M/s. Growth Avenue Ltd., Surat V. The Dy.CIT.,Circle-1, Surat

ITA 1066/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0965 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 27-07-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 17-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Principle of natural justice; Reasonable cause; Capital expenditure
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE SHRI S. S. GODARA, JM, & SHRI MANISH BORA D, AM. ITA NO.1066 /AHD/2013 ASST. YEAR: 2004-05 GROWTH AVENUESLTD. G-6, SUPER TEX TOWER, OPP. KINNARY CINEMA, RING ROAD, SURAT. VS. DCIT, CIRCLE-1, SURAT. APPELLANT RESPONDENT PAN AAAACG8681Q AND ITA NO.1277 /AHD/2013 ASST. YEAR: 2004-05 ACIT, CIRCLE-1, SURAT. VS. GROWTH AVENUESLTD. G-6, SUPER TEX TOWER, OPP. KINNARY CINEMA, RING ROAD, SURAT. APPELLANT RESPONDENT ASSESSEE BY NONE RESPONDENT BY SHRI PRASOON KABRA, SR.DR DATE OF HEARING: 27/7/2016 DATE OF PRONOUNCEMENT: 29/7/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . ITA NOS.1066 & 1277/AHD/2013 2 THESE CROSS APPEALS FOR ASST. YEAR 2004-05 BY ASSE SSEE & REVENUE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A )-1, SURAT DATED 11.02.2013 IN APPEAL NO.CAS-1/70/2011-12, PASSED AG AINST ORDER U/S 271(1)(C) OF THE IT ACT, 1961 (IN SHORT THE ACT ) FRAMED BY DCIT,CIRCLE-1, SURAT, ON 17.03.2011. 2. BRIEFLY STATED FACTS OF THE CASES ARE THAT THE A SSESSEE IS A LIMITED COMPANY AND ASSESSMENT U/S 143(3) OF THE AC T WAS FRAMED ON 22.12.2006 AFTER MAKING ADDITION OF RS.2,,37,83, 290/- ON THE FOLLOWING :- SL. NO. PARTICULARS AMOUNT (RS.) 1. ESTIMATION OF NP RS.33,33,853/- 2. CLAIM OF EROSION IN VALUE OF SHARES/STOCK RS.3,7 6,908/- 3. CLAIM OF LATE SUBMISSION OF MARGIN CERTIFICATE, MEMBERSHIP CONTINUANCE CHARGES & NSE SETTLEMENT DUES DISALLOWED RS.69,85,929/- 4. UNEXPLAINED CASH CREDITS RS.106,05,000/- 5. DISALLOWANCE OF INTEREST RS.24,81,600/- APPEAL BY THE ASSESSEE WAS DISMISSED BY LD. CIT(A) BEING TIME BARRED. THEREAFTER WHEN THE MATTER CAME UP BEFORE T HE TRIBUNAL, IT WAS SET ASIDE TO THE FILE OF LD. CIT(A) FOR PASSING FRESH ORDER. LD. CIT(A) FRAMED FRESH ORDER ON 18.11.2009 CONFIRMING ADDITION OF RS.2,29,52,361/- AS AGAINST RS.2,37,83,290/- . THER EAFTER PENALTY ITA NOS.1066 & 1277/AHD/2013 3 ORDER U/S 271(1)(C) OF THE ACT WAS PASSED ON 17/02/ 2011 AND PENALTY OF RS.82,33,012/- WAS IMPOSED U/S 271(1)(C) OF THE ACT. FURTHER ASSESSEE WENT IN APPEAL BEFORE LD. CIT(A) AGAINST T HE ORDER U/S 271(1)(C) OF THE ACT AND GOT PART RELIEF. NOW BOTH THE ASSESSEE AND THE REVENUE ARE IN APPEAL BEFORE THE TRIBUNAL. 3. FIRST WE TAKE UP ASSESSEES APPEAL IN ITA NO.106 6/AHD/2013 WHEREIN FOLLOWING GROUNDS HAVE BEEN RAISED :- 1. ON FACTS AND CIRCUMSTANCES OF THE CASE, THE ID . CIT(A) HAS ERRED IN PARTLY CONFIRMING THE PENALTY U/S. 271(L)(C) OF THE ACT IN RESPECT OF ADDITION U/S. 68 OF THE ACT, WHICH IS ABSOLUTELY ERRONEOUS AND NEEDS TO BE DELETED IN THE INTEREST OF NATURAL JUSTICE AND EQUITY. 2. THE APPELLANT CRAVES TO ADD, AMEND, ALTER, SUBST ITUTE, MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL, IF NECESSARY, ON THE BASIS OF SU BMISSIONS TO BE MADE AT THE TIME OF PERSONAL HEARING. 4. ON THE LAST DATE OF HEARING 08.062016 THE CASE W AS FIXED FOR HEARING ON 27.7.2016. WHEN THE CASE WAS CALLED FOR HEARING NONE APPEARED ON BEHALF OF THE ASSESSEE AND NEITHER ANY ADJOURNMENT PETITION WAS FILED. THIS SHOWS THAT THE ASSESSEE IS NOT SERIOUS IN PURSUING WITH THIS APPEAL, AND THEREFORE, BY FOLLOW ING THE DECISION OF ITAT, DELHI BENCH, IN CIT VS. MULTIPLAN INDIA PVT. LTD., 38 ITD 320 (DELHI), WE DISMISS THIS APPEAL OF THE ASSESSEE IN LIMINE. ITA NOS.1066 & 1277/AHD/2013 4 5. THE ASSESSEE MAY, IF SO ADVISED, FILE AN APPLICA TION BEFORE THIS TRIBUNAL FOR RESTORATION OF ITS APPEAL AND HEARING ON MERITS BY SHOWING REASONABLE CAUSE FOR NOT APPEARING BEFORE T HE TRIBUNAL ON THE DATE OF HEARING, WITHIN LIMITATION PROVIDED IN THE INCOME-TAX ACT. THE BENCH, IF SO SATISFIED, MAY RECALL ITS ORDER AN D RESTORE THE APPEAL TO ITS ORIGINAL NUMBER FOR HEARING ON MERITS. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED IN LIMINE. 7. NOW WE TAKE UP REVENUES APPEAL IN ITA NO.1277/A HD/2013 WHEREIN FOLLOWING GROUNDS HAVE BEEN RAISED:- [1] ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A)-I, SURAT HAS ERRED IN DELETING THE PENALTY LEVIED U/S 271(L)(C) ON THE ADDITION OF RS.33,33,853/- MADE ON ACCOUNT OF ESTIMATION GP WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO SUBMIT THE DEM AND NOTICE , ORDER , COMPLETE CORRESPONDENCE WITH THE NSE AND EXACT NATU RE OF CLIENT ADVISORY SERVICES, THEREBY, CONCEALING ITS TRUE AND CORRECT PARTICULARS OF INCOME. [2] ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A)-I, SURAT HAS ERRED IN DELETING THE PENALTY LEVIED U/S 271(L)(C) ON EROSION IN VALUE OF SHARE/STOCK WITHOUT APPRECIATING THE FACT THAT THE LOSS WAS NOT ACTUALLY INCURRED BY THE ASSESSEE AS THE DIFFERENCE BETWEEN MARKET VALUE AND GP VALUE IS CLAIMED AS EROSION IN VALUE OF SHAR ES, WHICH AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS. [3] ON THE FACTS AND CIRCUMSTANCE OF THE CASE A ND IN LAW, THE LD. CIT(A)-I, SURAT HAS ERRED IN DELETING THE PENALTY LEVIED U/S 271(L)(C) ON ADDITION MADE AFTER DISALLOWING PAYMENT TO NATIONAL STOCK EX CHANGE WITHOUT APPRECIATING THE FACT THAT THE PAYMENT WAS A PENALT Y PAID TO THE NSE FOR FAILURE TO ABIDE BY THE GUIDELINES AND FOR RENEWAL OF MEMBERSHIP, SO THE CLAIM WAS NOT ALLOWABLE AND FACTS WERE WRONGLY FURN ISHED. ITA NOS.1066 & 1277/AHD/2013 5 [4] ON THE FACTS AND CIRCUMSTANCE OF THE CASE A ND IN LAW, THE LD. CIT(A)-I, SURAT HAS ERRED IN DELETING THE PENALTY LEVIED U/S 27I(L)(C) ON ADDITION MADE U/S68 AND CORRESPONDING INTEREST WITHOUT APPRE CIATING THE FACT THAT THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE DEPOSITORS BY NOT FURNISHING THE PAN, CONFIRMATION AND COPY OF ACCOUN T OF PERSONS FROM WHOM UNSECURED LOANS WERE OBTAINED. [5] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. [6] IT IS THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) MAY BE SET-SIDE AND THAT OF ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE E XTENT. 8. ALL THESE GROUNDS ARE INTER-RELATED WE WILL TAKE THEM TOGETHER. PENALTY ON FOLLOWING ADDITIONS WERE DELETED BY LD. CIT(A):- SL. NO. PARTICULARS AMOUNT (RS.) 1. ESTIMATION OF NP RS.33,33,853/- 2. CLAIM OF EROSION IN VALUE OF SHARES/STOCK RS.3,7 6,908/- 3. CLAIM OF LATE SUBMISSION OF MARGIN CERTIFICATE, MEMBERSHIP CONTINUANCE CHARGES & NSE SETTLEMENT DUES DISALLOWED RS.69,85,929/- 4. UNEXPLAINED CASH CREDITS RS.77,40,000/- 9. LD. DR SUPPORTED THE ORDER OF LD. ASSESSING OFFI CER. 10. NONE APPEARED ON BEHALF OF THE ASSESSEE. THEREF ORE, WE PROCEED TO DECIDE THE ISSUE AFTER HEARING THE LD. D R AND PERUSING THE MATERIAL ON RECORD. THROUGH THE GROUNDS OF APPEAL R EVENUE IS AGGRIEVED WITH THE DELETION OF PENALTY U/S 271(1)(C ) OF THE ACT ON ITA NOS.1066 & 1277/AHD/2013 6 VARIOUS ADDITIONS WHEREAS THE QUANTUM ADDITIONS WER E CONFIRMED BY LD. CIT(A). 11. WE OBSERVE THAT SURVEY PROCEEDINGS WERE CARRIED OUT IN THE CASE OF ASSESSEE. DURING ASSESSMENT PROCEEDINGS ASS ESSEE HAS FILED ALL THE EXPLANATIONS IN RESPECT OF MATERIAL F ACTS RELATING TO COMPUTATION OF ITS INCOME. AS AGAINST ADMISSION OF ADDITIONAL INCOME AT APPROX. RS.1.6 CRORES DURING SURVEY PROCEEDINGS, ASSESSEE HAS SHOWN ADDITIONAL INCOME OF RS.60 LACS IN THE RETURN OF INCOME FILED. ADDITION OF RS.33,33,853/- WAS MADE DUE TO LOWER GR OSS PROFIT IN THE POST SURVEY PERIOD BUT THIS ADDITION WAS NOT BASED ON ANY FACTUAL DETAILS, DOCUMENTS OR MATERIAL EVIDENCES. IN SUCH S ITUATION PENALTY CANNOT BE INVOKED FOR CONCEALMENT OF INCOME OR FURN ISHING INACCURATE PARTICULARS UNDER SECTION 271(1)(C) OF THE ACT. LD. CIT(A) HAS RIGHTLY DELETED THE SAME. WE UPHOLD HIS ORDER ON THIS ISSUE . 12. AS REGARDS IMPOSITION OF PENALTY ON THE DISALLO WANCE OF RS.3,76,908/- FOR CLAIM OF EROSION IN VALUE OF SHAR ES/STOCK, WE FIND THAT ASSESSEE WAS HOLDING EQUITY SHARES AS STOCK IN TRADE AND AT THE TIME OF CALCULATION OF CLOSING STOCK THE VALUE OF E QUITY SHARES HELD AS ITA NOS.1066 & 1277/AHD/2013 7 STOCK IN TRADE GOT ERODED DUE TO DIFFERENCE BETWEEN MARKET PRICE AND THE COST BY RS.3,76,908/-. LD. ASSESSING OFFICER SI MPLY REJECTED THIS CLAIM OF ASSESSEE OF BEING INDULGED IN THE BUSINESS OF SHARES AND DISALLOWED THE CLAIM OF EROSION IN VALUE OF SHARES/ STOCK OF RS.3,76,908/-. WE ARE OF THE VIEW THAT THERE IS NO IOTA OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS IN T HE FACTS BEFORE US. THEREFORE, LD. CIT(A) HAS RIGHTLY DELETED THE PENAL TY U/S 271(1)(C) OF THE ACT. WE UPHOLD THE SAME. 13. GOING FURTHER PENALTY WAS ALSO IMPOSED ON THE D ISALLOWANCE OF RS.61.55 LACS BEING PAYMENT TO NATIONAL STOCK EXCHA NGE (NSE). WE OBSERVE THAT THIS PAYMENT OF RS.61.55 LACS WAS MADE FOR RESTORATION OF MEMBERSHIP OF NSE WHICH WAS SUSPENDED FOR NON-PA YMENT OF DUES. THIS AMOUNT WAS CLAIMED AS REVENUE EXPENDITUR E BY THE ASSESSEE WHEREAS LD. ASSESSING OFFICER TREATED IT A S CAPITAL EXPENDITURE AND ACCORDINGLY INITIATED PENALTY PROCE EDINGS. WE ARE OF THE VIEW THAT SUCH TYPE OF EXPENDITURE WHICH GETS I NTO DISPUTE FOR THE REASON OF THEIR NATURE AS TO WHETHER THEY ARE CAPIT AL OR REVENUE, CANNOT BE CATEGORIZED UNDER THE HEAD OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS FOR INVOCATION OF PENALTY ITA NOS.1066 & 1277/AHD/2013 8 PROCEEDINGS U/S 271(1)(C) BECAUSE THEY ARE CLAIMED WITH BONA FIDE BELIEF THAT THEY ARE REVENUE IN NATURE. SIMILARLY I S THE CASE IN THIS MATTER OF CLAIM OF PAYMENT MADE FOR RESTORATION OF MEMBERSHIP OF NSE. LD. CIT(A) HAS RIGHTLY DELETED THE PENALTY IMP OSED U/S 271(1)(C) OF THE ACT ON THIS DISALLOWANCE. WE UPHOLD THE ORDE R OF LD. CIT(A) ON THIS ISSUE. 14. FURTHER DURING ASSESSMENT PROCEEDINGS ADDITION OF RS.1,06,05,000/- WAS MADE FOR UNEXPLAINED CASH CRED IT U/S 68 OF THE ACT AS THE ASSESSEE WAS UNABLE TO SUBMIT CONFIRMATI ONS IN RESPECT OF 26 PARTIES. THEREAFTER DURING APPELLATE PROCEEDINGS ASSESSEE WAS ABLE TO FILE SOME OF THE CONFIRMATIONS. WE FIND THA T LD. CIT(A) CONFIRMED THE ADDITION BECAUSE SOME OF THE CONFIRMA TIONS WERE INCOMPLETE DUE TO NON-AVAILABILITY OF COMPLETE ADDR ESSES OR SIGNATURES AVAILABLE AND SOME EVEN IF COMPLETE IN A LL RESPECT WERE CONSIDERED AS INGENUINE. 15. THEREAFTER LD. CIT(A) DEALING WITH THE APPEAL O F ASSESSEE AGAINST PENALTY PROCEEDINGS U/S 271(1)(C) OF THE AC T OBSERVED THAT THE DETAILS OF THE CONFIRMATIONS FILED AND FOUND WI TH REGARD TO THE CASH CREDIT OF RS.77.40 LACS, WHICH WERE OBTAINED IN THE MONTH OF APRIL, ITA NOS.1066 & 1277/AHD/2013 9 2004 I.E. AT THE END OF FY 2003-04, BUT WERE NOT S UBMITTED DURING ASSESSMENT PROCEEDINGS BUT FILED LATER ON DURING TH E REMAND PROCEEDINGS. JUST FOR THIS REASON THEY WERE CONSIDE RED INGENUINE AND NO OTHER FACT WAS BROUGHT ON RECORD BY THE REVENUE TO ESTABLISH THAT THE CONFIRMATIONS WERE NOT GENUINE. ACCORDINGLY, LD . CIT(A) DELETED THE PENALTY U/S 271(1)(C) OF THE ACT ON THIS IMPUGN ED ADDITION U/S 68 OF THE ACT FOR UNEXPLAINED CASH CREDIT AT RS.77.40 LACS. 16. WE HAVE PERUSED THE RECORDS AND ARE OF THE VIEW THAT IN RELATION TO CASH CREDIT OF RS.77.40 LACS ASSESSEE H AS SUBMITTED CONFIRMATION LETTERS INCORPORATING ALL DETAILS INCL UDING NAMES, ADDRESSES, PAN AND THE SAME SHOULD NOT HAVE BEEN TR EATED INGENUINE JUST BECAUSE THEY WERE AVAILABLE WITH THE ASSESSEE IN APRIL, 2004 BUT WERE NOT SUBMITTED DURING ASSESSMEN T PROCEEDINGS AND FINALLY THEY WERE SUBMITTED BEFORE THE FIRST AP PELLATE AUTHORITY. APART FROM THIS ALLEGATION FOR DELAY IN SUBMISSION OF CONFIRMATION LETTERS NO OTHER MATERIAL EVIDENCE HAS BEEN PLACED ON RECORD BY THE REVENUE TO PROVE THAT THE CASH CREDITS WERE INGENUI NE AND/OR THERE WAS ANY ANOMALY IN THE CONFIRMATION LETTERS. IN SUC H SITUATION FOR THE PURPOSE OF IMPOSITION OF PENALTY U/S 271(1)(C) OF T HE ACT, THE CASE OF ITA NOS.1066 & 1277/AHD/2013 10 REVENUE SEEMS TO BE WEAK. THEREFORE, WE ARE OF THE VIEW THAT LD. CIT(A) HAS RIGHTLY DELETED THE IMPUGNED PENALTY ON THE ADDITION OF RS.77.40 LACS. WE UPHOLD THE ORDER OF LD. CIT(A) ON THIS ISSUE. 17. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE AND THAT OF THE REVENUE BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2016 SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 29/7/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NOS.1066 & 1277/AHD/2013 11 1. DATE OF DICTATION: 28/07/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 28/07/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 29/7/16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: