The DCIT, Circle-4, Baroda V. M/s. Pannax Appliances Pvt.Ltd., Baroda

ITA 3010/AHD/2011

• Counselvise Citation: 301020514 RSA 2011
• Duration Of Justice: 3 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 20-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 02-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Capital receipt
• Section: 50C; 115JB; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHRI S.S. GODARA JUDICIAL MEMBER ITA NO . 3010 /AHD/20 1 1 A. Y . 200 6 - 0 7 DY. CIT, BARODA. VS M/S. PANAX APPLIANCES PVT. LTD., BARODA. PAN: AABCP 8171B (APPELLANT) (RESPONDENT) REVENUE BY : SHRI P.L. KUREEL , SR.D.R. ASSESSEE(S) BY : NONE / DATE OF HEARING : 20 / 0 4 /201 5 / DATE OF PRONOUNCEMENT: 24 / 04 /201 5 / O R D E R PER: S. S. GODARA , JUDICIAL MEMBER THIS ASSESSEE S A PPEAL FOR A.Y.200 6 - 0 7 , ARISE S FROM ORDER OF CIT (A) - II I , B ARODA DATED 29 . 0 9 .20 1 1 IN CASE APPEAL NO. CAB/A/(A)III - 10/10 - 11 , IN PROCEEDINGS U/S. 143 (3) R.W.S. 147 OF THE INCOME TAX ACT IN SHORT THE ACT . 2. THE REVENUE S SUBSTANTIVE GROUNDS RAISED IN THE APPEAL READS AS FOLLOWS: 1 . ON THE FACTS AND IN THE CIRCUMS TANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 30,39,030 / - MADE U/S . 69B OF THE ACT IN THE HANDS OF THE ASSESSEE BEING A PURCHASER OF THE PROPERTY, HOLDING THAT THE PROVISIONS OF SECTION 50C OF THE ACT IS ONLY AP PLICABLE IN THE HANDS OF THE TRANSFEROR AND NO THE PURCHASER DESPITE THE FACT THAT THE ADDITION WAS MADE U/S ITA NO. 3010/ /AHD /20 1 1 M/S. PANAX APPLIANCES P. LTD. FOR A.Y. 20 0 6 - 0 7 - 2 - 69B OF THE ACT ON ACCOUNT OF AMOUNT OF INVESTMENT, NOT FULLY DISCLOSED IN THE BOOKS OF ACCOUNT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 21,70,197/ - BEING THE AMOUNT OF LOAN WAIVED BY THE BANK AND ASSESSEE COMPANY TRANSFERRED AND CREDITED THE AMOUNT IN ITS CAPITAL RESERVE ACCOUNT TREATING THE SAME AS CAPITAL RECEIPT. 3 . IN THE COURSE OF HEARING, THE APPELLANT - REVENUE STRONGLY SUPPORTS THE ASSESSING OFFICER S ACTION IN MAKING BOTH THE IMPUGNED ADDITIONS. THE ASSESSEE IS NOT PRESENT DESPITE SERVICE OF NOTICE DATED 05.03.2015. HENCE, IT IS PROCEEDED EX - PARTE. 4. THE AS SESSEE - COMPANY HAD FILED ITS RETURN ON 26.12.2006 ADMITTING INCOME OF RS.31,96,023/ - . THE SAME WAS SUMMARILY PROCESSED. THEREAFTER, THE ASSESSING OFFICER FRAMED A REGULAR ASSESSMENT ON 28.11.2008 ASSESSING TAXABLE TOTAL INCOME OF RS.34,49,665/ - . THE SAME W AS COMPUTED TO N IL AMOUNT AFTER SETTING OFF LOSS ES OF EARLIER YEARS. T HE ASSESSING OFFICER TO COMPUTE BOOK PROFITS U/S. 115JB OF RS.10,92,049/ - . HE ALSO PASSED RECTIFICATION ON 16.02.2009 RE - COMPUTING BOOK PROFITS TO RS.10,76,220/ - . THEREAFTER, HE FORMED REASONS TO BELIEVE THAT THE ASSESSEE HAD PURCHASED AN IMMOVABLE PROPERTY . THE CONCERNED STAMP DUTY VALUATION AUTHORITY HAD SHOWN VALUE OF LAND AND BUILDING MORE THAN THAT STATED IN THE SALE DEED TO THE TUNE OF RS.30,39,030/ - . THE ASSESSING OFFICER WAS OF T HE OPINION THAT THOUGH THE CONSEQUENTIAL CAPITAL GAINS HAD ARISEN IN THE SELLER S ITA NO. 3010/ /AHD /20 1 1 M/S. PANAX APPLIANCES P. LTD. FOR A.Y. 20 0 6 - 0 7 - 3 - HANDS, NECESSARY ADJUSTMENT HAD TO BE MADE IN ASSESSEE S CASE TO BE TAXED AS UNEXPLAINED INVESTMENT U/S.69B BEING NOT SHOWN IN THE BOOKS . 5 . THE ASSESSING OFFICER ALSO COME ACROSS ASSESSEE S LOAN BALANCE OF RS.54,80,014/ - WITH SWAMINARAYAN BANK . THIS BANK WENT INTO LIQUIDATION. ITS LIQUIDATOR SETTLED THE SAID LOAN FOR RS.33,09,817/ - . THE ASSESSEE TRANSFERRED THIS SUM IN CAPITAL RESERVE ACCOUNT. THE ASSESSING OFFICER SOUGHT TO INVOKE SECTION 41(1) OF THE ACT AS CESSATION OF LIABILITY. HE ISSUE D SECTION 148 NOTICE ON 15.03.2010. THE ASSESSEE OBJECTED VALIDITY OF THE REOPENING. THE ASSESSING OFFICER REJECTED THE SAME BY PASSING HIS ORDER DATED 28 .12.2010. THEREAFTER, HE QUOTED SE C.50C AND ADDED THE AFORESAID SUM OF RS.30,39,030/ - AS UNEXPLAINED INVESTMENT . 6 . THE ASSESSEE PREFERRED AN APPEAL. THE CIT(A) OBSERVES THAT SECTION 50C OF THE ACT IS SPECIFIC PROVISION MEANT TO COMPUTE CAPITAL GAINS IN THE HAND OF THE TRANSFEROR AND NOT TRANSFEREE. HE HOLDS THAT ASSESSEE HAD PURCHASED THE LAND AND BUILDING IN QUESTION IN ASSESSMENT YEAR 2000 - 01 . SO NO ADDITION COULD HAVE BEEN MADE IN THE IMPUGNED ASSESSMENT YEAR 2006 - 07. THEREFORE, THE REVENUE IS IN APPEAL. ITA NO. 3010/ /AHD /20 1 1 M/S. PANAX APPLIANCES P. LTD. FOR A.Y. 20 0 6 - 0 7 - 4 - 5. WE HAVE HEARD THE REVENUE A ND GONE THROUGH THE LOWER FINDINGS . RELEVANT FACTS STAND NARRATED HEREINABOVE. THE ASSESSEE IS PURCHASER OF THE LAND AND BUILDING IN QUESTION. THERE HAS BEEN A DIFFERENCE OF RS.30,39,030/ - IN THE ACTUAL PURCHASE PRICE AND THE ONE DETERMINED BY THE STAMP AU THORITIES . THE ASSESSING OFFICER ADDED THIS SUM AS ASSESSEE S UNEXPLAINED INVESTMENT U/S.69B FOR NOT HAVING RECORDED IT . SECTION 50C IS RELEVANT FOR COMPUTING CAPITAL GAIN ARISING FROM TRANSFER OF CAPITAL ASSET S . S UCH GAINS AR E TO BE ASSESSED ONLY IN THE HANDS OF THE TRANSFEROR. WE REI TERATE THAT PRESENT ASSESSEE IS THE TRANSFEREE. THEREFORE, WE OBSERVE THAT SECTION 50C IS SPECIFIC PROVISION IN A FISCAL STATUTE . ITS OPERATION CANNOT BE WIDENED TO INCLUDE TRANSFEREE SINCE WORDS IN A FISCAL STATUTE HA VE TO BE LITERALLY INTERPRETED . THUS, WE AFFIRM THE CIT(A) S FINDING S ON THIS S CORE ALONE . T HE REVENUE S CORRESPONDING GROUND IS REJECTED . 6. THIS LEAVES US WITH REVENUE S SECOND GROUND REGARDING DELETING THE ADDITION OF RS.21,70,197 / - U/S.41(I) (SUPRA) . THE ASSESSING AUTHORITY HAD MADE THE IMPUGNED ADDITION ON THE GROUND THAT THE ASSESSEE S LOAN LIABILITY WAIVED OF (SUPRA) HAD CEASED TO EXIST . HOWEVER, THERE IS NO FINDING FORTHCOMING FROM ASSESSMENT FRAMED OR LOWER APPELLATE ORDER CL ARIFYING A SPECIFIC INTEREST COMPONENT FORMING PART OF THE SUM IN QUESTION. IN OUR ITA NO. 3010/ /AHD /20 1 1 M/S. PANAX APPLIANCES P. LTD. FOR A.Y. 20 0 6 - 0 7 - 5 - CONSIDERED OPINION , IF THE ASSESSEE HAS ALREADY CLAIM THE SAID INTEREST COMPONENT AS DEDUCTION IN THE PRECEDING ASSESSMENT YEAR AND THE VERY AMOUNT IS WAIVED LATER ON, IT AM OUNTS TO PROFITS U/S.41 (I) AS CESSATION OF A LIABILITY. THUS , WE REMIT THIS ISSUE BACK TO THE ASSESSING AUTHORITY FOR ADJUDICATION AFRESH AS PER LAW. IN VIEW OF OUR DISCUSSION, T HE ASSESSEE WOULD BE AT LIBERTY TO PLACE ON RECORD ALL NECESSARY DETAILS. THE REVENUE S GROUND IS ACCEPTED FOR STATISTICAL PURPOSES. 7. THE REVENUE S APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON THIS DAY, THE 24 APRIL, 2014 AT AHMEDABAD. SD/ - SD/ - ( PRAMOD KUMAR ) ( S.S. GODARA ) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD; DATED 24 / 0 4 / 20 1 5 PRABHAT KR. KESARWANI , SR. P . S . S / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD