The ACIT, Central Circle-2(3), Ahmedabad V. Monarch Project & Fin. Market Ltd., Ahmedabad

ITA 2858/AHD/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9877 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 30-09-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 08-08-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K M MAHESH
• Keywords: Audit objection; Question of law
• Section: 143(3); 153A; 234B; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI MUKUL SHRAWAT, JM & SHRI A N PAHUJA , AM ITA NOS.2858 & 2859/AHD/2008 WITH CO NOS.258& 259AHD/2008 (ASSESSMENT YEARS:- 2000-01 AND 2001-02) ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2(3), ROOM NO. 305, ANNEXE TO AAYAKAR BHAVAN, AHMEDABAD V/S MONARCH PROJECT & FINMARKET LTD., A/62, PARISEEMA COMPLEX, OPP. LAL BUNGALOW, C. G. ROAD, AHMEDABAD [PAN: AAACM 8214 F] (APPELLANT) (RESPONDENT) REVENUE BY :- SHRI K M MAHESH, DR ASSESSEE BY:- SHRI BANDISH SOPARKAR, AR O R D E R A N PAHUJA : THESE TWO APPEALS BY THE REVENUE AND THE CORRESPONDING CROSS-OBJECTIONS[COS] BY THE ASSESSEE DIRECTED AGAINST A COMMON ORDER DATED 27-05-2008 OF THE LD. CIT(APPEALS)- III, AHMEDABAD FOR THE ASSESSMENT YEARS 2000-01 AN D 2001-02, RAISE THE FOLLOWING GROUNDS : ITA NO.2858 /AHD/2008[AY2000-01] 1 THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,27,970/- MADE ON ACCOUNT OF UNEXPL AINED CASH CREDIT. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 3 IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD . CIT(A) MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED TO THE ABOVE E XTENT. ITA NO. 2859/AHD/2008[ AY 2001-02] 1 THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.11,52,738/- MADE ON ACCOUNT OF UNEXP LAINED CASH CREDIT. ITA NOS. 2858&2859/AHD/2008 CO NOS.258 & 259/AHD/2008 2 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 3 IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD . CIT(A) MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED TO THE ABOVE E XTENT. CO NO.258AHD/2008[AY 2000-01] 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, (REVENUE EFFECT BEING LESS THAN RS.2 LAKHS) DEPARTMENT'S APPEAL DES ERVES NOT TO BE ADMITTED AT ALL AND AT ANY RATE DESERVES TO BE DISM ISSED IN LIMINE IN VIEW OF: (I) THE CBDT INSTRUCTION NO.2705 OF 2005 DATED 24.1 0.2005 READ WITH INSTRUCTIONS NO.1979 DATED 27.3.2000 AND NO.1985 DA TED 29.6.2000; AND (II) THE ITAT AHMEDABAD BENCH 'B' DECISION IN ITA N O. 3570/AHD/2007 DATED 28.12.2007 IN THE CASE OF JCIT VS. HEMETA AGRICULTURAL EQUIPMENTS - A.Y. 2002-03. 2. WITHOUT PREJUDICE, EVEN ON MERITS DEPARTMENT'S A PPEAL DESERVES TO BE DISMISSED. 3. WITHOUT PREJUDICE, ON THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE, THE CIT(A) SHOULD HAVE UPHELD THE ASSESSEE'S CONTENTION THAT IT WAS NOT AT ALL A FIT CASE FOR INVOKING THE PROVISIONS O F SECTION 153A FOR ANY OF THE YEARS INVOLVED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) SHOULD HAVE APPRECIATED THAT NO INCRIMINATING MATER IAL OR ANY UNDISCLOSED ASSET WAS FOUND AT ALL AND HENCE THE ASSESSING OFFI CER WAS NOT JUSTIFIED IN REOPENING THE ASSESSMENTS OF THESE YEARS BY INVOKIN G THE PROVISIONS OF SECTION 153A. 5. WITHOUT PREJUDICE, ON THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE THE CIT(A) SHOULD HAVE REALIZED THAT SINCE NO INCRI MINATING MATERIAL WAS FOUND AT ALL AND NO UNDISCLOSED ASSET HAD SURFACED THE ASSESSING OFFICER SHOULD HAVE NOT FRAMED THE ASSESSMENT ORDERS U/S. 1 53A FOR ANY OF THE YEARS. 6. WITHOUT PREJUDICE, ON THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE THE CIT(A) SHOULD HAVE REALIZED THAT THE ASSESSING OFFICER WAS NOT ITA NOS. 2858&2859/AHD/2008 CO NOS.258 & 259/AHD/2008 3 JUSTIFIED IN EMBARKING UPON THE PROCESSING AND SCRU TINY OF THE ASSESSMENT IN A FASHION WHICH WAS PERMISSIBLE IN A REGULAR ASS ESSMENT U/S. 143(3) BUT IN THIS PARTICULAR CASE IT WAS NOT PERMISSIBLE U/S. 153A. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) HAS ERRED IN NOT ACCEPTING THE ASSESSEE'S PLEA THAT IT WAS NOT AT ALL A FIT CASE FOR LEVY OF INTEREST U/S. 234A, 234B AND 234C OF TH E IT. ACT. 8 THE RESPONDENT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY GROUNDS OF CROSS OBJECTIONS EITHER BEFORE DURIN G THE COURSE OF HEARING OF THE SAME. CO NO.259AHD/2008[ AY 2001-02] 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT(A) SHOULD HAVE UPHELD THE ASSESSEE'S CONTENTION THAT I T WAS NOT AT ALL A FIT CASE FOR INVOKING THE PROVISIONS OF SECTION 153A FO R ANY OF THE YEARS INVOLVED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) SHOULD HAVE APPRECIATED THAT NO INCRIMINATING MATER IAL OR ANY UNDISCLOSED ASSET WAS FOUND AT ALL AND HENCE THE ASSESSING OFFI CER WAS NOT JUSTIFIED IN REOPENING THE ASSESSMENTS OF THESE YEARS BY INVOKIN G THE PROVISIONS OF SECTION 153A. 3. WITHOUT PREJUDICE, ON THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE THE CIT(A) SHOULD HAVE REALIZED THAT SINCE NO INCRI MINATING MATERIAL WAS FOUND AT ALL AND NO UNDISCLOSED ASSET HAD SURFACED THE ASSESSING OFFICER SHOULD HAVE NOT FRAMED THE ASSESSMENT ORDERS U/S. 1 53A FOR ANY OF THE YEARS. 4. WITHOUT PREJUDICE, ON THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE THE CIT(A) SHOULD HAVE REALIZED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN EMBARKING UPON THE PROCESSING AND SCRU TINY OF THE ASSESSMENT IN A FASHION WHICH WAS PERMISSIBLE IN A REGULAR ASS ESSMENT U/S. 143(3) BUT IN THIS PARTICULAR CASE IT WAS NOT PERMISSIBLE U/S. 153A. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) HAS ERRED IN NOT ACCEPTING THE ASSESSEE'S PLEA THAT IT WAS NOT AT ALL A FIT CASE FOR LEVY OF INTEREST U/S. 234A, 234B AND 234C OF TH E IT. ACT. ITA NOS. 2858&2859/AHD/2008 CO NOS.258 & 259/AHD/2008 4 6 THE RESPONDENT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY GROUNDS OF CROSS OBJECTIONS EITHER BEFORE DURIN G THE COURSE OF HEARING OF THE SAME. 2. ADVERTING FIRST TO THE APPEAL OF THE REVENUE IN THE AY 2000-01 & THE GROUND NO.1 RAISED IN THE CORRESPONDING CO, T HE LD. AR ON BEHALF OF THE ASSESSEE POINTED OUT THAT THE TAX EFF ECT IN THIS APPEAL FILED BY THE REVENUE IS BELOW THE LIMIT OF RS.2 LA KHS STIPULATED BY THE CBDT IN THEIR INSTRUCTION FOR FILING THE APPEA LS. THE LD. DR APPEARING BEFORE US COULD NOT POINT OUT THAT THE CA SE FALLS WITHIN ANY OF THE FOLLOWING EXCEPTIONS IN CBDT INSTRUCTION NO. 5 OF 2008 DATED 15.5.2008: (A) WHERE THE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT, (B) WHERE THE BOARD'S ORDER, NOTIFICATION, INSTRUCT ION OR CIRCULAR IS THE SUBJECT-MATTER OF AN ADVERSE ORDER, (C) WHERE PROSECUTION PROCEEDINGS ARE CONTEMPLATED AGAINST THE ASSESSEE, AND (D) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVIS IONS OF THE ACT IS UNDER CHALLENGE. 2.1 RECENTLY, HONBLE BOMBAY HIGH COURT IN TH EIR DECISION IN THE CASE OF CIT VS. MADHUKAR K INAMDAR(HUF),229 CTR(BOM.)77 WHILE R EFERRING TO A CIRCULAR DATED 5.6.2007 ISSUED BY THE CBDT, THE RELEVANT P ROVISIONS OF SEC. 268A OF THE ACT AND THEIR OWN DECISION IN THE CASE OF CIT VS. P OLYCOTT CORPORATION,20 DTR(BOM.)16 HELD THAT INSTRUCTION NO. 5 OF 2008 DA TED 15.5.2008 IS APPLICABLE EVEN TO MATTERS FILED BEFORE THAT DATE I.E. PENDIN G BEFORE THE COURT. THE INSTRUCTION NO. 5 OF 2008 DATED 15.5.2008 SEEMS TO LIMIT THE ISSUES IN SO FAR AS THE SAME QUESTION OF LAW OR RECURRING ISSUE EXCEPT TO THE EXTENT PROVIDED IN PARA.5. ON A PROPER READING OF PARA.5 OF THE INSTRU CTIONS IT WOULD BE CLEAR THAT A DUTY IS CAST ON THE ASSESSING OFFICER THAT EVEN IF THE DISPUTED QUESTIONS ARISE FOR MORE THAN ONE ASSESSMENT YEAR THEN AN APPEAL SHOULD BE FILED ONLY IN RESPECT OF ITA NOS. 2858&2859/AHD/2008 CO NOS.258 & 259/AHD/2008 5 THOSE YEARS WHERE THE MONETARY LIMIT EXCEEDS THE LI MITS AS SPECIFIED IN PARA.3 OF THE INSTRUCTIONS, HONBLE HIGH COURT OBSERVED. 3. IN VIEW OF THE FOREGOING AND IN THE LIGHT OF AFORES AID INSTRUCTION DATED 15.5.2008 OF THE CBDT AND DECISION DATED 5.8.2008 O F THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. CONCORD PHARMACEU TICALS IN TAX APPEAL NOS. 1402 TO 1405 OF 2007 AS ALSO CONSISTENT VIEW TAK EN BY VARIOUS HIGH COURTS IN THE CASE OF CIT VS. MADHUKAR K INAMDAR(H UF),229 CTR(BOM.)77, CIT VS. POLYCOTT CORPORATION,20 DTR(BOM.)16,CIT VS. CHHAJER PACKAGING AND PLASTICS P.LTD., 300 ITR 180(BOM.),CIT VS. CAMC O COLOUR CO,254 ITR 565(BOM.), CIT VS. ZOEB Y TOPIWALA,284 ITR 379 (BOM), & CIT VS. S.ANNAMALAI,258 ITR 675(MADRAS) AN D HONBLE DELHI HIGH COURT IN THEIR ORDER DATED 1.8.2007 IN I TA NO. 683/2007 IN THE CASE OF CIT VS. MANISH BHAMBRI, THIS APPEAL OF THE REVENUE CAN NOT BE ENTERTAINED AND IS ACCORDINGLY, DISMISSE D. CONSEQUENTLY, GROUND NO.1 RAISED IN THE CO FOR THE AY 2000-01 IS ALLOWED. 4. ADVERTING NOW TO GROUND NO.1 IN THE APPEAL FILED BY THE REVENUE FOR THE AY 2001-02, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT A SEARCH U/S 132 OF THE INCOME-TAX ACT,196 1[HEREINAFTER REFERRED TO AS THE ACT] WAS CONDUCTED IN THE GRO UP CASES OF HIMANSHU J SHAH ON 22-09-2005. INTER ALIA, A WARRA NT OF AUTHORIZATION WAS ISSUED IN THE NAME OF THE ASSESSE E COMPANY. CONSEQUENTLY, IN RESPONSE TO A NOTICE U/S 153A OF T HE ACT, THE ASSESSEE FILED RETURN DECLARING LOSS OF RS.6,59,544 ON 11-10-2007 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED A CREDIT OF RS.31,79,512/- UNDER THE HEAD SUNDRY CR EDITORS IN THE NAME OF UJJAWAL TRADING. THE AO ASKED THE ASSESSEE TO FURNISH EVIDENCE IN SUPPORT OF THE ABOVE CREDIT AND SUBSTAN TIATE THAT THE TRANSACTIONS WITH THIS PARTY WERE GENUINE AS ALSO E STABLISH THEIR CREDITWORTHINESS. IN RESPONSE TO THE SAID SHOW CAUS E, THE ASSESSEE ITA NOS. 2858&2859/AHD/2008 CO NOS.258 & 259/AHD/2008 6 REPLIED VIDE LETTER DATED 21-12-2007 THAT A SIMILA R ADDITION IN THE AY 1999-2000 HAD BEEN DELETED BY LD. CIT(A) .INTER ALIA , THE ASSESSEE POINTED OUT THAT NET INCREASE IN THE CREDI T DURING THE YEAR WAS ONLY RS.11,52,738/- IN THE ACCOUNT OF M/S UJJWA L TRADING . IN THE LIGHT OF THESE SUBMISSIONS, RELYING UPON HIS OWN FINDINGS IN THE AY 1999-2000 & 2001- 02, THE AO ADDED AN AMOUNT OF RS.11,52,738/-(31,79, 512 - 20,26,774) U/S 68 OF THE ACT, THE AMOUNT OF RS.17,98,904/- HAVING BEEN A DDED IN THE AY 1999-2000 & RS.2,27,970/- IN THE AY 2001-02 5. ON APPEAL, THE LEARNED CIT(A), WHILE RELYING UPO N THE ORDER OF HIS PREDECESSOR FOR AYS 1999-2000, DELETED THE ADDI TION IN THE FOLLOWING TERMS:- 5. IN RESPECT OF THE ADDITIONS, IT WAS ARGUED THAT THE CREDIT BALANCE IN THE ACCOUNT OF M/S UJJWAL TRADING WAS MAINLY ON ACC OUNT OF TRANSACTIONS OF SALES AND PURCHASE OF SHARES ON THEIR BEHALF AND THE MARGIN MONEY DEPOSITS RECEIVED FROM THIS PARTY. THE COPIES OF TH E ACCOUNTS HAD BEEN SUBMITTED IN THE ASSESSMENT PROCEEDINGS. THE CONFIR MATIONS OF THE PARTY HAD BEEN FILED, THOUGH ITS PAN WAS NOT READILY AVAI LABLE AS IT HAS MOVED TO BALOTRA IN BADMER DISTRICT OF RAJASTHAN. HOWEVER , THE .CREDIT BALANCE OF THE SAID PARTY WAS SUBSEQUENTLY PAID AS PER THE FOL LOWING DETAILS: . OPENING BALANCE = RS.3024331/- LESS: PAYMENTS AS ON 1.4 2002: DATE AMOUNT CHEUQE NO. BANK 20.3,03. 1500000 595355 HDFC BANK 21/3/03 920354 585359 HDFC BANK . TOTAL = RS.2420354 LESS: ADJUSTED AGAINST BILLS = RS.6.03 LAKHS ITA NOS. 2858&2859/AHD/2008 CO NOS.258 & 259/AHD/2008 7 BALANCE AS ON. 31.3.03 = RS. NIL THUS THE PAYMENT WAS MADE IN SUBSEQUENT ASSESSMENT YEAR (S) BY ACCOUNT PAYEE CHEQUES DRAWN ON HDFC BANK AND/OR THR OUGH PURCHASES/ ADJUSTMENTS MADE ON BEHALF OF THIS PARTY. IT WAS FI NALLY SUBMITTED THAT THESE FACTS HAD BEEN APPRAISED DURING THE ASSESSMEN T PROCEEDINGS/APPEAL PROCEEDINGS FOR A.Y. 1999-2000. A COPY OF THE IMPUGNED ORDER OF THE CIT(A) HAS BEEN FILED. 5.1. THE CONTENTIONS / DETAILS ON RECORD WERE CAREF ULLY CONSIDERED. IT IS SEEN THAT THE TRANSACTIONS WERE RELATED TO BUSINESS . THE ADDITIONS MADE ON SIMILAR GROUNDS IN A.Y. 2002-03 HAD ALSO BEEN DE LETED BY CIT(A), THOUGH ON TECHNICAL GROUND. BUT FOR A.Y. 99-2000, T HE CIT(A) HAS DELETED, THE ADDITIONS AFTER QUOTING THE SUBSEQUENT REPAYMEN T AND THE FACTS OF THE CASE. THE FACTS AND CIRCUMSTANCES AND THE RELATED P ARTIES/TRANSACTIONS BEING THE SAME, THE ADDITIONS MADE FOR THESE TWO AS SESSMENT YEARS ARE DELETED IN LIGHT OF THE EARLIER APPEAL ORDER FOR A. Y. 1999-2000 AND THE DETAILS REGARDING THE REPAYMENTS. THE RELATED GROUN DS OF APPEAL ARE ALLOWED. 6. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LEARNED DR SUPPORTE D THE ORDER OF THE AO WHILE THE LEARNED AR ON BEHALF OF THE ASSESSEE S UPPORTED THE FINDINGS OF THE LEARNED CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THOUGH THE AO DOUBTED THE G ENUINENESS OF THE PAYMENTS, THE LD. CIT(A) FOUND THAT TRANSACTIO NS RELATED TO THE BUSINESS OF THE ASSESSEE AND THE SUBSEQUENT REPAYME NTS THROUGH CHEQUES, ESTABLISHED THEIR GENUINENESS. SIMILAR ADD ITIONS HAVE BEEN DELETED IN THE AYS. 1999-2000, 2000-01 & 2002-03 BY THE LD. CIT(A). AS ALREADY MENTIONED ABOVE, THE APPEAL AGAINST ORDE R OF THE LD. CIT(A) FOR THE AY 2000-01 HAS BEEN DISMISSED BY US DUE TO LOW REVENUE EFFECT. THE LD. DR APPEARING BEFORE US DID NOT PLACE ANY MATERIAL, CONTROVERTING THE AFORESAID FINDINGS OF T HE LD. CIT(A) NOR RAISED ANY DOUBTS ABOUT GENUINENESS OF THE SUBSEQU ENT REPAYMENTS. IN THESE CIRCUMSTANCES, ESPECIALLY WHEN THERE IS NO ITA NOS. 2858&2859/AHD/2008 CO NOS.258 & 259/AHD/2008 8 MATERIAL BEFORE US TO TAKE A DIFFERENT VIEW IN THE MATTER, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). THEREFORE, GROUND NO.1 RAISED IN THE APPEAL OF THE REVENUE FOR THE AY 2001-02 IS DISMISSED. 8. GROUND NOS. 2 & 3 IN THESE APPEALS OF THE REVENUE FOR THE TWO ASSESSMENT YEARS ,BEING GENERAL IN NATURE IN N ATURE, DO NOT REQUIRE ANY SEPARATE ADJUDICATION WHILE GROUND NOS. 2 TO 8 IN THE CO FOR THE AY 2000-01 & GROUND NOS. 1 TO 6 IN THE CO F OR THE Y 2001-02 HAVING NOT BEEN PRESSED BEFORE US BY THE LD. AR ON BEHALF OF THE ASSESSEE, ALL THESE GROUNDS ARE DISMISSED. 9. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE AND THE CO FILED BY THE ASSESSEE FOR THE AY 2001-02 ARE DIS MISSED WHILE CO FOR THE AY 2000-01 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30-09-2010 SD/- SD/- (MUKUL SHRAWAT) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 30-09-2010 COPY OF THE ORDER FORWARDED TO : 1. MONARCH PROJECT & FINMARKET LTD., A/62, PARISEEM A COMPLEX, OPP. LAL BUNGALOW, C. G. ROAD, AHMEDABAD 2. ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL C IRCLE-2(3), ROOM NO. 305, ANNEXE TO AAYAKAR BHAVAN, AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-III, AHMEDABAD 5. DR, BENCH-C, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY.R/AR, ITAT, AHMEDABAD