ASST CIT CC 43, MUMBAI vs. WASHINGTON SOFTWARE LTD, PUNE

आयकर अपीऱीय अधिकरण, म ुंबई न्यायपीठ “जी” म ुंबई IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI सर्वश्री बी.आर.बास्करन, ऱेखा सदस्य एवं संदीप गोसाई, न्याययक सदस्य के सभऺ BEFORE S/SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER आयकर अपीऱ सं./ ITAs No.5306 to 5308/Mum/2014 and ITAs No. 5310 to 5312/Mum/2014 (निर्धारण वर्ा / Assessment Year : 2004-05, 2005-06 to 2007-08 & 2009-10 to 2011-12) बिधम/ M/s Washington Software Asstt. Commissioner of Income Tax-Central Circle -43, Ltd., Vs. Room No.659, 6th floor, 3rd floor,L-5, Mantri Park, Aayakar Bhavan, Near Tejas Soc, Kothrud, M K Road, Pune-411028 Mumbai-400020 स्थायी ऱेखा सं./ PAN : (अपीऱाथी /Appellant) .. (प्रत्यथी / Respondent) स्थामी रेखा सं./जीआइआय सं./PAN. :AACCS3502Q अपीऱाथी की ओर से / Revenue by : Ms.Anu Krisha Aggarwal प्रत्यथी की ओर से/Assessee by : Shri Prakash Jotwani सुनवाई की तारीख / Date of Hearing :10.12.2015 घोषणा की तारीख /Date of Pronouncement :10.12.2015 O R D E R PER BENCH:-

The revenue has filed these appeals challenging the orders passed by Ld CIT(A)-38, Mumbai and they relate to the assessment years 2004-05 to 2007-08 and 2009-10 to 2011-12, wherein the Ld CIT(A) had reduced the income estimated by the assessing officer from 5% of the turnover to 1% of the turnover in all the above said years.

6 others appeals 2. We heard the parties and perused the record. The assessee company is engaged in the business of software development. The revenue carried out search and seizure operations in the hands of a person named Shri Parag Mehta on 22.3.2011 and during the course of search several transactions pertaining to the assessee were found out. From the said documents it was noticed that the assessee herein was indulging in issuing bogus bills. It was noticed that the assessee has not filed return of income for AY 2004-05 and hence the assessment of the said year was reopened by issuing notice u/s 148 of the Act. Other years assessments were reopened u/s 153C of the Act. The assessee filed returns of income of all the years declaring NIL income. During the course of assessment proceedings, the assessee did not furnish the details that were called for by the assessing officer. The AO noticed that the DDIT (Inv.) has recorded a statement from the Chairman of the assessee company named Shri Sanjay D Sonawani u/s 131 of the Act on 12.04.2011, wherein he had admitted that the bills relating to non-genuine sales were issued by charging a commission @ 1% of the bill value. The AO prima facie agreed that the assessee has issued bills on receipt of commission, but he did not accept that the commission was charged @ 1%. The assessing officer, however, observed that the market enquiries made by him revealed that the rate of commission involved in such kind of transactions is not less than 5%. The AO also took the view that the assessee has helped the other persons to save tax @ 33% and hence the rate of commission could not be 1%. Accordingly he proceeded to compute the income by estimating the rate of commission @ 5% of the turnover and accordingly determined the total income of the assessee for all the years under consideration. The Ld.CIT(A), however, took the view that the assessing officer had estimated the rate of commission @ 5% on the basis of suspicion, surmises and conjectures, without bringing any material on record. He further noted that the assessee has admitted commission