READYMADE STEEL INDIA P.LTD, MUMBAI V. DCIT CIR 7(2), MUMBAI

ITA 7426/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2392 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 12-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TRIPARTHI
• Assessee Lawyers: JIGNA PAREKH
• Keywords: Business income
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.7426/M/2014 ASSESSMENT YEAR: 2010-11 M/S. READYMADE STEEL INDIA P. LTD., C/O M/S. U.B. LAKHANI & CO., A/102, NEEL KANTHDHARA, OPP. DHANWANTI HOSPITAL, N.S. ROAD, MULUND (W), MULUND 80 PAN: AADCR2540N VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE-7(2), R.NO.624, AAYAKAR BHAVAN, 6 TH FLOOR, M.K. ROAD, MUMBAI 400020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI JIGNA PAREKH, A.R. REVENUE BY : SHRI TRIPARTHI, D.R. DATE OF HEARING : 05.10.2016 DATE OF PRONOUNCEMENT : 19.10.2016 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 29.10.2014 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2010-11. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING REVISED GRO UNDS OF APPEAL: THE GROUNDS OF APPEAL MENTIONED HEREIN BELOW ARE W ITHOUT PREJUDICE TO ONE ANOTHER. 1. THE LD AO ERRED IN COMPUTING THE AMOUNT OF ACCOMMODATION TURNOVER AT RS.24,89,60,272/-, INSTEA D OF RS.24,16,32,566/-, DESPITE ACCEPTING THE BIFURCATED FIGURES OF GENUINE TURNOVER AND ACCOMMODATION TURNOVER PROVIDED BY THE APPELLANT, THUS ADOPTING THE FIGURE INFLATED BY RS.73,27,706/- OF ACCOMMODATION TURNOVER AS AGAINST THE CORRECT FIGUR E OF SUCH TURNOVER. THE CIT (A) ERRED IN CONFIRMING IT. ITA NO.7426/M/2014 M/S. READYMADE STEEL INDIA P. LTD. 2 2. THE LD AO ERRED IN ADOPTING THE RATE OF 3% FOR E STIMATING THE INCOME OF THE APPELLANT ON IMPUGNED ACCOMMODATION TURNOVER WITHOUT BRINGING ANY COMPARABLE CASE ON RECORD, AS WELL AS REJECTING THE RATE OF 1% DECLARED BY THE APPELLANT ITSELF WITHOUT ASSIGNI NG ANY REASON FOR SUCH REJECTION. THE CIT (A) ERRED IN CONFIRMING IT. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, DE LETE OR WITHDRAW ONE OR MORE GROUNDS OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT A SURVEY AC TION UNDER SECTION 133A OF THE INCOME TAX ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE AND IT WAS NOTICED THAT THE ASSESSEE COMPANY WAS PROVIDING ACC OMMODATION BILLS TO CERTAIN PARTIES APART FROM DOING THE ACTUAL BUSINES S OF TRADING IN FERROUS AND NON FERROUS GOODS. THE TURNOVER DECLARED BY THE AS SESSEE WAS BIFURCATED INTO TWO PARTS VIZ. I) ACTUAL BUSINESS TURNOVER AND II) TURNOVER DUE TO ACCOMMODATION BILLS. THE ASSESSEE DECLARED THE NET PROFIT FROM THE TURN OVER OF ACCOMMODATION BILLS AT THE RATE OF 1% IN THE RETURN OF INCOME. H OWEVER, THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) ESTIMATED THE S AME AT THE RATE OF 3% OF THE TURNOVER. BEING AGGRIEVED BY THE ABOVE ORDER OF TH E AO, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). 4. IT WAS PLEADED BEFORE THE LD. CIT(A) THAT THE PR OFIT AT THE RATE OF 3% WAS EXCESSIVE; THAT THE ASSESSEE HAS RIGHTLY DECLAR ED THE PROFIT AT THE RATE OF 1% OF THE TURNOVER OF ACCOMMODATION BILLS. THE LD. CI T(A) , HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ADDITION MADE BY THE AO IN THIS RESPECT. BEING AGGRIEVED BY THE ABOVE O RDER, THE ASSESSEE HAS COME IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O 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 ESTIMATION OF PROFITS AT THE RAT E OF 3% WERE VERY EXCESSIVE. ITA NO.7426/M/2014 M/S. READYMADE STEEL INDIA P. LTD. 3 IT WAS ALSO EXPLAINED THAT OUT OF THE TOTAL TURNOVE R 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.82,75,831 /- 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 ACTUALL Y RECEIVED BY THE ASSESSEE. THAT THE AO IN THE IMPUGNED ASSESSMENT ORDER HIMSEL F HAS MENTIONED THAT THERE WAS NO MENTION OF CASH COMMISSION IN THE SURV EY REPORT. BUT THE ASSESSEE, DESPITE THAT, ITSELF, HAS OFFERED FOR TAX ATION THE ACTUAL INCOME RECEIVED FROM PROVIDING ACCOMMODATION BILLS AND FURTHER THAT THE ASSESSEE HAD NOT CLAIMED ANY EXPENSES OR SUB COMMISSION IN RESPECT O F THE SAID DECLARED INCOME. THE LD. A.R. HAS RELIED UPON CERTAIN DECIS IONS OF THE TRIBUNAL WHEREIN THE COMMISSION INCOME FROM SUCH ACCOMMODATI ON BILLS HAS BEEN ESTIMATED OR ACCEPTED BY THE TRIBUNAL EVEN AT A RAT E WHICH IS LESS THAN 1% OF THE TURNOVER. SHE HAS MAINLY RELIED UPON THE DECIS ION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SAROJ ANIL STEEL PV T. LTD. VS. ITO. SHE HAS STATED THAT IN THE SAID CASE ALSO THAT ASSESSEE WAS IN THE SIMILAR BUSINESS AS THAT OF THE PRESENT ASSESSEE AND IN THE SAID CASE THE CO MMISSION INCOME WAS ESTIMATED BY THE AO AT THE RATE OF 1% OF THE TURNOV ER. BUT THE LD. CIT(A) IN THE APPELLATE PROCEEDINGS DIRECTED THE AO TO ESTIMA TE 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 CER TAIN ADMINISTRATIVE EXPENSES THERE FROM. THE LD. A.R. HAS STATED THAT IN THE CA SE 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 A PPROVED BY THE TRIBUNAL. CONSIDERING THE ABOVE SUBMISSIONS OF THE ASSESSEE A ND 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 S UCH CASES CAN BE ADOPTED FOR TURNOVER, HOWEVER, CONSIDERING THE FACTS OF THE CASE AND SUBMISSIONS OF THE ITA NO.7426/M/2014 M/S. READYMADE STEEL INDIA P. LTD. 4 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 SI DE. 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 O N THE BASIS OF WHICH THE CALCULATION AND INCOME OFFERED BY THE ASSESSEE CAN BE FAULTED WITH. WE ACCORDINGLY RESTRICT THE INCOME OFFERED FROM THE AC COMMODATION 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 NOT HAVE ANY BEARING IN ANY OTHER CASE AS SUCH TYPE OF CASES HAVE TO BE DECIDED ON THEIR OWN MERITS. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.10.2016. SD/- SD/- (ASHWANI TANEJA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 19.10.2016. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.