THE ACIT, 3(1), Bhopal V. M/S. NARMADA VFEHICLES PVT. LTD., Bhopal

ITA 216/IND/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5766 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-08-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 27-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: S S DESH
• Keywords: Unexplained investment; Business income; Assessment record
• Section: 143(3); 147; 148

Judgement Text

ACIT VS. M/S NARMADA VEHICLES PVT.LTD. ITA NO. 216/IND/2015 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JM & SHRI O.P. MEENA, AM ITA NO. 216/IND/2015 A.Y.2007-08 ACIT 3(1) BHOPAL ::: APPELLANT VS M/S NARMADA VEHICLES PVT. LTD. BHOPAL PAN AAACN 4996R ::: RESPONDENT APPELLANT BY SHRI MOHD. JAVED RESPONDENT BY SHRI S.S. DESHPANDE DATE OF HEARING 18 . 8 .2016 DATE OF PRONOUNCEMENT 8 . 9 .2016 O R D E R PER SHRI D.T.GARASIA, JM THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A)-2, BHOPAL, DATED 22.1.201 5. 2. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF SALE AND SERVICE OF ACIT VS. M/S NARMADA VEHICLES PVT.LTD. ITA NO. 216/IND/2015 2 HYUNDAI CARS AS ITS AUTHORISED DEALER. RETURN HAS BEEN FILED ON 31.10.2007 DECLARING INCOME OF RS.1,57,767/ - EARNED FROM BUSINESS RECEIPTS OF RS.20,54,61,025/-. VIDE ORDER DATED 31.12.2009 PASSED U/S 143(3) THE ASSESSEE S INCOME HAS BEEN ASSESSED AT RS.1,36,46,060/- BY MAKING ADDITION FOR DISALLOWANCE OF DISCOUNT (RS.3,00,000/-), UNEXPLAINED ADVANCE RECEIVED FROM CUSTOMERS (RS.1,29,74,290/-), PREVIOUS YEARS EXPENSES (RS.1,09,007/-) AND DISALLOWANCE OF MISCELLANEOUS EXPENSES (RS.75,000/-). THEREAFTER, PROCEEDINGS U/S 147 HAD BEEN INITIATED BY ISSUE OF NOTICE U/S 148 ON 28.3 .2012 AFTER RECORDING THE REASONS THEREFOR. VIDE IMPUGNED O RDER UNDER APPEAL, ADDITION OF RS.1,20,14,278/- HAS BEEN MADE FOR UNEXPLAINED INVESTMENT IN STOCK. 3. THE ASSESSEE FILED FIRST APPEAL BEFORE THE LEARNED C IT(A) WHO DELETED THE ADDITION BY OBSERVING AS UNDER :- ACIT VS. M/S NARMADA VEHICLES PVT.LTD. ITA NO. 216/IND/2015 3 6. APPELLANTS SUBMISSIONS ALONG WITH ASSESSMENT ORDER AND RECORDS HAVE BEEN CONSIDERED CAREFULLY. ASSESSMENT RECORDS OF THE A.O. ALONG WITH RETURN AN D BALANCE SHEET FILED BY THE APPELLANT COMPANY HAVE A LSO BEEN PERUSED. IN THE ORIGINAL ASSESSMENT ORDER DTD. 31.12.2009 PASSED AFTER DETAILED SCRUTINY, IT HAS B EEN CATEGORICALLY STATED BY THE A.O. THAT VARIOUS ASPEC TS OF THE CASE HAVE BEEN DISCUSSED. ALSO THE WRITTEN SUBMISSIONS FILED BY THE APPELLANT WITH SUPPORTING DOCUMENTS HAVE BEEN CONSIDERED BY THE A.O. WHO HAS ASSESSED APPELLANTS INCOME AT RS.1,36,46,060/- AS AGAINST RETURN INCOME OF RS.1,87,767/-. REASSESSMEN T PROCEEDINGS HAVE BEEN INITIATED ON THE BASIS OF AUD IT OBJECTION DT. 07.07.2010. IT IS ALSO PERTINENT TO N OTE THAT THE THEN A.O. HIMSELF HAS NOT ACCEPTED THE SAID AUD IT OBJECTION ON THE BASIS OF WHICH NOTICE U/S 148 ISSU ED AND IMPUGNED ADDITION MADE BY THE A.O. DURING THE ACIT VS. M/S NARMADA VEHICLES PVT.LTD. ITA NO. 216/IND/2015 4 COURSE OF APPEAL PROCEEDINGS THE APPELLANT HAS ACCORDINGLY ALSO BEEN ASKED TO RECONCILE ITS CLOSIN G STOCK BOTH QUANTITATIVELY AND QUALITATIVELY TO VERI FY THE CORRECTNESS OF ITS SUBMISSIONS MADE BEFORE A.O. THE N AND IN THE APPEAL REGARDING VALUATION OF STOCK SHOW N IN THE BALANCE SHEET. THESE DETAILS HAVE BEEN SUBMITTE D BY THE APPELLANT WHICH ARE FOUND ACCEPTABLE AFTER PERUSAL THEREOF. IT IS SEEN THAT A.O. HAS MADE THE IMPUGNED ADDITION SOLELY ON THE PRESUMPTION THAT TH E BANK CAN GIVE MAXIMUM LOAN UPTO 75% OF THE VALUE OF STOCK AND BOOK DEBTS AND THAT THESE NORMS HAVE BEEN STRICTLY FOLLOWED. ACCORDINGLY A.O. HAS ESTIMATED S TOCK AND BOOK DEBTS OF THE APPELLANT COMPANY BY MAKING A REVERSE CALCULATION. NO ADVERSE MATERIAL, WHATSOEVE R, HAS BEEN BROUGHT ON RECORD BY THE A.O. IN THIS REGA RD. ADMITTEDLY, EVEN THE RELEVANT STOCK STATEMENT, AS SUBMITTED TO THE BANK HAS NOT BEEN THEN FOUND ON ACIT VS. M/S NARMADA VEHICLES PVT.LTD. ITA NO. 216/IND/2015 5 RECORD TO ARRIVE AT THE DISCREPANCY AND ON THE BASI S OF WHICH NOTICE U/S 148 BEEN ISSUED TO THE APPELLANT. ALSO APPELLANTS AUDITED BOOKS OF ACCOUNTS HAVE BEEN ACCEPTED BY THE A.O. HIMSELF AT ALL STAGES WITHOUT SPECIFYING ANY DEFECT OR DEFICIENCY THEREIN. AS A M ATTER OF FACT, THERE IS NOT EVEN A SINGLE PIECE OF ADVERS E DOCUMENTARY EVIDENCE FOUND AVAILABLE ON RECORDS OF THE A.O. TO SHOW THAT THE APPELLANT INDEED HAD THE STOC K OR BOOK DEBTS AS ESTIMATED BY THE A.O. ON PRESUMPTION AND SURMISES. 6.1 AFTER PERUSAL OF ENTIRE MATERIAL ON RECORD, A.O . IS NOT FOUND JUSTIFIED IN MAKING ADDITION OF RS.1,20,14,278/- FOR DIFFERENCE IN VALUATION OF CLO SING STOCK AND DEBTS MADE ON PRESUMPTIONS AND ASSESSING IT AS UNEXPLAINED INVESTMENT OF THE APPELLANT COMPA NY. ACCORDINGLY, ADDITION OF RS.1,20,14,278/- IS NOT FO UND SUSTAINABLE AND HEREBY DELETED. ACIT VS. M/S NARMADA VEHICLES PVT.LTD. ITA NO. 216/IND/2015 6 4. WE HAVE HEARD BOTH THE SIDES. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF SALE AND SERVICE OF HYUNDAI CARS. THE ASSESSEE IS ALSO COVERE D UNDER THE COMPANIES ACT. THE ASSESSEE AVAILED LOAN AGAINST RESIDENTIAL PROPERTY FROM STATE BANK OF INDIA UND ER TRADERS EASY LOAN SCHEME AND ALSO SOME LOAN FROM CENTURION BANK UNDER THE INVENTORY FINDING SCHEME UNDER TIE UP WITH HYUNDAI MOTORS LIMITED. THE BANKS H AVE COME OUT WITH THESE EASY LOAN SCHEMES FOR AUTOMOBILE SECTOR. THE ASSESSING OFFICER HAS REOPENED THE ASSESS MENT ON THE GROUND THAT THE ASSESSEE HAS AVAILED THE LOAN OF RS.3,37,60,338/- AGAINST HYPOTHECATION OF STOCKS AND DEBTORS AS UNDER :- A. RS.2,87,57,228.28 FROM STATE BANK OF INDIA B. RS.50,03,109.97 FROM CENTURION BANK ACIT VS. M/S NARMADA VEHICLES PVT.LTD. ITA NO. 216/IND/2015 7 AS PER THE ASSESSING OFFICER AS PER THE NORMS FIXED BY THE RBI LOAN CAN BE GIVEN, MAXIMUM UPTO 75% OF STOCKS AND BOOK DEBTS. THE ASSESSEE HAS SHOWN INVENTORIES AND BOO K DEBTS TOTALING TO RS.3,29,59,595/-, THEREFORE, THE T OTAL STOCK MUST BE OF RS.4,50,13,784/- BUT THE ASSESSEE H AS HYPOTHECATED STOCK OF ONLY RS.3,29,59,595/- AS AGAINST REQUIRED 4,50,13,784/-. THEREFORE, THE ASSESSING OF FICER MADE THE VALUE OF STOCK AND DEBTORS AS SHORT FALL AND MAD E THE ADDITION OF RS.1,20,14,278/- IN THE VALUE OF STOC KS AND DEBTORS. 5. THE ASSESSEES CONTENTION BEFORE THE ASSESSING OF FICER AND THE LEARNED CIT(A) IS THAT THE ASSESSEE HAS NOT TAKE N LOAN FROM HYPOTHECATION OF STOCK BUT THE ASSESSEE HAS TAKEN THE LOAN AGAINST HYPOTHECATION OF HIS PROPERTY AT BHOPAL AND THE BANK HAS GIVEN A CERTIFICATE TO THAT EFFECT WHICH IS REPRODUCED AT PAGE 10 OF THE PAPER BOOK. THE CERTIFICATE HAS BEEN ISSUED BY STATE BANK OF INDIA CERTI FYING ACIT VS. M/S NARMADA VEHICLES PVT.LTD. ITA NO. 216/IND/2015 8 THAT THEY HAVE GIVEN THE LOAN AGAINST MORTGAGE OF HOUSE PROPERTY OF 3, SHYAMLA ROAD, BHOPAL. MOREOVER, THE ASSESSEE HAS SUBMITTED THAT IT HAS ALSO TAKEN LOAN FROM CENTURION BANK WHICH IS SUFFICIENT STOCK FOR GRANTING THE LOAN AND CENTURION BANK HAS GRANTED THE LOAN UNDER THE SCHEME INVENTORY FINDING SCHEME AND THIS SCHEME I S ONLY FOR CAR MANUFACTURERS OR THEIR DEALERS. THE ADVANCE GIVEN TO CAR DEALERS IS REPAID IN FIXED TIME AS THE REP AYMENT OF TIME INCREASES, THE RATE OF INTEREST IS ALSO INCREAS ED IN THAT SCHEME. THEREFORE, UNDER THIS SCHEME, THE ASSESS EE WAS GRANTED THE LOAN. THEREFORE, THE LEARNED CIT(A) IS JUSTIFIED IN DELETING THE ADDITION AND NO INTERFERENC E IS CALLED FOR. 6. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNCED IN OPEN COURT ON 8 SEPTEMBER, 2016 ACIT VS. M/S NARMADA VEHICLES PVT.LTD. ITA NO. 216/IND/2015 9 SD/- SD/- (O.P. MEENA) (D.T. G ARASIA) ACCOUNTANTMEMBER JUDICIAL MEMB ER 8 SEPTEMBER, 2016 DN/- ACIT VS. M/S NARMADA VEHICLES PVT.LTD. ITA NO. 216/IND/2015 10