Deputy Commissioner Income-tax, V. Charushila Suresh Borole, Jalgaon

ITA 335/PUN/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7666 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-04-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 03-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E . , , ! , ' # BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NO. 335/PUN/2016 '% & '& / ASSESSMENT YEAR : 2012-13 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, JALGAON. ....... / APPELLANT (% / V/S. CHARUSHILA SURESH BOROLE, PLOT NO. 1, PANKAJ NAGAR, YAWAL ROAD, CHOPDA, DIST.- JALGAON. PIN-425 107 PAN : AHOPB7367A / RESPONDENT )*# . /CO.NO.02/PUN/2018 '% & '& /ASSESSMENT YEAR: 2012-13 (ARISING OUT OF ITA NO.335/PUN/2016) CHARUSHILA SURESH BOROLE, PLOT NO. 1, PANKAJ NAGAR, YAWAL ROAD, CHOPDA, DIST.- JALGAON. PIN-425 107 PAN : AHOPB7367A .. / CROSS OBJECTOR (% / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, JALGAON. / RESPONDENT REVENUE BY : SHRI ACHAL SHARMA ASSESSEE BY : SHRI VINAY KAWADIA 2 ITA NO.335 /PUN/2016 CO. NO. 02/PUN/2018 A.Y. 2012-13 / DATE OF HEARING : 12.04.2018 / DATE OF PRONOUNCEMENT : 18.04.2018 + / ORDER PER VIKAS AWASTHY, JM THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-2, NASHIK DATED 14.12.2 015 FOR THE ASSESSMENT YEAR 2012-13. THE ASSESSEE HAS FILED CROSS O BJECTIONS SUPPORTING THE ABOVE SAID ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS A LAND DEVELOPER AND IS ALSO ENGAGED IN THE BUSINESS OF S ALE AND PURCHASE OF LAND. THE ASSESSEE HAD ENTERED INTO AN AGREEMENT DATED 01.03.2012 WITH SHRI KAMAL KUMAR KESHWANI FOR PURCHASE OF PROPERTY SITUATED A T OKHLA INDUSTRIAL AREA, NEW DELHI ADMEASURING 1966 SQ. YARDS. THE ASSESSEE PAID RS. 3 CRORES (10% OF THE TOTAL CONSIDERATION) AS ADVANCE AT THE TIME O F EXECUTION OF AGREEMENT. AS PER THE TERMS OF AGREEMENT, THE ASSESSEE WAS REQUIRED TO PAY FURTHER 25% OF THE TOTAL CONSIDERATION WITHIN 10 DAYS. THE ASSESSEE DEFAULTED IN MAKING PAYMENT OF 25% OF THE TOTAL AMOUNT WITHIN SPECIFIED TIME. SHRI KAMAL KUMAR KESHWANI VIDE LETTER DATED 28.03.2012 RESCINDED THE AGREEMENT AND FORFEITED THE ADVANCE OF RS. 3 CRORES GIVEN BY THE ASSESS EE. PURPORTEDLY, ARBITRATION CLAUSE WAS INVOKED AND SHRI BANWARI LAL AGARW AL, ADVOCATE WAS APPOINTED AS ARBITRATOR. THE ARBITRATOR DECIDED THE ISSUE AGAINST ASSESSEE HOLDING FORFEITURE OF ADVANCE TO BE VALID. THE ASSESSEE CLAIM ED THE AMOUNT OF RS.3 CRORE AS BAD DEBTS. THE ASSESSING OFFICER, IN SCRUTINY ASSESSMENT PROCEEDINGS, ISSUED COMMISSION U/S.131(1)(D) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) TO VERIFY THE GENU INENESS OF THE TRANSACTION 3 ITA NO.335 /PUN/2016 CO. NO. 02/PUN/2018 A.Y. 2012-13 BETWEEN THE ASSESSEE AND SHRI KAMAL KUMAR KESHWANI. THE COMMISSION VIDE REPORT DATED 30.01.2015 CONFIRMED THAT SHRI KAMAL KUMAR KESHWANI IS THE ACTUAL OWNER OF THE PROPERTY BEARING NO. A-138, OKHALA I NDUSTRIAL AREA, PHASE- II, NEW DELHI ADMEASURING 1966 SQ. YARDS. SHRI KAMAL KUMAR KESHWANI HAS NOT DISCLOSED THE AMOUNT RS.3 CRORES RECEIVED FROM ASSESSEE IN HIS RETURN OF INCOME. HOWEVER, HE HAS CREDITED THE AMOUNT TO HIS CAPITA L ACCOUNT. THE ASSESSING OFFICER VIDE ORDER DATED 19.02.2015 REJECTED TH E ASSESSEES CLAIM AND MADE ADDITION OF RS. 3 CRORES. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE FILED APPEAL BEFORE COMMISSIONER OF INCOME TAX (APPEALS). BEFORE FIRST APPELLATE A UTHORITY, ASSESSEE MADE AN ALTERNATE SUBMISSION OF ALLOWING THE AMO UNT OF RS.3 CRORES AS TRADING LOSS. THE COMMISSIONER OF INCOME TAX (APPEALS) VID E IMPUGNED ORDER ACCEPTED THE ALTERNATE CONTENTION OF ASSESSEE AND ALLO WED THE CLAIM OF RS. 3 CRORES AS BUSINESS LOSS. AGAINST THE ORDER OF C OMMISSIONER OF INCOME TAX (APPEALS), NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. SHRI ACHAL SHARMA REPRESENTING THE DEPARTMENT SUBMIT TED THAT THE CLAIM OF RS. 3 CRORES IS BASED ON AGREEMENT DATED 01.03.2012 A ND THE SAID AGREEMENT IS NOT REGISTERED. THEREFORE, NO RELIANCE CAN BE PLACED ON AN UN-REGISTERED DOCUMENT. THE LD. DR SUBMITTED THAT ASSESSEE HAS BEEN C ONSISTENTLY CHANGING HER STANCE WITH REGARD TO THE STEPS TAKEN TO RECOVER ADVANCE GIVEN TO SHRI KAMAL KUMAR KESHWANI FOR PURCHASE OF PROPERTY. IN HER STATEM ENT RECORDED ON 12.01.2015, SHE CATEGORICALLY STATED THAT NO LEGAL STEP WE RE TAKEN FOR RECOVERY OF THE ADVANCE. HOWEVER, IN SUBSEQUENT SUBMISSIONS, THE AR OF ASSESSEE VIDE LETTER DATED 19.02.2015 FURNISHED COPY OF ARBITRATION AWARD DATED 19.06.2012. THE ASSESSEE HAS BEEN TAKING CONTRARY STAND. THE LD. DR ASSERTED THAT THE AMOUNT OF RS.3 CRORES GIVEN BY ASSESSEE ALLEGEDLY FORFEITED BY RECIPIENT SHRI 4 ITA NO.335 /PUN/2016 CO. NO. 02/PUN/2018 A.Y. 2012-13 KAMAL KUMAR KESHWANI HAS NOT BEEN OFFERED TO TAX IN RETU RN OF INCOME BY SHRI KAMAL KUMAR KESHWANI. THE SAID AMOUNT HAS BEEN DIRECTLY CREDITED TO CAPITAL ACCOUNT. THEREFORE, THERE IS REVENUE LOSS AT BOTH ENDS. T HE LD. DR PRAYED FOR REVERSING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL S) AND RESTORING THE FINDINGS OF ASSESSING OFFICER. 5. PER CONTRA, SHRI VINAY KAWADIA APPEARING ON BEHALF OF AS SESSEE VEHEMENTLY DEFENDED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). THE LD. AR SUBMITTED THAT THE ASSESSEE HAS PAID RS.3 CRORES A S ADVANCE FOR PURCHASING INDUSTRIAL PLOT AT NEW DELHI FROM SHRI KAMAL KUMAR KESHWANI. THIS FACT HAS BEEN VERIFIED BY THE ASSESSING OFFICER THROUGH COMMISSION. FU RTHER, THE FACT THAT ASSESSEE HAS PAID RS.3 CRORES IS SUBSTANTIATED BY THE FACT THAT SHRI KAMAL KUMAR KESHWANI CREDITED THE SAID AMOUNT TO HIS CAPITAL AC COUNT. THIS FACT CLEARLY INDICATES THAT ASSESSEE HAS PAID RS.3 CRORES AS ADVANCE IN ACCORDANCE WITH THE TERMS OF PURCHASE AGREEMENT DATED 01.03.2012. H OW THE RECIPIENT OF THE AMOUNT TREATS THE AMOUNT IN HIS BOOKS IS NOT UNDER THE CONTROL AND DOMAIN OF ASSESSEE. HOWEVER, THE GENUINENESS OF THE TRANSACTIONS IS PROVED BY THE FACT THAT THE AMOUNT PAID BY ASSESSEE IN ACCORDANCE WITH AG REEMENT HAS BEEN RECEIVED BY THE RECIPIENT. THE LD. AR POINTED THAT AWARD O F THE ARBITRATOR FURTHER SUBSTANTIATES THAT THERE WAS TRANSACTION WITH RESPECT TO PURCHASE OF PLOT. THE TRANSACTION DID NOT FRUCTIFY AS THE ASSESSEE FAILED TO COM PLY WITH THE CONDITIONS OF AGREEMENT. THIS RESULTED IN FORFEITURE OF AMOUNT PAID AS A DVANCE AND THUS, THE ASSESSEE SUFFERED LOSS. THE LD. AR PRAYED FOR UPHOLDING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 5.1 THE LD. AR SUBMITTED THAT THE CROSS OBJECTIONS FILED BY ASSESSEE ARE IN SUPPORT OF THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). 5 ITA NO.335 /PUN/2016 CO. NO. 02/PUN/2018 A.Y. 2012-13 6. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATI VES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. IT IS AN AD MITTED FACT THAT THERE WAS AGREEMENT DATED 01.03.2012 BETWEEN THE ASSESSEE A ND SHRI KAMAL KUMAR KESHWANI IN RESPECT OF PROPERTY SITUATED AT OKHLA INDUST RIAL AREA, NEW DELHI. THE ASSESSEE HAD PAID RS.3 CRORES AS ADVANCE FOR PURCH ASING SAID PROPERTY. THE ASSESSEE FAILED TO HONOUR THE TERMS AND CONDITIONS O F THE AGREEMENT. THE VENDOR RESCINDED THE AGREEMENT AND FORFEITED THE ADVAN CE PAID BY ASSESSEE. ARBITRATION PROCEEDING ENSUED. FORFEITURE OF RS.3 CRORES P AID BY ASSESSEE AS ADVANCE WAS APPROVED BY ARBITRATOR VIDE AWARD DATED 2 9.06.2012. THE ASSESSING OFFICER HAD ISSUED COMMISSION TO VERIFY THE AUTHENTICITY OF TRANSACTION. THE COMMISSIONER VIDE REPORT DATED 30.01.2015 CONFIRMED THAT IN DUSTRIAL PLOT AT OKHLA INDUSTRIAL AREA, NEW DELHI WAS OWNED BY SHRI KAMAL KU MAR KESHWANI. IT WAS FURTHER POINTED THAT THOUGH SHRI KAMAL KUMAR KESHWA NI HAS NOT DISCLOSED THE AMOUNT OF RS.3 CRORES RECEIVED FROM ASSESSEE IN RETU RN OF INCOME, HE HAS CREDITED THE SAID AMOUNT TO HIS CAPITAL ACCOUNT. REPORT O F THE COMMISSIONER CLEARLY INDICATES THAT THERE WAS TRANSACTION BETWEEN TH E ASSESSEE AND SHRI KAMAL KUMAR KESHWANI WITH RESPECT TO PURCHASE OF INDUST RIAL PLOT AT OKHLA INDUSTRIAL AREA, NEW DELHI AND ASSESSEE HAS PAID RS.3 CROR ES TO VENDOR. THE ARBITRATION AWARD FURTHER SUBSTANTIATES THAT THE ASSESS EE HAD PAID RS.3 CRORES AS ADVANCE THAT WAS FORFEITED ON ACCOUNT OF NON COMPLIAN CE OF CONDITIONS MENTIONED IN THE AGREEMENT DATED 01.03.2012. THE COMMISSIO NER OF INCOME TAX (APPEALS) HAS GIVEN FINDING OF THE FACT THAT IN THE TRADING A CCOUNT, ONLY OPENING STOCK, CLOSING STOCK, SALES AND PURCHASE RELATED TO LANDS /PLOTS ARE RECORDED. IT CLEARLY INDICATES THAT THE ASSESSEE WAS ENGAGED IN TRAD ING OF PLOTS/LANDS. THE AMOUNT OF RS.3 CRORES PAID BY ASSESSEE THAT HAS BEEN FO RFEITED, IS ARISING OUT OF BUSINESS TRANSACTION. THUS, THE SAME IS ALLOWABLE AS TRAD ING LOSS SUFFERED IN NORMAL COURSE OF BUSINESS. WE DO NOT FIND ANY INFIRMITY IN TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN ALLOWING CLAIM OF THE ASSESSEE. THE 6 ITA NO.335 /PUN/2016 CO. NO. 02/PUN/2018 A.Y. 2012-13 FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ARE CONFIRMED AND APPEAL OF THE REVENUE IS DISMISSED. 7. THE ASSESSEE HAS FILED CROSS OBJECTIONS IN SUPPORT OF THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS). SINCE, THE APPEAL OF REVE NUE IS DISMISSED, CROSS OBJECTIONS FILED BY ASSESSEE HAVE BECOME INFRUCTUOUS AND THE SAME ARE DISMISSED AS SUCH. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE AND CROSS O BJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 18 TH DAY OF APRIL, 2018. SD/- SD/- ( . / D. KARUNAKARA RAO ) ( ! /VIKAS AWASTHY) / ACCOUNTANT MEMBER ! / JUDICIAL MEMBER / PUNE; '# / DATED :18 TH APRIL, 2018. SB + , )'-. / '- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEAL)-2, NASHIK. 4. THE PR. CIT-2, NASHIK. 5. &'( !!)* , + )* , ,-. , / DR, ITAT, A BENCH, PUNE. 6. (/0 12 / GUARD FILE. // TRUE COPY // +3 / BY ORDER, !4 ). / PRIVATE SECRETARY + )* , / ITAT, PUNE.