M/S Rich Paints Ltd, Baroda V. The Dcit Co Cir-1(2), Baroda

ITA 2118/AHD/2000

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57291 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 18-01-2012
• Assessment Year: 1997-1998
• Appeal Filed On: 09-10-2000
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: TUSHAR P HEMANI
• Keywords: Opportunity of being heard
• Section: 68

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH , , , , ! ! ! ! . .. . . .. .#$%& #$%& #$%& #$%&, , , , ' ' ' ' , ( ( ( ( BEFORE S/SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND A.K. GARODIA, ACCOUNTANT MEMBER) ITA NO.2118/AHD/2000 AND ITA NO.851/AHD/2009 [ASSTT.YEAR : 1997-1998] & ITA NO.2101 AND 2102/AHD/2001 [ASSTT.YEAR : 1995-1996 AND 1996-1997] RICH PAINTS LTD. E-38, SARDAR ESTATE AJWA ROAD, BARODA. /VS. DCIT, CO. CIR.1(2) BARODA. ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) ./ 0 1 / ASSESSEE BY : SHRI TUSHAR P. HEMANI 3 0 1 / REVENUE BY : SHRI B.L. YADAV 45 0 /6'/ DATE OF HEARING : 18 TH JANUARY, 2012 7$8 0 /6'/ DATE OF PRONOUNCEMENT : 21.03.2012 / O R D E R PER A.K. GARODIA, ACCOUNTANT MEMBER: ALL THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST APPELLATE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III, BARODA. I TA NO.2118/AHD/2000 IS FOR A.Y.1997-98 AGAINST THE ORD ER OF THE CIT(A) DATED 4.8.2000; ITA NO.2101/AHD/2001 FOR A.Y.1995-9 6 IS AGAINST THE ORDER OF THE CIT(A) DATED 16.10.2001; ITA NO.2102/A HD/2001 FOR A.Y.1996-97 IS AGAINST THE ORDER OF THE CIT(A) DATE D 16.10.2001 AND ITA NO.851/AHD/2009 FOR A.Y.1997-98 IS AGAINST THE ORDE R OF THE CIT(A) DATED 12.1.2009. FOR THE SAKE OF CONVENIENCE, WE DISPOSE OF ALL THESE APPEALS BY THIS COMBINED ORDER. ITA NO.2118/AHD/2000 AND ITA NO.851/AHD/2009 & ITA NO.2101 AND 2102/AHD/2001 -2- ITA NO.2118/AHD/2000 AND 851/AHD/2009 (A.Y.1997-98) 2. THE BRIEF FACTS AS NOTED BY THE AO AT PAGE NO.2 OF THE ASSESSMENT ORDER FOR A.Y.1997-98 THAT PROMOTERS CONTRIBUTION WAS BROUGHT IN, AS SHOWN IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE TO T HE TUNE OF RS.205.06 LAKHS INCLUDING RS.18.36 LAKHS PRIOR TO A.Y.1995-96 ; RS.50.50 LAKHS IN A.Y.1995-96, RS.15.78 LAKHS IN A.Y.1996-97 WHILE RS .120.42 LAKHS FOR A.Y.1997-98. IT WAS FURTHER NOTED THAT AN ENQUIRY IN THIS REGARD WAS CONDUCTED BY THE ADIT(INV), UNIT-IV, BARODA WHO ALS O RECORDED THE STATEMENT OF SHRI MAHENDRA M. SHAH, CHAIRMAN OF THE ASSESSEE-COMPANY ON 5-12-1997. HE ALSO NOTED THAT THE CONTENTIONS R AISED IN THIS STATEMENT HAVE BEEN RECONFIRMED BY THE ASSESSEE DURING THE CO URSE OF ASSESSMENT PROCEEDINGS. IT IS FURTHER NOTED THAT THE ENQUIRY REVEALED THAT THE PROMOTERS CONTRIBUTION HAS BEEN BROUGHT IN CASH AN D DEPOSITED IN THE DENA BANK, AJWA ROAD BRANCH ACCOUNT OF THE ASSESSEE. FO R THE PRESENT ASSTT.YEAR 1997-98, RS.74.29 LAKHS WAS DEPOSITED ON 3-4-1996 AND RS.48.05 LAKHS WAS DEPOSITED ON 4.4.1996. WHEN THE AO ASKED FOR EXPLANATION, IT WAS SUBMITTED BY THE ASSESSEE THAT THESE ARE MERELY BOOK ENTRIES TO FULFILL THE REQUIREMENTS OF SEBI THAT MINIMUM PROMOTERS CO NTRIBUTION SHOULD BE 25% OF THE TOTAL PROJECT AND NO REAL CASH WAS BROUG HT IN AND NO CASH HAS GONE OUT. IT WAS ALSO NOTED THAT THESE BOOK ENTRIE S WAS DONE WITH THE HELP OF THE THEN BRANCH MANAGER, DENA BANK, AJWA ROAD, V ADODARA.. IT WAS ALSO SUBMITTED BEFORE THE AO THAT AGAINST THE DEPOS IT OF RS.1,22,34,000/- THERE WAS A WITHDRAWAL OF RS.1,20,42,125/- AND IN T HIS MANNER, THE DEPOSITS AND WITHDRAWALS RESULTED IN NET ADDITION OF RS.1,91 ,875/- IN THE BANK ACCOUNT OF THE ASSESSEE. VARIOUS SUBMISSIONS WERE MADE BEFORE THE AO, BUT THE AO HAS NOT SATISFIED AND HE MADE ADDITION O F CASH DEPOSITS RS.1,22,34,000/-. APART FROM THIS, SOME OTHER ADDI TIONS AND DISALLOWANCE WERE ALSO MADE BY THE AO. BEING AGGRIEVED, THE MAT TER WAS CARRIED BEFORE ITA NO.2118/AHD/2000 AND ITA NO.851/AHD/2009 & ITA NO.2101 AND 2102/AHD/2001 -3- THE CIT(A), BUT WITHOUT SUCCESS, AND NOW THE ASSESS EE IS IN FURTHER APPEAL BEFORE US. 3. IT WAS SUBMITTED BY THE LEARNED AR OF THE ASSESS EE BEFORE THE LEARNED CIT(A), AS NOTED BY HIM IN HIS ORDER IN PA RA 1.3, PAGE NO.8 OF HIS ORDER THAT IT WAS THE ARGUMENTS OF THE ASSESSEE THA T EVEN THE BANK ACCOUNTS ARE FALSE AS THE SAID AMOUNTS SHOWN TO HAVE BEEN DE POSITED BY CASH, WERE NEVER DEPOSITED. IT WAS ALSO SUBMITTED THAT THE BA NK ACCOUNTS WERE MANIPULATED IN THIS REGARD WITH THE CONNIVANCE OF T HE BANK MANAGER. IT IS ALSO SUBMITTED THAT RETURN OF ALLOTMENT OF EQUITY S HARES VALUE OF RS.1,20,42,000/- ALLOTTED ON 4-4-1996 IS AVAILABLE AT PAGE NO.60 TO 65 OF THE PAPER BOOK(2) AND AS PER THE SAME, THESE SHARES WER E ALLOTTED TO DIFFERENT PERSONS AND HENCE TO THIS EXTENT, THE SOURCE OF CAS H DEPOSITED IN THE BANK ACCOUNT STANDS EXPLAINED, BUT THE SAME WAS NOT EXAM INED BY THE AUTHORITIES BELOW AND HENCE, THE MATTER SHOULD GO BACK TO THE F ILE OF THE AO FOR FRESH DECISION IN THE LIGHT OF THESE DOCUMENTS. 4. THE LEARNED COUNSEL FOR THE ASSESSEE PRESSED ONL Y GROUND NOS.1, 2 AND 3 IN A.Y.1997-98, GROUND NO.2, 3 AND 4 IN A.Y.1 995-96 AND GROUND NOS.2, 3 AND 4 IN A.Y.1996-97 AND THE REMAINING GRO UNDS WERE NOT PRESSED IN THESE THREE YEARS AND HENCE, THESE GROUNDS ARE D ISMISSED AS NOT PRESSED. 5. REGARDING PENALTY APPEAL, IT IS SUBMITTED THAT T HERE IS NO ACTUAL MOVEMENT OF FUNDS AND HENCE PENALTY IS NOT JUSTIFIE D. IN REPLY, IT WAS SUBMITTED BY THE LEARNED DR OF THE REVENUE THAT IT IS ONLY A STORY MADE OUT BY THE ASSESSEE. IT IS NOT RELIABLE AND HENCE, THE ORDER OF THE AUTHORITIES BELOW SHOULD BE UPHELD. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AND ALSO GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW. WE FIND THAT AS PER THE BANK STATEMENT OF THE ASSESSEE WITH DENA BANK, AJWA ROAD ITA NO.2118/AHD/2000 AND ITA NO.851/AHD/2009 & ITA NO.2101 AND 2102/AHD/2001 -4- BRANCH, BARODA, THERE IS DEPOSIT OF RS.74.29 LAKHS IS ON 3-4-1996 AND ANOTHER CASH DEPOSIT OF RS.48.05 LAKHS ON 4.4.1996 AND ON BOTH THE DATES, THERE IS WITHDRAWAL ALSO BY WAY OF CHEQUE ISSUED TO VARIOUS PARTIES. AT PAGE NOS. 60 TO 65 OF THE PAPER BOOK IS RETURN OF A LLOTMENT OF 12,04,200 EQUITY SHARES HAVING FACE VALUE OF RS.10/- EACH, WH ICH ARE SAID TO BE ALLOTTED ON 4.4.1996 TO VARIOUS PERSONS. IN OUR CO NSIDERED OPINION, THESE PERSONS ARE REQUIRED TO BE EXAMINED IN ORDER TO FIN D OUT AS TO WHETHER THREE INGREDIENTS OF CASH CREDITS I.E. IDENTITY, CREDIT-W ORTHINESS AND GENUINENESS OF THE TRANSACTION ARE BEING ESTABLISHED BY THE ASS ESSEE WITH REGARD TO THE CASH CREDIT TO THE EXTENT OF RS.1,20,42,000/- SAID TO HAVE BEEN RECEIVED FROM THESE PERSONS IN THE FORM OF SHARE APPLICATION MONEY. THE ASSESSEE SHOULD PROVIDE COMPLETE DETAILS AND PRESENT ADDRESS OF THESE PERSONS ALONG WITH THEIR CONFIRMATIONS AND PAN AND OTHER EVIDENCE S IN SUPPORT OF THIS CLAIM THAT AMOUNT RECEIVED FROM THESE PERSONS WAS A VAILABLE AS CASH ON 3.4.1996 AND 4.4.1996 AND ONLY THIS CASH RECEIVED F ROM THESE PERSONS WAS DEPOSITED IN THE BANK ACCOUNT. WE, THEREFORE, SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE FOR A.Y.1996-97 AND RESTORE TH IS MATTER BACK TO THE FILE OF THE AO FOR FRESH DECISION. THE AO SHOULD P ASS A SPEAKING ORDER AS PER THE LAW IN THE LIGHT OF THE ABOVE DISCUSSION AF TER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE WANT TO MAKE IT CLEAR THAT BURDEN IS ON THE ASS ESSEE TO FURNISH NECESSARY EVIDENCES TO SUPPORT ITS CLAIM THAT THE C ASH DEPOSITED IN THE BANK ON 3.4.1996 AND 4.4.1996 WAS IN FACT RECEIVED FROM THESE PERSONS. IN THE RESULT, THE QUANTUM APPEAL OF THE ASSESSEE FOR A.Y. 1997-98 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 7. NOW WE TAKE UP PENALTY APPEAL FOR A.Y.1997-98. 8. WE FIND THAT PENALTY WAS IMPOSED BY THE AO IN RE SPECT OF ADDITION MADE BY HIM OF RS.1,22,34,000/- UNDER SECTION 68 OF THE ACT. SINCE THE ITA NO.2118/AHD/2000 AND ITA NO.851/AHD/2009 & ITA NO.2101 AND 2102/AHD/2001 -5- ADDITION HAS BEEN RESTORED BACK TO THE FILE OF THE AO FOR FRESH CONSIDERATION, THE PRESENT PENALTY CANNOT SURVIVE, AND IF AT ALL ANY ADDITION IS WARRANTED IN THE SET ASIDE PROCEEDINGS, THE AO I S AT LIBERTY TO INITIATE PENALTY PROCEEDINGS. BUT, THE PRESENT APPEAL DOES NOT SURVIVE AND HENCE THE SAME IS CANCELLED. 9. NOW, WE TAKE UP THE REMAINING TWO QUANTUM APPEAL S FOR A.Y.1995- 96 AND 1996-97. IN THESE TWO YEARS ALSO, THE ONLY GROUND BEING PRESSED FOR OUR CONSIDERATION IS REGARDING ADDITION MADE BY THE AO UNDER SECTION 68 OF RS.50.50 LAKHS IN A.Y.1995-96 AND RS.11.77 LAKHS IN A.Y.1996-97. SINCE SIMILAR ADDITION IN A.Y.1997-98 IS RESTORED BACK BY US TO THE FILE OF THE AO FOR FRESH DECISION, WE FEEL THAT IN THESE TWO YEARS ALSO THIS ISSUE SHOULD GO BACK TO THE FILE OF AO FOR FRESH DECISION. HENCE, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) IN BOTH THESE YEARS ALSO ON THIS ISSUE AND RESTORE THIS MATTER BACK TO THE FILE OF THE AO FOR FRESH DECISIO N AS PER THE DIRECTION GIVEN BY US FOR A.Y.1997-98 (SUPRA). 10. REMAINING GROUNDS WERE NOT PRESSED BY THE LEARN ED COUNSEL OF THE ASSESSEE IN BOTH THE YEARS AND HENCE THE SAME ARE D ISMISSED AS NOT PRESSED. 11. IN THE RESULT, BOTH THE QUANTUM APPEALS FOR A.Y .1995-96 AND 1996- 97 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. 12. IN THE COMBINED RESULT, THE QUANTUM APPEAL FOR A.Y.1995-96, 1996- 97 AND 1997-98 ARE PARTLY ALLOWED FOR STATISTICAL P URPOSE AND PENALTY APPEAL FOR A.Y.1997-98 IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD./- SD./- ( /BHAVNESH SAINI) /JUDICIAL MEMBER ( . .. . . .. .#$%& #$%& #$%& #$%& /A.K. GARODIA) ' ' ' ' /ACCOUNTANT MEMBER ORDER PRONOUNCED SD./- (KB)JM SD./-(AKG)AM ITA NO.2118/AHD/2000 AND ITA NO.851/AHD/2009 & ITA NO.2101 AND 2102/AHD/2001 -6- C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD 1. DATE OF DICTATION : 06-03-2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER. : 09/12-03-2012 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S : 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT. : 21/3/2012 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER : 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S. : 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK. : 26/03/2012 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. : 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER. : 10. DATE OF DESPATCH OF THE ORDER :