RAMAN TRIKHA, MUMBAI V. INCOME TAX OFFICER 16(1)(5), MUMBAI

ITA 5413/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4867 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 21-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CIRCUMSTANCES OF CASE; ON FACTS
• Assessee Lawyers: SASHANK DUNDU SHRI R SINDHU SR
• Keywords: Bogus purchase; Business income; Set aside
• Section: 142(1); 133A; 143(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 5413 /MUM/201 7 ( / ASSESSMENT YEAR: 20 11 - 12 ) RAMAN TRIKHA 403A, ADELPHI CO - OP. HSG. SOC., BUILDING NO. 10, SHASTRI NAGAR, ANDHERI WEST (MUMBAI) - 400053 . / VS. ITO 16 (1)(5) ROOM NO. 439, AAYKAR BHAVAN, 4 TH FLOOR, M.K. ROAD, CHURCHGATE, MUMBAI - 400020. ./ ./ PAN/GIR NO. : AABPT7266L ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 14 / 0 5 / 201 9 / DATE OF PRONOUNCEMENT : 22 / 05 / 201 9 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 08 . 0 6 .201 7 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 4 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A. Y. 20 11 - 1 2 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. ON THE FACT & CIRCUMSTANCES OF THE CASE & LAW ON THE SUBJECT, THE LD. AO ERRED IN REOPENING THE CASE U/S 147 R.W.S 148 AND ON FACTS AND CIRCUMSTANCES OF THE CASE &LAW ON THE SUBJECT THE L D. CIT(A) ERRED IN CONFIRMING THE REOPENING. ASSESSEE BY : SHRI SASHANK DUNDU REVENUE BY: SHRI R. SINDHU (SR. AR) ITA NO. 5413 / M/201 7 A.Y.20 11 - 12 2 2. ON THE FACT & CIRCUMSTANCES OF THE CASE AND LAW ON THE SUBJECT THE LD. AO ERRED IN ADDING RS.8677801/ - ON ALLEGED BOGUS PURCHASES DURING THE YEAR (3% OF RS.289260048/ - & ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW ON THE SUBJECT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION & THE SAME BE DELETED 3. THE APPELLANT CRAVES LEAVE TO ADD OR MODIFY THE ABOVE GROUND OF APPEAL. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RE TURN OF INCOME FOR THE A.Y. 2011 - 1 2 ON 30.09 .201 1 DECLARING TOTAL INCOM E TO THE TUNE OF RS.5,40,893 / - . T HE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961. THEREAFTER, THE INFORMATION RECEIVED THAT THE SURVEY ACTION U/S 133A WAS CONDUCTED BY THE INVESTIGATION WING, MUMBAI IN THE CASE OF SHREE RAM MILLS GROUP ON 28.02.2013. IT WAS ALSO FOUND THAT THE ABOVE MENTIONED GROUP AGREED TO MADE BOGUS SALE OF RS.28,92,60,048/ - TO THE ASSESSEE. THE CASE WAS REOPENED AFTER THE ISSUANCE OF NOTICE U/S 148 OF THE ACT DATED 11.09.2 013. THEREAFTER, NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. AFTER CONDUCTING THE INQUIRY, THE AO ARRIVED AT THIS CONCLUSION THAT THE ASSESSEE RAISED PURCHASE OF RS. 28,92,60,048/ - AS BOGUS FROM SHREE RAM MILLS GROUP. TH EREFORE, 3% OF THE TOTAL BOGUS PURCHASE WAS ADDED TO THE INCOME OF THE ASSESSEE AND THE INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.92,18,690/ - . FEELING AGGRIEVED, THE A SSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO ALSO DISMISSED THE APPEAL OF T HE ASSESSEE, THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NOS. 1 ITA NO. 5413 / M/201 7 A.Y.20 11 - 12 3 4. AT THE TIME OF ARGUMENT, THIS ISSUE HAS NOT BEEN PRESSED BY THE LD. REPRESENTATIVE OF THE ASSESSEE, THEREFORE, THIS ISSUE IS DECIDED IN FAVOUR OF THE REVENUE AGAIN ST THE ASSESSEE BEING NOT PRESSED. ISSUE NOS. 2 5. W E HAVE HEARD ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE INCOME OF THE ASSESSEE IS 1% OF THE TRANSACTION W HICH IS THE COMMISSION INCOME BUT THE AO ESTIMATED THE COMMISSION INCOME @ 3% OF THE TURNOVER WHICH IS WRONG, HENCE, THE INCOME OF THE ASSESSEE IS LIABLE TO BE ASSESSED IF ANY @ 1% OF THE ACCOMMODATION BILL IF ANY. IN SUPPORT OF THIS CONTENTION, THE LD. RE PRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE UPON THE DECISION OF HONBLE ITAT IN ITA. NO. 7426 /M/2014 IN THE CASE TITLED AS M/S. READYMADE STEEL INDIA P. LTD. VS. DCIT, CIRCLE 7(2) DATED 19.10.2016 IN WHICH THE HONBLE ITAT HAS ASSESSED THE INCOME @ 1% OF THE TURNOVER. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE O THE DEPARTMENT HAS REFUTED THE SAID CONTENTION. ON APPRAISAL OF THE ARGUMENT ADVANCED BY THE LD. REPRESENT ATIVE OF THE PARTIES AND PERUSING THE RECORD, W E FIND THAT THE ASSESSEE IS THE PROPRIETOR OF M/S. MIRACLE TRADING. THE ASSESSEE IS IN THE BUSINESS OF TRADING IN STRUCTURAL STEEL. THE ASSESSEE WAS PROVIDING THE ACCOMMODATION BILLS APART FROM DOING THE TRADING IN STRUCTURAL STEEL. AT THE TIME OF ARGUMENT, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS RELIED UPON THE DECISION IN THE CASE OF M/S. READYMADE STEEL INDIA P. LTD . IN WHICH THE PROFIT WAS RESTRICTED TO THE EXTENT OF 1% OF THE TURNOVER OF ACCOMMODATION BILLS. THE RELEVANT FINDING HAS BEEN GIVEN IN PARA NO. 5 WHICH IS HEREBY REPRODU CED AS UNDER.: - ITA NO. 5413 / M/201 7 A.Y.20 11 - 12 4 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALSO GONE THROUGH THE RECORDS. THE ASSESSEE, BEFORE US, HAS NOT DISPUTED THAT IT WAS INDULGED IN PROVIDING ACCOMMODATION BILLS TO CERTAIN PARTIES. HOWEVER, IT HAS BEEN SUBMITTED THAT THE EST IMATION OF PROFITS AT THE RATE OF 3% WERE VERY EXCESSIVE. IT WAS ALSO EXPLAINED THAT OUT OF THE TOTAL TURNOVER OF RS.32.3 CRORES, THE GENUINE TURNOVER OF THE ACTUAL BUSINESS CARRIED OUT WAS ONLY RS.8.2 CRORES AND PROFIT THERE FROM HAS BEEN DECLARED AT RS.8 2,75,831/ - WHICH HAS ACCORDINGLY BEEN TAXED AS BUSINESS INCOME OF THE ASSESSEE. THE LD. A.R. HAS FURTHER SUBMITTED THAT THE ASSESSEE HAS DECLARED THE INCOME OF THE ACCOMMODATION BILLS AT THE RATE OF 1% OF THE TURNOVER WHICH WAS ACTUALLY RECEIVED BY THE ASS ESSEE. THAT THE AO IN THE IMPUGNED ASSESSMENT ORDER HIMSELF HAS MENTIONED THAT THERE WAS NO MENTION OF CASH COMMISSION IN THE SURVEY REPORT. BUT THE ASSESSEE, DESPITE THAT, ITSELF, HAS OFFERED FOR TAXATION THE ACTUAL INCOME RECEIVED FROM PROVIDING ACCOMMOD ATION BILLS AND FURTHER THAT THE ASSESSEE HAD NOT CLAIMED ANY EXPENSES OR SUB COMMISSION IN RESPECT OF THE SAID DECLARED INCOME. THE LD. A.R. HAS RELIED UPON CERTAIN DECISIONS OF THE TRIBUNAL WHEREIN THE COMMISSION INCOME FROM SUCH ACCOMMODATION BILLS HAS BEEN ESTIMATED OR ACCEPTED BY THE TRIBUNAL EVEN AT A RATE WHICH IS LESS THAN 1% OF THE TURNOVER. SHE HAS MAINLY RELIED UPON THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SAROJ ANIL STEEL PVT. LTD. VS. ITO. SHE HAS STATED THAT IN TH E SAID CASE ALSO THAT ASSESSEE WAS IN THE SIMILAR BUSINESS AS THAT OF THE PRESENT ASSESSEE AND IN THE SAID CASE THE COMMISSION INCOME WAS ESTIMATED BY THE AO AT THE RATE OF 1% OF THE TURNOVER. BUT THE LD. CIT(A) IN THE APPELLATE PROCEEDINGS DIRECTED THE AO TO ESTIMATE THE INCOME OF COMMISSION FROM HAWALA TRANSACTIONS AT THE RATE OF 0.4% OF GROSS TURNOVER. THE TRIBUNAL, HOWEVER, DIRECTED THE AO TO ESTIMATE THE INCOME AT THE RATE OF 1% OF TOTAL TURNOVER AND ALSO DIRECTED TO ALLOW CERTAIN ADMINISTRATIVE EXPENS ES THERE FROM. THE LD. A.R. HAS STATED THAT IN THE CASE OF THE ASSESSEE NO EXPENDITURE HAS BEEN CLAIMED. EVEN THE ESTIMATION OF INCOME AT THE RATE OF 1% OF THE ACCOMMODATION BILLS TURNOVER HAS ALSO BEEN APPROVED BY THE TRIBUNAL. CONSIDERING THE ABOVE SUBMI SSIONS OF THE ASSESSEE AND AFTER GOING THROUGH THE DECISION OF THE TRIBUNAL, THOUGH WE FIND THAT THERE CANNOT BE A FIXED CRITERIA TO ADOPT AS TO AT WHAT RATE THE COMMISSION INCOME IN SUCH CASES CAN BE ADOPTED FOR TURNOVER, HOWEVER, CONSIDERING THE FACTS OF THE CASE AND ITA NO. 5413 / M/201 7 A.Y.20 11 - 12 5 SUBMISSIONS OF THE LD. A.R., IN OUR VIEW, THE ESTIMATION OF COMMISSION INCOME AT THE RATE OF 3% IN THE ABSENCE OF ANY EVIDENCE, ANY CALCULATION OR OTHER BASIS OR ANY EXAMPLE OF A SIMILARLY PLACED CASE SEEMS TO BE ON HIGHER SIDE. THE ASSESSEE, ON THE OTHER HAND, HAS SUPPORTED ITS CASE WHILE PROVIDING ALL THE DETAILS INCLUDING THE ACTUAL AMOUNT OF THE TURNOVER AND THE ACTUAL AMOUNT RECEIVED BY THE ASSESSEE AND THE AO HAS NOT POINTED OUT ANY PECULIAR POINT ON THE BASIS OF WHICH THE CALCULATION AN D INCOME OFFERED BY THE ASSESSEE CAN BE FAULTED WITH. WE ACCORDINGLY RESTRICT THE INCOME OFFERED FROM THE ACCOMMODATION BILLS TURNOVER AT THE RATE OF 1% AS AGAINST 3% ESTIMATED BY THE AO. BEFORE PARTING, IT IS MADE CLEAR THAT OUR ABOVE OBSERVATIONS WILL NO T HAVE ANY BEARING IN ANY OTHER CASE AS SUCH TYPE OF CASES HAVE TO BE DECIDED ON THEIR OWN MERITS. 6. ON APPRAISAL OF THE ABOVE SAID MENTIONED FINDING, WE NOTICED THAT THE HONBLE ITAT IN THE CASE OF ACCOMMODATION ENTRY HAS RESTRICTED THE ADDITION @ 1% OF THE ACCOMMODATION BILLS. IT IS NOT IN DISPUTE THAT THE FACTS OF THE EACH CASE ARE DIFFERENT AND ACCORDINGLY THE DECISIONS ARE LIABLE TO BE GIVEN. ASSESSMENT OF THE YEAR IS DIFFERENT OF THE OTHER YEAR. AT THE TIME OF ARGUMENT, THE LD. REPRESENTATIVE OF THE ASSESSEE AGREED TO RESTRICT THE ADDITION TO THE EXTENT OF 1.5% OF THE ACCOMMODATION BILL, THEREFORE, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND RESTRICT THE ADDITION TO THE EXTENT OF 1.5% OF THE BOGUS PURCHASE. ACCORDINGLY, THIS ISSUE IS DEC IDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 22 /05 /2019 . SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 22 /05 /2019 ITA NO. 5413 / M/201 7 A.Y.20 11 - 12 6 V IJAY / 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// (SR. PRIVATE SECRETARY) , / ITAT, MUMBAI