HEMA R. GUPTA, MUMBAI v. ITO WD 14(3)(2), MUMBAI

ITA 2639/MUM/2015 | 2002-2003
Pronouncement Date: 30-09-2016 | Result: Allowed

Appeal Details

RSA Number 263919914 RSA 2015
Assessee PAN AAKPG3030E
Bench Mumbai
Appeal Number ITA 2639/MUM/2015
Duration Of Justice 1 year(s) 4 month(s) 23 day(s)
Appellant HEMA R. GUPTA, MUMBAI
Respondent ITO WD 14(3)(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 30-09-2016
Assessment Year 2002-2003
Appeal Filed On 07-05-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI BEFORE SHRI B.R.BASKARAN (AM) AND SHRI RAM LAL NEGI ( JM) ITA NO 2639/MUM/2015 ASSESSMENT YEAR: 2002-03 SMT. HEMA R. GUPTA. PROP. M/S. SHREE RAM SALES & SYNTHETICS SHOP NO. 4 RAM GALLI PANKAJ MARKET CHAMPA GALLY CROSS LANE MUMBAI- 400 002. PAN:- AAKPG3030E VS. THE ITO WD. 14(3 ) (2) EARNESH HOUSE MUMBAI. (APPELLANT) (RESPONDENT) & ITA NO 2638/MUM/2015 ASSESSMENT YEAR: 2008-09 SH. NILESH RAKESH KUMAR GUPTA. PROP. M/S. DEV VANI INSDUSTRIES SHOP NO. 4 RAM GALLI PANKAJ MARKET CHAMPA GALLY CROSS LANE MUMBAI- 400 002. PAN:- AFUPG9510H VS. THE ITO WD. 14(3)(2) EARNESH HOUSE MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. VIMAL PUNAMIYA RESPONDENT BY : CAPTAIN PRADEEP ARYA DATE OF HEARING: 2 9 /09 / 2016 DATE OF PRONOUNCEMENT: 30/09/20 16 O R D E R PER RAM LAL NEGI JM 2 ITA NO.2639 & 2638/MUM/2015 ASSESSMENT YEAR 2002-03 & 2008-09 THESE APPEALS HAVE BEEN PREFERRED BY THE ASS ESSEES AGAINST TWO ORDERS DATED 22/01/2015 PASSED BY THE LD. CIT(APPEALS)-39 MUMBAI FOR THE ASST. YEAR 2002-03 AND 2008-09 RESPECTIVELY. SINCE BOTH T HE ASSESSEES ARE THE MEMBERS OF SAME FAMILY AND THE ISSUES INVOLVED IN B OTH THE APPEALS ARE COMMON THE SAME WERE CLUBBED AND HEARD TOGETHER AN D ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 2639/MUM/2015 A.Y. 2002-03 2. SINCE THE FACTS AND CIRCUMSTANCES OF BOTH THE C ASE ARE IDENTICAL EXCEPT THE AMOUNT INVOLVED WE TAKE THE FACTS OF THE ITA 2639/ M/2015 AS LEAD CASE. SURVEY ACTION U/S 133A WAS CARRIED OUT AT THE BUSIN ESS PREMISES OF THE ASSESSEES HUSBAND AT SHOP NO. 4 RAM GALI PANKAJ MARKET CHAMPA GALI MUMBAI 400002 AND THE ASSESSEE AND HER SON (ASSESS EE IN ITA NO 2638/M/15) WERE COVERED IN THE SAID SURVEY ACTION. SINCE THE ASSESSEE ADMITTED THAT SHE IS ENGAGED IN ISSUING ACCOMMODATI ON SALE BILLS THE AO PASSED THE ASSESSMENT ORDER BY ESTIMATING THE COMMI SSION INCOME @ 6% OF SALES AND FURTHER ALLOWING 5% EXPENSES THEREOF. IN THE FIRST APPEAL THE LD. CIT(A) CONFIRMED THE FINDINGS OF THE AO. THE ASSESS EE ASSAILED THE ORDER OF THE LD. CIT(A) BEFORE THE ITAT AND DURING PENDENCY OF Q UANTUM APPEAL A.O LEVIED PENALTY OF RS. 9 33 424/ U/S 271(1)(C) OF THE ACT W HICH WAS CONFIRMED BY THE LD. CIT(A) IN THE FIRST APPEAL. IN THE MEAN TIME TH E ITAT VIDE ORDER DATED 14/09/2016 DECIDED THE QUANTUM APPEAL AND PARTLY AL LOWED THE APPEAL OF THE ASSESSEE BY REDUCING THE COMMISSION TO 0.6%. THE AS SESSEE HAS CHALLENGED THE PENALTY ORDER CONFIRMED BY THE LD. CIT(A) BY RAISIN G THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL:- 1. (A) THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) (CIT(A)] ERRED IN FACTS AND LAW IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER AND SUSTAINING THE PENALTY OF RS. 9 33 424/ - LEVIED U/S 3 ITA NO.2639 & 2638/MUM/2015 ASSESSMENT YEAR 2002-03 & 2008-09 271(1)(C) WITHOUT APPRECIATING THAT THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE. (B) THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) ERRED IN FACTS AND LAW IN NOT APPRECIATING THAT THE PENALTY U/S 271(1)(C) CANNOT BE LEVIED ON THE ADDITIONS MADE SOLELY ON TH E BASIS OF ESTIMATION AND WITHOUT BRINGING ON RECORD ANY TANGI BLE MATERIAL TO SHOW THAT THE APPELLANT HAD INFACT EARNED A HIGHER RATE OF COMMISSION OVER AND ABOVE 1% ON SALE BILLS. 3. BEFORE US THE LD. AUTHORISED REPRESENTATIVE (AR ) SUBMITTED THAT IN THE PRESENT CASE THE A.O LEVIED PENALTY ON THE ADDITION OF 6% OF SALES BUT IN SOME YEARS THE ADDITION WAS MADE AT @ 4% OF SALES AND 3% OF PURCHASES. HOWEVER IN APPEAL THE TRIBUNAL VIDE ORDER DATED 14/09/2016 CHANGED THE BASIS OF ESTIMATION BY HOLDING THAT ADDITION OF 0.60% OF TUR NOVER IS REASONABLE. SINCE THE TRIBUNAL HAS SUBSTANTIALLY CHANGED THE BASIS OF ESTIMATION PENALTY U/S 271(1)(C) CANNOT BE IMPOSED. SECONDLY PENALTY CAN NOT BE LEVIED WHERE THE ADDITION IS MADE ON THE BASIS OF ESTIMATION; THIRDL Y MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW DOES NOT ATTRACT SE CTION 271(1)(C) OF THE ACT AND WHEN THERE IS A DIFFERENCE OF OPINION THEN PENALTY CANNOT BE LEVIED. THE LD. AR PLACED RELIANCE ON FOLLOWING CASES: PCIT VS. FORTUNE TECHNOCOMPS P. LTD. ITA 313 OF 2016 (DELHI HC) CIT VS. RELIANCE PETRO PROD UCTS P. LTD. 322 ITR 158 (SC) NARESH CHAND AGARWAL VS. CIT (2013) 38 TAXMANN.COM 397 (ALLAHABAD HC) CALIFORNIA DESIGN & CONSTRUCTION INC INDIA CHANDIG ARH VS. ITO (2016) 65 TAXMANN.COM 248 (CHANDIGARH TRIBUNAL) MAHAVEER JAI N VS. DCIT (2014) 51 TAXMANN.COM 204(JODHPUR-TRIBUNAL) JCIT VS. BHAGWAN DASS GARG (2014) 48 TAXMANN. COM 185(CHANDIGARH-TRIBUNAL ITO VS. GURUN ANAK OIL AGENCY (2013) 35 TAXMANN. COM 562 (JODHPUR-TRIBUNAL) & CIT V/S MA HENDRA SINGH KHEDLA (2013) 33 TAXMANN.COM 666 (RAJASTHAN) TO SUBSTANTIATE THE CONTENTION OF THE ASSESSEE. 4 ITA NO.2639 & 2638/MUM/2015 ASSESSMENT YEAR 2002-03 & 2008-09 4. ON THE OTHER HAND THE LD. DR RELYING ON THE F INDINGS OF AUTHORITIES BELOW SUBMITTED THAT THERE IS NO INFIRMITY IN THE IMPUGNE D ORDER PASSED BY THE LD. CIT(A) TO INTERFERE WITH THE SAME. 5. WE HAVE HEARD THE RIVAL SUBMISSION AND ALSO CA REFULLY PERUSED THE MATERIAL PLACED ON RECORD INCLUDING THE CASES RELIED UPON I N THE LIGHT OF THE RESPECTIVE CONTENTIONS OF THE PARTIES. WE NOTICE THAT IN QUANT UM APPEAL ITA NOS. 5011 AND 5018/MUM/2014 SOUGHT ASSESSMENT YEARS 200203 T O 200910 THE COORDINATE BENCH VIDE ORDER DATED 14/09/2016 FOLLO WING THE DECISION RENDERED IN THE CASE OF SANJAY KUMAR GARG VERSUS ACIT (2011) 12 TAXMANN.COM 294 (DELHI) AND THE DECISION RENDERED BY THE COORDINATE BENCH IN THE CASE OF GOLD STAR FINVEST (P) LTD VERSUS ITO (2013) 33 TAXMANN.C OM 129 (MUMBAI TRIBUNAL) HELD THAT ADDITION OF 0.6%. OF TURNOVER IS REASONAB LE. THE RELEVANT PORTION OF THE ORDER READS AS UNDER:- 6.1 WE FIND THAT TRIBUNAL IN CASE OF SANJAY KUMAR VERSUS GARG VS. ACIT (SUPRA) HELD THAT RATE OF COMMISSION CANNOT BE MORE THAN 1% BUT IN PRESENT CASE THE ASSESSEE HAD ALREADY OFFER ED THE SAME FOR TAXATION PURPOSE BUT WITH RIDER OF ALLOWABILITY OF CERTAIN EXPENSES AGAINST SAME. HENCE THE RATE OF 6% ADOPTED BY ASSE SSING OFFICER WAS HIGHLY ONE. HENCE THE COMMISSION INCOME WAS TO BE TAKEN @ 0. 6% OF SALES TURNOVER. SIMILAR VIEW HAS ALSO BEEN TA KEN BY THE JURISDICTIONAL MUMBAI TRIBUNAL IN CASE OF GOLD STAR FINVEST (P.) LTD. VS ITO (2013) 33 TAXMANN.COM129 (MUMBAI TRIB.) W HEREIN TRIBUNAL HELD AS UNDER: 12. HAVING CAREFULLY EXAMINED THE VARIOUS ORDERS IN THE CASE OF DIFFERENT ASSESSEES IT HAS BECOME AMPLY AT THAT IN THESE TYPE OF ACTIVITIES BROKERS ARE ONLY CONCERNED WITH THEIR CO MMISSION ON THE VALUE OF THE TRANSACTIONS. NOW THE QUESTION COM ES WHAT WOULD BE THE REASONABLE PERCENTAGE OF COMMISSION ON THE TOTAL 5 ITA NO.2639 & 2638/MUM/2015 ASSESSMENT YEAR 2002-03 & 2008-09 TURNOVER? THE ASSESSEE HAS ALSO MADE OUT A CASE THA T THE CUSTOMERS DO NOT COME DIRECTLY TO HIM AND THEY COME THROUGH A SUB-BROKER WHO ALSO CHARGES A PARTICULAR SHARE OF C OMMISSION. IN ALL THE JUDGMENTS WHAT HAS BEEN STATED HIS THAT AN AVERAGE PERCENTAGE OF COMMISSION THESE BETWEEN.15% TO .25%. IN THE CASE OF PALRESHA & CO (SUPRA) AND KIRAN & AND CO. ( SUPRA) THE TRIBUNAL HAS CONSIDERED REASONABLENESS OF PERCENTAG E OF COMMISSION TO BE EARNED ON TURNOVER WAS AT .1%. THE ASSESSEE HIMSELF HAS OFFERED THE PERCENTAGE OF COMMISSION AT 0.15% WHICH IS MORE THAN THE PERCENTAGE OF COMMISSION CON SIDERED TO BE REASONABLE BY THE TRIBUNAL IN THE CASES OF PALRE SHA & CO. (SUPRA) AND KIRAN & CO. (SUPRA) IN SIMILAR TYPE OF PROJECTIONS. THE THEORY OF THE ASSESSING OFFICER TO TREAT THE EN TIRE DEPOSIT AS UNEXPLAINED CASH CREDITS CANNOT 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 W ITH THE COMMISSION EARNED ON PROVIDING ACCOMMODATION ENTRIE S. WE THEREFORE OF THE VIEW THAT SINCE THE ASSESSEE ITSE LF HAS DECLARED THE COMMISSION ON TURNOVER AT 0.15% WHICH IS MORE T HAN THE PERCENTAGE CONSIDERED TO BE REASONABLE BY THE TRIBU NAL IN THE CASE OF PALRESHA & CO. (SUPRA) AND KIRAN & CO. (SUP RA) THE SAME SHOULD BE ACCEPTED. WE ACCORDINGLY ACCEPT THE COM MISSION DECLARED BY THE ASSESSEE AND SET ASIDE THE ORDER OF THE CIT (A) IN THIS REGARD. 6.2 WE FIND THAT ITAT IN CASE OF SANJAY KUMAR GARG (SUPRA) HAS APPLIED 0.2% COMMISSION ON TURNOVER AND IN GOLD STA R FINVEST (P) LTD. (SUPRA) APPROVED 0.15%. SO TAKING ALL FAC TORS INTO CONSIDERATION WE HOLD THAT PERCENTAGE OF COMMISSIO N TO BE EARNED ON TURNOVER IS REASONABLE AT 0.6%. WE HOLD S O. 6 ITA NO.2639 & 2638/MUM/2015 ASSESSMENT YEAR 2002-03 & 2008-09 6. ADMITTEDLY THE AO HAD LEVIED PENALTY IN QUEST ION UNDER SECTION 271 (1) (C) OF THE ACT ON THE ADDITION MADE ON THE BASIS OF EST IMATION AND THE BASIS OF ESTIMATION WAS FURTHER CHANGED SUBSTANTIALLY BY THE TRIBUNAL IN QUANTUM APPEAL. AS PER THE SETTLED LAW PENALTY PROCEEDINGS ARE DIFFERENT FROM ASSESSMENT PROCEEDINGS BECAUSE THE STANDARD OF PROO F REQUIRED FOR IMPOSITION OF PENALTY IS DIFFERENT FROM THAT ON WHICH AN ADDIT ION COULD BE MAINTAINED. MERE ADDITION TO THE INCOME OF THE ASSESSEE DOES NO T MEAN THAT THE ASSESSEE HAS CONCEALED IN NARESH CHAND AGARWAL VS.CIT(2013)38 TAXMANN.COM 397 HONBLE ALLAHABAD HIGH COURT HAS HELD THAT WHEN ADD ITION IS MADE ON ESTIMATE BASIS PENALTY UNDER SECTION 271(1)(C) CANNOT BE IM POSED. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CASE OF HARIGOPAL SINGH VS. COMMISSIONER OF INCOME TAX REPORTED IN (2002) 125 TAXMAN 242 WHEREIN THE ESTIMATED ADDITION MADE BY THE AO WAS CONSIDERABLY REDUCED BY THE TRIBUNAL HAS HELD THAT IN SUCH CASES PROVISIONS OF SECTION 271 (1 )(C) OF THE ACT ARE NOT ATTRACTED. THE SAME VIEW HAVE BEEN TAKEN BY THE ITAT CHANDIGARH IN JCIT V. BHAGWAN DASS GARG (2014) 48.TAXMANN185 (CHANDIGARHTRIB) JODHPUR TRIBUNAL IN ITO V. GURUNANAK OIL AGENCY (2013) 35 TAXMANN 562(JODHPUR- TRIB.) AND OTHER BENCHES OF ITAT. SO IN VIEW OF THE DECISIONS OF TH E HONBLE HIGH COURTS AND TRIBUNALS WE ARE OF THE CONSIDERED OPINION THAT TH IS IS NOT A FIT CASE WHERE PENALTY CAN BE IMPOSED UNDER SECTION 271(1)(C) OF T HE ACT FOR CONCEALMENT OF INCOME OR FOR FURNISHING INCORRECT PARTICULARS OF I NCOME. WE THEREFORE SET ASIDE THE IMPUGNED ORDER AND ALLOW THE GROUNDS OF A PPEAL OF THE ASSESSEE. ITA NO. 2638/MUM/2015 A.Y. 2008-09 THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER PASS ED BY THE LD. CIT(A) ON THE FOLLOWING EFFECTIVE GROUND OF APPEAL: - 1(A) THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) [CIT (A)] ERRED IN FACTS AND LAW IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER AND SUSTAINING THE PENALTY OF RS. 12 98 327 /-LEVIED U/S 271 7 ITA NO.2639 & 2638/MUM/2015 ASSESSMENT YEAR 2002-03 & 2008-09 (1) (C) WITHOUT APPRECIATING THAT THE ASSESSMENT PR OCEEDINGS AND PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE. (B) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN FACTS AND LAW IN NOT APPRECIATING THAT THE PENALTY/S 271 (1) (C) CANNOT BE LEVIED ON THE CONDITIONS MADE SOLELY ON THE BASIS O F ESTIMATION AND WITHOUT BRINGING ON RECORD ANY A TANGIBLE MATERIAL TO SHOW THAT THE APPELLANT HAD IN FACT EARNED A HIGHER RATE OF COMMI SSION OVER AND ABOVE 1% ON SALE BILLS. 2. SINCE WE HAVE DECIDED THE IDENTICAL ISSUE IN F AVOUR OF THE ASSESSEE IN ITA NO 2639/M/2015 FOR THE ASSESSMENT YEAR 2002-03 AFOR ESAID ON THE SAME ANALOGY AND REASONING WE SET ASIDE THE IMPUGNED ORD ER PASSED BY THE LD. CIT(A) AND ALLOW THE GROUNDS OF APPEAL OF THE PRESE NT CASE. 3. IN THE RESULT BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPT. 2016 SD/- SD/- ( B.R.BASKARAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED:30/09/2016 8 ITA NO.2639 & 2638/MUM/2015 ASSESSMENT YEAR 2002-03 & 2008-09 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. ! # !$ / DR ITAT MUMBAI 6. %& ' / GUARD FILE. / BY ORDER ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI PRAMILA