ASST CIT CEN CIR 13, MUMBAI vs. NARENDRA R SHAH, MUMBAI

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ITA 397/MUM/2014Status: DisposedITAT Mumbai18 January 2017AY 2008-094 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 upheld the CIT(A)'s order, finding its estimation of commission income reasonable based on previous years' decisions in the assessee's own case. The revenue's appeals were dismissed.

What were the facts?

The assessee was found to be involved in facilitating artificial bogus capital gains and providing financial accommodation entries. The Assessing Officer estimated commission on bank transactions, which was partly deleted and partly sustained by the CIT(A).

What were the issues?

The primary issue was the correctness of the estimation of commission income earned by the assessee from facilitating bogus financial entries.

Which sections of the Income-tax Act were involved?

Section 132,Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, MUMBAI

Before: SHRI C.N. PRASAD, JM & SHRI MANOJ KUMAR AGGARWAL, AM

आदेश / O R D E R -398/Mum/2014 Shri Narendra R.Shah Assessment Years 2008-09 &2009-10 Per Manoj Kumar Aggarwal (Accountant Member) 1. The captioned appeal by revenue for Assessment Year [AY] 2008-09 & 2009-10 assails common order of Ld. Commissioner of Income Tax (Appeals)-37 [CIT(A)], Mumbai dated 22/11/2013 qua relief provided to the assessee with respect to bogus hawala entries. Since, common issues are involved, we dispose-off the same by this common order for the sake of convenience and brevity. None appeared on behalf of assessee despite being provided with several opportunities and hence, we proceed to decide the issues after hearing the revenue and on the basis of material available on record. First we take appeal for AY 2008-09. ITA 397/Mum/2014 for AY 2008-09 2. Briefly stated, the assessee was resident individual and filed its return of income for AY 2008-2009 on 23/07/2010 declaring total income of Rs.2,60,210/-. Pursuant to search operation u/s 132 on Narendra R.Shah Group on 24/01/2006, the assessee was subjected to assessment u/s 143(3) r.w.s.147 of the Income Tax Act vide Assessing Officer [AO] order dated 31/03/2011 wherein the total income was assessed at Rs.2,86,25,200/-. The assessee was found to be engaged in the business of facilitating artificial bogus capital gains through the share market and hawala operations and also involved in giving various other financial accommodation entries of gift, speculation profit etc. in nature. The AO estimated commission from these bank transactions in the following manner:-

1.

No. Particulars Amount (Rs.) Rate of Estimated Commission Commission 1. Cheques issued and unidentified 24,60,29,167/- 5% 1.23.01,458/- transfers (debits) 2. Cheques deposited and unidentified 20,16,23,247/- 5% 1,00,81,162/- transfers (credits)

Similarly, an additional sum of Rs.63,38,059/-, being commission on bank entries of group concern namely ‘M/s G.R.Pandya Share Broking Ltd.’ was also added to the income of the ITA NO. 397-398/Mum/2014 Shri Narendra R.Shah Assessment Years 2008-09 &2009-10 assessee on ‘protective basis’. The same was contested before CIT(A) who noted that the assessee was continuously engaged in similar activity since AY 2000-2001 and a consolidated order was passed by its predecessor in assessee’s own case from AY 2000-01 to 2007-08 on 31/01/2011. Relying upon the same, CIT(A) deleted estimated commission on total bank credits but sustained addition of 3% on total bank debit amount against which the assessee was entitled for expenses to the extent of 20%. Similar relief was provided qua ‘protective additions’. Aggrieved, the revenue is in appeal before us.

3.

The Ld. DR while supporting the stand of AO, fairly conceded that the issue involved in the appeal has already been settled by Tribunal in assessee’s own case from AY 2000-01 to 2007-08 in to 2644/Mum/2011 order dated 06/04/2016 where Tribunal finding the stand of CIT(A) reasonable, upheld the stand of First Appellate Authority in making correct estimation of income of the assessee.

4.

We have heard the Ld. DR and perused the relevant order. We find that the Tribunal in ITA No. 2637 to 2644/Mum/2011 order dated 06/04/2016 at Para-8 has upheld the stand of CIT(A) in estimating commission incomes @3% on debit entries against which estimated expenses to the extent of 20% were allowable to the assessee i.e. net commission rate of 2.4% has been approved by the Tribunal. Therefore, there being no change in facts or circumstances of the case, following the same, we upheld the stand of CIT(A) and dismiss the revenues’ appeal. ITA 398/Mum/2014 for AY 2009-2010 5. The assessee suffered similar addition of estimated commission @5% of total bank debits and credits vide AO order dated 31/03/2011. The CIT(A) relying upon, earlier years order in assessee’s own case, restricted the same to 3% of total cheques issued against which 20% estimated expenses were available to the assessee. Such estimation of income, being already approved by Tribunal in assessee’s own case from years 2001-01 to 2007-08, we find no infirmity in the order of CIT(A) and hence dismiss the revenue’s appeal.

-398/Mum/2014 Shri Narendra R.Shah Assessment Years 2008-09 &2009-10 6. In nutshell, both the appeals filed by the revenue stands dismissed. Order pronounced in the open court on 18th January, 2017.

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