India Land and Properties Ltd., CHENNAI V. ITO, CHENNAI

ITA 1950/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9223 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 23-05-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 09-09-2015
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR ACIT
• Assessee Lawyers: B RAMAKISHNANC A
• Keywords: Unexplained investment; Business income; Source of fund; Deemed export; Capital receipt
• Section: 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , ! , . ' # BEFORE SHRI A.MOHAN ALANKAMONY, , ACCOUNTANT MEMBER AND SHRI SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.1950 /MDS./2015 ( / ASSESSMENT YEAR :2005-06) M/S.INDIA LAND AND PROPERTIES LTD ., PLOT NO.14,3 RD MAIN ROAD, AMBATTUR INDUSTRIAL ESTATE, AMBATTUR, CHENNAI 600 058. VS. INCOME TAX OFFICER, COMPANY WARD-II(1), CHENNAI. PAN AAACI 9546 A ( $% / APPELLANT ) ( &'$% / RESPONDENT ) / APPELLANT BY : MR.B.RAMAKISHNAN,C.A / RESPONDENT BY : MR.R.CLEMENT RAMESH KUMAR, ACIT, D.R ! / DATE OF HEARING : 23.05.2016 '# ! /DATE OF PRONOUNCEMENT : 31.05.2016 ( / O R D E R PER G.PAVAN KUMAR , JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE COMMISSIONER OF INCOME TAX(A)-6, CHENNAI-34 IN ITA NO.1950/MDS/2015 2 ITA. NO.29/CIT(A)-6/2008-09 DATED 21.05.2015 PASS ED ORDER U/S.148 RW.S 147OF THE ACT FOR THE ASSESSMENT YEAR 2005-06. 2.1 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS FOR ADJUFICATION. GROUND NO. 1: THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) , ON FACTS AND CIRCUMSTANCES OF THE CASE, HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER (HEREIN AFTER REFERRED TO AS AO ) AMOUNTING TO RS.18,19,633/-, BEING THE DIFFERENCE BETWEEN THE PRICE OF CAR AS PE R BILL OF ENTRY AND ACTUAL MONEY PAID BY THE ASSESSEE, AS INCOME U/S 69 OF IN COME TAX ACT, 1961. GROUND NO.2: THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN NOT ACCEPTING THE PLEA THAT THE CAR WAS ORIGINALLY IMPORT BY M/S HISTORY LOGISTICS AND NOT BY THE APPELLANT AND ACCORDINGLY THE SAVING OF DUTY WILL N OT BE TAXABLE IN THE HAND OF THE ASSESSEE. GROUND NO.3: THE LEARNED COMMISSIONER OF INCOME TAX (A) OUGHT TO HAVE SEEN THAT THE CAR HAS NEVER BEEN SOLD TO THE ASSESSEE AND THE ASSESSE E ONLY FACILITATED THE PAYMENTS. GROUND NO.4: THE LEARNED COMMISSIONER OF TAX (A) SHOULD HAVE SEE N THAT THE CAR HAS NEITHER BEEN ENTERED IN THE FIXED ASSET REGISTER NOR APPEAR IN THE FIXED ASSET SCHEDULE IN THE FINANCIALS THEREBY WAS WRONGLY INTERPRETED BY T HE AO ASPURCHASED AND SOLD IN THE SAME YEAR. GROUND NO. 5: THE CIT(A) HAS FAILED TO NOTE THATIN GENERAL LAW IF THE APPARENT THING IS NOT REAL THE ONUS OF PROVING THAT THE APPARENT THING IS NOT REAL IS ON THE PERSON WHO AVERS IT AND HENCE THE SAME IS ON THE AO TO PROVE THAT TH E TRANSACTIONS HAVE BEEN PUT THROUGH UNDISCLOSED SOURCES. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS ENGAGED IN THE BUSINESS OF REAL ESTATE AND PROCESS OF DEVELOPI NG AN IT PARK AT AMBATTUR. FOR ASSESSMENT YEAR 2005-06, IN RESPONSE TO NOTICE ITA NO.1950/MDS/2015 3 U/S.148 OF THE ACT DATED 21.09.2007, ASSESSEE FILED NIL RETURN OF INCOME. SUBSEQUENTLY, A NOTICE U/S.143(2) WAS ISSUE D. ON PERUSAL OF THE CONFIDENTIAL FILE IN THIS CASE FROM ASST. DIREC TOR OF INCOME TAX, UNIT-III, NEW DELHI, IT WAS REVEALED THAT SHRI SANJ AY BHANDARI THROUGH M/S.HISTORY LOGISTICS MISUSING EPCG SCHEME, IMPORTE D A TOYOTA LEXUS CARE BEARING REGISTRATION NO.DL 2FCB 0999. UN DER EPCG SCHEME, THE TOUR OPERATORS ARE ALLOWED TO IMPORT CA RS PAYING MEAGER CUSTOMS DUTY AND MAIN OBJECT IS TO EARN FOREIGN EXC HANGE AND THE IMPORTER IS REQUIRED TO PAY 5 TIMES OF THE DUTY SAV ED OVER A PERIOD OF 8 YEARS. M/S.HISTORY LOGISTICS IS IN THE BAS OF TO UR OPERATING BY PLYING IMPORTED VEHICLES AND UNDER THE SCHEME IT IS CONSID ERED AS DEEMED EXPORT AND THE SAID COMPANY VIOLATED THE PROVISIONS OF THE SCHEME BY SELLING THE VEHICLE TO THE ASSESSEE, WHICH IS NO T PERMITTED. THE ASSESSEE HAD PURCHASED THE VEHICLE ON 23.11.2004 AN D PAID ` 28.5 LAKHS TO THE M/S.HISTORY LOGISTICS. AS PER THE BILL OF ENTRY RECEIVED FROM O/O.DRI, THE MARKET VALUE IN THE HANDS OF M/S. HISTORY LOGISTICS AFTER INCLUDING DUTY SAVED IS ` 46,69,633/-. ON COMPARISON WITH THE PURCHASE PARTICULARS AND THE VALUE OF IMPORT CAR, T HE AO ALLEGED THAT THE ASSESSEE HAS SAVED DUTY OF ` 18,19,633/- AND AS PER THE ITA NO.1950/MDS/2015 4 EXPLANATION FILED BY ASSESSEE ON 30.10.2008, THE AS SESSEE CONFIRMED THAT THE ASSESSEE HAD PAID ONLY ` 28.5 LAKHS AND HENCE,THE ASSESSEE HAS NOT PAID ANY CONSIDERATION OTHER THAN ` 28.5 LAKHS TO M/S.HISTORY LOGISTICS. THE AUTHORISED REPRESENTATIVE OF ASSESS EE APPEARED FROM TIME TO TIME AND FURNISHED THE DETAILS CALLED FOR DURING ASSESSMENT PROCEEDINGS. LD.A.R SUBMITTED THAT NO BE NEFIT IS OBTAINED BY THE ASSESSEE AND THE ASSESSEE IS NOT IN THE BUSINESS OF PURCHASE AND SALE OF IMPORTING OF CARS. THE AO WAS OF THE OPINION THAT THE TRANSACTIONS ARE PUT THROUGH THE ASSESSEE S BOOKS OF ACCOUNTS AND THE ASSESSEE HAS PAID ONLY ` 28.5 LAKHS AS AGAINST THE MARKET VALUE OF THE MOTOR CAR AT ` 46,69,633/-. THE ASSESSEE HAS SAVED IMPORT DUTY AND LD.A.R MENTIONED THAT IT IS A CAPITAL RECEIPT, AND THE CAR IS NOT TAKEN AS FIXED ASSET OF THE ASSE SSEE. HENCE, THE AO UNDER THE SUSPICION AND SURMISES TREATED AS PURC HASE AND SALE OF VEHICLE AND BROUGHT THE IMPORT DUTY OF ` 18,19,633/- SAVED BY ASSESSEE TO TAX AS BUSINESS INCOME. AGGRIEVED, THE ASSESSEE CARRIED THE APPEAL TO THE CIT(A). 4. IN HE APPELLATE PROCEEDINGS, THE AUTHORISED REP RESENTATIVE OF ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. ASSESSING ITA NO.1950/MDS/2015 5 OFFICER AND ALSO EXPLAINED THE PURPOSE OF PURCHASE OF VEHICLE AND ALSO CONSIDERATION PAID. LD.CIT(A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, GROUNDS OF APPEAL AND FINDINGS OF THE AO, DISCUSSED IN HIS ORDER THAT THE ASSESSEE IS ONLY THE PURCHASER O F THE VEHICLE BUT THE ACTUAL IMPORT IS MADE BY M/S.HISTORY LOGISTICS AND OBSERVED THAT IF ANY VIOLATION IS COMMITTED, EITHER UNDER THE IND IAN CUSTOMS ACT OR OTHER ACTS, IT WAS BY M/S.HISTORY LOGISTICS AND THE ASSESSEE HAS NO ROLE TO PLAY. LD.CIT(A) OBSERVED HIS VIEWS IN HIS O RDER AS FOLLOWS:- 4.3 HOWEVER, WHEN IT COMES TO THE INCOME TAX PURPO SE, WHAT IS TO BE SEEN IS THE ACTUAL INVESTMENT MADE BY THE ASSESS EE IN PURCHASING HE CAR. AS PER THE BILL OF ENTRY DATED 26.03.2004, OBTAINED FROM THE O/O DEPARTMENTAL REPRESENTATIVE, THE MARKET VALUE OF TH E CAR(INCLUDING THE CUSTOMS DUTY SAVES) IS ` 46,69,633/-. WHEN THE CARE IS IMMEDIATELY SOLD AFTER IMPORT, THE COST O THE ASSESSEE WOULD BE THE MARKET VALUE OF THE CAR. WHEREAS THE ASSESSEE CLAIMED THAT IT HAS PURCH ASED THE CAR AT ONLY ` 28.5 LAKHS, A CLAIM WHICH CANNOT BE ACCEPTED. THE COST OF PURCHASE OF THE CAR IN THE HANDS OF THE ASSESSEE SH OULD BE CONSIDERED AT THE MARKET VALUE OF THE CAR (INCLUDING THE CUSTO MS DUTY SAVED) OF ` 46,69,633/-. SINCE THE ASSESSEE HAS DECLARED ONLY RS.28.50 LAKHS THE BALANCE REPRESENTS THE UNEXPLAINED INVESTMENTS U/S. 69 OF THE ACT, AND NEEDS TO BE BROUGHT TO TAX, AS THE ASSESSEE HAS NO SOURCES OF INCOME TO EXPLAIN. THEREFORE, THE ABOVE ADDITION OF ` 18,19,633/-, MADE BY THE AO, ON ACCOUNT OF DUTY SAVED, IS IN FACT UNEXPLAINE D INVESTMENTS U/S.69 OF THE ACT. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO.1950/MDS/2015 6 5. BEFORE US, THE LD.A.R REITERATED THE SUBMISSION S MADE BEFORE THE REVENUE AND RELIED ON THE FACTUAL MATRIX OF PUR CHASE OF THE CAR AND EXPLAINED SITUATION UNDER WHICH THE ASSESSEE HA S UTILIZED THE CAR. THE LD.CIT(A) ERRED IN CONFIRMING THE ADDITION OF ` 18,19,633/-. THE LD.A.R SUBMITTED THAT THE DIFFERENCE BETWEEN TH E PRICE OF CAR AS PER BILL OF ENTRY AND ACTUAL MONEY PAID BY THE ASSE SSEE IS ASSESSED AS INCOME UNDER SECTION 69 OF THE ACT AND THE DUTY SAVED IS NOT TAXABLE IN THE HANDS OF THE ASSESSEE AS ORIGINAL IM PORTER IS M/S.HISTORY LOGISTICS. LD.A.R FURTHER SUBMITTED THA T THE CAR HAS NOT REFLECTED /ENTERED IN THE FIXED ASSET REGISTER NOR APPEARED IN THE FIXED ASSET SCHEDULE IN THE FINANCIALS AND ALSO ASSESSEE IS NOT A REAL PERSON ON WHOM THE IMPORT DUTY SAVED IS TAXABLE A ND PRAYED FOR ALLOWING THE APPEAL. 6. CONTRA, LD.D.R RELIED ON THE ORDER OF THE LD.CI T(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL ON RECORD AND EVIDENCES FILED BEFORE US. THE ONLY CON TENTION OF LD.A.R IS THAT THE ASSESSEE IS ONLY BUYER OF THE CAR AND ORIG INAL IMPORTER IS M/S.HISTORY LOGISTICS AND THE ASSESSEE COMPANY PAID ` 28.5 LAKHS IRRESPECTIVE OF THE AMOUNT OF BILL OF ENTRY. THE AS SESSEE IS ONLY AN ITA NO.1950/MDS/2015 7 END USER AND ANY VIOLATION OF SAVINGS OF CUSTOMS DU TY IS IN THE HANDS OF THE SELLER AND PROVISIONS OF THE SECTION 69 ARE NOT APPLICABLE. THE LD.A.R PRODUCED BEFORE US A COPY OF EPCG SCHEME UND ER FOREIGN TRADE (DEVELOPMENT AND REGULATION) ACT, 1992 AND TH E FOREIGN TRADE (REGULATION) RULES,1993 AT PARA 5.1 WHICH EXP LAINS THE PURPOSE OF SCHEME, TERMS AND CONDITIONS AND EMPHASI ZED ON RULE-6 PUBLISHED IN THE OFFICIAL GAZETTE. FURTHER, THE LD .A.R FILED EVIDENCE I.E. A LETTER DATED 20 TH DECEMBER, 2005 FOR THE FIRST TIME BEFORE THE TRIBUNAL WERE THE ASSESSEE HAS PURCHASED THE VEHICL E. HOWEVER THE ASSESSEE HAS PAID ` 25,06,909/- TOWARDS CUSTOMS DUTY ON 04.10.2005 IN THE FINANCIAL YEAR 2005-06 RELEVANT TO THE ASSES SMENT YEAR 2006- 07 AND SUPPORTED WITH MATERIAL EVIDENCE VIZ. BANK STATEMENTS ISSUED BY TAMILNADU MERCANTILE BANK LTD., MOUNT ROA D, CHENNAI AND UNION BANK OF INDIA, CONNAUGHT PLACE, NEW DELHI. L D.D.R STRONGLY OPPOSED THE SUBMISSIONS OF FRESH EVIDENCE FOR THE F IRST TIME AND ARGUED THAT THE AO WAS DEPRIVED OF EXAMINING THE FR ESH EVIDENCE AND IS VIOLATION OF RULE 46A OF THE ACT. WE, CONSI DERING THE APPARENT FACTS ON RECORD, AND CIRCUMSTANCES OF THE CASE, ARE OF THE CONSIDERED OPINION THAT THE MATTER HAS TO BE RE-EXAMINED WITH RESPECT TO FRESH ITA NO.1950/MDS/2015 8 EVIDENCE FILED BY THE ASSESSEE BEFORE US TO SUPPORT ITS CASE AND THE AO SHALL VERIFY THE GENUINENESS OF THE TRANSACTION AS THE CUSTOMS DUTY PAYMENT WAS MADE IN THE ASSESSMENT YEAR 2006-0 7. THEREFORE, WE REMIT THE ENTIRE ISSUE TO THE FILE OF AO FOR ADJ UDICATION AND THE ASSESSEE SHALL BE PROVIDED WITH ADEQUATE OPPORTUNIT Y OF BEING HEARD BEFORE PASSING THE ORDER 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON TUESDAY, THE 31 ST MAY, 2016 AT CHENNAI. SD/- SD/- ( . ) (A.MOHAN ALANKAMONY) ( . ) (G.PAVAN KUMAR) $ ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 31 ST MAY,2016 . K S SUNDARAM. %&$$'($)( /COPY TO: $ 1. /APPELLANT 2. /RESPONDENT 3. $ *$+, /CIT(A) 4. $ * /CIT 5. (-. $/ /DR 6. .0$1 /GF