The ITO,Vapi Ward-1, Vapi V. M/s. Dadra Industries, Vapi

ITA 23/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5957 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-07-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 02-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MEENA
• Keywords: Unexplained investment; Set aside
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.23 / AHD/2009 (ASSESSMENT YEAR 2001-02) ITO, WARD 1, VAPI VS. M/S. DADRA INDUSTRIES, PLOT NO.57-1/A, 1 ST PHASE, GIDC, VAPI PAN/GIR NO. : AAFFD6678J (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI S. K. MEENA, SR. D.R. RESPONDENT BY: SHRI S N SOPARKER, SR. ADV. SHRI JAIMIN GANDHI, AR O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDE R OF LD. CIT(A) VALSAD DATED 10.01.2008 FOR THE ASSESSMENT YEAR 200 1-02. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONCLUDING THAT THE ENT RY IN THE BOOKS OF THE ASSESSES WAS ONLY A SUBJECT MATTER OF RECONCILIATION AND THE ASSESSEE HAS OWNED UP THE INVESTMENT AS PER THE DOCUMENT IN QUESTION AND HAS ACCEPTED THE DUES OF T HE PARTNER CLAIMING THE AMOUNT RECEIVABLE ON THIS ACCOUNT FROM THE ASSESSEE AND THEREBY DELETING THE ADDITION OF RS.40 ,42,500/- MADE U/S.69 OF THE IT. ACT, 1961. I.T.A.NO. /AHD/200 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(A) HAS ERRED IN ACCEPTING THE RECONCILI ATION MADE IN THE BOOKS OF ACCOUNTS FOR F.Y.2006-07, AND THERE BY DELETING THE ADDITIONS MADE IN THE A.Y.2001-02, RELEVANT TO F.Y.2000- 01. 3. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LE ARNED CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. THE APPELLANT CRAVES TO ADD, ALTER OR AMEND ANY GRO UNDS OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE NOTED BY THE LD. CIT(A) IN PARA 5 & 6 OF HIS ORDER WHICH ARE REPRODUCED BELOW: A SURVEY U/S. 1 33 A OF THE INCOME TAX ACT WEIS C ARRIED OUT WITH REFERENCE TO THE CASE OF MR. RASHID AHMED SHEI KH ON I?' 1 MARCH 2006 AT THE PREMISES OF THE OFFICE OF THE APP ELLANT. DURING THE SAID SURVEY PROCEEDINGS. SALE DEED AND OTHER DO CUMENTS PERTAINING TO A PLOT OF LAND AT SURVEY NO.215/3 OF DADRA ADMEASURING 14,770 SQ. MTR. OF LAND PURCHASED FOR A SUM OF RS.40,42,500/- WAS FOUND AND HAS BEEN IMPOUNDED. TH E APPELLANT HAS NOT MADE ANY DECLARATION ABOUT UNDISCLOSED INCO ME DURING THE SAID SURVEY PROCEEDINGS. THE SOURCE OF THE INVESTMENT IN THE PLOT WAS EXPLAI NED WITH REFERENCE TO THE CASE OF MR. RASHID AHMED SHEIKH WH O IS THE PARTNER OF THE APPELLANT. THE ENTIRE CONSIDERATION FOR PURCHASE OF THE PLOT HAS BEEN PAID BY CHEQUES AS PER DETAILS PR OVIDED TO A.O. THE SAME HAS BEEN ALSO ACCOUNTED BY THE PARTNER MR. RASHID AHMED IN HIS PERSONAL ACCOUNT AS PER BALANCE SHEET AS ON 31 ST MARCH, 2002. THE ACCOUNT OF THE APPELLANT IS SHOWN AS ASSET FOR A SUM OF RS.40,95,068/- AND THE LIABILITY IS SHOWN IN THE NAME OF SPLENDID TRADERS PVT. LTD. FOR RS.5,42,500/-. THE SAID PARTNER MR. RAHID IS ASSESSED TO TAX AT VAPI UNDER PAN AEQPS792 6F AND PARTICULARS ABOUT HIS ASSESSMENT IS ALREADY ON THE RECORD OF THE A.O. I.T.A.NO. /AHD/200 3 4. THE A.O. MADE ADDITION ON THIS ACCOUNT U/S 69 BY HOLDING THAT SINCE THE BOOKS OF ACCOUNT AND THE BALANCE SHEET OF THE A SSESSEE FIRM WERE NOT PREPARED, SAID INVESTMENT MADE BY SHRI RASHID AHMAD SHEKH WAS REFLECTED NEITHER IN THE RETURN OF INCOME NOR IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND HENCE, IT IS CLEAR THAT NO SATISFACTORY EXPLANA TION IS FORTHCOMING FORM THE ASSESSEE REGARDING INVESTMENT MADE IN THE SAID PROP ERTY. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) W HO HAS DELETED THIS ADDITION AND NOW, THE REVENUE IS IN APPEAL BEFORE U S. 5. LD. D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER AND ALSO SUBMITTED THAT LD. CIT(A) WAS NOT JUSTIFIED IN DELE TING THE ADDITION ON THE BASIS OF BALANCE SHEET OF THE ASSESSEE FIRM FOR THE ACCOUNTING YEAR 2006-07 WHEN THE INVESTMENT WAS MADE IN THE FINANCIAL YEAR 2000-01. 6. AS AGAINST THIS, LD. COUNSEL FOR THE ASSESSEE SU PPORTED THE ORDER OF LD. CIT(A). IT IS ALSO SUBMITTED THAT LD. CIT(A) HAS O BTAINED REMAND REPORT FORM THE A.O. AND THE RELEVANT PORTION OF THE REMAN D REPORT HAS BEEN REPRODUCED BY THE LD. CIT(A) ON PAGES 8-9 OF HIS OR DER. IT IS SUBMITTED THAT IN THE REMAND REPORT ALSO, THE A.O. HAS NOT DISPUTE D ABOUT THIS FACT THAT PAYMENT FOR THE PROPERTY IN QUESTION WAS MADE BY A PARTNER OF THE ASSESSEE FIRM AND HENCE, THE ADDITION MADE BY THE A.O. U/S 6 9 WAS RIGHTLY DELETED BY LD. CIT(A). OUR ATTENTION WAS DRAWN TO PAGE 1 OF T HE PAPER BOOK TO SHOW THAT PAYMENT FOR THIS PROPERTY TO THE EXTENT OF RS. 35 LACS WAS MADE BY MR. RASHID AHMAD SHEKH, A PARTNER OF THE ASSESSEE FIRM BY WAY OF SEVEN ACCOUNTS PAYEE CHEQUES OF RS.5 LACS EACH. OUR ATTE NTION WAS ALSO DRAWN TO THE COPY OF HIS CAPITAL ACCOUNT IN THE BOOKS OF THE FIRM PREPARED AFTERWARDS AS PER WHICH THERE IS A CLOSING DEBIT BALANCE OF RS .71,08,077.94. IT IS ALSO SUBMITTED THAT ON PAGE 4 OF THE PAPER BOOK IS THE B ALANCE SHEET OF THE SAID PARTNER OF THE ASSESSEE FIRM, MR. RASHID AHMAD SHEK H AS ON 31.03.2002 AND I.T.A.NO. /AHD/200 4 POINTED OUT THAT IN THE SAID BALANCE SHEET, THAT PA RTNER HAS SHOWN PAYMENT ON ACCOUNT OF LAND OF THE ASSESSEE FIRM I.E. DADRA IND USTRIES TO THE EXTENT OF RS.40,95,068/- AND HAS SHOWN AN AMOUNT PAYABLE TO T HE VENDOR M/S. SPLENDID TRADERS PVT. LTD. OF RS.5,42,500/- AND HEN CE, OUT OF THE TOTAL VALUE OF THE LAND OF RS.40,42,500/- FOR WHICH ADDITION WA S MADE BY THE A.O., THE AMOUNT OF RS.5,42,500/- WAS PAYABLE AS ON 31.03.200 2 AND THE NET PAYMENT MADE TILL THAT DATE OF RS.35 LACS WAS PAID BY THE S AID PARTNER BY WAY OF ACCOUNTS PAYEE CHEQUES. IT IS FURTHER SUBMITTED TH AT ON PAGE 5 OF THE PAPER BOOK IS HIS BALANCE SHEET FOR THE YEAR ENDING 31.03 .2007 AND IN THE SAID BALANCE SHEET HE HAS SHOWN AMOUNT RECEIVABLE FROM T HE ASSESSEE OF RS.35,63,068/-DETAILS OF WHICH ARE AVAILABLE ON PAG E 6 OF THE PAPER BOOK. IT IS HIS SUBMISSION THAT IN THE LIGHT OF THESE FACTS, THE ADDITION MADE BY THE A.O. IS RIGHTLY DELETED BY LD. CIT(A) AND HENCE, HI S ORDER SHOULD BE UPHELD. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT OUT OF THE TOTAL PURCHASE PRICE OF THE LAND IN QUES TION OF RS.40,42,500/- AN AMOUNT OF RS.5,42,500/- WAS NOT PAID TO THE VENDOR EVEN UP TO 3.103.2007 BECAUSE AS PER THE COPY OF THE CAPITAL ACCOUNT OF T HE ASSESSEE FIRM M/S. DADRA INDUSTRIES IN THE BOOKS OF THE PARTNER SHRI R ASHID AHMED SHEKH, AS AVAILABLE ON PAGE 6 OF THE PAPER BOOK, THERE IS DEB IT ON ACCOUNT OF LAND OF RS.40.95 LACS, THERE IS A CREDIT OF RS.5,42,500/- O N ACCOUNT OF AMOUNT PAYABLE TO M/S. SPLENDID TRADERS PVT. LTD. HENCE,, THE PAYMENT WAS MADE TO THE VENDOR ON ACCOUNT OF LAND IN QUESTION OF ONL Y RS.35 LACS AND THAT TOO WAS PAID BY THE SAME PARTNER OUT OF HIS BANK ACCOUN T BY WAY OF ACCOUNTS PAYEE CHEQUES. IN THE LIGHT OF THESE FACTS, IT IS NOT ACCEPTABLE THAT INVESTMENT IN THE LAND IN QUESTION IS UNEXPLAINED INVESTMENT B ECAUSE THE ASSESSEE HAS DULY EXPLAINED THE SOURCE OF THIS INVESTMENT. AS P ER THE PROVISIONS OF I.T.A.NO. /AHD/200 5 SECTION 69, WHEN THE INVESTMENT WAS NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF INVESTMENT OR WHERE EXPLANATION OFFERED B Y THE ASSESSEE IS NOT SATISFACTORY, THEN THE VALUE OF INVESTMENT MAY BE D EEMED TO BE THE INCOME OF THE ASSESSEE. IN THE PRESENT CASE, THE INVESTMENT IN QUESTION WAS NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FI RM. ON THIS ASPECT, IT IS EXPLAINED THAT THE ASSESSEES BUSINESS WAS NOT CONT INUING AND FOR THIS REASON, NO BOOKS OF THE ASSESSEE FIRM WERE MAINTAINED FOR T HE YEAR IN QUESTION. BUT THE ASSESSEE HAS EXPLAINED THE SOURCE OF SUCH INVES TMENT. AS PER THE EXPLANATION OF THE ASSESSEE REGARDING SOURCE OF INV ESTMENT, IT IS SEEN THAT INVESTMENT WAS MADE BY WAY OF PAYMENT BY A/C PAYEE CHEQUES BY A PARTNER OF THE ASSESSEE FIRM. IN THE LIGHT OF THESE FACTS, IT IS NOT ACCEPTABLE THAT INVESTMENT IN QUESTION IS UNEXPLAINED INVESTMENT AN D HENCE, SECTION 69 OF THE ACT IS NOT APPLICABLE. UNDER THESE FACTS, WE DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A). 8. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISM ISSED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY 2011. SD./- SD./- (BHAVNESH SAINI) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 29 TH JULY, 2011 SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD 6. THE GUARD FILE I.T.A.NO. /AHD/200 6 1. DATE OF DICTATION. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER.. OTHER MEMBER 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 D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..