I.T.O.-5(1), Firozabad V. M/s Aman Cold Storage Pvt. Ltd., Firozabad

ITA 267/AGR/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60146 (ITAT-AGRA)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 08-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R K AGARWAL
• Keywords: Unexplained investment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.267/AGR/2011 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER-5(1) VS M/S AMAN COLD STORAGE PVT. LTD., FIROZABAD. AGRA GATE, SHIKOHABAD, DISTT. FIROZABAD. (PAN: AAFCA 0965 G). ITA NO.257/AGR/2011 ASSESSMENT YEAR : 2006-07 M/S AMAN COLD STORAGE PVT. LTD., VS. INCOME TAX OFF ICER-5(1) AGRA GATE, SHIKOHABAD, FIROZABAD. DISTT. FIROZABAD. (PAN: AAFCA 0965 G). (APPELLANTS) (RESPONDENTS) REVENUE BY : SHRI WASEEM ARSHAD, SR. D.R. ASSESSEE BY : SHRI R.K. AGARWAL & SHRI RAHUL AGARWAL, ADVOCATES DATE OF HEARING : 17.05.2012 DATE OF PRONOUNCEMENT : 25.05.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THESE ARE CROSS APPEALS FILED BY THE REVENUE AND AS SESSEE AGAINST THE ORDER DATED 31.03.2011 PASSED BY THE LD. CIT(A)-II, AGRA FOR THE ASSESSMENT YEAR 2006- 07. ITA NOS.267 & 257/AGR/2011 A.Y. 2006-07 . 2 ITA NO.267/AGR/2011 BY THE REVENUE FOR A.Y. 2006-07 . 2. THE FIRST GROUND OF REVENUES APPEAL IS IN RESPE CT OF DELETION OF ADDITION OF RS.3,50,000/- & RS.7,82,720/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED UNSECURED LOAN. 3. THE BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESS EE COMPANY RUNS A COLD STORAGE. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER NOTICED THAT THE ASSESSEE HAS SHOWN UNSECURED LOAN OF RS.3,50,000/- IN THE NA ME OF SHRI ANIL YADAV. THE ASSESSING OFFICER NOTICED THAT SHRI ANIL YADAV IS D OING SERVICE IN JAY PEE HOTEL AT AGRA ON A SALARY OF RS.6,800/- PER MONTH. AS ON AP RIL 2005 THERE WAS A BALANCE OF RS.3,42,333/- IN THE BANK ACCOUNT NO.8987 OF INDIAN OVERSEAS BANK. RS.10,000/- WAS DEPOSITED BY CASH ON 05.04.2005 BY ANIL YADAV I N HIS BANK ACCOUNT. SHRI ANIL YADAV HAS GIVEN LOAN TO THE ASSESSEE FOR RS.3, 50,000/- ON 13 TH APRIL 2005 THROUGH CHEQUE. THE ASSESSING OFFICER WAS OF THE V IEW THAT A PERSON GETTING SALARY OF RS.6,800/- PER MONTH CANNOT GIVE LOAN OF RS.3,50,000/-. THE ASSESSEE DID NOT EXPLAIN THE SOURCE OF OPENING BALANCE IN THE BA NK ACCOUNT OF SHRI ANIL YADAV. THEREFORE, THE ASSESSING OFFICER MADE THE ADDITION OF RS.3,50,000/-. THE CIT(A) DELETED THE SAID ADDITION OBSERVING THAT THE ASSESS ING OFFICER MADE ADDITION MERELY ON THE GROUND THAT OPENING BALANCE IN BANK A CCOUNT OF SHRI ANIL YADAV HAS ITA NOS.267 & 257/AGR/2011 A.Y. 2006-07 . 3 NOT BEEN EXPLAINED BY THE ASSESSEE. THE ASSESSING OFFICER HAS MERELY MENTIONED THAT SHRI ANIL YADAV IS GETTING SALARY OF RS.6,800/ - PER MONTH ONLY WHICH IS NOT SUFFICIENT FOR MAKING ADDITION UNLESS SOME THING IS BROUGHT ON RECORD TO SUGGEST THAT THE CREDIT APPEARING IN THE CREDITORS ACCOUNT WAS NOT GENUINE. 4. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. THE ADMITTED FACTS OF THE CASE ARE THAT THE CREDITO R WAS HAVING OPENING BALANCE OF RS.3,42,333/- AT THE BEGINNING OF THE F.Y. I.E. APR IL 2005. DURING THE YEAR ONLY RS.10,000/- HAS BEEN DEPOSITED BY THE CREDITOR SHRI ANIL YADAV IN HIS BANK ACCOUNT ON 05.04.2005. THE LOAN OF RS.3,50,000/- WAS GIVEN TO THE ASSESSEE ON 13.04.2005 THROUGH CHEQUE. THE ASSESSING OFFICER MADE ADDITIO N ON THE GROUND THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE OPENING BALANCE IN THE BANK ACCOUNT OF THE CREDITOR. WE FIND THAT THE CIT(A) HAS RIGHTLY APPR ECIATED THE FACTS THAT THE ASSESSEE HAS REASONABLY DISCHARGED ITS BURDEN BY SHOWING IDE NTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. THE CREDITOR WAS H AVING SUFFICIENT BALANCE IN HIS BANK ACCOUNT AND THE LOAN OF RS.3,50,000/- WAS GIVE N OUT OF THAT BANK ACCOUNT. THERE IS NO FINDING OR MATERIAL AVAILABLE ON RECORD BASED ON WHICH IT CAN BE SAID THAT THE LOAN WAS NON-GENUINE. THUS, WE FIND THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS.3,50,000/-. ITA NOS.267 & 257/AGR/2011 A.Y. 2006-07 . 4 5. THE SECOND PART OF THIS GROUND IS IN RESPECT OF DELETION OF ADDITION OF RS.7,82,720/-. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE RECEIVED LOAN THROUGH CHEQUE OF R S.7,82,720/- IN THE NAME OF M/S. SHIKOHABAD AUTO CENTRE, A SISTER CONCERN OF THE ASS ESSEE. THE ASSESSEE COMPANY FILED PROFIT & LOSS ACCOUNT AND BALANCE SHEET OF M/ S SHIKOHABAD AUTO CENTRE. THE ASSESSING OFFICER ASKED THE ASSESSEE T O FURNISH SOURCE OF RS.7,82,720/- WITH DOCUMENTARY EVIDENCE, BUT THE AS SESSEE FAILED TO DO SO AND HENCE THE ASSESSING OFFICER TREATED THE LOAN AMOUNT AS BOGUS LIABILITY. THE CIT(A) DELETED THE SAID ADDITION ON THE GROUND THAT THE AMOUNT OF LOAN IS DULY REFLECTED IN THE BOOKS OF ACCOUNTS OF THE CREDITOR AS ESTABLISHED FROM FINANCIAL STATEMENT OF CREDITORS SUBMITTED BY THE ASSESSEE. THE CREDITOR IS ASSESSED TO TAX AND, THEREFORE, THE CIT(A) FOUND THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION. 6. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. WE FIND THAT THE ADDITION MADE BY THE ASSESSING OFF ICER WAS MERELY ON PRESUMPTION THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SAID ENTRY WHEREAS THE ASSESSED FILED PROFIT & LOSS ACCOUNT AND BALANCE SH EET OF THE CREDITOR, M/S. SHIKOHABAD AUTO CENTRE. THE CREDITOR IS ASSESSED T O TAX AS NOTED BY THE CIT(A). THE REVENUE HAS FAILED TO POINT OUT ANY CONTRARY FA CT TO THE FINDING OF THE CIT(A). ITA NOS.267 & 257/AGR/2011 A.Y. 2006-07 . 5 IN THE LIGHT OF THE FACT, WE DO NOT FIND ANY INFIRM ITY IN THE ORDER OF CIT(A). ORDER OF THE CIT(A) IS CONFIRMED ON THE ISSUE. 7. THE OTHER GROUND NOS.2, 3 & 4 RAISED BY THE REVE NUE ARE ARGUMENTATIVE AND SUPPORTING TO THE ABOVE TWO ADDITIONS OF RS.3,50,00 0/- & RS.7,82,720/-. THUS, THEY ARE DECIDED ACCORDINGLY. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ITA NO.257/AGR/2011 FOR A.Y. 2006-07 BY THE ASSESSE E 9. THERE IS A DELAY IN FILING THE APPEAL BY ONE DAY . AFTER HEARING THE LD. REPRESENTATIVES OF THE PARTIES, IN THE INTEREST OF JUSTICE, THE DELAY OF ONE DAY IS CONDONED. 10. THE FIRST GROUND OF ASSESSEES APPEAL IS IN RES PECT OF CONFIRMING DISALLOWANCE OF RS.1,67,350/- CLAIMED IN RESPECT OF MANUFACTURING AND OPERATIONAL EXPENSES. THE ASSESSEE CLAIMED EXPENSES OF RS.1,67 ,350/- ON ACCOUNT OF MANUFACTURING AND OPERATIONAL EXPENSES. THE ASSESS ING OFFICER NOTICED THAT THE CONSTRUCTION OF COLD STORAGE WAS NOT COMPLETED DURI NG THE YEAR UNDER ITA NOS.267 & 257/AGR/2011 A.Y. 2006-07 . 6 CONSIDERATION. THEREFORE, HE DISALLOWED THE ASSESS EES CLAIM AS REVENUE EXPENSES. THE ASSESSING OFFICER TREATED THE SAID EXPENDITURE AS CAPITAL IN NATURE. THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICE R ON THE GROUND THAT IT IS ASSESSEES OWN ADMISSION THAT DURING THE YEAR THE E XPENSES WERE INCURRED FOR ERECTION AND INSTALLATION OF PLANT. THEREFORE, THE SAME CANNOT BE SAID TO BE REVENUE EXPENSES. THE EXPENSES INCURRED WERE CAPIT AL IN NATURE. 11. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. WE FIND THAT THE ADMITTED FACTS OF THE CASE ARE THA T DURING THE YEAR UNDER CONSIDERATION THE COLD STORAGE WAS UNDER CONSTRUCTI ON AND PLANT AND MACHINERY WAS UNDER ERECTION AND INSTALLATION. SINCE THE ASSESSE E DID NOT START THE BUSINESS, THEREFORE, THE CLAIM OF THE ASSESSEE CANNOT BE ALLO WED AS REVENUE EXPENSES. IN THE LIGHT OF THE FACTS, WE CONFIRM THE ORDER OF THE CIT (A). 12. THE SECOND GROUND OF ASSESSEES APPEAL IS IN RE SPECT OF DISALLOWANCE OF ADMINISTRATIVE EXPENSES OF RS.1,46,607/-. THE ASSE SSEE HAS CLAIMED REVENUE EXPENSES. THE ASSESSING OFFICER TREATED THE SAME A S CAPITAL IN NATURE. THE CIT(A) CONFIRMED THE ORDER OF ASSESSING OFFICER FOLLOWING THE REASONS GIVEN IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN RESPECT OF D ISALLOWANCE OF RS.1,67,350/-. ITA NOS.267 & 257/AGR/2011 A.Y. 2006-07 . 7 13. AFTER HEARING THE LD. REPRESENTATIVES OF THE PA RTIES AND IN THE LIGHT OF DISCUSSIONS MADE IN GROUND NO.1 ABOVE, WE DO NO FIN D ANY INFIRMITY IN THE ORDER OF THE CIT(A). THUS, WE CONFIRM THE ORDER OF CIT(A) O N THE ISSUE. 14. THE THIRD GROUND OF ASSESSEES APPEAL IN RESPEC T OF CONFIRMING DISALLOWANCE OF RS.98,70,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHARE APPLICATION MONEY. 15. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSIN G OFFICER NOTICED THAT THE ASSESSEE COMPANY ISSUED 987000 EQUITY SHARES OF RS. 10/- EACH. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE PARTICULA RS OF SHARE HOLDERS WITH COMPLETE ADDRESS AND OTHER DETAILS. THE ASSESSEE FURNISHED THE LIST OF 27 SHARE HOLDERS. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE ALL SHAREHOLDERS WITH THEIR CONFIRMATIONS AND EVIDENCES OF SOURCE OF INVESTMENT IN SHARE APPLICATION MONEY. SUMMONS WERE ALSO ISSUED TO ALL THE SHAREHOLDERS TO FURNISH THE SOURCE OF PURCHASE OF ALLOTTED SHARES WITH DOCUMENTARY EVIDENCE. THE ASSESSEE COMPANY HAS NOT PRODUCED ANY OF THE SHAREHOLDERS FOR EXAMINATION. IN COMPLIANCE OF SUMMONS, NOBODY ATTENDED NOR WAS ANY REPLY RECEIVED BY THE A SSESSING OFFICER. SOME OF THE SUMMONS WERE RETURNED BACK BY THE POSTAL AUTHORITY WITH THE REMARK INCOMPLETE ADDRESS. THE ASSESSING OFFICER FURTHER NOTICED TH AT OUT OF 27 SHARE HOLDERS 18 ITA NOS.267 & 257/AGR/2011 A.Y. 2006-07 . 8 WERE AGRICULTURISTS AND THEY HAVE INVESTED RS.2,50, 000/- TO RS.4,00,000/- FOR PURCHASE OF SHARES. THE ASSESSEE COMPANY FILED SIX CONFIRMATIONS OF THE CREDITORS WITH COPY OF ACKNOWLEDGEMENT OF RETURN FOR THE ASSE SSMENT YEAR 2006-07. IT HAS BEEN FURTHER NOTICED BY THE ASSESSING OFFICER THAT MISS DIVYA YADAV AND MISS PRIYA YADAV, D/O. MR. RAJIV YADAV ARE STUDENTS. TH EY HAVE PURCHASED SHARES FOR RS.4,90,000/- EACH. THE ASSESSEE DID NOT EXPLAIN T HE SOURCE OF BOTH THE SHAREHOLDERS. IN ABSENCE OF SATISFACTORY EXPLANATI ON ABOUT THE SOURCE OF INVESTMENT, GENUINENESS OF THE TRANSACTION AND CAPA CITY OF SHAREHOLDERS, THE ASSESSING OFFICER MADE THE ADDITION OF RS.98,70,000 /- AS UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE FROM HIS UNDISCLOSED SOURCES. THE ADDITION MADE BY THE ASSESSING OFFICER HAS BEEN CONFIRMED BY THE CIT(A). 16. THE ASSESSEE FILED APPLICATION DATED 07.05.2012 BEFORE US AND MADE PRAYER FOR ADMISSION OF FRESH EVIDENCE UNDER RULE 29 OF TH E I.T.A.T. RULES. IT HAS BEEN SUBMITTED IN THE APPLICATION THAT THE CONFIRMATION OF SHAREHOLDERS AS WELL AS UNSECURED LOAN COULD NOT BE FURNISHED BEFORE THE AS SESSING OFFICER AS THE NOTICE DATED 26.12.2008 WAS RECEIVED ON 02.01.2009 I.E. AF TER THE DATE OF HEARING AND PASSING THE ORDER BY THE ASSESSING OFFICER. THE AF FIDAVIT FROM DIRECTOR IN THIS REGARD HAS BEEN FILED WITH APPLICATION. THE ASSESS EE OBTAINED AFFIDAVITS FROM 24 OUT OF 27 SHAREHOLDERS WHO ARE ALIVE AND THE SAME W ERE ENCLOSED WITH THE ITA NOS.267 & 257/AGR/2011 A.Y. 2006-07 . 9 APPLICATION. COPY OF DEATH CERTIFICATE IN RESPECT OF 2 SHARE HOLDERS ARE ALSO FILED. THE OTHER DETAILS REGARDING TRANSFER DEEDS FILED WI TH ROC AND OTHER DETAILS OF SHARE HOLDERS ARE ALSO ENCLOSED. 17. AFTER HEARING THE LD. REPRESENTATIVES OF THE PA RTIES, WE FIND THAT THE FRESH EVIDENCES FILED BY THE ASSESSEE GOES TO THE ROOT OF THE MATTER AS IN THE ABSENCE OF THOSE DETAILS THE COMPLETE FACTS HAVE NOT BEEN BROU GHT ON RECORD, AFTER EXAMINING THE AVAILABLE DETAILS. THEREFORE, IN THE INTEREST OF JUSTICE, THE FRESH EVIDENCES FILED BY THE ASSESSEE ARE ADMITTED. SINCE THIS EVIDENCES REQUIRE VERIFICATION AND TO PROVIDE OPPORTUNITY TO REVENUE AUTHORITIES, WE THIN K IT PROPER TO SEND BACK THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO DECIDE THE ISSUE AFRESH AFTER CONSIDERING THE RELEVANT MATERIAL INCL UDING FRESH EVIDENCE FILED BEFORE US AND OTHER RELEVANT DOCUMENTS. PUT ON RECORD ALL RELEVANT FACTS AFTER VERIFICATION AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 18. THE FOURTH GROUND RAISED BY THE ASSESSEE READS AS UNDER :- BECAUSE ON THE FACTS AND CIRCUMSTANCES, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, AGRA EXCEE DED HIS POWERS IN MAKING OBSERVATION IN PARA 5.1 OF THE ORDER, THO UGH ALLOWING THE GROUND FOR STATISTICAL PURPOSE, IN RESPECT OF ADDIT ION OF RS.10,00,000/- MADE BY THE A.O. OF THE LOAN RECEIVED FROM SHRI RAM ESH CHAND YADAV. ITA NOS.267 & 257/AGR/2011 A.Y. 2006-07 . 10 19. THE LD. AUTHORISED REPRESENTATIVE HAS NOT PRESS ED THIS GROUND, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 20. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 21. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED AND APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT RESPONDENT CIT CONCERNED CIT (APPEALS) CONCERNED D.R., ITAT AGRA BENCH, AGRA GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY