ACIT, CHENNAI V. M/s. Mustang Trading & Investments P Ltd., CHENNAI

ITA 138/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57795 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 28-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Additional evidence; Onus to prove
• Section: 14A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NOS. 137 & 138/MDS/2011 ASSESSMENT YEARS : 2004-05 & 2005-06 THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-IV(3), CHENNAI. V. M/S. MUSTANG TRADING & INVESTMENTS P. LTD., ELDORADO 5 TH FLOOR, NO. 112, NUNGAMBAKKAM HIGH ROAD, CHENNAI-600 034. [PAN: AAACM4620P] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB, SR. DR RESPONDENT BY : NONE DATE OF HEARING : 11-01-2012 DATE OF PRONOUNCEMENT : 11-01-2012 O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THESE ARE TWO APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-V, CHENNAI IN ITA NOS. 185/07-08 AND 6 07/06-07 DATED 08-10-2010 FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06. 2. SHRI SHAJI P. JACOB, LEARNED SR. DR REPRESENTED ON BEHALF OF THE REVENUE AND NONE REPRESENTED ON BEHALF OF THE ASSESSEE. HERE W E MAY SPECIFICALLY MENTION THAT I.T.A. NOS.137 & 138/MDS/2011 2 THE APPEALS WERE POSTED FOR HEARING ON 10-01-2012 O N WHICH DATE AN ADJOURNMENT APPLICATION HAD BEEN FILED BY ONE SHRI G. S. SHIVEK UMAR, ADVOCATE. THE VAKALAT IN THE PRESENT CASE HAS BEEN FILED IN THE NAME OF SHRI R. SANKARANARAYANAN AND SHRI L. CHANDRASEKARAN, ADVOCATES. ON 10-01-2012 ONE SHRI NARESH ALSE HAD APPEARED AND MENTIONED THAT HE WAS WORKING IN THE OFFICE OF SHRI G. S. SHIVEKUMAR. HE WAS INFORMED THAT THE APPEALS WERE ADJOURNED TO 11-01-2 012 FOR THE REPRESENTATION OF THE COUNSEL IN THE PRESENT CASE. HOWEVER, TODAY ON 11-01-2012 NONE APPEARED ON BEHALF OF THE ASSESSEE. CONSEQUENTLY, THE APPEALS ARE BEING DECIDED ON MERITS. 3. IN THE REVENUES APPEALS THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : ITA NO.137/MDS/2011: 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2.1 THE LEARNED CIT(A) HAS ERRED IN DELETING THE A DDITION OF ` 2 CRORES ASSESSED U/S 68 STATED TO BE LOAN OBTAINED FROM M /S. FOSSIL LOGISTICS P. LTD. 2.2 THE LEARNED CIT(A) HAS ERRED IN RELYING UPON T HE CONFIRMATION LETTER FOR THE CREDITS FROM M/S. FOSSIL LOGISTICS P. LTD . 2.3 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE ASSESSEE HAS NOT DISCHARGED THE ONUS ON IT TO PRODUCE EVIDENCE TO PROVE THE GENUINENESS OF THE TRANSACTION AND CAPACITY OF TH E CREDITOR TO ADVANCE THE MONEY. 2.4 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT F ILING OF CONFIRMATION FOR CREDITS FOR THE AY 2003-04 DOES NOT ABSOLVE THE A SSESSEE FROM THE ONUS TO PROVE THE GENUINENESS OF THE CREDITS RELA TING TO THE RELEVANT ASSESSMENT YEAR. I.T.A. NOS.137 & 138/MDS/2011 3 2.5 WITHOUT PREJUDICE TO THE ABOVE IT IS SUBMITTED THAT HAVING REGARD TO THE PROVISIONS OF RULE 46A OF I.T. RULES, THE LEA RNED CIT(A) OUGHT TO HAVE GIVEN THE ASSESSING OFFICER A REASONABLE OPP ORTUNITY TO EXAMINE THE EVIDENCE PRODUCED BEFORE THE LEARNED CIT(A) F OR THE FIRST TIME. ` 3.1 THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` 7,80,000/- U/S 68 IN RESPECT OF UNEXPLAINED INCREASE IN UNSE CURED LOANS. 3.2 THE LEARNED CIT(A) HAS ERRED IN RELYING UPON T HE CONFIRMATION LETTER FOR THE LOANS FROM THE DIRECTORS OF THE ASSESSEE. 3.3 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE ASSESSEE HAS NOT DISCHARGED THE ONUS ON IT TO PRODUCE EVIDENCE TO PROVE THE GENUINENESS OF THE TRANSACTION AND CAPACITY OF TH E CREDITOR TO ADVANCE THE MONEY. 3.4 WITHOUT PREJUDICE TO THE ABOVE IT IS SUBMITTED THAT HAVING REGARD TO THE PROVISIONS OF RULE 46A OF I.T. RULES, THE LEA RNED CIT(A) OUGHT TO HAVE GIVEN THE ASSESSING OFFICER A REASONABLE OPP ORTUNITY TO EXAMINE THE EVIDENCE PRODUCED BEFORE THE LEARNED CIT(A) F OR THE FIRST TIME. 4.1 THE LEARNED CIT(A) HAS ERRED IN DELETING THE A DDITION MADE U/S 14A IN RESPECT OF INTEREST PAID OF ` 20,02,740/-. 4.2 THE LEARNED CIT(A) HAS ERRED IN STATING THAT T HE ASSESSEE IS ALSO IN THE BUSINESS OF DEALING IN SHARES. 4.3 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE AUDIT REPORT OF THE ASSESSEE DOES NOT INDICATE THAT THE ASSESSEES NA TURE OF BUSINESS INCLUDES DEALING INS SHARES. 4.4 THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT S INCE THE ASSESSEE DID NOT EARN ANY EXEMPT INCOME THE PROVISIONS OF SECT ION 14A DID NOT APPLY. I.T.A. NOS.137 & 138/MDS/2011 4 4.5 HAVING REGARD TO THE DECISION OF THE HON'BLE T RIBUNAL, DELHI IN THE CASE OF M/S. CHEMINVEST LTD (121 ITD 318) THE CIT (A) OUGHT TO HAVE UPHELD THE ACTION OF THE ASSESSING OFFICER. 5. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARN ED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. ITA 138/MDS/2011 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2.1 THE LEARNED CIT(A) HAS ERRED IN DELETING THE A DDITION MADE U/S 14A IN RESPECT OF INTEREST PAID OF ` 22,41,445/-. 2.2 THE LEARNED CIT(A) HAS ERRED IN STATING THAT T HE ASSESSEE IS ALSO IN THE BUSINESS OF DEALING IN SHARES. 2.3 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE AUDIT REPORT OF THE ASSESSEE DOES NOT INDICATE THAT THE ASSESSEES NA TURE OF BUSINESS INCLUDES DEALING IN SHARES. 2.4 THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT S INCE THE ASSESSEE DID NOT EARN ANY EXEMPT INCOME THE PROVISIONS OF SECT ION 14A DID NOT APPLY. 2.5 HAVING REGARD TO THE DECISION OF THE HON'BLE T RIBUNAL, DELHI IN THE CASE OF M/S. CHEMINVEST LTD (121 ITD 318) THE CIT (A) OUGHT TO HAVE UPHELD THE ACTION OF THE ASSESSING OFFICER. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARN ED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. I.T.A. NOS.137 & 138/MDS/2011 5 4. IT WAS SUBMITTED BY THE LEARNED DR THAT IN REGAR D TO ITA 137/MDS/2011 THE ISSUES WERE AGAINST THE ACTION OF THE LEARNED CIT(A ) IN ADMITTING ADDITIONAL EVIDENCE WITHOUT GRANTING THE ASSESSING OFFICER OPP ORTUNITY TO EXAMINE THE EVIDENCES PRODUCED. IT WAS THE FURTHER SUBMISSION THAT IN REGARD TO ITA NO. 138/MDS/2011 THE ISSUE WAS AGAINST THE ACTION OF TH E LEARNED CIT(A) IN DELETING THE DISALLOWANCE MADE BY INVOKING THE PROVISIONS OF SEC TION 14A. IN REGARD TO ITA NO. 137/MDS/2011 IT WAS THE SUBMISSION THAT IN PARAS 4. 2, 4.3 & 4.4 AS ALSO PARA 5.2 OF THE ORDER OF THE LEARNED CIT(A) THE LEARNED CIT(A) HAS TAKEN ON RECORD EVIDENCE IN THE FORM OF CONFIRMATION OF LOANS WHICH WAS NOT PUT TO THE ASSESSING OFFICER FOR HIS REBUTTAL. IT WAS THE SUBMISSION THAT HE HAD NO OBJ ECTION IF THE ISSUES ARE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE-ADJUDIC ATION. IN REGARD TO ITA NO. 138/MDS/2011 IT WAS THE SUBMISSION THAT THE ISSUE W AS LIABLE TO BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE-ADJUDICATION I N LINE WITH THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE MFG. CO. LTD. V. DCIT & ANOTHER REPORTED IN 328 ITR 81. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE LEARNED CIT(A) HAS ADMITTED ADDITIONAL EVIDENCE AND THE SAM E HAS BEEN DONE IN VIOLATION OF THE PROVISIONS OF RULE 46A INSOFAR AS THE EVIDENCES HAD NOT BEEN PUT TO THE ASSESSING OFFICER FOR HIS REBUTTAL, WE ARE OF THE V IEW THAT THE ISSUES IN THE APPEAL IN ITA NO. 137/MDS/2011 ARE LIABLE TO BE RESTORED TO T HE FILE OF THE ASSESSING OFFICER FOR RE-ADJUDICATION. THE ASSESSING OFFICER SHALL G RANT THE ASSESSEE ADEQUATE I.T.A. NOS.137 & 138/MDS/2011 6 OPPORTUNITY TO PRODUCE ALL SUCH EVIDENCES AS ARE RE QUIRED BY THE ASSESSEE TO SUBSTANTIATE ITS CLAIM. IN REGARD TO THE APPEAL OF THE REVENUE IN ITA NO. 138/MDS/2011, AS IT IS NOTICED THAT THE FACTS REQUI RED FOR ADJUDICATING THE ISSUE ARE NOT EMANATING FROM THE ORDER OF THE LOWER AUTHORITI ES INSOFAR AS IN THE ASSESSING OFFICERS ORDER IT IS MENTIONED THAT THERE IS ABSEN CE OF DETAILS AND EVIDENCES AND IN THE ORDER OF THE LEARNED CIT(A) HE HAS GIVEN A FIND ING THAT THE ENTIRE AMOUNT BORROWED FROM M/S. FOSSIL LOGISTICS P. LTD. IS SAID TO HAVE BEEN USED FOR THE PURCHASE OF SHARES OF M/S. SUPREME RENEWABLE ENERGY LTD, THIS ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE-ADJUDICATI ON AFTER OBTAINING ALL THE FACTS RELEVANT TO THE ISSUE. THE ASSESSING OFFICER SHALL GRANT THE ASSESSEE ADEQUATE OPPORTUNITY TO SUBSTANTIATE THE ASSESSEES CASE. I N THE CIRCUMSTANCES, THE APPEALS OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES . 6. THE ORDER WAS PRONOUNCED IN THE COURT ON 11-01-2 012. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 11 TH JANUARY, 2012. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE