Kavita Polymers, Pune V. Deputy Commissiner of Income-tax,

ITA 330/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2691 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-02-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 21-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Keywords: Search and seizure; Capital receipt

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.330/PN/2014 #& & / ASSESSMENT YEAR : 2001-02 KAVITA POLYMERS, C/O. M/S. ARIHANT GRANITES, 16A HIMALAYA ESTATE, SHIVAJINAGAR, PUNE 411005 PAN NO.AADFK1774G . / APPELLANT V/S DCIT, CENTRAL CIRCLE-2(2), PUNE . / RESPONDENT / ASSESSEE BY : NONE / REVENUE BY : SHRI SUBHASH CHANDRA / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 20-03-2012 OF THE CIT(A) CENTRAL, PUNE RELATING TO ASSESSMENT YEAR 2001-02. 2. THE ASSESSEE IN THE GROUNDS OF APPEAL HAS CHALLENGED THE ORDER OF THE CIT(A) IN SUSTAINING ADDITION OF RS.81 LAKHS MADE BY TH E AO ON ACCOUNT OF COMPENSATION RECEIVED TREATING THE SAME AS R EVENUE IN NATURE AS AGAINST CAPITAL RECEIPT CONSIDERED BY IT. / DATE OF HEARING :15.02.2016 / DATE OF PRONOUNCEMENT:17.02.2016 2 ITA NO.330/PN/2014 3. THIS APPEAL WAS FIRST FIXED FOR HEARING ON 27-01-2015 AND HEARING WAS SUBSEQUENTLY ADJOURNED TO 28-01-15. AT T HE REQUEST OF THE LD. COUNSEL FOR THE ASSESSEE ON 28-01-15 THE HEARIN G WAS ADJOURNED TO 28-04-15. SINCE THE BENCH DID NOT FUNCTION THE CASE GOT ADJOURNED TO 22-07-15 AND THEREAFTER TO 13-11-2015. SUBSEQUENTLY FRESH NOTICE THROUGH RPAD WAS DULY SERVED ON THE ASSE SSEE FIXING THE APPEAL FOR HEARING ON 15-02-2016. ALTHOUGH THE NOTICE WAS DULY SERVED ON THE ASSESSEE (ACKNOWLEDGEMENT PLACED ON RECO RD) NONE APPEARED ON BEHALF OF THE ASSESSEE WHEN THE NAME OF THE ASSESSEE WAS CALLED NOR ANY PETITION SEEKING ADJOURNMENT OF THE CASE W AS FILED. IT WAS FURTHER SEEN THAT THE CIT(A) HAS PASSED AN EXPARTE ORDER SINCE NOBODY APPEARED BEFORE HIM DESPITE REPEATED OPPORTUNITIE S GIVEN. FURTHER, THERE WAS ALSO A DELAY IN FILING OF THIS APPEAL BY TH E ASSESSEE BEFORE THE TRIBUNAL. UNDER THESE CIRCUMSTANCES WE PROCE ED TO DECIDE THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE. 4. FACTS OF THE CASE, IN BRIEF, THAT THE ASSESSEE IS A PART NERSHIP FIRM CONSISTING OF 7 PARTNERS ENGAGED IN THE BUSINESS OF MANUF ACTURING OF RUBBER GOODS. IT SUPPLIES GOODS TO VARIOUS GOVERNMENT AUTHORITIES AND LIMITED COMPANIES. A SEARCH AND SEIZURE ACTION AT THE RES IDENTIAL PREMISES OF SHRI MAHENDRA JAIN, ONE OF THE PARTNERS OF TH E FIRM WAS CONDUCTED. SIMULTANEOUS SURVEY ACTION U/S.133A OF THE I. T. ACT WAS ALSO CARRIED OUT AT THE FACTORY PREMISES OF THE ASSESSEE AND MIDC, BHOSARI, PUNE. THE ASSESSEE HAS ENTERED INTO AN AGREEM ENT WHEREBY IT TRANSFERRED THE ENTIRE ASSETS OF THE BUSINESS TOGETHE R WITH LIABILITY AS A GOING CONCERN TO ANOTHER FIRM M/S. LABONI DEVELOPERS. THE ERSTWHILE PARTNERS OF THE ASSESSEE FIRM RECEIVED RS. 81 LAKHS AGAINS T AGREED PRICE OF RS.2.25 CRORES. THE AO ISSUED NOTICE U/S.153A OF THE I.T. ACT 3 ITA NO.330/PN/2014 TO THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROC EEDINGS THE AO CAME TO THE CONCLUSION THAT THE ASSESSEE RECEIVED PAYM ENT OF RS.81 LAKHS TOWARDS THE COMPENSATION FOR USE OF ALL ITS FACILITIES AN D THEREFORE THIS AMOUNT IS TAXABLE IN THE HANDS OF THE ASSE SSEE AS A REGULAR REVENUE RECEIPT. HE FINALIZED THE ASSESSMENT OF TH E ASSESSEE AT RS.81 LAKHS AGAINST THE NIL INCOME SHOWN BY IT. 5. IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE AO BY OBSERVING AS UNDER : 7. A CAREFUL PERUSAL OF THE MATERIAL AVAILABLE ON R ECORD REVEALS THAT THE AO WAS JUSTIFIED IN TREATING THE AMOUNT OF RS.81 L AKHS IN THE HANDS OF THE APPELLANT AS REGULAR REVENUE RECEIPT AS MR. LENY JOHN HAS USED THE NAME OF ERSTWHILE KAVITA POLYMERS AND ITS LICENSE FOR C ONTINUING HIS BUSINESS. HE HAS NOT BEEN PAID ANY INTEREST ON THE AMOU NT OF RS.81 LAKHS WHICH WAS PAID TO ERSTWHILE KAVITA POLYMERS. MR. P.V. JOHN ADMITTED THAT ON THE BASIS OF LICENSE OF ERSTWHILE KAVITA POLYMERS, HI S FATHER HAD SECURED ORDERS FROM GOVT. AUTHORITIES. HE HAS ALSO USED ELECTRI CITY METER AND SUPPLY SANCTIONED TO THE ERSTWHILE KAVITA POLYMERS. TH E FACT THAT MR. LENY JOHN WAS NOT IN A POSITION TO PAY THE AGREED SALE PRIC E WAS WELL KNOWN TO THE APPELLANT. STILL THE APPELLANT PERMITTED SHRI JOHN TO MAKE USE OF ITS PREMISES, MACHINERY, LICENSE ETC. WITHOUT PAYMENT OF A NY LEASE-RENT. UNDER THE CIRCUMSTANCES, I AM IN AGREEMENT WITH THE A O THAT THE REAL INTENTION WAS TO ALLOW ALL FACILITIES OF THE APPELLAN T TO SHRI JOHN IN LIEU OF THE PAYMENT OF RS.81 LAKHS. THEREFORE, THE ACTION OF THE AO IN THE ADDITION OF RS.81 LAKHS AS REGULAR REVENUE RECEIPT IS UPHELD AND GROUNDS OF APPEAL NO.1 AND 2 ARE DISMISSED. 6. AGGRIEVED WITH SUCH ORDER OF THE LD.CIT(A), THE ASSESSE E IS IN APPEAL BEFORE US. 7. WE HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD AND HEARD THE LD. DEPARTMENTAL REPRESENTATIVE. WE FIND THE AO IN THE A SSESSMENT MADE AN ADDITION OF RS.81 LAKHS IN THE HANDS OF THE ASSESS EE AS REVENUE RECEIPT ON THE GROUND THAT SHRI LENY JOHN HAS USED THE NAME OF THE ERSTWHILE KAVITA POLYMERS AND ITS LICENSE FOR CONTINU ING ITS BUSINESS AND HE HAS NOT BEEN PAID ANY INTEREST ON THE AMOUNT OF RS.81 LAKHS WHICH HAS BEEN PAID TO ERSTWHILE KAVITA POLYME RS. THE PAYMENT MADE BY SHRI LENY JOHN HAS BEEN WITHDRAWN IMMED IATELY BY 4 ITA NO.330/PN/2014 THE PARTNERS. ACCORDING TO THE AO THIS INCOME IS TOWARD S COMPENSATION FOR USING THE NAME AND GOODWILL OF THEIR ESTAB LISHMENT AND THEREFORE IS A REVENUE RECEIPT WHEREAS THE ASSESSE E HAS SHOWN THE SAME AS LIABILITY. WE FIND THE LD.CIT(A) HAS UPHELD THE ACTION OF THE AO ON THE GROUND THAT THE REAL INTENTION WAS TO ALLOW ALL FACILITIES OF THE ASSESSEE TO SHRI JOHN IN LIEU OF THE PAYMENT OF RS.81 L AKHS AND THEREFORE THE SAME AMOUNTS TO REVENUE RECEIPT. IN ABS ENCE OF ANY CONTRARY MATERIAL BEFORE US, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) TREATING THE AMOUNT RECEIVED AS REVENUE IN NATURE. ACCORDINGLY, THE ORDER OF THE CIT(A) IS UPHELD AND THE GRO UNDS RAISED BY THE ASSESSEE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17-02-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED : 17 TH FEBRUARY, 2016. ) *#,! -! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A ) CENTRAL , PUNE 4. 5. 6. THE CIT CENTRAL, PUNE $ ''(, (, / DR, ITAT, B PUNE; - / GUARD FILE. / BY ORDER , // TRUE COPY // // $ ' //TRUE C // /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE