DCIT CC-1, MUMBAI V. MANAN TRADING CO.P. LTD, MUMBAI

ITA 5956/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8067 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-09-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 25-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREETAM SINGH
• Assessee Lawyers: BHUMIKA VORA
• Keywords: Accommodation entries
• Section: 143(3); 133A; 144

Judgement Text

B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER & SHRI AMIT SHUKLA, JUDICIAL MEMBER ./ I.T.A. NO.5956 / MUM/2011 ( / ASSESSMENT YEAR : 2008-2009 DY. COMMISSIONER OF INCOME TAX CC- 1, R. NO. 902, 9 TH FLOOR, OLD CGO BLDG. ANNEXE, M.K. ROAD MUMBAI 400 020. / VS. M/S MANAN TRADING CO. P. LTD., 325, AMRIT DIAMOND HOUSE, OPERA HOUSE, MUMBAI 400 004. ./ PAN : AADCM 5896 J ( / APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NO.6036 /MUM/2011 ( / ASSESSMENT YEAR : 2008-2009 M/S MANAN TRADING CO. P. LTD., 325, AMRIT DIAMOND HOUSE, OPERA HOUSE, MUMBAI 400 004. / VS. DY. COMMISSIONER OF INCOME TAX CC- 1, R. NO. 902, 9 TH FLOOR, OLD CGO BLDG. ANNEXE, M.K. ROAD MUMBAI 400 020. ./ PAN : AADCM 5896 J ( / APPELLANT ) .. ( / RESPONDENT ) REVENUE BY SHRI PREETAM SINGH ASSESSEE BY SHRI RAJIV KHANDELWAL & MS. BHUMIKA VORA ! ' / DATE OF HEARING : 11-09-2014 #$% ! ' / DATE OF PRONOUNCEMENT : 11-09-2014 [ & & & 2 ITA 5956/M/11 & ITA 6036/M/11 '( / O R D E R PER R.C. SHARMA, A.M . : THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE A ND REVENUE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A) -36, MUMBA I DATED 10-06-2011 FOR A.Y. 2008-09 IN THE MATTER OF ORDER U/S 143(3) OF THE IN COME TAX ACT, 1961. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND PERUSED T HE RECORD. A SEARCH/SURVEY OPERATION U/S 132(1) AND 133A OF THE ACT WAS CONDUCTED IN THE CASE OF SHRI PRAVIN KUMAR JAIN GROUP AND PERSONS. THE ASSESSEE COMPANY IS AN ASSOCIATE CONCERN OF SHRI PRAVIN KUMAR JAIN GROUP. FROM THE STATEMENT RECORDED DURING THE COURSE OF SEARCH, THE A.O. INFE RRED THAT SHRI PRAVIN KUMAR JAIN WAS ENGAGED IN ISSUING ACCOMMODATION BILLS AND RECEIVING COMMISSION FOR THE SAME. AFTER OBSERVING THAT THE ASSESSEE WAS EN GAGED IN THE ACTIVITIES OF ISSUING ACCOMMODATION BILLS/ENTRIES, THE A.O. REJEC TED THE BOOKS OF ACCOUNT/BOOK RESULTS MAINTAINED BY THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 145(3) AND PROCEEDED TO MAKE ASSESSMENT IN THE MANNER PROVIDED IN SECTION 144 OF THE ACT. ACCORDINGLY INCOME FROM PRO VIDING THE ACCOMMODATION BILLS/ENTRIES WAS ESTIMATED AT THE RATE OF 1% OF TO TAL TURNOVER. ANOTHER ADDITION OF RS. 26,79,317/- WAS MADE BY THE A.O. AS INCOME FROM OTHER SOURCES. ON APPEAL, THE LD. CIT(A) BY HIS IMPUGNED ORDER DIRECT ED THE A.O. TO ESTIMATE THE INCOME @ 0.5% (NET OF EXPENSES) OF THE TOTAL TURNOV ER INSTEAD OF 1% AS ADOPTED BY THE A.O. THE LD. CIT(A) HAS ALSO DELETED THE ADD ITION OF RS. 26,79,317/- AFTER OBSERVING THAT THERE IS NO DISCUSSION BY THE A.O. A BOUT THE ADDITION OF RS. 26,79,317/-. THE LD. CIT(A) FURTHER FOUND THAT THE A.O. HAS JUST PICKED UP THIS AMOUNT FROM THE P&L ACCOUNT AND CONSIDERED FOR ASS ESSMENT AFTER OBSERVING THAT FOREIGN EXCHANGE GAIN RELATING TO IMPORTS NEED S TO BE REDUCED FROM THE COST OF IMPORTS AND AMOUNT OF FOREIGN EXCHANGE GAIN HAS TO BE CONSIDERED AS PART AND 3 ITA 5956/M/11 & ITA 6036/M/11 PARCEL OF THE TURNOVER, DELETED THE ADDITION MADE B Y THE A.O. AGAINST THIS ORDER OF THE LD. CIT(A), BOTH ASSESSEE AND REVENUE ARE IN APPEAL BEFORE US. 3. THE GROUNDS TAKEN BY THE ASSESSEE AND REVENUE ARE AS UNDER:- ASSESSEES GROUND: 1. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW THE LEARNED CIT(A) ERRED IN NOT ADJUDICATING GROUND NO. 1 & 2 AND THUS CONFIRMED THE A.O.S ACTION OF REJECTING THE BOOK RESULTS U/S 143(3 HOLDING THAT THE APPELLANT WAS ENGAGED IN PROVIDING ACCOMMODATION BI LLS/ENTRIES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW THE LEARNED CIT(A) ERRED IN ESTIMATING THE BUSINESS INC OME TO THE EXTENT OF 0.5%$ OF THE TOTAL TURNOVER. REVENUES GROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPEL LANTS CASE AND IN LAW THE LEARNED CIT(A) ERRED IN REDUCING THE ESTIMATED INCO ME @ 1% OF THE TOTAL TURNOVER TO 0.5% OF THE TOTAL TURNOVER WITHOUT APPR ECIATING THE FACT THAT THE BOOKS OF ACCOUNTS SO PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WERE REJECTED ELABORATING THE FACTS OF REJECTION OF THE SAME AND CORRECT ESTIMATION OF INCOME. 4. IT WAS CONTENDED BY THE LD. COUNSEL FOR THE ASSE SSEE THAT THE ADDITION SUSTAINED BY ESTIMATING THE INCOME AT % HAVE BEEN DEALT WITH BY THE TRIBUNAL IN A NUMBER OF DECISIONS IN RESPECT OF SEARCH/SURVE Y OPERATION CONDUCTED IN THE CASES OF SHRI PRAVIN KUMAR JAIN GROUP PERSONS/ENTIT IES CONNECTED WITH HIM ON 31-03-2008. AT THE TIME OF HEARING THE ID. COUNSEL FOR THE ASSESSEE, MADE HIS SUBMISSIONS ON THE LINES OF SUBMISSIONS MADE BEFORE THE FIRST APPELLATE AUTHORITY THAT THE AUTHORITIES BELOW CONSIDERED THA T ASSESSEE WAS DOING BUSINESS OF ACCOMMODATION/BILL ENTRIES MERELY ON TH E STATEMENT OF SHRI PRAVIN KUMAR JAIN WITHOUT ANY COGENT MATERIAL. HE F URTHER REFERRED PAGES 4 TO 6 OF ASSESSMENT ORDER AND SUBMITTED THAT IN THE INV ENTORIES OF CHEQUE BOOKS FOUND AND SEIZED, THE NAME OF THE ASSESSEE IS NOT APPEARING IN ANY OF THE SAID STATEMENT. HE SUBMITTED THAT NO LETTER HEAD RE LATING TO ASSESSEE WAS FOUND DURING THE COURSE OF SEARCH. HE SUBMITTED THAT SIMI LAR ISSUE ON IDENTICAL FACTS 4 ITA 5956/M/11 & ITA 6036/M/11 WERE CONSIDERED BY THE TRIBUNAL IN OTHER GROUP CONC ERNS OF SHRI PRAVIN K JAIN IN I.T.A. NO.6035/M/2011 IN THE CASE OF M/S EASY MERCA NTILE PVT. LTD. VS. DCIT AND ITA NO. 6038/M/2011 IN THE CASE OF M/S SBJ TRAD ING (I) PVT. LTD. VS. DCIT VIDE ORDER DTD. 27-7-2012 AND ADDITION SUSTAINED BY LD. CIT(A) WAS DELETED. HE FURTHER SUBMITTED THAT THE TRIBUNAL AGAIN CONSIDERE D ON SIMILAR FACTS THE IDENTICAL ISSUE IN THE CASE OF M/S CAPETOWN MERCANT ILE CO. PVT. LTD. VS. DCIT IN ITA NO. 6037/M/2011 VIDE ORDER DATED 19-10-2012 AND DELETED THE ADDITION SUSTAINED BY LD. CIT(A), M/S RIDDHI SIDDHI MULTITRA DE P. LTD. VS. DCIT IN ITA NO. 6039/MUM/2011 ORDER DATED 9-11-2012. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CA REFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND FOUND FROM RECORD T HAT SIMILAR ISSUE WAS DEALT WITH BY THE TRIBUNAL IN A NUMBER OF DECISIONS CITED HEREINABOVE, COPY OF WHICH ARE ALSO PLACED ON RECORD WHEREIN ADDITION SUSTAINE D HAS BEEN DELETED BY THE TRIBUNAL. THE OBSERVATIONS OF THE TRIBUNAL IN THE C ASE OF M/S RIDDHI SIDDHI MULTITRADE P. LTD. (SUPRA) WAS AS UNDER:- WE OBSERVE THAT ID C1T(A) HAS HIMSELF STATED IN PA RA 9 THAT AO HAS ESTIMATED THE INCOME WITHOUT REFERENCE TO ANY COGEN T MATERIAL AND THE ESTIMATION WAS MADE ON THE BASIS OF STATEMENT OF SH RI PRAVIN KUMAR JAIN AND AS FAR AS ASSESSEE IS CONCERNED,NO SUCH STATEMENT W AS EVER MADE BY ANYONE ON ITS BEHALF. LD CIT(A) STATED THAT IN THE IMPUGNE D ORDER THAT IT IS SEEN FROM THE RECORD THAT NO SPECIFIC DEFECT WAS POINTED OUT BY THE AO IN THE BOOKS OF ACCOUNT. FURTHER, WE OBSERVE THAT ID CIT(A) HAS SUS TAINED THE ADDITION 0.5% OF THE TOTAL TURNOVER BY REJECTING BOOKS OF AC COUNT MERELY ON THE GROUND THAT THE INCOME SHOWN BY THE ASSESSEE IS MEA GER. LD C1T(A) HAS NOT BROUGHT ON RECORD ANY DEFECTS IN THE BOOKS OF ACCOU NT OF THE ASSESSEE. LD CIT(A) HAS ALSO NOT BROUGHT ON RECORD ANYTHING THAT ASSESSEE WAS ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. IN VIEW OF ABOVE, WE HOLD THAT ABOVE ADDITION SUSTAINED BY ID C1T(A) BY REJEC TING BOOK RESULTS OF THE ASSESSEE IS NOT BASED ON COGENT MATERIAL AND ACCORD INGLY, SAME IS DELETED. HENCE, GROUNDS OF APPEAL TAKEN BY ASSESSEE IS ALLOW ED. 6. WE FIND THAT THE FACTS AND CIRCUMSTANCES OF THE CAS E DURING THE YEAR UNDER CONSIDERATION ARE PARA MATERIA, THEREFORE, RE SPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN OTHER GROUP CASES, WE D ELETE THE ADDITION SUSTAINED 5 ITA 5956/M/11 & ITA 6036/M/11 BY ESTIMATING THE INCOME AT % OF THE TURNOVER. W E DIRECT ACCORDINGLY. 7. WITH REGARD TO THE ADDITION OF RS. 26,79,317/- , WE FIND THAT THE LD. CIT(A) DELETED THE SAME AFTER CONSIDERING THE FACT THAT FOREIGN EXCHANGE GAIN RELATING TO IMPORTS NEEDS TO BE REDUCED FROM THE CO ST OF IMPORTS AND AMOUNT OF FOREIGN EXCHANGE GAIN HAS TO BE CONSIDERED AS PART AND PARCEL OF THE TURNOVER. ACCORDINGLY IT WAS HELD THAT NO SEPARATE ADDITION W AS REQUIRED AND THAT THE A.O. HAS JUST PICKED UP THIS AMOUNT FROM THE P&L ACCOUNT AND MADE ADDITION WITHOUT ANY DISCUSSION. THE FINDINGS RECORDED BY T HE LD. CIT(A) IN PAGE NO. 5 OF HIS APPELLATE ORDER HAS NOT BEEN CONTROVERTED BY TH E DEPARTMENT BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS RECORDED BY THE LD. CIT(A) DELETI NG THE DISALLOWANCE OF RS. 26,79,317/- MADE BY THE A.O. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMIS SED WHEREAS APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH SEPTEMBER, 2014. '( ! #$% )'* 11-09-2014 $ ! + SD/- - SD/- (AMIT SHUKLA) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER & MUMBAI; )' DATED 11-09-2014. . , . ./ RK , SR. PS 6 ITA 5956/M/11 & ITA 6036/M/11 & & '( ! ,'-. /.%' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 0' ( ) / THE CIT(A) 36, MUMBAI 0' / CIT (CENTRAL)- 1, MUMBAI 5. . 1+ ,', , , / DR, ITAT, MUMBAI B BENCH 6. +23 4 / GUARD FILE. '( / BY ORDER, .' ,' //TRUE COPY// 5 / 6 7 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI