The ITO, Ward-8(4), Ahmedabad V. Vimpson Industries Pvt.Ltd., Ahmedabad

ITA 27/AHD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0024 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-12-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 04-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA
• Keywords: Additional evidence
• Section: 68; 144

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO. 27/AHD/2012 & CO NO.67/AHD/2012 / ASSESSMENT YEAR : 2005-06 ITO, WARD 8 (4), AHMEDABAD VS VIMPSON INVESTMENTS PVT LTD, 505, KAIVANYA BUILDING, OPP.SAFRON BUILDING, AMBAWADI, AHMEDABAD-380015 PAN : AAACV 7074 Q / (APPELLANT) / (RESPONDENT) & CROSS OBJECTOR REVENUE BY : SHRI JAMES KURIAN, SR DR ASSESSEE BY : SHRI P.M. MEHTA, AR / DATE OF HEARING : 01/12/2016 / DATE OF PRONOUNCEMENT: 05/12/2016 / O R D E R PER R.P. TOLANI, JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE AND THE CROSS-OBJECTION THEREOF FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME- TAX (APPEALS)-XIV, AHMEDABAD DATED 18.10.2011 FOR A Y 2005-06. 2. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE AS SESSEE SUBMITTED THAT HE IS NOT PRESSING THE CROSS-OBJECTION; HENCE THE CROS S-OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 3. REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- THAT THE LD. CIT HAS ERRED IN LAW AND ON FACTS IN G IVING FOLLOWING RELIEF ON THE ADDITION MADE BY THE AO IN A EX-PARTE ASSESSMEN T FRAMED U/S 144 OF THE IT ACT :- (I) CONDONING THE DELAY IN FILING OF ASSESSEES APPEAL; (II) ADMITTING THE ADDITIONAL EVIDENCE IN VIOLATION OF R ULE 46A; ITA NO. 27/AHD/2012 & CO NO.67/AHD/2012 ITO VS. VIMPSON INVESTMENTS PVT LTD AY : 2005-06 2 (III) DELETING THE DISALLOWANCE OF RS.2,81,433/- BEING BU SINESS LOSS; (IV) DELETING THE DISALLOWANCE OF RS.91,31,410/- ON ACCO UNT OF LONG TERM CAPITAL LOSS; (V) DELETING THE ADDITION OF RS.2,18,19,780/- MADE BY T HE AO U/S 68 OF THE ACT. 4. THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTI ON TO THE DETAILED ORDER OF THE LD. CIT(A) AND CONTENDS THAT:- (I) THE DELAY IN FILING THE ASSESSEES APPEAL WAS CONDO NED BY VERIFYING THAT THE ASSESSEES BUSINESS WAS CLOSED DUE TO LOSS AND BY THE END OF 2005, ALL THE STAFF OF THE COMPANY HAD LEFT THE SER VICE. THE COMPANY VACATED THE RENTED PREMISE AND SHIFTED TO NEW PLACE IN THE BEGINNING OF 2006. THE NOTICES OF HEARING ISSUED BY THE AO W ERE ADDRESSED TO THE OLD ADDRESS, WHICH WERE NOT RECEIVED BY THE ASS ESSEE. (II) DUE TO THE PROBLEMS CAUSED BY THE BUSINESS LOSS, TH E MD OF THE ASSESSEE-COMPANY UNDERWENT VARIOUS MEDICAL PROBLEMS INCLUDING NEUROLOGICAL AND PARA SUPER NUCLEAR PALSY (PSP), WH ICH IS A RARE DEGENERATIVE NEUROLOGICAL DISORDER WITHOUT CURE. (III) THE ASSESSEE BECAME AWARE ABOUT THE ASSESSMENT ORDE R IN 2009 WHEN THE DEPARTMENT WAS SEARCHING THE ASSESSEE FOR RECOV ERY PROCEEDINGS. ON COMING TO KNOW ABOUT THE ASSESSMENT ORDER, ASSES SEE ASKED FOR CERTIFIED COPY OF THE SAME AND RECEIVED THE COPY TH EREOF ON 04.02.2010 AND THEREAFTER THE APPEAL WAS FILED. (IV) THE LD. CIT(A), BY A DETAILED ORDER AND RELYING ON VARIOUS JUDGMENTS, HELD THAT THE ASSESSEE WAS PREVENTED BY A REASONABL E CAUSE IN FILING THE APPEAL LATE; THEREFORE, THERE IS NO INFIRMITY IN THE ORDER OF LD. CIT(A) IN CONDONING THE DELAY. ITA NO. 27/AHD/2012 & CO NO.67/AHD/2012 ITO VS. VIMPSON INVESTMENTS PVT LTD AY : 2005-06 3 (V) APROPOS ADMISSION OF ADDITIONAL EVIDENCES, LD. CIT( A) HAS CATEGORICALLY HELD THAT DUE TO NON-RECEIPT OF NOTIC E OF HEARING, THE ASSESSEE COULD NOT ATTEND THE ASSESSMENT PROCEEDING S AND EX-PARTE ASSESSMENT WAS MADE IN ARBITRARY MANNER IN THE ABSE NCE OF ASSESSEE. THEREFORE, IT WAS INEVITABLE TO ADMIT THE ADDITIONA L EVIDENCES OF THE ASSESSEE UNDER RULE 46A. (VI) FURTHER, THE LD. CIT(A) SENT ENTIRE ADDITIONAL EVID ENCES TO THE AO FOR A DETAILED REMAND REPORT WHICH WAS SUBMITTED BY THE AO AND THE ASSESSEE FILED A REJOINDER THEREON. CONSEQUENTLY, THERE IS NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN ADMITTING THE ADD ITIONAL EVIDENCES. (VII) APROPOS THE ISSUE OF BUSINESS LOSS, I.E. THE GROUND NO.3 RAISED BY THE REVENUE, THE LD. AO DID NOT MAKE ANY ADVERSE COMMEN TS ON THE ASSESSEES BUSINESS LOSS AND THE LD. CIT(A), AFTER DUE VERIFICATION, DELETED THAT ADDITION. (VIII) APROPOS GROUND NO.4, I.E. DISALLOWANCE ON ACCOUNT O F LONG TERM CAPITAL LOSS, LD. CIT(A) AFTER CONSIDERING THE REMA ND REPORT, ASSESSEES EVIDENCE AND OTHER MATERIAL ON RECORD, D ELETED THE ADDITION BY DETAILED OBSERVATION AS UNDER:- I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER A ND THE SUBMISSION FILED BY THE APPELLANT. THE APPELLANT HAD CLAIMED LONG TERM LOSS OF RS.91,31,410/- IN THE RETURN OF INCOME. SINCE NOBO DY ATTENDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE ASSESS MENT ORDER WAS PASSED U/S 144 OF THE ACT THE LOSS WAS DISALLOWED. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HAS FURNISHED ALL THE DETAILS REGARDING SALE OF SHARES DURING THE YEAR. IT HAS BE EN SUBMITTED THAT 75,000 SHARES OF VEER PLASTICS PVT. LTD. WERE SOLD FOR CONSIDERATION OF RS.11,25,000/- TO MR. HARJIVSINGH K. ARORA AND MR. SUKHVIRSINGH K. ARORA IN THE MONTH OF MAY, 2004. THE A. O. IN THE R EMAND REPORT HAS COMMENTED THAT THE LOSS ON SALE OF SHARES IS NOT VE RIFIABLE AS NEITHER PURCHASE PRICE NOR THE SALE PRICE OF THE UNLISTED S HARES IS AVAILABLE FROM ITA NO. 27/AHD/2012 & CO NO.67/AHD/2012 ITO VS. VIMPSON INVESTMENTS PVT LTD AY : 2005-06 4 THE MATERIAL SUBMITTED BY THE ASSESSEE. THE COMMENT MADE BY THE A.O. IS NOTED. IT IS A FACT THAT THE SHARES ARE NOT LISTED BUT THE APPELLANT HAS GIVEN ALL THE NECESSARY EVIDENCE REGARDING SALE OF SHARES . THE APPELLANT HAS ALSO SHOWN RELEVANT ENTRIES IN THE BANK ACCOUNT SHOWING THE PAYMENTS RECEIVED. THE APPELLANT HAS ALSO FILED THE CONFIRMA TION FROM THE BUYERS, THEIR PA NO. AND THE DETAILS OF PAYMENT RECEIVED FR OM THEM. THEREFORE, THE APPELLANT HAS GIVEN NECESSARY PROOF REGARDING S ALE PRICE OF THE SHARES. IT HAS ALSO GIVEN THE EVIDENCE REGARDING THE PURCHA SE PRICE OF THE SHARES IN EARLIER YEARS. THE APPELLANT HAD BOUGHT 1,50,000 EQ UITY SHARES OUT OF WHICH 75,000 SHARES WERE SOLD IN FINANCIAL YEAR 200 3-04 AND BALANCE SHARES HAVE BEEN SOLD BY HIM DURING THE CURRENT FIN ANCIAL YEAR. THEREFORE, AS THE APPELLANT HAS SUBMITTED ALL THE N ECESSARY INFORMATION REGARDING THE TRANSACTION OF SALE OF SHARES, THE LO NG TERM CAPITAL LOSS ARISING OUT OF SUCH SALE CANNOT BE DISALLOWED. THE DISALLOWANCE MADE BY THE A.O. IS, THEREFORE, DELETED. THE GROUND OF APPE AL IS, THEREFORE, ALLOWED. (IX) SINCE THE ADDITION HAS BEEN DELETED AFTER DUE VERIF ICATION OF EVIDENCE SUBMITTED BY THE ASSESSEE, THERE IS NO INFIRMITY IN THE ORDER OF LD. CIT(A). (X) APROPOS THE LAST GROUND IN RESPECT OF ADDITION U/S 68 OF THE ACT, DETAILED REMAND REPORT WAS CALLED FOR AND THE LD. C IT(A), AFTER CONSIDERING THE REMAND REPORT, DELETED THE ADDITION BY FOLLOWING OBSERVATIONS:- I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER A ND THE SUBMISSION FILED BY THE APPELLANT. THE AO HAD MADE THE ADDITI ON ON ACCOUNT OF ACCEPTANCE OF FOLLOWING UNSECURED LOANS DURING THE YEAR: A) PAN EMANI COSMED LIMITED - RS.2,05,19,780/- B) SHRI SHARADBHAI C. PATEL - RS. 2,00,000/- C) M/S. YANKEE FINANCE - RS. 12,00,000/- DURING THE COURSE OF REMAND PROCEEDINGS, THE A. O. VERIFIED ALL THE THREE LOANS AND HAS COMMENTED THAT THE LOAN ACCEPTED FROM SHARADBHAI C. PATEL AND M/S. YANKEE FINANCE WERE VERIFIABLE SINCE THE APPELLANT HAS FILED CONFIRMATION OF THESE PERSONS ALONG WITH PAN OF DEPOSITORS WHICH WAS VERIFIED FROM THE PAN DATABASE OF THE DEPARTMEN T. HOWEVER, IN RESPECT OF THE LOAN FROM PAN EMAMI COSMED LIMITED, IT HAS BEEN COMMENTED BY THE A.O. THAT THE LOAN IS NOT VERIFIAB LE AS THE PAN PROVIDED IN THE CONFIRMATION FILED BY THE APPELLANT WAS INVALID AND, ITA NO. 27/AHD/2012 & CO NO.67/AHD/2012 ITO VS. VIMPSON INVESTMENTS PVT LTD AY : 2005-06 5 THEREFORE, NEITHER THE GENUINENESS NOR THE CREDITWO RTHINESS OF THE DEPOSITOR IS PROVED. THE REPORT OF THE A.O. WAS CON FRONTED TO THE APPELLANT FOR HIS COMMENTS. THE APPELLANT HAS SUBMI TTED THAT THE PAN QUOTED IN THE CONFIRMATION IS CORRECT WHICH IS AABC P 5150 G. IT HAS ALSO SUBMITTED THE COPY OF RETURN WHICH SHOW THE SAME PA N NO. THE APPELLANT HAS ALSO SUBMITTED THE QUERY DETAIL FROM THE WEBSITE OF THE INCOME TAX DEPARTMENT WHERE THE SAME PA NO. IS REFL ECTED. THE APPELLANT HAS ALSO SUBMITTED THE COPY OF BANK ACCOU NT WHICH SHOW THAT THE LOAN OF RS.2,00,00,000/- HAVE BEEN RECEIVED THR OUGH CHEQUE IN THE BANK ACCOUNT. THE APPELLANT HAS ALSO SUBMITTED THE PHOTO COPY OF THE ACKNOWLEDGEMENT OF FILING OF RETURN OF INCOME OF PA N EMAMI COSMED LIMITED FOR A. Y. 2005-06. CONSIDERING ALL THESE EV IDENCES, THE UNSECURED LOAN RECEIVED FROM PAN EMAMI COSMED LIMITED STANDS PROVED SATISFACTORILY. THE APPELLANT HAS PROVED THE CREDIT WORTHINESS AND THE GENUINENESS OF THE TRANSACTION. HE HAS ALSO CONFIRM ED THE CORRECTNESS OF PAN. THEREFORE, ALL THE THREE UNSECURED LOANS SHOWN BY THE APPELLANT IN THE RETURN DURING THE YEAR STANDS PROVED AND VERIFI ED. THE ADDITION MADE BY THE A. O. IS, THEREFORE, DELETED. THE GROUND OF APPEAL IS ALLOWED. (XI) A PERUSAL OF THE LD. AOS ORDER REVEALED THAT THE L D. AO IN HIS REMAND REPORT DID NOT RAISE ANY OBJECTION IN RESPECT OF SH ARADBHAI C. PATEL AND M/S. YANKEE FINANCE AND COMMENTED THEM TO BE VE RIFIABLE. (XII) APROPOS THE OTHER LOAN FROM PAN EMAMI COSMED LIMITE D, THE AO MISTAKENLY COMMENTED THAT THE PAN NUMBER PROVIDED B Y THE ASSESSEE IS NOT CORRECT. THE ASSESSEE DEMONSTRATED BEFORE THE LD. CIT(A) THAT THE PAN NUMBER IS CORRECT AND THE SAME IS EXISTED ON THE WEB SITE OF THE IT DEPARTMENT IN THE NAME OF PAN EM AMI COSMED LIMITED. THEIR RETURN OF INCOME WAS FILED AND THE COPY OF THE BANK ACCOUNT SHOWING THE LOAN OF RS.2 CRORES RECEIVED BY CHEQUE THROUGH BANK TRANSFER WAS ALSO PRODUCED BEFORE THE CIT(A). (XIII) THE LD. CIT(A) HELD THAT THE AO WAS NOT CORRECT IN HOLDING THAT THE PAN NUMBER WAS NOT IN EXISTENCE AND THE LD. CIT(A), ON VERIFICATION, HELD THAT THE ASSESSEE HAS DISCHARGED ITS PRIMARY O NUS IN EXPLAINING THE ABOVE CASH CREDIT BY REASONABLE EVIDENCE. ITA NO. 27/AHD/2012 & CO NO.67/AHD/2012 ITO VS. VIMPSON INVESTMENTS PVT LTD AY : 2005-06 6 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NO T FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN CONDONING THE DELAY IN FILING THE APPEAL AGAINST THE EX-PARTE ASSESSMENT AS THE ASSESSEE WAS NOT SERVED WITH THE COPY OF THE ASSESSMENT ORDER AND ASSESSEE OBTAINED THE CERTIFIED COPY THEREON ON 04.02.2010 AND THE APPEAL WAS PROMPTLY F ILED ON 08.02.2010. 5.1 SIMILARLY, THE ADDITIONAL EVIDENCE HAS BEEN ADM ITTED AFTER PROPERLY HOLDING THAT THE ASSESSEE WAS PREVENTED BY SUFFICIE NT CAUSE IN NOT BEING ABLE TO FILE THE SAME BEFORE THE CIT(A). CONSEQUENTLY, THESE TWO GROUNDS OF THE REVENUE ARE DISMISSED. 5.2 APROPOS GROUND NO.3, THE AO HAS NOT MADE ANY AD VERSE COMMENTS ON THE BUSINESS LOSS OF THE ASSESSEE IN THE REMAND REPORT. THEREFORE, LD. CIT(A)S ORDER IN THIS REGARD IS UPHELD. ACCORDING LY, THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 5.3 APROPOS GROUND NO.4, LD. CIT(A) AFTER VERIFYING ALL THE RELEVANT DOCUMENTS, PAN NUMBERS OF THE BUYERS AND CHEQUE PAY MENT ETC., DELETED THE ADDITION. THE LD. CIT(A)S FINDINGS ON FACTS A RE IRREFUTABLE AND ARE ACCORDINGLY UPHELD. THUS, THIS GROUND OF THE REVENU E IS ALSO DISMISSED. 5.4 SIMILARLY IN RESPECT OF GROUND NO.5, LD. AO IN THE REMAND REPORT HAS ACCEPTED THE CREDITS OF TWO PERSONS AND IN RESPECT OF PAN EMAMI COSMED LIMITED, THE AOS OBJECTION WAS FOUND TO BE MISTAKE N. THE PAN NUMBER AND RETURN OF INCOME OF THE SAID DEPOSITOR WERE FOU ND TO BE CORRECT. THE PAYMENT WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQUE W HICH THE ASSESSEE SUPPORTED BY BANK STATEMENTS. IN THESE FACTS AND C IRCUMSTANCES, THE CIT(A) ITA NO. 27/AHD/2012 & CO NO.67/AHD/2012 ITO VS. VIMPSON INVESTMENTS PVT LTD AY : 2005-06 7 WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE HAS DISC HARGED ITS BURDEN AND EXPLAINED THE CASH CREDIT. UNDER THESE FACTS AND C IRCUMSTANCES OF THE CASE, THE ADDITION DELETED BY THE LD. CIT(A) IN THIS BEHA LF IS ALSO UPHELD. ACCORDINGLY, THIS GROUND OF THE REVENUES APPEAL IS ALSO DISMISSED. 6. IN THE RESULT, REVENUES APPEAL AND ASSESSEES C ROSS OBJECTION, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 5 TH DECEMBER, 2016 AT AHMEDABAD. SD/- SD/- AMARJIT SINGH (ACCOUNTANT MEMBER) R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 05/12/2016 *BIJU T., SR PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD