GOLDSTAR FINVEST P LTD, MUMBAI V. DCIT CC(46), MUMBAI

ITA 7564/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3261 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2004-2005
• Appeal Filed On: 18-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P MEENA
• Keywords: Search and seizure; Document seized; Difference of opinion; Accommodation entries; Documents seized
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI RAJENDRA (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 7564/MUM/2014 ASSESSMENT YEAR: 2004-05 ITA NO. 7566/MUM/2014 ASSESSMENT YEAR: 2005-06 ITA NO. 7567/MUM/2014 ASSESSMENT YEAR: 2006-07 ITA NO. 7568/MUM/2014 ASSESSMENT YEAR: 2007-08 ITA NO. 7569/MUM/2014 ASSESSMENT YEAR: 2008-09 ITA NO. 7570/MUM/2014 ASSESSMENT YEAR: 2009-10 M/S. GOLDSTAR FINVEST PVT. LTD . BLOCK H, SHRI. SADASHIV CHS LTD, 6 TH ROAD, SANTACRUZ(E), MUMBAI- 400 055. PAN: AABCG3811B VS. THE DCIT - CENTRAL CIRCLE - 46, 6 TH FLOOR, ROOM NO. 659, AAYAKAR BHAWAN, M.K.ROAD, MUMBAI- 400 020. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. MUKESH CHOKSHI RESPONDENT BY : SHRI. O.P. MEENA DATE OF HEARING: 1 8/08/2016 DATE OF PRONOUNCEMENT: 24/08/20 16 O R D E R PER BENCH THESE APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE A GAINST COMMON ORDER DT. 31/10/2014 PASSED BY THE LD. CIT(APPEALS) -38, MUMBAI, FOR THE ASST. YEARS 2004-05 TO 2009-10. SINCE ALL THESE APPEALS P ERTAIN TO THE SAME ASSESSEE 2 ITA NO. 7564/MUM/2014 & ITA 7566-7570/MUM/2014 ASSESSMENT YEAR 2004-05 TO 2009-10 FOR THE DIFFERENT ASSESSMENT YEARS, THE SAME WERE C LUBBED AND HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ALL THESE APPEALS THE ASSESSEE HAS RAISED T HE COMMON GROUND OF APPEAL THAT THE LD. CIT(A) HAS ERRED IN LAW AND IN FACT IN CONFIRMING THE ORDER PASSED BY THE A.O U/S 271(1)(C) OF THE INCOME TAX ACT, 196 1(IN SHORT THE ACT). SINCE, THE ONLY ISSUE RAISED BY THE ASSESSEE IN ALL THE SI X APPEALS IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE PENALTY IMPOSED BY THE AO U/S 271(1)(C) OF THE ACT, WE ARE DISCUSSING THE FACTS OF THE APPEAL PERTAININ G TO A.Y. 2004-05 AS THE LEAD CASE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ONE OF THE CONCERNS, FLOATED AND RUN BY MUKESH CHOKSI. SEARCH AND SEIZURE OPERA TIONS U/S 132 OF THE ACT WERE CONDUCTED ON 25/11/2009 IN THE CASE OF MAHASAG AR SECURITIES P. LTD. NOW KNOWN AS M/S ALAGH SECURITIES P. LTD. AND ITS G ROUP COMPANIES, AT THE RESIDENTIAL PREMISES OF THE DIRECTORS OF THE COMPAN Y AND THE AUDITOR OF THE GROUP COMPANIES. DURING THE COURSE OF SEARCH, IT WA S FOUND THAT THE GROUP COMPANIES WERE IN THE PRACTICE OF PROVIDING ACCOMMO DATION ENTRIES IN CASES INVOLVING TRADING, SPECULATION PROFITS, SHORT TERM AND LONG TERM CAPITAL GAINS OR LOSSES, COMMODITY TRADING, DERIVATIVE PROFIT OR LOS S, SHARE APPLICATION MONEY, BOGUS INVOICES FOR PURCHASES AND SALES ETC. 4. DURING THE ASSESSMENT PROCEEDING, THIS FACT ALSO CAME TO NOTICE THAT THE ASSESSEE EARNED COMMISSION IN THE RANGE OF 1.5% TO 3.5% ON VARIOUS KINDS OF ACCOMMODATION ENTRIES PROVIDED BY IT. THE A.O RELYI NG UPON THE STATEMENT OF AGENTS AND EMPLOYEES OF MUKESH CHOKSHI AND ONE OF THE DIRECTORS OF THE GROUP COMPANIES, ESTIMATED NET COMMISSION OF THE AS SESSEE @ 2% OF THE TOTAL RECEIPTS SHOWN IN THE BANK ACCOUNTS AND ADDED THE S AME TO THE INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE ESTIMATE OF C OMMISSION BEFORE THE LD. CIT(A) AND URGED THAT THE COMMISSION SHOULD BE TAK EN @ 0.15% IN VIEW OF THE 3 ITA NO. 7564/MUM/2014 & ITA 7566-7570/MUM/2014 ASSESSMENT YEAR 2004-05 TO 2009-10 ORDER OF THE TRIBUNAL. HOWEVER, THE LD. CIT(A) CONF IRMED THE ORDER OF THE A.O., HOLDING THAT THE FACTS AND CIRCUMSTANCES ON THE BAS IS OF WHICH THE ITAT HAD DETERMINED THE COMMISSION INCOME @ 0.15% WERE NOT S IMILAR TO THE FACTS OF THE PRESENT CASE. IN SECOND APPEAL, THE CO-ORDINATE BEN CH OF THE TRIBUNAL, FOLLOWING ITS EARLIER ORDERS, DIRECTED THE A.O TO R ESTRICT THE ESTIMATE @ 0.15% OF THE TURNOVER. 5. ACCORDINGLY, PENALTY PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE U/S 271(1)(C) OF THE ACT AND AFTER HEARING THE ASSESSEE , THE AO IMPOSED PENALTY OF RS. 22,43,000/-. THE ASSESSEE CHALLENGED THE IMPUGN ED PENALTY ORDER BEFORE THE LD. CIT(A). THE LD. CIT(A) CONFIRMED THE PENALT Y IMPOSED BY THE A.O U/S 271(1)(C) OF THE ACT. THE ASSESSEE HAS CHALLENGED T HE IMPUGNED ORDER PASSED BY THE LD CIT(A). 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE IS IDENTICAL T O THE FACTS AND CIRCUMSTANCES OF THE CASE OF M/S MIHIR AGENCIES PVT. LTD. AND THE CASE OF MR. MUKESH CHOKSI. THAT IN THE CASE OF M/S MIHIR AGENCIES PVT. LTD.(IT A NO. 695/MUM/2015 FOR THE A.Y. 2004-05) AND (MR. MUKESH CHOKSI IN ITA NO. 996/MUM/2015 FOR THE A.Y. 2005-06) THE TRIBUNAL HAS ALLOWED THE APPEAL O F THE ASSESSEE AND DELETED THE PENALTY IMPOSED U/S 271(1)(C) OF THE ACT. 7. ON THE OTHER HAND THE LD. DR RELYING UPON THE CO NCURRENT FINDINGS OF THE AUTHORITIES BELOW, SUBMITTED THAT SINCE EACH AND EV ERY CASE IS REQUIRED TO BE DECIDED ON ITS OWN MERIT, THE LD. CIT(A) HAS RIGHTL Y CONFIRMED THE PENALTY LEVIED BY THE AO. THEREFORE, THERE IS NO MERIT IN T HE ASSESSEES APPEAL. 8. WE NOTICE THAT IN M/S MIHIR AGENCIES P. LTD. VS. DCIT IN ITA 996/M/2015 FOR THE A.Y. 2004-05 AND MR. MUKESH CHOKSI VS. DCIT IN ITA 996/M/2015 FOR 4 ITA NO. 7564/MUM/2014 & ITA 7566-7570/MUM/2014 ASSESSMENT YEAR 2004-05 TO 2009-10 THE A.Y. 2005-06, THE CO-ORDINATE BENCH HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE HOLDING AS UNDER:- 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PRODUCE THE MATERIAL BEFORE US. WE FIND THAT CASE UNDER CONSIDERATION AN ACTION U/S.132 OF THE ACT WAS CARRIED OUT COVERING ALL THE GROUP E NTITIES INCLUDING THE ASSESSEE UNDER CONSIDERATION, THAT IT WAS FOUND GROUP CONCERNS WERE ENGAGED IN PROVIDING ACCOMMODATION BILLS/HAWAL A ENTRIES, THAT THE ASSESSEE DID NOT DISPUTE THE SAID FACT, TH AT THE AO ESTIMATED THE INCOME FROM THE ACCOMMODATION ENTRIES @ 2% OF THE TOTAL TRANSACTIONS APPEARING IN THE BANK ACCOUNTS O F THE ASSESSEE, THAT THE THEN FAA CONFIRMED THE QUANTUM ADDITION MA DE BY THE AO, THAT IN THE CASE UNDER CONSIDERATION THE TRIBUNAL H AD HELD THAT COMMISSION INCOME SHOULD BE TAKEN AT THE RATE OF 0. 15% (ITA /6435/MUM/2012 AY-2004-05 AND OTHER SIX APPEALS DT .6.1.16). THE UNDISPUTED FACT IS THAT THERE IS DIFFERENCE OF OPINION AS TO HOW MUCH INCOME SHOULD BE ESTIMATED FOR THE HAWALA ENTR IES-THE AO ESTIMATED AT A PARTICULAR PERCENTAGE, WHEREAS THE A SSESSEE HAD SHOWN THE INCOME AT A DIFFERENT PERCENT. THE ADDITI ON MADE BY THE AO AND CONFIRMED BY THE FAA IN QUANTUM ADDITION MAY OR MAY NOT BE. BUT, LEVYING PENALTY ON THE BASIS OF AN ESTIMAT ED ADDITION COULD NOT BE HELD TO BE JUSTIFIED. NO AUTHORITY IS REQUIR ED TO BE CITED THAT PENALTY AND ASSESSMENT PROCEEDINGS ARE SEPARATE AND DISTINCT PROCEEDINGS AND THE QUANTUM PROCEEDINGS SHOULD NOT RESULT IN AUTOMATIC LEVY OF CONCEALMENT PENALTY. IT IS A CASE OF ESTIMATION OF INCOME BY THE AO AND THE ASSESSEE. HERE WE WOULD LIKE TO DISCUSS TWO CASES. ONE OF THE M IS AERO TRADERS P. LTD.(322 ITR 316).IN THAT CASE THE ASSE SSEE-COMPANY 5 ITA NO. 7564/MUM/2014 & ITA 7566-7570/MUM/2014 ASSESSMENT YEAR 2004-05 TO 2009-10 HAD FILED ITS RETURN OF INCOME FOR THE YEAR 1997-98 ON A NOTICE U/S.148 OF THE ACT, 1961DECLARING A LOSS OF RS. 83, 64, 468/-.THE ASSESSEE HAD, IN THE RETURN ATTACHED A NOTE STATING THAT IT WAS IMPOSSIBLE FOR IT TO SUBSTANTIATE ITS CLAIM OF LOSS BY WAY OF ANY EVIDENCE AS THE RELEVANT RECORDS WERE SEIZED AND WE RE WITH THE POLICE AUTHORITIES. THE AO AFTER BEING UNABLE TO OB TAIN COPIES OF THE SEIZED DOCUMENTS, BASED HIS ASSESSMENT ORDER ON THE LIMITED DOCUMENTS PROVIDED AND REJECTED THE BOOK RESULTS DE CLARED BY THE ASSESSEE. HE ESTIMATED THE INCOME OF THE ASSESSEE A T RS.61,00,000/-.HE ALSO INITIATED PENALTY PROCEEDING S SEPARATELY. THE FAA ESTIMATED THE TOTAL INCOME OF THE ASSESSEE AT RS. 1,02,980/-.THE TRIBUNAL CONFIRMED THIS ORDER. THE A O OBSERVED THAT THE PROFIT WAS ESTIMATED AFTER REJECTION OF BOOKS O F ACCOUNT DUE TO CERTAIN DISCREPANCIES AND IMPOSED A PENALTY ON THE ASSESSEE OF RS. 36,41,003/-, ON THE GROUND THAT IT WAS A CLEAR CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME. THE FAA DELETED T HE PENALTY HOLDING THAT THE ADDITION MADE BY THE AO ON THE BAS IS OF ESTIMATED PROFIT COULD NOT BE A SUBJECT-MATTER OF PENALTY FOR CONCEALMENT OF INCOME. THE TRIBUNAL CONFIRMED THIS ORDER. ON APPEA L, THE AO DISMISSED THE APPEAL AND HELD THAT THE FINDING ARRI VED AT BY THE TRIBUNAL DID NOT WARRANT INTERFERENCE AS IT WAS PUR ELY A FINDING OF FACT. IN THE CASE OF DURGA KAMAL RICE MILLS (265 IT R 25)THE HONBLE CALCUTTA HIGH COURT HAS HELD AS UNDER: WHEN TWO VIEWS ARE POSSIBLE AND WHEN NO CLEAR AND DEFINITE INFERENCE CAN BE DRAWN, IN A PENALTY PROCEEDING, PE NALTY CANNOT BE IMPOSED.IN QUANTUM PROCEEDINGS, A PARTI CULAR PROVISION MIGHT BE ATTRACTED FOR ADDITION TO THE IN COME OF THE ASSESSEE. BUT WHEN IT COMES TO THE QUESTION OF IMPO SITION OF 6 ITA NO. 7564/MUM/2014 & ITA 7566-7570/MUM/2014 ASSESSMENT YEAR 2004-05 TO 2009-10 PENALTY, THEN INDEPENDENT OF THE FINDING ARRIVED AT IN THE QUANTUM PROCEEDINGS, THE AUTHORITY HAS TO FIND CONC LUSIVELY THAT THE ASSESSEE OWNS THE CONCEALED AMOUNT. CONSIDERING THE FACT THAT TRIBUNAL HAS ADOPTED A PA RTICULAR RATE FOR ESTIMATING THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, WE HOLD THAT THE FAA WAS NOT JUSTIFI ED IN CONFIRMING THE ORDER PASSED BY THE AO U/S. 271(1)(C) OF THE AC T. THEREFORE, REVERSING HIS ORDER, WE DECIDE THE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. 7. IN OUR CONSIDERED VIEW, THE FACTS AND CIRCUMSTAN CES OF THE PRESENT CASE AND THE ISSUE INVOLVED ARE IDENTICAL TO THE FACTS AND C IRCUMSTANCES OF THE CASES AND ISSUE INVOLVED IN THE ABOVE REFERRED CASES. SINCE, THE CO-ORDINATE BENCH HAS ALREADY DECIDED THE IDENTICAL ISSUE IN FAVOUR OF TH E ASSESSEE, WE RESPECTFULLY FOLLOW THE DECISION DATED 27.7.2016 RENDERED IN THE CASE M/S MIHIR AGENCIES PVT. LTD. AND MUKESH CHOKSI (SUPRA) AND ALLOW THE S OLE GROUND OF THE PRESENT APPEAL OF THE ASSESSEE. 8. SINCE, THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ISSUE INVOLVED IN THE REMAINING CASES ARE IDENTICAL TO APPEAL NO 7564/MUM /14 FOR THE AY 2004-05 AFORESAID, EXCEPT THE AMOUNTS OF PENALTY AND SINCE WE HAVE DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN THE SA ID CASE, WE ALLOW THE REMAINING APPEALS, I.E., ITA NO. 7566/MUM/2014 FOR THE A Y 2005-06, ITA NO7567/MUM/2014 FOR A Y2006-07, ITA NO. 7568/MUM/201 4 FOR A Y 2007-08, ITA NO. 7569/MUM/2014 FOR A Y 2008-09 AND I TA NO 7570/MUM/2014 FOR THE A Y 2009-10 OF THE ASSESSEE AC CORDINGLY. 7 ITA NO. 7564/MUM/2014 & ITA 7566-7570/MUM/2014 ASSESSMENT YEAR 2004-05 TO 2009-10 9. IN THE RESULT, ALL THE SIX APPEALS FILED BY THE ASSESSEE FOR THE A.YS 2004-05 TO 2009-10 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 2 4 TH AUGUST, 2016. SD/- SD/- ( RAJENDRA ) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 24/08/2016 / 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// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA