ITO, New Delhi V. M/s Marudhar Farms Ltd., New Delhi

ITA 2198/DEL/2010

• Counselvise Citation: 219820114 RSA 2010
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 15-12-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 10-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R S NEGI SENIOR
• Keywords: Unexplained investment
• Section: 142(1); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.2198/DEL./2010 (ASSESSMENT YEAR : 1998-99) ITO, WARD 6 (2), VS. M/S. MARUDHAR FARMS LTD., NEW DELHI. 4, COMMUNITY CENTRE, EAST OF KAILASH, NEW DELHI-110065. (PAN : AAACM9032F) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI R.S. NEGI, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THE REVENUE HAS FILED THIS APPEAL AGAINST THE ORDER OF CIT (APPEALS)-V, NEW DELHI DATED 26.02.2010 FOR THE ASSESSMENT YEAR 1998-99. THE GROUNDS OF APPEAL READ AS UNDER :- 1. THE ORDER OF THE LEARNED CIT (APPEALS) IS ERRON EOUS AND CONTRARY TO FACTS AND LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT (APPEALS) HAS ERRED IN DELETING THE ADD ITION OF RS.4,00,000/- MADE BY A.O. BEING THE UNEXPLAINED INVESTMENT. 2.1 THE LD. CIT (APPEALS) HAS IGNORED THAT THE ASSE SSEE DID NOT PRODUCE ITS BOOKS OF ACCOUNTS FOR VERIFICATION OF EVIDENCES DURING THE REMAND PROCEEDINGS. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR A MEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. ITA NO.2198/DEL./2010 2 2. THE RETURN OF INCOME WAS FILED ON 16.12.1999. I N RESPONSE TO NOTICE U/S 142(1) OF THE INCOME-TAX ACT, THE RETURN WAS PR OCESSED U/S 143(1)(A) ON 31.03.2000. SINCE THE RETURN WAS LATE THE RETURN WAS PROCESSED AT NIL INCOME. THE ASSESSING OFFICER MADE AN ADDITION OF RS.40 LACS ON ACCOUNT OF EXPENSES INCURRED FOR THE VILLA PROJECT AS ADVANCE PAYMENT FOR THE LAND PURCHASED AND ADVANCE FOR UNDERTAKING LAND DEVELOPM ENT AND INFRASTRUCTURAL EXPENSES. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE COMPLETE DETAILS IN THIS REGARD. THE ASSESSEE FAILED TO EXP LAIN/FILE DETAILS REGARDING THE SOURCE OF INVESTMENT IN THE VILLA PROJECT. THE ASS ESSING OFFICER MADE THE ADDITION OF RS.40 LACS AS UNEXPLAINED INVESTMENT. 3. THE ASSESSEE FILED AN APPEAL AGAINST THE ORDER O F ASSESSING OFFICER BEFORE THE CIT (A). THE CIT (A) GRANTED THE RELIEF BY HOLDING AS UNDER :- 29. IN VIEW OF THE ABOVE FACTS AND EVIDENCE ON REC ORD, I HOLD THAT NO ADDITION ON ACCOUNT OF UNEXPLAINED INVESTME NT IN PURCHASE OF LAND UNDER MARUDHAR VILLA PROJECT COULD BE MADE IN THE ASSESSMENT YEAR 1998-99 AS THE ACTUAL INVESTMENT HA D BEEN MADE DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 1997-98. FURTHER, THE ASSESSEE'S SUBMISSION THAT THE SOURCE OF INVESTMENT IN MARUDHAR VILLA PROJECT WAS OUT OF THE AMOUNT OF LOANS RECEIV ED BACK FROM SIX PARTIES, CANNOT BE DOUBTED AND CANNOT BE OUT RI GHTLY REJECTED AS THE ASSESSEE COMPANY HAD DISCHARGED THE BURDEN W HICH LAY UPON HIM U/S 68 OF THE ACT AND THE INVESTMENT MADE BY THE ASSESSEE COMPANY STANDS EXPLAINED. THE ADDITION OF RS.40 LAKHS IS ACCORDINGLY, DELETED . 4. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US AND THE ONLY GROUND OF REVENUE IS THAT THE CIT (A) HAS IGNORED THAT THE AS SESSEE DID NOT PRODUCE ITS BOOKS OF ACCOUNTS VERIFICATION OF EVIDENCE DURING T HE REMAND PROCEEDINGS. ITA NO.2198/DEL./2010 3 5. NONE ATTENDED ON BEHALF OF THE ASSESSEE. 6. WE HAVE HEARD THE REVENUE AND PERUSED THE RECORD . THE ASSESSING OFFICER MADE ADDITION OF RS.40 LACS FOR THE VILLA P ROJECT AS ADVANCE PAYMENT FOR LAND PURCHASED, ADVANCE FOR LAND UNDERTAKING AN D INFRASTRUCTURAL EXPENSES. THE ASSESSING OFFICER ASKED TO FILE THE COMPLETE DE TAILS ALONG WITH SUPPORTING VOUCHERS. THE ASSESSEE REPLIED THAT DETAILS AND EV IDENCE REGARDING THE VILLA PROJECT ARE NOT AVAILABLE WITH THEM. IT WAS ALSO C LAIMED THAT THE BANK ACCOUNTS ARE INOPERATIVE AND NO BANK TRANSACTIONS H AVE BEEN MADE BY THE COMPANY WITH ANY PERSONS DURING THE LAST SIX YEARS . BEFORE THE CIT (A), THE ASSESSEE SUBMITTED THAT THE DETAILS OF THE LAND PUR CHASED FOR THE PROJECT AS REFLECTED IN THE BALANCE SHEET WAS AS UNDER :- ASST. YEAR BALANCE REFLECTED IN BALANCE SHEET 1993-94 3,46,318 1994-95 3,46,318 1995-96 3,46,318 1996-97 12,37,453 1997-98 19,70,000 1998-99 59,70,000 IT WAS ALSO CLAIMED THAT NO INVESTMENT WAS MADE DUR ING THE RELEVANT YEAR AND THE INVESTMENT WAS MADE ONLY FOR THE YEAR RELEVANT TO ASSESSMENT YEAR 1997- 98. IN THE REMAND PROCEEDINGS, IT WAS CLAIMED THAT DURING THE RELEVANT PERIOD FOR ASSESSMENT YEAR 1997-98, NO INVESTMENT WAS MADE IN THE PURCHASE OF LAND. THE INVESTMENT OF RS.40 LACS WAS CLAIMED TO HAVE BEEN MADE DURING THE PERIOD 05.07.1996 TO 07.08.1996 BY RECALLING TH E LOANS ADVANCE BY IT TO ITA NO.2198/DEL./2010 4 SIX PARTIES. THESE LOANS ARE CLAIMED TO HAVE BEEN RECEIVED BACK BY CHEQUE AND WERE CLAIMED TO HAVE BEEN VERIFIABLE BY BANK ST ATEMENT. THE DETAILS OF THE RECALLED LOANS AND THEIR ENTRY IN THE BANK IS S TATED TO BE AS UNDER :- NAME OF PARTY AMOUNT DATE OF CREDIT IN BANK A/C WITH PNB TARIKA PRINTS 10,00,000 05.07.1996 - DO - 3,36,348 02.08.1996 TIRUPATI INTERNATIONAL 5,80,000 02.08.1996 - DO - 6,00,000 02.08.1996 KANODIA CLOTHIER P. LTD. 6,71,774 17.05.1996 HINDUSTAN REFRIGERATION STORES 5,00,000 17.05.1996 OTHER CREDIT 3,02,034 17.05.1996 TOTAL : 41,89,471 THE DETAILS OF PAYMENTS MADE FOR PURCHASE OF LAND I S AS UNDER :- DATE OF PAYMENT CHEQUE NO. AMOUNT (RS.) 17.05.1996 CASH 5,000 17.05.1996 951 1,25,000 17.05.1996 952 3,50,000 06.07.1996 955 9,60,000 06.07.1996 954 40,000 08.07.1996 963 5,00,000 08.07.1996 963 5,80,000 02.08.1996 966 5,80,000 02.08.1996 965 6,00,000 03.08.1996 967 5,35,000 40,00,000 IT WAS CLAIMED THAT DUE TO INADVERTENT MISTAKE, THE AMOUNT OF INVESTMENT IN THE PURCHASE OF LAND WAS REFLECTED AS LAND AND ADVA NCES AND THE SAME WAS TRANSFERRED TO THE VILLA PROJECT BY A GENERAL ENTRY DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 1998-98. IT WAS CLAIME D THAT IT WAS ONLY A GENERAL ENTRY, THEREFORE, NO ADDITION CAN BE MADE. IT WAS ALSO CLAIMED THAT ASSESSEE HAD RECEIVED THE INTEREST ON THE LOANS ADVANCED TO THE SIX PARTIES AND THE ITA NO.2198/DEL./2010 5 BALANCE WAS REFLECTED IN THE BALANCE SHEET. IT WAS ALSO CLAIMED THAT INVESTMENT WAS MADE THROUGH THE BANKING CHANNELS WH ICH IS DULY VERIFIABLE. IT WAS ALSO CLAIMED THAT ALL LOAN ACCOUNTS WERE SQU ARED UP AND ALL THE PARTIES WERE ASSESSED TO TAX. THE CIT (A) ADMITTED THE AD DITIONAL EVIDENCE AS THE REMAND REPORT WAS CALLED UPON. THE ASSESSING OFFIC ER HAS STATED THAT DURING THE REMAND PROCEEDINGS, THE ASSESSEE HAS NOT PRODUC ED HIS BOOKS OF ACCOUNT FOR VERIFICATION. THE CIT (A) ACCEPTED AN AFFIDAVI T FROM ONE OF THE DIRECTORS, SHRI ASHOK MEHTA WHEREIN IT WAS STATED THAT BOOKS O F ACCOUNT AND DOCUMENTS WERE PRODUCED AND FURNISHED BEFORE THE ASSESSING OF FICER IN THE REMAND PROCEEDINGS. CIT (A) ALSO RECORDED THAT ASSESSING OFFICER HAS NOT REBUTTED THE STATEMENT MADE IN THE AFFIDAVIT. THE CIT (A) A CCEPTED THE CLAIM OF THE ASSESSEE THAT THE INVESTMENT OF RS.40 LACS WAS MADE DURING THE PERIOD 5.7.1996 TO 7.8.1996 WHICH PERTAINS TO THE ASSESSME NT YEAR 1997-98. THE CIT (A) ALSO ACCEPTED THE ASSESSEES CLAIM THAT THERE W AS A MISTAKE IN SHOWING INVESTMENT IN THE VILLA PROJECT UNDER THE HEAD LOAN AND ADVANCES WHICH HAS BEEN COLLECTED DURING THE PERIOD UNDER CONSIDERATIO N. THE CIT (A) HAS ALSO ACCEPTED THE CLAIM OF THE ASSESSEE THAT RELEVANT CO MPLETE DETAILS WERE FILED IN THE REMAND PROCEEDINGS BUT THERE IS NOTHING ON RECO RD WHICH COULD SHOW AND ESTABLISH THAT THESE BOOKS OF ACCOUNTS WERE PRODUCE D FOR VERIFICATION BEFORE THE ASSESSING OFFICER EXCEPT AN AFFIDAVIT FILED BY ONE OF THE DIRECTORS. IN OUR CONSIDERED VIEW AND IN THE INTEREST OF JUSTICE, IT IS NECESSARY THAT ASSESSING ITA NO.2198/DEL./2010 6 OFFICER SHOULD HAVE BEEN GIVEN A CHANCE WHEN THE AD DITIONAL EVIDENCES WERE ADMITTED BY THE CIT (A) AND THE SAME WERE FORWARDED TO THE ASSESSING OFFICER FOR HIS VERIFICATION. SINCE THERE IS NOTHI NG ON THE RECORD WHICH COULD PROVE THAT THE ASSESSEE HAS COOPERATED IN THE REMAN D PROCEEDINGS AND FILED THE NECESSARY DETAILS AND BOOKS OF ACCOUNTS WERE PR ODUCED BEFORE THE ASSESSING OFFICER. IN THE INTEREST OF JUSTICE AND EQUITY, WE FIND IT FIT TO REMAND THE MATTER TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION THAT ASSESSEE SHALL PRODUCE NECESSARY DETAILS AND ALSO T HE BOOKS OF ACCOUNT WHEREIN THE INVESTMENT IN THE VILLA PROJECT HAS BEE N RECORDED. THE NECESSARY CONFIRMING STATEMENT ALONG WITH ACCOUNT FROM THE PA RTIES FROM WHOM THE LOANS WERE CALLED WERE ALSO TO BE FILED FOR VERIFIC ATION. IN VIEW OF THESE FACTS, WE SET ASIDE THE ORDER OF THE CIT (A) AND RESTORE T HE MATTER TO THE FILE OF ASSESSING OFFICER FOR DECIDING AFRESH. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 16 TH DAY OF DECEMBER, 2011. SD/- SD/- (RAJPAL YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 16 TH DAY OF DECEMBER, 2011/TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-V, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.