Case Law Details
Ms Inderpuri Express Couriers Pvt Ltd Vs DCIT (ITAT Mumbai)
The AO has made protective addition in the hands of the assessee towards estimated commission income derived from hawala transactions on the ground that certain incriminating materials were found in the premises of the assessee and further, one of the employees has stated that the company is involved in hawala transactions. It is also an admitted fact that substantive addition made in the hands of Shri Vishal Kalantri has attained finality in view of the order of ITAT, where the addition made by the AO has been examined in the light of incriminating material found during the course of search. Once, the substantive addition has been considered by the appellate authorities in the hands of Shri Vishal Kalantri, the protective addition made towards commission income in the hands of the assessee could not be sustained.
FULL TEXT OF THE ITAT JUDGMENT
This bunch of seven appeals filed by the revenue are directed against the common order passed by the Commissioner of Income-tax (Appeals)-48, Mumbai dated 29-07-2016 for the assessment years 2007-08 to 2013-14. Since facts are identical and issues are common, for the sake of convenience, these appeals were heard together and are disposed of by this common order.
2. The revenue has taken up more or less common grounds of appeal for all assessment years. For the sake of brevity, ground of appeal raised for AY 2007-08 in ITA No.6072/Mum/2016 are extracted below:-
“(i) On the facts and circumstances of the case and in law, the Ld’ Commissioner of Income Tax (Appeal) erred in deleting the addition of undisclosed income amounting to Rs.47,15,000/- as estimated on hawala business of transporting cash from one place to another as per modus operand! as admitted by the assessee/ without appreciating the fact that the assessing officer has rightly extrapolated the income of the assessee for the years A. Y. 2007-08 to AY. 2013-14 under consideration based on the cash amounting to Rs 82,22,200/- found during the course of search at office premise and the locker of the assessee maintained with M/s Gold Sukh Safety Vaults Ltd, which was admitted being his undisclosed commission income on hawala transaction for the period 1.4.2012 till the date of search (9.11.2O12) of the assessee?”
(ii) “On the facts and circumstances of the case and in law, the Ld’ Commissioner of Income Tax (Appeal) erred in ignoring the principal of extrapolation of income as laid down by the Hon’ble Supreme Court in the case of Eusafali 90 ITR 271?”
3. The brief facts of the case are that the assessee is a private limited company engaged in the business of courier services. A search action u/s 132 of the I.T. Act, 1961 was carried out at the office premises of the assessee. During the course of search, a locker No.575 at M/s Gold Sukh Safety Vaults Ltd, Vithalwadi, Mumbai which was operated in the name of Shri Vishal Kalantri, Managing Director of the company having total cash of Rs.82,22,200 was found. In the statement recorded u/s 132(4), Shri Vishal Kalantri, Managing Director of the company has admitted that cash found in locker was his own unaccounted income and accordingly has offered it for taxation in the return of income filed for AY 2013-14. Consequent to search, notices u/s 153A of the Act were issued for six assessment years immediately preceding the assessment year in which search took place. Later, the cases have been selected for scrutiny and during the course of assessment proceedings, the AO has made addition on the basis of estimated commission income from hawala business in the hands of Shri Vishal Kalantri, on substantive basis. The AO also made addition towards similar commission income in the hands of the assessee on protective basis on the ground that certain incriminating materials related to hawala business were found from the premises of the assessee company and further, one of the employees, Shri Daudayal Sharma had stated that the assessee company was involved in the business of hawala transactions.
4. Aggrieved by the assessment order, assessee preferred appeal before the CIT(A). Before the CIT(A), assessee stated that the AO has made addition towards estimated commission income on the basis of incriminating material found during search in the hands of Shri Vishal Kalantri on substantive basis and the said addition has been challenged by Shri Vishal Kalantri before the first appellate authority. The assessee further contended that when addition has been made on substantive basis in the hands of Shri Vishal Kalantri, protective addition made in the hands of the assessee was not sustainable. The Ld.CIT(A), after considering the submissions of the assessee, observed that the AO has made substantive addition in the hands of Shri Vishal Kalantri towards commission income earned from hawala business and protective addition in the hands of the assessee for similar commission income. The Ld.CIT(A) further observed that since substantive addition made in the hands of Shri Vishal Kalantri has been dealt with in his hands and allowed partial relief, protective addition made in the hands of the assessee cannot be sustained. Accordingly, he directed the AO to delete addition made towards estimated commission income on protective basis in the hands of the assessee. Aggrieved by the order of Ld.CIT(A), the revenue is in appeals before us.
5. The Ld.DR submitted that the issue involved in these appeals is protective addition made by the AO towards estimated commission income derived from hawala transactions. The Ld.DR further submitted that the AO has made substantive addition in the hands of Shri Vishal Kalantri, the Managing Director of the company and the said addition has been dealt with in his hands and after considering relevant submissions, partial relief has been granted. The Ld.DR further submitted that on further appeal before the ITAT, the ITAT, Mumbai Bench “F” in ITA No.6086 to 6092/Mum/2016 has considered the issue and after considering relevant facts, has upheld the findings of the Ld.CIT(A). Though the substantive addition has been considered in the hands of Shri Vishal Kalantri and such addition has been deleted partially by the ITAT, the protective addition made in the hands of the assessee needs to be examined in the light of facts gathered by the AO during assessment proceedings independently without being influenced by the order passed by the ITAT in the case of Shri Vishal Kalantri.
6. The Ld.AR for the assessee, on the other hand, submitted that since the substantive addition made in the hands of Shri Vishal Kalantri has attained finality in view of ITAT’s order, the protective addition made in the hands of assessee could not be sustained and accordingly, the Ld.CIT(A) was right in deleting addition made by the AO for all assessment years.
7. We have heard both the parties and perused the material available on record. The AO has made protective addition in the hands of the assessee towards estimated commission income derived from hawala transactions on the ground that certain incriminating materials were found in the premises of the assessee and further, one of the employees has stated that the company is involved in hawala transactions. It is also an admitted fact that substantive addition made in the hands of Shri Vishal Kalantri has attained finality in view of the order of ITAT, where the addition made by the AO has been examined in the light of incriminating material found during the course of search. Once, the substantive addition has been considered by the appellate authorities in the hands of Shri Vishal Kalantri, the protective addition made towards commission income in the hands of the assessee could not be sustained. The Ld.CIT(A), after considering relevant submissions, has rightly deleted addition made in the hands of the assessee for all assessment years under consideration. We do not find any error in the findings of Ld.CIT(A) and hence, we are inclined to uphold the findings of Ld.CIT(A) and dismiss the appeals filed by the revenue for AYs 2007-08 to 2013-14.
8. In the result, all the appeals filed by the revenue are dismissed.
Order pronounced in the open court on 16thNovember, 2018.
