M/s. Vishnu Webtech P. Ltd., Kolkata V. ACIT, Circle - 5, Kolkata, Kolkata

CO 82/KOL/2010

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1480 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 3 month(s) 20 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 30-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R S BISWAS
• Assessee Lawyers: DEV KR KOTHARI
• Keywords: Unexplained investment; Depreciation; Source of fund; Additional evidence; Assessment record
• Section: 143(3); 69; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI N.V.VASUDEVAN, JUDICIAL MEMBER ITA NO 1241 /KOL/ 2010 & C.O. NO.82/KOL/2010 (ARISING OUT ITA NO.1241/KOL/2010) ASSESSMENT YEAR:2005-06 ACIT, CIRCLE-5, KOLKATA, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAVAN, 8 TH FLOOR, KOLKATA 01 VISHNU WEBTECH PVT. LTD. 8, N.S. ROAD, C-3/3, GILLANDER HOUSE, 8, N.S.ROAD, KOLKATA-01 [ PAN NO. AABCV 5467 G ] / V/S . / V/S . VISHNU WEBTECH PVT. LTD. 8, N.S. ROAD, C-3/3, GILLANDER HOUSE, 8, N.S. ROAD, KOLKATA-01 ACIT, CIRCLE-5, KOLKATA P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAVAN, 8ATH FLOOR, KOLKATA /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI DEV KR. KOTHARI, FCA /BY REVENUE SHRI R.S.BISWAS, CIT-DR /DATE OF HEARING 20-10-2015 /DATE OF PRONOUNCEMENT 20-10-2015 /O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER:- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF CIT(A)-VI, KOLKATA DATED 17.03.2010 AND THE SAME IS BEING DISP OSED OF ALONG WITH THE CROSS OBJECTION FILED BY THE ASSESSEE BEING C.O NO. 82/KO L/2010. ITA NO.1241/KOL/2010 & CO 82/KOL/10 A.Y. 2005 -06 ACIT CIR-5, KOL. V. VISHNU WEBTECH (P) LTD. PAGE 2 2. THE ASSESSEE IN THE PRESENT IS A COMPANY WHICH I S ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 26.10.2005 DECLARING TOTAL INCOME OF RS.13,75,020/-. IN THE ASSESSMENT ORIGINAL COMPLETED U/S. 143(3) OF THE ACT VIDE ORDE R DATED 27.12.2007, TOTAL INCOME OF ASSESSEE WAS DETERMINED BY ASSESSING OFFICER AT RS. 39,24,108/- AFTER MAKING ADDITIONS OF RS.25,49,088/- TO THE INCOME RETURNED BY THE ASSESSEE. THE SAID ASSESSMENT WAS SUBSEQUENTLY SET ASIDE BY CIT VIDE H IS ORDER PASSED U/S 263 OF THE ACT WITH A DIRECTION TO THE AO TO RECONCILE THE EXPENDI TURE INCURRED BY THE ASSESSEE ON CONSTRUCTION WITH RESPECTIVE SOURCE OF FUNDS CLAIME D TO BE AVAILABLE WITH THE ASSESSEE DATE-WISE AND TO PASS A SPEAKING ORDER. AS PER THE DIRECTION OF CIT, THE EXPENDITURE INCURRED BY ASSESSEE ON CONSTRUCTION WAS VERIFIED B Y THE AO WITH REFERENCE TO THE CORRESPONDING SOURCES OF FUNDS CLAIMED TO BE AVAILA BLE WITH THE ASSESSEE. IN THIS REGARD, ASSESSEE FURNISHED THE RELEVANT DETAILS OF PAYMENTS AS WELL AS SOURCES OF FUNDS FOR AYS 2002-03, 2003-04 & 2004-05. IN THE DETAILS SO FURNISHED, THE SOURCE OF FUNDS WAS EXPLAINED BY THE ASSESSEE AS SHARE CAPITAL OF R S.150 LAKH, SHARE PREMIUM OF RS.150 LAKHS, INTERNAL ACCRUAL OF RS.41 LAKH, ADVAN CE OF RS.34 LAKH AND CURRENT LIABILITY OF RS.16 LAKH. IT WAS CLAIMED THAT SAID S OURCES OF FUNDS WAS SUFFICIENT TO FULLY COVER THE EXPENDITURE OF RS.3.48 CRORES INCURRED BY THE ASSESSEE ON CONSTRUCTION DURING THE YEAR UNDER CONSIDERATION. THIS CLAIM OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE AO. ACCORDING TO HIM, THE MAIN SO URCE OF FUNDS CLAIMED TO BE SHARE CAPITAL WAS RECEIVED BY THE ASSESSEE IN THE MONTH O F MARCH WHILE THE EXPENDITURE ON CONSTRUCTION WAS INCURRED BEFORE 30 TH SEPTEMBER 2004. HE HELD THAT THERE WAS THUS NO LINK BETWEEN THE SHARE CAPITAL RECEIVED BY THE ASSE SSEE AND THE INVESTMENT MADE IN THE CONSTRUCTION. CONSEQUENTLY, THE SAID INVESTMENT MAD E BY THE ASSESSEE IN CONSTRUCTION WAS TREATED BY AO AS UNEXPLAINED AND ADDITION OF RS .3.48 CRORES WAS MADE BY HIM TO THE TOTAL INCOME OF THE ASSESSEE IN THE ASSESSMENT COMPLETED U/S. 143(3) R.W.S. 263 OF THE ACT VIDE ORDER DATED 27.11.2009. 3. AGAINST THE ORDER PASSED BY AO U/S. 143(3) R.WS. 263 OF THE ACT, AN APPEAL WAS PREFERRED BY ASSESSEE BEFORE CIT(A) DISPUTING THE A DDITION OF RS.3.48 CRORES MADE BY AO ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN CONSTRUCTION. AFTER CONSIDERING ITA NO.1241/KOL/2010 & CO 82/KOL/10 A.Y. 2005 -06 ACIT CIR-5, KOL. V. VISHNU WEBTECH (P) LTD. PAGE 3 THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIALS AVAILABLE ON RECORD, LD. CIT(A) DELETED THE ADDITION MADE BY THE AO ON ACCOU NT OF ALLEGED UNEXPLAINED INVESTMENT IN CONSTRUCTION FOR THE FOLLOWING REASON S GIVEN IN HIS IMPUGNED ORDER:- I HAVE GONE THROUGH THE SUBMISSIONS AND DOCUMENTS FILED BY THE APPELLANT AND ALSO THE ORDER OF THE A.O AS SEEN FRO M THE RECORD, THE CIT- II, KOLKATA IN HIS ORDER U/S. 263 HAS ISSUED A DIRE CTION TO RECONCILE THE ISSUE OF EXPENDITURE INCURRED BY THE ASSESSEE TOGET HER WITH DATE WISE SOURCES INCOMING FUNDS AVAILABLE TO THEM AND TO PAS S A SPEAKING ORDER. AS SEEN FROM THE DETAILS OF FUN FLOW STATEMENT AND BANK ACCOUNTS FILED BEFORE ME, THE APPELLANT FILED THE SAME DETAILS BEF ORE THE ASSESSING OFFICER. ASSESSEE ALSO SUBMITTED THAT CASH FLOW STA TEMENT ALONG WITH CASH BOOK, BANK BOOKS WERE PRODUCED BEFORE THE A.O DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS. THE AO IN HIS ORDER HAS NOT POINTED OUT ANY UN- EXPLAINED CREDIT OR NEGATIVE CASH BALANCE OF THE AP PELLANT IN CASH BOOK. THE APPELLANT SUBMITTED THE DATES OF SHARE APPLICAT ION MONEY RECEIVED BY ACCOUNT PAYEE CHEQUES FORM PROMOTERS AND SHARE APPL ICANTS WHICH WERE DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. THE DETAILS FILED BEFORE ME SHOW THAT THE COST OF CONSTRUCTION WAS NET FROM TIM E TO TIME WITH THE PROMOTERS CONTRIBUTION FOR SHARE CAPITAL. AS SEEN FROM THE BOOKS OF ACCOUNTS PRODUCED BEFORE ME THE ALLOTMENT OF SHARES WAS MADE ON 07.03.2005 AGAINST SHARE CAPITAL RECEIVED IN EARLIE R YEARS AND ALSO FINANCIAL YEAR 2004-05. THE APPELLANT ALSO FILED TH E DETAILS OF BUILDING CONSTRUCTION DURING THE FYR-2003-04 AND 2004-05. TH E APPELLANT SUBMITTED THE LEDGER EXTRACT RECORD OF SHARE APPLIC ATION MONEY RECEIVED FROM ALL THE PROMOTERS. THE ASSESSING OFFICER REFERRING TO THE LETTER FIELD BY THE APPELLANT DATED 22.10.2009 HAS CONCLUDED THAT THE ASSESSEE HIMSELF ACCEPTED THAT EXPENDITURE WAS INCURRED BY THE ASSESSEE AFTER 30.0 9.2004. HOWEVER, AS SEEN FROM THE LETTER DATED 22.10.2009 THE ASSESSEE FILED DETAILS AND EVIDENCES TO SHOW THAT ALL ASSETS WERE PUT TO USE B EFORE 30.09.2004. THE APPELLANT ALSO FILED THE SUMMARY OF EXPENSES ACCOUN TED FOR AFTER 30.09.2004. AS SEEN FROM THESE DETAILS THE MAJOR PA RT OF EXPENSES WERE INCURRED OR ACTUALLY PAID BEFORE 30.09.2004. ONLY J OURNAL ENTRIES WERE MADE AFTER 30.09.2004 ON RECEIPT OF FINAL BILLS OR SETTLEMENT OF BILLS. ON VERIFICATION OF THE CONTENTS OF THE LETTER DATED 22 .10.2009, THE CONCLUSION DRAWN BY THE AO IS WITHOUT ANY EVIDENCES ON BASIS. THE A.O HAS NOT BROUGHT ON RECORD ANY INCONSISTENCIES/CASH DEFICIT/ INTRODUCTION OF UNACCOUNTED MONIES IN THE BOOKS OF ACCOUNTS. THE OB SERVATION OF THE AO THAT THE ASSESSEE HAS RECEIVED FUNDS ONLY ON 07.03. 2005 IS WITHOUT ANY BASIS OR FACT BROUGHT ON RECORD. AS SEEN FROM THE B ALANCE-SHEET THERE WAS CAPITAL WORK IN PROGRESS OF RS.2,47,72,922/- AND PR E-OPERATIVE EXPENSES ITA NO.1241/KOL/2010 & CO 82/KOL/10 A.Y. 2005 -06 ACIT CIR-5, KOL. V. VISHNU WEBTECH (P) LTD. PAGE 4 OF RS.6,49,469/- INCURRED IN EARLIER YEARS AND BROU GHT FORWARD AS CAPITAL WORK IN PROGRESS. THE EXPENDITURE INCURRED IN EARLI ER YEARS CANNOT BE ADDED AS INCOME FROM THE ASSESSMENT YEAR 2005-06 U/ S. 69 OF THE I.T. ACT. THE APPELLANT FILED THE COMPLETE DETAILS OF PAYMENT S MADE DURING THE CONSTRUCTION PERIOD AND ALSO THE RELEVANT SOURCES O F FUNDS. AS SEEN FROM THE DETAILS FURNISHED BY THE APPELLANT, AFTER 30.09 .2004 AN AMOUNT OF RS.5,50,000/- WAS INCURRED AND THERE WERE CREDITS, DISCOUNT, REBATE OF RS.8,62,951/-. THUS, NO NET EXPENDITURE WAS INCURRE D BY THE ASSESSEE. THE AO HAS NOT BROUGHT OUT ANY MATERIAL ON RECORD TO SH OW THAT THE CONSTRUCTION OF THE BUILDING HAS NOT BEEN COMPLETED BEFORE 30.09.2004. THE AO HAS ALSO ALLOWED THE DEPRECIATION AS CLAIMED BY THE APPELLANT. THE SHARE CAPITAL WAS RECEIVED BY THE APPELLANT DUR ING THE FINANCIAL YEAR 2002-03, 2003-04 & 2004-05. THIS IS EVIDENT FROM TH E FUND FLOW STATEMENT AND THE BALANCE SHEET SUBMITTED BY THE AP PELLANT FOR THE RELEVANT ASSESSMENT YEAR DURING THE COURSE OF APPEL LATE PROCEEDINGS. THE OBSERVATION OF THE A.O THAT THE ASSESSEE RECEIVED F UNDS ONLY ON 07.03.2005 IS FACTUALLY INCURRED AND THE AO IS NOT JUSTIFIED IN MAKING AN ADDITION U/S. 69 WITHOUT BRINGING ANY FACTS ON RECO RD. THE AO IS DIRECTED TO DELETE THE ADDITION MADE U/S. 69 OF THE IT ACT. THESE ROUNDS OF APPEAL ARE ALLOWED . AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE HAS P REFERRED THIS APPEAL BEFORE THE TRIBUNAL WHILE THE ASSESSEE HAS FILED ITS CO. 4. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND AL SO PERUSED THE MATERIALS ON RECORD. THE ONLY GRIEVANCE OF THE REVENUE AS PRO JECTED IN THE SOLITARY GROUND RAISED IN ITS APPEAL IS THAT THE ADDITION MADE BY A O ON ACCOUNT OF UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE IN THE CONSTRUCTION HAS BEEN DELETED BY CIT(A) BY RELYING ON THE NEW EVIDENCE FILED BY THE ASSESSE E WITHOUT GIVING ANY OPPORTUNITY TO THE AO TO VERIFY THE SAME WHICH IS C ONTRARY TO THE PROVISION OF RULE 46A OF THE IT RULES, 1962. IN ITS CO, THE ASSE SSEE-COMPANY HAS SUPPORTED THE IMPUGNED ORDER OF CIT(A) STATING THAT THERE WAS NO ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE CIT(A) AND CIT(A) HAVI NG GIVEN RELIEF TO THE ASSESSEE RELYING ON THE SAME EVIDENCE WHICH WAS AVA ILABLE BEFORE AO, THERE IS NO VIOLATION OF RULE 46A OF THE IT RULES. KEEPING I N VIEW THIS ASSERTION MADE ITA NO.1241/KOL/2010 & CO 82/KOL/10 A.Y. 2005 -06 ACIT CIR-5, KOL. V. VISHNU WEBTECH (P) LTD. PAGE 5 BY THE ASSESSEE-COMPANY IN ITS CO WHICH WAS REITERA TED BY LD. COUNSEL OF ASSESSEE, OPPORTUNITY WAS GIVEN TO LD. DR TO POINT OUT SPECIFICALLY THE ADDITIONAL EVIDENCE, IF ANY, FILED BY ASSESSEE BEFO RE CIT(A) FOR THE FIRST TIME WHICH HAS BEEN RELIED BY THE CIT(A) TO GIVE RELIEF TO THE ASSESSEE. AFTER HAVING GONE THROUGH THE RELEVANT ASSESSMENT RECORD, LD. DR HAS NOT BEEN ABLE TO POINT OUT ANY SUCH ADDITIONAL EVIDENCE FILED BY THE ASSES SEE AND RELIED UPON BY THE CIT(A) TO GIVE RELIEF TO THE ASSESSEE. LD. COUNSEL FOR ASSESSEE ON THE OTHER HAND, HAS TAKEN US THROUGH THE IMPUGNED ORDER OF CI T(A) TO SHOW THAT THERE WAS NO NEW EVIDENCE FILED BY THE ASSESSEE FOR THE F IRST TIME BEFORE CIT(A) AND THIS POSITION CLEARLY EVIDENT FROM THE ORDER OF THE CIT(A) HAS NOT BEEN REBUTTED OR CONTROVERTED OUT BY THE LD. DR. WE THEREFORE FIN D NO MERIT IN THIS APPEAL FILED BY REVENUE AND UPHOLDING THE IMPUGNED ORDER O F CIT(A), WE DISMISS THE SAID APPEAL. 5. AS A RESULT OF OUR DECISION RENDER ABOVE, UPHOLD ING THE IMPUGNED ORDER OF CIT(A) GIVING RELIEF TO THE ASSESSEE ON THE ISSU E INVOLVED IN THIS CASE, THE CO FILED BY THE ASSESSEE HAS BECOME INFRUCTOUS, THE SA ME IS ACCORDINGLY DISMISSED. 6. IN THE RESULT, APPEAL OF REVENUE AND CO OF THE ASSE SSEE BOTH ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 20/10/2015 SD/- SD/- (N.V.VASUDEVAN) (P.M.JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBE R *DKP #$% - 20/10/2015 ITA NO.1241/KOL/2010 & CO 82/KOL/10 A.Y. 2005 -06 ACIT CIR-5, KOL. V. VISHNU WEBTECH (P) LTD. PAGE 6 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE VISHNU WEBTECH P.LTD., C-3/3, GILLANDER HOUSE, 8, N.S. ROAD, KOLKATA-01 2. /REVENUE-ACIT, CIR-5, P-7, CHOWRINGHEE SQ. AAYAKAR BHAVAN, 8 TH FL, KOL-01 3. $$&' ( / CONCERNED CIT 4. ( - / CIT (A) 5. )*+ ,,&' , &' / DR, ITAT, KOLKATA 6. +-. / GUARD FILE. BY ORD ER/ , /TRUE COPY/ / $ &',