DCIT CC 1, MUMBAI v. EASY MERCANTILE P.LTD, MUMBAI

ITA 921/MUM/2013 | 2009-2010
Pronouncement Date: 19-11-2014 | Result: Dismissed

Appeal Details

RSA Number 92119914 RSA 2013
Assessee PAN AABCE7519A
Bench Mumbai
Appeal Number ITA 921/MUM/2013
Duration Of Justice 1 year(s) 9 month(s) 15 day(s)
Appellant DCIT CC 1, MUMBAI
Respondent EASY MERCANTILE P.LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-11-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 19-11-2014
Date Of Final Hearing 13-11-2014
Next Hearing Date 13-11-2014
Assessment Year 2009-2010
Appeal Filed On 04-02-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH M UMBAI BEFORE HONBLE S/SHRI VIJAY PAL RAO (JM) AND B.R.BASKARAN (AM) . . ./I.T.A. NO.921/MUM/2013 ( / ASSESSMENT YEAR : 2009-10) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE -1 R NO.902 9 TH FLOOR OLD CGO BUILDING ANNEX M K ROAD MUMBAI-400020 / VS. M/S EASY MERCANTILE PVT.LTD. 626 PANCHRATNA BLDG. OPERA HOUSE MUMBAI-400004 ( / APPELLANT) .. ( / RESPONDENT) ./ ./PAN/GIR NO. :AABCE7519A ./I.T.A. NO.922/MUM/2013 ( / ASSESSMENT YEAR : 2009-10) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE -1 R NO.902 9 TH FLOOR OLD CGO BUILDING ANNEX M K ROAD MUMBAI-400020 / VS. M/S SUMUKH COMMERCIAL PVT. LTD (FORMERLY KNOWN AS CAPETOWN MECANTILE CO.P.LTD.) C/O M/S EASY MERCANTILE PVT.LTD. 626 PANCHRATNA BLDG. OPERA HOUSE MUMBAI-400004 ( / APPELLANT) .. ( / RESPONDENT) ./ ./PAN/GIR NO. : AACCC7400M ./I.T.A. NO.923/MUM/2013 ( / ASSESSMENT YEAR : 2009-10) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE -1 R NO.902 9 TH FLOOR OLD CGO BUILDING ANNEX M K ROAD MUMBAI-400020 / VS. M/S SBJ TRADING (I) LTD. 626 PANCHRATNA BLDG. OPERA HOUSE MUMBAI-400004 ( / APPELLANT) .. ( / RESPONDENT) ./ ./PAN/GIR NO. : AAKCS9022P ITA. NO921/MUM/2013 AND OTHER TWO APPEALS 2 ! / REVENUE BY SHRI NAIL PHILIP ' ! / ASSESSEES BY SHRI VIMAL PUNAMIYA # ' $% / DATE OF HEARING : 13.11.2014 &' ' $% /DATE OF PRONOUNCEMENT : 19.11.2014 / O R D E R PER B.R.BASKARAN ACCOUNTANT MEMBER: ALL THESE APPEALS HAVE BEEN FILED BY THE REVENUE AR E DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) AND THEY RELATE TO A SSESSMENT YEAR 2009-10. THESE APPEALS WERE HEARD TOGETHER AND THEY ARE BEIN G DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE NOTICE THAT THE AO IN ALL THESE CASES REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEES AND ESTIMATED INCOME AT 1 PER CENT OF THE TOTAL TUR NOVER BY FOLLOWING THE VIEW TAKEN IN ASSESSMENT YEAR 2008-09. THE BACKGROUND R ELATING TO REJECTION OF BOOKS OF ACCOUNTS IN THE ASSESSMENT YEAR 2008-09 AR E SET OUT IN BRIEF. THE DEPARTMENT CARRIED OUT SEARCH AND SEIZURE ACTION IN THE CASE OF SHRI PRAVIN KUMAR JAIN GROUP. DURING THE COURSE OF THIS OPER ATION IT WAS NOTICED THAT SHRI PRAVIN KUMAR JAIN ITS ASSOCIATES CONCERN ARE ENGAG ED IN THE ACTIVITIES OF PROVIDING ACCOMMODATION BILLS. FOLLOWING THE SAID FINDING THE AO IN THE ASSESSMENT YEAR 2008-09 REJECTED THE BOOKS OF ACCO UNT AND ESTIMATED THE TOTAL INCOME FOR THE ASSESSMENT YEAR 2008-09 AND ESTIMAT ED INCOME AT 1% OF THE TOTAL TURNOVER AND THE SAME METHODOLOGY HAS BEEN FO LLOWED BY THE AO IN THE YEAR UNDER CONSIDERATION ALSO. 3. THE LD. CIT(A) NOTICED THAT THE ADDITION MADE B Y AO IN THE ASSESSMENT YEAR 2008-09 WAS DELETED BY THE ITAT AND IN EFFECT THE RETURNED INCOME WAS RESTORED. HENCE THE LD. CIT(A) BY FOLLOWING THE OR DER OF TRIBUNAL ALLOWED THE APPEAL FILED BY ASSESSEES IN ALL THE THREE CASES. AGGRIEVED REVENUE HAS FILED THESE APPEALS BEFORE US. ITA. NO921/MUM/2013 AND OTHER TWO APPEALS 3 4. THE ASSESSEE HAS FILED A COPY OF THE ORDER DATED 19.10.2012 PASSED BY THE ITAT IN THE CASE OF M/S CAPETOWN MERCANTILE CO. PVT.LTD. V/S DCIT IN ITA NOS.6037/MUM/2011 AND 5957/MUM/2011 IN WHICH THE T RIBUNAL HAS DELETED THE ADDITION BY FOLLOWING THE DECISION RENDERED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S EASY MERCANTILE PVT.LT D V/S DCIT (ITA NO.6035/MUM/2011 DATED 27.7.2012 FOR AY-2008-09). THE RELEVANT OBSERVATIONS MADE BY THE TRIBUNAL IN THE CASE OF M /S EASY MERCANTILE PVT.LTD (SUPRA) ARE EXTRACTED BELOW:. '8. IT IS ALSO A FACT THAT WHILE EXAMINING THE SALE S MADE BY THE ASSESSEE COMPANY THE AO ISSUED NOTICE U/S. 133(6) OF THE AC T TO THE PARTIES WHO CONFIRMED THE TRANSACTION MADE WITH THE ASSESSEE. A DMITTEDLY NO INCRIMINATING MATERIAL FROM ANY OF THE PARTIES HAVI NG DEALINGS WITH THE ASSESSEE COMPANY WERE EITHER BROUGHT ON RECORD OR W ERE AVAILABLE TO SUBSTANTIATE THE ALLEGATION OF PROVIDING ACCOMMODAT ION BILLS ONLY BECAUSE ONE SHRI PRAVIN KUMAR JAIN IN HIS STATEMENT HAS ACC EPTED OF PROVIDING ACCOMMODATION BILLS CANNOT IPSO FACTO MAKE THE ASSE SSEE COMPANY ALSO TO BE ENGAGED IN THE SAME KIND OF BUSINESS. WE HAVE ALSO PERUSED THE AUDITED STATEMENT OF ACCOUNTS FILED BY THE ASSESSEE . ON A CAREFUL CONSIDERATION OF THE BALANCE SHEET WE FIND THAT TH ERE ARE UNSECURED LOANS TO THE TUNE OF RS. 8 01 00 000/-. THE GENUINENESS O F WHICH HAS NOT BEEN DOUBTED BY THE AO. UNDER THE HEAD 'CURRENT ASSETS' LOANS AND ADVANCES THERE IS AN ITEM OF VAT RECEIVABLE AMOUNTING TO RS. 16 738/- WHICH HAS ALSO NOT BEEN QUESTIONED BY THE AO AND THERE ARE OT HER ADVANCES INCLUDING SUNDRY CREDITORS. THE AO HAS ESTIMATED A COMMISSION INCOME FROM THE ALLEGED BUSINESS OF PROVIDING ACCOMMODATIO N BILLS. THE AO HAS TAKEN THE TURNOVER OF THE ASSESSEE SHOWN IN ITS AUD ITED STATEMENT OF ACCOUNTS I.E. RS. 3 55 08 600/-. THOUGH THE ASSESSI NG OFFICER HAS TREATED THIS ENTIRE SALE AS ACCOMMODATION ENTRIES BUT AT TH E SAME TIME GROSSLY FAILED INTO BRINGING ANY COGENT MATERIAL EVIDENCE O N RECORD TO SHOW THAT THE ASSESSEE WAS ACTUALLY ENGAGED IN THE BUSINESS O F PROVIDING ACCOMMODATION BILLS/ENTRIES. EVEN REFERENCE OF THE STATEMENT OF SHRI PRAVIN KUMAR JAIN WOULD NOT HELP AO BECAUSE IN HIS ENTIRE STATEMENT ALONGWITH NAME OF THE CONCERN TO WHOM HE HAS ACCEPT ED OF GIVING ACCOMMODATION BILLS THERE IS NO REFERENCE OF THE N AME OF THE ASSESSEE COMPANY. AS NOTHING HAS BEEN BROUGHT ON RECORD TO H OLD THAT THE ASSESSEE IS ENGAGED IN PROVIDING ACCOMMODATION BILL S MERELY ON THE BASIS OF THE STATEMENT OF SHRI PRAVIN KUMAR JAIN W HICH HAS NO BEARING/REFERENCE TO THE ASSESSEE COMPANY NO ADDIT ION CAN BE MADE IN THE HANDS OF THE ASSESSEE. IN FACT THE ENTIRE & 595 7/MUM/2011 ASSESSMENT HAS BEEN FRAMED ON IRRELEVANT FACTS THER EFORE THE ASSESSMENT MADE BY THE AO CANNOT BE ACCEPTED. THE LD. CIT(A) H AS ERRED IN CONFIRMING THIS ASSESSMENT. AS WE HAVE HELD THAT CO MMISSION INCOME IS NOT ASSESSABLE IN THE HANDS OF THE ASSESSEE ITS RE TURN AS PER ACCOUNT IS ACCEPTED AND THE ADDITION MADE WITH RESPECT TO COMM ISSION IS DELETED. AS THE RETURNED INCOME HAS BEEN ACCEPTED THE ADDITION AL GROUND RAISED BY THE ASSESSEE FOR ALLOWABILITY OF EXPENSES AGAINST C OMMISSION HAS BECOME INFRUCTUOUS THEREFORE NEED NOT BE ADJUDICATED SEPA RATELY'. ITA. NO921/MUM/2013 AND OTHER TWO APPEALS 4 THUS IT IS SEEN THAT THE TRIBUNAL IN ASSESSMENT YE AR 2008-09 BEING THE YEAR OF SEARCH DID NOT AGREE WITH THE VIEW ENTERTAINED BY AO AND ACCORDINGLY DELETED THE INCOME ESTIMATED BY REJECTING THE BOOKS OF ACCO UNT. THE LD A.R SUBMITTED THAT THE ADDITIONS MADE IN ALL THE THREE CASES UNDE R CONSIDERATION IN AY 2008-09 HAS BEEN DELETED BY THE TRIBUNAL ON IDENTICAL REASO NING. THE YEAR UNDER CONSIDERATION IS THE YEAR SUCCEEDING THE YEAR OF SE ARCH. FURTHER THE AO HAS NOT BROUGHT ANY OTHER MATERIAL ON RECORD EXCEPT PLACING RELIANCE ON THE ASSESSMENT ORDERS PASSED IN AY 2008-09 WHICH HAS SINCE BEEN R EVERSED BY THE TRIBUNAL. IN VIEW OF THE FOREGOING WE ARE OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT AND ESTIMATING THE INCOME. AC CORDINGLY WE CONFIRM THE ACTION OF THE LD. CIT(A) IN ALL THE THREE CASES. 5. THE REVENUE HAS ALSO RAISED ANOTHER GROUND RELA TING TO DISALLOWANCE U/S 40(A)(II) OF THE INCOME TAX ACT 1961 (THE ACT). THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEES HAVE ALR EADY MADE DISALLOWANCE U/S 40(A)(II) OF THE ACT IN THEIR RESPECTIVE RETURNED I NCOMES AND HENCE NO FURTHER DISALLOWANCE IS CALLED FOR. IN VIEW OF THE SAME W E DO NOT FIND ANY MERIT IN THE GROUND RAISED BY THE REVENUE IN THIS REGARD. HOWE VER IF THE AO FINDS THAT ANY OF THE ASSESSEES DID NOT MAKE THE SAID DISALLOWANCE IN THE RETURNED INCOME THE AO IS FREE TO MAKE THE SAID DISALLOWANCE. AFTER AFF ORDING THE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT ALL THE APPEALS FILED BY THE REVE NUE ARE DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 19TH NOV 2014. &' # () * + 19TH NOV 2014 ' ' - SD SD ( / VIJAY PAL RAO ) ( . . / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ( # MUMBAI: 19TH NOV 2014. . . ./ SRL SR. PS ITA. NO921/MUM/2013 AND OTHER TWO APPEALS 5 !'# $#%! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. # 0$ ( ) / THE CIT(A)- CONCERNED 4. # 0$ / CIT CONCERNED 5. 1 $ 2 % 2 ( # / DR ITAT MUMBAI CONCERNED 6. 3 4 / GUARD FILE. 5 # / BY ORDER TRUE COPY 6 (ASSTT. REGISTRAR) % 2 ( # /ITAT MUMBAI