THE VIEW THAT THE ORDERS PASSED BY LD CIT(A) DO NOT CALL FOR ANY INTERFERENCE. THOUGH THE ASSESSING OFFICER HAS STATED THAT THE MARKET ENQUIRIES REVEALED THAT THE RATE OF COMMISSION WAS 5%, WE NOTICE THAT THE SAME WAS BALD STATEMENT UNSUPPORTED BY ANY MATERIAL. FURTHER, THE ASSESSING OFFICER HAS DR AWN INFERENCE BY PRESUMING THAT THE ASSESSEE HAS HELPED OTHERS TO SAVE TAX @ 33%, WHICH IS ALSO NOT SUPPORTED BY ANY MATERIAL. AS SUBMITTED BY LD A.R, THE BASIS OF THE ASSESSMENTS OF ALL THE YEARS IS THE BASIS OF SWORN STATEMENT GIVEN BY THE DIRECTOR OF THE ASSESSEE COMPANY, WHEREIN HE HAD ADMITTED THAT THE RATE OF COMMISSION WAS 1% ONLY, SINCE THE FACT THAT THE ASSESSEE IS ISSUING ACCOMMODATION BILLS IS ACCEPTED BY THE AO. HENCE, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER SHOULD HAVE BROUGHT ON RECO RD SOME CREDIBLE MATERIAL TO SHOW THAT THE RATE OF COMMISSION STATED BY THE DIRECTOR WAS NOT CORRECT. HENCE, WE ARE OF THE VIEW THAT THERE IS NO REASON TO SUSPECT THE STATEMENT OF THE DIRECTOR THAT THE RATE OF ITA NO. 932/ MUM/ 2014 & 6 OTHERS APPEALS 4 COMMISSION WAS 1% OF THE TURNOVER. UNDER TH ESE SET OF FACTS, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF LD CIT(A) ON THIS ISSUE. 5. IN THE RESULT, ALL THE APPEALS FILED BY THE REVENUE ARE DISMISSED. PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON 10 - 12 - 2015. SD SD ( / SANDEEP GOSAIN ) ( . . / B.R.BASKARAN) /JUDICIAL MEMBER /ACCOUNTANT MEMBER MUMBAI ; DATED 10 TH DEC,2015 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONC ERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI