Lydia Construction Pvt. Ltd., Ahmedabad V. ITO, Ward-2(1)(3), Ahmedabad

ITA 297/AHD/2018

AI Insights

The case involves two appeals: one by the Revenue and another by the assessee, Lydia Construction Pvt. Ltd., against the order of the Commissioner of Income Tax (Appeals)-2, Ahmedabad. The appeals arose from an order passed by the ITO, Ward-2(1)(3), Ahmedabad under sections 143(3) r.w.s. 147 of the Income Tax Act, 1961 for the Assessment Year 2011-12. The Revenue's appeal was dismissed based on the monetary threshold for tax effect as per the CBDT Circular, while the assessee's appeal was dismissed due to the non-genuine nature of the share application money received from certain companies.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125406 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-05-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 06-02-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Tax effect; Accommodation entries; Tax effect
• Section: 15; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER & Ms. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./I. T. A. Nos. 297 & 729 /Ahd/2018 ( नधा रण वष / Ass es sment Years : 2011-12 ) L y di a Co ns t r uct io n Pvt . L t d. LL- 15 , Sa h j an a n d To w er , O p p. J i vr a j P ar k B u s S to p, J iv r aj C r os s Ro ad , A h me da ba d - 3 8 0 0 5 1 ITO War d 2( 1) ( 3 ) , A h m eda ba d बनाम/ Vs . & ITO W ar d 2 ( 1 ) (3 ), Ah m e da b a d L y di a C o ns t r u ct io n Pv t . L t d. LL - 1 5 , Sa hj a n an d To w e r , O p p . J i vr aj P a r k B u s Sto p , J iv r a j C r o s s R o a d, A h m e da b ad - 3 80 0 51 थायी लेखा सं./जीआइआर सं./P A N/ G I R N o . : A A B C L7 4 4 1 C (अपीलाथ /Appellant) . . ( यथ / Respondent) अपीलाथ ओर से /Appellant by : None यथ क ओर से/Respondent by : Shri A. P. Singh, CIT. D.R. & Shri Atul Pandey, Sr. DR स ु नवाई क तार ख / D a t e o f H e a r i ng 30/05/2023 घोषणा क तार ख /D a t e o f P ro n o u nc e me n t 31/05/2023 ITA Nos. 297 & 729/Ahd/2018 (Lydia Construction Pvt. Ltd.) A.Y.– 2011-12 - 2 - O R D E R PER Ms. MADHUMITA ROY - JM: Both the appeals filed by the assessee & Revenue are directed against the order dated 07.12.2017, passed by the Ld. Commissioner of Income Tax (Appeals)-2, Ahmedabad (in short ‘the CIT(A)) arising out of the order dated 15.09.2016 passed by the ITO, Ward-2(1)(3), Ahmedabad under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for Assessment Year 2011-12. 2. None appeared for the assessee when the matter was taken up for hearing. It further appears from the records that on very many occasions whenever the matter was fixed for hearing none appeared on behalf of the assessee neither any adjournment has been sought for except on 28 th September, 2022, when Shri Biren Shah appeared but the case was adjourned till 15.11.2022. After the said date, notices were again issued to the assessee informing the date of hearing of the matter but no assistance was rendered by the assessee neither by his Counsel. Even today, no adjournment application has been filed on behalf of the assessee. Having no other alternative, we have decided to proceed with the matter ex parte. ITA No. 729/Ahd/2018 (Revenue’s Appeal) 3. At the time of hearing, it is transpired that the appeal filed by the Revenue is hit by recently issued CBDT Circular No.17 of 2019 dated 08/08/2019 revising the previous thresholds pertaining to tax effects. It is inter alia noticed that the CBDT vide Instruction No. F. No. 279/Misc/M- ITA Nos. 297 & 729/Ahd/2018 (Lydia Construction Pvt. Ltd.) A.Y.– 2011-12 - 3 - 93/2018-ITJ dt. 20/08/2019 has observed that Circular No.17/2019 dated 08/08/2019 relating to enhancement of monetary limits is also applicable to all pending appeals. As per aforesaid Circular read with instruction, all pending appeals filed by Revenue are liable to be dismissed as a measure for reducing litigation where the tax effect does not exceed the prescribed monetary limit which is now revised at Rs.50 Lakhs. In the instant case, the tax effect on the disputed issues raised by the Revenue is stated to be not exceeding Rs.50 lakhs and therefore appeal of the Revenue is required to be dismissed in limine. 4. The Learned DR for the Revenue fairly admitted the applicability of the CBDT Circular No. 17 of 2019. Accordingly, appeal of the Revenue is dismissed as not maintainable. However, it will be open to the Revenue to seek restoration of its appeal on showing inapplicability of the aforesaid CBDT Circular in any manner. 5. In the result, the appeal of the Revenue is dismissed. ITA No. 297/Ahd/2018 (Assessee’s Appeal) 6. We have heard the Ld. DR who has vehemently argued in support of the order passed by the Ld. CIT(A) in confirming the impugned addition of Rs.1,45,10,000/-. We have further considered the order passed by the Ld. CIT(A), wherefrom, it appears that the Ld. AO has categorically mentioned that by way of an objection filed before the Ld. AO at the time of reopening of assessment, it was admitted by the assessee that it has received a sum of Rs.6,50,00,000/- only from the three parties, the details whereof is as follows: ITA Nos. 297 & 729/Ahd/2018 (Lydia Construction Pvt. Ltd.) A.Y.– 2011-12 - 4 - Name of Party Amount (Rs.) Ansh Merchandise Pvt. Ltd. 3,00,00,000 Casper Enterprises Pvt. Ltd. 1,00,00,000 Vanguard Jewels Limited 2,50,00,000 Total 6,50,00,000 7. Further that, out of the said amount of Rs.6,50,00,000/-, Rs.5,04,90,000/- was refunded within 15 days from the receipt by the appellant. In support of the same, the assessee submitted the annual account, bank statement. We find from the order passed by the Ld. CIT(A) that he has categorically examined this issue in the following manner: i. Out of the amount of Rs.3 Crores received by the assessee from M/s. Ansh Merchandise Pvt. Ltd., Rs.2 Crore was refunded back within 13 days from said receipt. The share application money received from the said parties is only, therefore, Rs.1 Crore, for which, share has been allocated in the subsequent year. The entire transaction is reflected in the bank statement which has also been reproduced by the Ld. CIT(A) at Page No. 32 of the order impugned. ii. Out of Rs.1Crore received from M/s. Casper enterprises Pvt. Ltd., the appellant returned back Rs.54,90,000/- within 11 days from the receipt. Thus, share application money received from the said party is only Rs.45,10,000/- which is reflecting in the bank statement as reproduced by the Ld. CIT(A) at Page No. 32 of the impugned order. iii. Out of Rs.5 Crore received from M/s. Vanguard Jewels Limited , the appellant received Rs.2,50,00,000/- as unsecured loan and has returned the entire amount within 15 days of receipt. Needless to mention that this above ITA Nos. 297 & 729/Ahd/2018 (Lydia Construction Pvt. Ltd.) A.Y.– 2011-12 - 5 - transaction is reflected in the bank statement of the said company reproduced at Page No.32 of the impugned order. 8. It was further narrated by the Ld. CIT(A) that as per balance sheet as on 31.03.2011, the share application money is, therefore Rs.1,45,10,000/- and the break up, whereof, is also reproduced at Page No.32 of the order impugned. Thus, effectively, the Company received share application money of Rs.5 Crore from M/s. Ansh Merchandise Pvt. Ltd. and Rs.45,10,000/- from M/s. Casper enterprises Pvt. Ltd. during the year under consideration and deployed in its business. It has further observed by the Ld. CIT(A) that these two companies have been engaged in providing accommodation entries and have been used to launder unaccounted money. These are shell companies and their names have recently been struck off from Register of Companies in cracking down the shell companies by Government. Under these particular facts and circumstances of the matter, the share application money totaling to Rs.1,45,10,000/- in respect of M/s. Ansh Merchandise Pvt. Ltd. and M/s. Casper enterprises Pvt. Ltd. as appearing in the balance sheet has been considered to be non-genuine and addition made to that extent has been, thus, confirmed by the Ld. CIT(A). 9. Having regard to the facts and circumstances of the case and elaborate discussions made by the Ld. CIT(A), upon examination of the issue which is also supported by cogent evidence, the contents whereof, were duly reproduced in the order passed by the Ld. CIT(A), we do not find any reason to interfere with the stand taken by the Ld. CIT(A) in holding the same as non- genuine in view of the finding of fact of these two entities having engaged in providing accommodation entries and have been used to launder unaccounted ITA Nos. 297 & 729/Ahd/2018 (Lydia Construction Pvt. Ltd.) A.Y.– 2011-12 - 6 - money and further striking off their names from the Register of Companies found to be just and proper, without any ambiguity, thus, the same is hereby confirmed. The appeal preferred by the assessee, thus, found to be devoid of any merit and hence, dismissed. 10. In the result, assessee’s appeal is dismissed. 11. In the combined result, Revenue’s appeal & assessee’s appeal; both are dismissed. This Order pronounced on 31/05/2023 Sd/- Sd/- (ANNAPURNA GUPTA) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 31/05/2023 True Copy S. K. SINHA आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं%धत आयकर आय ु 'त / Concerned CIT 4. आयकर आय ु 'त(अपील) / The CIT(A)- 5. *वभागीय -त-न%ध, आयकर अपील य अ%धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड3 फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील$य अ%धकरण, अहमदाबाद / ITAT, Ahmedabad