ALEMBIC SECURITIES P.LTD, MUMBAI v. DCIT CEN CIR 46, MUMBAI

ITA 244/MUM/2013 | 2010-2011
Pronouncement Date: 30-09-2016 | Result: Allowed

Appeal Details

RSA Number 24419914 RSA 2013
Assessee PAN AAACA7087N
Bench Mumbai
Appeal Number ITA 244/MUM/2013
Duration Of Justice 3 year(s) 8 month(s) 23 day(s)
Appellant ALEMBIC SECURITIES P.LTD, MUMBAI
Respondent DCIT CEN CIR 46, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 30-09-2016
Date Of Final Hearing 16-07-2015
Next Hearing Date 16-07-2015
Assessment Year 2010-2011
Appeal Filed On 07-01-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI G.S. PANNU ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI JUDICIAL MEMBER ITA NO S . 243 TO 245 /MUM/20 1 3 : (A.Y S : 2006 - 07 20 1 0 - 11 & 20 09 - 1 0 ) M/S. ALEMBIC SECURITIES PVT.LTD. BLOCK H SHRI SADASHIV CHS LTD. 6 TH ROAD SANTACRUZ (E) MUMBAI 400 055 ( APPELLANT ) PAN : AAACA7087N VS. DCIT CENTRAL CIRCLE - 46 MUMBAI (RESPONDENT) ASSESSEE BY : SHRI MUKESH CHOKSI REVENUE BY : SHRI A. RAMACHANDRAN DATE OF HEARING : 22 /0 9 /2016 DATE OF PRONOUNCEMENT : 30 / 09 /2016 O R D E R PER G.S. PANNU AM : THESE THREE APPEALS ARE FILED BY THE SAME ASSESSEE PERTAINING TO ASSESSMENT YEARS 2006 - 07 2009 - 10 & 2010 - 11 AND INVOLVE CERTAIN COMMON ISSUES. THEREFORE THEY HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. APPEAL FOR ASSESSMENT YEAR 2006 - 07 IS TAKEN AS THE LEAD CASE TO APPRECIATE THE CONTROVERSY . 2 M/S. ALEMBIC SECURITIES PVT. LTD. ITA NOS. 243 TO 245/MUM/2013 ITA NO. 243/MUM/2013 (ASSESSMENT YEAR 2006 - 07) : 2. THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST AN ORDER PASSED BY CIT(A) - 38 MUMBAI DATED 30/11/2012 WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFIC ER UNDER SECTION 143(3) R.W.S. 153C OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) DATED 08/12/2011. 3. IN THIS APPEAL ASSESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL WHICH READ AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ORDER OF ASSESSING OFFICER . 2. THE LEARNED. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THE FACT THAT THE ORDER IS PASSED BY THE ASSESSING OFFICER WITHOUT PROVIDING SUFFICIENT OPPORTUNITY OF HEARING TO THE APPELLANT. 3. THE LEARNED. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER WITHOUT PROVIDING OPPORTU NITY OF HEARING TO THE APPELLANT. 4. THE LEARNED. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THE FACT THAT NO EVIDENCE OF THE VALID SATISFACTION HAS BEEN BROUGHT ON RECORD BEFORE THE ISSUE OF NOTICE/S 153C OF THE ACT. 5. THE LEARNED. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS BY APPLYING 2% RATE OF INCOME INSTEAD OF 0.15% WITHOUT APPRECIATING THE FACT THAT NO EVIDENCE CORROBORATING THE RATE OF 2% HAS BEEN FOUND DURING & AFTER THE COURSE OF SEARCH PROCEEDINGS AGAINST THE APPELLANT. 6. THE LEARNED. COMMISSIONER OF INCOME TAX (APPEALS) HAVE ERRED IN LAW AND IN FACTS IN CONFIRMING THE ADDITIONS MADE UNDER THE ACT AMOUNTING TO RS. 5 25 700/ - . 3 M/S. ALEMBIC SECURITIES PVT. LTD. ITA NOS. 243 TO 245/MUM/2013 7 . THE LEARNED. COMMISSIONER OF INCOME TAX (APPE ALS) HAVE ERRED IN LAW AND IN FACTS IN CONFIRMING THE INCOME ON GROSS RECEIPTS WITHOUT REDUCING THE TRANSFER ENTRIES AMOUNT IN BANK ACCOUNT MANAGED BY AGENTS FROM WHICH NO INCOME IS EARNED. 8. THE LEARNED. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS CONFIRMING THE ADDITIONS MADE BY ASSESSING OFFICER AT 2% ON THE GROSS DEPOSITS AS AGAINST 0.15% OFFERED BY THE APPELLANT. 9 . THE LEARNED. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACT OF ASSESSI NG OFFICER OF APPLICATION OF THE RATE OF 2% INCOME ON ENTIRE BANK DEPOSITS MANAGED BY AGENTS AS AGAINST 0.03% OFFERED BY THE APPELLANT. 10 . THE LEARNED. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS BY CONFIRMING THE ASSESSMENT MADE U /S. 153C MADE BY THE ASSESSING OFFICER WITHOUT APPRECIATING THE FACT THAT ONLY THE INCOME WHICH IS BASED ON THE EVIDENCES FOUND AS A RESULT OF SEARCH CAN BE ASSESSED IN THE PRESENT ASSESSMENT. 11 . THE LEARNED. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRE D IN LAW AND IN FACTS BY CONFIRMING THE ASSESSMENT MADE BY ASSESSING OFFICER BY IGNORING THE FACTS THAT NO NEW ASSETS HAVE BEEN GENERATED OR EMERGED OUT OF THE INCOME DURING THE LAST 10 YEARS EVEN AFTER THE DETAILED SEARCH CARRIED OUT BY THE INCOME TAX DEP ARTMENT. 1 2 . THE LEARNED. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACT OF ASSESSING OFFICER OF THE DISALLOWANCE OF BUSINESS EXPENSES AGAINST THE INCOME ESTIMATED. 1 3 . THE LEARNED. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACT OF ASSESSING OFFICER OF LEVYING INTEREST U/S. 234B AND 234C OF THE ACT. 4. AT THE TIME OF HEARING IT WAS STATED BY THE LD. REPRESENTATIVE FOR THE ASSESSEE THAT THE ISSUES RAISED IN THE CAPTIO NED APPEALS HAVE ALREADY BEEN DECIDED BY THE TRIBUNAL IN THE CASES OF THE SISTER CONCERNS 4 M/S. ALEMBIC SECURITIES PVT. LTD. ITA NOS. 243 TO 245/MUM/2013 OF ASSESSEE COMPANY AND IN THIS CONTEXT REFERENCE HAS BEEN MADE TO THE FOLLOWING DECISIONS: - (I) M/S. GOLDSTAR FINVEST PVT. LTD. ITA NOS.887/MUM/2012 & 2699/MUM/2013 ORDER DATED 30/11/2015. (II) M/S. MIHIR AGENCIES PVT. LTD. ITA NOS.6114 - 6120/MUM/2012 ORDER DATED 6/1/2016. (III) M/S. ALLIANCE INTERMEDIATERIES AND NETWORK PVT. LTD. ITA NOS. 2700 2702&2701/MUM/2013 ORDER DATED 24/2/2016. (IV) MR. MUKE SH CHOKSI ITA NOS.833 - 839/MUM/2013 ORDER DATED 04/05/2016. 5. IN BRIEF THE BACKGROUND OF THE DISPUTE IS THAT A SEARCH AND SEIZURE ACTION UNDER SECTION 132(1) OF THE ACT WAS CONDUCTED IN THE CASE OF SEVERAL COMPANIES WHOSE KINGPIN IS IDENTIFIED AS ONE MR. MUKESH CHOKSI. IT WAS FOUND IN THE COURSE OF SEARCH THAT SUCH ENTITIES WERE PROVIDING ACCOMMODATION ENTRIES BY WAY OF SHARE TRADING/ LOANS ETC. AS THE ASSESSEE HEREIN ALSO WAS COVERED IN THE SEARCH AN ASSESSMENT UNDER SECTION 143(3) R.W.S. 153C OF THE ACT DATED 8/12/2011 WAS MADE FOR ASSESSMENT YEAR 200 6 - 0 7 WHEREIN THE TOTAL INCOME WAS ASSESSED AT RS. 5 25 700 / - AS AGAINST THE RETURNED INCOME OF RS. NIL. SUCH ASSESSMENT OF INCOME HAS BEEN FURTHER AFFIRMED BY THE CIT(A) AGAINST WHICH THE ASSESSE E IS IN APPEAL BEFORE US. 5.1 DURING THE COURSE OF SEARCH PROCEEDINGS THE REVENUE HAD NOTED THAT FOR PROVIDING ACCOMMODATION ENTRIES THE ENTITIES LIKE THE ASSESSEE WHICH WERE CONTROLLED BY MR. MUKESH CHOKSI WERE EARNING COMMISSION 5 M/S. ALEMBIC SECURITIES PVT. LTD. ITA NOS. 243 TO 245/MUM/2013 INCOME. IN VIEW OF THE AFORESAID THE ASSESSING OFFICER CONCLUDED THAT THE GROUP WAS EARNING COMMISSION RANGING FROM 1.5% TO 3.5% AND ACCORDINGLY HE ESTIMATED THE NET COMMISSION INCOME @2%. ACCORDINGLY BASED ON THE TOTAL RECEIPTS REFLECTED IN THE BANK ACCOUNT THE ASSESS ING OFFICER ESTIMATED THE COMMISSION INCOME @2% AT RS. 5 25 700/ - . THIS ACTION OF THE ASSESSING OFFICER HAS SINCE BEEN UPHELD BY THE CIT(A). 6. BEFORE US THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT SIMILAR ADDITIONS WERE MADE BY THE ASSESSING OFFICER IN THE CASES OF OTHER GROUP CONCERNS ALSO WHICH WERE COVERED BY THE SEARCH ACTION CARRIED OUT BY THE DEPARTMENT ON 25/11/2009. IT IS POINTED OUT THAT IN THE AFORESAID DECISIONS THE TRIBUNAL HAS ACCEPTED THE STAND OF THE ASSESSEE THAT COMMISSION INCOME WAS LIABLE TO BE ASSESSED @0.15% OF THE TOTAL RECEIPTS AND ALSO THE FACT THAT THE NET INCOME WAS TO BE ASSESSED AFTER ALLOWING 50% OF THE EXPENSES CLAIMED. IT WAS THEREFORE CONTENDED THAT FOLLOWING THE DECISIONS OF THE CO - ORDINATE BENCHES RENDERE D IN THE GROUP CONCERNS OF SHRI MUKESH CHOKSI REFERRED ABOVE THE ASSESSED INCOME IN THIS CASE ALSO BE DIRECTED TO BE COMPUTED ACCORDINGLY. 7. ON THE OTHER HAND LD. DEPARTMENTAL REPRESENTATIVE WHILE NOT DISPUTING THE AFORESAID PRECEDENTS SOUGHT TO PO INT OUT THAT THE OTHER CASES WERE ASSESSED ON THE BASIS OF THE SURVEYS CONDUCTED WHEREAS THE INSTANT ASSESSEE WAS COVERED BY THE SEARCH ACTION UNDER SECTION 132(1) OF THE ACT. 6 M/S. ALEMBIC SECURITIES PVT. LTD. ITA NOS. 243 TO 245/MUM/2013 8. IN REPLY LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT EVEN THE GR OUP CONCERN CASES RELIED UPON BY HIM WERE COVERED BY THE SEARCH ACTION AND THERE IS COMPLETE IDENTITY ON FACTS. THEREFORE IT WAS CONTENDED THAT THE SAID ISSUE HAS ALREADY BEEN DECIDED IN THE AFORESAID DECISIONS AND THE SAME RATIO IS APPLICABLE IN THE CAPTIONED APPEALS ALSO. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT SIMILAR ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASES OF M/S. GOLDSTAR FINVEST PVT. LTD.(SUPRA) M/S. MIHIR AGENCIES PVT. LTD.(SUPRA) M/S. ALLIANCE INTERME DIATERIES AND NETWORK PVT. LTD.(SUPRA) AND MR. MUKESH CHOKSI(SUPRA) WHICH HAVE BEEN RELIED UPON BY THE ASSESSEE BEFORE US. T HE TRIBUNAL DIRECTED THAT THE INCOME BY WAY OF COMMISSION FROM THE BUSINESS OF ACCOMMODATION ENTRIES BEING CARRIED OUT BY MUKESH CHOKSI GROUP WAS LIABLE TO BE ASSESSED AT 0.15% INSTEAD OF 2% APPLIED BY THE ASSESSING OFFICER. IN THIS CONTEXT WE REPRODUCE HEREINAFTER PARAS 5 & 6 OF THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. GOLDSTAR FINVEST PVT. LTD.(SUPRA) WHEREIN EARLIER PRECE DENTS HAVE ALSO BEEN REFERRED : - 5. WE HAVE GONE THROUGH THE ORDERS OF LOWER AUTHORITIES AND THE ORDERS OF THE CO - ORDINATE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE AND OTHER ORDERS RELIED UPON BY THE ASSESSEE. IT IS NOTED BY US THAT IDENTICAL ISSUE HAD CAME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2002 - 03. THE RELEVANT OBSERVATIONS FROM THE TRIBUNALS ORDER ARE REPRODUCED BELOW: '12. HAVING CAREFULLY EXAMINED THE VARIOUS ORDERS IN THE CASE OF DIFFERENT ASSESSEES' IT HAS BE COME AMPLY CLEAR THAT IN THESE TYPES OF ACTIVITIES BROKERS ARE ONLY CONCERNED WITH THEIR COMMISSION ON THE VALUE OF TRANSACTIONS. NOW THE QUESTION 7 M/S. ALEMBIC SECURITIES PVT. LTD. ITA NOS. 243 TO 245/MUM/2013 COMES WHAT WOULD BE THE REASONABLE PERCENTAGE TO THE COMMISSION ON THE TOTAL TURNOVER? THE ASSESSEE HAS ALSO MADE OUT A CASE THAT THE CUSTOMERS DO NOT COME DIRECTLY TO HIM AND THEY COME THROUGH A SUB - BROKER WHO ALSO CHARGES A PARTICULAR SHARE OF COMMISSION. IN ALL THE JUDGMENTS WHAT HAS BEEN STATED IS THAT AN AVERAGE PERCENTAGE OF COMMISSION IS BETWEEN 0.15% TO 0.25%. IN THE CASE OF PALRESHA & CO. AND KIRAN & CO (SURPA) THE TRIBUNAL HAS CONSIDERED REASONABLENESS OF PERCENTAGE OF COMMISSION TO BE EARNED ON TURNOVER WAS AT 0.1%. THE ASSESSEE HIMSELF HAS OFFERED THE PERCENTAGE OF COMMISSION AT 0.15% WHICH IS MO RE THAN THE PERCENTAGE OF COMMISSION CONSIDERED TO BE REASONABLE BY THE TRIBUNAL IN THE CASE OF PALRESHA & CO AND KIRAN & CO (SUPRA) IN SIMILAR TYPE OF TRANSACTIONS. THE THEORY OF ASSESSING OFFICER TO TREAT THE ENTIRE DEPOSIT AS UNEXPLAINED CASH CREDITS C ANNOT BE ACCEPTED IN THE LIGHT OF ASSESSMENT ORDERS IN THE CASE OF BENEFICIARIES AND ALSO IN THE LIGHT OF THE FACT THAT ASSESSEE IS ONLY CONCERNED WITH THE COMMISSION EARNED ON PROVIDING ACCOMMODATION ENTRIES. WE THEREFORE OF THE VIEW THAT SINCE THE ASSE SSEE ITSELF HAS DECLARED THE COMMISSION ON TURNOVER AT 0.15% WHICH IS MORE THAN THE PERCENTAGE CONSIDERED TO BE REASONABLE BY THE TRIBUNAL IN THE CASE OF PALRESHA & CO AND KIRAN & CO (SUPRA) THE SAME SHOULD BE ACCEPTED. WE ACCORDINGLY ACCEPT THE COMMISS ION DECLARED BY THE ASSESSEE AND SET ASIDE THE ORDER OF THE CIT (A) IN THIS REGARD.' 6. IT IS FURTHER NOTICED BY US THAT THIS STAND HAS BEEN CONSTANTLY ACCEPTED BY THE TRIBUNAL IN VARIOUS ORDERS DETAILS OF WHICH HAVE BEEN GIVEN BY THE LD. COUNSEL AS MEN TIONED ABOVE. WE HAVE GONE THROUGH THE ORDERS AS ENCLOSED IN THE PAPER BOOK FILED BY THE ASSESSEE AND FIND THAT THE LD. AR HAS CORRECTLY STATED THAT THIS ISSUE HAS BEEN UNANIMOUSLY ACCEPTED BY THE TRIBUNAL IN VARIOUS CASES INCLUDING THE CASE OF ASSESSEE. N OTHING HAS BEEN BROUGHT ON RECORD BY THE LD. DR TO DISTINGUISH THESE CASES. THEREFORE RESPECTFULLY FOLLOWING THE ORDERS OF THE TRIBUNAL INCLUDING THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING YEAR WE FIND THAT THE LD. CIT(A) H AS RIGHTLY DELETED THE ADDITION NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A) THEREFORE THE SAME IS UPHELD. GROUNDS NO.1 AND 2 TAKEN BY THE REVENUE STAND DISMISSED. 8 M/S. ALEMBIC SECURITIES PVT. LTD. ITA NOS. 243 TO 245/MUM/2013 9.1 SINCE IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE APPELLANT COMP ANY BEFORE US IS ALSO A PART OF THE ENTITIES CONTROLLED BY MR. MUKESH CHOKSI IN OUR VIEW THE AFORESAID DECISIONS ARE RELEVANT TO ASSESS THE INCOME OF THE ASSESSEE. IN THIS VIEW OF THE MATTER WE THEREFORE SET - ASIDE THE ORDER OF THE CIT(A) AND DIRECT T HE ASSESSING OFFICER TO RECOMPUTE THE COMMISSION INCOME FROM THE BUSINESS OF PROVIDING ACCOMMODATION ENTRY IN CONFORMITY WITH THE AFORESAID PRECEDENTS. 9.2 BEFORE PARTING WE MAY ALSO STATE THAT WHILE RECOMPUTING THE TOTAL INCOME THE ASSESSING OFFICER SH ALL ALSO GIVE EFFECT TO THE DIRECTIONS OF THE TRIBUNAL IN THE PRECEDENTS REGARDING THE ALLOWABILITY OF EXPENDITURE CLAIMED. 9.3 IN CONCLUSION WE THEREFORE SET - ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER TO REDETERMINE THE TOTAL INCOME AS PER AFORESAID DIRECTIONS. NEEDLESS TO MENTION THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD BEFORE RECOMPUTING THE INCOME AS PER LAW. 10. IN THE RESULT APPEAL OF THE A SSESSEE FO R ASSESSMENT YEAR 2006 - 0 7 IS ALLOWED AS ABOVE. 11. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE FACTS AND CIRCUMSTANCES IN ITA NOS. 244 & 245 /MUM/2013 FOR ASSESSMENT YEARS 20 1 0 - 11 & 200 9 - 1 0 ARE PARI MATERIA TO THOSE CONSIDERED BY US IN ITA 9 M/S. ALEMBIC SECURITIES PVT. LTD. ITA NOS. 243 TO 245/MUM/2013 NO. 243 /MUM/2013 FOR ASSESSMENT YEAR 200 6 - 0 7 THUS OUR DECISION THEREIN SHALL APPLY MUTATIS MUTANDIS IN THESE APPEALS ALSO. 12 . RESULTANTLY ALL THE APPEALS OF ASSESSEE ARE ALLOWED AS ABOVE . ORDER PRONOUNCED IN THE OPEN COURT ON 3 0 T H SEPTEMBER 2016. SD/ - SD/ - ( RAM LAL NEGI ) JUDICIAL MEMBER ( G.S. PANNU ) ACCOUNTANT MEMBER MUMBAI DATE : 3 0 T H SEPTEMBER 2016 * SSL * COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R A BENCH MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T MUMBAI