Prabhavi Investments Pvt. Ltd, Ahmedabad V. The ITO, Ward-3(1)(4), Ahmedabad

ITA 1410/AHD/2018

AI Insights

Prabhavi Investments Pvt. Ltd. appealed against the order of the Commissioner of Income-tax (Appeals)-9, Ahmedabad, which confirmed the addition of Rs. 5,00,000 as unexplained investment in shares of M/s Gold Finch Jewellery Ltd. on a protective basis. The case originated from a reassessment under Section 148 of the Income Tax Act, 1961, following statements made by the director of Prabhavi Investments during investigations related to M/s Cluster Jewellery Ltd. The tribunal examined the evidences provided by the assessee, including audited books and bank statements, and found them sufficient to establish the genuineness of the investments, leading to the allowance of the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129012 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-08-2023
• Assessment Year: 2008-2009
• Appeal Filed On: 27-05-2018
• Other Referred Cases: Cluster Jewellery Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MEHUL K. PATEL
• Keywords: Unexplained investment; Accommodation entries
• Section: 69; 148; 14A; 143(1); 250

Judgement Text

ITA No. 1410/Ahd/2018 Prabhavi Investments Pvt Ltd Vs. ITO Assessment Years: 2008-09 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD \ BEFORE Ms. SUCHITRA R. KAMBLE, JUDICIAL MEMBER ITA No. 1410/Ahd/2018 Assessment Year: 2008-09 Prabhavi Investments Pvt. Ltd., B-801/2, Sukh tower, Opp. Mirambica School, Naranpura, Ahmedabad-380013 PAN : AACCP 7093 H Vs Income Tax Officer, Ward-3(1)(4), Ahmedabad अपीलाथ / (Appellant) यथ / (Respondent) Assessee by : Shri Mehul K. Patel, Advocate Revenue by : Shri Yogesh Mishra, Sr DR सुनवाई की तारीख/Da te of Hear ing : 28/ 08/2 023 घोषणा की तारीख /Date of Pro noun ce men t : 13/1 0/20 23 O R D E R This appeal filed by the assessee is directed against the order of the Commissioner of Income-tax (Appeals)-9, Ahmedabad [hereinafter referred to as "CIT(A)" for short] dated 21.02.2018 passed under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as "the Act" for short] for the Assessment Year 2008-09. 2. The grounds raised by the assessee in its appeal read as under:- “1. The learned Commissioner of Income Tax (Appeals) has erred in not adjudicating the grounds raised by the Appellant in respect of action of the Assessing Officer in issuing notice u/s.148 of the Act, which is illegal and bad in law and hence the same should be quashed. Reassessment made on the basis of the same requires to be cancelled. 2. The learned Commissioner of Income Tax (Appeals) has erred in not adjudicating the grounds raised by the Appellant in respect of action of the Assessing Officer in passing an order u/s.143(3) r.w.s.147 of the I.T. Act, 1961 which is illegal and bad in law hence the same requires to be cancelled. 3. The learned Commissioner of Income Tax (Appeals) has erred in confirming the addition of Rs.5,00,000/- made by the Assessing Officer treating the amount of investment made by the Appellant Co. in the shares of M/s.Goldfinch Jewellery Ltd. as alleged unexplained investment u/s.69 of the I. T. Act, 1961 on protective basis.” ITA No. 1410/Ahd/2018 Prabhavi Investments Pvt Ltd Vs. ITO Assessment Years: 2008-09 Page 2 of 4 3. The Assessee company filed return of income for A.Y. 2008-09 on 29.11.2008 declaring total income of Rs. 9,16,390/-. The return was processed u/s 143(1) of the Act on 23.04.2009. The case was reopened after recording the reason and notice u/s 148 was issued on 12.03.2015.- The assessee company in reply to the said notice vide letter dated 18.08.2015 requested to treat the original return of income filed as on 29.11.2008 as filed against notice u/s 148 of the Act. The assessee company requested to supply the reasons for re-opening which was supplied to the assessee company on 18.08.2015. The assessee objected the same vide letter dated 24.09.2015 and the same was disposed off vide order dated 02.11.2015. The Assessing Officer observed that in the case of Cluster Jewellery Ltd. for A.Y. 2008-09, the assessee company’s Director Shri Rupang Ramanlal Shah’s statement was recorded by ITO Ward 1(3) Ahmedabad on 06.03.2013 and 28.03.2013 u/s 131(1) of the Act. The Director of the assessee company stated that during the financial year 2007-08 his company had invested Rs. 9,00,000/- in the shares of M/s Cluster Jewellery Ltd. and Rs. 5,00,000/- in the shares of M/s Gold Finch Jewellery Pvt. Ltd. and admitted that he had received cash from the respective companies against which he has issued cheques for investing in the shares as well as admitted that he has received 0.5% commission on these accommodation entries. After taking into account the reply of the assessee company, the Assessing Officer held that while recording the statement of Shri Rupang R. Shah Director of the company on 28.09.2013 for the cross examination in the case of Cluster Jewellery Ltd. wherein he had also not explained the source of investments in the said companies and therefore in light of no supporting details regarding credit/deposit in the books/bank accounts of the assessee company, the same should be treated as undisclosed investment u/s 69 of the Act in the hands of the assessee company and taxed the same on protective basis. The Assessing Officer also made disallowance of Rs. 5,72,098/- u/s 14A of the Act. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. The Ld. AR submitted that the assessee company has shown all the investment in its books of accounts which was audited as per the Income Tax Act. In fact, a claim ITA No. 1410/Ahd/2018 Prabhavi Investments Pvt Ltd Vs. ITO Assessment Years: 2008-09 Page 3 of 4 for transactions of investments shown in the books of accounts in the share capital/premium of M/s Cluster Jewellery Ltd. and M/s Gold Finch Jewellery Ltd. has not been deleted or omitted and the same stands as investments. The assessee company issued account payee’s cheques for investments of Rs. 9,00,000/- and Rs. 5,00,000/- during the F.Y. 2007-08 in the share capital / share premium of the said two companies which transactions have been shown in the books of accounts. The Ld. AR submitted that in substantive additions of M/s Gold Finch Jewellery Ltd., the CIT(A) has deleted the addition thereby holding that documentary evidence while establishing the investment made by the assessee company herein in the said company. Thus, the protective addition does not sustain. In fact, genuineness of the transactions is accepted by the Revenue in taker’s case. 6. The Ld. DR submitted that the substantive evidence was never filed by the assessee in consonance with the undisclosed investment and therefore the Assessing Officer has rightly made addition u/s 69 on protective basis as the Director of the Assessee company admitted that the company received 0.5% commission for investment. The Ld. DR relied upon the assessment order and the order of the CIT(A). 7. Heard both the parties and perused all the relevant material available on record. There is delay of 26 days in filing the present appeal for which the assessee has filed the affidavit explaining the reason for delay. The delay appears to be genuine, hence delay is condoned. It is pertinent to note that in case of M/s Gold Finch Jewellery Ltd. the substantive addition was deleted by the CIT(A) thereby observing that the details of the very same investment made by the assessee company herein is genuine. On one hand the Revenue is finding the investment in taker’s account genuine but in the giver’s case taking a contrary view despite giving the details of the investments and also the parties to whom the investment is given as well as explaining the source of the investment in assessee’s company’s accounts and from bank statements. Merely, taking the stand that the assessee company has not filed supportive details and admitted the investment cannot hold against the assessee, when in fact, the assessee has given the explanation through its accounts as well as bank statement that there was investment and thus, Section 69 will not be attracted ITA No. 1410/Ahd/2018 Prabhavi Investments Pvt Ltd Vs. ITO Assessment Years: 2008-09 Page 4 of 4 when the disclosed investment is on record. In fact, the protective addition in the assessee’s case does not survive on this basis itself. Therefore, appeal of the assessee is allowed. 8. In result, appeal of the assessee is allowed. Order pronounced in the open Court on this 13 th day of October, 2023. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 13 th day of October, 2023 Bt* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order TRUE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad 1. Date of dictation: .... Words processed by Hon’ble JM on her laptop...11.10.2023 2. Date of dictation: .... Words processed by Hon’ble JM on her laptop...12.10.2023 3. Date on which the typed draft is placed before the Dictating Member: ...12.10.2023.... 4. Date on which the approved draft comes to the Sr. P.S./P.S.: ...12.10.2023.... 5. Date on which the fair order is placed before the Dictating Member for Pronouncement: ......13.10.2023..................... 6. Date on which the file goes to the Bench Clerk : ......13.10.2023............. 7. Date on which the file goes to the Head Clerk : .................................. 8. The date on which the file goes to the Assistant Registrar for signature on the order: ...... 9. Date of Despatch of the Order: ........................