TRANS CONDUCT (INDIA), MUMBAI V. ACIT 21(1), MUMBAI

MA 1/MUM/2018

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 8320 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 03-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2009-2010
• Appeal Filed On: 02-01-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NISHANT SAMAIYA
• Keywords: Bogus purchase
• Section: 44AD

Judgement Text

1 E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER MA NO. 01/MUM/2018 & 02/MUM/2018 ARISING OUT OF ITA NO. 105/MUM/2015 & 106/MUM/2015 ASSESSMENT YEAR 2009 - 2010 & 2011 - 12 TRANS CONDUCT (INDIA) G - 16, KESAR VILLA MALVIYA ROAD, VILE PARLE(E) MUMBAI - 400057 PAN A AFFT2605K V. ACIT 21(1) MUMBAI APPLICANT RESPONDENT APPLICANT BY SHRI. RAHUL HAKANI RESPONDENT BY SHRI NISHANT SAMAIYA DATE OF HEARING : 28 - 09 - 2018 DATE OF PRONOUNCEMENT : 0 3 - 10 - 2018 ORDER PER RAMIT KOCHAR, ACCOUNTANT MEMBER THE ASSESSEE HAS FILED THE S E TWO MISCELLANEOUS APPLICATION S BEING MA NO. 01 /MUM/201 8 AND MA NO. 02/MUM/2018 ARISING OUT OF APPEAL IN ITA N O. 105/MUM/2015 AND ITA NO. 106/MUM/2015 FOR ASSESSMENT YEARS 2009 - 10 AND 2011 - 12 RESPECTIVELY SEEKING SETTING ASIDE OR IN ALTERNATIVE RECALL OF AN COMMON ORDER PASSED BY INCOME - TAX APPELLATE TRIBUNAL, E - BENC H, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL ) IN ITA NO. 105/MUM/2015 AND 106/MUM/2016 FOR AY 2009 - 10 AND 2011 - 12 RESPECTIVELY VIDE COMMON ORDER S DATED 14.07.2017 . 2. THE BRIEF FACTS ARE THAT FO R BOTH THE ASSESSMENT YEARS CROSS APPEALS WERE FILED BY BOTH ASSESSEE AND THE REVENUE. THE GERMANE TO APPEAL ARE AS TO ALLEGED BOGUS PURCHASES BEING MADE BY TH E ASSESSEE TO THE TUNE OF RS. 2 .16 MA NO. 01 & 02 /MUM/2018 ARISING OUT OF ITA NO. 105 & 106/MUM/2015 2 CRORES MADE BY THE ASSESSEE FROM ALLEGED BOGUS DEALERS/ACCOMM ODATION ENTRY PROVIDERS FOR AY 2009 - 10 WHICH WERE UNCOVERED BY MAHARASHTRA VAT AUTHORITIES AND THIS INCRIMINATING INFORMATION AS TO THE ASSESSEE BEING BENEFICIARY OF THESE ALLEGED BOGUS PURCHASES WERE PASSED ON BY THE MAHARASHTRA VAT AUTHORITIES TO THE INC OME - TAX DEPARTMENT. THE ASSESSEE BEING CIVIL CONTRACTOR UNDER TAKING JOBS WITH MAHARASHTRA CORPORATION OF GREATER MUMBAI AND ALSO WITH OTHER GOVERNMENT /SEMI GOVERNMENT DEPARTMENT WAS ASKED TO EXPLAIN THE SAME BY THE AO BUT THE ASSESSEE COULD NOT GIVE SATI SFACTORY REPLY BEFORE THE AO WHICH LED TO 100% ADDITION OF THESE ALLEGED BOGUS PURCHASE S . THE ASSESSEE FILED FIRST APPEAL WITH LEARNED CIT(A) WHO AFTER CONSIDERING THE REPLIES OF THE ASSESSEE CAME TO CONCLUSION THAT IN SUCH CASES PROFIT OF THE ASSESSEE IS TO BE ESTIMATED AND ACCORDINGLY ASSESSEE INCOME WAS ESTIMATED @8% ON GROSS TURNOVER WITH RESPECT TO CONTRACT AWARDED AND COMPLETED BY THE ASSESSEE, 8% ON THE CONTRACTS AWARDED TO OTHERS BUT COMPLETED BY THE ASSESSEE AND 5.76% OF THE CONTRACTS AWARDED TO AS SESSEE BUT SUB - CONTRACTED BY THE ASSESSEE. THIS WAS MAINLY DONE BY LEARNED CIT(A) BASED ON INCOME ACCEPTED IN SOME OTHER CASES OF CIVIL CONTRACTORS BY HONBLE SETTLEMENT COMMISSION . BOTH REVENUE AND ASSESSEE WAS AGGRIEVED AND FILED APPEAL WITH TRIBUNAL. I T IS ALSO PERTINENT TO MENTION THAT FACTS BEING SIMILAR , THE TRIBUNAL PASSED COMMON ORDERS FOR AY 2009 - 10 AND 2011 - 12 , WHEREIN TRIBUNAL FOLLOWED THE DECISION OF AY 2009 - 10 WHILE PASSING ORDERS FOR AY 2011 - 12. THE TRIBUNAL PASSED COMMON ORDER FOR BOTH THE ASSESSMENT YEARS WRT CROSS APPEALS FILED BY ASSESSEE AND REVENUE GAVE FINDING OF FACT THAT THERE WERE SEVERAL LACUNAS AND GAPS IN DISCHARGE OF ONUS BY THE ASSESSEE WHICH ARE DETAILED IN TRIBUNALS ORDER IN PARA 11 AND IT WAS FINALLY FOUND BY TRIBUNAL THA T IN SUCH CASES PROFITS EMBEDDED IN THE TURNOVER IS TO BE BROUGHT TO TAX. THE TRIBUNAL AFTER CONSIDERING PECULIAR FACTUAL MATRIX OF THE CASE TOOK CONSCIOUS DECISION BY TAKING GUIDANCE FROM PROVISIONS OF SECTION 44AD OF THE 1961 ACT TO BRING TO TAX BY ESTI MATING INCOME @8% OF THE GROSS TUR NOVER. THE ASSESSEE WAS ENGAGED IN CIVIL CONSTRUCTION BUSINESS. PROVISIONS OF SECTION 44AD WERE NOT STRICTLY APPLICABLE BUT KEEPING IN VIEW THAT THE ASSESSEE IS ENGAGED IN BUSINESS OF CIVIL CONSTRUCTION CONTRACT, THE TRIB UNAL TOOK GUIDANCE FROM IT AND MA NO. 01 & 02 /MUM/2018 ARISING OUT OF ITA NO. 105 & 106/MUM/2015 3 CONSIDERED THE SAID ESTIMATE TO BE FAIR, HONEST ESTIMATE BASED ON EQUITY, JUSTICE AND FAIR PLAY TO BOTH THE PARTIES. THE TRIBUNAL RELIED UPON DECISION OF HONBLE SUPREME COURT IN THE CASE OF KACHWALA GEMS V. JCIT (2007) 288 ITR 10 (SC) WHEREIN HONBLE SUPREME COURT HELD THAT IN BEST JUDGMENT ASSESSMENTS , THERE IS ALWAYS A DEGREE OF SOME GUESS WORK WHICH SHOULD BE HONEST AND NOT AN ARBITRARY GUESS WORK . THE TRIBUNAL PASSED A DETAILED WELL REASONED ORDER AND TOOK A CONSCIOUS D ECISION TO BRING TO TAX INCOME ESTIMATING THE SAME @8% OF GROSS TURNOVER , VIDE ORDERS DATED 14 - 07 - 2017 . NOW, THIS MISCELLANEOUS APPLICATION S ARE FILED AND THE ASSESSEE IS CHALLENGING ADOPTION OF ESTIMATE OF INCOME BY WAY OF PROFITS@8% BY TRIBUNAL IN THE C ASE WHERE THE ASSESSEE HAS BEEN AWARDED THE CONTRACT BUT THE SAME IS SUB - CONTRACTED BY THE ASSESSEE TO OTHERS ON THE PLEA THAT IN SOME OTHER APPEAL ADJUDICATED BY MUMBAI - TRIBUNAL IN ACIT V. PINAKI D PANANI FOR AY 2009 - 10 IN ITA NO. 119/MUM/2015 DATED 19.11 .2016, THE TRIBUNAL ADOPTED LOWER RATE IN SUCH CASES. IT IS CLAIMED THAT MAIN GRIEVANCE OF THE ASSESSEE IS THE NON CONSIDERATION OF SAID DECISION OF THE TRIBUNAL WHILE ADJUDICATING APPEAL WHICH IS A MISTAKE APPARENT FROM RECORD SO FAR SO THE ASSESSEE SHOUL D ALSO BE CHARGED TO TAX BY ESTIMATING INCOME @ 5.76% OF THE CONTACTS AWARDED TO THE ASSESSEE BUT SUB - CONTRACTED BY IT. IT IS CLAIMED THAT IN THE CASE OF SMT. PINAKI D PANANI , THE HONBLE SETTLEMENT COMMISSION COMPUTED INCOME @ 5.76% OF THE CONTRACTS AWAR DED TO THE TAX - PAYER BUT SUB - CONTRACTED TO OTHERS. IN ANY CASE , THESE ARE MATTER OF ESTIMATION OF THE INCOME AND EACH CASE IS TO BE DECIDED ON FACTUAL BACKGROUND AND CIRCUMSTANCES OF THE CASE. HONBLE SUPREME COURT HAS RIGHTLY HELD IN KACHWALA GEMS(SUPRA) THAT IN BEST JUDGMENT ASSESSMENT , THERE IS ALWAYS A CERTAIN DEGREE OF GUESS WORK BUT THERE SHOULD BE AN ATTEMPT TO MAKE AN HONEST AND FAIR ESTIMATE OF THE INCOME AND THERE SHOULD NOT BE TOTAL ARBITRARINESS. THE TRIBUNAL CONSIDERED THE SAID DECISION OF HO NBLE SUPREME COURT IN MAKING ESTIMATES OF INCOME @ 8% OF GROSS TURNOVER KEEPING IN VIEW OF THE FACT THAT THE ASSESSEE IS IN BUSINESS OF CIVIL CONTRACTS AND SECTION 44AD ALBEIT NOT STRICTLY APPLICABLE PROVIDED LIGHT TO TRIBUNAL IN ESTIMATING INCOME @ 8% EV EN IN CASE THE CONTRACTS WERE AWARDED TO THE ASSESSEE WHICH WERE FURTHER SUB - CONTRACTED BY THE ASSESSEE. THE TRIBUNAL RELIED UPON MA NO. 01 & 02 /MUM/2018 ARISING OUT OF ITA NO. 105 & 106/MUM/2015 4 DECISION IN CASE DECIDED BY HONBLE SETTLEMENT COMMISSI ON IN THE CASE OF SHRI ANAND BAB ULAL MEHTA FOR AY 2010 - 11 AND 2011 - 12 WHEREIN INCOME @ 8% WAS ESTIMATED ON TOTAL CONTRACT VALUE, WHEREIN TRIBUNAL IN ITA NO. 144/MUM/2015 FOR AY 2009 - 10 HAS ACCEPTED INCOME @8% ON TOTAL TURNOVER OF CONTRACTED VALUE . . THE ONLY GRIEVANCE OF THE ASSESSEE IN THESE MAS WHICH ARE HIGHLIGHTED BY LEARNED COUNSEL FOR THE ASSESSEE IS THAT BASED ON SOME OTHER ORDER , THE INCOME TO BE BROUGHT TO TAX IN THIS CASE SHOULD ALSO BE ASSESSED AT 5.76% OF THE CONTRACT VALUE AWARDED TO ASSESSEE BUT SUB - CONTRACTED TO OTHERS. THE LEARNED DR STRONGLY OBJECTED TO T HIS GRIEVANCE OF THE ASSESSEE AND RIGHTLY SO THAT SCOPE OF RECTIFICATION U/S 254(2) OF THE 1961 ACT IS RESTRICTED TO MISTAKE APPARENT FROM RECORDS AND IT DOES NOT GIVE POWERS TO TRIBUNAL TO REVIEW ITS OWN WELL REASONED ORDER. THUS AFTER HEARING BOTH THE P ARTIES AND MATERIAL ON RECORD, WE DONOT FIND ANY MISTAKE APPARENT FROM RECORD AS TRIBUNAL HAS PASSED A WELL REASONED ORDER AFTER TAKING CONSCIOUS DECISION TO BRING TO TAX BY ESTIMATING INCOME @8% ON TOTAL CONTRACTED VALUE . WE DONOT FIND ANY MERIT IN THE RE CTIFICATION APPLICATIONS FILED BY THE ASSESSEE FOR AY 2009 - 10 AND 2011 - 12 AS IT IS SEEKING TO REVIEW OF THE WELL REASONED COMMON ORDER OF THE TRIBUNAL DATED 14 - 07 - 2017 WHICH IS NOT PERMISSIBLE AND HENCE BOTH THESE MAS STOOD DISMISSED. WE ORDER ACCORDINGLY . 3. THUS, THESE TWO M.A. S NO. 01 AND 02/MUM/2018 ARISING OUT OF APPEAL IN ITA NO. NO. 10 5 & 106/MUM/2015 FOR AY 2009 - 10 & 2011 - 12 STOOD DISMISSED AS INDICATED ABOVE. ORDER PRONO UNCED IN THE OPEN COURT ON 0 3 .10 .2018 0 3 .10 .2018 S D / - S D / - ( MAHAVIR SINGH ) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 0 3 .10 .2018 COPY TO MA NO. 01 & 02 /MUM/2018 ARISING OUT OF ITA NO. 105 & 106/MUM/2015 5 NISHANT VERMA SR. PRIVATE SECRETARY 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) CONCERNED, MUMBAI 4 . THE CIT - CONCERNED, MUMBAI 5 . THE DR BENCH, 6 . MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI