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Income Tax Appellate Tribunal, “I”
Before: HON’BLE SH. G. S. PANNU, AM & HON’BLE SH. SANDEEP GOSAIN, JM
M/s Mihir Agencies ACIT CC 46 R. No. 659, 6th floor, Pvt. Ltd. बिधम/ H. Block Shri Sadashiv AayakarBhavan, Chambers, 6th Road, Mumbai-400020 Vs. Santacruz (east) Mumbai Pin- स्थायीलेखासं./जीआइआरसं./ PAN No. AAGFM0809D (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant by : Shri M. Dayasagar, DR प्रत्यथीकीओरसे/Respondentby : Shri MukeshChokshi, AR सुनवाईकीतारीख/ : 30/05/2018 Date of Hearing घोषणाकीतारीख / 27/07/2018 : Date of Pronouncement आदेश / O R D E R
Per Sandeep Gosain, Judicial Member:
The present Appeal filed by the revenueis against the order of Ld. CIT (Appeal) – 37, Mumbai dated 08.11.11for AY 2003- 04on the grounds mentioned herein below:-
M/s Mihir Agencies Pvt. Ltd. 1. "On the Facts and in the circumstances of the case and in law, the Ld CIT(A) erred in restricting the addition of Rs. 1734 lakhs made on account of unexplained cash credits u/s. 68 of the Act to 0.15% without appreciating that the assessee had failed to furnish satisfactory explanation with regard to the identity of the parties and the source and genuineness of the transactions."
2. "On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in restricting the addition to the commission income @ 0.15% without considering that the material found during the course of search clearly established that the net commission charged by the assessee group of companies varied between 1.5% and 3.6% and the facts of ITAT decision in assessee's own case for A.Y. 2002-03 (ITA No. 4912/M/05) as relied upon by the CIT(A) were clearly distinguishable The appellant prays that the order of the CIT(A) on the above ground be set aside and that of Assessing Officer be restored.
The appellant craves leave to amend or alter any ground and /or add new grounds which may be necessary.
M/s Mihir Agencies Pvt. Ltd.
The brief facts of the case are thatassessee is a company engaged in the business of providingaccommodating entries to the entry seeker. A search & seizure action u/s.132(1) was carried out on 28.6.2006 in the case of one Shri Hitesh M Bagthariya, an entry operator who used to arrange cheques of M/sMahasagar Securities, and M/s.Goldstar FinvestP.Ltd. During the course of the search action, certain incriminating material pertaining to the assessee company were found and seized and hence the assessee was covered u/s 153C of the Act. The assessment u/s.143(3) rws 153C was completed on 24.11.08 by the A.O. determining total income at Rs. 11,614/- as against returned income at Rs. NIL.
Subsequently, search action u/s.132(l) was again carried out on 25.11.09 in the case of Mahasagar Group of companies, now known as Alag Securities. The assessee is one of the companies of the above said group. During the course of this search also, certain incriminating material pertaining to the appellant were found and seized. Hence the assessment completed u/s.143( 3) rws 153C of the Act was reopened. The order of assessment u/s 143(3) r.w.s. 147 of the I.T. Act was M/s Mihir Agencies Pvt. Ltd. passed on 31.12.10 thereby making additions of Rs. 1,734 lakhs to the total income of the assessee towards deposit made in various bank account as un-explained income from undisclosed sources u/s 68 of the Act.
Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties partly allowed the appeal of the assessee.
Now before us, the revenue has preferred the present appeal by raising the above grounds.
Ground No. 1& 2 3. Thesegrounds raised by the revenueare inter connected and inter related and relates to challenging the order of Ld. CIT(A)in restricting the addition of Rs. 1734 lakhs made on account of unexplained cash credits u/s. 68 of the Act to 0.15% without appreciating that the assessee had failed to furnish satisfactory explanation with regard to the identity of the parties and the source and genuineness of the transactions,therefore we thought it fit to dispose of these grounds by this common order.
At the very outset, Ld. AR appearing on behalf of the assessee submitted before us that the present case is fully covered by the order of Coordinate Bench of Hon’ble ITAT in for AY 2004-05 to 2010-11 in assessee’s own case wherein the identical grounds raised in the present appeal have already been decided on merits.
On the other hand, Ld. DR relied upon the orders passed by AO.
We have heard both the partiesand we have also perused the material placed on record as well as the orders passed by revenue authorities. We find that the identical ground has already been decided by the Coordinate Bench of Hon’ble ITAT in 6441/Mum/12 for AY 2004-05 to 2010-11in assessee’s own case. The operative portion of the order of Hon’ble ITAT contained in para no. 6 to 10, which is reproduced below:-
M/s Mihir Agencies Pvt. Ltd.
6. After considering the relevant finding given in the impugnedorders as well as submission made by the parties, we find that the assessee is one of the group concerns of MukeshChokshi Group. A search and seizure action u/s 132(1) was conducted in the case of the assessee along with the other group companies on 25.11.2009 and on subsequent dates, wherein it was found that all these group companies belonging to Shri MukeshChokshi and his family members were involved in accommodation entries for various kinds of activities. The Ld. AO after taking into consideration all the receipts from the bank statements of the assessee from such activities, has applied a commission income @ 2%. Before the CIT(A), various appellate orders were relied upon which has been noted by the CIT(A) in the impugned order at para 2.1. The Ld. CIT(A) after referring to the various material found at the time of search of Shri MukeshChokshi and his employees and the statements wherein various rates of commission charged have been stated ranging from 0.15% to 2% on different kind of accommodation entries. Accordingly, Ld. CIT(A) updated the application of net profit rate of 2% as applied by the AO.
M/s Mihir Agencies Pvt. Ltd.
We find that in the case of Gold Star Finvest Ltd, which is asister concern of the assessee, on similar facts for the assessment year 2003-04 and 2004-05, the Tribunal after referring to various decisions have upheld the percentage of commission on net profit @ 0.15% which was quite consistent with the statement recorded at the time of search. Accordingly, following the judicial precedence in the case of the assessee's sister concern (supra), we uphold the rate of commission / rate of net profit from such activities at0.15%. Accordingly, ground no. 4, 5 as raised by the assessee are allowed
As regards the disallowance of business expenses, the Ld. CIT(A) has directed the AO not to allow any expenses against the net income of 2% determined. We find that the Tribunal in the case of Gold Star Finvest Ltd. have disallowed only 50% of the business expenses. Accordingly, following the judicial precedence, which is applicable mutatis mutandi in the case of the assessee also, we direct the AO to allow the business expenses to the extent of 50%. Accordingly, ground no. 8 is treated as partly allowed.
In the result, appeal of the assessee is partly allowed.
M/s Mihir Agencies Pvt. Ltd. 10. It has been admitted by both the parties that in all the appeals, similar issue are permeating through, therefore, our finding will apply mutatis mutandis in all the appeals. Accordingly, the net profit rate / commission income from the total turnover will be taken at 0.15% and expenses would be allowed to the extent of50%. Thus all the appeals of the assessee bunched hereinabove are partly allowed.
After having gone through the facts of the present case as well as considering the orders passed by revenue authorities and order’s of ITAT as mentioned above in assessee’s own case, we find that the identical issues have already been decided by the ITAT in assessee’s own case for AY 2004-05 to 2010-11in ITA 6435-6441/Mum/12. No change in facts have been pointed out before us, therefore, respectfully following the decision of the Coordinate Bench of Hon’ble ITAT and in order to maintain judicial consistency, we apply the same findings in the present case which are applicable mutatis mutandis in the present case. Accordingly, we direct the AO to allow the business expenses to the extent of 50%.Resultantly, these grounds raised by the assessee stands dismissed.
7. In the net result, the appeal filed by the assessee stands dismissed with no orders as to cost. Order pronounced in the open court on 27th July. 2018 Sd/- Sd/- (G. S. Pannu) (Sandeep Gosain) लेखासदस्य / Accountant Member न्याययकसदस्य / Judicial Member मुंबई Mumbai;यदनांकDated : 27.07.2018 Sr.PS. Dhananjay आदेशकीप्रनिनिनिअग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी/ The Appellant 2. प्रत्यथी/ The Respondent आयकरआयुक्त(अपील) / The CIT(A) 3. 4. आयकरआयुक्त/ CIT- concerned 5. यवभागीयप्रयतयनयध, आयकरअपीलीयअयधकरण, मुंबई/ DR, ITAT, Mumbai 6. गार्डफाईल / Guard File आदेशधिुसधर/ BY ORDER,