DCIT CEN CIR 8(1), MUMBAI vs. SWISS BRAINSTORE SYSTEMS INDIA P.LTD, MUMBAI

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ITA 2774/MUM/2015Status: DisposedITAT Mumbai06 April 2017AY 2010-114 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the AO's estimation of commission income on a best judgment basis was reasonable given the assessee's non-cooperation. The reduction by the CIT(A) lacked justification, and thus the AO's estimation was restored.

What were the facts?

The assessee was subjected to assessment based on search operations, where the Assessing Officer (AO) estimated commission income at 4% of total receipts. The Commissioner of Income Tax (Appeals) reduced this percentage to 3% without substantial reasoning.

What were the issues?

Whether the CIT(A) was justified in reducing the commission percentage estimated by the AO on a best judgment basis without providing cogent reasoning.

Which sections of the Income-tax Act were involved?

Section 153C,Section 144,Section 132,Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “I” BENCH, MUMBAI

Before: SHRI D.T. GARASIA, JM & SHRI MANOJ KUMAR AGGARWAL, AM

For Appellant: Shri B.C.S.Naik, Ld. DR

Heard together (2 matters)

I.T.A. No. 2774/Mum/2015
I.T.A. No. 2775/Mum/2015

Read from the judgment's own cause title. This page is filed under one of them.

& 2775/M/2015 M/s Swiss Brainstore Systems (I) Private Limited Assessment Year 2010-11 & 2011-12 आदेश / O R D E R Per Manoj Kumar Aggarwal (Accountant Member)

1.

These are two appeals by revenue for Assessment Year [AY] 2010-11 & 2011-12 which assails the common order of Ld. Commissioner of Income tax (Appeals)-50 [CIT(A)] dated 21/01/2015. None is present for the assessee despite being provided with several opportunities and therefore, we proceed to decide the appeals on the basis of material available on record and after hearing the revenue. First we take up for AY 2010-11 where the revenue is aggrieved by relief provided by the Ld. CIT(A) qua reduction of commission percentage from 5% to 3% without there being any appearance / submissions by the assessee in this regard.

2.

Briefly stated, the assessee, being resident corporate assessee, was subjected to an assessment u/s 153C/ 144 vide Assessing Officer [AO] order dated 21/03/2013 wherein the total income of the assessee was enhanced by Rs.3,31,89,040/- as against returned income of Rs.23,28,610/- consequent to search operations u/s 132 in the case of M/s JIK Industries Private Limited on 04/02/2011. The assessee was found to have issued bogus bills to certain entities against certain commission and could not provide any information / books of accounts in response to notices issue u/s 142(1) and also failed to file any return of income pursuant to notice u/s 153C. The Ld. AO after appreciating the material available on record and after analyzing the bank transactions estimated the commission income @4% on total receipts in various Bank Accounts for Rs.82,97,26,000/- on best judgment basis which amounted to Rs.3,31,89,040/- and finalized the assessment after adding the same to the returned income of the assessee. The same was contested before Ld. CIT(A) vide order dated 21/01/2015 where the assessee failed to make any appearance and also failed to make any submissions. The Ld. CIT(A) reduced the commission percentage to 3% as against 4% as made by the Ld. AO. It is noted by the bench from calculations in original assessment order that the commission percentage & 2775/M/2015 M/s Swiss Brainstore Systems (I) Private Limited Assessment Year 2010-11 & 2011-12 taken by the Ld. AO is 4% whereas the same has wrongly been mentioned as 5% in the order of Ld. CIT(A) as well as in the grounds of appeal

s raised by the revenue and therefore, the same be taken as 4% instead of 5% for all purposes. Aggrieved, the revenue is in appeal before us and assailed the reduction of commission percentage.

3. The Ld. DR’s primary contention is that the AO made the assessment by estimating the commission percentage on the basis of material available on record and after perusing the various statements made by the parties during search operations and thereafter and appreciating the bank statements of the assessee. As the assessee never came forward to rebut the conclusions / substantiate his claim, the AO was left with no option but to estimate the same on some reasonable basis and he has done so, which is quite reasonable and fair in the circumstances. The Ld. CIT(A) reduced the commission percentage by finding that no evidences were given by the AO to adopt the commission percentage @5%. However, he reduced the commission percentage acting in the same way without providing any reasoning / justification / evidences.

4. We have heard the contentions and perused the material available on record. We agree with the various contentions of the Ld. DR that since the assessee was not forthcoming with any information, the Ld. AO was left with no option but to estimate the commission percentage on best judgment basis only and after appreciating the material available on record and he has done so. He has applied his mind to the matter and estimated the same as per his conscience and abilities. The Ld. CIT(A) reduced the same by holding that no evidences were adduced by the AO to estimate the same @5% whereas he himself reduced the commission percentage without any cogent reasoning / justification / evidences. Therefore, we do not find any infirmity in the order / findings of the Ld. AO and therefore, no hesitation in reversing the order of Ld. CIT(A) in this regard. Therefore, the commission percentage of 4% as estimated by AO are sustained whereas the relief of 1% provided by the Ld. CIT(A) is reversed. The revenue’s appeal stands allowed.

ITA No.2774 & 2775/M/2015 M/s Swiss Brainstore Systems (I) Private Limited Assessment Year 2010-11 & 2011-12 5. Similar are the facts in for AY 2011-12 where the assessee was saddled with addition of Rs.3,99,06,280/- on account of commission @4% which was reduced to 3% by the Ld. CIT(A) on similar grounds. Since, we have already decided the issue in AY 2010-2011 in preceding paragraphs, taking the same stand, we sustain the additions made by the Ld. AO and reverse the relief of 1%. The revenue’s appeal stands allowed. In nutshell, both the appeals of the revenue are allowed.

6.

Order pronounced in the open court on 06th April, 2017.

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