DCIT, UDAIPUR V. M/s. Tariq Granites Private Limited, RAJSAMAND

ITA 260/JODH/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54421 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 22-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R H GOHEL
• Keywords: Unexplained cash credit; Unexplained investment; Additional evidence; Cost of acquisition

Judgement Text

1 ITA 260(2)-10 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH JODHPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ) ITA NO. 260/JODH/2010 ASSTT. YEAR : 2006-07. THE DCIT, CENTRAL CIRCLE-2, VS. M/S. TARIQ GRANI TES PVT. LTD., UDAIPUR. NH-8, VILLAGE. MOZAWATO KA GUDA, POST. DHANIN, DIST. RAJSAMAND ITA NO. 135/JODH/2010 ASSTT. YEAR : 2006-07. M/S. TARIQ GRANITES PVT. LTD., VS. THE DCIT, CEN TRAL CIRCLE-2, DIST. RAJSAMAND. UDAIPUR. (APPELLANTS) (RESPONDENTS) DEPARTMENT BY : SHRI R.H. GOHEL ASSESSEE BY : SHRI SANDEEP JHA NWAR DATE OF HEARING : 07.12.2011. DATE OF PRONOUNCEMENT : 15.12.2011. ORDER DATED : 15/12/2011. PER R.K. GUPTA, J.M. THESE TWO CROSS APPEALS ARE FILED BY THE ASSESSEE A ND DEPARTMENT RESPECTIVELY AGAINST THE ORDER OF CIT(A), UDAIPUR DATED 15/02/20 10 FOR THE ASSESSMENT YEAR 2006-07. 2 2. GROUND NO. 1 OF THE ASSESSEES APPEAL IS AGAINST UPHOLDING THE VALIDITY OF THE ORDER PASSED BY THE ASSESSING OFFICER WHILE THE DEP ARTMENT HAS TAKEN GROUND NO. 1 AGAINST THE ADMISSION OF ADDITIONAL EVIDENCES DURING THE CO URSE OF APPELLATE PROCEEDINGS. 3. THE CIT(A) IN THE APPELLATE PROCEEDINGS FOUND TH AT DATE OF ASSESSMENT ORDER IS SHOWN AS 27.11.2008 BUT THE SAME WAS DISPATCHED TO ASSESSEE ONLY ON 20.12.2008 AS CONFIRMED FROM THE ACKNOWLEDGMENT GIVEN BY THE POST AL AUTHORITIES WHEREAS THE ASSESSEE SUBMITTED THE REPLIES TO THE ASSESSING OFFICER ON 1 5.12.2008 ALONGWITH SUPPORTING PAPERS AND DOCUMENTS. THE ASSESSEES PAPERS ALONGWITH THE COPIES OF REPLIES SO FILED IN THE APPELLATE PROCEEDINGS. THE CIT(A) PROCEEDED TO DEC IDE THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE BEFORE HIM ON THE BASIS OF THESE PAPER S AFTER ALLOWING THE REASONABLE OPPORTUNITY FOR EXAMINING THESE PAPERS TO THE ASSES SING OFFICER BY WAY OF CALLING HIS REMAND REPORT. 4. WE FIND SUCH ACTION OF CIT(A) JUST AND REASONABL E AND MEETS END OF JUSTICE AT BOTH ENDS. WE THEREFORE, DISMISS GROUND NO. 1 OF B OTH THE APPEALS OF THE ASSESSEE AND THE DEPARTMENT. 5. GROUND NO. 2 OF THE ASSESSEES APPEAL IS TAKEN A GAINST SUSTAINING THE ADDITION OF RS. 42,01,100/- IN RESPECT OF UNEXPLAINED INVESTMEN T IN PURCHASE OF GRANITE BLOCKS. 6. THE ASSESSING OFFICER MADE AN ADDITION FOR UNEXP LAINED INVESTMENT IN STOCK FOR RS. 78,84,050 (RS.34,22,760/- FOR GRANITE BLOCKS + RS.44,61,290/- FOR GRANITE SLABS). THE DEPARTMENT HAS TAKEN GROUND NO. 2 IN ITS APPEAL AGA INST DELETION OF PART ADDITION, HOWEVER, IN THE GROUND OF APPEAL, WRONGLY AN AMOUNT OF RS.42,01,100/- HAS BEEN MENTIONED AS AGAINST RS.36,82,950/-. 3 7. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF SURVEY 35 GRANITE BLOCKS WERE FOUND MEASURING 242.48 CUBIC METERS. FURTHER, STOCK OF 59483.866 SQ. METERS OF GRANITE SLABS WAS ALSO FOUND. ASSESSING OFFICER VA LUED THE STOCK OF BLOCKS OF 242.48 CUBIC METERS ON THE BASIS OF PAGE NO. 9 OF ANNEXURE B-2 FOUND DURING THE COURSE OF SEARCH AT RESIDENCE OF ASSESSEES DIRECTOR ON WHICH TOTAL PURCHASE COST OF 5 BLOCKS OF 26.42 CUBIC METER IS MENTIONED AT RS.372935. HE AP PLIED THE SAME RATIO ON 242.48 CUBIC METER OF STOCK FOUND DURING SURVEY AND VALUED THE S AME OF RS.34,22,760/- WITHOUT GIVING ANY CREDIT FOR THE STOCK ACCOUNTED IN THE BOOKS OF ACCOUNTS. FURTHER HE APPLIED A SELLING RATE OF RS.75 PER SQ. FT. ON THE STOCK OF MARBLE SL ABS FOUND AND VALUED THE SAME AT RS.44,61,290/- AND MADE THE ADDITION OF THE ENTIRE AMOUNT. THE LD. CIT(A) HAS GIVEN A FINDING OF MAKING PAYMENT OF ON MONEY OF RS.2,01,00 0/- FOR PURCHASE OF 5 BLOCKS ON THE BASIS OF THE PAPER FOUND DURING THE COURSE OF SEARC H AT THE RESIDENCE OF THE DIRECTOR. HE FURTHER ESTIMATED ON MONEY PAYMENT OF RS.40,00,000/ - BEING 100% OF PAYMENT SHOWN TO HAVE BEEN MADE TO M/S SWAN INDUSTRIES LTD. FOR PURC HASE OF 59 BLOCKS. HE ALSO OBSERVED THAT THE STOCK OF GRANITE SLABS IS OUT OF THE 35 BL OCKS SAWN BY THE ASSESSEE, NO FURTHER ADDITION IS REQUIRED TO BE MADE IN RESPECT OF GRANI TE SLABS. ACCORDINGLY HE COMPUTED AN UNEXPLAINED INVESTMENT IN PURCHASES OF BLOCKS AT RS .42,01,100/-. 8. BEFORE US, THE LD. A/R POINTED OUT THAT THE ASSE SSEE HAS ALREADY ACCOUNTED FOR THE ON MONEY PAYMENT ON 5 BLOCKS IN THE BOOKS OF ACCOUN TS. HE REFERRED PAPER BOOK PAGE 28 FOR DETAILS OF PURCHASES ACCOUNTED AND REFERRED ENT RIES MADE FOR RS.1,14,500/-, 23,915/- AND RS.1,17,360/- MADE ON THE BASIS OF PAGE NO. 9 O F ANNEXURE B-2 FOUND DURING THE COURSE OF SEARCH. HE ACCORDINGLY SUBMITTED THAT T HE MONEY PAID OVER AND ABOVE THE BILL AMOUNT ON PURCHASE OF 5 BLOCKS HAVE BEEN INCLUDED I N THE BOOKS OF ACCOUNTS AND THUS 4 SOURCE OF THE SAME IS AVAILABLE AS PER THE BOOKS OF ACCOUNTS. HE ALSO SUBMITTED THAT SHARE APPLICATION MONEY BROUGHT IN BY THE DIRECTOR OF THE ASSESSEE COMPANY IS THE SOURCE FOR PAYMENTS MADE BY THE ASSESSEE COMPANY AND THE SAME HAS BEEN SURRENDERED BY THE SAID DIRECTOR, SH. ISHAQ MOHD. WHILE COMPUTING HIS TOTAL INCOME. HE DRAWN OUR ATTENTION TOWARDS RETURN FILED BY THE SAID DIRECTOR PLACED IN THE PAPER BOOK AT NO. 40 TO 45. HE THEREFORE SUBMITTED THAT SINCE THE MONEY PAID OVER AND ABOVE THE BILL AMOUNT HAS ALREADY BEEN INCLUDED IN THE BOOKS, NO ADDITION WAS REQUIRE D TO BE SUSTAINED IN RESPECT OF PURCHASE OF 5 BLOCKS BY THE ASSESSEE. HE FURTHER S UBMITTED THAT 59 BLOCKS HAVE BEEN SHOWN TO HAVE BEEN PURCHASED FROM M/S SWAN INDUSTRI ES LIMITED ALONGWITH THE ENTIRE UNIT ON AS IS WHERE IS BASIS. THE ASSESSEE MADE A TOTAL PAYMENT OF RS.1,00,00,000/- FOR THE ENTIRE ACQUISITION IN WHICH 40 LACS WAS IN RESP ECT OF THE STOCK AS STATED BY THE DIRECTOR BEFORE THE DDI IN THE SEARCH PROCEEDINGS. THE SAID SUM OF RS.40,00,000 IS DULY ACCOUNTED IN THE BOOKS OF THE ASSESSEE ALONGWITH SA LES TAX OF RS.3,60,000 @9% AS PER THE VAT INVOICE ISSUED BY M/S SWAN INDUSTRIES, PLACED I N THE PAPER BOOK AT PAGE 30. HE SUBMITTED THAT THE ASSESSEE DID NOT MAKE ANY PAYMEN T OVER AND ABOVE THE SAID CONSIDERATION OF RS.1,00,00,000/- TO M/S SWAN INDUS TRIES WHICH HAS BEEN DULY ACCOUNTED FOR BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS. HE SU BMITTED THAT EVEN NO EVIDENCE OF MAKING ANY PAYMENT OVER AND ABOVE RS.1,00,00,000/- WAS FOUND DURING THE COURSE OF SEARCH. HE ALSO SUBMITTED THAT IN SUCH CIRCUMSTANC ES THE ESTIMATION OF ON-MONEY PAYMENT WAS NOT JUSTIFIED AND NO ADDITION WAS REQUI RED TO MADE ON THIS ACCOUNT. HE ACCORDINGLY REQUESTED TO DELETE THE ENTIRE ADDITION . THE LD. D/R ON THE OTHER HAND RELIED ON THE ORDER OF THE ASSESSING OFFICER AND REQUESTED TO SUSTAIN THE ENTIRE ADDITION. 5 9. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FOUND THAT THE ASSESSEE ACQUIRED 59 BLOCKS FROM M/S SWAN INDUSTRIES ALONGWITH ACQUISITION OF ENTIRE UNIT ON AS IS WHERE IS BASIS FOR A TOTAL CON SIDERATION OF RS.1,00,00,000/-. OF THIS A SUM OF RS.40,00,000/- WAS PAID TOWARDS STOCK AND BA LANCE SUM WAS PAID TOWARDS THE PLANT AND MACHINERY AS STATED BY THE DIRECTOR OF TH E ASSESSEE BEFORE THE DDI IN THE POST SEARCH PROCEEDINGS. NO EVIDENCE HAS BEEN FOUND DUR ING THE COURSE OF SEARCH SHOWING ANY MONEY PAID OVER AND ABOVE THE SUM OF RS.1 CRORE TO M/S SWAN INDUSTRIES FOR THE SAID ACQUISITION. FURTHER, THE CASE OF ACQUIRING 59 BLO CKS ALONGWITH PURCHASE OF UNIT ON AS IS WHERE IS BASIS CANNOT BE COMPARED WITH THE 5 BLOCKS PURCHASED SEPARATELY FROM DIFFERENT PARTIES. THEREFORE, THE HYPOTHESIS DRAWN BY THE LD . CIT(A) IN ESTIMATING THE VALUE OF ON MONEY PAYMENT FOR PURCHASE OF 59 BLOCKS IS NOT CORR ECT AT ALL. IN THIS VIEW OF THE MATTER WE HEREBY HOLD THAT NO ADDITION CAN BE MADE IN RESP ECT OF UNEXPLAINED MONEY PAID OVER AND ABOVE DECLARED BY THE ASSESSEE FOR THE SAID PUR CHASE OF 59 BLOCKS FROM M/S SWAN INDUSTRIES. 10. FURTHER, THE ASSESSEE HAS ALREADY INCLUDED THE SUM PAID OVER AND ABOVE THE AMOUNT CHARGED AS PER INVOICES OF THE PARTIES FOR P URCHASE OF 5 BLOCKS IN THE BOOKS OF ACCOUNTS. BY DOING THIS, THE SOURCE OF MAKING PAYM ENT FOR THE SAME IS EXPLAINED AND THE MONEY BROUGHT IN TO THE COMPANY BY WAY OF CASH CRED ITS OR SHARE APPLICATION MONEY ARE TO BE SEPARATELY DEALT WITH. THEREFORE, NO ADDITIO N CAN BE MADE IN RESPECT OF PURCHASE OF 5 BLOCKS ALSO. WE ACCORDINGLY DELETE THE ENTIRE AD DITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PURCHASE OF GRANITE BLOCKS. THE GROUN D NO. 2 OF THE ASSESSEES APPEAL IS ALLOWED. AS REGARDS THE GROUND OF THE DEPARTMENT, WE FIND THAT CIT (A) HAS RIGHTLY HELD THAT THE ASSESSEE HAS USED 35 BLOCKS FOR PRODUCTION OF GRANITE SLABS AND NO SEPARATE 6 INVESTMENT IS MADE BY THE ASSESSEE FOR PURCHASE OF THE SLABS. THEREFORE, CIT(A) WAS RIGHT IN NOT INCLUDING ANY AMOUNT ON ACCOUNT OF UNE XPLAINED INVESTMENT ON ACCOUNT OF SLABS. ACCORDINGLY, GROUND NO. 2 OF THE DEPARTMENT AL APPEAL IS DISMISSED. 11. GROUND NO. 3 IN THE DEPARTMENTAL APPEAL HAS BEE N TAKEN AGAINST THE DELETION OF ADDITION OF RS. 5030000 BEING UNEXPLAINED SHARE APP LICATION MONEY BY ADMITTING THE ADDITIONAL EVIDENCES. 12. THE ASSESSING OFFICER MADE THIS ADDITION ON THE GROUND THAT DESPITE OF VARIOUS OPPORTUNITIES OF BEING HEARD GIVEN TO ASSESSEE; NO DETAILS, CONFIRMATION, PAN WERE FURNISHED. HOWEVER, CIT(A) DELETED THE ADDITION BY FINDING THAT THE ASSESSEE FURNISHED ALL DETAILS LIKE PAN NO., BALANCE SHEET, BANK ACCOU NTS OF THE PARTIES. ALL THE DOCUMENTS WERE SENT TO THE ASSESSING OFFICER AND THE ASSESSIN G OFFICER IN HIS REMAND REPORT FOUND THAT THE AMOUNTS GIVEN TO THE ASSESSEE HAVE BEEN APPEARI NG IN THE BALANCE SHEETS OF THE PERSONS. HE ALSO MENTIONED THAT THE SHARE APPLICATI ON MONEY OF ISHAQ MOHD. HAS BEEN INCLUDED IN HIS RETURN OF INCOME. NO ADVERSE COMMEN T HAS BEEN MADE BY THE ASSESSING OFFICER IN RESPECT OF ANY OF THE EVIDENCES FURNISHE D BY THE ASSESSEE. 13. THEREFORE, WE ARE OF THE OPINION THAT THERE IS NO INFIRMITY IN THE ORDER OF CIT(A) AND THE SAME IS UPHOLD. THE GROUND OF THE DEPARTMEN TAL APPEAL IS ACCORDINGLY REJECTED. 14. GROUND NO. 4 IN THE DEPARTMENTAL APPEAL HAS BEE N TAKEN AGAINST THE DELETION OF ADDITION OF UNEXPLAINED CREDIT OF RS. 47,89,144/- M ADE BY APPLYING THE PROVISIONS OF SECTION 68. 15. THE ASSESSING OFFICER MADE THIS ADDITION ON THE GROUND THAT DESPITE OF VARIOUS OPPORTUNITIES OF BEING HEARD GIVEN TO THE ASSESSEE, NO EVIDENCES IN THIS RESPECT WERE FURNISHED. HOWEVER, CIT(A) DELETED THE ADDITION BY FINDING THAT DURING THE APPELLATE 7 PROCEEDINGS PAN NUMBER, CONFIRMATION AND BALANCE SH EET OF LENDER I.E. M/S TARIQ MARBLES PVT. LTD. WERE SUBMITTED AS ADDITIONAL EVID ENCES AND FROM THESE DOCUMENTS, THE SAID CREDIT IS DULY EXPLAINED. THE CIT(A) ALSO SEN T THE SAID EVIDENCES FOR THE REMAND REPORT OF THE ASSESSING OFFICER WHEREIN HE HAS NOT GIVEN ANY ADVERSE COMMENT IN RESPECT OF ANY OF THE EVIDENCES. IN FACT THE CREDITOR ALSO IS ASSESSED WITH THE SAME ASSESSING OFFICER. 16. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THA T THERE IS NO INFIRMITY IN THE ORDER OF CIT(A) AND THE SAME IS UPHOLD. THE GROUND OF THE DEPARTMENTAL APPEAL IS ACCORDINGLY REJECTED. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AND THE DEPARTMENTAL APPEAL IS DISMISSED. 18. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 15 .12.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JODHPUR, COPY FORWARDED TO :- THE DCIT, CENTRAL CIRCLE-2, UDAIPUR. M/S. TARIQ GRANITES PVT. LTD., RAJSAMAND. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 260(2)/JODH/2010) BY ORDER, AR ITAT JODHPUR.