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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL
Before: SHRI G.D. AGRAWALG.D. AGRAWAL & AND BEFORE SHRI G.D. AGRAWALG.D. AGRAWAL & AND SHRI ABY T. VARKEY SHRI ABY T. VARKEYSHRI ABY T. VARKEY SHRI ABY T. VARKEY
PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP :- PER G.D. PER G.D. AGRAWAL, VP AGRAWAL, VP These appeals by the assessees for the assessment years 2002- 03, 2003-04, 2004-05, 2005-06 & 2007-08 are directed against the order of learned CIT(A)-XXXII, New Delhi dated 17th February, 2012 and 5th March, 2012.
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The appeals under consideration are delayed by 43 days. It was pointed out by the learned counsel that identical issue has been considered by the ITAT in the case of group companies and the delay of 43 days has been condoned by the ITAT. Copy of the order is filed before us.
Learned CIT-DR, on the other hand, objected to the condonation of delay and she stated that no evidence is brought on record by the assessee that these companies also belonged to the S.K. Gupta group of companies. She, therefore, submitted that the delay should not be condoned.
In the rejoinder, it was pointed out by the learned counsel that in the assessment order, the Assessing Officer himself has mentioned that the assessee companies are the companies being operated and controlled by Shri S.K. Gupta.
We have carefully considered the arguments of both the sides and perused relevant material placed before us. We find that the Assessing Officer at page 19 paragraph 4.1 of his order has recorded the following finding:-
“4. Inferences: Inferences: Inferences: Inferences: i.i.i.i. It is proved beyond doubt on the basis of documentary evidences, confessional statement of Shri S.K. Gupta, the main person controlling the state of affairs of the assessee, husband of Smt. Saroj Gupta, director of the assessee company and results of the assessment that assessee is engaged in the accommodation entry business and not doing any genuine sale & purchase as claimed in the final account statements annexed with return of income.”
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Thus, the Assessing Officer himself has arrived at the conclusion after considering all the documentary evidence and the statement of Shri S.K. Gupta that he was the main person controlling the affairs of the assessee company. That the ITAT has considered the identical issue of condonation of delay of 43 days in the case of another company which is also claimed to have been controlled and operated by Shri S.K. Gupta. In the said case, i.e., in the case of M/s Konichiva Builders Pvt.Ltd. vide and others, order dated 14th February, 2014, the ITAT condoned the delay of 43 days in filing the appeals.
The facts of the assessees’ case are identical. We, therefore, respectfully following the above decision of ITAT in the cases of group concern, condone the delay of 43 days and admit the appeals.
In all these appeals, common grounds have been raised. Though as per the memorandum of appeal various grounds were raised, but, at the time of hearing before us, the learned counsel for the assessee only disputed with regard to the estimation of profit from entry business. The learned counsel pointed out that the Assessing Officer has mentioned in the assessment order that the assessee companies are one of the companies which are being operated and controlled by Shri S.K. Gupta and the Assessing Officer estimated 2% net profit from the accommodation entries given by the assessee. He pointed out that the issue of other companies of the same group has already been decided by the ITAT wherein the ITAT set aside the matter to the file of the Assessing Officer for allowing the deduction of the expenditure incurred by the assessee for earning of commission income. Copies of the orders are filed before us.
Learned CIT-DR, on the other hand, relied upon the orders of authorities below and she stated that the estimation of 2% of the profit
4 ITA-3205/D/2012 & 4 others from accommodation entry business is quite fair and reasonable and no further deduction for any expenditure incurred is to be allowed. The 2% is taken by the Assessing Officer as net income and not the gross commission. She further submitted that even if the ITAT is of the opinion that some further deduction for the expenditure incurred is to be allowed, then some estimated deduction say .25% can be allowed as a deduction instead of setting aside the matter to the file of the Assessing Officer.
We have considered the rival submissions and have perused the relevant material placed before us. We find that the ITAT, in the case of group concern i.e. in the case of M/s Konichiva Builders Pvt.Ltd. in cited above, held as under:-
“11. In this case the assessee company’s Director has agreed that the commission was to the tune of 1.5% to 2%. Hence, estimation of commission income @ 2% cannot be disputed. However, at the same time it has also been submitted in the same statement that the assessee has to incur the expenditure on account of salary, rent bank charges, conveyers, telephone, water and electricity. However, it is also settled that mere submission that expenditure has been incurred cannot lead to allowance of expenditure. Assessee has to prove with cogent material that the expenditure has been incurred to earn the income. In these circumstances we remit the issue to the file of the AO. The Assessing Officer shall examine the aspect of allowance of expenditure on the basis of cogent materials to be submitted by the assessee.”
Since the facts of the appeals before us are identical, we deem it proper to respectfully follow the above decision of the ITAT and set aside the matter to the file of the Assessing Officer for allowing the deduction for expenditure incurred by the assessee for earning of commission income in the light of the above direction of the ITAT.
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With regard to the ground No.5 raised by the assessee in the case of M/s Shark Communication Pvt.Ltd. of addition of `10,00,000/- on account of alleged sales to M/s Reliance Industries Ltd., it is observed that the said issue is covered in favour of the Revenue by the earlier decision of ITAT dated 14th February, 2014 (supra) passed in the case of the group concern. The ITAT, in the aforesaid order, held as under:-
“30. We have heard both the counsel and perused the records. We find that authorities below on the facts and circumstances of the case have held that the statement/affidavit of the assessee after two months of the search was an after thought and was not backed by necessary evidences about genuine and non-genuine business. During the appellate proceedings the assessee had not been able to counter any of the findings of the authorities below with suitable evidence. We further note that the addition has been made only on protective basis. In this regard, ld.CIT’s reliance upon the case law from the Apex Court in the case of Lalji Haridas v. ITO 43 ITR 387 (Supra) is germane. In these circumstances, we do not find any infirmity in the order of the ld.CIT(A), accordingly, we uphold the same.”
Respectfully following the above decision of ITAT in the case of group concern, we uphold the impugned order of learned CIT(A) on this issue and dismiss ground No.5 of the assessee’s appeal.
In the result, the appeals of M/s Swen Television Limited are deemed to be allowed for statistical purpose, while the appeal of M/s Shark Communication Private Limited is deemed to be partly allowed for statistical purposes. Decision pronounced in the open Court on 17.11.2015. Sd/- Sd/- (ABY T. VARKEY) (ABY T. VARKEY (G.D. AGRAWAL G.D. AGRAWAL) (ABY T. VARKEY (ABY T. VARKEY G.D. AGRAWAL G.D. AGRAWAL JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK.
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