Income Tax Appellate Tribunal - MumbaiKisan Agro Mart P. Ltd., Mira Road vs Pr. Cit-1, Mumbai on 10 June, 2022आयकर अपील य अ धकरण\n                                    मुंबई पीठ "एच "\n                       ी  वकास अव थी,  या यक सद य एवं\n                       ी गगन गोयल, लेखा सद य के सम&\n                     IN THE INCOME TAX APPELLATE TRIBUNAL\n                          MUMBAI BENCH "H", MUMBAI\n                BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER &\n                   SHRI GAGAN GOYAL, ACCOUNTANT MEMBER\n                        आअसं.936/म/ुं 2021 ( न.व. 2011-12)\n                       ITA NO.936/MUM/2021(A.Y.2011-12)\n\n Kisan Agro Mart Private Limited,\n604, A, Chandresh Arcade,\nLaxmi Park, Lodha Road,\nMira Road (East) 401 107.\nPAN: AAECK-0252F                                        ...... अपीलाथ- /Appellant\n\nबनाम Vs.\nThe Principal Commissioner of Income Tax,\nMumbai -1,\nAaykar Bhavan, M.K.Road,\nMumbai 400 020                                           .....       . तवाद /Respondent\n\n             अपीलाथ- 0वारा/ Appellant       by : Shri K. Gopal\n             . तवाद 0वारा/Respondent by        : Shri Ajay Chandra\n      सन\n       ु वाई क1  त थ/ Date of hearing                            :       17/03/2022\n      घोषणा क1  त थ/ Date of pronouncement                       :       10/06/2022\n\n                                     आदे श/ ORDER\n\n PER VIKAS AWASTHY, JM:This appeal by the assessee is directed against the order of Principal\nCommissioner of Income Tax, Mumbai -1 dated 31/03/2021 passed undersection 263of the Income Tax Act, 1961 [in short 'the Act'] for the assessment\nyear 2011-12.2ITA NO.936/MUM/2021(A.Y.2011-12)2.    Shri K. Gopal appearing on behalf of the assessee submitted that the\nPCIT has erred in assuming jurisdiction undersection 263of the Income Tax\nAct, 1961 [in short 'the Act'] holding that the Assessing Officer ought to have\nmade addition in respect of payment of commission @ 3% undersection 69Cof the Act. The ld.Counsel for the assessee submitted that assessment for\nassessment year 2011-12 in the case of assessee was reopened and notice\nundersection 148of the Act dated 28/03/2018 was issued to the assessee.\nDuring the period relevant to the assessment year under appeal, the assessee\ncompany had allotted 20,80,000 shares having face value of Rs.1/- each at a\npremium of Rs.99/- per share to Shri Ramesh Jain and Shri Rishabh Jain. Both\nthe aforesaid persons were directors and the only shareholder of the assessee\ncompany. In reassessment proceedings the Assessing Officer held that the\nshare capital of Rs.20,80,000/- and share premium of Rs.19,60,20,000/-\nintroduced by the shareholders cum Directors of the company in assessment\nyear 2011-12 were in fact their unaccounted money received from M/s.\nSuvidha Trading Pvt. Ltd. The Assessing Officer treated the aforesaid amount\nof share capital and share premium as unexplained cash credit undersection\n68of the Act . The assessee against the assessment order dated 24/12/2018\npassed undersection 143(3)r.w.s. 147 of the Act filed appeal before the\nCIT(A).   During the pendency of appeal proceedings, the PCIT issued notice\nundersection 263of the Act dated 08/03/2021 on the presumption that\ntransaction of accommodation entries do entail unaccounted payment of\ncommission, therefore, the Assessing Officer ought to have been made\ndisallowance undersection 69Cof the Act towards such unaccounted\ncommission and should have brought to tax such commission under section.\n69C of the Act. Since, the Assessing Officer has failed to invoke the provisions3ITA NO.936/MUM/2021(A.Y.2011-12)\n\n\n\n\nofsection 69Cof the Act, the assessment order is erroneous and prejudicial to\nthe interest of Revenue. The PCIT on wrong assumption of facts issued notice\nundersection 263of the Act and passed the impugned order. The ld.Counsel\nfor the assessee submitted that the findings of PCIT that the assessee must\nhave received commission are purely based on surmises and conjectures.\nThere is no document on record to suggest that the assessee company has\nreceived commission.       During the assessment proceedings it was held by\nAssessing Officer that Shri Ramesh Jain and Shri Rishabh Jain the directors of\nthe assessee company and the only shareholders have introduced their\nunaccounted money by way of             share capital and share premium, not\nadmitting but presuming that it is the unaccounted money of the directors cum\nshareholders, there would be no reason for charging commission from them\nas they are the only shareholders and directors of assessee company.The PCIT\nhas failed to point out as to what evidences were left out by the Assessing\nOfficer indicating that there was payment of commission. The ld.Counsel for\nthe assessee asserted that PCIT in exercise of revisional powers wants to thrust\nhis opinion on the Assessing Officer. The opinion of the PCIT is solely based on\nsurmises and conjectures without there being any documentary evidence. The\nld.Counsel for the assessee in support of his submissions placed reliance on the\ndecisions rendered in the case ofCIT vs. Gabriel India Ltd., 230 ITR 108 (Bom).3.    Per contra, Shri Ajay Chandra representing the Department vehemently\ndefended the impugned order. The ld.Departmental Representative submitted that\nthe Assessing Officer while passing the assessment order failed to consider the fact\nthat the transaction of accommodation entries entails payment of commission. The\nld.Departmental Representative further pointed that commission charges was not\nsubject matter of appeal by the assessee before CIT(A). It is only the issues which are4ITA NO.936/MUM/2021(A.Y.2011-12)\n\n\n\n\nsubject matter of appeal before the CIT(A) that could not be raised in revisional\nproceedings.    The ld.Departmental Representative prayed for up holding the\nimpugned order and dismissing appeal by the assessee.4.    We have heard the submissions made by rival sides and have examined the\norders of authorities below. The Assessing Officer passed the assessment order\ndated 24/12/2018 consequent to reopening of the assessment. A perusal fo the\nreasons recorded for reopening [at page -6 of the paper book] shows that the\nassessment of assessee company was reopened as the Jain Family was involved in\nintroducing their unaccounted money by multi layering the transaction. Shri Ramesh\nJain and Shri Rishabh Jain, Directors of the assessee company had received money\nfrom M/s. Suvidha Trading Pvt. Ltd. The same money was passed on to the assessee\nby way of capital and share premium which was further transferred to M/s. Crescent\nEntertainment & Tourism Ltd. for further investment in Khandesh Central Mall. The\nAssessing Officer in categorical terms held that the amount paid by Shri Ramesh Jain\nand Shri Rishabh Jain as share capital /share premium during the period relevant to\nthe assessment year under appeal is treated as unexplained cash credited undersection 68of the Act. The findings of Assessing Officer are subject matter of appeal\nin separate proceedings, hence, we refrain to comment on the merits of the addition\nin proceedings arising undersection 263of the Act. Since, it was purportedly\nunaccounted money of the Directors cum only Shareholders of the assessee\ncompany,       charging   commission from own shareholders and directors for\nregularizing their unaccounted money is preposterous. Even otherwise, the PCIT has\nnot referred to any documentary evidence which has been left out by the Assessing\nOfficer which could suggest that the assessee has charged commission from the\nDirectors/Shareholders.    The entire findings of the PCIT are solely based on\npresumption. The PCIT has even assumed the rate of commission at 3% without\neven referring to any documents on record which suggest the rate of commission\ncharged if any on such transaction of accommodation entries. The twin conditions5ITA NO.936/MUM/2021(A.Y.2011-12)\n\n\n\n\nnecessary for exercising revisional jurisdiction i.e. the assessment order should be\nerroneous and prejudicial to the interest of Revenue are missing in the instant case.\nWhat appears from the impugned order is that the PCIT wants to thrust upon his\nown opinion that the assessee must have charged commission for providing\naccommodation entries. The powers conferred undersection 263of the Act are no\nunfettered and hence, does not give liberty to the PCIT to make additions merely on\npresumptions without there being any cogent material on record. We find merit in\nthe appeal by the assessee,     consequently, the impugned order is quashed and\nappeal by the assessee is allowed.Order pronounced in the open court on Friday       the 10th day of June, 2022.Sd/-                                       Sd/-\n                ( GAGAN GOYAL )                           (VIKAS AWASTHY)\n      लेखा सद य/ACCOUNTANT MEMBER                 या यक सद य/JUDICIAL MEMBER\nमुंबई/ Mumbai, 5दनांक/Dated 10/06/2022\nVm, Sr. PS(O/S)\n  त ल प अ े षतCopy of the Order forwarded to :\n\n1.   अपीलाथ-/The Appellant ,\n2.   . तवाद / The Respondent.\n3.   आयकर आय6\n            ु त(अ)/ The CIT(A)-\n4.   आयकर आय6\n            ु त CIT\n5.    वभागीय . त न ध, आय.अपी.अ ध., मब\n                                    ु ंई/DR, ITAT,\n     Mumbai\n6.   गाड9 फाइल/Guard file.\n\n                                                  BY ORDER,\n//True Copy//\n                                        (Dy./Asstt. Registrar)\n                                        ITAT, Mumbai