Neelkamal Cineplex Pvt. Ltd., Delhi V. ITO, New Delhi

ITA 3126/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5365 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 31-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K CHADHA
• Keywords: Business income; Opportunity of being heard; Additional evidence; Assessment record; Set aside
• Section: 69C; 143(3); 133(6); 201; 13; 145(3); 68; 145; 144

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO. 3126 /DEL/201 6 ASSESSMENT YEAR : 20 11 - 12 NEELKAMAL CINEPLEX PVT. LTD., 7, LGF, SHRESHTHA VIHAR, DELHI. PAN: AA CCN3668G VS ITO, WARD - 13(2), NEW DELHI. (APP ELL A NT ) (RESPONDENT) A SSESSEE BY : SHRI P.C. YADAV, ADVOCATE RE VENUE BY : SHRI V.K. CHADHA, SR. DR DATE OF HEARING : 17 . 1 2 . 201 9 DATE OF PRONOUNCEMEN T : 18 . 02 . 201 9 ORDER PER R. K. PANDA, AM : TH IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 31.03.2016 OF THE CIT(A) - 2 0 , NEW DELHI , RELATING TO ASSESSMENT YEAR S 20 11 - 12 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A COMPANY AND ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPERS. IT FILED ITS RETURN OF INCOME ON 24 TH MARCH, 2012 DECLARING THE TOTAL INCOME AT RS.1,15,810/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED FROM THE BALANCE SHEET OF THE ASS ESSEE THAT SHARE APPLICATION MONEY OF RS.4,02,50,000/ - WAS PENDING FOR ALLOTMENT OUT OF WHICH AN ITA NO. 3126 /DEL/201 6 2 AMOUNT OF RS.77 LAKH WAS RECEIVED DURING EH YEAR AND RS.3,25,00,000/ - WAS SHOWN AS OUTSTANDING AS ON 01.04.2010. THE AO ASKED THE ASSESSEE TO FILE THE CONFIRM ATION OF SHARE APPLICATION MONEY PENDING FOR ALLOTMENT INCLUDING THOSE RECEIVED DURING THE YEAR ALONG WITH ITR, BALANCE SHEET AND BANK STATEMENT WITH SOURCE TO PROVE THE IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF THE PARTIES AND ALSO FILE JUSTIFICATION FOR NON - ALLOTMENT OF SHARES. THE ASSESSEE FILED THE FOLLOWING CHART: - PARTICULARS OPENING BALANCE 01.04.2010 ADDITION CLOSING BALANCE AS ON 31.03.2011 RAMA PLY BOARD INDIA PRIVATE LIMITED 57,00,000 SATKAR FIN LEASE PRIVATE LIMITED 40,00,000 ZAYATT CONSTRUCTION PRIVATE LIMITED 10,00,000 TOTAL AMOUNT RECEIVED DURING PERIOD 01.04.2010 31.03.2011 325,50,000 107,00,000 432,50,000 3. IN ABSENCE OF FILING OF ANY CONFIRMATION, ADDRESS, IT PARTICULARS AND BANK STATEMENT TO PROVE THE IDENTITY, GENUINEN ESS AND CREDIT WORTHINESS OF THE PARTIES FROM WHOM SHARE APPLICATION MONEY WAS RECEIVED, THE AO MADE ADDITION OF RS.1,07,00,000/ - TO THE TOTAL INCOME OF THE ASSESSEE. 4. SIMILARLY, THE AO OBSERVED THAT THERE IS DIFFERENCE IN OPENING STOCK AND CLOSING STOC K SINCE THE OPENING STOCK AS ON 01.04.2010 WAS APPEARING AT RS.12,15,76,258/ - WHEREAS THE CLOSING STOCK SHOWN AS ON 31.03.2010 WAS RS.11,38,67,290/ - . HE, THEREFORE, ASKED THE ASSESSEE TO SUBSTANTIATE THE DIFFERENCE OF RS.77,08,968/ - . IT WAS EXPLAINED BY THE ASSESSEE THAT DURING THE YEAR ITA NO. 3126 /DEL/201 6 3 EXPENDITURE OF RS.77,08,967/ - WAS INCURRED FOR THE COMPLETION OF MALL WHICH WAS ADDED TO THE OPENING STOCK WHILE FILING THE RETURN OF INCOME ELECTRONICALLY. 5. HOWEVER, THE AO WAS NOT SATISFIED WITH THE ARGUMENT ADVANCED BY THE ASSESSEE. ACCORDING TO HIM, AFTER AN EXPENDITURE WAS INCURRED DURING THE YEAR, THE SAME SHOULD HAVE BEEN BOOKED AS ON DATE OF INCURRING THE EXPENDITURE AND NOT IN THE OPENING STOCK AS COMING FORWARD FROM THE PREVIOUS YEAR. REJECTING THE VARIOUS EX PLANATIONS GIVEN BY THE ASSESSEE, THE AO MADE AN ADDITION OF RS.77,08,967/ - TO THE TOTAL INCOME OF THE ASSESSEE. 6. SINCE THERE WAS DIFFERENCE IN THE FIGURE OF SHARE APPLICATION MONEY RECEIVED AND OPENING STOCK AND CLOSING STOCK, THE AO HELD THAT THE BOOK S OF ACCOUNT ARE NOT RELIABLE. HE, THEREFORE, INVOKED THE PROVISIONS OF SECTION 145 OF THE IT ACT AND ESTIMATED THE NET INCOME OF THE ASSESSEE AT RS.11,17,600/ - BEING 8% OF GROSS RECEIPT OF RS.1,39,70,000/ - DECLARED IN THE ITR FORM. SINCE THE ASSESSEE CO MPANY HAS DECLARED THE NET PROFIT OF RS.1,15,812/ - , THE AO MADE AN ADDITION OF RS.10,01,788/ - TO THE TOTAL INCOME OF THE ASSESSEE BEING THE DIFFERENCE. THE AO, ACCORDINGLY, COMPLETED THE ASSESSMENT AT A TOTAL INCOME OF RS.1,96,55,650/ - AS AGAINST THE RETU RNED INCOME OF RS.2,44,892/ - 7. IN APPEAL, THE LD.CIT(A) RESTRICTED THE ADDITION OF RS.1,07,00,000/ - TO RS.57 LAKHS BEING THE AMOUNT RECEIVED FROM RAMA PLY BOARD INDIA PRIVATE LIMITED. SO FAR AS THE ADDITION OF RS.77,08,967/ - IS CONCERNED, THE LD.CIT(A) UPHELD THE ACTION OF THE AO BY OBSERVING AS UNDER: - ITA NO. 3126 /DEL/201 6 4 {5.3} I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND THE ASSESSMENT ORDER. I HAVE FURTHER CONSIDERED THAT THE CLOSING STOCK AS PER AUDITED BALANCE SHEET IS DECLARED AT RS.11,38,67,290/ - AS ON 3 1/03/2010. WHEREAS OPENING STOCK AS ON 01/04/2010 IS DECLARED AT RS.12,15.76,258/ - . THE APPELLANT HAS CLAIMED THAT IT IS AFTER ADJUSTMENT OF EXPENDITURE INCURRED. HOWEVER, I HAVE ALSO NOTED THAT THE DETAILS OF EXPENDITURE AND THE DATE OF INCURRING SUCH EXP ENDITURE ALONG WITH THE PURPOSE IS NOT GIVEN. IN ABSENCE OF THE EVIDENCES, THE A.O IS JUSTIFIED IN MAKING AN ADDITION OF RS.77,08,967/ - AS SUCH CHANGES IN STOCK WOULD LEAD TO DISTURB THE FINANCIAL RESULTS. THEREFORE. I AM NOT INCLINED TO INTERFERE WITH THE DECISION OF THE A.O. ACCORDINGLY, THE APPELLANT S GROUND OF APPEAL IS DISMISSED ON THIS ISSUE. 8. SO FAR AS THE ESTIMATION OF GP AT 8% IS CONCERNED, THE LD.CIT(A UPHELD THE ACTION OF THE AO BY OBSERVING AS UNDER: - IN VIEW OF THE ABOVE MENTIONED FACTS WHEN BOOKS OF ACCOUNTS AND RELATED DOCUMENTS WERE NOT PRODUCED DURING THE ASSESSMENT PROCEEDINGS, THE A.O WAS LEFT WITH NO OPTION BUT TO COMPLETE THE ASSESSMENT ON THE BASIS OF MATERIAL ON RECORDS. THEREFORE, A.O IS FULLY JUSTIFIED IN REJECTION THE BOOKS O F WHICH HAS NEVER BEEN PRODUCED BEFORE HIM. IN VIEW OF THE FACTUAL MATRIX OF THE CASE, I AM NOT INCLINED TO INTERFERE WITH THE DECISION OF THE A.O TO ESTIMATE THE INCOME AT 8% AS PER THE INCOME DECLARED BY THE ASSESSES IN THE RELEVANT FIELD OF BUSINESS. AC CORDINGLY, THE GROUND OF APPEAL ON THIS ISSUE IS DISMISSED. 9. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS: - 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LD . CIT (APPEAL) IS BAD BOTH IN THE EYES OF LAW AND ON FACTS. 2. THAT THE LD. CIT (APPEAL) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS. 77,08,967/ - ON ACCOUNT OF ALLEGED DIFFERENCE IN OPENING STOCK AS COMPARED WITH CLOSING STOCK OF PREVIOUS YEAR. 3. THAT THE LD. CIT (APPEAL) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS 10,01,788/ - BEING THE ESTIMATED BUSINESS INCOME OF THE ASSESSEE AT 8% OF THE TOTAL SALES FOR THE YEAR UNDER CONSIDERATION AND UPHOLDING THE REJEC TION OF BOOKS OF ACCOUNTS BY AO . 4. THAT THE LD. CIT (APPEAL) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS. 57,00,000/ - ON ACCOUNT OF FRESH SHARE APPLICATION MONEY. ITA NO. 3126 /DEL/201 6 5 5. THAT THE IMPUGNED APPELLATE ORDER IS ARBITRARY, ILLEGAL, BAD IN L AW AND IN VIOLATION OF RUDIMENTARY PRINCIPLES OF CONTEMPORARY JURISPRUDENCE. 6. T HAT THE APPELLANT CRAVES LEAVE TO ADD/ALTER ANY/ALL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 10. GROUNDS OF APPEAL NO.1, 5 AND 6 BEING GENERAL IN NATURE ARE DISMISSED. 11. SO FAR AS GROUND OF APPEAL NO.2 IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT BOTH THE AUTHORITIES HAVE FAILED TO APPRECIATE THAT THE ASSESSEE WAS FOLLOWING REVENUE RECOGNITION METHOD AND THE DIFFERENCE HAS HAPP ENED DUE TO THE FORMAT OF ITR IN WHICH THE RETURN OF INCOME HAS TO BE SUBMITTED. HE SUBMITTED THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED WHICH REFLECT THE CORRECT FIGURE OF THE OPENING AND CLOSING STOCK. REFERRING TO PAGE 36 OF THE PAPER BOOK, SCHEDULE G , THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE SAME AND SUBMITTED THAT IF THIS PAGE IS READ WITH PAGE 109 OF THE PAPER BOOK IT WILL PROVE THAT THE FIGURES WERE WRONGLY ENT E RED IN THE RETURN OF INCOME. HE SUBMITTED T HAT THE ABOVE FACT WAS BROUGHT TO THE NOTICE OF THE AO WHICH HE HAS IGNORED. HE SUBMITTED THAT THE ENTRIES IN THE BOOKS OF ACCOUNT ARE NOT SACROSANCT FOR DETERMINING THE INCOME OF THE ASSESSEE. HE FURTHER SUBMITTED THAT IT IS ALSO AN ADMITTED FACT THAT T HE ASSESSEE WAS HAVING NO UNACCOUNTED STOCK. HE SUBMITTED THAT THE COMPLETE DETAILS OF INVENTORY WAS PROVIDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH WAS MATCHING WITH THE AUDITED BOOKS AND, THEREFORE, MERELY BECAUSE THE EXPENSES HAVE BEEN WRONG LY ADDED IN THE OPENING STOCK, THE SAME DOES NOT MEAN THAT THE ASSESSEE HAS NOT ITA NO. 3126 /DEL/201 6 6 INCURRED THESE EXPENSES. HE SUBMITTED THAT THE LD.CIT(A) WHILE ACCEPTING THE CONTENTION OF THE ASSESSEE SUSTAINED THE ADDITION ON THE GROUND THAT DATE AND PURPOSE OF THESE EXP ENSES ARE NOT CLEAR. HE FAILED TO APPRECIATE THAT THIS FIGURE IS OF THE EXPENSES INCURRED FOR CARRYING OUT THE CONSTRUCTION OF THE PROPERTIES. THE HEADING OF THESE EXPENSES, THUS, SUGGESTS THAT THE EXPENSES ARE RELEVANT FOR CARRYING OUT THE BUSINESS OF RE AL ESTATE. HE FURTHER SUBMITTED THAT NO SEPARATE ADDITION U/S 69C HAS BEEN MADE BY THE AO VIS - - VIS THE EXPENSES OF RS.77,08,967/ - . THE LD. COUNSEL FOR THE ASSESSEE FILED A CHART CONTAINING THE NET PROFIT RATE FOR THE LAST FOUR YEARS INCLUDING THE YEAR U NDER APPEAL. WITHOUT PREJUDICE TO THE ABOVE, HE SUBMITTED THAT IT IS THE SETTLED PROPOSITION OF LAW THAT ONCE THE BOOKS ARE REJECTED, THEN, THE SAME BOOKS CANNOT BE VISITED AGAIN FOR MAKING OTHER ADDITIONS. FOR THE ABOVE PROPOSITION, HE RELIED ON THE DEC ISION OF THE RAJASTHAN HIGH COURT IN THE CASE OF MALPANI HOUSE OF STONES VS. CIT (2017) 395 ITR 385 (RAJ). 12. SO FAR AS GROUND OF APPEAL NO.3 IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO HAS ADOPTED THE NET PROFIT RATE OF 8% WHI CH HAS BEEN UPHELD BY THE CIT(A). HE SUBMITTED THAT IN THE LINE OF BUSINESS OF THE ASSESSEE AND CONSIDERING THE PAST RESULTS, THE NET PROFIT CANNOT EXCEED 2%. HE ACCORDINGLY SUBMITTED THAT THE NET PROFIT RATE ADOPTED BY THE AO AND THE CIT(A) AT 8% SHOULD BE REDUCED TO 2%. ITA NO. 3126 /DEL/201 6 7 13. THE LD. DR, ON THE OTHER HAND, HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE ARE NOT AT ALL RELIABLE. THE AO HAS RIGHTLY REJECTED THE BOOK RESULTS AND HAS GONE FOR EST IMATION OF PROFIT AT 8%. SO FAR AS THE ADDITION OF RS.77,08,967/ - IS CONCERNED, HE SUBMITTED THAT THERE IS DIFFERENCE IN THE CLOSING STOCK OF THE PRECEDING YEAR VIS - - VIS THE OPENING STOCK OF THE CURRENT YEAR WHICH THE ASSESSEE COULD NOT RECONCILE. THERE FORE, THE LD. CIT(A) WAS JUSTIFIED IN SUSTAINING THE ADDITION MADE BY THE AO. 14. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO C ONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE AO, IN THE INSTANT CASE, COMPLETED THE ASSESSMENT U/S 144 OF THE IT ACT WHEREIN, APART FROM MAKING THE ADDITION U/S 68 OF THE ACT, MADE ADDITION OF RS.77,08,967/ - BEING THE DIFFERENCE IN THE CLO SING STOCK OF THE PRECEDING YEAR AND OPENING STOCK OF THE CURRENT YEAR AND MADE FURTHER ADDITION OF RS.10,01,788/ - BEING THE DIFFERENCE IN THE NET PROFIT ADOPTED BY HIM AT 8% OF THE TOTAL RECEIPTS AND THE NET PROFIT DECLARED BY THE ASSESSEE. WE FIND, THE LD.CIT(A) UPHELD THE ACTION OF THE AO THE REASONS FOR WHICH HAVE ALREADY BEEN REPRODUCED IN THE PRECEDING PARAGRAPHS. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT ONCE THE BOOKS OF ACCOUNT ARE REJECTED, THE AO CANNOT REVISIT THE SAME BOOK S FOR MAKING OTHER TRADING ADDITIONS. FURTHER, IT IS ALSO HIS ARGUMENT THAT THE PROFIT RATE OF 8% ADOPTED BY THE AO AND UPHELD BY THE CIT(A), IN THE INSTANT CASE, IS ON THE HIGHER ITA NO. 3126 /DEL/201 6 8 SIDE. A PERUSAL OF THE NET PROFIT S FOR DIFFERENT ASSESSMENT YEARS FILED BY THE LD. COUNSEL FOR THE ASSESSEE IN THE PAPER BOOK SHOWS THE FOLLOWING RESULTS: - A.Y TURNOVER NET PROFIT % OF PROFIT STATUS OF RETURN REMARKS 2011 - 12 1,85,10,856/ - 3,95,477 2.14 143(3) PRESENT MATTER 2012 - 13 1,61,09,261 7,05,676/ - 4.38 143(3) FINAL 201 3 - 14 8,12,31,117 (77,68,545/ - ) N.A 143(3) FINAL 2014 - 15 2,90,45,585/ - (12,90,983/ - ) N.A 143(3) FINAL 15. WE FIND, IN THE INSTANT CASE, THE ASSESSEE HAS EXPLAINED THE DIFFERENCE IN THE CLOSING STOCK FIGURE OF THE LAST YEAR AND THE OPENING STOCK FIGURE OF THE CURRENT YEAR FILED BEFORE THE AO AND THE CIT(A). HOWEVER, THE SAME WAS REJECTED ON THE GROUND THAT THE DETAILS OF THE EXPENDITURE AND DATE OF INCURRING SUCH EXPENDITURE ALONG WITH THE PURPOSE WAS NOT GIVEN. HOWEVER, AT THE SAME TIME, IT IS ALSO AN A DMITTED FACT THAT THE BOOKS RESULTS WERE REJECTED U/S 145(3) OF THE IT ACT AND THE AO HAS GONE FOR ESTIMATION OF PROFIT. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND CONSIDERING THE FACT THAT THERE IS DIFFERENCE OF RS.77,08,967/ - IN THE CLOSING STOCK OF PRECEDING YEAR AND THE OPENING STOCK OF THE CURRENT YEAR, WE ARE OF THE CONSIDERED OPINION THAT ADOPTION OF NET PROFIT RATE OF 3% ON RS.2,16,78,967/ - (I.E., THE TURNOVER OF RS.1,39,70,000/ - + RS.77,08,967/ - BEING THE DIFFERENCE IN STOCKS) WILL MEE T THE ENDS OF JUSTICE. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO RECOMPUTE THE ADDITION BY CONSIDERING THE NET PROFIT AT RS.6,50,369/ - LESS NET PROFIT ALREADY DISCLOSED BY THE ASSESSEE AT RS.1,15,812/ - (SUBJECT TO VERIFICATION) . GROUNDS OF APPEAL NO.2 AND 3 FILED BY THE ASSESSEE ARE ACCORDINGLY PARTLY ALLOWED. ITA NO. 3126 /DEL/201 6 9 16. GROUND OF APPEAL NO.4 RELATES TO THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS.57 LAKHS. 17. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE YE AR, THE ASSESSEE HAS RECEIVED FRESH SHARE APPLICATION MONEY TO THE TUNE OF RS.1,07,00,000/ - . IN SUPPORT OF THE SAME, THE ASSESSEE FILED A FEW DOCUMENTS WITH THE AO AND CERTAIN OTHER DOCUMENTS BEFORE THE CIT(A) WITH AN APPLICATION FOR ACCEPTING THE ADDITIO NAL EVIDENCES. ON THE BASIS OF SUCH ADDITIONAL EVIDENCES, THE CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. AFTER CONSIDERING THE REMAND REPORT, THE LD.CIT(A) DELETED RS.50 LAKHS AND SUSTAINED RS.57,00,000/ - . THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ALTHOUGH THE ASSESSEE HAS FILED VARIOUS DETAILS DURING ASSESSMENT PROCEEDINGS AS WELL AS REMAND PROCEEDINGS , HOWEVER, THE SAME WERE COMPLETELY IGNORED AND THE ADDITION SUSTAINED BY THE CIT(A) TO THE EXTENT OF RS.57 LAKHS IS NOT CORRECT. THE LD. COUNS EL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE FOLLOWING SEQUENCE OF EVENTS AS PER PARA 20 OF HIS SYNOPSIS WHICH IS AS UNDER: - DATE PARTICULARS PAGE NO 1.04.2010 RAMA PLY BOARD MERGED WITH AAA PAPER PG NO - 4 OF DECISIONS PB 22.09.2011 SEARCH I N RAMA PAPER MILL GROUP WAS CONDUCTED PG - 9 DECISIONS PB 14.11.2011 & 08.2.2012 HON BLE DELHI HIGH COURT ALLOWED MERGER WITH EFFECT FROM 1.04.2010 PG NO 8 OF DECISIONS PB 24.03.2012 PRESENT ASSESSEE FILED RETURN OF INCOME FOR THE IMPUGNED YEAR ADMITTED FACT IN AO ORDER 06.06.2013 AO OF RAMA ISSUED NOTICE FOR ASSESSMENT OF AY 2011 - 12 UNDER SECTION 153A. NO ADDITION IN THE HANDS OF AAA VIS - A - VIS ADVANCE/INVESTMENT MADE IN THE ASSESSEE COMPANY PG NO - 9 OF DECISIONS PB 28 . 04.2017 HON BLE LUCKNOW BENCH OF TH E ITAT QUASHED THE ASSESSMENT PROCEEDINGS OF AAA CASES PG NO11 OF DECISIONS PB ITA NO. 3126 /DEL/201 6 10 DEC 2016 AO PASSED ASSESSMENT ORDER OF AAA FOR AY 2014 - 15 WHEREIN TRANSACTION RELATED TO ASSESSEE WAS QUESTIONED PG NO - 13 OF DECISIONS PB 21.06.2019 CIT(A) IN AAA PAPER ALLOWE D THE APPEAL OF THE ASSESSEE. PG NO - 17 OF DECISIONS PB 18. HE SUBMITTED THAT A PERUSAL OF THE ABOVE SHOWS THAT THERE IS NOT EVEN AN IOTA OF DOUBT VIS - - VIS IDENTITY OF M/S RAMA PLY BOARD INDIA PVT. LTD. FURTHER, THE ASSESSEE HAS EXPLAINED THAT THE TOTAL OUTSTANDING OF M/S RAMA PLY BOARD INDIA PRIVATE LTD., WAS RS.3.17 CRORE WHICH HAS BEEN ACCEPTED BY THE CIT(A). FURTHER, DURING THE COURSE OF SEARCH IN CASE OF RAMA PAPER MILL GROUP, NOTHING INCRIMINATING WAS FOUND THAT THE ASSESSEE HAS RECEIVED BACK HIS OWN MONEY. FURTHER, ALL OUTSTANDING AMOUNTS WERE FINALLY SETTLED IN 2014 - 15. HE SUBMITTED THAT DURING A.Y. 2014 - 15, THE AO IN THE CASE OF RAMA PLY BOARD INDIA PRIVATE LTD. (NOW M/S AAA PAPER) HAD MADE AN ADDITION OF RS.2.7 CRORE ON THE GROUND THAT IT HA S RECEIVED A LOAN FROM THE ASSESSEE. HOWEVER, THE CIT(A), AFTER CONSIDERING THE REMAND REPORT AND STATEMENTS FILED BY THE ASSESSEE HAS OBSERVED THAT M/S AAA PAPER HAS ULTIMATELY GOT A SHOP IN SENIOR MALL DEVELOPED BY THE ASSESSEE AGAINST THEIR ADVANCE AND IT IS NOT AN ADVANCE FROM NILKAMAL TO AAA PAPER. HE ACCORDINGLY SUBMITTED THAT THE ADDITION MADE BY THE AO AND SUSTAINED BY THE CIT(A) SHOULD BE DELETED. IN HIS ALTERNATE CONTENTION, HE SUBMITTED THAT THE MATTER SHOULD BE RESTORED TO THE FILE OF THE AO O R THE CIT(A) WITH A DIRECTION TO ADJUDICATE THE ISSUE AFRESH IN THE LIGHT OF THE SUBMISSIONS NOW MADE THAT THE AMOUNT HAS ALREADY BEEN REFUNDED IN THE SUBSEQUENT YEARS THROUGH SALE OF SHOP. 19. THE LD. DR, ON THE OTHER HAND, HEAVILY RELIED ON THE ORDER OF THE CIT(A). ITA NO. 3126 /DEL/201 6 11 20. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS RELIED ON BY THE PARTIES. WE FIN D, THE AO, IN THE INSTANT CASE, MADE ADDITION OF RS.1,07,00,000/ - U/S 68 ON THE GROUND THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE AMOUNT RECEIVED FROM THREE DIFFERENT PARTIES ON ACCOUNT OF SHARE APPLICATION MONEY. WE FIND, IN APPEAL, THE LD.CIT(A) DELET ED THE ADDITION OF RS.40 LAKHS RECEIVED FROM SATKAR FINLEASE P. LTD. AND RS.10 LAKH RECEIVED FROM M/S ZAYAT CONSTRUCTION (P) LTD. FOR WHICH THE REVENUE IS NOT IN APPEAL BEFORE THE TRIBUNAL. SO FAR AS THE ORDER OF THE CIT(A) SUSTAINING THE ADDITION OF RS.5 7 LAKHS FROM RAM PLYBOARD INDUSTRIES P. LTD., IS CONCERNED, WE FIND HE SUSTAINED THE SAME BY OBSERVING AS UNDER: - . THEREFORE, THE APPELLANT S SUBMISSION WITH REGARD TO SHARE APPLICATION MONEY AMOUNTING TO RS.50 LAKHS FROM THE ABOVE 2 ENTITIES ARE ACC EPTED. HOWEVER, DURING THE YEAR UNDER CONSIDERATION THE APPELLANT HAS GOT TOTAL OF RS. 1,07,00,000/ - THEREFORE, THE BALANCE DETAILS WERE NOT PRODUCED BEFORE THE A.O AS IS MENTIONED IN THE ASSESSMENT ORDER. IT HAS NOT BEEN FILED AS ADDITIONAL EVIDENCES DURI NG APPELLATE PROCEEDINGS. I HAVE FURTHER TAKEN INTO CONSIDERATION THAT THE M/S RAM PLYBOARD INDUSTRIES P LTD HAS NOT GIVEN ANY CONFIRMATION WITH REGARD TO INVESTMENT IN SHARE APPLICATION MONEY. IT HAS CONFIRMED THE TRANSACTION WHICH RUNS TO RS.3.17 CRORE D URING THE YEAR WITH THE APPELLANT COMPANY. THEREFORE, APPELLANT'S CLAIM CANNOT BE ACCEPTED UNLESS THE PARTY CONFIRMS ABOUT THE NATURE OF TRANSACTION. THEREFORE, THE BALANCE AMOUNT OF RS.57 LAKHS IS CONFIRMED AS ADDITION UNDER SECTION 68 OF THE ACT. APPELLA NT'S GROUND OF APPEAL ON THIS ISSUE IS PARTLY ALLOWED. 21. WE FIND FROM THE ORDER OF THE CIT(A) IN THE CASE OF AAA PAPER MARKETING LIMITED FOR A.Y. 2014 - 15 THAT THE LD.CIT(A) AT PARA 60 OF THE ORDER HAS OBSERVED AS UNDER: - ITA NO. 3126 /DEL/201 6 12 6.0 ADDITION U/S 68 OF RS. 2 ,75,80 , 750/ - 6.1 IN THE ASSESSMENT ORDER, AO MENTIONED THAT THE I ASSESSES HAS RECEIVED UNSECURED LOAN FROM M/S. NEEL KAMA L CINEPLEX LTD AMOUNTING TO RS. 2,75,80,750/ - . THE ASSESSEE WAS ASKED TO FURNISH THE DOCUMENTARY EVIDENCES TO SUPPORT IT. THE ASSESS EE SUBMITTED HIS WRITTEN REPLY AND STATED THEREIN THAT THE CONFIRMED COPY OF ACCOUNT, BANK STATEMENT AND COPY OF ITR HAVE ALREADY BEEN FILED AND PLACED ON ASSESSMENT RECORD WHILE HE ONLY MISLED TIRE DEPARTMENT AND HAS NOT FURNISHED ANY DOCUMENT. EVEN, AFTE R GETTING SUFFICIENT OPPORTUNITIES, THE ASSESSEE COULD NOT PROVE THE CREDITWORTHINESS, CAPACITY & GENUINENESS OF TRANSACTION/LOAN. HENCE, THIS UNEXPLAINED LOAN, WAS BEING DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE U/S 68. 6.2 THE APPELL ANT SUBMITTED THAT DURING THE RELEVANT ASSESSMENT YEAR, HE HAD PURCHASED TIRE COMMERCIAL PROPERTY SITUATED AT SHOPPERS' PRIDE MALI SHAKTI CHOWK, CIVIL LINES, BIJNOR AND THE CONSIDERATION OF THE PROPERTY WAS CREDITED IN THE ACCOUNT OF M/S NEELKAMA L CINEPLEX PVT LTD. THERE HAD NOT BEEN ANY BANKING TRANSACTION WITH THE PARTY. APPELLANT SUBMITTED CONFIRMATION OF ACCOUNT, COPY OF BALANCE SHEET, COPY OF ITR AND SALE DEED OF THE SAID, PROPERTY. 6.3 REMAND REPORT WAS CALLED FOR FROM THE CONCERNED AO WITH DIRECTIO N TO GO THROUGH THE CONTENTS OF SAID SUBMISSION AND SEND THE REPORT VIDE LETTER DATED 03.07.2017. T HE AO SENT HIS REPORT VIDE HIS LETTER DATED 21.08.2017. I N WHICH , THE AO MENTIONED THAT A NOTICE U/S 133(6) WAS ISSUED TO LENDER M/S NEEL KAMA L CINEPLAX PVT LTD TO FURNISH THE SUPPORTIVE DOCUMENTS. A REPLY WAS RECEIVED FROM THE LENDER WHICH WAS AS FOLLOWS: WE SOLD THE PROPERTY SITUATES AT SHOPPERS PRIDE MALL SHAKTI CHOWK, CIVIL LINES, BIJNOR BEARING SHOP NO. 1 - 8 LGF AND SHOP NO. 1 SF TO M/S AAA PAPER MARK ETING PVT. LTD. DURING F.Y. 2013 - 14 AND SINCE THE ABOVE SAID TRANSACTION HAD BEEN IN THE NATURE OF SELLING PROPERTIES AGAINST THEIR INVESTMENT IN M/S RANT PLY BOARD INDUSTRIES LTD (NOW MERGED WITH M/S AAA PAPER MARKETING) THERE HAS BEEN NO BANKING TRANSACT ION WITH M/S AAA PAPER MARKETING LTD.' 6.4 THUS, IT IS CLEARED FROM THE SUBMISSION AND REMAND REPORT OF THE AO THAT THE APPELLANT HAS PURCHASED THE ABOVE MENTIONED PROPERTY AND WRONGLY ENTERED IN UNSECURED LOAN WHILE THIS TRANSACTION SHOULD HAVE BEEN SHOW N AS INVESTMENT OR FIXED ASSETS IN THE BALANCE SHEET. THEREFORE, THE SAME CANNOT BE TREATED AS UNSECURED LOAN AND HENCE THE ADDITION AMOUNTING TO RS. 2,75,80.750/ - ON ACCOUNT OF UNEXPLAINED LOAN IS INCORRECTLY MADE. TO THIS EXTENT, THE PLEA OF THE APPELLAN T IS CORRECT. THE AO IS DIRECTED TO ALLOW THE SAME AND ALSO VERIFY THE SOURCE OF INVESTMENT IN THE PROPERTY. ITA NO. 3126 /DEL/201 6 13 22. SINCE THE LD.CIT(A) HAS SUSTAINED THE ADDITION TO THE TUNE OF RS.57 LAKHS ON THE GROUND THAT NO CONFIRMATION WAS FILED BY THE ASSESSEE AND CO NSIDERING THE FACT THAT THERE IS A RUNNING ACCOUNT BETWEEN THE ASSESSEE AND M/S RAMA PLY BOARD INDUSTRIES LTD., THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE DEEM IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO G RANT ONE FINAL OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE THE NATURE OF TRANSACTION TO HIS SATISFACTION AND DECIDE THE ISSUE AS PER FACT AND LAW. NEEDLESS TO SAY, THE AO SHALL GIVE DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORD INGLY. GROUND OF APPEAL NO.3 IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 23 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEES IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 18 .0 2.2020 . SD/ - SD/ - ( K . NARASIMHA CHARY ) ( R. K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18 TH FEBRUARY, 2020. DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI