Vasupujya Enterprises Pvt. Ltd., Kolkata V. ITO, Ward-5(4),Kolkata, Kolkata

ITA 1881/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1751 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 27-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S M DAS CITSRDR
• Assessee Lawyers: MANISH TIWARI
• Keywords: Source of fund; Tangible material
• Section: 147; 69; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.1881/KOL/2016 ASSESSMENT YEAR:2005-06 VASUPUJYA ENTERPRISES PVT. LTD., 35, CHITTARANJAN AVENUE, KOLKATA-700012 [ PAN NO.AAACV 8958 M ] / V/S . INCOME TAX OFFICER, WARD-5(4), P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI MANISH TIWARI, FCA /BY RESPONDENT SHRI S.M. DAS, ADDL. CIT-SR-DR /DATE OF HEARING 21-03-2017 /DATE OF PRONOUNCEMENT 12-05-2017 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKATA DATED 20.07.2016. A SSESSMENT WAS FRAMED BY ITO WARD-5(4), KOLKATA U/S 147 OF THE INCOME TAX ACT, 1 961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 28.03.2013FOR ASSES SMENT YEAR 2005-06. SHRI MANISH TIWARI, LD. AUTHORIZED REPRESENTATIVE A PPEARED ON BEHALF OF ASSESSEE AND SHRI S.M. DAS, LD. DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF OF REVENUE. 2. FIRST ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER BY S USTAINING THE DISALLOWANCE OF 15 LAKH U/S. 69 OF THE ACT. ITA NO.1881/KOL/2016 A.Y . 2005-06 VASUPUJYA ENTERPRISES PVT. LTD. VS. ITO W D-5(4) KOL. PAGE 2 3. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A PRIV ATE LIMITED COMPANY AND ENGAGED IN THE ACTIVITIES OF INVESTMENTS. THE ASSESSEE IN T HE YEAR UNDER CONSIDERATION ACQUIRED 3,000 SHARES OF M/S GAMBHIR TOWER PVT. LTD. (GTPL F OR SHORT) LOCATED IN JAIPUR FOR 15 LAKH. ON QUESTION BY THE AO ABOUT THE SOURCE OF SUCH INVESTMENT IN THE AFORESAID COMPANY, THE ASSESSEE FAILED TO FURNISH THE NECESSA RY DETAILS IN THIS REGARD. THEREFORE, THE AO TREATED THE AFORESAID INVESTMENT AS UNEXPLAI NED INVESTMENT U/S. 69 OF THE ACT. ACCORDINGLY, THE INVESTMENT WAS DISALLOWED AND ADDE D TO THE TOTAL INCOME OF ASSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE PROVISION OF S EC. 69 OF THE ACT ARE ATTRACTED TO THOSE INVESTMENTS WHICH HAVE NOT BEEN RECORDED IN T HE BOOKS OF ACCOUNT AS WELL AS EITHER ASSESSEE FAILS TO EXPLAIN THE NATURE AND SOU RCE OF INVESTMENT OR THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT SATISFACTORY. HOWEVE R, IN THE INSTANT CASE, THE SHARES ARE DULY RECORDED IN THE FINANCIAL STATEMENT WHICH HAS BEEN DULY AUDITED BY THE CHARTERED ACCOUNTANT. IT WAS ALSO SUBMITTED THAT THE IMPUGNED INVESTMENT WAS MADE BY THE ASSESSEE BY ISSUING DEMAND DRAFT OUT OF THE DISCLOS ED BANK ACCOUNTS, HENCE, THE SOURCE OF FUND CANNOT BE DOUBTED. THE ASSESSEE ALSO SUBMITTED THAT THERE IS NO EVIDENCE SUGGESTING THAT THE AMOUNT OF MONEY INVEST ED BY THE ASSESSEE WAS RETURNED TO IT IN THE FORM OF CASH. HOWEVER, THE LD. CIT(A) DISREGARDED THE CONTENTION OF THE ASSESSEE BY OBSERVING AS UNDER:- I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHORIZE D REPRESENTATIVE OF THE APPELLANT AS WELL AS THE ASSESSMENT ORDER FRAMED IN THE LIGHT OF THE MATERIALS AVAILABLE ON RECORD BEFORE THE ASSESSING OFFICER DU RING THE ASSESSMENT PROCEEDINGS. THE AO HAS CONSIDERED THE ISSUE IN DET AILS WHILE PASSING THE ASSESSMENT ORDER. KEEPING IN VIEW OF ABOVE, THE ORD ER OF THE AO IS UPHELD AND THIS GROUND OF APPEAL IS DISMISSED. BEING AGGRIEVED, ASSESSEE CAME IN SECOND APPEAL BEF ORE ON THE FOLLOWING GROUNDS:- 1. THAT ON THE FACT AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) IS WRONG AND UNJUSTIFIED IN DISMISSING APPELLANTS GRO UND ON MERIT AND THEREBY CONFIRMING THE ACTION OF THE ASSESSING OFFICER WHO CONSIDERED INVESTMENT IN ACQUIRING 3000 SHARES OF GAMBHIR TOWER PVT. LTD. AT RS.15,00,000- AS UNEXPLAINED U/S. 69 OF INCOME TAX ACT, 1961. 5. BEFORE US LD. AR REITERATED THE ARGUMENTS THAT W ERE MADE BEFORE LD. CIT(A) WHEREAS LD. DR HEAVILY RELIED ON THE ORDER OF ASSES SING OFFICER. ITA NO.1881/KOL/2016 A.Y . 2005-06 VASUPUJYA ENTERPRISES PVT. LTD. VS. ITO W D-5(4) KOL. PAGE 3 6. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE ON HAND, T HE PROCEEDINGS WERE INITIATED U/S. 147 OF THE ACT ON THE BASIS OF INFORMATION RECEIVED FROM DCIT, CIRCLE-3 JAIPUR. A SEARCH WAS CONDUCTED DATED 06.08.2008 ON SAKUN GROU P BASED IN JAIPUR INVOLVING TWO COMPANIES NAMELY M/S SGM REAL ESTATE PVT. LTD A ND M/S GAMBHIR TOWER PVT. LTD. IN THE STATEMENT OF DIRECTOR OF SAKUN GROUP, I T WAS ADMITTED THAT THE ACCOMMODATION ENTRY WAS TAKEN FROM THE ASSESSEE BY PAYING CASH TO THE ASSESSEE. ADMITTEDLY, ASSESSEE HAS MADE INVESTMENT FOR 15 LAKH BY ACQUIRING SHARES OF M/S GAMBHIR TOWER PVT. LTD. AND SHARES WERE PURCHASED B Y ASSESSEE AFTER MAKING THE PAYMENT FROM STANDARD CHARTERED BANK OF A/C NO.3310 5100813 WHICH WAS DULY DISCLOSED IN THE BALANCE-SHEET. THE BOOKS OF ACCOUN T OF THE ASSESSEE WERE AUDITED AND NO DEFECT WHATSOEVER WAS REPORTED BY THE AUTHORITIE S BELOW AS THE PAYMENT HAD BEEN MADE FROM THE DISCLOSED BANK ACCOUNT OF ASSESSEE. T HEREFORE, IT CANNOT BE INFERRED THAT ASSESSEE HAS UNDISCLOSED INVESTMENT AS ENVISAG ED U/S. 69 OF THE ACT. THE AUTHORITIES BELOW HAS JUST RELIED IN THE STATEMENT RECORDED OF THE DIRECTOR OF M/S GAMBHIR TOWER PVT. LTD. THE AUTHORITIES BELOW HAVE NOT BROUGHT ANY TANGIBLE MATERIAL SUGGESTING THAT IMPUGNED INVESTMENT WAS MA DE OUT OF THE UNDISCLOSED SOURCE OF FUND. HERE, IT IS PERTINENT TO NOTE THAT THE ASS ESSING OFFICER HAS MADE THE ADDITION U/S 69 OF THE ACT. A CAREFUL PERUSAL OF THE PROVISI ON DIVULGES THAT IN ORDER TO INVOKE THIS PROVISION, IT IS SINE QUA NON THAT THE ASSESSEE MUST HAVE MADE INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT. THE FACTU M OF THE ASSESSEE HAVING MADE INVESTMENT SHOULD BE FIRST PROVED BY THE AO, ONLY T HEN THE BURDEN SHIFTS ON THE ASSESSEE TO PROVE THE SOURCE OF INVESTMENT. SUCH IN VESTMENT OUTSIDE THE BOOKS OF ACCOUNT MUST BE POSITIVELY PROVIDED BY THE AO AND N OT ONLY INFERRED FROM THE ATTENDING FACTS. IF SUCH AN INVESTMENT OUTSIDE THE BOOKS IS NOT PROVED, THE ASSESSEE CANNOT BE CALLED UPON TO PROVE THE SOURCE OF SUCH A HYPOTHETICAL INVESTMENT. ADVERTING TO THE FACTS OF THE INSTANT CASE, IT IS F OUND THAT APART FROM RELYING ON THE STATEMENT GIVEN BY THE DIRECTOR OF THE COMPANY, THE AO HAS NOT BROUGHT ON RECORD ANY OTHER MATERIAL TO INDICATE THAT THE ASSESSEE HAS MA DE INVESTMENTS OUTSIDE THE BOOKS. IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE, WE ARE INC LINED TO REVERSE THE ORDER OF AUTHORITIES BELOW ITA NO.1881/KOL/2016 A.Y . 2005-06 VASUPUJYA ENTERPRISES PVT. LTD. VS. ITO W D-5(4) KOL. PAGE 4 7. WITH REGARD TO GROUND NO.2 NO ARGUMENT WAS ADVAN CED AT THE TIME OF HEARING, ACCORDINGLY SAME IS TREATED AS NOT PRESSED AND REJE CTED AS SUCH. 8. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED PAR TLY. ORDER PRONOUNCED IN OPEN COURT ON 12/05/2017 SD/- SD/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S ! - /05/2017 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-VASUPUJYAENTERPRISES PVT. LTD.35,CHITTAR ANJAN AVENUE, KOL-12 2. /RESPONDENT-ITO, WARD-5(4), P-7, CHOWRINGHEE SQ., K OLKATA-69 3. '# % / CONCERNED CIT 4. % - / CIT (A) 5. &'( ))'# , '# / DR, ITAT, KOLKATA 6. (*+ / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR.P RIVATE SECRETARY, HEAD OF OFFICE/DDO / /'#,