Smt. Urvi M.Kothari, Baroda V. The Income Tax Officer,Ward-2(2), Baroda

ITA 1331/AHD/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6078 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 26-07-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Keywords: Unexplained investment

Judgement Text

, MH MHMH MH IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.1331/AHD/2014 ( / ASSESSMENT YEAR : 2005-06) URVI M. KOTHARI 4, RAJENDRAPARK SOCIETY MANJALPUR, BARODA / VS. ITO, WARD -2(2), BARODA ./ ./ PAN/GIR NO. : ANCPK 5011 A ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : MS. URVASHI SODHAN, A.R. / RESPONDENT BY : SHRI V. K. SINGH, SR. D.R. / DATE OF HEARING 21/11/2017 !'# / DATE OF PRONOUNCEMENT 19/02/2018 $% / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-II, BARODA, DAT ED 25/02/2014 FOR THE ASSESSMENT YEAR (AY) 2005-06, ON THE FOLLOW ING GROUNDS: I. THE LD.CIT(A) ERRED IN HOLDING THAT THE APPELLANT H AS NOT BEEN ABLE TO CONTROVERT THE FINDINGS OF THE ASSESSING OF FICER OR HAS NOT BEEN ABLE TO FURNISH THE CONCRETE EVIDENCE IN SUPPO RT OF HER CLAIM. II. THE LD.CIT(A) ERRED IN HOLDING THAT LEVY OF PENALTY U/S.271(1)(C) IS JUSTIFIED. III. THE LD.CIT(A) ERRED IN CONFIRMING THE PENALTY LEVIE D U/S.271(1)(C) AMOUNTING TO RS.8,10,500/-. IV. IT IS PRAYED THAT PENALTY LEVIED U/S.271(1)(C) AMOU NTING TO RS.8,10,500/- BE DELETED. ITA NO.1331/AHD /2014 URVI M. KOTHARI VS. ITO ASST.YEAR 2005-06 - 2 - 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- IN THIS CASE, RETURN OF INCOME WAS FILED ON 29.08.2 005 DECLARING TOTAL NET TAXABLE INCOME OF RS. 3,78,850/-. THE ASS ESSMENT U/S.143(3) OF THE I.T. ACT WAS FINALIZED ON 31/12/2007 DETERMININ G TOTAL INCOME OF RS.36,11,254/-. WHILE FINALIZING THE ASSESSMENT ORD ER, THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS.32,32,404/- ON A CCOUNT OF UNEXPLAINED INVESTMENT FROM UNDISCLOSED SOURCES. PE NALTY PROCEEDINGS U/S.271(L)(C) OF THE I.T. ACT WAS INITIATED WITH RE SPECT TO THE ADDITION AND WAS LEVIED BY ORDER DATED 18/01/2005. 3. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO DISMISSED THE APPEAL OF T HE ASSESSEE. 4. WE HAVE HEARD RIVAL SUBMISSION, LD. AR FILED A C OPY OF AN ORDER OF CO-ORDINATE BENCH IN ITA NO.827/AHD/2009 FOR ASST. YEAR 2005-06 TITLED AS URVI M KOTHARI VS. THE INCOME TAX OFFICER. AS INCOME TAX OFFICER HAS DELETED THE QUANTUM BY HOLDING AS FOLLOWS: 7. AS PER THE ASSESSEE, THE CONTRACTS WERE TERMINA TED BEFORE THE EXPIRY OF THE CONTRACT PERIOD. THE ASSESSEE HAD NOT RECEIVED ANY PAYMENT TOWARDS THE SERVICES RENDERED NOR THE INCOM E WAS ACCRUED TO THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. U NDER THESE FACTS, THE AUTHORITIES BELOW WERE TOTALLY UNJUSTIFIED FOR MAKI NG ADDITION. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSE E ENTERED INTO VARIOUS AGREEMENTS WITH THE PARTIES AS MENTIONED IN THE ASS ESSMENT ORDER. HOWEVER, CONTENTION OF THE ASSESSEE IS THAT CONTRAC T WAS TERMINATED BEFORE THE EXPIRY OF THE PERIOD. THEREFORE, DURING THE YEAR UNDER APPEAL, NO PAYMENT WAS EITHER ACCRUED OR RECEIVED B Y THE ASSESSEE. THE ASSESSING OFFICER AT PAGE NO.4 OF HIS ORDER HAS MEN TIONED THAT THERE ITA NO.1331/AHD /2014 URVI M. KOTHARI VS. ITO ASST.YEAR 2005-06 - 3 - WERE AGREEMENTS WITH MULTI TECH PLAST CONTAINERS LT D., KUONI TRAVELS (INDIA) PVT. LTD., VFS (INDIA) PVT. LTD., UTI BANK LTD. AND PRABHAT AUTOMATION. OUT OF THESE, 5 PARTIES, THE AGREEMENT IN RESPECT OF 3 PARTIES WAS UP TO THE PERIOD OF 14 TH OCTOBER, 2005 TO 7/9 TH JUNE, 2006 AND IN RESPECT OF OTHER THREE PARTIES, THERE WAS NO AGREEMENT. AS PER THE ASSESSING OFFICER, THE AGREEMENT AMOUNT WAS RS.32,3 2,404/-. THEREFORE, THIS AMOUNT IN FACT ACCRUED TO ASSESSEE AND ON THAT BASIS, THE ASSESSING OFFICER MADE ADDITION OF THE SAME AS UNDISCLOSED IN COME. HOWEVER, THE LD. CIT(A) REDUCED THIS AMOUNT TO RS.23,85,738/- AN D GAVE RELIEF OF RS.8,46,666/-. IN RESPECT OF AMOUNT RELATED TO VFS (INDIA) PVT. LTD., THE ASSESSEE HAS PLACED ON RECORD A CERTIFICATE FROM VF S (INDIA) PVT. LTD. THAT NO AMOUNT WAS PAID TO THE ASSESSEE AFTER 1 ST APRIL, 2004. HOWEVER, ASSESSING OFFICER HAS NOT MADE ENQUIRY FRO M CONCERNED VFS (INDIA) PVT. LTD. AND PROCEEDED TO MAKE ADDITION ON ASSUMPTION BASIS. IN OUR CONSIDERED VIEW, THE ASSESSING OFFICER OUGHT TO HAVE VERIFIED FROM THE CONCERNED PARTY ABOUT THE VERACITY OF THE CERTIFICATE WHICH IS ENCLOSED AT PAGE 9 OF PAPER BOOK. DURING COURSE OF HEARING LD. COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE SIG NATURE MADE AT THE CERTIFICATE ENCLOSED AT PAGE 9 AND LETTER ENCLOSED AT PAGE NOS. 115 & 116 AND THE AGREEMENT ENCLOSED AT PAGE 117 TO 120, ONE OF THE SUNDRY CREDITOR IS MR. GEORGE THOMAS WHOSE SIGNATURE MATCH ES WITH THE CERTIFICATE ON PAGE 9 OF THE PAPER BOOK. UNDER THE SE FACTS, IT CAN BE INFERRED THAT THE FINDING OF THE AUTHORITIES IS ILL FOUNDED AND CANNOT BE SUSTAINED. AS NO CONTRARY MATERIAL HAS BEEN PLACED BY THE REVENUE AND GATHERED ANY MATERIAL BY MAKING ENQUIRY IN THIS RES PECT, WE HEREBY DIRECT THE ASSESSING OFFICER TO DELETE THE AMOUNT O F RS. 19,71,435/- VFS (INDIA) PVT. LTD. IN RESPECT OF KUONI TRAVELS(INDIA ) PVT. LTD., ASSESSING OFFICER HAS MADE ADDITION AMOUNTING TO RS .4,80,000/- AND CONFIRMED BY LD. CIT(A). ASSESSING OFFICER HAD MADE ADDITION ON THE BASIS THAT THE CONTRACT EXISTED UP TO 19.10.2005. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE CANCELLATION OF AGREEMENT BETWEEN M/S. KUONI TRAVELS (INDIA) PVT. LTD. AT PAPER BOOK PAGE 10. THE CANCELLATION OF AGREEMENT DATED 1 ST APRIL, 2004 IS MADE. AS PER THIS CANCELLATION, AGREEMENT DATED 31.01.2003 WAS TERMINATED WITH IMMEDIATE EFFECT MEANING THEREBY THERE WAS NO CONTR ACT EXISTING BETWEEN THE PARTIES POST 1 ST APRIL 2004. AS PER THIS CANCELLATION, AGREEMENT AMOUNT OF RS.15,50,000/- WAS TO BE REFUND ED. THE CONTENTION OF THE ASSESSEE IS THAT THIS AMOUNT OF RS.15,50,000 /- WAS DULY OFFERED AS INCOME IN THE PRECEDING YEAR. THE AUTHORITIES BELOW HAVE CONSTRUED THE TERMS OF THE CANCELLATION OF AGREEMENT THAT THE ASS ESSEE WAS IN RECEIPT OF THE CHARGE TILL OCTOBER, 2005. HOWEVER, THE AUTH ORITIES BELOW HAVE ITA NO.1331/AHD /2014 URVI M. KOTHARI VS. ITO ASST.YEAR 2005-06 - 4 - NOT VERIFIED THE FACTUM OF PAYMENT THROUGH M/S. KUO NI TRAVELS (INDIA) PVT. LTD. UNDER THESE FACTS AND THE TERM OF CONTRAC T IS CLEAR THAT CONTRACT WAS TERMINATED WITH IMMEDIATE EFFECT. HOWE VER, THE SAME TERM STATES THAT ALL AMOUNTS RECEIVED UNDER THE AGREEMEN T FOR SERVICES RENDERED TILL 14/10/2005 HAS BEEN DULY RECEIVED AND NO AMOUN T IS OUTSTANDING AS ON DATE OF THIS AGREEMENT. AS PER TH IS TERM, IF IT IS TO BE READ COMPLETELY, THEN THERE WAS NO DUES OUTSTANDING ON 1 ST DAY OF APRIL, 2004. HOWEVER, IT IS CLEAR FROM THE CONTRACT THAT THE SERVICE PREFERRED WAS RENDERING SERVICES TILL 14.10.2005 DESPITE THE FACT THAT THE CONTRACT WAS TERMINATED ON 1 S1 APRIL, 2004. UNDER THESE FACTS, IT CANNOT BE INFERRED THAT NO SERVICE WAS PROVIDED POST 1 S APRIL, 2004. AS IT IS CLEARLY MENTIONED IN THE CANCELLATION AGREEMENT THA T THE SERVICE PROVIDER WAS RENDERING SERVICES TILL 14.10.2005 AND THE PAYMENTS FOR THE SERVICES RENDERED TILL 14.10.2005 WAS MADE ON 1 ST APRIL, 2004. THE ASSESSEE HAS NOT PLACED ANY CONFIRMATION FROM THE C ONCERNED PARITIES CLARIFYING THE POSITION. UNDER THESE FACTS, WE AR E UNABLE TO ACCEPT THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. TH E ADDITION MADE IN RESPECT OF M/S. KUONI TRAVELS (INDIA) PVT. LTD. IS HEREBY SUSTAINED. THE ONLY AMOUNT IN RESPECT OF PRABHAT AUTOMATION, LD. C OUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BE FORE THE LD. CIT(A). WE FIND THAT THE ASSESSING OFFICER HAS NOTED THAT T HERE WAS NO AGREEMENT ABOUT THE VALIDITY OF THE PERIOD OF F.Y. 2004-05. LD. CIT(A) CONFIRMED THE FINDING OF ASSESSING OFFICER ON THE B ASIS THAT APPELLANT IS THE OWNER OF THE PROPERTY. THEREFORE, IN THE ABSE NCE OF ANY EVIDENCE THAT THE PROPERTY WAS LYING VACANT, THE ASSESSING O FFICER HAD CONFIRMED THE ADDITION. LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT IN RESPECT OF THE ISSUE OF OWNERSHIP IN THE PRECEDING YEAR, THE I SSUE TRAVELLED UP TO THE STATE OF THE TRIBUNAL, IN ITA NO. 1039/AHD/20 08 IN ASSESSEE'S OWN CASE FOR A.Y. 2004-05, LD. COUNSEL SUBMITTED THAT T HE ADDITION OF RS.5,85,000/- WAS MADE U/S.69 IN RESPECT OF AMOUNTS STATED TO BE INVESTED AND THE PROPERTIES LEASE TO M/S. PRABHAT A UTOMATION AND THE HON'BLE TRIBUNAL HAS HELD THAT THE ASSESSEE HAD MER ELY POSSESSED THE RIGHT THEREOF WHICH IS NOT EQUIVALENT TO OWNERSHIP RIGHT THOUGH THE ASSESSEE IS DESCRIBE AS OWNER IN THIS CASE, WE FIND THAT THE ASSESSING OFFICER HAD MADE NO EFFORT TO FIND OUT WHETHER THE PARTICULAR PROPERTY WAS VACANT, DURING YEAR UNDER CONSIDERATION. UNDER THESE FACTS, WE DO NOT SEE ANY REASON TO SUSTAIN THE FINDING OF AUTHOR ITIES BELOW. HENCE, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADD ITION MADE ON ACCOUNT OF PRESUMED INCOME RECEIVED FROM M/S. PRABHAT AUTOM ATION OF RS.58,500/-. THE GROUND NO.1 & 2 OF THE ASSESSEES APPEAL ARE APRTLY ALLOWED. ITA NO.1331/AHD /2014 URVI M. KOTHARI VS. ITO ASST.YEAR 2005-06 - 5 - 8. GROUND NOS.3 & 4 ARE GENERAL IN NATURE NEEDS NO ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. 5. PENALTY HAS BEEN IMPOSED ON THE AFORESAID ADDITI ONS TOWARDS INCOME PURPORTEDLY RECEIVED BY THE ASSESSEE UNDER R EFERENCE. WE FIND OURSELVES IN AGREEMENT PLEA RAISED ON BEHAL F OF THE ASSESSEE THAT SUFFICIENT AMBIGUITY EXIST IN THE INT ERPRETATION OF CANCELLATION AGREEMENT FROM KUONI TRAVELS INDIA PVT . LTD. THEREFORE, BENEFIT OF DOUBT SHOULD BE GIVEN TO THE ASSESSEE AN D DISCRETION FOR NON IMPOSING THE PENALTY SHOULD BE EXERCISED IN FAVOUR OF THE ASSESSEE. SIMILARLY AS REGARD PENALTY ARISING AN ADDITION OF RS.58,500/- ATTRIBUTABLE TO M/S. PRABHAT AUTOMATION, VERIFIED SOME MERIT IN THE PLEA OF THE ASSESSEE FOR NON IMPOSITION OF PENALTY HAVING REGAR DS TO THE FACT NARRATED BY THE COORDINATE BENCH OF THE TRIBUNAL IN QUANTUM PROCEEDING. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 19/02/2018 SD/- SD/- IZNHI DQEKJ DSFM;K EGKOHJ IZLKN IZNHI DQEKJ DSFM;K EGKOHJ IZLKN IZNHI DQEKJ DSFM;K EGKOHJ IZLKN IZNHI DQEKJ DSFM;K EGKOHJ IZLKN YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; (PRADIP KUMAR KEDIA) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 19/02/2018 PRITI YADAV, SR.PS ITA NO.1331/AHD /2014 URVI M. KOTHARI VS. ITO ASST.YEAR 2005-06 - 6 - !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-II, BARODA 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 24/11/2017 (DICTATION-PAD 2 PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 28/11/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 19/02/2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER