ACIT, Circle-12(2), Kol, Kolkata V. M/s Tirupati Awas(P) Ltd., Kolkata

ITA 1560/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1195 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 29-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Reassessment proceedings
• Section: 142(1); 133(6); 148; 132

Judgement Text

1 ITA NO. 1560/KOL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, KOLKATA BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER, AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 1560/KOL/2016 A.Y 2011-12 A.C.I.T, CIR-12(2) VS. M/S. TIRUPATI AWAS P.LTD KOLKATA PAN:AACCT4575A (APPELLANT) (RES PONDENT) APPEARANCES BY : S. DASGUPTA, ADDL. CIT, LD.DR SHRI SUBASH AGARWAL, ADVOCATE, LD.AR DATE OF HEARING : 08-01-2018 DATE OF PRONOUNCEMENT : 28-03-2018 O R D E R SHRI S.S. VISWANETHRA RAVI, JM :- THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), 4, KO LKATA DATED 04- 05-2016 FOR THE ASSESSMENT YEAR 2011-12. 2. IT IS NOTICED THAT THE APPEAL FILED BY THE REVE NUE IS TIME BARRED BY 6 DAYS, FOR WHICH THE REVENUE VIDE ITS LETTER D T. 29-07-2016 ( COPY OF THE SAME IS ON RECORD) FILED FOR CONDONATION OF DELAY. CONSIDERING THE SAME AND HEARING BOTH THE PARTIES, WE CONDONE T HE SAID DELAY AND ADMIT THE APPEAL AND DISPOSE OF THE SAME ON MERITS ON THE BASIS OF MATERIAL ON RECORD. 2 ITA NO. 1560/KOL/2016 3. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS TO BE DECIDED AS TO WHETHER THE CIT-A IS JUSTIFIED IN DELETING THE ADD ITION MADE BY THE AO BY ACCEPTING NEW EVIDENCE UNDER RULE 46A OF THE IT RULES 1962 IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A COMPANY ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT & INVESTMENT IN SHARES. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y UNDER CONSIDERATION DECLARING TOTAL INCOME OF RS.10,68,10 0/- ON 30-01-2015, AND THE SAME WAS PROCESSED U/S. 143(1) OF THE ACT ON 28-01-2012. 5. A SEARCH & SEIZURE OPERATION WAS CONDUCTED IN TH E OFFICE OF SACHET SARAF & OTHERS U/S. 132 OF THE ACT ON 22-03-2013, W HEREIN A STATEMENT OF SHRI SACHET SARAF, DIRECTOR OF M/S. MARIGOLD VAN IJYA P.LTD WAS TAKEN. HE STATED THAT M/S. MARIGOLD VANIJYA P.LTD IS A BRO KER OF CURRENCY DERIVATIVES LISTED WITH MCX STOCK EXCHANGE. A NOTIC E U/S. 148 OF THE ACT WAS ISSUED THE ASSESSEE. IN RESPONSE, THE ASSESSEE REQUESTED TO TREAT THE RETURN ORIGINALLY FILED ON 08-08-11, AS A RETUR N FILED IN RESPONSE TO NOTICE ISSUED U/S. 148 OF THE ACT. THE AO FURTHER I SSUED NOTICES U/S. 143(2) AND 142(1) OF THE ACT AND IN RESPONSE TO WHI CH, THE AR OF THE ASSESSEE APPEARED. FOR VERIFICATION OF TRANSACTION NOTICE U/S. 133(6) OF THE ACT WAS ISSUED TO MCX, MUMBAI AND ASSESSEE WAS ALSO ASKED TO CLARIFY THE ALLEGED LOSS OF RS. 43,90,251/- . IT FA ILED TO DO SO. THEREFORE, AO ADDED BACK THE SUM OF RS. 43,90,251/- AS UNEXPLA INED LOSS BY HIS ORDER DT. 31-03-2015 PASSED U/S. 147/143(3). 6. THE ASSESSEE CHALLENGED THE ABOVE ORDER OF AO BE FORE THE CIT-A AND CONTENDED THAT THE SAID TRANSACTION WAS ONLINE THROUGH MCX STOCK EXCHANGE BY ITS BROKER, M/S. MARIGOLD VANIJYA PVT. LTD, IS A REGISTERED 3 ITA NO. 1560/KOL/2016 MEMBER OF MCX STOCK EXCHANGE LIMITED. THE CLAIM OF LOSS WAS DULY REFLECTED IN THE AUDITED FINANCIAL STATEMENT AS WEL L AS IN THE RETURN OF INCOME BY APPLYING THE PROVISIONS OF SECTION 43(5)( D) OF THE ACT. THE ASSESSEE COMPANY IS REGISTERED WITH THE SAID BROKER AND COMPLIED WITH ALL KYC NORMS. THE ASSESSEE HAS BEEN ALLOTTED CLIEN T (CODE) NO. CK0105 FOR TRADING PURPOSE IN CURRENCY DERIVATIVES IN THE SEGMENT OF EXCHANGE. THE MCX STOCK EXCHANGE IS A NOTIFIED/LISTED STOCK EXCHANGE UNDER THE INCOME TAX ACT. THE ASSESSEE HAS BEEN ISSUED VALID CONTRACT NOTES IN RESPECT OF ON LINE TRADE, WHEREIN, ORDER NUMBER, TR ADE NUMBER, TRADE TIME ETC. ARE PROPERLY MENTIONED AS PRESCRIBED BY C ONCERNED AUTHORITIES/STOCK EXCHANGE. THE ASSESSEE MADE THE PAYMENTS TO ABOVE SAID REGISTERED/LISTED BROKER FOR THE SAID TRANSACT ION BY WAY OF ACCOUNT PAYEE CHEQUES. THE ASSESSEE SUBMITTED ALL THE DETAI LS RELATING TO CONTRACT NOTES AND LEDGER COPIES OF ASSESSEE IN THE BOOKS OF SAID BROKER. APART FROM ABOVE, THE ASSESSEE ALSO SUBMITT ED AN AFFIDAVIT OF MR. SACHET SARAF, DIRECTOR OF M/S. MARIGOLD VANIJYA PVT. LTD ADMITTING THAT ALL THE FOREIGN CURRENCY TRANSACTIONS DONE BY ASSESSEE ARE BOANFIDE, GENUINE AND RECORDED BY SAID MCX STOCK E XCHANGE REFERRING TO THE STATEMENT GIVEN BY SHRI SACHET SA RAF DURING THE COURSE OF SEARCH & SEIZURE OPERATION, IT WAS SUBMIT TED THAT THERE NO DIRECT CONNECTION WITH THE ASSESSEE. 7. THE CIT-A CONSIDERING THE ABOVE SUBMISSIONS OF A SSESSEE WAS SATISFIED THAT THE ASSESSEE SUBMITTED ALL THE REQU IRED DETAILS IN SUPPORT OF ITS TRANSACTION/CLAIM. THE CIT-A HELD THAT THE A O DID NOT PLACE ON RECORD ANY COGENT AND FACTUAL OR PALPABLE MATERIAL /EVIDENCE IN SUPPORT OF HIS VIEW AND THEREFORE, DELETED THE SAID ADDITIO N MADE BY THE AO BY OBSERVING AS UNDER:- 4.2 I HAVE CONSIDERED THE SUBMISSION OF THE AR OF T HE APPELLANT AS WELL AS THE CASE LAWS REFERRED TO IN HIS SUBMISSION. I FIND THAT THE APPELLANT HAS INCURRED LOSS OF RS. 43,90,251/- ON ACCOUNT OF DEALING IN FOREIGN EXCHAN GE DERIVATIVES. THE ASSESSMENT IN 4 ITA NO. 1560/KOL/2016 THE INSTANT CASE WAS REOPENED BY THE AO BASED ON IN FORMATION RECEIVED BY THE AO OF MARIGOLD VANIJYA (P) LTD. MR. SHRI SACHET SARAFT, O NE OF THE DIRECTORS OF MARIGOLD VANIJYA (P) LTD DURING THE COURSE OF SEARCH & SEIZURE OPERA TION U/S. 132 OF THE ACT, HAD DEPOSED BEFORE THE CONCERNED DDIT THAT THE COMPANY WAS ENGA GED IN THE BUSINESS OF PROVIDING ACCOMMODATION OF LOSSES AND PROFITS TO THE BENEFICI ARIES AS AND WHEN DESIRED. THE APPELLANT IN THE INSTANT CASE BEING AN ALLEGED BENE FICIARY WAS ISSUED NOTICE U/S. 148 OF THE ACT. IN COURSE OF THE REASSESSMENT PROCEEDINGS, THE APPELLANT FURNISHED ALL THE REQUISITE DOCUMENTS IN SUPPORT OF TRANSACTIONS ENTE RED INTO BY IT IN RESPECT OF FOREIGN EXCHANGE DERIVATIVES. ON THIS SCORE, I FIND THAT NO ENQUIRY, WHATSOEVER, HAS BEEN CONDUCTED BY THE AO WITH EITHER THE BROKER OR THE MCX STOCK EXCHANGE TO VERIFY THE GENUINENESS OF THE TRANSACTIONS ENTERED INTO BY THE APPELLANT. NO CONVINCING MATERIAL, EXCEPT FOR THE STATEMENT OF MR. SACHET SARAF, HAS B EEN RELIED UPON BY THE AO IN MAKING THE IMPUGNED ADDITION. IT HAS BEEN BROUGHT TO MY NO TICE THAT EVEN THE STATEMENT OF MR. SACHET SARAF WAS RETRACTED AT A LATER POINT OF TIM E (SUPRA). THIS FACT HAS NOT BEEN CONTROVERTED BY THE AO IN ANY MANNER. IT IS TRITE L AW THAT ADDITIONS CANNOT BE MADE, BASED MERELY ON THE STATEMENT OF A THIRD PARTY, IN THE ABSENCE OF ANY CORROBORATIVE MATERIAL EVIDENCE. THERE MUST BE COGENT AND PALPABL E MATERIAL EVIDENCE MATERIAL EVIDENCES ON RECORD FOR ANY JUSTIFIABLE ACTION IN T HE MATTER. I FIND THAT THE AO HAS NOT DONE JUSTICE IN THE MATTER IN THIS RESPECT FOR WHIC H THE IMPUGNED ADDITION CANNOT STAND THE TEST OF APPEAL. I FIND THAT THE APPELLANT HAS D ISCHARGED ITS INITIAL ONUS BY FURNISHING ALL THE REQUISITE DETAILS IN RESPECT OF FOREIGN EXC HANGE LOSS INCURRED BY IT. IT IS NOT THE CASE OF THE AO THAT THE APPELLANT HAS FAILED TO FUR NISH DOCUMENTARY EVIDENCES IN SUPPORT OF THE SAID FOREIGN CURRENCY LOSS. THUS, CONSIDERIN G THE ENTIRE FACTS AND CIRCUMSTANCES OF THE ISSUE AT HAND IN THE BACKDROP OF THE VARIOUS CA SE LAWS CITED IN THE SUBMISSION SUPRA AND IN THE ABSENCE OF ANY COGENT FINDING OR CORROB ORATIVE MATERIALS BROUGHT ON RECORD BY THE AO TO SUBSTANTIATE HIS STAND IN SUBVERTING T HE SUBMISSION OF THE APPELLANT ON THE IMPUGNED MATTER AT THE ASSESSMENT STAGE. I DO NOT F IND ANY MERIT IN THE ACTION OF THE AO IN MAKING THE IMPUGNED DISALLOWANCE OF RS.43,90, 251/- AS UNEXPLAINED LOSS WITH REGARD TO THE SAID TRANSACTIONS. IN VIEW OF THE FOR EGOING, I FIND THAT THE ADDITION MADE ON THIS COUNT IS NOT SUSTAINABLE AT THE APPELLATE STAG E WHICH IS NOW DIRECTED TO BE DELETED. THE AO IS DIRECTED ACCORDINGLY. 8. BEFORE US THE LD. DR SUBMITS THAT THE ASSESSEE F AILED TO PRODUCE ANY EVIDENCE GATHERED BY THE AO IN RE-ASSESSMENT PR OCEEDINGS. MCX STOCK EXCHANGE DID NOT FURNISH FULL DETAILS IN RESP ECT OF SAID TRANSACTION OF ASSESSEE IN RESPONSE TO NOTICE ISSUED U/S. 133(6 ) OF THE ACT. THUS THE AO HAS RIGHTLY ADDED THE SAID AMOUNT TO THE TOTAL I NCOME OF ASSESSEE. THE CIT-A BASING ON SUBMISSIONS OF ASSESSEE HAS GIV EN RELIEF TO ASSESSEE WITHOUT CALLING REMAND REPORT OF AO IN ADM ITTING ADDITIONAL EVIDENCE. THUS, THE CIT-A HAS ERRED IN ACCEPTING W RONG CONTENTION OF ASSESSEE. HE ALSO VIOLATED THE PROVISIONS OF RULE 4 6A IN ADMITTING THE SAME. THE CIT-A HAS ALSO FAILED TO GIVE AN OPPORTUN ITY TO AO FOR VERIFICATION OF THE DETAILS AS SUBMITTED BY THE ASS ESSEE. IN VIEW OF ABOVE, HE PRAYED TO ALLOW THE GROUNDS OF APPEAL OF THE REVENUE. 9. ON THE OTHER HAND, THE LD. AR SUBMITS THAT THERE WAS NO NEW SUBMISSION/EVIDENCE BEFORE THE CIT-A AS ALLEGEDLY A RGUED BY THE LD.DR. 5 ITA NO. 1560/KOL/2016 THE CIT-A ONLY CONSIDERED THOSE DETAILS WHICH WERE AVAILABLE BEFORE THE AO. IN RESPONSE TO NOTICES ISSUED U/S. 143(2) AND 1 42(1) OF THE ACT, THE ASSESSEE PRODUCED ALL THE DETAILS BEFORE THE AO IN SUPPORT OF THE CONTENTION AND CLAIM. IN RESPONSE TO NOTICE ISSUED U/S. 133(6) OF THE ACT, SAID MCX STOCK EXCHANGE, MUMBAI PROVIDED ALL THE DETAILS REGARDING THE SAID TRANSACTIONS. THE AO AFTER EXAMI NING THE SAME, HAS HIGH HANDEDLY HELD THAT THE CLAIM OF ASSESSEE IS BO GUS AND THEREFORE, ADDED THE IMPUGNED AMOUNT, WHICH IS NOT AT ALL JUST IFIED. THE LD.AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE CIT-A AND P RAYED TO DISMISS THE GROUNDS RAISED BY THE REVENUE IN THE APPEAL. 10. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L ON RECORD. WE FIND THAT THE AO ISSUED NOTICE U/S. 133(6) OF THE A CT TO MCX STOCK EXCHANGE, MUMBAI. ADMITTEDLY THE SAID STOCK EXCHANG E COMPLIED WITH THE NOTICE ISSUED BY THE AO ALONG WITH SUPPLYING VA RIOUS DETAILS IN RESPECT OF SAID TRANSACTION. ACCORDING TO AO, IT IS INCOMPLETE DETAILS. HOWEVER, THE CIT-A NOTED IN HIS ORDER THAT THE AO F AILED TO VERIFY THE GENUINENESS OF TRANSACTION WITH THAT OF BROKER OF M CX STOCK EXCHANGE. IT IS ALSO OBSERVED THAT THE CIT-A FOUND SATISFIED THAT THE ASSESSEE FILED ALL THE REQUIRED DETAILS AND DOCUMENTS IN SUP PORT OF THE TRANSACTIONS ENTERED INTO BY IT IN RESPECT OF FOREI GN EXCHANGE DERIVATIVES. WE FIND THAT THE AO MADE THE ADDITION ONLY ON THE BASIS OF STATEMENT RECORDED DURING THE SEARCH & SEIZURE OPE RATION IN THE PREMISES OF THE SAID SHRI SACHET SARAF, DIRECTOR OF M/S. MARIGOLD VANIJYA P.LTD. THE SAID STATEMENT OF MR. SARAF WAS RETRACT ED AT A LATER POINT OF TIME. THE CIT-A FOUND SATISFIED THAT THERE WAS NO C ORROBORATIVE EVIDENCE WHICH SUPPORTS THE VIEW OF THE AO THAT THE SAID TRANSACTION WAS UNEXPLAINED. THEREFORE, WE FIND NO ADDITIONAL E VIDENCE, WHICH WAS FILED BEFORE THE CIT-A, BUT NOT BEFORE THE AO. THE CIT-A DELETED THE 6 ITA NO. 1560/KOL/2016 SAID ADDITION ONLY ON THE BASIS OF MATERIAL/EVIDENC E AVAILABLE ON RECORD, WHICH WERE VERY MUCH BEFORE THE AO IN THE RE-ASSESS MENT PROCEEDINGS. THE CASE LAWS AS RELIED ON BY THE ASSESSEE BEFORE T HE CIT-A WERE RELEVANT AND APPLICABLE TO THE PRESENT FACTS OF THE CASE. THE CIT-A HAS DISCUSSED THE EACH CASE LAW THOROUGHLY. THUS, THE C IT-A WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO ON THIS ISSUE. THE GROUNDS RAISED BY THE REVENUE IN THE APPEAL ARE DISMISSED. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28-03 -2018 SD/- SD/- J. SUDHAKAR REDDY S.S.VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28-03-2018 1. THE APPELLANT/DEPARTMENT: THE ACIT, CIRCLE 12(2 ), AAYKAR BHAWAN, 6 TH FLOOR, P-7 CHOWRINGHEE SQUARE, KOL-69. 2 . THE RESPONDENT/ ASSESSEE: M/S. TIRUPATI AWAS P.LTD 59 K.N SEN ROAD, KOLKATA - 42. 3. CIT 4. CIT(A) 5. THE DEPARTMENTAL REPRESENTATIVE 6. GUARD FILE TRUE COPY BY ORDER SR.PS/H.O.O ITAT KOLKATA * PRADIP SPS COPY OF THE ORDER FORWARDED TO: -