ITO, Bangalore V. M/s Dhansri Estates Pvt. Ltd., Bangalore

ITA 2/BANG/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5218 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-06-2010
• Assessment Year: 1999-2000
• Appeal Filed On: 01-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V S SREELEKHA
• Assessee Lawyers: G SITHARAMAN
• Section: 133(6); 147; 148

Judgement Text

PAGE 1 OF 6 ITA NO.2/BANG/2010 1 IN THE INOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE DR. O K NARAYANAN, VICE PRESIDENT AND SMT. P MADHAVI DEVI, J.M. ITA NO.2/BANG/2010 (ASST. YEAR 1999-2000) THE INCOME TAX OFFICER, WARD-11(1), BANGALORE. -APPELLANT VS M/S DHANSRI ESTATES PVT. LTD., NO.6, CUNNINGHAM ROAD, BANGALORE-52. - RESPONDENT APPELLANT BY : SMT. V S SREELEKHA, ADDL. CIT RESPONDENT BY : SHRI G SITHARAMAN, C.A. O R D E R PER P MADHAVI DEVI : THE REVENUE HAS FILED THIS APPEAL AGAINST THE OR DER OF THE CIT(A)-I DATED 04.11.2009. 2. THE ONLY GRIEVANCE OF THE REVENUE IS AGAINST TH E ORDER OF CIT(A) IN DELETING THE ADDITION OF RS.50 LAKHS M ADE BY THE ASSESSING OFFICER, WITHOUT CAUSING FURTHER VERIFICA TION/ENQUIRIES. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY, WHICH IS ENGAGED IN THE BUSINESS OF DEVELO PMENT OF PROPERTIES AND REAL ESTATE HAD NOT FILED ITS RETURN OF INCOME FOR THE ASST. YEAR 1999-2000. A NOTICE U/S 148 OF THE I T ACT WAS ISSUED AND THE ASSESSMENT WAS REOPENED AFTER DULY RECORDIN G THE REASONS PAGE 2 OF 6 ITA NO.2/BANG/2010 2 AND OBTAINING THE APPROVAL OF THE ADDITIONAL CIT. DURING THE ASSESSMENT PROCEEDINGS U/S 147 R.W.S. 143(3), THE A SSESSEE WAS ASKED TO SUBMIT THE DETAILS WITH REGARD TO ITS INCO ME. THE ASSESSEE SUBMITTED A LETTER DATED 2212.2006 DETAILING THE CU RRENT LIABILITIES AS APPEARING IN THEIR BOOKS AS ON 31.3.1999. FROM THE SAID DETAILS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE OWED B RINDAVAN BEVERAGES PRIVATE LIMITED, AM AMOUNT OF RS.2,29,55, 875/-. HE CALLED FOR INFORMATION U/S 133(6) OF THE I T ACT FR OM M/S BRINDAVAN BEVERAGES PRIVATE LIMITED, WHO FURNISHED LETTER CON FIRMING THE TRANSACTION. AFTER CONSIDERING THE SAME, THE ASSES SING OFFICER OBSERVED THAT IN THE ASSESSEES BOOKS OF ACCOUNT, T HE AMOUNT RECEIVED FROM 1/4/1998 TO 31/3/1999 WAS RS.2,29,55, 875/- AND THE ASSESSEE ALSO HAD AN OPENING BALANCE OF RS.50 LAKHS UP TO 31.3.1998. HE FURTHER OBSERVED THAT AT SCHEDULE 8 OF THE BALANCE SHEET OF BRINDAVAN BEVERAGES PRIVATE LIMITED AS ON 31.3.1999 UNDER THE HEAD LOANS AND ADVANCES AN AMOUNT OF RS.1,79,55,875/- IS SHOWN AGAINST M/S DHANSRI ESTAT ES PVT. LTD. TO VERIFY THE SAME, SUMMONS U/S 131OF THE I T ACT WAS ISSUED TO M/S BRINDAVAN BEVERAGES PRIVATE LIMITED TO PRODUCE THE GENERAL LEDGER AND PARTY-WISE LEDGER FOR THE PERIOD 1/4/199 8 TO 31/3/1999. IN RESPONSE, A LETTER DETAILING THE PAYMENTS MADE T O M/S DHANSRI ESTATES PVT. LTD. FOR THE PERIOD 1/4/1998 TO 31/3/1 999 AMOUNTING TO RS.2,29,55,875/- WAS FILED. OBSERVING THERE-FROM, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT M/S BRINDAVAN B EVERAGES PRIVATE LIMITED HAS PAID A SUM OF RS.2,29,55,875/- TO THE ASSESSEE BUT IT HAS ACCOUNTED FOR A SUM OF RS.1,79,55,875/- ONLY IN ITS BALANCE SHEET AS ON 31.3.1999 AND THEREFORE, THE ON LY CONCLUSION PAGE 3 OF 6 ITA NO.2/BANG/2010 3 THAT CAN BE DRAWN IS THAT M/S BRINDAVAN BEVERAGES P RIVATE LIMITED HAS FOREGONE ITS CLAIM FOR AN AMOUNT OF RS.50 LAKHS . HE OBSERVED THAT THIS AMOUNTS TO CESSATION OF LIABILITY AND IS TO BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY, CHARGEABLE TO INCOME TAX AS INCOME OF THAT PREVIOUS YEAR U/S 41(1)(A) OF THE I T ACT. HE ACCORDINGLY COMPUTED T HE INCOME OF THE ASSESSEE. 4. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) STATING THAT WHEN THE ASSESSING OFFICER CALL ED FOR INFORMATION FROM BRINDAVAN BEVERAGES PRIVATE LIMITE D U/S 133(6) OF THE I T ACT, THEY HAVE GIVEN THE INFORMATION TO THE ASSESSING OFFICER IN RESPECT OF VARIOUS PAYMENTS MADE TO THE ASSESSEE DURING THE YEAR 1998-99 AMOUNTING TO RS.2,29,55,885/- AND THE ASSESSEE HAD RECEIVED RS.50 LAKHS EARLIER TO 31.3.1998 FROM BRINDAVAN BEVERAGES PRIVATE LIMITED AND THUS, THE TOTAL AMOUN T DUE BY THE ASSESSEE TO BRINDAVAN BEVERAGES PRIVATE LIMITED, IN THE OPINION OF THE ASSESSING OFFICER, WAS RS.2,79,55,885/-, WHEREA S THE ASSESSEE COMPANY IS RECOGNIZING THE LIABILITY OF ONLY RS.2,2 9,55,885/- AND THUS , THE DIFFERENCE WAS TAXED U/S 41(1)(A) OF THE I T ACT. THE ASSESSEE PRODUCED THE CONFIRMATION RECEIVED FROM BR INDAVAN BEVERAGES PRIVATE LIMITED WHEREIN IT WAS STATED THA T IN THE COURSE OF THE YEAR 1998-99, THERE IS A REFUND OF RS.50 LAK HS FROM JITU VIRWANI TOWARDS THE PAYMENTS RECEIVED OF RS.2,79,55 ,885/- TO BRINDAVAN BEVERAGES PRIVATE LIMITED AND WHILE RECOR DING THIS PAYMENT OF RS.50 LAKHS, BRINDAVAN BEVERAGES PRIVATE LIMITED PAGE 4 OF 6 ITA NO.2/BANG/2010 4 ERRONEOUSLY GAVE THE CREDIT TO SOME OTHER ACCOUNT, WHICH WAS SUBSEQUENTLY RECTIFIED BY THEM. IT WAS THUS EXPLAI NED THAT ON RECOGNITION OF THE PAYMENT OF RS.50 LAKHS BY BRINDA VAN BEVERAGES PRIVATE LIMITED, THERE IS NO DIFFERENCE OF BALANCES BETWEEN THE ASSESSEE COMPANY AND BRINDAVAN BEVERAGES PRIVATE LI MITED. THE LEARNED CIT(A) CALLED FOR A REMAND REPORT ON THE SA ID CONFIRMATION LETTER. IN THE REMAND REPORT, THE ASSESSING OFFICE R ONLY REITERATED THE FINDINGS MADE BY HIM DURING THE ASSESSMENT PROC EEDINGS U/S 147 R.W.S. 143(3). IN RESPONSE TO THE SAME, THE AS SESSEE ALSO FILED A REJOINDER EXPLAINING ITS CASE AND THEREAFTER, THE L EARNED CIT(A) CAME TO THE CONCLUSION THAT THE ASSESSING OFFICER H AVING NOT COMMENTED UPON THE VERACITY OF THE STATEMENTS MADE BY THE ASSESSEE IN ITS LETTER, THE CONTENTS ARE TO BE CONS IDERED AS TRUE AND DELETED THE ADDITION. 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 6. THE LEARNED DR SUPPORTED THE ORDER OF THE ASSES SING OFFICER WHILE THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND P LACED RELIANCE UPON THE ORDER OF THE CIT(A). 7. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE RIVAL CONTENTIONS, WE FIND THAT THE DISPUTE IS WITH REGARD TO THE PAGE 5 OF 6 ITA NO.2/BANG/2010 5 LIABILITY OF RS.50 LAKHS WHICH HAD NOT BEEN RECORDE D IN THE BOOKS OF ACCOUNT OF M/S BRINDAVAN BEVERAGES PRIVATE LIMITED PRODUCED DURING THE ASSESSMENT PROCEEDINGS. HOWEVER, WE FIN D THAT THE SAID PARTY HAD SUBSEQUENTLY RECTIFIED ITS ACCOUNTS AND H AD SUBMITTED THAT THE AMOUNT OF RS.50 LAKHS PAID TO JITU VIRWANI ON 2 1.7.98 HAS BEEN REFUNDED ON 17.8.98 VIDE CHEQUE NO.073997 DRAWN ON FEDERAL BANK LTD. AND ERRONEOUSLY THIS AMOUNT WAS NOT CREDITED T O MR. JITU VIRWANI. THE SAID COMPANY HAS THEREFORE CONFIRMED THAT THE LOAN OUTSTANDING FROM THE ASSESSEE AS ON 31.3.1999 IS RS .2,29,55,875/-. THIS LETTER HAD BEEN SENT TO THE ASSESSING OFFICER FOR VERIFICATION. THE ASSESSING OFFICER HAS NOT CARRIED OUT THE VERIF ICATION BUT HAS ONLY REITERATED HIS FINDINGS MADE DURING THE SCRUTI NY ASSESSMENT. AS FAR AS THE ASSESSEE IS CONCERNED, THE ASSESSEE H AS MADE EFFORTS TO EXPLAIN THE DISCREPANCY BY FILING THE CONFIRMATION FROM THE CREDITOR AND THE RELEVANT DETAILS WERE FILED. IT IS THE DUT Y OF THE ASSESSING OFFICER TO DO THE VERIFICATION OF SUCH DETAILS IF H E WAS NOT SATISFIED WITH THE SAID DETAILS. THE ASSESSING OFFICER HAS F AILED TO DO SO. AS RIGHTLY POINTED OUT BY THE LEARNED DR, POWERS OF TH E CIT(A) WAS COTERMINOUS WITH THAT OF THE ASSESSING OFFICER THE CIT(A) HAS THEREFORE APPRECIATED THE EVIDENCE FILED BY THE ASS ESSEE AND HAS COME TO THE CONCLUSION THAT THE ADDITION IS NOT CAL LED FOR. FURTHER, THE ASSESSEE HAS ALSO FILED EVIDENCE BEFORE US THAT THE ASSESSEE HAD NEVER CLAIMED THIS AS AN EXPENDITURE IN THE EARLIER YEARS AND THEREFORE, IT CANNOT BE TREATED AS A CESSATION OF L IABILITY AND CANNOT BE ADDED U/S 41(1)(A) OF THE I T ACT. IN VIEW OF T HE SAME, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. PAGE 6 OF 6 ITA NO.2/BANG/2010 6 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ORDER PRONOUNCED ON MONDAY, THE 7 TH DAY OF JUNE, 2010 AT BANGALORE. SD/- SD/- (DR. O K NARAYANAN) (P MADHAVI DE VI) VICE PRESIDENT JUDICIAL MEMBER COPY TO : 1) THE ASSESSEE (2) THE REVENUE (3) TH E CIT(A) CONCERNED. (4) THE CIT CONCERNED. (5) THE DR (6) GUARD FILE. (7) GUARD FILE, NEW DELHI. MSP/4.6. BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.