Poonawalla Finvest & Agro Pvt. Ltd., Pune V. ACIT, Pune

ITA 1111/PUN/2010

• Counselvise Citation: 111124514 RSA 2010
• Duration Of Justice: 2 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 31-10-2012
• Assessment Year: 1999-2000
• Appeal Filed On: 05-08-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Unexplained investment
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NOS. 1110 & 1111/PN/2010 (ASSESSMENT YEARS: 1999-2000 & 2001- 2002) POONAWALLA FINVEST & AGRO PVT. LTD. ( EARLIER KNOWN AS THEUR AGRO PVT. LTD. ) 16 B/ 1, SAROSH BHAVAN DR. AMBEDKAR ROAD, PUNE 411 001 PAN : AAACT 6842 Q . APPELLANT VS. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 4, PUNE . RESPONDENT APPELLANT BY : MR. SUNIL PATHAK RESPONDENT BY : MS. ANN KAPTHUAMA DATE OF HEARING : 18-03-2013 DATE OF PRONOUNCEMENT : 30-04-2013 ORDER PER G. S. PANNU, AM THE CAPTIONED TWO APPEALS HAVE BEEN PREFERRED BY T HE ASSESSEE AND INVOLVE A COMMON ISSUE, THEREFORE, THEY HAVE BEEN C LUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED F OR THE SAKE OF CONVENIENCE AND BREVITY. 2. IN BOTH THE APPEALS, THE COMMON ISSUE RELATES TO AN ADDITION MADE BY THE ASSESSING OFFICER BY INVOKING SECTION 69B OF TH E INCOME TAX ACT, 1961 (IN SHORT THE ACT) AMOUNTING TO RS. 2,25,741/- AN D RS. 17,81,989/- RESPECTIVELY FOR THE ASSESSMENT YEARS 1999-2000 & 2 001-02. IN BOTH THE APPEALS, THE ADDITION UNDER SECTION 69B HAS BEEN MA DE ON THE GROUND THAT THE ASSESSEE HAD UNDER-VALUED THE PURCHASE PRICE OF HORSES IMPORTED FROM ABROAD. THE CIT(A) IN BOTH THE ASSESSMENT YEARS VID E SEPARATE BUT SIMILARLY WORDED ORDERS DATED 17.06.2010, HAS UPHELD THE STAN D OF THE ASSESSING OFFICER. NOT BEING SATISFIED BY THE ORDER OF CIT(A) , ASSESSEE IS IN FURTHER APPEAL BEFORE US. ITA NOS. 1110 & 1111/PN/2010 POONAWALLA FINVEST & AGRO PVT. LTD. A.YS. 1999-2000 & 2001- 2002 3. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT T HE FACTS AND CIRCUMSTANCES IN BOTH THE ASSESSMENT YEARS LEADING UP TO THE PRESENT DISPUTE ARE IDENTICAL AND STAND ON SIMILAR FOOTING. THE FAC TS PERTINENT TO ADJUDICATE THE CONTROVERSY CAN BE UNDERSTOOD AS FOLLOWS. THE ASSES SEE IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND IS INTER-ALIA ENGAGED IN THE BUSINESS OF BREEDING AND SELLING OF RACE HORSES. IN THE COURSE OF SUCH ACTIVITY, ASSESSEE WAS FOUND TO HAVE IMPORT ED CERTAIN HORSES. ON THE BASIS OF INFORMATION WITH THE DEPARTMENT OF REVENUE INTELLIGENCE (DRI) AUTHORITIES, IT WAS NOTICED THAT THE ASSESSEE HAD U NDER-INVOICED SOME OF THE IMPORTS FROM U.K. AND IRELAND. IN THIS CONNECTION, THE HIGH COMMISSION OF INDIA, LONDON, AFTER MAKING ENQUIRIES WITH IRISH CU STOMS AUTHORITIES SENT A REPORT DATED 07.03.2003, A COPY OF WHICH HAS BEEN P LACED IN THE PAPER BOOK AT PAGES 67 TO 69. THE SAID REPORT REVEALED THAT IN RESPECT OF THREE HORSES IMPORTED DURING THE PERIOD RELEVANT TO THE ASSESSME NT YEAR 2001-02 AND ONE HORSE IMPORTED DURING THE PERIOD RELEVANT TO THE AS SESSMENT YEAR 1999-2000, THE VALUE DECLARED BY THE ASSESSEE TO THE INDIAN CU STOMS (BASED ON THE PURCHASE PRICE) WAS LOWER THAN THE VALUE DECLARED T O THE IRISH CUSTOMS. ACCORDINGLY, THE DIFFERENCE AMOUNTING TO RS. 2,25,7 41/- FOR THE ASSESSMENT YEAR 1999-2000 AND RS. 17,81,989 FOR THE ASSESSMENT YEAR 2001-02 HAS BEEN TREATED AS AN INVESTMENT NOT DISCLOSED IN THE BOOKS OF ACCOUNTS, AND THE SAME HAS BEEN ADDED TO THE TOTAL INCOME BY INVOKING SECT ION 69B OF THE ACT. THE CIT(A) HAS ALSO UPHELD THE AFORESAID ACTION OF THE ASSESSING OFFICER, AND ACCORDINGLY THE ASSESSEE IS IN FURTHER APPEAL BEFOR E US. 4. IN THE ABOVE BACKGROUND, THE RIVAL COUNSELS HAVE MADE THEIR SUBMISSIONS. ON BEHALF OF THE ASSESSEE, DETAILED PA PER BOOKS HAVE BEEN FILED WHEREIN THE CORRESPONDENCE MADE WITH THE LOWER AUTH ORITIES AS WELL AS COPY OF PROCEEDINGS BEFORE THE CUSTOMS AUTHORITIES, INCL UDING THOSE BEFORE THE CUSTOM & CENTRAL EXCISE SETTLEMENT COMMISSION HAVE ALSO BEEN PLACED ON ITA NOS. 1110 & 1111/PN/2010 POONAWALLA FINVEST & AGRO PVT. LTD. A.YS. 1999-2000 & 2001- 2002 RECORD. RIVAL SUBMISSIONS HAVE BEEN HEARD AND RELEV ANT MATERIAL HAS BEEN PERUSED. 5. BEFORE US, THE PERTINENT POINT RAISED BY THE LEA RNED COUNSEL FOR THE ASSESSEE IS TO THE EFFECT THAT THE IMPUGNED ADDITIO N IS BEYOND THE SCOPE AND PURVIEW OF SECTION 69B OF THE ACT. ACCORDING TO THE LEARNED COUNSEL, IN THE PRESENT CASE THE ADDITION HAS BEEN MADE BY THE ASSE SSING OFFICER PRIMARILY FOR THE REASON THAT THE ASSESSEE HAD AGREED TO PAY CUSTOMS DUTY ON THE VALUE OF IMPORTS, WHICH IS HIGHER THAN THE ACTUAL IMPORT/ PURCHASE PRICE PAID BY THE ASSESSEE. ACCORDING TO THE ASSESSEE, CUSTOMS DUTY I S LEVIED WITH RESPECT TO THE VALUE OF GOODS AS DETERMINED IN TERMS OF THE CU STOMS TARIFF ACT, 1975 AND THE RELEVANT RULES AND ORDERS AND SO FAR AS THE APP LICATION OF SECTION 69B OF THE ACT IS CONCERNED, THE SAME REQUIRES THE ASSESSI NG OFFICER TO ESTABLISH THAT THE ASSESSEE ACTUALLY EXPENDED MONEY OVER AND ABOVE THE AMOUNT DECLARED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. ACCORDING TO THE LEARNED COUNSEL, IN THE PRESENT CASE THE ENTIRE PROCEEDINGS BEFORE THE CUSTOMS AUTHORITIES MERELY REVEAL THAT FOR THE PURPOSE OF PAYMENT OF CU STOMS DUTY, ASSESSEE AGREED TO A HIGHER VALUE THAN THE AMOUNT OF PURCHAS E PRICE RECORDED IN ITS BOOKS OF ACCOUNT. IT IS CONTENDED THAT THE AFORESAI D DOES NOT ESTABLISH THAT THE ASSESSEE HAS ACTUALLY PAID FOR THE IMPORT OF HORSES OVER AND ABOVE THE AMOUNT DISCLOSED IN THE ACCOUNT BOOKS. IN THIS CONN ECTION, A REFERENCE HAS BEEN MADE TO THE FOLLOWING EXTRACT FROM THE REPORT OF THE HIGH COMMISSION OF INDIA, LONDON DATED 07.03.2003, WHICH APPEARS AT PA GE 69 OF THE PAPER BOOK : - 17. INDIA (PET NAME) PIEBALD MARE 93 (NON THOROUGH BRED). THIS HORSE WAS STABLED IN IRELAND PRIOR TO BEING EXPORTED. THE LIVERY STABLE HAS INFORMED THIS BUREAU THAT THE HORSE WAS STABLED ON BEHALF OF MRS. SIMONE POONAWALLA, WHO HAD BOUGHT THE HORSE AT LOCAL AUCTION. THIS HOR SE WAS BOUGHT AS A FOSTER MARE ONLY. WE HAVE BEEN UNABLE TO ESTABLISH THE SEL LING PRICE. HOWEVER AS THIS HORSE IS A NON-THOROUGHBRED, THE VALUE WHICH W AS DECLARED TO CUSTOMS I.E. IR 3.992 COULD NOT BE DISPUTED. ITA NOS. 1110 & 1111/PN/2010 POONAWALLA FINVEST & AGRO PVT. LTD. A.YS. 1999-2000 & 2001- 2002 6. IT IS SOUGHT TO BE MADE OUT THAT THE REPORT ITSE LF SUGGESTS THAT THE INFORMATION DOES NOT ESTABLISH THE ACTUAL SELLING PRICE AND THEREFORE IT FOLLOWS THAT ADOPTION OF HIGHER VALUE FOR THE PURPOSE OF CH ARGING OF CUSTOMS DUTY DOES NOT LEAD TO A CONCLUSION THAT THE ASSESSEE HAD ACTU ALLY PAID A PRICE HIGHER THAN THAT RECORDED IN THE BOOKS OF ACCOUNT. THE LEA RNED COUNSEL HAS FURTHER REFERRED TO THE DECISION OF ITAT, JAIPUR BENCH IN T HE CASE OF ACIT VS. SWAMI COMPLEX PVT. LTD. (2007) 111 TTJ (JP) 531 TO POINT OUT THAT MERELY BECAUSE VALUATION FOR THE PURPOSE OF PAYMENT OF CUSTOMS DUT Y WAS HIGHER, IT WOULD NOT LEAD TO AN INFERENCE THAT THE ASSESSEE HAD MADE ANY INVESTMENT OVER AND ABOVE THE STATED AMOUNT FOR THE PURPOSES OF SECTION 69B OF THE ACT. EXPLAINING THE DIFFERENCE OF RS. 2,25,741/- FOR THE ASSESSMENT YEAR 1999-2000, THE LEARNED COUNSEL POINTED OUT THAT THE AMOUNT OF 3992 IRISH POUNDS (IN SHORT IRP) REPORTED BY THE HIGH COMMIS SION OF INDIA, LONDON WAS THE VALUE DECLARED TO THE IRISH CUSTOMS AUTHORITIES FOR TWO HORSES, WHEREAS ONLY ONE HORSE WAS ACTUALLY SHIPPED TO INDIA, AND A CCORDINGLY INVOICE OF ONLY IRP 1093 WAS RAISED, AND THEREFORE, ASSESSEE PAID C USTOMS DUTY ON THE AMOUNT ACTUALLY PAID FOR IMPORT OF ONE HORSE WHICH WAS ASSESSED AT RS. 1,66,017/-. THE LEARNED COUNSEL POINTED OUT THA T DURING INVESTIGATIONS BY THE DRI, ASSESSEE WAS TOLD THAT THE VALUE OF IMPORT SHOULD HAVE BEEN IRP 3992 AND NOT IRP 1093 AND ACCORDINGLY, ASSESSEE PAID THE DIFFERENTIAL CUSTOMS DUTY. IT WAS POINTED OUT THAT THE AFORESAID POSITION WOULD SHOW THAT THERE WAS NO MATERIAL TO SAY THAT THE ASSESSEE HAS ACTUALLY PAID MORE THAN THE STATED PRICE ENTERED IN ITS ACCOUNT BOOKS AT RS. 1, 66,017/-. 7. SIMILARLY, WITH REGARD TO THE ADDITION OF RS. 17 ,81,989/- FOR ASSESSMENT YEAR 2001-02, WHICH IS BASED ON THE FOLLOWING REPOR T OF HIGH COMMISSION OF INDIA, LONDON :- 1. SALEEMAH 93 CH M BY STORM BIRD EX RETIRE, SOLD BY AUCTION TO IRISH BLOODSTOCK AGENT AT GOFFS BLOODSTOCK SALES, IRELAND IN NOVEMBER 2000 FOR IR ITA NOS. 1110 & 1111/PN/2010 POONAWALLA FINVEST & AGRO PVT. LTD. A.YS. 1999-2000 & 2001- 2002 3,000 (PRICE EXCLUDES 5% AUCTION FEE). EXPORTED F ROM SHANNON AIRPORT ON 14/01/2001. 2. TIME AND TIME 93 CH M BY SOVIET STAR EX CIRCUS F EATHERS, SOLD BY AUCTION IN IRISH BLOODSTOCK AGENT AT GOFFS BLOODSTO CK SALES, NOVEMBER 2000 FOR IR 3.000 (PRICE EXCLUDED 5% AUCTION FEE). EXP ORTED FROM SHANNON AIRPORT ON 14/01/2001. 3. PERINTHOS 95 B M BY MTOTO EX PERSIAN LILAC, SOLD BY AUCTION TO IRISH BLOODSTOCK AGENT AT GOFFS BLOODSTOCK SALES, NOVEMBE R 2000 FOR IR9000 (PRICE EXCLUDES 5% AUCTION FEE) EXPORTED FROM SHANN ON AIRPORT ON 14/01/2001. THE LEARNED COUNSEL EXPLAINED THAT THE ASSESSEE HAD ASSESSED THE AFORESAID THREE PURCHASES AT RS. 16,55,663/- FOR THE PURPOSE OF PAYMENT OF CUSTOMS DUTY BASED ON ACTUAL PRICE PAID OF IRP 18100. AS PE R THE INFORMATION OBTAINED BY DRI, THE VALUE WAS ASSESSABLE AT IRP 43,000 I.E. INDIAN RS. 34,37,652/- (WHICH WAS THE AUCTION PRICE) INSTEAD OF RS.16,55,6 63/-, DECLARED BY THE ASSESSEE BASED ON THE INVOICE PRICE. IT IS SUBMITT ED THAT THOUGH THE ASSESSEE PAID ONLY RS. 16,55,663/- WHICH IS EQUIVALENT TO IR P 18100, THE SAME WAS LOWER THAN THE AUCTION PRICE OF IRP 43,000, NOTED B Y THE DRI. IT HAS BEEN EXPLAINED THAT M/S KILSHANNING STUD HAD PURCHASED T HE THREE HORSES IN AN AUCTION FOR IRP 43,000 FOR A KUWAITI CLIENT, BUT TH E DEAL FELL THROUGH AND M/S KILSHANNING STUD OFFERED THE HORSES TO THE ASSESSEE , AND THE SALE PRICE WAS NEGOTIATED FOR A DISCOUNTED PRICE OF IRP 18100, WHI CH WAS CONFIRMED BY THE SELLER VIDE LETTER DATED 02.12.2000, COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK AT PAGE 111. THE ASSESSEE HAD DECLARED T HE ASSESSABLE VALUE FOR CUSTOMS DUTY AT RS. 16,55,663/- EQUIVALENT TO THE I NVOICE VALUE OF IRP 18100. THOUGH SUBSEQUENTLY ASSESSEE AGREED TO PAY CUSTOMS DUTY ON THE PRICE OF IRP 43,000, AS MANDATED BY DRI SO, HOWEVER, IT WAS POINTED OUT THAT THE SAME DOES NOT SHOW THAT THE ASSESSEE HAD PURCHASED THE AFORESAID HORSES FOR MORE THAN THE STATED PRICE, SO AS TO MAKE AN AD DITION UNDER SECTION 69B OF THE ACT. ON THE BASIS OF AFORESAID, IT IS SUBMITTED THE MATERIAL AND THE EVIDENCE SUGGEST THAT NO INVESTMENT HAS BEEN MADE B Y THE ASSESSEE IN ITA NOS. 1110 & 1111/PN/2010 POONAWALLA FINVEST & AGRO PVT. LTD. A.YS. 1999-2000 & 2001- 2002 PURCHASE OF THE AFORESAID HORSES OVER AND ABOVE THE AMOUNTS RECORDED IN THE BOOKS OF ACCOUNT THOUGH FOR THE PURPOSE OF PAYMENT OF CUSTOMS DUTY, THE ASSESSEE HAD CHOSEN TO ACCEPT HIGHER ASSESSABLE VAL UES OF THE RESPECTIVE PURCHASES PRIMARILY TO AVOID LITIGATION WITH CUSTOM S AUTHORITIES. ACCORDINGLY, THE ADDITION FOR BOTH THE YEARS IS SOUGHT TO BE ASS AILED. 8. ON THE OTHER HAND, THE LEARNED DR APPEARING FOR THE REVENUE, HAS DEFENDED THE ORDERS OF THE AUTHORITIES BELOW BY POI NTING OUT THAT THE EVIDENCES, IN THE FORM OF (I) THE ENQUIRY REPORT OF HIGH COMMISSION OF INDIA, LONDON (II) THE PROCEEDINGS CONDUCTED BY THE DRI, A ND (III) ORDER OF CUSTOMS AND CENTRAL EXCISE SETTLEMENT COMMISSION SHOW THAT THE ASSESSEE CAN BE SAID TO HAVE PAID PRICE FOR THE IMPORT OF THE HORSE S IN QUESTION OVER AND ABOVE THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNT AND THE REFORE, THE DIFFERENTIAL HAS BEEN RIGHTLY ASSESSED AS UNEXPLAINED INVESTMENT UND ER SECTION 69B OF THE ACT. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. SECTION 69B OF THE ACT EMPOWERS THE ASSESSING OFFICER TO BRING TO TAX AN AMOUNT OF INVESTMENT MADE BY THE ASSESSEE IN ANY BULLION, JEWELLERY OR O THER VALUABLE ARTICLE, WHICH IS OVER AND ABOVE THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE; SO, HOWEVER THE AFORESAID POWER IS CI RCUMSCRIBED BY THE FACT THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO OFFER AN EXPLANATION ABOUT THE EXCESS AMOUNT OR THE EXPLANATION OFFERED IS NOT FOUND SATISFACTORY BY THE ASSESSING OFFICER. FURTHER, THE PRESENCE OF THE EXP RESSION .AND THE ASSESSING OFFICER FINDS THAT THE AMOUNT EXPENDED ON MAKING SUCH INVESTMENTS. IS SIGNIFICANT, AS IT SHOWS THAT SECTION 69B CAN BE INVOKED ONLY IN A SITUATION WHERE IT IS ESTABLISHED THAT ASSESSEE HAS ACTUALLY SPENT AN AMOUNT IN MAKING INVESTMENT WHICH IS OVER AND ABOVE THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNT. IN THIS BACKGROUN D, IN THE PRESENT CASE, IT IS TO BE EXAMINED WHETHER INVOKING OF SECTION 69B OF T HE ACT IS JUSTIFIED OR NOT. THE CASE MADE OUT BY THE REVENUE IS THAT THE FAIR V ALUE OF THE HORSES ITA NOS. 1110 & 1111/PN/2010 POONAWALLA FINVEST & AGRO PVT. LTD. A.YS. 1999-2000 & 2001- 2002 DECLARED BY THE EXPORTER TO THE IRISH CUSTOMS IS HI GHER THAN THE VALUE DECLARED BY THE ASSESSEE IMPORTER TO THE INDIAN CUSTOMS. THE CLAIM OF THE ASSESSEE IS THAT THE VALUE DECLARED TO THE INDIAN CUSTOMS IS BA SED ON THE INVOICES RAISED BY THE EXPORTER AND THE AMOUNTS ACTUALLY PAID BY TH E ASSESSEE FOR SUCH IMPORTS. THE REVENUE HAS POINTED OUT THAT THE ASSES SEE WAS CONFRONTED BY CUSTOMS AUTHORITIES ON THIS ASPECT, AND THE ASSESSE E AGREED TO PAY THE CUSTOMS DUTY ON THE DIFFERENCE IN VALUES. THE SAID DIFFERENTIAL IN VALUES HAS BEEN TREATED BY THE ASSESSING OFFICER AS INVESTMENT MADE IN ACQUISITION OF HORSES, WHICH HAS NOT BEEN FULLY DISCLOSED IN THE A CCOUNT BOOKS, AND ACCORDINGLY SECTION 69B OF THE ACT HAS BEEN INVOKED . PER CONTRA, AS PER THE APPELLANT THE FACT THAT IT HAS PAID CUSTOMS DUTY WI TH REFERENCE TO THE VALUE OF IMPORTS WHICH IS HIGHER THAN THE IMPORT/PURCHASE PR ICE RECORDED IN ITS BOOKS OF ACCOUNT, DOES NOT IPSO FACTO SHOW AND PROVE THAT ASSESSEE HAS PAID OR EXPENDED AMOUNT TOWARDS SUCH PURCHASES IN EXCESS OF THE AMOUNT RECORDED IN THIS BEHALF IN THE BOOKS OF ACCOUNT MAINTAINED B Y IT. IN OUR CONSIDERED OPINION, ALTHOUGH THE ASSESSEE IS CORRECT IN ASSERT ING THAT THE DIFFERENCE IN VALUES NOTED ABOVE WOULD NOT IPSO FACTO DEMONSTRATE THAT THE ASSESSEE ACTUALLY SPENT THE IMPUGNED SUMS, BUT HAVING REGARD TO THE PROCEEDINGS CARRIED OUT BY THE CUSTOMS AUTHORITIES, THE ONUS IS ENTIRELY ON THE ASSESSEE TO ESTABLISH THAT IT DID NOT ACTUALLY SPENT THE IMPUGN ED AMOUNTS FOR ACQUISITION OF THE HORSES. THUS, WE MAY PROCEED TO EXAMINE WHETHER THE ASSESSEE HAS DISCHARGED SUCH ONUS OR NOT. 10. IN THE ASSESSMENT YEAR 1999-2000, ASSESSEE IMPO RTED A MARE UNNAMED PIEBALD WHOSE PURCHASE PRICE WAS RS. 1,66 ,017/- I.E. CORRESPONDING TO IRP 1093, AND CUSTOMS DUTY WAS ALS O PAID BY THE ASSESSEE ON THE ABOVE TRANSACTION TREATING THE PURCHASE/INVO ICE VALUE AS THE ASSESSABLE VALUE. SUBSEQUENTLY, AS PER THE ENQUIRIE S MADE BY DRI, IT WAS REVEALED THAT THE VALUE DECLARED TO THE IRISH CUSTO MS WAS IRP 3992. THE ASSESSEE COMPANY WAS SHOW-CAUSED BY THE DRI AS WHY THE ASSESSABLE VALUE OF THE IMPORT SHOULD NOT BE TAKEN AT THE VALUE DECL ARED TO THE IRISH CUSTOMS ITA NOS. 1110 & 1111/PN/2010 POONAWALLA FINVEST & AGRO PVT. LTD. A.YS. 1999-2000 & 2001- 2002 AND THE DIFFERENTIAL DUTY BE NOT RECOVERED FROM THE ASSESSEE. THE ASSESSEE AGREED TO PAY THE DIFFERENTIAL CUSTOMS DUTY, BUT IT S EXPLANATION FOR THE DIFFERENCE IN VALUES WAS AS UNDER :- AS REGARDS THE UNNAMED PIEBALD MARE. I HAVE TO STA TE THAT THIS IS A NON-THOROUGHBRED HORSE, WHICH WAS STABLED AT LIVERY STABLE AT IRELAND. THIS WAS BOUGHT AS A FOSTER MARE. THE ACTUAL DEAL WAS FO R TWO NON-THOROUGHBRED MARES AND THE PRICE NEGOTIATED AT IRELAND POUNDS 39 92/-. HOWEVER, ONLY ONE MARE WAS EXPORTED BY THE AGENT. AS SUCH, WE PAID DU TY ON THE PRICE DECLARED OF ONE MARE. AS INFORMED BY YOU, WE UNDERTAKE TO PA Y THE DUTY DEPOSIT ON THE DIFFERENTIAL AMOUNT ARISING FROM THE ORIGINALLY NEG OTIATED AMOUNT. 11. THUS, THE PLEA OF THE ASSESSEE WAS THAT THE INF ORMATION OBTAINED BY THE DRI OF IRP 3992 WAS FOR TWO HORSES, WHILE ASSESSEE PAID ONLY IRP 1039 (I.E. RS. 1,66,017/-) FOR ONE HORSE. AS PER THE ASS ESSEE, THE AMOUNT OF IRP 3992 WAS THE NEGOTIATED PRICE FOR TWO HORSES, W HEREAS ONLY ONE HORSE WAS ACTUALLY SHIPPED BY THE AGENT AND THEREFORE, AS SESSEE PAID ONLY IRP 1093 (I.E. RS. 1,66,017/-), AND PAID THE CUSTOMS DUTY AC CORDINGLY. 12. IN OUR CONSIDERED OPINION, IT IS UNDENIABLE THA T THE VALUE DECLARED BY THE SHIPPER TO THE IRISH CUSTOMS IS IRP 3992 BUT TH E PLEA THAT THE SAID VALUE WAS FOR TWO HORSES IS NOT ESTABLISHED ON THE BASIS OF ANY MATERIAL. PERTINENTLY, THE INFORMATION PROCURED BY THE DRI THROUGH THE HIG H COMMISSION OF INDIA, LONDON, WHOSE RELEVANT PORTION HAS BEEN REPRODUCED BY US IN PARA 5 EARLIER DOES NOT SAY THAT THE VALUE DECLARED TO THE IRISH C USTOMS AT IRP 3992 WAS FOR TWO HORSES. THERE IS NO OTHER CORROBORATIVE EVIDENC E TO SUPPORT THE PLEA OF THE ASSESSEE THAT THE VALUE OF IRP 3992 DECLARED TO THE IRISH CUSTOMS WAS FOR TWO HORSES, AND THEREFORE, IN OUR VIEW, THE ASSESSEE HA S FAILED TO OFFER A SATISFACTORY EXPLANATION ABOUT THE DIFFERENCE IN VA LUES. ACCORDINGLY, THE ADDITION OF RS. 2,25,741/- MADE BY THE ASSESSING OF FICER FOR ASSESSMENT YEAR 1999-2000 HAS BEEN RIGHTLY CONFIRMED BY THE CIT(A). RESULTANTLY, THE ASSESSEE HAS TO FAIL IN ASSESSMENT YEAR 1999-2000. ITA NOS. 1110 & 1111/PN/2010 POONAWALLA FINVEST & AGRO PVT. LTD. A.YS. 1999-2000 & 2001- 2002 13. FOR THE ASSESSMENT YEAR 2001-02, ASSESSEE WAS F OUND TO HAVE IMPORTED THREE HORSES I.E. PERINTHOS, SALEEMAH AND TIME & TIME FROM M/S KILSHANNING STUD, IRELAND WHICH WERE CLAIMED TO HAVE BEEN PURCHASED AT A TOTAL PRICE OF IRP 18,100 I.E. INDIAN RS. 16,55,6 63/-. AS PER THE REPORT OBTAINED BY DRI FROM THE HIGH COMMISSIONER OF INDIA , LONDON THE VALUE DECLARED TO THE IRISH CUSTOMS WAS IRP 43,000 CORRES PONDING TO INDIAN RS. 34,31,652/-. ON BEING SHOW-CAUSED BY THE DRI TH E ASSESSEE EXPLAINED THE SAID DISCREPANCY AS UNDER :- TO YOUR QUERY, I HEREBY ADMIT THAT THE THREE MARES PERINTHOS, SALEEMAH AND TIME AND TIME, WERE SOLD IN AUCTION AT THE GOFFS NOVERMBER 2000 BREEDING STOCK SALE AT KILDARE, IRELAND. WE WE RE APPROACHED BY THE BLOODSTOCK AGENT M/S KILSHANNING STUD, IRELAND FOR THESE MARES. M/S KILSHANNING STUD HAD BOUGHT THESE MARES FOR THEIR C LIENT BASED IN KUWAIT. HOWEVER, THE DEAL FELL THROUGH AND M/S KILSHANNING STUD WAS LOOKING FOR A BUYER FOR THE SAID MARES. WE NEGOTIATED THE DEAL AT A DISCOUNTED PRICE ON THE CONDITION THAT M/S KILSHANNING STUD WILL HAVE AN OP TION TO BUY ANY OF THE PROSPECTIVE FOALS FROM ANY OF THE SAID MARES FOR TH E COVERING STUD FEE ONLY. I AM SUBMITTING HEREWITH A PHOTOCOPY OF THE NEGOTIATI ON LETTER DATED 2 ND DECEMBER 2000 OF M/S KILSHANNING STUD, IRELAND IN T HIS REGARD. WE PAID THE DUTY ON THE PRICE, WHICH WE PAID TO KILSHANNING STU D. HOWEVER, NOW WE ARE TOLD THAT WE SHOULD HAVE PAID THE DUTY ON THE AUCTI ON PRICE. AS SUCH WE UNDERTAKE TO PAY THE DUTY DEPOSIT OF THE DIFFERENTI AL AMOUNT ARISING ON THE SAID THREE MARES. 14. THE AFORESAID EXPLANATION OF THE ASSESSEE REVEA LS THAT ORIGINALLY THESE HORSES WERE BOUGHT IN AUCTION BY M/S KILSHANNING ST UD, IRELAND FOR A CLIENT IN KUWAIT WHO BACKED OUT OF THE DEAL. THE SELLER THEN THE APPROACHED THE ASSESSEE AND OFFERED A LOWER PRICE WITH CERTAIN CON DITIONS AND A COPY OF SUCH COMMUNICATION DATED 02.12.2000 IS PLACED AT PAGE 11 1 OF THE PAPER BOOK. IN TERMS OF THE SAID COMMUNICATION, ASSESSEE AGREED TO PURCHASE THE HORSES AT IRP 18,100 (I.E. INDIAN RS. 16,55,663/-) AS AGAINST THE AUCTION PRICE OF ITA NOS. 1110 & 1111/PN/2010 POONAWALLA FINVEST & AGRO PVT. LTD. A.YS. 1999-2000 & 2001- 2002 IRP 43,000 AT WHICH IT WAS PROCURED BY THE SELLER M /S KILSHANNING STUD, IRELAND. ON THE AFORESAID BASIS, IT IS SOUGHT TO BE MADE OUT THAT THE TERMS OF SALE CLEARLY ESTABLISH THAT WHAT THE ASSESSEE PAID WAS EQUIVALENT TO IRP 18,100 AND NOT IRP 43,000, WHICH WAS THE VALUE DECLARED TO THE IRISH CUSTOMS WHICH WAS BASED ON THE AUCTION PRICE AT WHI CH THE SELLER HAD ACQUIRED THE HORSES. WE FIND THAT THE AFORESAID EVI DENCE, BEING THE COMMUNICATION OF THE SELLER-M/S KILSHANNING STUD DA TED 02.12.2000, WAS PUTFORTH BY THE ASSESSEE BEFORE THE LOWER AUTHORITI ES AS WELL AS BEFORE THE DRI AUTHORITIES AND THE CUSTOMS & CENTRAL EXCISE SETTLE MENT COMMISSION DURING THE RESPECTIVE PROCEEDINGS. THERE IS NO MATERIAL ON RECORD TO SUGGEST THAT THE SAID EXPLANATION RENDERED BY THE ASSESSEE WAS FOUND TO BE FALSE. OF COURSE, THE ASSESSEE AGREED TO DEPOSIT THE DIFFERENTIAL CUS TOMS DUTY ON BEING SHOW-CAUSED, SO HOWEVER, THAT BY ITSELF DOES NOT NE GATE THE EVIDENCE IN THE FORM OF THE COMMUNICATION FROM THE SELLER-M/S KILSH ANNING STUD DATED 02.12.2000 WHICH SUPPORTS THE STATED PURCHASE PRICE . NOTABLY, INFORMATION PROVIDED BY THE HIGH COMMISSION OF INDIA, LONDON AL SO SHOWS THAT THE VALUE DECLARED TO THE IRISH CUSTOMS WAS THE AUCTION PRICE AT WHICH THE SELLER-M/S KILSHANNING STUD HAD ACQUIRED THE HORSES, AND, IN V IEW OF THE EXPLANATION FURNISHED BY THE ASSESSEE, THE FACTS OF THE CASE DO NOT JUSTIFY AN INFERENCE THAT THE ASSESSEE HAS INVESTED ANY AMOUNT IN ACQUIRING T HE THREE HORSES OVER AND ABOVE THE AMOUNT STATED IN ITS BOOKS OF ACCOUNT. TH EREFORE, THE ADDITION OF RS. 17,81,989/- MADE BY THE ASSESSING OFFICER BY IN VOKING SECTION 69B OF THE ACT IS NOT MERITED. ACCORDINGLY, IN SO FAR AS ASSES SMENT YEAR 2001-02 IS CONCERNED THE ORDER OF THE CIT(A) IS SET-ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF RS. 17,81,989/-. ACCORDINGLY, ASSESSEE SUCCEEDS ON THIS ASPECT. 15. IN BOTH THE ASSESSMENT YEARS, ANOTHER COMMON GR OUND RAISED BY THE ASSESSEE RELATES TO THE VALIDITY OF THE INITIATION OF PROCEEDINGS BY ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT. THE SAID GROUN D WAS NOT PRESSED AT THE TIME OF HEARING AND IS ACCORDINGLY DISMISSED AS NOT PRESSED. ITA NOS. 1110 & 1111/PN/2010 POONAWALLA FINVEST & AGRO PVT. LTD. A.YS. 1999-2000 & 2001- 2002 16. RESULTANTLY, WHEREAS THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 1999-2000 IS DISMISSED; THAT FOR THE ASSESSMEN T YEAR 2001-02 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL, 2013. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED: 30 TH APRIL, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, PUNE; 4) THE CIT-II, PUNE; 5) THE DR, A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY I.T.A.T., PUNE