ACIT, Madurai V. M/s. Susee Vechicle Dealers P Limited, Tirunelveli

ITA 303/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57765 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-01-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 21-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R B NAIK
• Assessee Lawyers: G BASKAR
• Keywords: Unexplained investment; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 303/MDS/2011 (ASSESSMENT YEAR : 2005-06) THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE III, MADURAI. (APPELLANT) V. M/S SUSEE VEHICLE DEALERS P. LIMITED, 184/2, TRIVANDRAM ROAD, VANNARAPETTAI, TIRUNELVELI. PAN : AAHCS8801K (RESPONDENT) APPELLANT BY : SHRI R.B. NAIK, CIT-DR RESPONDENT BY : SHRI G. BASKAR, ADVOCATE DATE OF HEARING : 10.01.2012 DATE OF PRONOUNCEMENT : 13.01.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE, IT HAS RAISE D TWO GRIEVANCES. FIRST ONE IS THAT LD. CIT(APPEALS) DEL ETED AN ADDITION OF ` 5,37,600/- MADE BY THE A.O., CONSIDERING EXCESS AMO UNT COLLECTED AT THE TIME OF REGISTRATION OF VEHICLES BY THE ASSESSE E, AND SECOND ONE I.T.A. NO. 303/MDS/11 2 IS ON DELETION OF ADDITION OF ` 94,83,334/- MADE BY THE A.O., CONSIDERING INVESTMENT IN SHARE CAPITAL MADE BY SHR I R. PURUSHOTHAMAN TO BE UNEXPLAINED. 2. IN SO FAR AS FIRST ISSUE IS CONCERNED, WE FIND T HAT LD. CIT(APPEALS) HAD FOLLOWED DECISION OF THIS TRIBUNAL IN I.T.A. NOS.1378 TO 1380 DATED 29.1.2010. NOTHING HAS BEEN BROUGHT ON RECORD BY THE LEARNED D.R. TO TAKE A DIFFERENT VIEW HERE. 3. VIS--VIS THE SECOND ISSUE, WE FIND THAT THIS TR IBUNAL HAD ALREADY CONSIDERED A SIMILAR ADDITION MADE IN THE C ASE OF SHRI R. PURUSHOTHAMAN (HUF) FOR INVESTMENT MADE IN THE SHAR E CAPITAL OF SAME ASSESSEE IN I.T.A. NO. 1454 AND 1455/MDS/2010 DATED 17.10.2011. IT WAS HELD WITH REGARD TO THIS ISSUE ON UNEXPLAINED INVESTMENT IN SHARE CAPITAL, THAT THE CAPITAL INTRO DUCTION IN ASSESSEES COMPANY WAS OUT OF TRANSFER OF STOCK TRADING ON CRE DITORS, DEBTORS, CASH, BANK BALANCE. THERE IS A SPECIFIC FINDING TH AT THERE IS NO CASH FUND DIRECTLY INTRODUCED IN THESE COMPANIES. RELEV ANT PARA 6 OF THE ORDER OF TRIBUNAL MENTIONED SUPRA, IS REPRODUCED HE REUNDER FOR BREVITY:- I.T.A. NO. 303/MDS/11 3 6. WE HAVE GONE THROUGH THE RECORDS AND HAVE FOUND THAT THE ASSESSING OFFICER HAS SIMPLY CONSIDERED THE SPE CIAL AUDIT REPORT OBTAINED U/S 142(2A) AND HAS ALSO FAILED TO CONSIDER THE DISCONTINUATION OF BUSINESS OF THE FIRM IN WHICH TH E ENTIRE ASSETS BELONG TO THE ASSESSEE AND HIS WIFE AND SON AS STAT ED ABOVE. THE ASSESSING OFFICER HAS ALSO FAILED TO CONSIDER T HE SPECIAL AUDIT REPORT WHICH EXPLAINED THE FACTUAL POSITION O F THIS CASE. STOCKS OF THE FIRM WERE SOLD AND TRANSFERRED TO THE ABOVE STATED THREE PRIVATE LIMITED COMPANIES. THE SUNDRY DEBTORS AND SUNDRY CREDITORS ALONGWITH THE AVAILABLE CASH AND B ANK BALANCES WERE TRANSFERRED TO THE RESPECTIVE PRIVATE LIMITED COMPANIES FROM THE RESPECTIVE DIVISIONS. THE CAPITAL CONTRI BUTION IN THE PRIVATE LIMITED COMPANIES IS ONLY BY WAY OF SALE OF VEHICLES AND TRANSFER OF DEBTORS, CREDITORS AND CASH/BANK BALANC ES. THE NECESSARY ENTRIES ARE RECORDED IN THE BOOKS OF THE FIRM AS WELL AS THAT OF THE COMPANIES AND NO DIRECT CASH/FUNDS A RE INTRODUCED BY THIS ASSESSEE IN THE SAID PRIVATE LIMITED COMPAN IES. THE TRANSFER IS ONLY BY JOURNAL ENTRIES AND TRANSFER EN TRIES IN THE BOOKS OF THE FIRM AND IN THE BOOKS OF THE COMPANIES . THESE FACTS WHICH ARE VERY RELEVANT AND IMPORTANT FOR THE DECISION OF THE IMPUGNED ISSUE WERE NOT AT ALL CONSIDERED PROPE RLY BY THE ASSESSING OFFICER. ON THE CONTRARY, THESE EVIDENCE (S) HAVE BEEN CONSIDERED IN THEIR CORRECT PERSPECTIVE BY THE LD. CIT(A). THE DEPARTMENT COULD NOT DISPUTE THEE FACTS WHICH HAVE BEEN CULLED OUT BY US AND MENTIONED ABOVE. THE SPECIAL AUDITOR S GAVE FINDING IN THEIR REPORT. THE SPECIAL AUDIT WAS ORD ERED BY THE ASSESSING OFFICER TO FIND OUT WHETHER THERE WAS ANY UNEXPLAINED CASH OR FUNDS INTRODUCED BY THE ASSESSEE IN THE COM PANIES OR NOT. THERE WAS NO FUNDS TRANSFER AND THE CAPITALS INTROD UCED WERE ONLY BY JOURNAL ENTRIES. THE FACT THAT THE ASSESSE E IN HIS HUF CAPACITY WAS THE SHAREHOLDER IN THE THREE PRIVATE L IMITED COMPANIES AND NOT IN HIS INDIVIDUAL CAPACITY BECAUS E HE HAS CONSIDERED THESE INVESTMENTS IN THE ASSESSMENT OF ASSESSEE- HUF. THE SAME INVESTMENT WAS NOT CONSIDERED IN HIS INDIVIDUAL ASSESSMENT AND ADDITIONS WERE MADE. THIS IS SOMETH ING BEYOND I.T.A. NO. 303/MDS/11 4 THE SCOPE OF INCOME-TAX ACT, 1961 AS IT AMOUNTS TO DOUBLE TAXATION OF THE SAME INCOME. THE PERUSAL OF THE REL EVANT PAGES OF PAPER BOOK FILED BY THE ASSESSEE AND THE OTHER R ECORDS INCLUDING THE ASSESSMENT RECORDS IN THE CASE OF COM PANIES AND ASSESSEE-HUF, AND THE PERUSAL OF SPECIAL AUDIT REPO RT, IT BECOMES CRYSTAL CLEAR THAT THERE IS NO DIRECT CASH OR FUNDS INTRODUCED BY THE ASSESSEE IN THESE THREE COMPANIES . WHATEVER MAY BE THE OTHER REASON OF DISCONTINUATION OF THE F IRM, BUT ON RECORD, AS PER THE EVIDENCE WHICH EVINCE DISPUTE BE TWEEN THE PARTNERS OF THE ERSTWHILE FIRM, IT IS PROVED THAT T HERE WAS SOME MISUNDERSTANDING OR QUARREL AMONGST THE PARTNERS OF THE FIRM AND THAT IS WHY THE BUSINESS OF THE FIRM COULD NOT BE CONTINUED. THUS, WE DO NOT FIND ANY EVIDENCE TO CONCLUDE THAT THIS ASSESSEE HAS INTRODUCED SHARE CAPITAL OF ` 2.05 CRORES IN THESE COMPANIES BY WAY OF CASH/FUNDS BELONGING TO HIM. BUT IT IS P ROVED ON RECORD THAT THE CAPITAL INTRODUCTION IN THE PRIVATE LIMITE D COMPANIES WAS OUT OF TRANSFER OF STOCK, DEBTORS AND CREDITORS, CA SH AND BANK BALANCES ONLY. THE SPECIAL AUDITORS REPORT ALSO SU PPORTS THE ASSESSEES VERSION AS IN THAT REPORT, THE AUDITORS HAVE CATEGORICALLY GIVEN A FINDING THAT NO SUCH CASH OR FUND BELONGING TO THE ASSESSEE WAS DIRECTLY INTRODUCED IN THESE CO MPANIES. HENCE, HOW CAN IT BE CONCLUDED THAT THE UNEXPLAINED INCOME OF THE ASSESSEE WAS INTRODUCED AS CAPITAL IN THESE COM PANIES. IN OUR CONSIDERED OPINION, THE DELETION OF THE IMPUGNE D ADDITION IS CORRECT AND HAS TO BE APPROVED. ACCORDINGLY, THE G ROUNDS RAISED BY THE REVENUE FAIL. 4. THERE BEING NO FUND INTRODUCTION MADE BY THE ASS ESSEE, HERE ALSO IT CANNOT BE SAID THAT THERE WAS ANY UNEXPLAIN ED INVESTMENTS. LD. CIT(APPEALS) RIGHTLY RELIED ON THE DECISION IN THE CASE OF SHRI R. PURUSHOTHAMAN (HUF) WHILE DELETING THE ADDITION REL ATING TO I.T.A. NO. 303/MDS/11 5 UNEXPLAINED INVESTMENT IN SHARE CAPITAL. THUS, EFF ECTIVELY WE DO NOT FIND ANY MERIT IN THE APPEAL FILED BY THE REVENUE. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE STAND S DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 13 TH JANUARY, 2012. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 13 TH JANUARY, 2012. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-II, MADURAI (4) CIT, CENTRAL RANGE, CHENNAI (5) D.R. (6) GUARD FILE