ITO, WD-2(4), KOLKATA, Kolkata V. M/s Shree Guru Realtors Pvt. Ltd., Kolkata

ITA 1361/KOL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1703 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 06-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: P K SANGHAI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Earning of tax free income
• Section: 43CA; 50C; 14A

Judgement Text

1 ITA NO. 1361/KOL/2015 ASSESSMENT YEAR: 2011-2012 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI A.T. VARKEY, JUDICIAL MEMBER I.T.A. NO. 1361/KOL./2015 ASSESSMENT YEAR: 2011-2012 INCOME TAX OFFICER,................................ .....................................APPELLANT WARD-2(4), KOLKATA, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- M/S. SHREE GURU REALTORS PVT. LIMITED,............. .................RESPONDENT 133/1/1A, S.N. BANERJEE ROAD, 3 RD FLOOR, KOLKATA-700 013 [PAN: AAKCS 2052 H] APPEARANCES BY: SHRI S. DASGUPTA, ADDL. CIT, SR. D.R., FOR THE DEPA RTMENT SHRI P.K. SANGHAI, FCA, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : JANUARY 30, 2018 DATE OF PRONOUNCING THE ORDER : FEBRUARY 07, 2018 O R D E R PER SHRI P.M. JAGTAP, ACCOUNTANT MEMBER : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKATA DAT ED 16.07.2015. 2. THE COMMON ISSUE INVOLVED IN GROUNDS NO. 1 & 2 R ELATES TO THE DELETION BY THE LD. CIT(APPEALS) OF THE ADDITION OF RS.19,20,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT FOUND TO BE MADE IN THE BANK ACCOUNT OF THE ASSESSEE WITH HD FC BANK. 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN REAL ESTATE BUSINESS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 28.09.2012 DECLARI NG TOTAL INCOME OF RS.6,16,090/-. IN ITS BANK ACCOUNT MAINTAINED WITH HDFC BANK, CASH DEPOSITS AGGREGATING TO RS.19,20,000/- WERE MADE BY THE ASSESSEE- 2 ITA NO. 1361/KOL/2015 ASSESSMENT YEAR: 2011-2012 COMPANY DURING THE YEAR UNDER CONSIDERATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED B Y THE ASSESSING OFFICER TO EXPLAIN THE SOURCE OF THE SAID CASH DEPO SITS. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE, HOWEVER, COULD NOT PRODUCE THE CASH BOOK IN ORDER TO EXPLAIN THE SAID CASH DEPOSITS MADE IN ITS BANK ACCOUNT. HE, THEREFORE, TREATED THE SAID CASH DEPOSITS AS UNEXPL AINED AND MADE ADDITION OF RS.19,20,000/- TO THE TOTAL INCOME OF T HE ASSESSEE. 4. THE ADDITION OF RS.19,20,000/- MADE BY THE ASSES SING OFFICER ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS MADE IN ITS BA NK ACCOUNT WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFO RE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE A SSESSEE, THE LD. CIT(APPEALS) DELETED THE SAID ADDITION MADE BY THE ASSESSING OFFICER FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO. 4.2 OF HIS IMPUGNED ORDER:- 4.2. I HAVE CONSIDERED THE ORAL AS WELL AS THE WR ITTEN SUBMISSION OF THE AR OF THE APPELLANT ON THE MATTER IN COMING TO A DECISION. THE ASSESSMENT ORDER IS ALSO CONSIDE RED. I FIND FROM THE MATERIAL FACTS ON RECORD THAT REQUISITE DE TAILS TO EXPLAIN THE IMPUGNED CASH DEPOSITS WERE FILED BEFOR E THE AO VIDE SUBMISSION DATED 03.02.2014 CONTAINING THE CAS H FLOW STATEMENT AS WELL AS THE CASH BOOK FOR THE PERIOD 0 1.04.2010 TO 30.03.2011. THE AO HAS SIMPLY BRUSHED ASIDE THESE M ATERIAL DOCUMENTS AS MENTIONED IN THE ASSESSMENT ORDER AS B EING NOT PRODUCED BY THE ASSESSEE INSPITE OF SEVERAL OPPORTU NITIES GIVEN IN THIS REGARD. I FIND THE ACTION OF THE AO TO BE F RAUGHT WITH UNTENABLE PREMISE. MOREOVER, ON GOING THROUGH THE C ASH BOOK OF THE APPELLANT, I FIND THAT THE IMPUGNED AMOUNTS ARE ALL ACCOUNTED FOR. HENCE I FIND THAT THE ACTION OF THE AO IN MAKING THE IMPUGNED ADDITION IS WITHOUT ANY LEGAL OR ACCOU NTING BASIS. THE AO HAS NOT COME TO A LOGICAL CONCLUSION WITH CO NCLUSIVE MATERIAL PROOF IN MAKING THE SAID ADDITION. UNDER T HE FACTS AND CIRCUMSTANCES, I AM UNABLE TO ENDORSE THE ACTION OF THE AO WHICH IS NOW DIRECTED TO BE DELETED. THE AO IS DIRE CTED ACCORDINGLY. THIS GROUND IS ALLOWED. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. THE MAIN CONTENTION RAISED BY THE LD. D.R. IS THAT THE RELEV ANT DETAILS TO EXPLAIN THE IMPUGNED CASH DEPOSITS WERE NOT FURNISHED BY THE AS SESSEE BEFORE THE ASSESSING OFFICER AND THE FINDING RECORDED BY THE L D. CIT(APPEALS) WHILE 3 ITA NO. 1361/KOL/2015 ASSESSMENT YEAR: 2011-2012 GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE IS CONT RARY TO THE OBSERVATIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORD ER. HOWEVER, AS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE FRO M THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER VIDE LETTER DATED 03.0 2.2014 (COPY AT PAGE NO. 1 TO 3 OF THE PAPER BOOK), THE RELEVANT DETAILS TO EXPLAIN THE IMPUGNED CASH DEPOSITS WERE DULY FURNISHED BY THE ASSESSEE D URING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER AND EVEN THE COPY OF CASH BOOK WAS ALSO FILED ALONG WITH THE SAID LETTER TO SUBSTANTIATE THE SAID EXPLANATION. HE HAS ALSO POINTED OUT FROM PAGE 3 OF THE ASSESSMENT ORDER THAT THERE WAS A SPECIFIC MENTION MADE BY THE ASSES SING OFFICER TO THE WRITTEN SUBMISSION FILED BY THE ASSESSEE. KEEPING I N VIEW THIS SUBMISSION MADE BY THE LD. COUNSEL FOR THE ASSESSEE, WE FIND N O INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) TREATING THE CASH DEPOSITS FOUND TO BE MADE IN THE BANK ACCOUNT OF THE ASSESSEE WITH HDFC BANK AS EXPLAINED AND DELETING THE ADDITION MADE BY THE ASS ESSING OFFICER ON THIS ISSUE. THE SAME IS, THEREFORE, UPHELD DISMISSING GR OUNDS NO. 1 & 2 OF THE REVENUES APPEAL. 6. THE ISSUE RAISED IN GROUND NO. 3 OF THE REVENUE S APPEAL RELATES TO THE DELETION BY THE LD. CIT(APPEALS) OF THE ADDITIO N OF RS.55,24,450/- MADE BY THE ASSESSING OFFICER ON THE BASIS OF STAMP DUTY VALUATION OF THE PROPERTY SOLD BY THE ASSESSEE. 7. THE PROPERTY VIZ. UNIT-E 304, CITY CENTRE, SALT LAKE LYING IN ITS STOCK WAS SOLD BY THE ASSESSEE-COMPANY DURING THE Y EAR UNDER CONSIDERATION FOR RS.93,56,000/-. SINCE THE FAIR MA RKET VALUE OF THE SAID PROPERTY AS ON THE DATE OF SALE WAS DETERMINED BY T HE CONCERNED AUTHORITY FOR STAMP DUTY PURPOSE AT RS.1,48,80,450/ -, THE DIFFERENCE OF RS.55,24,450/- (RS.1,48,80,450/- MINUS RS.93,56,000 /-) WAS ADDED BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESS EE AS BUSINESS PROFIT. 8. THE ADDITION OF RS.55,24,450/- MADE BY THE ASSES SING OFFICER WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFO RE THE LD. CIT(APPEALS) 4 ITA NO. 1361/KOL/2015 ASSESSMENT YEAR: 2011-2012 AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE A SSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) DELETED THE SAID ADDITION FOR THE FOLLOWING REASONS GIVEN IN PARAGRA PH NO. 5.2 OF HIS IMPUGNED ORDER:- 5.2. I HAVE CONSIDERED THE CONTENTIONS RAISED BY THE AR OF THE APPELLANT IN THE BACKDROP OF THE ASSESSMENT ORD ER. I FIND THAT THE A.O. HAS SIMPLY TAKEN INTO ACCOUNT THE REGISTER ED VALUE OF THE STAMP DUTY AUTHORITY AS THE SALE CONSIDERATION AND REDUCED IT BY THE ACTUAL SALE VALUE CONSIDERATION RECEIVED BY THE APPELLANT AND MADE THE ADDITION AMOUNTING TO RS.55,24,450/-. THIS WAS DONE WITHOUT ASSIGNING ANY REASON OR PREMISE THEREOF. AS SUBMITTED BY THE AR, IT COULD BE PRESUMED THAT THE AO APPLIED THE PROVISIONS OF SECTION 43CA OF THE ACT WHICH CAME IN TO EFFECT ONLY FROM THE AY 2014-15. DURING THE YEAR UNDER CONSIDER ATION, THERE WAS NO PROVISION UNDER THE ACT FOR TAKING INTO CONS IDERATION CIRCLE RATE IN DETERMINING THE SALE VALUE FOR ASSET S OTHER THAN CAPITAL ASSETS. IN VIEW OF THE FOREGOING, I FIND TH E ACTION OF THE AO NOT JUSTIFIABLE OR TENABLE WITH RESPECT TO THE L EGAL ISSUE AT HAND RESULTING IN MAKING THE IMPUGNED ADDITION ON A CCOUNT OF SALE OF STOCK-IN-TRADE. THEREFORE, THERE IS NO MERI T IN THE ACTION OF THE AO FOR WHICH IT IS DIRECTED TO DELETED THE A DDITION MADE OF RS.55,24,450/-. THIS GROUND IS ALLOWED. 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. IT IS OBSERVED THAT THE IMMOVABLE PROPERTY SOLD BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS NOT ITS CAPITAL ASSET, BUT THE SA ME CONSTITUTED ITS STOCK- IN-TRADE. THE PROVISIONS OF SECTION 50C THUS WERE N OT APPLICABLE IN THE CASE OF THE ASSESSEE AND THE ADDITION ON THE BASIS OF VALUATION MADE FOR THE PURPOSE OF STAMP DUTY COULD BE MADE ONLY AS PER THE PROVISIONS OF SECTION 43CA OF THE ACT AND NOT SECTION 50C. HOWEVE R, THE PROVISIONS OF SECTION 43CA HAVING BEEN INTRODUCED IN THE STATUTE ONLY W.E.F. ASSESSMENT YEAR 2014-15, THE SAME WERE NOT APPLICAB LE TO THE YEAR UNDER CONSIDERATION, I.E. A.Y. 2011-12 AND, IN OUR OPINIO N, THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ISSUE, WAS RIGHTLY DE LETED BY THE LD. CIT(APPEALS) BY HOLDING THE SAME TO BE UNSUSTAINABL E. IN THAT VIEW OF THE MATTER, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT (APPEALS) ON THIS ISSUE AND DISMISS GROUND NO. 3 OF THE REVENUES APP EAL. 5 ITA NO. 1361/KOL/2015 ASSESSMENT YEAR: 2011-2012 10. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 4 O F THE REVENUES APPEAL RELATING TO THE DELETION BY THE LD. CIT(APPE ALS) OF THE DISALLOWANCE OF RS.3,68,736/- MADE BY THE ASSESSING OFFICER UNDE R SECTION 14A ON THE GROUND THAT THERE WAS NO EXEMPT INCOME EARNED BY TH E ASSESSEE DURING THE YEAR UNDER CONSIDERATION, IT IS OBSERVED THAT T HE SAME IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD. VS.- CIT [378 ITR 33], WHEREIN IT WAS HELD THAT THERE BEING NO EXEMPT INCOME EARNE D BY THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR, NO DISALLOWANCE COULD BE MADE UNDER SECTION 14A OF THE ACT. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE HONBLE DELHI HIGH COURT, WE UPHOLD THE IMPUGNED OR DER OF THE LD. CIT(APPEALS) DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 14A AND DISMISS GROUND NO. 4 OF THE R EVENUES APPEAL. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH DAY OF FEBRUARY, 2018. SD/- SD/- (A.T. VARKEY) (P.M. J AGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 7 TH DAY OF FEBRUARY, 2018 COPIES TO : (1) INCOME TAX OFFICER, WARD-2(4), KOLKATA, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 2) M/S. SHREE GURU REALTORS PVT. LIMITED, 133/1/1A, S.N. BANERJEE ROAD, 3 RD FLOOR, KOLKATA-700 013 (3) CIT(APPEALS)-4, KOLKATA, (4) CIT- , KOLKATA, (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/DDO, INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.