MAHASAGAR SECURITIES P.LTD, MUMBAI V. ACIT CEN CIR 46, MUMBAI

ITA 7425/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0608 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 17-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K AGARWAL
• Keywords: Search and seizure; Document seized; Accommodation entries; Documents seized
• Section: 143(3); 153A

Judgement Text

INCOME TAX APPELLATE TRIBUNAL BENCHES B,MUMBAI BEFORE SHRI P.K. BANSAL, VICE PRESIDENT, AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 7425/MUM/2013 (AY 2002-03); M/S. MAHASAGAR SECURITIES PVT. LTD. BLOCK-H, SHRI SADASHIV CO. OP. HSG. SOC. LTD., 6 TH ROAD, SANTACRUZ (E), MUMBAI-400055 VS. ACIT CC-46 ROOM NO. 659, 6 TH FLOOR, AAYAKAR BHAVAN, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 (APPELLANT) (RESPONDENT ) PAN: AABCR1593B APPELLANT BY MR. MUKESHCHOKSI RESPONDENT BY MR. V.K. AGARWAL (CIT DR) DATE OF HEARING: 01/06/2 017 DATE OF ORDER : 01/06/2017 ORDER UNDER SECTION 254(1) OF INCOME TAXACT PER PAWAN SINGH, JUDICIAL MEMBER, 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF TH E INCOME TAX ACT IS DIRECTED AGAINST OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-38, MUMBAI FOR ASSESSMENT YEARS 2002-03. THE ASSESSEE H AS RAISED SOLITARY GROUND OF APPEAL THAT LD. CIT(A) ERRED IN CONFIRMIN G THE ORDER PASSED BY ASSESSING OFFICER U/S. 271(1)(C) OF THE INCOME-TAX ACT. 2. AT THE OUTSET OF THE HEARING THE LD. AR OF THE ASSESSEE ARGUED THAT THE GROUNDS OF APPEAL RAISED IN THE PRESENT APPEAL IS COVERED IN HIS FAVOUR BY VARIOUS DECISION OF TRIBUNAL IN ASSESSEES OWN C ASE AND IN ASSESSEES GROUP CASE IN ITA NO. 996/M/02015 AND IN CASE OF MI HIR AGENCIES PVT. LTD., 695/M/2015. IT WAS FURTHER ARGUED THAT THE A SSESSEE FILED APPEAL ITA NO.7425/M/2013 M/S. MAHASAGAR SECURITIES PVT. LTD. 2 BEFORE THE TRIBUNAL IN THE QUANTUM ASSESSMENT VIDES APPEAL(S) ITA NO. 833/M/2013 FOR AY 2004-5, ITA NO. 835/M/2013 FOR AY 2006-07, APPEAL ITA NO. 836/M/2013 FOR THE AY 2007-08, APPEA L ITA NO. 837/M/2013 AY 2008-09, ITA NO. 838/M/2013 FOR AY 20 08-09 AND ITA NO. 839/M/2013 FOR AY 2010-11, WHEREIN THE ESTI MATION OF INCOME COMMISSION INCOME WAS RESTRICTED TO 0.15%. IT WAS F URTHER ARGUED THAT THE ORDER WHICH IS BASED ON ESTIMATE DISALLOWANCE I S NOT SUSTAINABLE. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE NOT DISP UTED THE FACTUAL POSITION AND THE FINDING ON VARIOUS CO-ORDINATE BEN CHES OF THE TRIBUNAL IN ASSESSEES GROUP CASE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF PART IES AND PERUSED THE RECORDS OF THE APPEALS. WE HAVE SEEN THAT THE ASSES SEE CHALLENGED THE ADDITION IN QUANTUM ASSESSMENT BEFORE TRIBUNAL AND THE COORDINATE BENCH OF THIS TRIBUNAL VIDE ORDER DATED 04 TH MAY 2016 IN ITA NO. 833/M/2013 FOR AY 2004-5, ITA NO. 835/M/2013 FOR AY 2006-07, I TA NO. 836/M/2013 FOR THE AY 2007-08,ITA NO. 837/M/2013 AY 2008-09, ITA NO. 838/M/2013 FOR AY 2008-09 AND ITA NO. 839/M/201 3 FOR AY 2010-11. THE FOLLOWING ORDER WAS PASSED AS UNDER: 2. AT THE OUTSET, THE ASSESSEE SUBMITTED THAT, SI MILAR ISSUE HAD ARISEN IN GROUP CONCERNS OF THE ASSESSEE BEFORE THE TRIBUNAL WHEREIN THE RATE OF COMMISSION HAS BEEN ACCEPTED AT 0.15%. THE LIST OF SOME OF THE ITAT DECISIONS FILED BEFORE US ARE AS UNDER: (I) M/S. GOLDSTAR FINVEST P. LTD. ITAS 887 AND 269 9/M/2013, ORDER DATED 30.11.2015; ITA NO.7425/M/2013 M/S. MAHASAGAR SECURITIES PVT. LTD. 3 (II) M/S. MIHIR AGENCIES PVT. LTD., IN ITAS 6435 TO 6441/M/2012 VIDE ORDER DATED 06.01.2016; AND (III) ALLIANCE INTERMEDIATERIES AND NETWORKS P LT D., IN ITAS 2700 TO 2702/M/2013 ORDER DATED 20.02.2016 3. LD. DR ALSO ADMITTED THAT, THE ISSUE OF RATE O F COMMISSION HAS BEEN DECIDED BY THE TRIBUNAL IN VARIOUS CASES. 4. BRIEF FACTS QUA THE ISSUE INVOLVED ARE THAT, A SEARCH AND SEIZURE ACTION UNDER SECTION 132(1) WAS CONDUCTED IN THE GR OUP COMPANIES OWNED AND FLOATED BY ASSESSEE, SHRI MUKESH CHOKSI O N 25.11.2009. THE ASSESSEE WAS ALSO COVERED UNDER THE SAME SEARCH AND CONSEQUENTLY ASSESSMENTS UNDER SECTION 153A R.W.S. 143(3) WERE C OMPLETED. THE AO IN THE ASSESSMENT ORDER HAS NOTED THAT, DURING THE COURSE OF THE SEARCH AND SEIZURE ACTION, IT WAS FOUND THAT THE ASSESSEE AND THE GROUP COMPANIES OF THE ASSESSEE WERE ENGAGED IN THE BUSIN ESS OF ACCOMMODATION ENTRIES AND LAUNDERING OF BLACK MONEY . THE ASSESSEE HIMSELF WAS THE MASTERMIND BEHIND FORMATION OF ALL THESE COMPANIES. VARIOUS OTHER DETAILS AND MODUS OPERANDI HAVE BEEN NOTED BY HIM ALONG WITH THE STATEMENT ON OATH OF THE ASSESSEE AN D THE SEIZED DOCUMENTS. THUS, ON THE BASIS OF HIS DETAIL DISCUS SIONS AND MATERIAL ON RECORD, THE AO HELD THAT, THE ASSESSEE AND THE GROU P COMPANIES RUN BY HIM WERE RECEIVING COMMISSION INCOME FROM FOR ALL T HESE ACTIVITIES. SUCH A COMMISSION INCOME WAN RANGING BETWEEN 1.5% T O 3.5%. THE AO ACCORDINGLY REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE AND ESTIMATED THE NET PROFIT RATE OF THE COMMISSION @ 2 %, WHICH ACCORDING TO THE ASSESSEE WAS 0.15%. BEFORE THE CIT (A), THE ASSESSEE FILED VARIOUS DECISIONS PASSED BY THE CIT (A) IN GROUP CO MPANIES, WHEREIN, 0.15% OF THE COMMISSION RATE HAS BEEN ACCEPTED. HO WEVER, THE LD. CIT (A) DID NOT ACCEPT THE ASSESSEES CONTENTION AND CO NFIRMED THE ESTIMATE MADE BY THE AO. 5. ON THE PERUSAL OF THE IMPUGNED ORDERS AND THE FINDING OF THE TRIBUNAL IN THE CASE OF M/S. MIHIR AGENCIES PVT. LT D., (SUPRA) AND ON SIMILAR OTHER DECISIONS AS RELIED BEFORE US, WE FIN D THAT THE TRIBUNAL HAS UPHELD THE NET PROFIT RATE OF 0.15%. THE RELEVANT OBSERVATION OF THE TRIBUNAL IN THE CASE OF M/S. MIHIR AGENCIES PVT. LT D. IS REPRODUCED HEREUNDER:- 7. WE FIND THAT IN THE CASE OF GOLD STAR FINVEST LTD., WHICH IS A SISTER CONCERN OF THE ASSESSEE, ON SIMILAR FACTS FO R THE ASSESSMENT ITA NO.7425/M/2013 M/S. MAHASAGAR SECURITIES PVT. LTD. 4 YEAR 2003-04 AND 2004-05, THE TRIBUNAL AFTER REFERR ING TO VARIOUS DECISIONS HAVE UPHELD THE PERCENTAGE OF COM MISSION ON NET PROFIT @ 0.15% WHICH WAS QUITE CONSISTENT WITH THE STATEMENT RECORDED AT THE TIME OF SEARCH. ACCORDINGLY, FOLLO WING THE JUDICIAL PRECEDENCE IN THE CASE OF THE ASSESSEES S ISTER CONCERN (SUPRA), WE UPHOLD THE RATE OF COMMISSION / RATE OF NET PROFIT FROM SUCH ACTIVITIES AT 0.15%. ACCORDINGLY, GROUND NO. 4, 5 AS RAISED BY THE ASSESSEE ARE ALLOWED. THUS, CONSISTENT WITH THE VIEW TAKEN IN VARIOUS S IMILAR MATTERS, WE ALSO UPHOLD THE RATE OF COMMISSION / NET PROFIT RATE FROM SUCH ACTIVITY AT 0.15%. ACCORDINGLY, THIS ISSUE IS DECI DED IN FAVOR OF THE ASSESSEE. 6. SINCE NO ARGUMENTS HAVE BEEN PLACED ON OTHER G ROUNDS OF APPEAL, THE SAME ARE NOT BEING ADJUDICATED UPON. I N THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 7. IN ALL THE APPEALS, EXACTLY SIMILAR ISSUE ARE INVOLVED FOR OUR CONSIDERATION, OUR FINDING GIVEN ABOVE WILL APPLY M UTATIS MUTANDIS TO THE IMPUGNED APPEALS ALSO, THEREFORE, ALL THE APPEA LS FILED BY THE ASSESSEE ARE TREATED AS PARTLY ALLOWED. 5. CONSIDERING THE FACT THAT THE CO-ORDINATE BENCH OF TRIBUNAL IN ASSESEESS GROUP CASE THE INCOME OF THE ASSESSEE WA S ASSESSED ON ESTIMATE BASIS, WHICH WAS FURTHER REDUCED BY THE TR IBUNAL TO 0.15%. THE FACTS OF PRESENT CASE ARE ALMOST SIMILAR, AS THE IN COME WAS ASSESSED IN THE HAND OF ASSESSEE ON ESTIMATE BASIS. IT IS SETTLED L AW THAT PENALTY IS NOT ATTRACTED ON ADDITION/DISALLOWANCE MADE ON ESTIMATE BASIS, THUS, THE PENALTY LEVIED BY ASSESSING OFFICER IS DELETED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER WAS PRONOUNCED IN THE OPEN COURT ON 1 ST DAY OF JUNE 2017. SD/- (P.K. BANSAL) SD/- (PAWAN SINGH) VICE PRESIDENT JUDICIALMEMBER MUMBAI; DATED : 01/06/2017 ITA NO.7425/M/2013 M/S. MAHASAGAR SECURITIES PVT. LTD. 5 S.K., P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT, MUMBAI. 4. CIT(A)- , MUMBAI 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, (DY./ASSTT. REGISTRAR) IT AT, MUMBAI