R.K. & CO. P.LTD, MUMBAI V. ITO 7(2)(1), MUMBAI

ITA 3199/MUM/2010

• Counselvise Citation: 319919914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 20-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 23-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJIV DUTT
• Assessee Lawyers: S S PHADKAR
• Keywords: Unexplained investment
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI R.S.SYAL, AM AN D SHRI R.S.PADVEKAR, JM ITA NO.3199/MUM/2010 : ASST.YEAR 2005-2006 M/S.R.K. & CO. PRIVATE LIMITED 1 KAMDAR SHOPPING CENTRE TEJPAL ROAD, VILE PARLE (EAST) MUMBAI 400 057. PA NO.AACCR3695P. VS. THE INCOME TAX OFFICER WARD 7(2)(1) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.S.PHADKAR RESPONDENT BY : SHRI SANJIV DUTT O R D E R PER R.S.SYAL (AM) : THIS APPEAL BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX U/S.263 ON 24.03.2010 IN RE LATION TO THE ASSESSMENT YEAR 2005-2006. 2. BRIEFLY STATED THE FACTS OF THE CAS E ARE THAT ASSESSMENT WAS MADE BY THE ASSESSING OFFICER U/S.143(3), IN WH ICH PURCHASE OF TDR BY THE ASSESSEE AMOUNTING TO RS.1,42,51,105 FROM M/S.PR ANAY INVESTMENTS WAS CONSIDERED AS UNEXPLAINED INVESTMENT U/S.69. THE LEAR NED CIT OBSERVED THAT THE FACT THAT INVESTMENT SHOWN IN THE BOOKS WAS TREATED AS UNEXPLAINED, WAS NOT CORRECT. HE HOWEVER NOTED THAT THE QUESTION WHETHE R M/S.PRANAY INVESTME NT WAS ACTUALLY EXISTING OR NOT WAS NOT PROPE RLY DECIDED BY THE AO. SHOW CAUSE NOTICE WAS ISSUED. IN RESPONSE TO THAT THE ASSESSEE ARGUED THAT COMPLETE DETAILS IN RESPECT OF THE SAID TRANSACTION OF PURCHASE OF TDR WERE FILED AT THE AS SESSMENT STAGE. IT WAS CONTENDED THE ACCOUNT OF ASSESSEE IN THE BOOKS OF M/S.PRANAY INVESTMENT WAS PRODUCED IN WHICH FULL DETAILS OF PAYMENTS WERE GIVEN. IT WAS ALSO CLAIMED THAT M/S.PRANAY INVESTMENT HAD DULY COMPLIED WITH NOTICE U/S.133( 6). SINCE THE A.O. HAD MADE ADDITION U/S.69, THE ASSESSEE PREF ERRED APPEAL BEFORE THE LEARNED CIT(A) ITA NO.3199/MUM/2010 M/S.R.K. & CO. PVT. LTD. 2 WHO ALSO TOOK NOTE OF THE FACT THAT TH E ASSESSEE HAD FURNISHED COPIES OF BOOKS OF ACCOUNT OF M/S.PRANAY INVESTME NT FOR TRANSFER OF TDR. IT WAS, THEREFORE, PLEADED THAT THIS ISSUE COULD NOT BE TAKEN UP WITHIN THE PURVI EW OF SECTION 263. THE LEARNED CIT DID NOT RECORD ANY ADVERSE FINDING ON THIS ISSUE IN THE IMPUGNED ORDER. AS SUCH, IT BECOMES OBVIOUS THAT THIS ISSUE ALBEIT TAKEN UP IN NOTICE U/S.263 DID NOT FIND ANY ADVERSE FINDING IN THE IMPUGNED ORDER RESULTING IN THE ASSESSMENT ORDER TURNING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 3. SECOND GROUND ON WHICH NOTICE U/S.263 WAS ISSUED IS ABOUT THE GENUINENESS OF VARIOUS CREDITORS SUCH AS DR.HEMLATA M.SHAH, M/S.D.N. CORPORATION. IT WAS ARGUED BEFORE THE LEARNED CIT THAT IN REPLY TO SHOW CAUSE NOTICE BY THE A.O., THE ASSESSEE SUBMITTED VARIOUS DETAILS ALONG W ITH CONFIRMATION OF THE CREDITORS. THE ASSESSEE ALSO GAVE THE STATUS OF THE CREDITORS, SOME OF WHICH WERE DIRECTORS IN THE COMPANY AND ITS SISTER CONCERNS . IT WAS ALSO STATED THAT THE A.O. HAD TAKEN THE VIEW ABOUT THE GENUINENESS OF THE CREDITORS ON THE BASIS OF EVIDENCE PRODUCED BEFORE HIM IN RESPONSE TO NOTICE U/S.133(6). TH E LEARNED CIT OBSERVED IN THE PENULTIMATE PARA THAT : AFTER GOING THROUGH THE SUBM ISSIONS OF THE APPELLANT IT IS SEEN THAT ADMITTEDLY THE ASSESSING OFFICER HAS SENT COPIES OF THE ACKNOWLEDGEMENTS OF RETURNS OF THE VARIOUS CREDITORS TO TH EIR RESPECTIVE ASSESSING OFFICERS. THESE WERE GIVEN BY THE ASSESSEE. THIS WILL BE SUFFICIENT TO CROSS-VERI FY IF THE RETURNS HAVE BEEN FILED BY THE CREDITORS. HE HOWEVER FURTHER HE LD THAT IT WOULD NOT BE SUFFICIENT TO PROVE THAT THE MONEY WAS GENUINELY RECEI VED BY THE ASSESSEE FROM THE CREDITORS. 4. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD IT IS SEEN THAT THE ASSESSEE SUBMITTED COMPLETE EVIDENCE ABOUT THE GENUINENESS OF THE CREDITORS TO THE ASSESS ING OFFICER. APART FROM THAT, THE A.O. HIMSELF GOT THE EVIDENCE DI RECTLY FROM THE CREDITORS THROUGH NOTICE U/S.133(6). FROM THE ABOVE QUOTED PORTION FROM TH E IMPUGNED ORDER IT IS NOTED THAT THE ASSESSING OFFICER NOT ONLY STOPPED TH ERE BUT ALSO SENT COPIES OF THE ITA NO.3199/MUM/2010 M/S.R.K. & CO. PVT. LTD. 3 ACKNOWLEDGEMENT OF VARIOUS CREDITORS TO THE RESPECTIVE ASSESSING OFFICERS. THERE IS NO MATERIAL TO INDICATE, EVEN REMOTELY, THAT THE CREDITORS ACCEPTED BY THE A.O. IN ASSESSMENT U/S.143(3) WERE NO T GENUINE. THE BASIC CONDITIONS FOR THE EXERCISE OF POWER U/S 263 ARE THAT TH E ASSESSMENT ORDER SHOULD BE BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE . UNLESS IT IS SHOWN THAT THE ASSESSMENT ORDER IS ERRONEOUS EITHER DUE TO NON APPLICATIO N OF MIND BY THE AO OR THE WRONGFUL APPLICATION OF MIND HAS RESULTE D IN TO THE LOSS TO THE REVE NUE, THE RESORT TO SEC. 263 IS IMPERMISSIBLE. IN OUR CONSIDERED OPI NION THE LEARNED CIT WAS NOT JUSTIFIED IN EXERCISING REVISIONARY POWER IN RESPECT OF CREDITORS WHICH WERE DULY EXAMINED BY THE ASSESSING OFFICER IN THE COURSE OF AS SESSMENT PROCEEDINGS, MORE SPECIFICALLY WHEN HE HIMSELF ALSO DID NO T FIND ANYTHING WRONG WITH THE CREDITORS. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER. 5. IN THE RESULT, TH E APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS 24 TH DAY OF JUNE, 2011. SD/- SD/- ( R.S.PADVEKAR ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 24 TH JUNE, 2011. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) -VII, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.