Mark Leasing & Finance Ltd., Ahmedabad V. The Income tax Officer, Ward-4(4), Ahmedabad

ITA 2403/AHD/2009

• Counselvise Citation: 240320514 RSA 2009
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-10-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 13-08-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PUMIL H SHAH
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD BEFORE SHRI T. K. SHARMA ,JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.2403 / AHD/2009 (ASSESSMENT YEAR 1999-2000) MARK LEASING & FINANCE LTD., 36, HIRABHAI MARKET, DIWAN BALLUBHAI MARG, B/H, NEW CLOTH MARKET, AHMEDABAD VS. ITO, WARD 4(4), AHMEDABAD PAN/GIR NO. : AAACM8010H (APPELLANT) .. (RESPONDENT) APPELLANT BY: SRI PUMIL H SHAH, AR RESPONDENT BY: SHRI SAMIR TEKRIWAL, SR. DR DATE OF HEARING: 10.10.2011 DATE OF PRONOUNCEMENT: 14.10.11 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORD ER OF LD. CIT(A) VIII, AHMEDABAD DATED 28.11.2008 FOR THE ASSESSMENT YEAR 1999-2000. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND O N FACTS IN CONFIRMING THE ADDITION OF RS.9,96,455/- MADE BY TH E A.O. ON ACCOUNT OF DISALLOWANCE OF CURRENT LIABILITIES BEIN G ADVANCES RECEIVED FROM CUSTOMERS AS UNEXPLAINED WITHOUT PROP ER CONSIDERATION AND APPRECIATION OF THE FACTS AND EVI DENCES AVAILABLE ON RECORD. IN VIEW OF THE FACTS, SUBMISSIONS AND EV IDENCES FILED AS WELL AS LEGAL POSITION IN SUPPORT THEREOF, THE IMPU GNED ADDITION OF RS.9,96,455/- REQUIRES TO BE DELETED. I.T.A.NO. 2403 /AHD/2009 2 2. THE LEARNED CIT(A) HAS FAILED TO CONSIDER THE FACT THAT THE CLOSING BALANCE OF ADVANCES FROM CUSTOMERS I.E.RS.9 ,96,455/- IN FACT REPRESENTS OPENING BALANCE AS PER DETAILS FURN ISHED TO THE A.O. AND HENCE EVEN OTHERWISE NO ADDITION IS WARRANTED M ORE PARTICULARLY WHEN THE SAME ADVANCES HAVE BEEN ACCEP TED BY THE DEPARTMENT AS GENUINE IN EARLIER YEARS. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT CONSIDERING OR APPRECIATING THE FACT THAT THE ENTIR E ADVANCES ARE ADJUSTED AGAINST LEASE RENTALS AND SINCE THE RECEIP T OF LEASE RENTALS AS INCOME HAS NOT BEEN DISPUTED BY HIM THE ADDITION ON ACCOUNT OF ADVANCES FROM CUSTOMERS HAS RESULTED IN CONTRADICTO RY STANDS ON THE SAME ISSUE. 4. IT IS THUS CONTENDED THAT THE LEARNED CIT( A) FAILED TO CONSIDER THE FACT THAT THE A.O. HAS DULY ACCEPTED T HE LEASE RENTAL RECEIVED FORM PARTIES AS SHOWN IN THEIR ACCOUNT AND OFFERED AS INCOME BY THE COMPANY AS GENUINE AND ON THE OTHER H AND HAS TREATED THE ADVANCES RECEIVED FROM THE SAME CUSTOME RS AS NON- GENUINE, WHICH IS NOT ONLY CONTRADICTORY IN ITSELF BUT BAD IN LAW. 5. THE LEARNED CIT(A) HAS ALSO FAILED TO CONS IDER AND APPRECIATE THE FACTS THAT SIMILAR ADVANCES FROM CUS TOMERS HAVE BEEN RECEIVED AGAINST THE LEASE OF VEHICLES IN CASE OF VARIOUS GROUP CONCERNS AND THAT THE ADDITIONS MADE IN SUCH CONCER NS NAMELY ELCON FINLEASE & INDUSTRIES LTD., RATHORE LEASING & FINANCE LTD. AND SHREE ARAVELI FINLEASE LTD. IN VARIOUS ASSESSME NT YEARS MADE BY THE SAME A.O. IN THE CENTRAL CIRCLE HAVE BEEN DE LETED BY THE LEARNED CIT(A) IN THE APPELLATE ORDERS PASSED IN CA SE OF SUCH GROUP CONCERNS. THE LEARNED A.O. THUS OUGHT TO HAVE FOLLO WED THE SAID ORDERS INSTEAD OF ATTEMPTING TO DISTINGUISH THE SAI D ORDERS ON FRIVOLOUS AND IRRELEVANT GROUNDS. 6. THE LEARNED CIT(A) HAS FAILED TO CONSIDER THE FACT THAT THE A.O. IN THE ORIGINAL ASSESSMENT ORDER HAS DISALLOWE D THE CLOSING BALANCE IN NAME OF THE PARTIES FROM WHOM ADVANCES H AVE BEEN RECEIVED. BY DOING SO, THE A.O. HAS, IN PRINCIPLE, ACCEPTED THE GENUINENESS OF THE TRANSACTIONS APPEARING IN THESE ACCOUNTS. THEREFORE, THE IMPUGNED ADDITION WHILE TREATING THE ADVANCES AS UNEXPLAINED AND NON-GENUINE IS EVEN OTHERWISE BAD I N LAW. 7. THE LEARNED CIT(A) HAS FURTHER FAILED TO C ONSIDER THE FACT THAT THE A.O. HAS FAILED TO CONSIDER THE ALTERNATIV E ARGUMENT OF THE APPELLANT THAT IN CASE THE CLOSING BALANCE OF ADVAN CES RECEIVED FROM CUSTOMERS AMOUNTING TO RS.9,96,455/- IS TREATE D AS NON- GENUINE, THE LEASE RENTAL OF RS.21,53,982/-RECEIVED FROM THE SAME I.T.A.NO. 2403 /AHD/2009 3 CUSTOMERS ALSO REQUIRES TO BE IGNORED AND THE INCOM E OFFERED BY THE COMPANY IN THE BOOKS OF ACCOUNTS AND RETURN OF INCOME NEEDS TO BE REDUCED TO THAT EXTENT. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, MO DIFY OR DELETE ANY OF THE ABOVE GROUNDS AS WELL AS TO SUBMIT ADDIT IONAL GROUNDS AT THE TIME OF HEARING OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE TILL THE ASSESSMENT STAGE ARE NOTED BY LD. CIT(A) IN PARA 4.1 OF HIS ORDER WHICH IS REPRODUCED BELOW: BRIEFLY STATED, FACTS OF THE CASE ARE THAT APPELLA NT IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF LASING AND FINAN CING OF VEHICLES. IN THIS CASE, THE ORIGINAL ASSESSMENT WA S COMPLETED UNDER SECTION 143(3) OF THE ACT ON 4 TH MARC, 2002 DETERMINING THE TOTAL INCOME AT RS.56,83,152/-. THE APPELLANT FILED AN A PPEAL AGAINST THE SAID ASSESSMENT ORDER BEFORE THE CIT(A)-II, AHMEDAB AD. THE LD. CIT(A) VIDED HIS ORDER DATED 15.01.2003 DELETED THE ADDITION OF RS.9,96,455/- MADE ON ACCOUNT OF CURRENT LIABILITIE S. THE DEPARTMENT FILED AN APPEAL AGAINST THAT DELETION MA DE BY THE LD. CIT(A) II, AHMEDABAD, BEFORE THE HONBLE ITAT AHMED ABAD BENCH-C IN ITS ORDER IN I.T.A.NO. 972/AHD/2003 DATE D 16 TH OCTOBER, 2006 SET ASIDE THE ORDER OF LD. CIT(A) AS WELL AS OF THE A.O. AND RESTORED THE MATTER BACK TO THE FILE OF TH E A.O. FOR FRESH ADJUDICATION. IN PURSUANCE OF THE ORDER OF HONBLE ITAT THE O CARRIED OUT THE FRESH PROCEEDINGS AND AGAIN ADDED T HIS AMOUNT OF RS.9,96,455/- IN THE INCOME OF THE APPELLANT. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. IT IS SUBMITTED BY THE LD. A.R. THAT THE DETAILS OF ADVANCES FROM CUSTOMERS IS AVAILABLE ON PAGES 34 & 45 OF THE PAPE R BOOK. IT IS ALSO SUBMITTED THAT RECEIPT DURING THE PRESENT YEAR FROM THESE CUSTOMERS WAS OF RS.19,81,814/- AND THE SAME WAS ADJUSTED TOWARDS LEASE RENTALS AND HENCE, NO ADDITION IS JUSTIFIED. HE ALSO SUBMITTED A COPY OF THE TRIBUNAL ORDER IN THE FIRST ROUND IN I.T.A.NO. 972/AHD/2003 DATED 16.10.2006. I.T.A.NO. 2403 /AHD/2009 4 5. AS AGAINST THIS, IT WAS SUBMITTED BY THE LD. D.R . THAT THE MATTER WAS RESTORED BACK BY THE TRIBUNAL FOR A FRESH DECIS ION BY THE A.O. AFTER VERIFICATION OF LIABILITY AND FINAL OUTCOME OF OTHE R DECIDED CASES BUT THE ASSESSEE HAS NOT FURNISHED ANY DETAILS/EVIDENCE BEF ORE THE A.O. TO ENABLE THE A.O. TO VERIFY THE LIABILITY IN QUESTION. HE A LSO SUBMITTED THAT THE FINAL OUTCOME OF THE DECIDED CASES IS ALSO NOT MADE AVAILABLE BY THE ASSESSEE AND HENCE, NO INTERFERENCE IS CALLED FOR I N THE ORDER OF LD. CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION, PERUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT IN THE FIRST ROUND, THE TRIBUNAL RESTORED BACK THE ISSUE TO THE FILE OF THE A.O. FOR A FRESH DECISION AS PER PARA 4 OF ITS ORDER DATED 10.10.2006. PARA 4 OF THIS TRIBUNAL ORDER IS REPRODUCED BELOW: WHAT ARE THOSE OTHER CASES HAVE NOT BROUGHT TO OUR NOTICE. IN THESE CIRCUMSTANCES, WE SET ASIDE THE ORDERS OF THE CIT(A) AS WELL AS OF THE A.O. AND REMIT THE MATTER BACK TO THE FIL E OF THE A.O. TO REPROCESS THE ASSESSMENT OF THIS AMOUNT AFTER VERIF ICATION OF THE LIABILITIES AND THE FINAL OUTCOME OF OTHER DECIDED CASES. 7. IT IS NOTED BY THE A.O. IN THE IMPUGNED ORDER TH AT THE ASSESSEE HAS FAILED TO FILE CONFIRMATION OF ACCOUNTS, PAN AND TH E PRESENT NAMES & ADDRESSES OF THE PARTIES AND, THEREFORE, HE HAD NO OPTION BUT TO REPEAT THE ADDITION OF RS.9,96,455/-. HE ALSO OBSERVED THAT I N MOST OF THE CASES, THE AMOUNT WAS RECEIVED IN CASH. IT GOES TO SHOW THA T THE ASSESSEE DID NOT COOPERATE AT ALL TO ENABLE THE A.O. TO CARRY OUT TH E DIRECTION OF THE TRIBUNAL. WE ALSO FIND THAT IT IS NOTED BY THE LD. CIT(A) IN PARA 4.6 OF HIS ORDER THAT ASSESSEE HAS FILED ORDERS OF CIT(A) II, AHMEDABAD IN THE CASE OF SHREE ARAVELI FINLEASE LTD. DATED 25.02.2003 FO R THE ASSESSMENT YEARS 1998-99 AND 1999-2000. HE FURTHER NOTED THAT IN BO TH OF THOSE CASES, I.T.A.NO. 2403 /AHD/2009 5 CIT(A) II HAD DELETED CERTAIN ADDITIONS MADE ON ACC OUNT OF ADVANCES FROM CUSTOMERS U/S 68 OF THE INCOME TAX ACT, 1961 B Y REFERRING TO THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 1995-96 TO 1998-99. HE FURTHER NOTED THAT LD. A.R. HAD FAILED TO SHOW THAT THE FAC TS OF THIS CASE ARE SIMILAR TO THE CASE UNDER REFERENCE AND THE PARTIES REFERRED TO IN THESE CASES ARE SAME. HE ALSO NOTED THAT LD. A.R. FAILED TO SHOW THAT THE DECISION OF LD. CIT(A) IN THOSE TWO CASES HAD ATTAI NED FINALITY. FROM THESE OBSERVATIONS OF AUTHORITIES BELOW, WE FIND TH AT THE ASSESSEE COULD NOT FURNISH THE DESIRED INFORMATION TO THE A.O. TO ENABLE IT TO CARRY OUT THE TRIBUNAL DIRECTION I.E. VERIFICATION OF LIABILITY. THE 2 ND DIRECTION OF THE TRIBUNAL WAS REGARDING FINAL OUTCOME OF OTHER DECID ED CASES AND A CLEAR FINDING HAS BEEN GIVEN BY THE LD. CIT(A) THAT LD. A .R. HAS FAILED TO SHOW THAT THE FACTS ARE IDENTICAL AND ALSO FAILED TO SHO W THAT THE ISSUE HAS ATTAINED FINALITY IN THOSE CASES AND WHAT IS THE FI NAL OUTCOME. BEFORE US ALSO, NO SUCH EVIDENCE HAS BEEN BROUGHT OUT ON RECO RD AND IN THE PAPER BOOK ALSO, THE ASSESSEE ONLY SUBMITTED A COPY OF OR DER OF LD. CIT(A) IN THE CASE OF SHREE ARAVELI FINLEASE LTD. FOR THE ASS ESSMENT YEAR 1998-99 AND 1999-2000 AND IT IS NOT SHOWN BEFORE US ALSO AS TO WHETHER THE MATTER WAS CARRIED BY THE REVENUE TO THE TRIBUNAL AND WHAT IS THE TRIBUNAL DECISION IN THAT CASE. IN THE ABSENCE OF DETAILS S UCH AS CORRECT ADDRESS AND PAN IT IS NOT POSSIBLE FOR THE A.O. TO VERIFY LIABI LITY IN QUESTION AND HENCE, THE ASSESSEE DID NOT COOPERATE TO ENABLE THE A.O. TO CARRY OUT THE TRIBUNAL DIRECTION. THEREFORE, WE FEEL THAT NO INT ERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A) IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 8. REGARDING THIS CONTENTION THAT AS PER THE DETAIL S AVAILABLE ON PAGE 45 OF THE PAPER BOOK, ENTIRE AMOUNT RECEIVED FROM T HE CUSTOMERS IN THE PRESENT YEAR WAS TRANSFERRED TO LEASE RENTAL INCOME , WE FIND THAT THERE WAS I.T.A.NO. 2403 /AHD/2009 6 OPENING BALANCE ALSO FOR THESE VERY CUSTOMERS TO TH E EXTENT OF RS.12,92,992/- AND HENCE, IN THE ABSENCE OF ANY EVI DENCE, IT IS NOT ACCEPTABLE THAT THE ENTIRE AMOUNT TRANSFERRED TO TH E LEASE RENTAL IS OUT OF THE RECEIPT DURING THE PRESENT YEAR AND THE CLOSING BALANCE IS OUT OF THE OPENING BALANCE. THIS CONTENTION WAS ALSO RAISED BEFORE US THAT THE OPENING BALANCE IS ON ACCOUNT OF SECURITY DEPOSIT R ECEIVED FROM THESE CUSTOMERS BUT NO EVIDENCE HAS BEEN BROUGHT ON RECOR D IN THIS RESPECT BEFORE US OR BEFORE THE AUTHORITIES BELOW. THE A.O . HAS NOT MADE ADDITION FOR THE ENTIRE RECEIPT IN THE PRESENT YEAR BUT THE ADDITION WAS MADE FOR THE CLOSING BALANCE ONLY BECAUSE BALANCE A MOUNT OF RECEIPT IN THE PRESENT YEAR AND TOTAL OPENING BALANCE WAS CONS IDERED TO HAVE BEEN ACCOUNTED FOR AS LEASE RENTAL INCOME. IN THE ABSEN CE OF ANY EVIDENCE, IT HAS TO BE ACCEPTED THAT TRANSFER TO LEASE RENTAL IN COME IS FIRST OUT OF OPENING BALANCE & THEN OUT OF RECEIPT OF THE PRESEN T YEAR AND HENCE, TOTAL CLOSING BALANCE IS OUT OF RECEIPT OF THE PRESENT YE AR. 9. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS DIS MISSED. 10. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH OCT., 2011. SD./- SD./- (T. K. SHARMA) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 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 BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD I.T.A.NO. 2403 /AHD/2009 7 1. DATE OF DICTATION 10/10 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13/10 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.13/10 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 14/10 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.14/10 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 14/10/11 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. ..