MUKESH CHOKSI, MUMBAI V. DCIT CEN CIR 46, MUMBAI

ITA 833/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3923 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-03-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 31-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N P SINGH
• Keywords: Search and seizure; Document seized; Accommodation entries; Documents seized
• Section: 143(3); 153A; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B , MUMBAI , , BEFORE SHRI B R BASKARAN , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMBER ITA NO. 833 /MUM/201 3 (ASSESSMENT YEAR 200 4 - 0 5 ) ITA NO. 834/MUM/2013 (ASSESSMENT YEAR 2005 - 06) ITA NO. 835/MUM/2013 (ASSESSMENT YEAR 2006 - 07) ITA NO. 836/MUM/2013 (ASSESSMENT YEAR 2007 - 08) ITA NO. 837/MUM/2013 (ASSESSMENT YEAR 2008 - 09) ITA NO. 838/MUM/2013 (ASSESSMENT YEAR 2009 - 10) ITA NO. 839/MUM/2013 (ASSESSMENT YEAR 2010 - 11) MR. MUKESH CHOKSI, BLOCK H, SHRI SADASHIV CHS LTD., SANTACRUZ (EAST), MUMBAI - 400 055 P AN: AA AP C 7767 J VS DY . COMMISSIONER OF INCOME TAX CENTRAL C IRCLE - 46 , ROOM NO. 659, 6 TH FLOOR A A YAKA R BHAVAN, M K ROAD, MUMBAI - 400 0 20 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MUKESH CHOKSI RESPONDENT BY : SHRI N P SINGH /DATE OF HEARING : 0 4 - 0 5 - 201 6 /DATE OF PRONOUNCEMENT : 0 4 - 0 5 - 2016 ORDER PER BENCH : T HE AFORESAID APPEAL S HA VE BEEN FILED BY THE ASSESSEE AGAINST COMMON ORDER DATED 3 0 . 11 .2012 , PASSED BY CIT(A) - 3 8 , MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 1 5 3 R.W.S. 143(3) FOR THE ASSESSMENT YEARS 2004 - 05; 2005 - 06; 2006 - 07; 2007 - 08; 2008 - 09; 2009 - 10; AND 2010 - 11. THE SOLE ISSUE ARGUED 2 MR. MUKESH CHOKSI ITA S NO. 833 TO 839 /M UM /201 3 BEFORE US , IS ESTI MATION OF NET PROFIT RATE OF 2%, MADE BY THE AO AS AGAINST 0.15% OFFERED BY THE ASSESSEE ON THE GROSS RECEIP TS. 2. AT THE OUTSET, THE ASSESSEE SUBMITTED THAT, SIMILAR ISSUE HA D ARISEN IN G ROUP 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 A R E AS UND ER : - (I) M/S GOLDSTAR FINVEST P LTD - ITAS 887 AND 2699/M/2013, ORDER DATED 30.11.2015; (II) M/S MIHIR AGENCIES PVT LTD. IN ITAS 6435 TO 6441/M/2012 VIDE ORDER DATED 06.01.2016; AND (III) ALLIANCE INTERMEDIAT E RIES AND NETWORKS P LTD., IN ITAS 2700 TO 2702/ M/201 3 ORDER DATED 20.02.2016. 3. LD. DR ALSO ADMITTED THAT, TH E ISSUE OF RATE OF 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 GROUP COMPANIES OWNED AND FLOATED BY ASSESSEE, SHRI MUKESH CHOKSI ON 25.11.2009. THE ASSESSEE WAS ALSO COVERED UNDER THE SAME SEARCH AND CONSEQUENTLY ASSESSMENTS UNDER SECTION 153A R.W.S. 143(3) WERE COMPLETED. 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 BUSINESS OF ACCOMMODATION ENTRIES AND LAUNDERING OF BL ACK 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 AND THE SEIZED DOCUMENTS. THUS, ON TH E BASIS OF H I S DETAIL DISCUSSIONS AND MATERIAL ON RECORD , THE AO HELD THAT , THE ASSESSEE AND THE GROUP COMPANIES RUN BY HIM WERE RECEIVING COMMISSION INCOME FROM FOR ALL THESE ACTIVITIES. SUCH A COMMISSION INCOME WAS RANG ING BETWEEN 1.5% TO 3.5%. THE AO 3 MR. MUKESH CHOKSI ITA S NO. 833 TO 839 /M UM /201 3 ACCORDINGLY REJE CTED 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 COMPANIES, WHEREIN, 0.15% O F THE COMMISSION RATE HAS BEEN ACCEPTED. HOWEVER , THE LD. CIT(A) DID NOT ACCEPT THE ASSESSEES CONTENTION AND CONFIRMED THE ESTIMATE MADE BY THE AO. 5. ON THE PERUSAL OF THE IMPUGNED ORDER S AND THE FINDING OF THE TRIBUNAL IN THE CASE OF M/S MIHIR AGENCIE S PVT LTD ( SUPRA ) AND ON SIMILAR OTHER DECISIONS AS RELIED BEFORE US, WE FIND 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 LTD 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 FOR THE ASSESSMENT YEAR 2003 - 04 AND 2004 - 05, THE TRIBUNAL AFTER REFERRING TO VARIOUS DECISIONS HAVE UPHELD THE PERCENTAGE OF COMMISSION ON NET PROFI T @ 0.15% WHICH WAS QUITE CONSISTENT WITH THE STATEMENT RECORDED AT THE TIME OF SEARCH. ACCORDINGLY, FOLLOWING THE JUDICIAL PRECEDENCE IN THE CASE OF THE ASSESSEES SISTER CONCERN (SUPRA), WE UPHOLD THE RATE OF COMMISSION / RATE OF NET PROFIT FROM SUCH ACT IVITIES AT 0.15%. ACCORDINGLY, GROUND NO. 4, 5 AS RAISED BY THE ASSESSEE ARE ALLOWED . THUS, CONSISTENT WITH THE VIEW TAKEN IN VARIOUS SIMILAR MATTERS, WE ALSO UPH O LD THE RATE OF COMMISSION / NET PROFIT RATE FROM SUCH ACTIVITY AT 0.15%. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 4 MR. MUKESH CHOKSI ITA S NO. 833 TO 839 /M UM /201 3 6. SINCE NO ARGUMENTS HAVE BEEN PLACED O N OTHER GROUNDS 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 ISS UE ARE INVOLVED FOR OUR CONSIDERATION, OUR FINDING GIVEN ABOVE WILL APPLY MUTATIS MUTANDIS TO THE IMPUGNED APPEALS ALSO, THEREFORE, ALL THE APPEALS FILED BY THE ASSESSEE ARE TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH MA Y , 2016 . SD/ - SD/ - ( ) ( ) (B R BASKARAN ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 4 TH MAY , 2016 /COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT(A) - 3 8 , MUMBAI. 4 ) THE COMMISSIONER OF INCOME TAX - CENTRAL - IV , MUMBAI. 5 ) , , / THE D.R. B BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. BY ORDER / / TRUE COPY / / , ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN, SR.PS