EXCITING MERCANTILE PRIVATE LIMITED , MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 46, MUMBAI

MA 806/MUM/2017

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 5561 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 24-10-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Corroborative evidences; Accommodation entries
• Section: 254(2); 68

Judgement Text

1 MA 806/MUM/2017 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI AMARJIT SINGH (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) M.A. NO.806/MUM/2017 (ARISING OUT OF ITA NO.314/MUM/2013) (ASSESSMENT YEAR: 2010-11) EXCITING MERCANTILE PRIVATE LIMITED BLOCK H, SHRI SADASHIV CHS LTD. 6 TH ROAD, SANTACRUZ EAST MUMBAI-400 055 PAN : AACCE1895L VS DCIT,CC - 46 AAYKAR BHAWAN MUMBAI-400 020 APPLICANT RESPONDENT APPLICANT BY MUKESH CHOKSHI RESPONDENT BY MANOJ KUMAR SINGH DATE OF HEARING 19.07 .2019 DATE OF PRONOUNCEMENT 09 . 10 .2019 O R D ER PER G MANJUNATHA: AM THE ASSESSEE HAS FILED THIS MISCELLANEOUS APPLICATI ON U/S 254(2) OF THE INCOME TAX ACT, 1961 AND REQUESTED TO RECALL OR DER OF THE TRIBUNAL IN ITA.NO.314/MUM/2013, DATED 30/06/2015 FOR Y 2010-1 1. 2 MA 806/MUM/2017 2. THE ASSESSEE HAS NARRATED FACTS AND MISTAKES STA TED TO BE APPARENT FROM THE ORDER OF THE TRIBUNAL DATED 30/06 /2015. THE RELEVANT CONTENTS OF MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE ARE REPRODUCED AS UNDER:- 1 THE APPLICANT IS A LIMITED COMPANY REGULARLY ASSE SSED TO TAX. THE ASSESSMENT WAS COMPLETED IN THE APPLICANT'S CASE ON 8.12.2011 DETERMINING THE INCOME AT RS 8,40,600/- BY MAKING A DDITION ON ACCOUNT OF COMMISSION INCOME @ 2% ON TOTAL BANK DE POSITS OF KS. 4,20,30,000 DURING THE ACCOUNTING YEAR. THE SAID A DDITION WAS SUBSEQUENTLY CONFIRMED BY THE HON'BLE COMMISSIONER OF INCOME-TAX (APPEALS) VIDE ORDER DATED 30.11.2012. AGAINST THE SAID APPEAL, THE APPLICANT HAD PREFERRED APPEAL BEFORE YOUR HONOUR W HEREIN THE HON'BLE INCOME-TAX APPELLATE TRIBUNAL HAD VIDE ORDE R DATED 30.6.2015 HELD THAT THE APPLICANT WAS LIABLE TO TAX ON THE IN COME COMPUTED @ 1% OF THE TOTAL DEPOSITS. ACCORDINGLY, THE APPEAL OF T HE APPLICANT WAS PARTLY ALLOWED. HOWEVER, THE SAID DECISION WAS RENDERED BA SED ON INCORRECT FACTUAL MATRIX AS EXPLAINED AT THE TIME OF HEARING. 2 DURING A.Y. 2010-11, THE APPLICANT WAS INVOLVED IN ASSISTING ITS GROUP -COMPANIES IN PROVIDING ACCOMMODATION ENTRIES. ACCO RDINGLY, THE APPLICANT HAD SHOWN RECEIPTS AND PAYMENTS IN THE BA NK ACCOUNT IN CONNECTION WITH THE ACCOMMODATION ENTRIES OF M/S. B UNIYAD CHEMICALS LID. SINCE THE ASSESSING OFFICER HAD TREATED THE EN TIRE DEPOSITS AS INCOME OF THE APPLICANT, THE MATTER REACHED HON'BLE INCOME-TAX APPELLATE TRIBUNAL. IT WAS EXPLAINED BEFORE THE HON 'BLE BENCH THAT THE APPLICANT BEING A CONDUIT FOR OTHER GROUP CO MPANIES FOR CARRYING OUT THE ACCOMMODATION ENTRIES, THE ENTIRE DEPOSITS CANNOT HE TREATED AS INCOME AND THAT ONLY THE INCOME ARISING OUT O F TRANSFER OF FUNDS TO OUTSIDE BENEFICIARIES CAN BE ASSESSED IN THE HANDS OF THE APPLICANT. 3. THE HON'BLE TRIBUNAL HELD THAT THE APPELLA NT IS LIABLE TO TAX ON THE COMMISSION / BROKERAGE INCOME @ 1% ON THE ENTIRE BA NK DEPOSITS OF THE APPELLANT DURING THE YEAR. 4. WE SUBMIT THAT DURING THE COURSE OF HEARI NG IT WAS EXPLAINED BY THE APPELLANT THAT THE APPELLANT WAS ACTING AS AN INTER MEDIARY BOTH FOR THE GROUP COMPANY VIZ M/S BUNIYAD CHEMICALS LIMITED & M/S PRA BHA MULTITRADE PVT LTD AS WELL AS FOR OUTSIDE BENEFICIARY COMPANIES M/S LA DRIYA TEXTILE PROJECT PVT LID & M/S MAHAVIR CORPORATION AND OUT OF TOTAL DEPO SITS OF RS. 4.20.30.000/- THE APPLICANT HAS RECEIVED RS. 1,40,00,000/- ON BEH ALF OF M/S BUNIYAD CHEMICALS LIMITED ( SISTER CONCERN ) & RS, 2,73,40 ,000 ON BEHALF OF M/S LADRIYA TE\TILE PROJECTS PVT LTD & THE BALANCE AMOU NT WAS SPENT TOWARDS 3 MA 806/MUM/2017 EXPENSES , M/S LADRIYA TEXTILE PROJECTS PVT LTD & M /S MAHAVIR CORPORATION ARE UNDER THE SAME MANAGEMENT. THE APPLICANT HAS NOT RECEIVED ANY INCOME ON THE FUNDS TRANSFERRED TO SISTER CONCERN M/S BUNIYAD CHEMICALS LIMITED OF RS. 1,40,00,000- . IT HAS DONE ACCOMMODA TION ENTRY BUSINESS OF RS. 2,73,40,000/- ON WHICH IT HAS EARNED COMMISSION INCOME OF RS. 37,000/- WHICH IS APPROXIMATELY 0.13.5% OUT OF WHICH IT HAS TRANSFERRED RS. 12,000/- TO M/S PRABHA MULTITRADE PVT LTD ( ANOTHER SISTER CONC ERN ) & THE BALANCE COMMISSION RS. 25,000/- WAS WITHDRAWN FROM BANK ACC OUNT BY WAY OF PAY ORDER IT WAS THEREFORE EXPLAINED THAT THE APPELLANT SHOULD NOT BE HELD LIABLE TO TAX ON ANY INCOME ON THE AMOUNT OF RS. 1,40,00,000/ - AS THE APPELLANT HAS NOT EARNED ANY PART OF THE INCOME. IT WAS ALSO CONT ENDED MAT THE AFORESAID 2 COMPANIES VIZ SISTER CONCERNS OF THE APPLICANT HAVE BEEN TAXED ON THE INCOME @2% OF THE ACCOMMODATION ENTRIES AND THAT TA XING THE SAME AMOUNT AGAIN IN THE HANDS OF THE APPELLANT WOULD AMOUNT TO DOUBLE TAXATION. THE RELEVANT FACTS ARE CLEARLY APPARENT FROM THE BANK S TATEMENT OF THE APPLICANT FOR THE YEAR UNDER CONSIDERATION. IT WAS FURTHER SU BMITTED THAT THE ACCOUNT OF THE ASSESSEE BEING A CONDUIT ACCOUNT, THE AMOUNT AP PEARING IN THE BANK STATEMENT TO THE EXTENT OF RS . 1,40,00,000/- ARE NOTHING BUT THE AMOUNTS ALREADY COVERED BY THE DEPOSITS IN THE BANK ACCOUNT OF M/S, BTMIYAD CHEMICALS LIMITED & RS.. I2,000/-OF M/S PRABHA MULT ITRADE PVT LTD & SINCE INCOME HAS BEEN OFFERED FOR TAXATION BY THESE COMPA NIES ON ACCOUNT OF THESE ACCOMMODATION ENTRIES, NO ADDITION WHATSOEVER IN RE LATION TO THESE IS CALLED FOR AND THEREFORE, THE ADDITION MADE BY AO UDER SEC TION 68 OF THE I.T.ACT WS NOT JUSTIFIED. IT WAS SUBMITTED THAT M/S.BUNIYAD C HEMICALS LIMITED & M/S PRABHA MULTITRADE PVT LTD ARE GROUP COMPANIES OF TH E ASSESSEE AND THE ACCOUNT OF THE ASSESSES BEING A CONDUIT ACCOUNT THE ASSESSEE HAS NOT EARNED ANY COMMISSION ON THE FUNDS TRANSFERRED TO T HESE SISTER CONCERNS . IT WAS SUBMITTED THAT WHILE FRAMING THE ASSESSMENTS IN THE CASE OF THE ABOVE TWO COMPANIES THE AMOUNT OF CREDITS APPEALING IN TH EIR HANK STATEMENT ON ACCOUNT OF TRANSFER ENTRIES FROM SISTER CONCERN WER E CONSIDERED AND NO ADDITION TREATING THE SAME AS INCOME FROM UNDISCLOS ED SOURCES WAS MADE. 5. THE ABOVE OBSERVATION OF HONBLE TRIBUNAL AS REGARDS THE FACTS EXPLAINED BEFORE THE BENCH CLEARLY STATES THAT THE APPELLANT'S CLAIM WAS THAT THE APPELLANT IS LIABLE TO TAX ONLY ON THE INCOME A RISING OUT OF FUNDS TRANSFERRED TO OUTSIDE BENEFICIARIES I.E RS, 2,73,40,000/- AND HENCE NO ADDITION CAN BE SUSTAINED IN THE PRESENT CASE ON ACCOUNT OF THE FUN DS TRANSFERRED TO SISTER CONCERNS OF RS. 1,40,12,000/-. HOWEVER, THESE CONTE NTIONS OF THE APPELLANT MADE BY THE APPELLANT HAVE NOT BEEN CONSIDERED AT T HE TIME OF PASSING THE ORDER. 6. VIDE PARA 8 AT PAGE 4 OF THE ORDER, IT IS STATED NO TRIBUNAL DECISION HAVE BEEN FILED WHEREIN ON SIMILAR SET OF FACTS & CIRCUM STANCES 0.15% HAVE BEEN ACCEPTED THOUGH THEY HAVE BEEN MENTIONED IN THE APP ELLATE ORDER & THE CONTENTION OF THE ASSESSEE TO ESTIMATE THE INCOME @ 0.15% WAS REJECTED ON ACCOUNT OF NON SUBMISSION OF SUPPORTING EVIDENCE OF ITAT JUDGMENTS ASSESSING INCOME @ 0.15% THOUGH THE SAID DECISIONS HAVE BEEN DULY DISTINGUISHED BY THE LOWER AUTHORITIES. WE ARC ENCL OSING THE DECISIONS OF VARIOUS BENCHES ACCEPTING THE COMMISSION INCOME @ 0 .15% OF THE BANKING TURNOVER IN THE CASE OF GROUP COMPANIES. 4 MA 806/MUM/2017 1. M/S. GOLDSTAR FINVEST PVT LTD - ITA 887 &2699/MU M/2013 ORDER DATED 30.11.2015 AND ITA NO. 6114-6120/MUM/2012- 2. M/S.. MIHIR AGENCIES PVT LTD. IN ITAS 6435-6441/ MUM/2012 VIDE ORDER DATED 06.01.2016 3. M/S. ALLIANCE INTERMEDIATERIES AND NETWORK PVT LTD; IN ITAS 2700 TO 2702/MUM/2013 THE SAID JUDGMENTS ARE ENCLOSED HEREWITH AS SUPPORT ING EVIDENCE. FURTHER THE APPLICANT PLEADS THAT THE RELEVANT MATERIAL SEI ZED BY THE DEPARTMENT FROM THE PREMISES OF MR. MUKESH CHOKSI CM WHICH THE AO & APPELLATE AUTHORITIES HAVE RELIED FOR ASSESSING INCOME @ 2% DOES NOT CONT AIN ANY DETAILS RELATING TO APPLICANT. NO WHERE IN THE SAID MATERIAL & THE S TATEMENT OF MR, MUKESH CHOKSI IT IS MENTIONED THAT THE APPLICANT IS EARNIN G INCOME RANGING FROM 1 .5% TO 3.5%. THE INVESTING AUTHORITIES HAVE NOT FOUND A NY MATERIAL ABOUT THE APPLICANT ON WHICH INCOME RATE CAN BE ESTIMATED IT IS SUBMITTED THAT THE ORDER HITS BEEN PASSED ON THE INCORRECT FACTUAL MATRIX TH AT THE ASSESSEE DOES NOT HAVE ANY OBJECTION FOR ASSESSING ITSELF AT 2% OF TH E TOTAL DEPOSITS WHEN THE APPELLANT HAD ALWAYS BEEN CONTENDING THAT INCOME @ 0.15% R CAN BE ASSESSED IN THE HANDS OF THE APPELLANT. SINCE THE S AID FACTS HAVE NOT BEEN EXAMINED BY THE HONBLE INCOME-TAX APPELLATE TRIBUN AL. WE SUBMIT THAT THE ORDER SUFFERS FROM MISTAKE APPARENT ON RECORD IN AS MUCH AS THE IMPORTANT FACTUAL CONTENTIONS HAVE BEEN REMAINED TO BE EXAMIN ED. 7. WE THEREFORE PRAY YOUR HONOUR TO KINDLY RECTIFY THE SAID MISTAKE AND RE- STORE THE APPEAL FOR DECIDING THE ISSUE BASED ON TH E CORRECT FACTS. 3. WE HAVE HEARD THE CONTENTIONS OF RIVAL PARTIES A ND PERUSED THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSE ALON G WITH ORDER OF THE TRIBUNAL IN ITA.NO.314/MUM/2013 AND FIND THAT THERE IS NO MERIT IN MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE SEE KING REDUCTION OF ONE PERCENT PROFIT ESTIMATED BY THE TRIBUNAL ON TOTAL T RANSACTIONS. WE FIND THAT THE TRIBUNAL AFTER RECORDING NECESSARY FACTS A ND ALSO TAKEN INTO ACCOUNT VARIOUS OTHER FACTORS BROUGHT OUT BY THE LD . AO HAD DECIDED THE APPEAL OF THE ASSESEE. IF, YOU GO THROUGH CONTENTS OF MISCELLANEOUS 5 MA 806/MUM/2017 APPLICATION FILED BY THE ASSESSEE ALONG WITH ORDER OF THE TRIBUNAL, WE FIND THAT WHAT ASSESSEE SEEKS THROUGH ITS MISCELLANEOUS APPLICATION IS REVIEW OF DECISION RENDERED BY THE TRIBUNAL, IN THE LIGHT OF FACTS OF PRESENT CASE, WHICH IS NOT PERMISSIBLE U/S 254(2) O F THE I.T.ACT, 1961. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO MERIT IN MISCELLANEOUS APPLICATION FILED BY THE ASSESEE AND HENCE, THE SAME IS DISMISSED. 4. IN THE RESULT, MISCELLANEOUS APPLICATION FILED B Y THE ASSESEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.10.2019. SD/- SD/- AMARJIT SINGH G MANJUNATHA JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 09.10.2019 THIRUMALESH, SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//