INCOME TAX OFFICER WARD-4(2)(1), MUMBAI V. M/S.LUCKY STAR INTERNATIONAL PRIVATE LIMITED, MUMBAI

MA 210/MUM/2021

AI Insights

The case involves the Income Tax Officer (ITO) appealing against the decision of the CIT(A), which had allowed the assessee, M/s. Luckystar International Pvt. Ltd., to retain an addition of Rs 1.25 crore to its income, initially added by the ITO under section 68 of the Income Tax Act for the assessment year 2010-11. The ITAT initially dismissed the appeal due to the low tax effect as per CBDT Circular No. 17/2019. However, upon the revenue's application citing serious allegations of tax evasion involving bogus entities, the ITAT recalled its order and restored the appeal for re-examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123146 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-02-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-11-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 21-09-2021
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Tax effect; Accommodation entries; Tax effect
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A”, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER AND MS KAVITHA RAJAGOPAL, HON'BLE JUDICIAL MEMBER MA.No. 210/MUM/2021 [ARISING OUT OF ITA NO. 5691/MUM/2017 (A.Y: 2010-11)] Income Tax Officer – 4(2)(1) Room No. 644/669, 6 th Floor Aayakar Bhavan, M.K. Road Mumbai - 400020 v. M/s. Luckystar International Pvt. Ltd., 211/213, 2 nd Floor Kalabadevi Road, Nr. Jewel world Mumbai - 400002 PAN: AABCL1519M (Appellant) (Respondent) Assessee Represented by : None Department Represented by : Ms. Richa Gulati Date of Hearing : 25.11.2022 Date of Pronouncement : 03.02.2023 O R D E R PER S. RIFAUR RAHMAN (AM) 1. Through this Miscellaneous Application revenue is seeking for recall of the order passed by the Tribunal in ITA.No. 5691/Mum/2017 dated 02.02.2021 for the A.Y. 2010-11 which was dismissed on account of low tax effect. 2 MA.No. 210/MUM/2021 M/s. Luckystar International Pvt. Ltd., 2. In the Miscellaneous Application, revenue submitted as under: - “1. The Hon'ble Income Tax Appellate Tribunal, Mumbai Bench "A", Mumbai passed an order dated 02.02.2021 in ITA No. 5691/Mum/2017 for A.Y. 2010-11, in response to the appeal filed by the revenue against order of the Ld. CIT(A)-9. Mumbai, dated 05.06.2017. The same is received in the office of Pr.CIT-4, Mumbai on 09.07.2021. 2. In this case, the AO observed that the assessee had taken bogus share application money of Rs 1.25.00,000/- from bogus entities i.e Mr. Shirish C Shah and his key employee and associate group engaged in providing accommodation entries like LTCG, Share Capital with huge premium, turn over. loan etc. and failed to prove creditworthiness and identity of lender and genuineness of transaction. Hence, AO added Rs 1,25.00.000/- to total income of the assessee u/s 68 of the IT Act for A.Y.2010-11. Being aggrieved by the decision of Ld. AO, the assessee had filed the appeal before the Ld. CIT(A) wherein the Ld. CIT(A) allowed the assessee's appeal. Being aggrieved by the decision of Ld. CIT (A), revenue filed appeal to Hon'ble ITAT. Mumbai on following ground: - "On the fact and the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made by the AO of Rs 12500000/- on bogus share application money received without appreciating the fact that the entry of these share application money in the books of account are bogus accommodation entries which ahs been provided by Mr Shirish C Shah and his key employee and associate group in the form of share application in FY 2009-10 pertaining to AY 2010-11. 3. The ITAT dismissed the revenue's appeal as not maintainable in view of the circular issued by the CBDT No.17/2019 dated 08.08.2019 wherein the revenue has been directed to withdraw the appeal preferred by it, before the Tribunal if the tax effect on the disputed issue is less than or equal to Rs.50,00,000/-. The Hon'ble ITAT has further stated that "tax effect in the preferred appeal is less than Rs.50 lacs. Accordingly, we dismiss the aforesaid appeal filed by the Revenue as not maintainable withdrawn." 4. Though the tax effect in the present case is below Rs. 50 Lakh but the assessee had obtained share application money from bogus entities i.e Mr. Shirish C Shah and his key employee and 3 MA.No. 210/MUM/2021 M/s. Luckystar International Pvt. Ltd., associate group engaged in providing accommodation entries like LTCG. Share Capital with huge premium, turn over, loan etc. and failed to prove creditworthiness and identity of lender and genuineness of transaction. Also, the modus operandi adopted for tax evasion falls under exception as per circular 23/2019 dated 06.09.2019. 5. In view of the above, it is humbly prayed that the Hon'ble ITAT, Mumbai. Bench "A" may recall its order dated 02/02/2021 to adjudicate the grounds of appeal raised before the ITAT on the unexplained income which is not decided on its order through the raised ground by the Revenue in its appeal. Hence, the M.A. is preferred by the Revenue. 6. The application is moved with prior approval of the Pr.CIT-4, Mumbai vide letter No. Pr. CIT-4/Judi./ITAT/2021-22 dated 21.09.2021.” 3. In spite of issue of notice none appeared on behalf of the assessee. Therefore, we proceed to dispose off this Miscellaneous Application with the assistance of Ld.DR. 4. At the time of hearing, Ld.DR submitted that though the tax effect in the present case is below ₹.50 Lakh but the assessee had obtained share application money from bogus entities i.e Mr. Shirish C Shah and his key employee and associate group engaged in providing accommodation entries like LTCG. Share Capital with huge premium, turn over, loan etc. and failed to prove creditworthiness and identity of lender and genuineness of transaction. Ld. DR further submitted that, the modus operandi adopted for tax evasion falls under exception as per circular 23/2019 dated 06.09.2019. 4 MA.No. 210/MUM/2021 M/s. Luckystar International Pvt. Ltd., 5. Considered the submissions of the Ld. DR and material placed on record. The appeal of the revenue was dismissed on account of low tax effect. The revenue has now pointed out that even though tax effect involved in the appeal is less than the threshold limit as specified in Circular No. 17/2019 dated 08.08.2019, the assessee had obtained share application money from bogus entities engaged in providing accommodation entries like LTCG and the modus operandi adopted for tax evasion falls under exception as per circular 23/2019 dated 06.09.2019. Thus, in view of aforesaid unrebutted facts, the order dated 02.02.2021 in appeal of the revenue in ITA.No. 5691/Mum/2017 for A.Y. 2010-11 is recalled and the appeal of the revenue is restored to its original number. Accordingly, the order dated 02.02.2021 is recalled, the Registry is directed to list the appeal for hearing in due course after notice to both sides. Order pronounced in the open court on 03 rd February, 2023. Sd/- Sd/- (KAVITHA RAJAGOPAL) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 03/02/2023 Giridhar, Sr.PS 5 MA.No. 210/MUM/2021 M/s. Luckystar International Pvt. Ltd., Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum