DCIT CEN CIR 8(1), MUMBAI vs. CHAITALI SALES AGENCY P.LTD, THANE

order dated 31.03.2016 of the CIT(A)-50,Mumbai,the assessee has filed appeals for the above-mentioned assessment years(AY.s).The assessee company is engaged in the business of manufacturing and sale of crystal and handmade artistic glasses.As the issue involved in both the AY.s is common,so,we are adjudicating the appeals together. Effective ground of appeal is reducing the estimated addition from 4% to 0.15%. Brief Facts: 2.At the time of search M/s. JIK Industries Ltd. (JIL ) an action u/s.132 was also carried out at the premises of Dilip Jayantilal Shah(DJS) and Rajendra Jayantilal Shah(RJS). In his statement, dated 04.02.2011 DJS admitted that he was authorized signatory of M/s. Chaitali Sales Agency Pvt.Ltd. i.e.,the assessee ,that the company used to issue accommodation entries only. He further admitted to have issued accommodation bills to JIL, and two other companies. He also admitted having received commission for facilitating the bogus sale bills @ 0.02% to 0.01%. Considering the available material, the AO held that the beneficiaries would be ready to pay about 5% of the value of the bill amount, that the concerned issuing bogus bill will get about 4% of the value of the bills and the balance 1% would go to intermediaries. During the assessment proceedings,he obtained bank statements of the assessee-company from Axis Bank, Kandivali (W) Branch.The Bank statements revealed large number of credit entries provided by the assessee to different persons.During the assessment proceeedings the assessee did not comply with the notices issued by the AO. Therefore, the entire credit made

4908&10/M/16-chaitali in the above stated bank account were treated as receipts against bogus bills issued by the assessee.Accordingly, the AO assessed the income of the assessee for the AY 2009-10, 2010-11 and 2011-12 at Rs.23.04 lakhs, Rs.1.57 crores and Rs.43.92 lakhs respectively. 3.Aggrieved by the order of the AO, assessee preferred an appeal before the First Appellate Authority (FAA).Before him, it was claimed that DJS was not authorized by the assessee to carry out any transaction or operate any bank account on its behalf.The FAA called for details from the bank and held that as per the documents provided by the bank the CMD had introduced DJS as one of the directors of the company,that the company had passed a resolution authorizing DJS to operate a bank account, that the submission of the assessee made in that regard were factually incorrect, that the bank account belonged to the assessee . Later on,the assessee submitted that estimate of 4% of deposits on commissions was far away from reality.It referred to the case of Gold Star Finvest Co., delivered by the ITAT, Mumbai in its support. After considering the submission of the assessee and case of Gold Star Finvest ,the FAA estimated the income of the assessee at 0.15% of the aggregate of the value of accommo - dation entries provided by it.Accordingly, he estimated the income of the assessee for the AY 2009-10 to 2011-12 at Rs.86,419,5.92 lakhs and Rs.1.64 lakhs respectively. 4.During the course of hearing before us, the Departmental Representative (DR) relied upon the order of the AO .The Authorised Representative (AR) referred to the case of Gold Star Finvest Pvt. Ltd.(33taxmann.com 129) and Rohit Praveen Panwala (ITA/(SS)/ 608 to 612/ Ahd/ 2010 dt.31.5.2011.

5.We have heard the rival submissions and perused the material before us.We find that the assessee had not co-operated with AO during the assessment proceedings, that it was providing accomodation entries, that the AO estimated commission income of the assessee at 4% of the total deposits, that the FAA reduced the commission income and estimated the same at 0.15% of the aggregate of value of accommodation entries.In our opinion, the estimate made by AO was on higher side and had no basis. We would like to refer to the case of Gold Star Invest P. Ltd. (Supra), wherein under identical circumstances the Tribunal had estimated the commission income of the assessee @ 0.15 % of the aggregate value of the bogus bills/accommodation entries.

4908&10/M/16-chaitali