ACIT 6(1), MUMBAI V. ATLAS AUTOMATIVE COMPONENTS P.LTD, MUMBAI

ITA 2422/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3699 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 12-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANJEEV V JOSHI
• Keywords: Unexplained investment; Additional evidence
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO. 2422/MUM/2012 (ASSESSMENT YEAR: 2008-09) ACIT, CIRCLE 6(1) M/S. ATLAS AUTOMATIVE COMPONENTS ROOM NO. 506, 5TH FLOOR PVT. LTD., UDYOG MANDIR COM POUND AAYAKAR BHAVAN, M.K. ROAD VS. 7C, BHAGOJI KEER MARG, MAHIM MUMBAI 400020 MUMBAI 400016 PAN - AABCA 0742 K APPELLANT RESPONDENT APPELLANT BY: MISS NEERAJA PRADHAN RESPONDENT BY: SHRI SANJEEV V. JOSHI DATE OF HEARING: 25.04.2013 DATE OF PRONOUNCEMENT: 25.04.2013 O R D E R PER D. MANMOHAN, V.P. THIS IS AN APPEAL FILED AT THE INSTANCE OF REVENUE AND IT PERTAINS TO A.Y. 2008-09. 2. THE ONLY GROUND URGED BEFORE US READS AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. CIT(A) ERRED IN HOLDING THAT RS.35 LAKHS WAS NOT UNDISCLOS ED INVESTMENT U/S 69 OF THE ACT IGNORING THE FACTS THA T ASSESSEE DURING THE COURSE OF SCRUTINY PROCEEDINGS COULD NOT SUBMIT ANY EVIDENCE REGARDING ITS CLAIM OF PAYMENT OF RS.35 LA KHS AS SECURITY DEPOSIT TO M/S SILICON MEADOWS ENGINEERING SERVICES P. LTD. 3. THE FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STATED IN BRIEF. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALES OF ALUMINIUM CASTINGS. FOR THE YEAR UNDER CONSIDERATION IT DECLA RED A TOTAL INCOME OF ` 1.89 CRORES. THE CASE HAVING BEEN SELECTED FOR SCRU TINY, THE AO CALLED FOR DETAILS OF THE AMOUNTS ADVANCED BY THE ASSESSEE AS WELL AS THE INTEREST BEARING LOANS OBTAINED. IN PARTICULAR, IT WAS NOTIC ED THAT THE ASSESSEE ADVANCED A SUM OF ` 35 LAKHS IN THE FORM OF RENT DEPOSIT TO M/S SILICON ITA NO. 2422/MUM/2012 M/S. ATLAS AUTOMATIVE COMPONENTS PVT. LTD. 2 MEADOWS ENGINEERING SERVICES P. LTD. ACCORDING TO T HE ASSESSEE THE DEPOSIT WAS MADE FOR TAKING THE PREMISES ON LEASE FROM THE SAID PARTY AND HENCE NO INTEREST WAS CHARGED ON THE SAID DEPOSIT. THE AO, H OWEVER, NOTICED THAT AS PER THE RENT AGREEMENT BETWEEN M/S SILICON MEADOWS ENGINEERING SERVICES P. LTD. AND THE ASSESSEE COMPANY THERE WERE NO SUCH TERMS AND CONDITIONS OF INTEREST FREE DEPOSIT AND HENCE THERE WAS NO NEE D FOR MAKING SUCH DEPOSIT. SINCE THE ASSESSEE COMPANY BORROWED HUGE A MOUNTS, WHICH WAS INTEREST BEARING, ACCORDING TO THE AO THE ASSESSEE SHOULD NOT HAVE DEPOSITED ` 35 LAKHS WITH M/S SILICON MEADOWS ENGINEERING SERVI CES P. LTD. IN RESPONSE TO THE SHOW CAUSE NOTICE THE ASSESSEE SUBM ITTED THAT IT HAD MADE THE DEPOSIT THOUGH IT WAS NOT MENTIONED IN THE AGRE EMENT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS A SKED TO PROVE THE GENUINENESS OF THE DEPOSIT GIVEN AND WHY THE SAME M AY NOT BE TREATED AS UNEXPLAINED INVESTMENT, IN THE ABSENCE OF ANY DETAI LS FILED BY THE ASSESSEE. THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE DEPOSIT AND HENCE THE AO SOUGHT TO MAKE AN ADDITION UNDER SECTION 69 OF T HE INCOME TAX ACT. IT MAY BE NOTICED THAT SECTION 69 OF THE ACT GETS ATTR ACTED IN RESPECT OF INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT AND WITH REGARD TO THE SOURCE OF INCOME, NO EXPLANATION ABOUT THE N ATURE AND SOURCE OF INVESTMENT IS OFFERED; THEN THE VALUE OF THE INVEST MENT CAN BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR. THE AO WAS OF THE OPINION THAT THE AMOUNT OF ` 35 LAKHS CAN BE BROUGHT TO TAX IN THE YEAR UNDER CONSIDERATION UNDER SECTION 69 OF THE INCOME TAX AC T. 4. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THA T THE AO HAS WRONGLY INVOKED PROVISIONS OF SECTION 69 OF THE ACT . EXPLAINING FURTHER, IT WAS SUBMITTED THAT SECTION 69 GETS ATTRACTED ONLY W HEN AN INVESTMENT IS NOT DULY RECORDED IN THE BOOKS OF ACCOUNT WHEREAS, IN T HE INSTANT CASE, THE AMOUNT OF ADVANCE IN THE FORM OF DEPOSIT WAS RECORD ED IN ITS BOOKS OF ACCOUNT AND HENCE SECTION 69 IS NOT APPLICABLE. IT WAS ALSO CONTENDED THAT M/S SILICON MEADOWS ENGINEERING SERVICES P. LTD. IS AN ASSOCIATED COMPANY AND THE FACT REMAINS THAT THE DEPOSIT WAS MADE OUT OF THE AMOUNTS AVAILABLE WITH THE ASSESSEE WHICH WAS NOT QUESTIONE D AND THE SAME WAS ALSO RECORDED IN THE BOOKS. RELIANCE WAS ALSO PLACED ON SEVERAL CASE LAWS IN ITA NO. 2422/MUM/2012 M/S. ATLAS AUTOMATIVE COMPONENTS PVT. LTD. 3 SUPPORT OF HIS CONTENTION THAT SECTION 69 IS NOT AP PLICABLE TO THE INSTANT CASE. 5. THE LEARNED CIT(A) EXAMINED THE FACTS OF THE CASE W HILE COMING TO THE CONCLUSION THAT SECTION 69 WAS WRONGLY INVOKED BY T HE AO. IN THIS REGARD HE OBSERVED AS UNDER: - 3.5 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT, CASE LAWS CITED AS WELL AS THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS EVIDENT THAT THE AMOUNT OF DEPOSIT OF RS.35 LACS IS NOT AN UNDISCLOSED INVESTMENT OF THE APPELLANT BECAUSE THE SAME IS REC ORDED IN THE BOOKS OF ACCOUNT OF THE APPELLANT. THE ONLY REASON FOR THE AO FOR MAKING THIS ADDITION WAS THAT THERE WAS NO STIPULAT ION REGARDING THE SAID DEPOSIT IN THE RENT AGREEMENT. IN MY OPINION, THIS REASON IS NOT SUFFICIENT. IT IS IMMATERIAL WHETHER OR NOT THE REN T AGREEMENT PROVIDES FOR A DEPOSIT. SO FAR AS, THE APPELLANT HAS MADE AN INVESTMENT FROM OUT OF ITS DISCLOSED SOURCE AND SO FAR AS, IT IS RE CORDED IN THE BOOKS OF ACCOUNT, NO ADDITION OF THIS SORT CAN BE MADE. FURT HERMORE, IT IS SEEN THAT THE DEPOSIT DOES NOT PERTAIN TO THE CURRENT YE AR; RATHER IT PERTAINS TO THE EARLIER YEAR. THE CASE LAWS CITED BY THE APP ELLANT ALSO SUPPORT THE CONTENTION OF THE APPELLANT IN THIS REGARD. THE REFORE, THE ADDITION OF RS.35 LACS IS NOT JUSTIFIED AND THE SAME IS HERE BY DELETED. 6. AGGRIEVED BY THE ORDER OF THE CIT(A) REVENUE PREFER RED AN APPEAL IN A ROUTINE FASHION WHEREIN IT WAS MERELY CONTENDED THA T THE LEARNED CIT(A) ERRED IN HOLDING THAT THE SUM OF ` 35 LAKHS WAS NOT AN UNDISCLOSED INVESTMENT WITHIN THE MEANING OF SECTION 69 OF THE INCOME TAX ACT. THE CONTENTION OF THE AO APPEARS TO BE ON THE PREMISE T HAT EVEN IF IT IS RECORDED IN THE BOOKS OF ACCOUNT, IF THE PAYMENT/DEPOSIT IS NOT PROVED, ADDITION CAN BE MADE UNDER SECTION 69 OF THE ACT. AT THE TIME OF HEARING THE LEARNED D.R. WAS UNABLE TO CONTRADICT THE FINDINGS OF THE LEARNE D CIT(A). THOUGH RELIANCE WAS HEAVILY PLACED UPON THE CONCLUSIONS REACHED BY THE AO, IT COULD NOT BE SHOWN AS TO HOW SECTION 69 CAN BE MADE APPLICABLE T O THE INSTANT CASE. IT WAS ALSO POINTED OUT FROM THE BENCH THAT THE LEARNE D CIT(A) CATEGORICALLY POINTED OUT THAT THE DEPOSIT DOES NOT PERTAIN TO TH E CURRENT YEAR BUT IT PERTAINS TO THE EARLIER YEAR. EVEN ON THIS ASPECT T HE LEARNED D.R. COULD NOT FURNISH ANY MATERIAL TO CONTRADICT THE FINDINGS OF THE LEARNED CIT(A). IT CAN THUS BE SEEN THAT THE REVENUE HAS PREFERRED THE APP EAL IN A MERE ROUTINE FASHION WITHOUT APPLICATION OF MIND AND WITHOUT ANY BASIC UNDERSTANDING OF PROVISIONS OF SECTION 69 OF THE ACT, MORE SO WHEN T HE FINDING OF THE LEARNED ITA NO. 2422/MUM/2012 M/S. ATLAS AUTOMATIVE COMPONENTS PVT. LTD. 4 CIT(A) THAT THE DEPOSIT DOES NOT PERTAIN TO THIS YE AR IS NOT CONTROVERTED EITHER IN THE GROUNDS OF APPEAL OR BY ANY MATERIAL, WHATSOEVER, IN THE FORM OF ADDITIONAL EVIDENCE. 7. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE WE H AVE NO OTHER ALTERNATIVE EXCEPT TO HOLD THAT THE APPELLANT HAS N OT MADE OUT A CASE UNDER SECTION 69 OF THE ACT SINCE THE PAYMENT WAS RECORDE D IN THE BOOKS OF ACCOUNT AND THE SOURCE OF INVESTMENT IS NOT DISPUTE D APART FROM THE FACT THAT THE PAYMENT WAS STATED TO HAVE NOT BEEN MADE I N THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION . WE, THEREFORE, UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL FILE D BY THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH APRIL, 2013. SD/- SD/- (SANJAY ARORA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 25 TH APRIL, 2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 14, MUMBAI 4. THE CIT VI, MUMBAI CITY 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.