The ITO, Ward-8(1), Ahmedabad V. Top Media Entertainment Ltd., Ahmedabad

ITA 229/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6539 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-04-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 18-01-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S C TIWARI
• Assessee Lawyers: S N DIVETIA
• Keywords: Unexplained investment
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI D.C. AGRAWAL, A.M.) I.T.A. NO. 229/AHD./2008 ASSESSMENT YEAR : 2001-2002 INCOME TAX OFFICER, WARD-8(1), VS.- TOP MEDIA ENTERTAINMENT LTD., AHMEDABAD AHMEDABAD (PAN : AACCT 2229 B) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.C. TIWARI, SR. D.R. RESPONDENT BY : SHRI S.N. DIVETIA, A DVOCATE O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER DATED 26.10.2007 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XIV, AHMEDABAD DELETING THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 69 OF THE INCOME TA X ACT ON ACCOUNT OF UNEXPLAINED INVESTMENT OF RS.97,00,000/-, BEING VALUE OF 20 LACS SHARES OF INFOQUEST SOFTWARE LTD. FOR THE ASSESSMENT YEAR 2001-02. 2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT IN THE ASSESSEE COMPANYS DEMAT A/C., THERE WAS A CREDIT O F 20 LAKHS SHARES OF M/S. INFOQUEST SOFTWARE LTD. FROM THE DETAILS OBTAINED FROM THE DE MAT A/C., IT WAS OBSERVED THAT ON 26.02.2001, 20 LAKHS SHARES OF M/S. INFOQUEST SOFTW ARE LTD. WERE RECEIVED FROM M/S. COVERAGE & CONSULTANTS LTD., BUT IN THE BOOKS OF ACCOUNT, NO ENTRIES WERE MADE. THE A.O. ASKED FOR THE EXPLANATION FROM THE ASSESSEE, TO WHICH IT WAS REPL IED THAT THESE SHARES WERE TAKEN AS LOAN FOR THE PURPOSE OF SECURITY IN RESPECT OF THE OUTSTANDING A MOUNT DUE FROM THE SAID CONCERN FOR SALE OF FLATS. SINCE IT WAS IN THE NATURE OF LOAN FOR THE S ECURITY TAKEN, NO FINANCIAL TRANSACTIONS WERE INVOLVED AND NO ENTRIES WERE MADE IN THE BOOKS. THE A.O. DID NOT ACCEPT THE EXPLANATION GIVEN BY THE ASSESSEE AND ADDED THE AMOUNT AS UNEXPLAINED INVESTMENT IN SHARE PURCHASE AND HELD THAT IT IS A COLOURABLE DEVICE TO EVADE THE TAX AND INVE STMENTS WERE MADE FROM UNDISCLOSED SOURCES. HENCE, AN ADDITION OF RS.97,00,000/- WAS MADE. 2 ITA NO. 229/AHD/2008 3. ON APPEAL, IN THE IMPUGNED ORDER, THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSEE THAT 20 LAC S SHARES OF M/S. INFOQUEST SOFTWARE LTD. WERE RECEIVED AS LOAN, DETAILS OF WHICH ALONGWITH CONFIR MATION WERE FILED, THEREFORE, HE DELETED THE ADDITION OF RS.97,00,000/- MADE UNDER SECTION 69 OF I.T. ACT. THE REASONING GIVEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS CONT AINED IN PARA 5.3 OF THE IMPUGNED ORDER, WHICH READS AS UNDER :- 5.3. I HAVE CONSIDERED THE FACTS OF THE CASE AND T HE SUBMISSIONS PUT FORTH BY THE APPELLANT. I AM INCLINED TO AGREE WITH THE VIEWS OF THE APPELLANT. THE APPELLANT HAS EXPLAINED THE ACQUISIT ION OF SHARES IN ITS DMAT A/C. AND FILED THE CONFIRMATION THERETO FROM COVERAGE & CONSULTANTS LTD., CONFIRMING THAT THE SHARES WERE T RANSFERRED FROM THEIR CONCERN AND IN NEXT YEAR, THE SHARES WERE AGAIN TRA NSFERRED BACK TO THE A/C. OF SMT. SONAL PARIKH & SMT. BHAVANA PATEL AS P ER INSTRUCTION OF M/S. COVERAGE & CONSULTANTS LTD. AND FILED THE EVID ENCE AND CONFIRMATION. HENCE, THE APPELLANT HAS DISCHARGED I TS ONUS AND EXPLAINED THE SOURCE OF ACQUISITION. THE PURPOSE FO R TAKING THE SHARES WAS EXPLAINED, AS IT WAS FOR THE SECURITY FOR THE O UTSTANDING AMOUNT DUE ON THE SALE OF FLATS. THE EXPLANATION IS ACCEPTABLE , AS IT IS IN THE NATURE OF COLLATERAL SECURITY REFUNDABLE AND CAN BE EQUATE D AS LOAN AGAINST THE SHARES. HENCE, THE ACQUISITION OF SHARES STANDS EXP LAINED AND IT CANNOT BE SAID THAT IT IS UNEXPLAINED INVESTMENT IN SHARES . THE CASE OF MCDOWELL IS ALSO NOT APPLICABLE IN THIS CASE, AS TH ERE IS NO COLOURABLE DEVICE OF AVOIDANCE OF PAYMENT OF TAX. ALL THE NECE SSARY DETAILS AND CONFIRMATIONS WERE FILED BEFORE THE A.O. HENCE, THE RE IS NO CASE OF UNEXPLAINED INVESTMENT AND THE ADDITION MADE IN THI S RESPECT IS, THEREFORE, DELETED. 4. AGGRIEVED BY THIS ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE REVENUE IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF R EVENUE SHRI S.C. TIWARI, SR. D.R. APPEARED AND CONTENDED THAT THE ASSESSEE FAILED TO PROVE THE INVESTMENT IN SHARES, THEREFORE, ADDITION OF RS.97,00,000/- UNDER SECTION 69 WAS RIG HTLY MADE BY THE A.O. THE LD. D.R. FURTHER SUBMITTED THAT NO ENTRY IN RESPECT OF SAID ALLEGED LOAN OF SHARES WAS MADE BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS, THEREFORE, THE ASSESSING OFFICER RIGHTLY PRESUMED THAT THE ASSESSEE MADE THE INVESTMENT OUTSIDE THE BOOKS OF ACCOUNTS. 3 ITA NO. 229/AHD/2008 6. ON THE OTHER HAND, SHRI S.N. DIVETIA, ADVOCATE, APPEARING ON BEHALF OF THE ASSESSEE SUPPORTED THE ORDER OF AUTHORITIES BELOW. HE SUBMIT TED THAT THERE WAS NO NECESSITY OF MAKING THE ENTRY IN THE BOOKS OF ACCOUNTS BECAUSE THESE SHARES WERE TAKEN AS LOAN FOR THE PURPOSE OF SECURITY IN RESPECT OF OUTSTANDING AMOUNT DUE FROM THE SAID CONCERN FOR THE SALE OF FLATS. IN THE NEXT YEAR, THE SHARES WERE RETURNED, THEREFORE, THE ASSESSING OFFICER MADE NO CASE FOR INVOKING THE PROVISIONS CONTAINED IN SECTION 69 OF THE INCOME TA X ACT. 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. BEFORE BOTH THE AUTHORITIES BELOW, THE ASSES SEE EXPLAINED THE SOURCE OF SHARES THAT THESE WERE TAKEN AS LOAN FOR THE PURPOSE OF SECURITY IN R ESPECT OF OUTSTANDING AMOUNT DUE FROM THE SAID CONCERN FOR SALE OF FLATS. SINCE IT WAS IN THE NATU RE OF LOAN FOR THE SECURITY TAKEN, NO FINANCIAL TRANSACTION WAS INVOLVED AND THERE WAS NO NECESSITY FOR MAKING ANY ENTRY IN THE BOOKS OF ACCOUNTS. IN OUR OPINION, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS GIVEN COGENT REASON FOR DELETING THE ADDITION OF RS.97,00,000/- MADE BY THE ASSESSING OFFICER UNDER SECTION 69 OF THE INCOME TAX ACT. WE, THEREFORE, INCLINE TO UPHOLD THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS). 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 30.04.2010 . SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 / 04 /2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.