The ACIT, 3(1), Indore V. M/s. Dwekam Industries Ltd., Indore

ITA 27/IND/2012

• Counselvise Citation: 2722714 RSA 2012
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 12-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DARSHAN SINGH
• Assessee Lawyers: SHRI; S N AGARWAL
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AABCD8990L I.T.A.NO. 27 /IND/201 2 . A.Y. : 2005 - 06 ACIT, 3(1), DWEKAM INDUSTRIES LIMITED, INDORE VS INDORE APPE LLANT RESPONDENT PAN NO. : AABCD8990L C.O. NO. 13/IND/2012 (ARISING OUT OF I.T.A.NO. 13/IND/2012) A.Y. : 2005 - 06 DWEKAM INDUSTRIES LIMITED, VS ACIT, 3(1), INDORE INDORE CROSS OBJECTOR RESPONDENT DEPARTMENT BY : SHRI DARSHAN SINGH, CIT DR ASSESSEE BY : SHRI S.N. AGARWAL AND SHRI PANKAJ MOGRA, CAS DATE OF HEARING : 11 . 10 .2012 DATE OF PRONOUNCEMENT : 18.12 .201 2 -: 2: - 2 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AGAINST THE ORDER OF CIT( A) DATED 28.10.2011 FOR THE ASSESSMENT YEAR 2005-06. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE COMPA NY IS AN INVESTMENT COMPANY INVOLVED IN SUBSCRIBING SHARE CA PITAL OF VARIOUS CONCERNS AND ADVANCING LOAN. ON APPRAISAL O F PROFIT AND LOSS ACCOUNT AND BALANCE SHEET, THE ASSESSING O FFICER OBSERVED THAT SHARE APPLICATION MONEY OUTSTANDING H AS BEEN REDUCED TO RS. 17.34 LAKHS FROM PREVIOUS YEARS RS. 129.89 LAKHS , PREFERENCE SHARES OF M/S. SAM INDUSTRIES HA S BEEN REDUCED TO RS. 47.02 LAKHS FROM RS. 52.25 LAKHS. AC CORDINGLY, ADDITION OF RS. 60,95,500/- WAS MADE U/S 68. THE AS SESSING OFFICER ALSO MADE PROTECTIVE ADDITION OF RS. 98,05, 000/-. THE ADDITION SO MADE WAS DELETED BY THE LD.CIT(A) AFTER HAVING THE FOLLOWING OBSERVATIONS :- 4.1.3. ON PERUSAL OF THE ASSESSMENT ORDER, SUBMISSIONS MADE BY THE ASSESSEE ON DIFFERENT DATES -: 3: - 3 WITH ITS ENCLOSURES, REMAND REPORT AS SUBMITTED BY THE ASSESSING OFFICER AND REPLY FILED WITH REFERENC E TO THE REMAND REPORT AND VERBAL ARGUMENTS AS FORWARDED BY THE LD.COUNSEL FOR THE ASSESSEE. THE ASSESSING OFFICER HAS ADDED THE AMOUNT OF INVESTMENT AS MADE BY THE ASSESSEE BY INVOKING THE PROVISION OF SECTION 68 OF THE INCOME-TAX ACT, MORE SO WHEN ON PERUSAL OF THE BALANCE SHEET AS REPRODUCED IN PARA 3.1 OF THIS ORDER THAT NO FRESH FUNDS WERE RECEIVED IN THE YEAR OF APPEAL. THE AMOUNT AS ADVANCED BY THE ASSESSEE TO ITS VARIOUS GROUP COMPANIES RECEIVED BACK AND THEN INVESTED IN THE DIFFERENT COMPANIES EITHER THROUGH SHARE CAPITAL/SHARE APPLICATION AND IN FORM OF LOANS & ADVANCES. THE AMOUNT AS INVESTED DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNT. THE ASSESSING OFFICER ALSO REFERRED THE AMOUNT OF CASH DEPOSITED IN DIFFERENT COMPANIES AND TRY TO LINK THE SAME WITH T HE INVESTMENT MADE BY THE ASSESSEE. THE SAID AMOUNT WAS DEPOSITED BY ALL OTHER GROUP COMPANIES AND NOT -: 4: - 4 UTILIZED TOWARDS REPAYMENT OF AMOUNT ADVANCED BY THE ASSESSEE WHICH WAS DULY VERIFIED DURING REMAND PROCEEDINGS. THAT MOST OF THE COMPANIES HAVING THEI R DIFFERENT NATURE OF BUSINESSES AND REGULARLY MAINTAINING THEIR BOOKS OF ACCOUNT. HENCE, CASH DEPOSITED IN THE BANK ACCOUNT OF THE OTHER GROUP COMPANIES IN NO WAY EFFECT THE FATE OF THE CASE OF THE ASSESSEE. THAT ALL OTHER DEFECTS AS POINTED OUT BY THE ASSESSING OFFICER AS IN FACT IN NOTHING AS CLEAR FR OM THE REMAND REPORT BUT SEEMS THAT THESE WERE MENTIONED AS TO JUSTIFIED THE ADDITION MADE BY HIM IN THE ASSESSMENT ORDER. THE ASSESSEE DURING THE COURSE OF APPEAL JUSTIFIED IN EXPLAINING THE SOURCE OF INVESTMENT THROUGH VARIOUS DOCUMENTS AND THE ASSESSING OFFICER HIMSELF SATISFIED WITH THE EXPLANATION OF THE ASSESSEE IN REMAND REPORT. CONSIDERING THE TOTALITY OF THE FACTS OF THE PRESEN T CASE, ADDITION OF RS. 60,95,000/- AS MADE BY THE ASSESSING OFFICER IN RESPECT OF INVESTMENT MADE BY THE ASSESSEE IN DIFFERENT COMPANIES BY INVOKING THE -: 5: - 5 PROVISION OF SECTION 68 IS NOT JUSTIFIED. ACCORDING LY, THE ADDITION OF RS. 60,95,000/- ON THIS ACCOUNT IS DELETED. 4.2.3 ON PERUSAL OF THE ASSESSMENT ORDER, SUBMISSIONS MADE BY THE ASSESSEE ON DIFFERENT DATES WITH ITS ENCLOSURES, REMAND REPORT AS SUBMITTED BY THE ASSESSING OFFICER AND REPLY FILED WITH REFERENC E TO THE REMAND REPORT AND VERBAL ARGUMENTS AS FORWARDED BY THE LD.COUNSEL FOR THE ASSESSEE. THE ADDITION MADE BY THE ASSESSING OFFICER MERELY ON TH E BASIS OF INVESTMENT MADE IN THE UNQUOTED SHARES. HOWEVER, THE FACTS THAT THERE WAS NO FRESH INVESTMENT IN TOTO BUT THE AMOUNT OF SHARE APPLICATION MONEY OF RS. 1,20,34,000/- WAS TRANSFERRED FROM SHARE APPLICATION MONEY TO INVESTMENT IN UNQUOTED SHARES. THE BALANCE AMOUNT OF INVESTMENT WAS ALSO PROPERLY EXPLAINED BY THE ASSESSEE. IN REMAND REPORT, THE ASSESSING OFFICER HIMSELF AGREED WITH THE CONTENTION OF THE ASSESSEE. CONSIDERING THE TOTALITY OF THE FACTS OF THE PRESEN T -: 6: - 6 CASE, ADDITION OF RS. 98,05,000/- AS MADE BY THE ASSESSING OFFICER IN RESPECT OF INVESTMENT MADE BY THE ASSESSEE IN DIFFERENT COMPANIES ON PROTECTIVE BASIS IS NOT JUSTIFIED. ACCORDINGLY, THE ADDITION O F RS. 98,05,000/- IS DELETED. 3. AGAINST THE ABOVE ORDER OF CIT(A), THE REVENUE IS I N APPEAL BEFORE US, WHEREIN IT HAS CONTESTED DELETION OF ADDITION MADE U/S 68 OF THE ACT AS WELL AS DELETION OF ADDIT ION MADE ON PROTECTIVE BASIS. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION, WHICH IS PRECISELY IN SUPPORT OF CIT(A)S ORDER. 4. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSE D. FROM THE RECORD, WE FOUND THAT ADDITIONS WERE MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT. DURING THE AP PELLATE PROCEEDINGS, THE LEARNED CIT(A) CALLED FOR A REMAN D REPORT WHEREIN THE ASSESSING OFFICER HAS ACCEPTED THE ASSE SSEES CONTENTIONS. WE FIND THAT THE ADDITIONS WERE MADE M ERELY ON THE BASIS OF INVESTMENT MADE IN UNQUOTED SHARES. H OWEVER, THERE WAS NO FRESH INVESTMENT IN TOTO BUT THE AMOUN T OF SHARE APPLICATION MONEY WAS TRANSFERRED FROM SHARE APPLIC ATION MONEY TO INVESTMENT IN UNQUOTED SHARES. THE LEARNE D CIT(A) -: 7: - 7 ALSO RECORDED A FINDING AFTER CONSIDERING THE REMAN D REPORT THAT THE ASSESSEE HAS PROPERLY EXPLAINED THE INVEST MENT IN DIFFERENT COMPANIES WHICH WAS ADDED BY THE ASSESSIN G OFFICER ON PROTECTIVE BASIS. A FINDING WAS ALSO RECORDED B Y CIT(A) TO THE EFFECT THAT NO FRESH FUNDS WERE RECEIVED IN THE YEAR UNDER APPEAL, WHICH IS AS PER MATERIAL ON RECORD. SINCE T HERE IS NO INCREASE IN OVERALL INVESTMENT, NOR IN LOANS AND AD VANCES, WE ARE IN AGREEMENT WITH THE FINDING OF THE LEARNED CI T(A) THAT NO ADDITION IS WARRANTED U/S 68 OF THE ACT. ACCORDING LY, WE UPHOLD THE ORDER AND THE FINDINGS OF THE LEARNED CI T(A). 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE CROSS OBJECTIONS WHICH ARE BASICA LLY IN SUPPORT OF THE ORDER OF CIT(A) BECOME INFRUCTUOUS I N VIEW OF OUR DISMISSING THE REVENUES APPEAL. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 18 TH DECEMBER, 2012. SD SD (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :18 TH DECEMBER, 2012. CPU* -: 8: - 8 1810