IN INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NOS. 243 TO 245/MUM/2013 : (A.Ys : 2006-07, 2010-11 & 2009-10) M/s. Alembic Securities Pvt.Ltd., Vs. DCIT, Central Circle-46, Block H, Shri Sadashiv CHS Ltd., Mumbai (Respondent) th 6 Road, Santacruz (E), Mumbai 400 055 (Appellant) PAN : AAACA7087N Assessee by : Shri Mukesh Choksi Revenue by : Shri A. Ramachandran Date of Hearing : 22/09/2016 Date of Pronouncement : 30/09/2016 ORDER PER G.S. PANNU, AM : These three appeals are filed by same assessee pertaining to assessment years 2006-07, 2009-10 & 2010-11 and involve certain common issues. Therefore, they have been clubbed and heard together and consolidated order is being passed for sake of convenience and brevity. Appeal for Assessment Year 2006-07 is taken as lead case to appreciate controversy. 2 M/s. Alembic Securities Pvt. Ltd. ITA Nos. 243 to 245/Mum/2013 ITA NO. 243/MUM/2013 (Assessment Year 2006-07) : 2. captioned appeal by assessee is directed against order passed by CIT(A)-38, Mumbai dated 30/11/2012, which in turn arises out of order passed by Assessing Officer under section 143(3) r.w.s. 153C of Income Tax Act, 1961 (in short Act ) dated 08/12/2011. 3. In this appeal, assessee has raised multiple Grounds of appeal, which read as under:- 1. On facts and circumstances of case learned. Commissioner of Income Tax (Appeals) has erred in confirming order of Assessing Officer. 2. learned. Commissioner of Income Tax (Appeals) has erred in law and in facts in not appreciating fact that order is passed by assessing officer without providing sufficient opportunity of hearing to appellant. 3. learned. Commissioner of Income Tax (Appeals) has erred in law and in facts in passing order without providing opportunity of hearing to appellant. 4. learned. Commissioner of Income Tax (Appeals) has erred in law and in facts in not appreciating fact that no evidence of valid satisfaction has been brought on record before issue of notice/s 153C of Act. 5. learned. Commissioner of Income Tax (Appeals) has erred in law and in facts by applying 2% rate of income instead of 0.15% without appreciating fact that no evidence corroborating rate of 2% has been found during & after course of search proceedings against appellant. 6. learned. Commissioner of Income Tax (Appeals) have erred in law and in facts in confirming additions made under Act amounting to Rs.5,25,700/-. 3 M/s. Alembic Securities Pvt. Ltd. ITA Nos. 243 to 245/Mum/2013 7. learned. Commissioner of Income Tax (Appeals) have erred in law and in facts in confirming income on gross receipts without reducing transfer entries amount in bank account MANAGED BY AGENTS from which no income is earned. 8. learned. Commissioner of Income Tax (Appeals) has erred in law and in facts confirming additions made by Assessing Officer at 2% on gross deposits as against 0.15% offered by appellant. 9. learned. Commissioner of Income Tax (Appeals) has erred in law and in facts in confirming act of Assessing Officer of application of rate of 2% income on entire bank deposits managed by agents as against 0.03% offered by appellant. 10. learned. Commissioner of Income Tax (Appeals) has erred in law and in facts by confirming assessment made u/s. 153C made by Assessing Officer without appreciating fact that only income which is based on evidences found as result of search can be assessed in present assessment. 11. learned. Commissioner of Income Tax (Appeals) has erred in law and in facts by confirming assessment made by Assessing Officer by ignoring facts that no new assets have been generated or emerged out of income during last 10 years even after detailed search carried out by Income Tax department. 12. learned. Commissioner of Income Tax (Appeals) has erred in law and in facts in confirming act of Assessing Officer of disallowance of business expenses against income estimated. 13. learned. Commissioner of Income Tax (Appeals) has erred in law and in facts in confirming act of Assessing Officer of levying interest u/s. 234B and 234C of Act. 4. At time of hearing, it was stated by Ld. Representative for assessee that issues raised in captioned appeals have already been decided by Tribunal in cases of sister concerns 4 M/s. Alembic Securities Pvt. Ltd. ITA Nos. 243 to 245/Mum/2013 of assessee company and in this context, reference has been made to following decisions:- (i) M/s. Goldstar Finvest Pvt. Ltd. ITA Nos.887/Mum/2012 & 2699/Mum/2013 order dated 30/11/2015. (ii) M/s. Mihir Agencies Pvt. Ltd., ITA Nos.6114-6120/Mum/2012 order dated 6/1/2016. (iii) M/s. Alliance Intermediateries and Network Pvt. Ltd., ITA Nos. 2700,2702&2701/Mum/2013 order dated 24/2/2016. (iv) Mr. Mukesh Choksi ITA Nos.833 -839/Mum/2013 order dated 04/05/2016. 5. In brief, background of dispute is that search and seizure action under section 132(1) of Act was conducted in case of several companies, whose kingpin is identified as one Mr. Mukesh Choksi. It was found in course of search that such entities were providing accommodation entries by way of share trading/ loans, etc. As assessee herein also was covered in search, assessment under section 143(3) r.w.s. 153C of Act dated 8/12/2011 was made for assessment year 2006-07, wherein total income was assessed at Rs.5,25,700/- as against returned income of Rs.NIL. Such assessment of income has been further affirmed by CIT(A), against which assessee is in appeal before us. 5.1 During course of search proceedings, Revenue had noted that for providing accommodation entries, entities like assessee, which were controlled by Mr. Mukesh Choksi were earning commission 5 M/s. Alembic Securities Pvt. Ltd. ITA Nos. 243 to 245/Mum/2013 income. In view of aforesaid, Assessing Officer concluded that group was earning commission ranging from 1.5% to 3.5% and accordingly he estimated net commission income @2%. Accordingly, based on total receipts reflected in bank account, Assessing Officer estimated commission income @2% at Rs.5,25,700/-. This action of Assessing Officer has since been upheld by CIT(A). 6. Before us, Ld. Representative for assessee submitted that similar additions were made by Assessing Officer in cases of other group concerns also, which were covered by search action carried out by Department on 25/11/2009. It is pointed out that in aforesaid decisions, Tribunal has accepted stand of assessee that commission income was liable to be assessed @0.15% of total receipts and also fact that net income was to be assessed after allowing 50% of expenses claimed. It was, therefore, contended that following decisions of Co-ordinate Benches rendered in group concerns of Shri Mukesh Choksi referred above, assessed income in this case also be directed to be computed accordingly. 7. On other hand, Ld. Departmental Representative while not disputing aforesaid precedents, sought to point out that other cases were assessed on basis of surveys conducted, whereas instant assessee was covered by search action under section 132(1) of Act. 6 M/s. Alembic Securities Pvt. Ltd. ITA Nos. 243 to 245/Mum/2013 8. In reply, Ld. Representative for assessee pointed out that even group concern cases, relied upon by him, were covered by search action and there is complete identity on facts. Therefore, it was contended that said issue has already been decided in aforesaid decisions, and same ratio is applicable in captioned appeals also. 9. We have carefully considered rival submissions. We find that similar issue had come up before Tribunal in cases of M/s. Goldstar Finvest Pvt. Ltd.(supra), M/s. Mihir Agencies Pvt. Ltd.(supra), M/s. Alliance Intermediateries and Network Pvt. Ltd.(supra) and Mr. Mukesh Choksi(supra), which have been relied upon by assessee before us. Tribunal directed that income by way of commission from business of accommodation entries being carried out by Mukesh Choksi group was liable to be assessed at 0.15% instead of 2% applied by Assessing Officer. In this context, we reproduce hereinafter paras 5 & 6 of order of Tribunal in case of M/s. Goldstar Finvest Pvt. Ltd.(supra), wherein earlier precedents have also been referred :- 5. We have gone through orders of lower authorities and orders of co-ordinate bench of Tribunal in assessee s own case and other orders relied upon by assessee. It is noted by us that identical issue had came up before Tribunal in assessee s own case for assessment year 2002-03. relevant observations from Tribunal s order are reproduced below: "12. Having, carefully examined various orders in case of different assessees' it has become amply clear that in these types of activities, brokers are only concerned with their commission on value of transactions. Now question 7 M/s. Alembic Securities Pvt. Ltd. ITA Nos. 243 to 245/Mum/2013 comes what would be reasonable percentage to commission on total turnover? assessee has also made out case that customers do not come directly to him and they come through sub- broker who also charges particular share of commission. In all judgments what has been stated is that average percentage of commission is between 0.15% to 0.25%. In case of Palresha & Co. and Kiran & Co (surpa), Tribunal has considered reasonableness of percentage of commission to be earned on turnover was at 0.1%. assessee himself has offered percentage of commission at 0.15%, which is more than percentage of commission considered to be reasonable by Tribunal in case of Palresha & Co and Kiran & Co (supra) in similar type of transactions. theory of Assessing Officer to treat entire deposit as unexplained cash credits, cannot be accepted in light of assessment orders in case of beneficiaries and also in light of fact that assessee is only concerned with commission earned on providing accommodation entries. We, therefore, of view that since assessee itself has declared commission on turnover at 0.15% which is more than percentage considered to be reasonable by Tribunal in case of Palresha & Co and Kiran & Co (supra), same should be accepted. We, accordingly, accept commission declared by assessee and set aside order of CIT (A) in this regard." 6. It is further noticed by us that this stand has been constantly accepted by Tribunal in various orders, details of which have been given by ld. Counsel, as mentioned above. We have gone through orders as enclosed in paper book filed by assessee and find that ld. AR has correctly stated that this issue has been unanimously accepted by Tribunal in various cases including case of assessee. Nothing has been brought on record by ld. DR to distinguish these cases. Therefore, respectfully following orders of Tribunal including order of Tribunal in assessee s own case in immediately preceding year, we find that ld. CIT(A) has rightly deleted addition, no interference is called for in order of ld. CIT(A), therefore, same is upheld. Grounds No.1 and 2 taken by Revenue stand dismissed. 8 M/s. Alembic Securities Pvt. Ltd. ITA Nos. 243 to 245/Mum/2013 9.1 Since it was common point between parties that appellant company before us is also part of entities controlled by Mr. Mukesh Choksi, in our view, aforesaid decisions are relevant to assess income of assessee. In this view of matter, we, therefore, set-aside order of CIT(A) and direct Assessing Officer to recompute commission income from business of providing accommodation entry in conformity with aforesaid precedents. 9.2 Before parting we may also state that while recomputing total income, Assessing Officer shall also give effect to directions of Tribunal in precedents regarding allowability of expenditure claimed. 9.3 In conclusion, we, therefore, set-aside order of CIT(A) and restore matter back to file of Assessing Officer to redetermine total income as per aforesaid directions. Needless to mention, Assessing Officer shall allow assessee reasonable opportunity of being heard before recomputing income as per law. 10. In result, appeal of assessee for assessment year 2006-07 is allowed, as above. 11. It was common point between parties that facts and circumstances in ITA Nos. 244 & 245/Mum/2013, for assessment years 2010-11 & 2009-10 are pari materia to those considered by us in ITA 9 M/s. Alembic Securities Pvt. Ltd. ITA Nos. 243 to 245/Mum/2013 No. 243/Mum/2013, for assessment year 2006-07, thus, our decision therein shall apply mutatis mutandis in these appeals also. 12. Resultantly, all appeals of assessee are allowed, as above. Order pronounced in open court on 30th September, 2016. Sd/- Sd/- (RAM LAL NEGI) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Date : 30th September, 2016 SSL Copy to : 1) Appellant 2) Respondent 3) CIT(A) concerned 4) CIT concerned 5) D.R, Bench, Mumbai 6) Guard file By Order Dy./Asstt. Registrar I.T.A.T, Mumbai M/s. Alembic Securities Pvt.Ltd. v. DCIT, Central Circle-46, Mumbai