The ACIT, Circle-6,, Surat v. Shri Deepenkumar Mistry, Surat

ITA 3392/AHD/2009 | 2006-2007
Pronouncement Date: 30-08-2011 | Result: Allowed

Appeal Details

RSA Number 339220514 RSA 2009
Bench Ahmedabad
Appeal Number ITA 3392/AHD/2009
Duration Of Justice 1 year(s) 8 month(s) 7 day(s)
Appellant The ACIT, Circle-6,, Surat
Respondent Shri Deepenkumar Mistry, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 30-08-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted B
Tribunal Order Date 30-08-2011
Date Of Final Hearing 24-08-2011
Next Hearing Date 24-08-2011
Assessment Year 2006-2007
Appeal Filed On 23-12-2009
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI D.K. TYAGI JM AND A.K. GARODIA A.M . ASSTT. CIT CIRCLE-6 SURAT. SHRI DEEPENKUMAR MISTRY 803-C SHREENATHJI APARTMENT 1108-B HATFALIA HARIPURA SURAT. APPELLANT VS. RESPONDENT APPELLANT BY :- SHRI SAMIR TEKRIWAL SR.DR RESPONDENT BY:- NONE O R D E R DATE OF HEARING 24/8/2011. DATE OF PRONOUNCEMENT -30.08.2011. PER D.K. TYAGI JUDICIAL MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 24.08.2009 FOR ASST. YEAR 2006-07. THE REVENUE HAS RAISED FOLLOWING GROUND IN THIS APPEAL :- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A)-IV SURAT HAS ERRED IN DELETING THE ADDI TION MADE BY THE AO OF RS.99 70 591/-. 2. THE FACTS OF THE CASE ARE THAT A SURVEY U/S 133A OF THE I.T. ACT WAS CARRIED OUT BY THE DDIT (INV) UNIT-IV(2) MUMBAI O N 19/04/2006 AT THE BUSINESS PREMISES OF THE ASSESSEE. THOUGH THE SURVE Y PERTAINS TO ASST. ITA NO.3392/AHD/2009 ASST. YEAR 2006-07 ITA NO.3392/AHD/2009 ASST. YEAR 2006-07 2 YEAR 2007-08 YET THE BOOKS OF ACCOUNTS ETC. WERE I MPOUNDED AND THE FINDING OF THE SURVEY TEAM MAINLY RELATE TO ASST. Y EAR 2006-07. DURING THE COURSE OF SURVEY IT WAS OBSERVED THAT FOLLOWING CONCERNS WERE OPERATING FROM THE SAID PREMISES. THESE WERE PROP. CONCERNS OF MR. DEEPAN S. MISTRY AND MR. RAMESH PATEL : SL. NO. ASSESSEE NAME ADDRESS PROPRIETOR 1 M/S PUJAN IMPEX ROOM NO.124 2 ND FLOOR FLOX CHAMBERS OPERA HOUSE TATA ROAD NO1. MUMBAI-4. DEEPAN S. MISTRY. 2. M/S MARVEL IMPEX -DO- RAMESH PATEL 3. M/S ATLANTA CORPORATION 503-A OSWAL ONYX JESAL PARK BHYANDER (EAST) MUMBAI MANUBHAI PATEL 4 M/S NIMBUS TRADING -DO- DAYALAL V. PATEL 5 M/S VENUS STONES -DO- RAKESH PATEL DURING THE COURSE OF SURVEY SHRI DEEPAN S. MISTRY ASSESSEE AND SHRI HIRAL R. KANSARA MANAGER OF AN ASSOCIATE CONCERN H AVE ADMITTED THE MODUS OPERANDI OF THEIR BUSINESS. SHRI DEEPAN S. MI STRY AND SHRI HIRAL R. KANSARA ARE HAWALA OPERATORS AND PROVIDE ACCOMMO DATION ENTRIES TO DIAMOND TRADERS FOR COMMISSION INCOME. THEY HAVE OP ENED ABOVE FIVE CONCERNS EITHER IN THEIR NAME OR IN THE NAME OF THE IR TRUSTED EMPLOYEES. THEY CONTACTED THE PARTIES DIRECTLY OR THROUGH BROK ERS. THEY ALSO PROVIDED THE DETAILS REGARDING DIAMOND MATERIALS S UCH AS RATES QUANTITY AMOUNT. IT HAS BEEN FOUND THAT THEY WERE PREPARING BOGUS SALE BILLS IN THEIR TWO CONCERNS NAMELY M/S PUJAN IMPEX M/S MARV EL IMPEX. THEY ACCEPTED CHEQUE FROM THEIR CUSTOMERS AND DEPOSITED THE SAME INTO THE BANK ACCOUNTS OF THEIR CONCERNS. SUBSEQUENTLY THEY WITHDREW CASH AFTER ROUTING THIS AMOUNT THROUGH ONE OR MORE BANK ACCOUN TS OF THEIR CONCERNS. THEY DIRECTLY WITHDREW THE CASH AFTER DEPOSITING TH E CHEQUE. AS SOON THEY WITHDREW THE CASH FROM THE BANK CUSTOMERS OR THEIR REPRESENTATIVES AND WERE HANDED OVER THE BOGUS SALE BILLS AND CASH AFTE R DEDUCTING THEIR COMMISSION. THEN THEY MADE ADJUSTMENT TOWARDS PURCH ASES TO OTHER ITA NO.3392/AHD/2009 ASST. YEAR 2006-07 3 CONCERNS BELONGING TO PURCHASER. THEN THEY MADE ADJ USTMENT TOWARDS PURCHASES TO OTHER CONCERNS BELONGING TO PURCHASER. THEY ISSUED BOGUS BILLS FROM THEIR MUMBAI OFFICE TO THOSE PARTIES WHO WERE INTERESTED IN PURCHASE OF BILLS WITH VAT AND PARTIES WHO WERE INT ERESTED IN PURCHASE OF BILLS WITH/WITHOUT VAT THEY MANAGED IT FROM SUR AT OFFICE. IN SHORT BY ABOVE NARRATION THE AO FELT AND CONCLUDED THAT T HE ASSESSEE HAD NEVER DONE TRADING ACTIVITY AND BUSINESS INVOLVING DIAMON DS/GOLD BUT HE WAS ONLY HAWALA OPERATOR AND HAD ONLY COMMISSION INCOME THEREOF. HENCE THE AO DID NOT BELIEVE THE BOOKS OF ACCOUNTS ITS R ESULTS AND REJECTED IT U/S 145 OF THE ACT. 3. THE CONTENTION OF ASSESSEE BEFORE THE AO WAS THA T THE ASSESSEE HAS GOT TURNOVER OF RS.278 26 99 710/-. THE ASSESSEE HA S ADMITTED COMMISSION OF 0.25% ON HIS TURNOVER. OVER AND ABOVE THIS THE ASSESSEE CLAIMS TO HAVE BORN BCTT @ 0.1% WHICH LEADS TO DIF FERENTIAL COMMISSION OF 0.15% WHICH WHEN MULTIPLIED WITH THE TURN OVER SHOWS THE COMMISSION INCOME EARNED BY THE ASSESSEE TO THE TUNE OF RS.41 049/-. THIS CAN BE TAKEN AS THE COMMISSION OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. HOWEVER THE AO NOTICED THAT AS PER ONE INSTANCE FROM IMPOUNDED MATERIAL (AT PAGE NO.18 OF ANNEXURE A-14 WHEREIN IT IS NOTICED THAT THE ASSESSEE HAS RECEIVED RS.15 000/- FOR THE BILL OF RS.30 00 000/- @ 0.5%) IS THE COMMISSION AMOUNT COM ES TO RS.1 39 13 498/-. THIS CAN BE TAKEN AS THE COMMISSI ON OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. ACCORDING TO THE AO A SSESSEE HAS DONE TOTAL CASH WITHDRAWALS OUT OF HIS BANK ACCOUNTS OF RS.17 27 03 000/-. BCTT ON THIS @ 0.1% COMES TO RS.1 72 703/-. THE ASSESSEE HAS STATED IN HIS REPLY FOR THE SHOW CAUSE THAT BCTT ON THIS @ 0.1%. LOOKING TO THE FACT THAT TOTAL CASH WITHDRAWAL WAS ONLY OF RS.17 27 03 000/- THE DEDUCTION OF BCTT CAN BE GIVEN UP TO THAT AMOUNT WHICH HAS BEEN PAID BY ASSESSEE ITA NO.3392/AHD/2009 ASST. YEAR 2006-07 4 FROM HIS CONCERN. THE CASH WITHDRAWAL FROM SISTER C ONCERNS THOUGH MANAGED BY THE ASSESSEE HIMSELF CANNOT BE TAKEN FOR ARRIVING AT THE SUM OF BCTT EXPENSES AS THE SISTER CONCERNS ARE ASSESSE D TO TAX SEPARATELY AND THEY ARE SEPARATE ENTITY. HENCE THE COMMISSION INCOME AFTER GIVING DEDUCTION BCTT COMES TO RS.1 37 40 795/-. THIS CAN BE TAKEN AS THE COMMISSION OF THE ASSESSEE FOR THE YEAR UNDER CONSI DERATION. THIS IS WHAT HAS BEEN FINALLY TAXED. 4. THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A ) WHEREIN THE ARGUMENTS OF THE ASSESSEE WERE AS UNDER :- IT IS TRUE THAT IN THE SURVEY ACTION CONDUCTED ON 19.04.2006 OF MUMBAI BY OFFICERS OF MUMBAI THE APPELLANT HAS ADMITTED THAT HE IS ENGAG ED IN NON-GENUINE TRANSACTION ON COMMISSION BASIS THE COMMISSION RATES VARY FROM TI ME TO TIME AND DEPENDING ON THE DEMAND AND SUPPLY AVAILABLE IN THE MARKET. ALTHOUGH THE APPELLANT HAS SOME WHERE ACCEPTED THE COMMISSION RATE IS 0.25% ON SALES BUT ACTUALLY IT WAS PREVAILING IN THE MONTH OF MARCH 2006 ONLY WHEREAS BEFORE MARCH THE RATES WERE BELOW 0.25%. THE APPELLANT HAS NOT ADMITTED ANY WHERE THE STATEM ENT THAT THE RATE OF COMMISSION IS @ 50% AND APPELLANT IS SURE THAT IN THE IMPOUNDED M ATERIAL THE COMMISSION RATE IS NOT MENTIONED ANY WHERE. HOW IT IS WORKED OUT TO 0. 50% IT IS BEYOND HIS IMAGINATION. FURTHER DURING SURVEY ACTION THE APPELLANT HAS ADMI TTED THAT 0.10% EXPENSES IS INCURRED BY THE APPELLANT FOR BCTT WHICH WAS NO WHE RE RECORDED IN THE STATEMENT BY THE OFFICERS OF INCOME TAX DEPARTMENT FAVOURING THE REVENUE. FURTHER IT MAY BE NOTED THAT THE TOTAL TURNOVER OF FY 2005-06 CORRESPONDING TO ASST. YEAR 2006-07 WAS CONSISTING INTERNAL TURNOVER ALSO WHICH DID NOT CARRY ANY COMMISSION INCOME. ACTUAL GROSS INCOME FROM THIS BUSINESS CAME DOWN TO 0.15% OR LESS BY VIRTUE OF RATE VARIATION AND APPLICABLE BCTT ON EXTERNAL TURNOVER ONLY. IN THIS WAY HE REQUESTED THE AO TO NOT TO CONSIDER 0.50% COMMISSION RATE AND COMPLETE THE ASSESSMENT PROCEEDING WITH CONSIDERATION OF THE RATES AS EXPLA INED ABOVE. THE LD. CIT(A) AFTER TAKING INTO CONSIDERATION THE SUBMISSIONS OF ASSESSEE HELD AS UNDER :-. REGARDING THE FIRST POINT HAVING PERUSED THE MATE RIAL AVAILABLE ON RECORD ARGUMENTS ON BOTH SIDES AND MOST IMPORTANTLY THE ST ATEMENT OF THE APPELLANT RECORDED ITA NO.3392/AHD/2009 ASST. YEAR 2006-07 5 ON OATH DURING SURVEY I FIND THAT THERE IS NO REAS ON TO BELIEVE THAT THE APPELLANT WOULD CHOOSE TO STATE LIES ON OATH. THERE ARE TWO R EFERENCES TO THE RATE OF COMMISSION BEING @.025% (IN RESPONSE TO QUESTION NO.4 & 8 OF S TATEMENT OF ASSESSEE RECORDED ON 19.4.2006). SIMILARLY THE STATEMENT OF SHRI HIRA LAL RAMESH CHANDRA KANSARA MANAGER OF PUJAN IMPEX ALSO CONFIRMS THE RATE OF CO MMISSION @ .25% IN RESPONSE TO QUESTION NO.4 & 8 OF HIS STATEMENT. BOTH THESE STAT EMENTS ARE AVAILABLE. ORDINARILY IT IS UNDERSTOOD THAT A PERSON WOULD VOLUNTEER TRUTH O N OATH UNLESS IT IS PROVEN OTHERWISE. EVEN IN THE SEIZED MATERIAL THERE IS NO EVIDENCE TO SUBSTANTIATE THE AOS FINDING ABOUT THE COMMISSION RATE TO BE .5% THE SOL ITARY EVIDENCES ON WHICH THE AO HAS BASED HIS FINDING TO PAGE NO.18 OF ANNEXURE A-1 4. BUT THAT IS A SOLITARY TRANSACTION OF WITHDRAWAL. IT IS UNDERSTOOD THAT MO ST OF THE TRANSACTION WERE ROUTED THROUGH OTHER SISTER CONCERNS LIKE ATLANTA CORPORAT ION NIMBUS TRADING AND VENUS STONES. THEREFORE UNLESS EACH AND EVERY TRANSACTIO N OF DEPOSIT AND CORRESPONDING WITHDRAWAL THE CASH LEADS TO AN EARNING @ .5% I AM AFRAID AOS CONCLUSION CANNOT BE FOUND JUSTIFIED. EVEN ABOUT THE TRANSACTION AS A PPEARING ON PAGE 18 IT HAS BEEN EXPLAINED THAT THE MONIES WERE WITHDRAWN AND TRANSF ERRED WITH NO DEFINITE TRAIL OF LEAVING .5% AS EARNINGS. IF THAT WAS SO ALL OTHER T RANSACTIONS WILL ALSO BE IDENTICAL. IT IS NOT THE CASE OF THE AO THAT ALL OTHER TRANSACTIO NS SUBSTANTIATE THE FACT OF EARNING @ .5%. THEREFORE I SEE NO RATIONALE TO UPHOLD THE ES TIMATION OF COMMISSION INCOME IN APPELLANTS HAND @ .5% DISREGARDING THE VOLUNTARILY STATED RATE OF .25%. THE ADDITION MADE IS THEREFORE DIRECTED TO BE DELETED. 5. BEFORE US THE LD. DR RELIED ON THE ORDER OF AO W HEREAS THE LD. AR RELIED ON THE ORDER OF LD. CIT(A). 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD WE FIND THAT THE SURVEY OPERATION U/S 133A OF THE ACT WAS CARRIE D OUT BY THE INVESTIGATION WING OF THE DEPARTMENT ON 19.4.2006 A T THE BUSINESS PREMISES OF THE ASSESSEE. DURING THIS SURVEY OPERAT ION STATEMENT OF ASSESSEE WAS RECORDED IN WHICH HE ADMITTED THAT HE WAS ENGAGED IN THE NON-GENUINE BUSINESS TRANSACTIONS ON COMMISSION BAS IS. ACCORDING TO THE ASSESSEE THE RATE OF COMMISSION VARIED FROM TIME TO TIME AND SECONDLY ON THE DEMAND AND SUPPLY AVAILABLE IN THE MARKET. ASSE SSEE IN THIS STATEMENT ADMITTED TO HAVE EARNED THIS COMMISSION @ .25% OF T HE TOTAL TURNOVER. WHILE THE AO ON THE BASIS OF SEIZED MATERIAL WORKED OUT THIS RATE OF COMMISSION AT .50%. THE LD. CIT(A) HOWEVER ACCEPT ED THE CONTENTIONS OF THE ASSESSEE THAT HE EARNED COMMISSION @ .25% ON THE GROUND THAT AT ITA NO.3392/AHD/2009 ASST. YEAR 2006-07 6 THE TIME OF SURVEY ITSELF ASSESSEE ADMITTED THAT HE EARNED COMMISSION ONLY AT THIS RATE AND THERE WAS NO REASON TO BELIEV E THAT ASSESSEE WOULD TELL LIES ON OATH UNLESS PROVED OTHERWISE. THIS ACT ION OF THE LD. CIT(A) IS CONTRARY TO THE FACTS AS AO HAD BASED HIS FINDING O N PAGE 18 OF ANNEXURE -14 OF THE SEIZED MATERIAL. HOWEVER WE FEEL THAT I N VIEW OF THE FOLLOWING OBSERVATION OF THE LD. CIT(A) THE MATTER REQUIRES F URTHER VERIFICATION :- EVEN IN THE SEIZED MATERIAL THERE IS NO EVIDENCE TO SUBSTANTIATE THE AOS FINDING ABOUT THE COMMISSION RATE TO BE .5% THE SOLITARY EV IDENCES ON WHICH THE AO HAS BASED HIS FINDING TO PAGE NO.18 OF ANNEXURE A-14. B UT THAT IS A SOLITARY TRANSACTION OF WITHDRAWAL. IT IS UNDERSTOOD THAT MOST OF THE TRANS ACTION WERE ROUTED THROUGH OTHER SISTER CONCERNS LIKE ATLANTA CORPORATION NIMBUS TR ADING AND VENUS STONES. THEREFORE UNLESS EACH AND EVERY TRANSACTION OF DEP OSIT AND CORRESPONDING WITHDRAWAL THE CASH LEADS TO AN EARNING @ .5% I AM AFRAID AOS CONCLUSION CANNOT BE FOUND JUSTIFIED. EVEN ABOUT THE TRANSACTION AS A PPEARING ON PAGE 18 IT HAS BEEN EXPLAINED THAT THE MONIES WERE WITHDRAWN AND TRANSF ERRED WITH NO DEFINITE TRAIL OF LEAVING .5% AS EARNINGS. IN VIEW OF THE ABOVE THE MATTER IS RESTORED BACK T O THE FILE OF AO FOR FURTHER VERIFICATION AND DECIDING THE ISSUE AFRESH AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN OPEN COURT ON 30.8.2011. SD/- SD/- (A. K. GARODIA) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD DATED : 30.8.2011. MAHATA/- ITA NO.3392/AHD/2009 ASST. YEAR 2006-07 7 COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD 1.DATE OF DICTATION 25/8/11. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER 29/8/11. /OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..