ACIT, CHENNAI V. Shri M.Sivaji, CHENNAI

ITA 1146/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61098 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-04-2012
• Assessment Year: 1999-2000
• Appeal Filed On: 17-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYARAGAVAN
• Assessee Lawyers: DR ANITA SUMANTH
• Keywords: Unexplained investment
• Section: 143(3); 69; 148

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI. BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NO. 1146/MDS/2011 ASSESSMENT YEAR: 1999-2000 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE XIV, 6 TH FLOOR, NEW BLOCK, 121, MAHATMA GANDHI ROAD, CHENNAI 600 034. VS. SHRI M. SIVAJI, AJ-81, 3 RD CROSS STREET, 9 TH MAIN ROAD, ANNA NAGAR, CHENNAI 600 040 [PAN: AKWPM3996R] (APPELLANT) (RESPONDENT) I.T.A. NO. 1147/MDS/2011 ASSESSMENT YEAR: 1999-2000 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE XIV, 6 TH FLOOR, NEW BLOCK, 121, MAHATMA GANDHI ROAD, CHENNAI 600 034. VS. SMT. S. RAJESWARI AJ-81, 3 RD CROSS STREET, 9 TH MAIN ROAD, ANNA NAGAR, CHENNAI 600 040 [PAN:BELPS3627D] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JAYARAGAVAN, JCIT RESPONDENT BY : DR. ANITA SUMANTH, ADVOCATE DATE OF HEARING : 30.04.2012 DATE OF PRONOUNCEMENT : 16.05.2012 ORDER PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER THESE TWO APPEALS FILED BY THE DEPARTMENT ARE DIRE CTED AGAINST THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. . . . 1146 & 1147/M/11 1146 & 1147/M/11 1146 & 1147/M/11 1146 & 1147/M/11 2 SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX ( APPEALS) XII, CHENNAI BOTH DATED 04.03.2011 IN ITA NO. 1/2007-2008 [IN TH E CASE OF SHRI M. SHIVAJI] AND IN ITA NO. 2/2007-2008 [IN THE CASE OF SMT. S. RAJESWARI] FOR THE ASSESSMENT YEAR 1999-2000. AS THE ISSUE IS COMM ON IN BOTH THE APPEALS AND THEY ARE CONNECTED ASSESSEES, COMMON OR DER IS PASSED FOR THE SAKE OF CONVENIENCE. SHRI JAYARAGAVAN, JCIT REPRESE NTED ON BEHALF OF THE REVENUE AND DR. ANITA SUMANTH, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE. 2. THE ONLY COMMON ISSUE IN THESE APPEALS OF THE R EVENUE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELET ING THE ADDITION TOWARDS UNEXPLAINED INVESTMENT MADE UNDER SECTION 6 9 OF THE ACT. I.T.A. NO. 1146/MDS/2011 3. IN THIS CASE, THERE WAS INFORMATION BEFORE THE ASSESSING OFFICER THAT THE ASSESSEE HAD PURCHASED 3,41,000 SHARES OF FACE VALUE OF ` .34,10,000/- IN M/S. META FILMS (INDIA) LTD. IN THE YEAR 1998, B UT THE ASSESSEE HAD NOT FILED ANY RETURN OF INCOME FOR THIS YEAR. THEREFORE , THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 148 ON 30.03.2006 FOR R EOPENING THE ASSESSMENT. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED NIL RETURN ON 21.11.2006. THE ASSESSMENT WAS COMPLETED ON 30.03.2 007 UNDER SECTION 143(3) R.W.S. 147 DETERMINING THE INCOME OF THE ASS ESSEE AT ` .34,10,000/- TREATING THE ALLEGED INVESTMENT IN M/S. META FILMS (INDIA) LTD. AS INCOME I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. . . . 1146 & 1147/M/11 1146 & 1147/M/11 1146 & 1147/M/11 1146 & 1147/M/11 3 FROM OTHER SOURCES INVOKING PROVISIONS OF SECTION 6 9 OF THE ACT. 4. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) DELETED THE ADDITION, AGAINST WHICH THE REVENUE IS IN APPEAL BE FORE US. 5. THE COUNSEL FOR THE REVENUE SUBMITTED THAT THE ASSESSEE MADE INVESTMENT IN THE COMPANY M/S. META FILMS (INDIA) L TD. BY WAY OF SHARE APPLICATION MONEY AND NO RETURN OF INCOME WAS FILED . THEREFORE, NOTICE UNDER SECTION 148 WAS ISSUED AND COMPLETED THE ASSE SSMENT. HE SUBMITTED THAT THE INVESTMENT WAS NOT EXPLAINED BY THE ASSESS EE AND THEREFORE ADDITION WAS MADE UNDER SECTION 69 OF THE ACT. THE COUNSEL SUPPORTED THE ORDER OF THE ASSESSING OFFICER IN TREATING THE SAID INVESTMENT AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT. 6. THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD NOT MADE ANY INVESTMENT DURING THE ASSESSMENT YEAR 1999 -2000 AND THEREFORE, THE QUESTION OF MAKING ADDITION UNDER SECTION 69 DU RING THIS ASSESSMENT YEAR DOES NOT ARISE. THE COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) RIGHTLY DELETE D THE ADDITION SINCE IT DOES NOT RELATE TO THE ASSESSMENT YEAR 1999-2000 AN D RELIED ON THE COMMISSIONER OF INCOME TAX (APPEALS)S ORDER. 7. WE HAVE HEARD BOTH SIDES, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE COMMISSIONER OF INCOME TAX (APPEALS) I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. . . . 1146 & 1147/M/11 1146 & 1147/M/11 1146 & 1147/M/11 1146 & 1147/M/11 4 HAS CONSIDERED THIS ISSUE AND HELD THAT THE INVESTM ENT WAS MADE DURING THE ASSESSMENT YEAR 1998-99 AND SINCE THE DEPARTMENT CO ULD NOT REOPEN THE ASSESSMENT FOR THE ASSESSMENT YEAR 1998-99 DUE TO L IMITATION OF TIME, ADDITION WAS MADE DURING THE ASSESSMENT YEAR 1999-2 000, WHICH IS NOT SUSTAINABLE UNDER THE LAW. RELEVANT OBSERVATIONS OF THE COMMISSIONER OF INCOME TAX (APPEALS) ARE AS UNDER: IN THE INSTANT CASE, ON A PERUSAL OF THE DETAILS A VAILABLE ON RECORD, IT IS SEEN THAT THOUGH THE COMPANY HAD S HOWN THE SHARE CAPITAL OF ` .266.00 LAKHS FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1999-2000, THE SHARES WERE FLOA TED AND RAISED BY THE COMPANY ONLY DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1998-1999. IN THIS CONNECTION I T IS PERTINENT TO POINT OUT THAT THE SHARE CAPITAL OF ` .266.00 LAKHS RAISED BY THE COMPANY WERE ALREADY REFLECTED IN THE BOOKS OF, ACC OUNTS FOR THE ASSESSMENT YEAR 1998-1999 OF THE COMPANY AND IN FAC T HAD BEEN BROUGHT TO TAX BY ASSESSING OFFICER IN THE ORDER PA SSED U/S 143(3) READ WITH SEC. 147 OF THE INCOME-TAX ACT, 19 61 DT. 29.12.2006 FOR THE SAID ASSESSMENT YEAR. THE CRUX OF THE APPEAL IS THE YEAR IN WHICH THIS IN COME HAS TO BE TAXED AS THAT OF THE APPELLANT OR OTHERWISE. THE ASSESSING OFFICER HAD BROUGHT THE SAID AMOUNT TO TAX FOR THE ASSESSMENT YEAR 1999-2000 AS THE TIME-LIMIT PERIOD FOR REOPENI NG THE ASSESSMENT FOR THE ASSESSMENT YEAR 1998-99 HAD ALRE ADY LAPSED. HOWEVER, THE ENTIRE RUN-UP TO THE FLOATING OF SHARE S AND RAISING THE SHARE CAPITAL BY THE ABOVE MENTIONED CO MPANY HAD TAKEN PLACE IN THE ASSESSMENT YEAR 1998-1999 AND TH AT THE CONTRIBUTION OF THE APPELLANT HAD TO BE ASSESSED IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1998-1999 ONLY . AND HENCE, THE ACTION OF THE ASSESSING OFFICER IN HIS E NTHUSIASM TO BRING THIS AMOUNT TO TAX IN THE ASSESSMENT YEAR 199 9-2000 IS UNSUSTAINABLE, AND NOT LEGALLY TENABLE. 8. WE AGREE WITH THE VIEW TAKEN BY THE COMMISSIONE R OF INCOME TAX (APPEALS) SINCE INVESTMENT WAS MADE DURING THE ASSE SSMENT YEAR 1998-99, I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. . . . 1146 & 1147/M/11 1146 & 1147/M/11 1146 & 1147/M/11 1146 & 1147/M/11 5 THE ADDITION CANNOT BE MADE IN THE ASSESSMENT YEAR 1999-2000. THEREFORE, WE SUSTAIN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND DISMISS THE GROUNDS OF APPEAL OF THE REVENUE. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. I.T.A. NO. 1147/MDS/2011 10. IN VIEW OF OUR DECISION IN I.T.A. NO. 1146/MDS /2011 IN THE CASE OF SHRI M. SIVAJI, WE DISMISS THE APPEAL OF THE REVENUE IN THE CASE OF SMT. S. RAJESWARI AS THE FACTS AND CIRCUMSTANCES ARE IDENTI CAL IN BOTH THE CASES. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 16 TH OF MAY, 2012 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER CHENNAI, DATED, THE 16.05.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.