PRAMOD GADIA, MUMBAI V. DCIT CEN CIR 46, MUMBAI

ITA 665/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2645 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 27-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 24-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C W ANGOLKAR
• Assessee Lawyers: HARI S RAHEJA
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI RAMIT KOCHAR , AM ./ ITA NO S . 661 TO 666 /MUM/2013 ( / ASSESSMENT YEAR S : 2005 - 06 TO 2010 - 11 ) SHRI PRAMOD GADIA /APPELLANT B - 506, PRITI SAGAR CHS NEW LINK ROAD, BORIVALI (W) MUMBAI / VS. DCIT, CENTRAL CIRCLE 46 / RESPONDENT AYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 ./ PAN - ADUPG6871G / APPELLANT BY: SHRI HARI S. RAHEJA / RESPONDENT BY : SHRI C.W. ANGOLKAR / DATE OF HEARING : 20.10. 2015 / DATE OF PRONOUNCEMENT : 30 .10.2015 / O R D E R PER BENCH ALL THESE APPEALS OF THE ASSESSEE PERTAIN TO THE SAME ASSESSEE ON SAME ISSUE. THEREFORE THEY ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. AS SEARCH SEIZURE ACTION UNDER SECTION 132 OF THE ACT WAS CONDUCTED IN THE CASE OF M/S. MAHASAGAR SECURITIES PVT. LTD., M/S. 2 ITA NO. 661 +5 /MUM/2013 SHRI PRAMOD GADIA M IHIR AGENCIES PVT. LTD, M/S. ALLIANCE INTERMEDIATORIES & NETWORK PVT. LTD. AND ITS GROUP COMPANIES ON 25.11.2009 AND ALSO WAS ALSO COVERED IN THE SEARCH. THEREAFTER NOTICE UNDER SECTION 153A OF THE ACT DATED 08.07.2011 WAS ISSUED DIRECTING THE ASSESSEE TO FILE THE RETURN OF INCOME. IN RESPONSE TO THE SAME ASSESSEE FILED RETURN OF INCOME ON 24.08.2011 DECLARING TOTAL INCOME OF ` 1,08,2 00/ - . LATER ON, ASSESSEE HAD REVISED HIS INCOME TO ` 3,28,097/ - BY DECLARING ADDITIONAL INCOME OF ` 2,19,897/ - . ASSESSING OFFICER OBSERVED THAT ASSESSEE IS EARNING COMMISSION ON SHARE APPLICATION MONEY TRANSACTIONS @0.25% TO 0.40% AND ON SHARE PROFIT TRANSAC TIONS @1.25% TO 2.5%. THUS HE HAS NOT ACCEPTED THE CONTENTIONS OF THE ASSESSEE AND TREATED THE COMMISSION INCOME AT 2% AND ASSESSED THE TOTAL INCOME AT ` 6,07,370/ - IN A.Y. 2005 - 06, WHICH WAS CONFIRMED BY THE CIT(A). 2.1 BEFORE THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT SIMILAR ISSUE AROSE IN ASSESSEES OWN CASE FOR A.Y. 2004 - 05 IN ITA NO. 660/MUM/2013 ON SIMILAR SET OF FACTS THE TRIBUNAL HAS DIRECTED THE ASSESSING OFFICER TO APPLY 0.5% COMMISSION TOTAL DEPOSITS BY OBSERVING AS UNDER: - 5. AFTER CO NSIDERING THE ORDER OF THE AO, CIT(A) AND THE SUBMISSION OF BOTH THE PARTIES, I FOUND THAT ON SIMILAR FACTS IN CASE OF M/S ALEMBIC SECURITIES PRIVATE LIMITED (SUPRA), THE ISSUE HAS BEEN DISCUSSED AT GREAT LENGTH, WHEREIN I HAVE 3 ITA NO. 661 +5 /MUM/2013 SHRI PRAMOD GADIA TAKEN A VIEW THAT IF THE NET PROFIT AT THE RATE OF 0.50 % IS TAKEN, THAT WILL MEET THE END OF JUSTICE. THE FINDINGS IN THE AFORESAID CASE HAVE BEEN RECORDED IN PARA 9, WHICH ARE AS UNDER: - 9. I HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED THEM CAREFULLY. AFTER CONSIDERING THE RELEVANT MATERIAL AND PERUSING THE VARIOUS CASE LAWS ALONG WITH THE ORDER OF THE AO AS WELL AS THE ORDER OF CIT(A), I FOUND THAT THE ASSESSEE DESERVES TO SUCCEED IN PART. THIS IS ALSO A FACT THAT CERTAIN DOCUMENTS WERE FOUND WHICH INDICATED EARNING OF COMMISSION B ETWEEN 1.5% TO 3.06% BUT THESE EVIDENCES WERE NOT RELATED TO THE ASSESSEE AS THEY WERE RELATED TO DIFFERENT ENTITIES OR AGENTS. THE SUBMISSION OF MR. MUKESH CHOKSI, WHO HANDLED ALL THESE COMPANIES WERE RECORDED AND HE HAS CATEGORICALLY STATED THAT HE USED TO CHARGE A COMMISSION AT THE RATE OF 0.03% OF TRANSACTION CONDUCTED THROUGH VARIOUS BANK ACCOUNTS AND HAVE CHARGED COMMISSION AT THE RATE OF 0.15% OF THE TRANSACTION BELONGING TO BENEFICIARIES. AFFIDAVIT WAS ALSO FILED. COPY OF THE SAME IS PLACED ON RECOR D, IT IS FURTHER SEEN THAT A SEARCH WAS ALSO CONDUCTED IN CASE OF M/S MIHIR AGENCIES PVT. LTD. THE MATTER CAME UPTO THE STAGE OF THE TRIBUNAL AND THE TRIBUNAL FOLLOWING OTHER ORDER OF THE TRIBUNAL HELD THAT THE COMMISSION INCOME EARNED BY THE COMPANY I.E. M/S. MIHIR AGENCIES PVT. LTD. AT 0.15% WAS CORRECT. WHILE HOLDING SO, THE TRIBUNAL HAS FOLLOWED THE ORDER OF THE TRIBUNAL IN CASE OF M/S GOLDSTAR FIN VEST PVT. LTD . I FURTHER NOTED THAT IN THE CASE OF M/S RICHMOND SECURITIES PVT. LTD. AGAIN THE TRIBUNAL HELD THAT COMMISSION OF 0.15% IS REASONABLE. I FURTHER NOTED THAT THE AO PASSED ASSESSMENT UNDER SECTION 143(3) FOR ASSESSMENT YEAR 2007 - 08 VIDE ORDER DATED 24 - 11 - 2008. IN THIS CASE ALSO THE AO FOLLOWING THE ORDER OF THE TRIBUNAL HAS AC CEPTED THE COMMISSION AT THE RATE OF 0.15%, COPY OF THIS ORDER IS PLACED IN THE PAPER BOOK. FROM THESE FACTS, IT IS EMERGES THAT EVEN THE DEPARTMENT HAS ACCEPTED THE EARNING OF COMMISSION AT THE RATE OF 0.15%, HOWEVER, I AM OF THE VIEW THAT SINCE IN THE PR ESENT CASE STATEMENT OF VARIOUS PARTIES WERE RECORDED AND CERTAIN MATERIAL WERE ALSO FOUND, THEREFORE, I FEEL THAT IF THE INCOME IS COMPUTED BY APPLYING A NET COMMISSION OF 0.50% INSTEAD OF 0.15% DECLARED BY THE ASSESSEE AND 2% ADMITTED BY THE AO, WHICH IS CONFIRMED BY THE LEARNED CIT(A), THAT WILL MEET THE END OF JUSTICE. ACCORDINGLY, I DIRECT THE AO TO RECOMPUTE THE INCOME BY TAKING A NET PROFIT RATE OF 0.50% OF DEPOSITS FOR ALL RELEVANT YEARS IN THESE APPEALS. I ORDER ACCORDINGLY. 4 ITA NO. 661 +5 /MUM/2013 SHRI PRAMOD GADIA 6. FOLLOWING THE O RDER IN THE CASE OF MIS ALEMBIC SECURITIES PRIVATE LIMITED (SUPRA), WHICH IS EVEN DATED, I DIRECT THE AO TO COMPUTE THE INCOME BY APPLYING 0.50% COMMISSION ON TOTAL DEPOSITS. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. 3. NOTHING CONTRARY WAS BROUGHT TO OUR NOTICE. THE FACTS BEING SIMILAR, FOLLOWING THE SAME REASON, ASSESSING OFFICER IS DIRECTED TO COMPUTE THE INCOME BY APPLYING 0.50% OF TOTAL DEPOSITS. APPEAL IS PARTLY ALLOWED. 4. SIMILAR ISSUE AROSE IN OTHER YEARS IN ITA NO S. 662 TO 666/MUM/2013. FACTS BEING SIMILAR IN ALL THESE APPEALS, FOLLOWING THE SAME REASONING THE AO IS DIRECTED TO COMPUTE THE INCOME BY APPLYING 0.50% OF TOTAL DEPOSITS 5. IN THE RESULT, ALL THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUN CED IN THE OPEN COURT ON 30 TH OCTOBER, 2015. 30.10.2015 SD/ - SD/ - (RAMIT KOCHAR) ( SHAILENDRA KUMAR YADAV ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI , DATED 30 TH OCTOBER, 2015 5 ITA NO. 661 +5 /MUM/2013 SHRI PRAMOD GADIA / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) - 38 , MUMBAI 4. / THE CIT - CENTRAL - IV , MUMBAI 5. , , / DR, C BENCH ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER //TRUE COPY// /ASSTT. REGISTRAR) , /ITAT, MUMBAI