VAJRA TRADING CO, P. LTD, MUMBAI V. DCIT CC 38,

ITA 2655/MUM/2012

• Counselvise Citation: 265519914 RSA 2012
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 23-12-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 19-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA KUMAR
• Assessee Lawyers: M P MAKHIJA S M MAKHIJA
• Keywords: Unexplained investment; Reassessment proceedings
• Section: 147; 69; 148; 234B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F MUMBAI . . , / BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND . , SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER . / ITA NO.2655/MUM/2012 / ASSESSMENT YEAR 2003-04. M/S. VAJRA TRADING CO. P.LTD., PLOT NO.8, SHAH INDUSTRIAL ESTATE, OFF. VEERA DESAI ROAD, ANDHERI (WEST), MUMBAI 400 053 / VS. THE DCIT, CC.38, MUMBAI. ! ./ '# ./ PAN/GIR NO. : AAACA 1329F ( !$ / APPELLANT ) .. ( %&!$ / RESPONDENT ) !$ ' / APPELLANT BY: S/SHRI M.P..MAKHIJA / S.M.MAKHIJA %&!$ ( ' / RESPONDENT BY : SHRI RAJENDRA KUMAR ( ) / DATE OF HEARING : 19/05/2014 *+ ( ) / DATE OF PRONOUNCEMENT : 19/05/2014 , / O R D E R PER I.P.BANSAL, J.M: THIS IS AN APPEAL FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-41, MUMBAI DATED 7/2/2012 FOR ASSESSMENT YEAR 2003- 04. GROUNDS OF APPEAL READ AS UNDER: 1. THE LD. COMMISSIONER OF INCOME TAX (A) ERRED I N CONFIRMING THAT RE-OPENING OF THE ASSESSMENT OF THE APPELLANT U/S. 147 OF THE ACT IS NOT BAD-IN-LAW. 2. THE LD. COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.1,25,000/- U/S. 69 OF THE ACT AND THEREBY TRE ATED THE SAME AS UNEXPLAINED INVESTMENT. . / ITA NO.2655/MUM/2012 / ASSESSMENT YEAR 2003-04. 2 3. THE LD. COMMISSIONER OF INCOME TAX (A) ERRED I N CONFIRMING THE ADDITION OF RS.3,00,250/- IN VIEW OF SECTION 69 AND THEREBY TRE ATED THE SAME AS UNEXPLAINED INVESTMENT. 4. THE LD. COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE INTEREST CHARGED U/S. 234B OF THE ACT OF RS.1,21,971/-. 5. THE LD. COMMISSIONER OF INCOME TAX (A) ERRED IN INITIATING THE PENALTY PROCEEDINGS OF SEC. 27191)(C) OF INCOME TAX ACT, 19 61. 2. THE FACTS WHICH WILL BE RELEVANT TO DISPOSE OF T HIS APPEAL ARE AS UNDER: 2.1 A RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 31/3/2004 AT A LOSS OF RS.1,52,968/-. THE RETURN WAS PROCESSED UNDER SECT ION 143(1) OF THE INCOME TAX ACT, 1961 (THE ACT) ON 6/4/2004. SUBSEQUENTLY, ON PERUSAL OF RECORDS AND OTHER ACCOMPANYING DOCUMENTS I.E. P&L ACCOUNT , BAL ANCE SHEET ETC. IT WAS NOTICED BY THE DEPARTMENT THAT THE ASSESSEE HAD SHO WN TOTAL INVESTMENT AT RS.46,31,040/-. IT WAS ALSO NOTICED THAT MAJOR INV ESTMENT OUT OF THE SAID INVESTMENT WAS WITH M/S.MONALISA INFOTECH LTD. WHIC H WAS AMOUNTING TO RS.43,12,490/-. IT WAS FURTHER NOTICED THAT ASSESS EE, AS PROMOTER HAD ACQUIRED 1832450 SHARES ( EACH HAVING FACE VALUE OF RS.10 PER SHARE) FROM M/S. K. SERA SERA PRODUCTIONS LTD. DURING THE FINA NCIAL YEAR 2002-03 AND SUCH INVESTMENT WAS NOT SHOWN IN THE BALANCE SHEET FOR THE YEAR ENDING 31/3/2003. THEREFORE, A NOTICE UNDER SECTION 148 W AS ISSUED ON 26/3/2010. IN RESPONSE TO NOTICE UNDER SECTION 148 THE ASSESSE E STATED THAT EARLIER RETURNED FILED BY THE ASSESSEE ON 31/3/2004 MAY BE TREATED AS FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. 2.2 IN RESPONSE TO QUERY RELATING TO INVESTMENT IN THE SHARES OF M/S. K. SERA SERA PRODUCTIONS LTD. IT WAS SUBMITTED THAT ONLY 42 5700 NOS. OF SHARES WERE ACQUIRED @ RS.1/- PER SHARE AND A SUM OF RS.3.00 LA CS WAS PAID TO THEM AND BALANCE WAS PAID IN CASH TO VARIOUS SHARE HOLDERS O F THE ORIGINAL PROMOTERS. TO SUBSTANTIATE SUCH CONTENTION DOCUMENTARY EVIDENCE W AS ALSO FILED. AFTER EXAMINING DOCUMENTARY EVIDENCE AO CAME TO THE CONCL USION THAT OUT OF TOTAL . / ITA NO.2655/MUM/2012 / ASSESSMENT YEAR 2003-04. 3 INVESTMENT OF RS.4,25,700/- THE EVIDENCE REGARDING SOURCE WAS SUBMITTED ONLY FOR A SUM OF RS.3.00 LACS, AND BALANCE INVESTMENT OF RS.1,25,700/- HAS NOT BEEN EXPLAINED. ACCORDINGLY, AN ADDITION OF RS.1,2 5,700/- WAS MADE, WHICH HAS BEEN CONFIRMED BY LD. CIT(A) FOR THE ASSESSEE H AS RAISED GROUND NO.2 OF THE PRESENT APPEAL. 2.3 FACTS RELATING TO ISSUE RAISED IN GROUND NO.3 I S THAT FROM SCHEDULE-F SUBMITTED WITH THE BALANCE SHEET SHOWING INVESTMENT , IT WAS NOTICED BY THE AO THAT INVESTMENT IN EQUITY SHARES OF M/S. MONALISA INFOTECH LTD. WAS SHOWN AT RS.46,12,744/- (565224 SHARES), WHEREAS CORRESPONDI NG SCHEDULE F ACCOMPANYING ORIGINAL RETURN HAD SHOWN THE INVESTME NT IN THE SAME COMPANY AT RS.43,12,490/-(535139 SHARES). ACCORDINGLY, DIF FERENCE OF RS.3,00,250/- WAS ADDED TO THE INCOME OF THE ASSESSEE WHICH HAS A LSO BEEN CONFIRMED BY LD. CIT(A). 3. EFFECTIVELY ISSUES RAISED IN GROUNDS OF APPEAL NO.2 & 3 WERE ARGUED BEFORE US. APROPOS GROUND NO.2, IT WAS SUBMITTED B Y LD. AR THAT TWO BALANCE SHEETS WERE SUBMITTED BEFORE THE AO, ONE BALANCE SH EET WAS FILED ALONGWITH RETURN OF INCOME AND OTHER WAS PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS SUBMITTED THAT COPY OF BALANCE SHEET ATTACHED WITH THE RETURN OF INCOME IS SUBMITTED AT PAGES 12 TO 22 OF THE PAPER BOOK AND COPY OF BALANCE SHEET SUBMITTED DURING THE COURSE OF ASSESS MENT PROCEEDINGS IS SUBMITTED AT PAGES 1 TO 11 OF THE PAPER BOOK. 3.1 SCHEDULE F IN BOTH THE BALANCE SHEET READ AS U NDER: (1) IN THE BALANCE SHEET ATTACHED ALONG WITH RETUR N: SCHEDULE F INVESTMENTS [AT COST] QUOTED: EQ. SHARES IN MONALISA INFOTECH LTD. (PREVIOUSLY MONALISA MULTIPLAST LTD.) 565.224(PREVIOUS YEAR 565.224 SHS OF RS.10/- EACH FULLY PD UP ) MKT. VALUE RS.169.567/- [PREVIOUS YEAR RS.339.134/-] 46,12,740 46,12,740 . / ITA NO.2655/MUM/2012 / ASSESSMENT YEAR 2003-04. 4 EQ.SHS IN BLOW PLAST LTD. 200 (PREVIOUS YEAR 200 SHS OF RS.10/- EACH FULLY PD.UP) MKT VALUE RS.500/- [PREVIOUS YEAR RS.1,000/- 18.300 18.300 EQ.SHS. IN K. SERA SERA PRODUCTIONS LTD. (PREVIOUSLY GAMET PAPER MILLS LTD.) 425.700 (PREVIOUS YEAR NIL SHS OF RS.10/- EACH FULLY PD. UP) MKT. VALUE RS.18.730.800 425.700 TOTAL 5,056,740 4,631.040 ( 2) BALANCE SHEET SUBMITTED DURING THE COURSE OF AS SESSMENT PROCEEDINGS: SCHEDULE F INVESTMENTS-[AT COST] QUOTED: EQ. SHARES IN MONALISA INFOTECH LTD. (PREVIOUSLY MONALISA MULTIPLAST LTD.) 535,199 (PREVIOUS YEAR 535,199 SHS OF RS.10/- EACH FULLY PD UP ) MKT. VALUE RS.160,560/- [PREVIOUS YEAR RS.321,119] 4,312,490 4,312,490 EQ.SHS IN BLOW PLAST LTD. 200 PREVIOUS YEAR 200 SHS OF RS.10/- EACH FULLY PD. UP) MKT. VALUE RS.500/- PREVIOUS YEAR RS.1,000/- 18,300 18,300 UNQUOTED: EQ.SHARES IN MEHER PLASTICS PVT. LTD.3000 (PREVIOUS YEAR 3,000 SHS OF RS.10/- EACH FULLY PD.UP) EQ.SHS. IN NAVJEEVAN COMMERCIAL PREMISES SOCIETY LTD. 25 [PREVIOUS YEAR 25 SHS OF RS.10/- EACH FULLY PD.UP) 300,000 250 300,000 250 TOTAL 4,631,040 4,631,040 (1) IN THE BALANCE SHEET ATTACHED ALONG WITH RETUR N: SCHEDULE : J LOANS AND ADVANCES: SCHEDULE J. PG. 18B-2 ADVANCES CONSIDERED GOOD & RECOVERABLE IN CASH OR KIND OR FOR VALUE TO BE RECEIVED 5,905,288 7,886,440 DEPOSITS 45,100 45,000 TOTAL 5,950,388 7,931,540 . / ITA NO.2655/MUM/2012 / ASSESSMENT YEAR 2003-04. 5 ( 2) BALANCE SHEET SUBMITTED DURING THE COURSE OF AS SESSMENT PROCEEDINGS: SCHEDULE : J LOANS & ADVANCES: ADVANCES CONSIDERED GOOD & RECOVERABLE IN CASH OR KIND OR FOR VALUE TO BE RECEIVED 4,479,588 7,886,440 DEPOSITS 45,100 45,000 TOTAL 5,524,688 7,931,540 3.2 REFERRING TO SCHEDULE-J SUBMITTED ALONGWITH RET URN OF INCOME IT WAS SUBMITTED BY LD. AR THAT INVESTMENT OF RS.4,25,700/ - WAS WRONGLY SHOWN IN SCHEDULE-J UNDER THE HEAD LOANS AND ADVANCES INSTEA D OF SHOWING THE SAME IN SCHEDULE F RELATING TO INVESTMENT AND IN THE REVI SED ACCOUNTS SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AMO UNT OF RS.4,25,700/- WAS REDUCED FROM THE SCHEDULE-J AND ADDED TO THE SCHEDU LE F AND THUS, THERE WAS NO MISSTATEMENT AND ENTIRE INVESTMENT OF RS.4 ,25,700/- WAS PROVED. HE SUBMITTED THAT IT HAS WRONGLY BEEN MENTIONED BY AO THAT ASSESSEE TO SUBMIT PROOF RELATING TO ONLY FOR A SUM OF RS.3.00 LACS OU T OF TOTAL INVESTMENT OF RS.4,25,700/-. IT WAS SUBMITTED BY LD. AR THAT FOR VERIFICATION OF THE FACT THE MATTER MAY BE RESTORED TO THE FILE OF AO. 3.3 APROPOS GROUND NO.3, IT WAS SUBMITTED BY LD. AR THAT WHILE DESCRIBING FIRST ITEM IN SCHEDULE-F IN THE BALANCE SHEET SUBM ITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AN AMOUNT OF RS.3,00,250/- W AS OVER STATED. HE SUBMITTED THAT THE CORRECT FIGURE OF FIRST ITEM WA S MENTIONED IN THE FIRST BALANCE SHEET SUBMITTED ALONGWITH RETURN WHICH WAS A SUM OF RS.43,12,490/- AND IN THE BALANCE SHEET SUBMITTED DURING THE COURS E OF ASSESSMENT PROCEEDINGS IT WAS WRONGLY MENTIONED AS RS.46,12,74 0/-. THE DIFFERENCE BETWEEN THESE AMOUNTS COMES TO RS.3,00,250/-. HE S UBMITTED THAT ASSESSEE HAS FURNISHED RECONCILED BALANCE SHEET CORRECTING A LL THESE MISTAKES AND THERE IS NO DIFFERENCE IN THE FIGURES AND THE ASSESSEE HA S EVIDENCE TO PROVE THAT ALL THESE INVESTMENTS ARE EXPLAINABLE AND ARE DULY RECO RDED IN THE BOOKS OF . / ITA NO.2655/MUM/2012 / ASSESSMENT YEAR 2003-04. 6 ACCOUNT. THEREFORE, HE SUBMITTED THAT HE HAS NO OB JECTION IF THE MATTER IS RESTORED BACK TO THE FILE OF AO FOR NECESSARY RECTI FICATION. 3.4 APART FROM ARGUING THE GROUND NO.2 AND 3 ON MER ITS, LD. AR SUBMITTED THAT RE-ASSESSMENT PROCEEDINGS HAVE WRONGLY BEEN IN ITIATED AND THE SAME SHOULD BE HELD INVALID. 3.5 SO FAR AS IT RELATES TO GROUND.4 IT WAS SUBMITT ED BY LD. AR THAT LEVY OF INTEREST UNDER SECTION 234B IS CONSEQUENTIAL AND AO MAY BE DIRECTED TO RECOMPUTE THIS INTEREST AFTER GIVING EFFECT TO THIS ORDER. 3.6 APROPOS GROUND NO.5, IT WAS SUBMITTED THAT PENA LTY PROCEEDINGS UNDER SECTION 271(1)(C) HAVE WRONGLY BEEN INITIATED BY TH E AO. 4. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS PASSED BY AO AND LD. CIT(A). IT WAS SUBMITTED BY LD. DR THAT ASSESSEE D ID NOT DISCLOSE PROPER INCOME AND ITS EARLIER ASSESSMENT WAS MADE UNDER SE CTION 143(1) OF THE ACT, THEREFORE, RE-ASSESSMENT PROCEEDINGS WERE RIGHTLY I NITIATED BY THE DEPARTMENT. HE FURTHER SUBMITTED THAT ASSESSEE COULD NOT SUBSTA NTIATE THE INVESTMENT MADE BY IT AND, THEREFORE, ADDITIONS OF RS.1,25,700 /- AND RS.3,00,250/- WERE RIGHTLY MADE BY THE AO. THUS, IT WAS PLEADED BY LD . DR THAT APPEAL FILED BY THE ASSESSEE SHOULD BE DISMISSED AND THE ORDER PASS ED BY LD. CIT(A) SHOULD BE UPHELD. 5. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS WAS CAREFULLY BEEN CONSIDERED. THE ASSESSMENT WAS REOPENED UPON RECO RDING REASONS. THE ASSESSEE EVEN DID NOT SEEK COPY OF REASONS AND NO O BJECTION WHATSOEVER WERE SUBMITTED AGAINST THE INITIATION OF REASSESSMENT PR OCEEDINGS. THE ASSESSMENT WAS ALSO FRAMED UNDER SECTION 143(1). IN VIEW OF T HESE FACTS AND CIRCUMSTANCES OF THE CASE WE DECLINE TO INTERFERE I N THE FINDINGS RECORDED BY LD. . / ITA NO.2655/MUM/2012 / ASSESSMENT YEAR 2003-04. 7 CIT(A) THAT ASSESSEE DID NOT HAVE A CASE AGAINST T HE INITIATION OF REASSESSMENT PROCEEDINGS. 5.1 SO FAR AS IT RELATES TO GRIEVANCE OF THE ASSESS EE IN RESPECT OF GROUND NO.2 & 3, AFTER CAREFUL CONSIDERATION WE FOUND THAT THE ASSESSEE HAS RIGHT GRIEVANCES AND THESE ADDITIONS ARE ON ACCOUNT OF MISTAKES OCC URRED IN SUBMISSION OF BALANCE SHEET. THE ASSESSEE HAS SUBMITTED RECONCIL ED BALANCE SHEET WHICH WILL BE EXAMINED BY THE AO AND AFTER GIVING THE ASS ESSEE A REASONABLE OPPORTUNITY OF HEARING THE AO WILL RE-ADJUDICATE TH E ISSUE RELATING TO IMPUGNED ADDITION. WE DIRECT ACCORDINGLY. 5.2 FOR STATISTICAL PURPOSES GROUND NO.2 & 3 ARE CO NSIDERED TO BE ALLOWED. 5.3 SO FAR AS IT RELATES TO LEVY OF INTEREST UNDER SECTION 234B THE SAME IS CONSEQUENTIAL AND WILL BE RECOMPUTED BY THE AO AFTE R GIVING EFFECT TO THIS ORDER. 5.4 SO FAR AS IT RELATES TO INITIATION OF CONCEALME NT PENALTY, WE OBSERVED THAT THE SAME IS PREMATURE, THEREFORE, THE SAME IS DISM ISSED. 6. IN THE RESULT, THE APPEAL IS CONSIDERED TO BE PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19/05/201 4 , ( *+ - ./ 19/05/2014 + ( 0 1 SD/- SD/- ( . / D.KARUNAKARA RAO ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; . DATED 19/05/2014 . / ITA NO.2655/MUM/2012 / ASSESSMENT YEAR 2003-04. 8 , , , , ( (( ( %)2 %)2 %)2 %)2 32 ) 32 ) 32 ) 32 ) / COPY OF THE ORDER FORWARDED TO : 1. !$ / THE APPELLANT 2. %&!$ / THE RESPONDENT. 3. 4 ( ) / THE CIT(A)- 4. 4 / CIT 5. 250 %) , , / DR, ITAT, MUMBAI 6. 0 6 / GUARD FILE. , , , , / BY ORDER, &2) %) //TRUE COPY// 7 77 7 / 8 8 8 8 ' ' ' ' (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . . ./ VM , SR. PS