ITO 29(2)(1), MUMBAI vs. KIRAN ANIL BIST, MUMBAI

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ITA 687/MUM/2017Status: DisposedITAT Mumbai20 June 2018AY 2012-136 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal found no infirmity in the order of the CIT(A) as the Assessing Officer had not brought any evidence to support the presumption of commission income. The transactions were within group companies to increase turnover without movement of goods.

What were the facts?

The Assessing Officer made an addition of Rs. 62,55,235/- on account of commission, estimating it at 2% of the sales turnover. The Commissioner of Income Tax (Appeal) reduced this estimation to 0.1% of the sales turnover.

What were the issues?

Whether the estimation of commission income by the Assessing Officer was justified without supporting evidence, and if the reduction by the CIT(A) was appropriate based on similar past cases.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, ‘H’ MUMBAI

Before: Shri Joginder Singh, & Shri Manoj Kumar Aggarwal

For Respondent: Shri Bhupendra Shah
Hearing: 20/06/2018

20/06/2018 सुनवाई क� तार�ख / Date of Hearing: 20/06/2018 आदेश क� तार�ख /Date of Order:

Kiran Anil Bist आदेश / O R D E R Per Joginder Singh(Judicial Member) The Revenue is aggrieved by the impugned order dated 09/11/2016 of the Ld. First Appellate Authority, Mumbai, directing the Assessing Officer to estimate commission at the rate of 0.1% of the sales turnover which works out to Rs.3,12,764/- in stead of 2% and thereby granting relief of Rs.59,42,474/- without appreciating the detail facts, relying upon the decision in the case of Smt. Kalawati Negi, where on similar facts, the commission was estimated at the rate of 0.1% of the sales turnover.

2.

During hearing, the Ld. DR, Shri Rajat Mittal, defended the addition made by the Ld. Assessing Officer by claiming that the assessee is doing circular trading, therefore, the Ld. Commissioner of Income Tax (Appeal) wrongly followed the decision of Smt. Kalawati Negi. On the other hand, the ld. counsel for the assessee, Shri Bhupendra Shah, strongly defended the impugned order by inviting our attention to the factual finding recorded by the Ld. Commissioner of Income Tax (Appeal) by claiming that identically in the case of Smt. Kalawati Negi, the Department itself calculated the commission @0.1% of the sales turnover.

Kiran Anil Bist The assessee also furnished the copy of the assessment order dated 20/03/2015 in the case of Smt. Kalawati Negi for Assessment Year 2011-12. This factual matrix was not controverted by the Ld. DR. 2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is an individual having salary income from M/s Shirdi Industries Ltd. and also carrying out business activity in the name of Hiralal Printing, which is engaged in trading activities of MDF Board/plywood, declared income of Rs.1,93,074/- in its return filed on 20/07/2012.

Thereafter the assessee filed revised return on 29/03/2014, declaring total income of Rs.2,07,880/- which was processed under section 143(1) of the Act. The case of the assessee was selected under CASS, therefore, notice under section 143(2) and 142(1) were issued/served upon the assessee. The assessee attended the proceedings and filed the details as is evidenced from assessment order itself. The Ld. Assessing Officer while framing the assessment made addition of Rs.62,55,235/- on account of commission by estimating the same @ 2% of the sales turnover of Rs.31,27,64,170/-. The Kiran Anil Bist Ld. Commissioner of Income Tax (Appeal) has reproduced the observation made in the assessment order. Finally, the Ld. Commissioner of Income Tax (Appeal) reduced the estimated commission @ 0.1% against 2% made by the Ld. Assessing Officer. The Revenue is aggrieved and is in appeal before this Tribunal.

2.2. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, the disallowance/addition was made by the Ld. Assessing Officer merely on the presumption that the assessee is providing accommodation entries and thus must have earned some commission income. However, we find that no such evidence was brought on record by the Ld. Assessing Officer for such presumption. The assessee is an employee of one Asia Group. There is an uncontroverted finding in the impugned order that the amount of sale and purchases are exactly same and no profit or loss resulted from such purchase/sale. The assessee has admitted that the transaction of sale and purchases were within the group

Kiran Anil Bist companies only and were made at the instance of the employer to increase the turnover of the group company. It was also further admitted that there was no movement of goods and the transactions were shown of doing circular trading within the group merely to increase the turnover. The Ld. Commissioner of Income Tax (Appeal) has mentioned the case of Smt. Kalawati Negi, who was also an employee of the same group and showed similar transaction to jack up the turnover, wherein, the Ld. Assessing Officer itself made the addition on such account @ 0.1%. No contrary decision was brought to our notice. Thus, we find no infirmity in the conclusion of the Ld. Commissioner of Income Tax (Appeal), resultantly, the appeal of the Revenue is dismissed.

Finally, the appeal of the Revenue is dismissed.

This Order was pronounced in the open court in the presence of Ld. representatives from both sides at the conclusion of hearing on 20/06/2018.

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