ACIT CC 46, MUMBAI V. MINAXI CHOKSI, MUMBAI

ITA 889/MUM/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0512 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-09-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 09-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N P SINGH
• Keywords: Unexplained cash credit; Business expenditure
• Section: 143(3); 68

Judgement Text

, , B, INCOME TAX APPELLATE TRIBUNAL BENCHES B,MUMBAI BEFORE SHRI P.K. BANSAL, VICE PRESIDENT, AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 889/MUM/2012 ASSESSMENT YEAR: 2003-04 A CIT CC 46 R. NO. 659, AAYAKARBHAVAN, M.K. ROAD, MUMBAI-400020 / VS. MINAXI CHOKSI 600, SHANTI KUTIR, 10 TH ROAD, SANTACRUZ (E) MUMBAI 400055 (APPELLANT) (RESPONDENT ) P.A. NO. A CLP 5729P ITA NO. 890/MUM/2012 ASSESSMENT YEAR: 2003-04 ACIT CC 46 R. NO. 659, AAYAKARBHAVAN, M.K. ROAD, MUMBAI-400020 / VS. MANEKLAL CHOKSI 600, SHANTI KUTIR, 10 TH ROAD, SANTACRUZ (E) MUMBAI 400055 (APPELLANT) (RESPONDENT ) P.A. NO. A ER P 3198L APPELLANT BY MR. N.P. SINGH (CIT DR) RESPONDENT BY MR. MUKESHCHOKSI ITA NO.7447/MUM/2012 ASSESSMENT YEAR: 2009-10 BUNIYAD CHEMICALS LTD., BLOCK H, SHRI SADASHIV CHS LTD, 6 TH ROAD, SANTACRUZ (E) MUMBAI 400055 / VS. ACIT CC 46 R. NO. 659, AAYAKARBHAVAN, M.K. ROAD, MUMBAI-400020 (APPELLANT) (RESPONDENT ) P.A. NO. AABCB 6954G APPELLANT BY MR. MU KESHCHOKSI RESPONDENT BY MR. N.P. SINGH (CIT DR) / DATE OF HEARING: 30 /0 5 /2017 /DATE OF ORDER: 30 /0 5 /2017 ITA NO.889/M/2015 MINAXI CHOKSI 2 / O R D E R PER BENCH : 1. THESE THREE APPEALS UNDER SECTION 253 OF THE INCOME TAX ACT ARE DIRECTED AGAINST DIFFERENT ORDERS OF COMMISSION ER OF INCOME TAX (APPEALS) FOR DIFFERENT ASSESSMENT YEARS. OUT OF WHICH TWO APPEALS BY REVENUE AND ONE BY APPELLANT ARE FILED A GAINST THE ORDER OF LD COMMISSIONER (APPEALS). ALL THESE APPE ALS BELONG TO THE SAME GROUPE THUS ALL APPEAL WERE HEARD TOGETHER AND ARE DECIDED BY CONSOLIDATED ORDER TO AVOID THE CONFLICT ING DECISION. ITA NO. 890/M/2012 2. THIS APPEAL IS FILED BY REVENUE AGAINST THE ORDER O F CIT (A) 37M DATED 17/11/2011 FOR ASSESSMENT YEAR 2003-04. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF APPEAL. 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT (A) ERRED IN RESTRICTING THE ADDITION O F RS. 54.07 LACS MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S. 68 OF T HE ACT TO 0.15% WITHOUT APPRECIATING THAT THE ASSESSEE HAD FAILED T O FURNISH SATISFACTORY EXPLANATION WITH REGARD TO THE IDENTIT Y OF THE PARTIES AND THE SOURCE AND GENUINENESS OF THE TRANSACTION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE ADDITION TO THE COMMISSION INCOME @ 0.15% WITHOUT CONSIDERING THAT THE MATERIAL FOUND DURING THE COURSE OF SEARCH CLEARLY ESTABLISHED THAT THE NET COMMISSI ON CHARGED BY THE ASSESSEE GROUP OF COMPANIES VARIED BETWEEN 1.5% AND 3.6% AND THE FACTS OF ITAT DECISION IN THE CASE OF M/S. MIHIR AG ENCIES PVT. LTD. FOR A.Y. 2002-03 (ITA NO. 4912/M/05) AS RELIED UPON BY THE CIT (A) WERE CLEARLY DISTINGUISHABLE. 3. BRIEF FACTS OF THE CASE ARE THAT AS SEARCH ACTION W AS CARRIED OUT IN THE PREMISES OF MUKESH CHOKSI GROUP ON DATED 25/ 11/2009. ON THE BASIS OF INCRIMINATING MATERIAL, THE ASSESSM ENT OF MANEKLAL CHOKSI WAS ALSO REOPENED. THE ASSESSMENT WAS COMPLETED ON 31/12/2010 U/S. 143(3) R.W.S. 147 OF I NCOME TAX ACT. THE AO MADE ADDITION ON ACCOUNT OF UNDISCLOSED INCOME U/S. 68 OF RS. 54,07,000/- . THE LEGAL HEIR OF MAN EKLAL CHOKSI FILED APPEAL BEFORE COMMISSIONER (APPEALS) WHEREIN THE ADDITION WAS RESTRICTED TO 0.15% OF COMMISSION INCOME. AGGR IEVED, BY ITA NO.889/M/2015 MINAXI CHOKSI 3 THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) T HE REVENUE HAS FILED PRESENT APPEAL. 4. WE HAVE HEARD LD. DR FOR THE REVENUE AND THE LRS O F THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECO RD. THE LD. AR REPRESENTING THE RESPONDENT AT THE OUTSET SUBMI TTED THAT THE ASSESSEE (SHRI MANIKLALCHOKSI) DIED ON 06/01 /2007. THE ASSESSMENT ORDER WAS PASSED AGAINST THE DEAD PERSON AND THE ORDER PASSES AGAINST THE DEAD PERSON IS VOID. IT W AS FURTHER ARGUED THAT THE REVENUE MADE THE SIMILAR ADDITION F OR ASSESSMENT YEAR 2004-05 AND THE LEGAL HEIR OF ASSES SEE FILED APPEAL BEFORE TRIBUNAL, WHEREIN IT WAS HELD THAT TH E ASSESSMENT MADE AGAINST THE DEAD PERSON IS VOID. THUS, IT WAS SUBMITTED BY THE LD. AR OF THE DECEASED ASSESSEE THAT THE APP EAL FILED BY THE REVENUE IS NOT MAINTAINABLE AS THE ASSESSMENT O RDER IS ITSELF VOID. ON THE OTHER HAND THE LD. DR FOR THE R EVENUE NOT DISPUTED THE ORDER PASSED BY TRIBUNAL FOR ASSESSMEN T YEAR 2004-05, WHEREIN THE SIMILAR ASSESSMENT ORDER FOR A Y 2004-05 WAS HELD AS VOID. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF PARTY AN D HAVE GONE THROUGH THE ORDER BY AUTHORITIES BELOW. WE HAVE SE EN THAT THE ASSESSEE HAS PLACED ON RECORD THE COPY OF DEATH CER TIFICATE OF LATE MANIKLAL C. CHOKSI. AS PER THE DEATH CERTIFIC ATE MANIKLAL C. CHOKSI DIED ON 6.1.2007. THE ASSESSMENT ORDER W AS PASSED BY AO ON 31.12.2010. WE HAVE FURTHER SEEN THAT THE COORDINATE BENCH CONSIDER THE IDENTICAL GROUNDS OF APPEAL ON A PPEAL BY LEGAL HEIRS OF THE DECEASED ASSESSEE FOR ASSESSMENT YEAR 2004- 05 AND MADE THE FOLLOWING OBSERVATION. WE FIND THAT THE AO HAD MENTIONED THE NAME OF THE ASSESSEE AS LATE SHRI MANEKLAL CHOKSI IN THE ASSESS MENT ORDER, THAT THE APPEAL BEFORE THE FAA WAS FILED BY ONE MUK ESH CHOKSI, THAT MUKESH CHOKSI HAD VERIFIED THE FORM NO. 35, TH AT THE FAA HAS ALSO DECIDED THE APPEAL FILED BY LATE MANEKLAL CHOKSI. ON A SPECIFIC QUERY BY THE BENCH AR ADMITTED THAT FACT O F DEATH OF THE ASSESSEE WAS NEVER BROUGHT TO THE NOTICE OF THE AO/ FAA AND THE DEATH CERTIFICATE WAS NOT PRODUCED BEFORE THEM. WE ARE UNABLE TO UNDERSTAND AS HOW AN ASSESSMENT CAN BE MADE IN T HE YEAR ITA NO.889/M/2015 MINAXI CHOKSI 4 2011 OF A PERSON WHO HAD EXPIRED IN THE YEAR 2007 I .E. FOUR YEARS BEFORE THE ASSESSMENT WAS COMPLETED. IT APPE ARS THAT SEARCH WARRANT WAS ALSO ISSUED IN THE CASE OF THE D EAD PERSON. THE FAA HAD, BEFORE PASSING AN ORDER OF 29 PAGES, N OT CHECKED THE BASIC FACT AS TO WHO HAD SIGNED AND VERIFIED TH E FORM NO. 35 INSPITE OF THE FACT THE ASSESSMENT ORDER WAS PASSED IN THE NAME OF LATE MANEKLAL CHOKSI AND NAME OF HIS LEGAL HEIR S WAS NOT APPEARING. WE ARE ON THE OPINION THT THE ASSESSMENT MADE IN CASE OF A DEAD PERSON IN VOID. HONBLE HIGH COURTS OF DELH I, MP AND P & H, HAVE IN THE CASES OF R.C. JAIN (140 TAXMAN), SAN TOSH RANI (88 TAXMAN209) RAKESHKUMAR, MUKESHKUMAR (178 TAXMAN) RESPECTIVELY, HELD THAT SUCH ASSESSMENT ARE VOID. RESPECTFULLY, FOLLOWING THE ABOVE JUDGMENTS, WE HOLD THAT THE ASS ESSMENT MADE BY THE AO WAS INVALID AND AB INITIO VOID. 6. CONSIDERING THE ENTIRETY OF THE FACT WE HOLD THAT T HE ASSESSMENT ORDER DATED 31.12.2010 PASSED BY AO U/S. 143(3) R. W.S. 147 IS VOID AB-INITIO. IN THE RESULT APPEAL FILED BY REVE NUE IS NOT MAINTAINABLE AND HENCE THE SAME IS DISMISSED. ITA NO. 889/M/2012 7. THIS APPEAL IS FILED BY REVENUE FOR AY 2003-04. THO UGH THE REVENUE HAS RAISED TWO GROUNDS OF APPEAL. HOWEVER, AS PER OUR CONSIDERED OPINION THE SOLITARY GROUND OF APPEAL IS IF THE LD CIT(A) ERRED IN RESTRICTING THE COMMISSION INCOME T O 0.15% 8. AT THE OUTSET OF THE HEARING THE LD. AR OF THE ASSE SSEE ARGUED THAT THE GROUNDS OF APPEAL RAISED BY REVENUE IN THE PRESENT APPEAL IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF COORDINATE BENCH OF TRIBUNAL IN ASSESSEES GROUP , WHEREIN, THE COMMISSION INCOME WAS ON SIMILAR FACTS WAS REST RICTED TO 0.15 %. THE EXPENDITURE WAS ALLOWED TO THE EXTENT OF 50%. THE LD AR FOR THE ASSESSEE FILED THE COPIES OF VARIOUS DECISIONS OF TRIBUNAL IN ITA NO. 6114/MUM/2012 (ASSESSMENT YEAR 2004- 05), ITA NO. 6115/MUM/2012 (ASSESSMENT YEAR 2005-06 ), ITA NO. 6116/MUM/2012 (ASSESSMENT YEAR 2006-07), ITA NO . 6117/MUM/2012 (ASSESSMENT YEAR 2007-08), ITA NO. 6118/MUM/2012 (ASSESSMENT YEAR 2008-09), ITA NO. 6119/MUM/2012 (ASSESSMENT YEAR 2009-10), ITA NO. ITA NO.889/M/2015 MINAXI CHOKSI 5 6120/MUM/2012 (ASSESSMENT YEAR 2010-11), DCIT VS M/ S. GOLDSTAR FINVEST PRIVATE LIMITED AND IN ITA NO. 887 /M/2012, GOLDSTAR FINVEST PRIVATE LIMITED VS ACIT IN ITA NO 2699/M/2012, FOR AY 2004-05; IN MIHIR AGENCY PVT L TD VS DCIT IN ITA NO. 6436/M/2012 FOR AY 2004-05, ITA NO . 6436/MUM/2012 AY 2005-06; ITA NO. 6437/MUM/2012 FO R AY 2006-07; ITA NO. 6438/MUM/2012 AY 2007-08; ITA N O. 6439/MUM/2012 AY 2008-09; ITA NO. 6440/MUM/2012, FO R AY 2009-10; ITA NO. 6441/MUM/2012 FOR AY 2010-11. THE LD. DR FOR THE REVENUE NOT DISPUTED CONTENTION OF LD. A R OF THE ASSESSEE. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF PARTIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES APPEAL INCLU DING THE ORDERS OF TRIBUNAL IN ASSESSEES GROUP CASE. THE C OORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES GROUP CASE IN ITA NO. 6114/MUM/2012 (ASSESSMENT YEAR 2004-05), ITA NO. 6115/MUM/2012 (ASSESSMENT YEAR 2005-06), ITA NO. 6116/MUM/2012 (ASSESSMENT YEAR 2006-07), ITA NO. 6117/MUM/2012 (ASSESSMENT YEAR 2007-08), ITA NO. 6118/MUM/2012 (ASSESSMENT YEAR 2008-09), ITA NO. 6119/MUM/2012 (ASSESSMENT YEAR 2009-10), ITA NO. 6120/MUM/2012 (ASSESSMENT YEAR 2010-11), DCIT VS M/ S. GOLDSTAR FINVEST PRIVATE LIMITED AND IN ITA NO. 887 /M/2012, GOLDSTAR FINVEST PRIVATE LIMITED VS ACIT IN ITA NO 2699/M/2012, FOR AY 2004-05; IN MIHIR AGENCY PVT L TD VS DCIT IN ITA NO. 6436/M/2012 FOR AY 2004-05, ITA NO . 6436/MUM/2012 AY 2005-06; ITA NO. 6437/MUM/2012 FO R AY 2006-07; ITA NO. 6438/MUM/2012 AY 2007-08; ITA N O. 6439/MUM/2012 AY 2008-09; ITA NO. 6440/MUM/2012, FO R AY 2009-10; ITA NO. 6441/MUM/2012 FOR AY 2010-11 P ASSED THE FOLLOWING ORDER. 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 YEAR ITA NO.889/M/2015 MINAXI CHOKSI 6 2003-04 AND 2004-05, THE TRIBUNAL AFTER REFERRING T O VARIOUS DECISIONS HAVE UPHELD THE PERCENTAGE OF COMMISSION ON NET PRO FIT @ 0.15% WHICH WAS QUITE CONSISTENT WITH THE STATEMENT RECORDED AT THE TIME OF SEARCH. ACCORDINGLY, FOLLOWING THE JUDICIAL PRECEDENCE IN T HE CASE OF THE ASSESSEES SISTER CONCERN (SUPRA), WE UPHOLD THE RA TE OF COMMISSION / RATE OF NET PROFIT FROM SUCH ACTIVITIES AT 0.15%. ACCORDINGLY, GROUND NO. 4, 5 AS RAISED BY THE ASSESSEE ARE ALLOWED. 8. AS REGARDS THE DISALLOWANCE OF BUSINESS EXPENS ES, THE LD. CIT(A) HAS DIRECTED THE AO NOT TO ALLOW ANY EXPENSES AGAIN ST THE NET INCOME OF 2% DETERMINED. WE FIND THAT THE TRIBUNAL IN THE CASE OF GOLD STAR FINVEST LTD. HAVE DISALLOWED ONLY 50% OF THE BUSINE SS EXPENSES. ACCORDINGLY, FOLLOWING THE JUDICIAL PRECEDENCE, WHI CH IS APPLICABLE MUTATIS MUTANDIS IN THE CASE OF THE ASSESSEE ALSO, WE DIRECT THE AO TO ALLOW THE BUSINESS EXPENSES TO THE EXTENT OF 50%. ACCORDINGLY, GROUND NO. 8 IS TREATED AS PARTLY ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. 10. IT HAS BEEN ADMITTED BY BOTH THE PARTIES THAT IN ALL THE APPEALS, SIMILAR ISSUE ARE PERMEATING THROUGH, THEREFORE, OU R FINDING WILL APPLY MUTATIS MUTANDIS IN ALL THE APPEALS. ACCORDINGLY, THE NET PROFIT RATE / COMMISSION INCOME FROM THE TOTAL TURNOVER WILL BE T AKEN AT 0.15% AND EXPENSES WOULD BE ALLOWED TO THE EXTENT OF 50%. TH US ALL THE APPEALS OF THE ASSESSEE BUNCHED HEREINABOVE ARE PARTLY ALLO WED. 11. RESULTANTLY, ALL THE APPEALS OF THE ASSESSEE STANDS PARTLY ALLOWED. 10. CONSIDERING AND RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE BENCH IN ASSESSEES GROUP CASE WE DID NOT FIND ANY ILLEGALITY AND INFIRMITY IN THE ORDER PASSED BY LD. COMMISSIONER O F INCOME TAX (APPEALS). IN THE RESULT THE APPEAL FILE BY REVENU E IS DISMISSED. ITA NO. 7447/M/2012 11. THIS APPEAL IS FILED BY ASSESSEE AGAINST THE ORDER OF CIT (A). THOUGH THE ASSESSEE HAS RAISED AS MANY AS SIX GROUN D OF APPEAL. HOWEVER, AS PER CONSIDER OPINION THE SUBST ANTIAL GROUND OF APPEAL RAISED IN GROUND NO. 1 TO 4 IS WH ETHER LD. CIT(A) ERRED IN CONFIRMING THE ADDITION AT THE RATE OF 0.37% ON GROSS DEPOSITS AGAINST 0.15% OFFERED BY ASSESSEE. GROUND NO. 5 IS CONSEQUENTIAL. GROUND NO. 6 IS GENERAL IN NAT URE. 12. WE HAVE HEARD RIVAL CONTENTION OF THE PARTIES AND HAVE GONE THROUGH THE ORDER OF AUTHORITIES BELOW. AT THE OUT SET THE LD. AR OF THE ASSESSEE ARGUED THAT THE GROUNDS OF APPEAL R AISED BY ASSESSEE IS ALSO COVERED IN FAVOUR OF ASSESSEE IN A SSESSEES ITA NO.889/M/2015 MINAXI CHOKSI 7 GROUP CASE AS REFERRED IN ITA NO. 899/M/2012. ON T HE OTHER HAND THE LD. DR FOR THE REVENUE NOT DISPUTED THAT T HE GROUNDS OF APPEAL RAISED BY ASSESSEE IS COVERED IN FAVOUR O F ASSESSEE. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PARTIES AND PURSUE THE VARIOUS ORDERS OF COORDINATE BENCHES OF TRIBUNAL IN ASSESSEES GROUP CASE, WHICH WE HAVE ALREADY REFERR ED IN PARA 9 ABOVE. CONSIDERING, THE DECISION OF COORDINATE BEN CH AND WE RESPECTFULLY FOLLOWING THE SAME ALLOWS THE GROUNDS OF APPEAL RAISED BY ASSESSEE IN TERMS OF ORDER PASSED IN ITA NO. 6435 TO 6441/M/2012 FOR AY 2004-05 TO AY 2010-11. ACCORDIN GLY, WE DIRECT THE ASSESSING OFFICER TO FOLLOW SAID ORDER. 14. IN THE RESULT ITA NO. 890/M/2012, ITA NO. 889 /M/2012 ARE DISMISSED AND ITA NO. 7447/M/2012 IS PARTLY ALLOWED . ORDER WAS PRONOUNCED IN THE OPEN COURT ON 30 TH DAY OF MAY 2017. SD/ - (P.K. BANSAL) SD/ - (PAWAN SINGH) VICE PRESIDENT JUDICIALMEMBER MUMBAI; DATED : 30/05/2017 RAHUL DHOKE , 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) , / ITAT, MUMBAI