TURAKHIA STEELS P.LTD, MUMBAI V. CIT -(CEN) -IV, MUMBAI

ITA 3853/MUM/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71975 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 15-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GIRIJA DAYAL
• Keywords: Corroborative evidences
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E , MUMBAI BEFORE SHRI D. KARUNAKARA RAO , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 3854/M/13 ASSESSMENT YEAR: 2007 - 08 M/S. TURAKHIA STEEL & METAL (I) PVT. LTD. 2/3, ASHOK CHAMBER S, DEVJI RATANSY MARG (BROACH STREET), MASJID BUNDER, MUMBAI 400 009 PAN: AABCT5331P VS. COMMISSIONER OF INCOME TAX, CENTRAL - IV AAYAKAR BHAVAN, MUMBAI (APPELLANT) (RESPONDENT) ITA NO. 3853/M/13 A SSESSMENT YEAR: 2007 - 08 M/S. TURAKHIA STEELS PVT. LTD. 2/3, ASHOK CHAMBERS, DEVJI RATANSY MARG (BROACH STREET), MASJID (E) , MUMBAI 400 009 PAN: AABC R7990N VS. COMMISSIONER OF INCOME TAX, CENTRAL - IV AAYAKAR BHAVAN, MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAKESH JOSHI, A.R. REVENUE BY : SHRI GIRIJA DAYAL, D.R. DATE OF HEARING : 21.11.13 DATE OF PRONOUNCEMENT : 18.12.13 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE NO TED APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE ORDER S OF THE CIT DATED 30.03.13 RELEVANT TO ASSESSMENT YEAR 2007 - 08 . THE COMMON ISSUE INVOLVED IN BOTH THE APPEALS IS RELATING TO INVOKING OF JURISDICTION BY THE CIT UNDER SECTION 263 OF THE INCOME TAX ACT. AS THE FACTS AS WELL AS THE ISSUES INVOLVED IN BOTH THE APPEALS ARE IDENTICAL IN NATURE, HENCE ITA NO. 3854 & 3853 /M/13 M/S. TURAKHIA STEEL & METAL (I) PVT. LTD. & M/S. TURAKHIA STEELS PVT. LTD. 2 WE WILL DISPOSE OF F BOTH THE APPEALS WITH THIS COMMON ORDER. FOR THE SAKE OF CONVENIENCE, THE FACTS HAVE BEEN TAKEN FROM ITA NO.3854/M/13. ITA NO. 3 854/M/13 2. THE ASSESSEE HAS CONTESTED THE ACTION OF THE CIT IN DIRECTING THE AO TO MAKE DE - NOVO ASSESSMENT AFTER CONDUCTING ENQUIRIES ON THE ISSUES AS DISCUSSED IN THE IMPUGNED ORDER INVOKING PROVISIONS OF SECTION 263 OF THE INCOME TAX ACT. 3 . THE ISSU E INVOLVED IN THIS CASE IS RELATING TO SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE A SSESSING O FFICER (AO) DURING THE ASSESSMENT PROCEEDINGS ASKED THE ASSESSEE TO SUBMIT THE NECESSARY DETAILS AND CLARIFICATION TO PROVE THE GENUINENESS OF TRANSACTIONS RELATING TO SHARE APPLICATION MONEY. AFTER CONSIDERING THE REPLY OF THE ASSESSEE AND MAKING CERTAIN ENQUIRIES , AO ACCEPTED THE CONTENTION OF THE ASSESSEE AND DID NOT MAKE ANY ADDITION IN RESPECT OF SHARE APPLICATIO N MONEY RECEIVED BY THE ASSESSEE. HOWEVER, THE CIT, INVOKING PROVISIONS OF SECTION 263, SET ASIDE THE ASSESSMENT ORDER OBSERVING THAT THE AO DID NOT MAKE NECESSARY ENQUIRIES ON THE ISSUE UNDER CONSIDERATION. THE CIT FURTHER OBSERVED THAT DURING THE COURSE OF SEARCH , THE INVESTIGATION WING HAD MADE CERTAIN EN QUIRIES FROM INVESTOR COMPANIES AND DIRECTORS OF SOME OF THE COMPANIES WERE ALSO EXAMINED. IT WAS FOUND THAT SOME OF THOSE COMPANIES WERE MERELY PAPER ENTITIES. HOWEVER, AO HAD NOT CONSIDERED THE REPO RT OF INVESTIGATION WING AND DID NOT MAKE ANY ENQUIRY WITH REGARD TO THE GENUINENESS OF THE SHARE CAPITAL TRANSACTIONS FROM THE ABOVE COMPANIES, THEIR CREDIT WORTHINESS AND ALSO WHETHER THE SAID COMPANIES WERE REALLY EXISTING AND CONDUCTING ANY BUSINESS. IT WAS SUBMITTED BY THE ASSESSEE THAT BEFORE PASSING THE ASSESSMENT ORDER THE AO HAD MADE ENQUIRIES IN RESPECT OF THE SHARE HOLDERS AND ALSO EXAMINE D THE DETAILS FURNISHED BY THE SHARE HOLDERS. ALL THE INFORMATION CALLED FOR FROM THE ITA NO. 3854 & 3853 /M/13 M/S. TURAKHIA STEEL & METAL (I) PVT. LTD. & M/S. TURAKHIA STEELS PVT. LTD. 3 ASSESSEE BY THE AO WA S FURNISHED TO HIM AND AFTER MAKING THE NECESSARY INQUIRIES AND GETTING SATISFIED, TRANSACTIONS IN QUESTION WERE HELD GENUINE BY THE AO. UNDER SUCH CIRCUMSTANCES THE EXERCISE OF JURISDICTION UNDER SECTION 263 BY THE CIT WAS NOT WARRANTED. HOWEVER, THE CI T HELD THAT THE ORDER OF THE AO WAS ERRONEOUS AND AS IT WAS MADE WITHOUT MAKING ENQUIRIES AND WITHOUT APPLICATION OF MIND . HE THEREFORE SET ASIDE THE SAME AND REMANDED THE MATTER TO AO FOR DE - NOVO ASSESSMENT AFTER CONDUCT ING NECESSARY ENQUIRIES. 4 . WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE PARTIES AND ALSO HAVE GONE THROUGH THE RECORDS. AT THE OUTSET THE LD. A.R. HAS BROUGHT OUR ATTENTION TO THE FACT THAT ON IDENTICAL ISSUES , CITING SIMILAR REASONS, JURISDICTION UNDER SECTION 263 WAS INVOKED BY THE LD. CIT IN THE CASE OF OTHER GROUP CONCERN OF THE ASSESSEE I.E. M/S. TURAKHIA FERROMET PVT. LTD. & M/S. STANDARD CONDUIT PVT. LTD. , BUT IN APPEAL THE TRIBUNAL HAS SET ASIDE THE ORDER OF THE CIT PASSED UNDER SECTION 263 OF THE ACT. IT HAS BEEN FURTHER SUBMITTED THAT THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THAT OF ITS SISTER CONCERN AND HENCE THE CASE OF THE APPELLANT IS SQUARELY COVERED WITH THE SAID DECISION. 5. WE HAVE GONE THROUGH THE CONSOLIDATED ORDER OF THE ITAT DATED 31.10.13 PASSED IN THE CASE OF M/S. TURAKHIA FERROMET PVT. LTD. (ITA NO.4148 TO 4152/M/13) AND M/S. STANDARD CONDUIT PVT. LTD. (ITA NO. 3966 TO 3969/M/13 ) . A PERUSAL OF THE SAID ORDER REVEALS THAT ON ALMOST IDENTICAL FACTS , THE JURISDICTION UNDER SECTION 263 WAS INVOKED BY THE CIT IN THE ABOVE NOTED SISTER CONCERN OF THE ASSESSEE . HOWEVER, IN APPEAL THE TRIBUNAL HELD THAT FROM THE FACTS OF THE CASE IT REVEALED THAT THE AO HAD MADE DETAILED ENQUIRY IN RESPECT OF SHARE APPLICATION MONEY AND ALSO IN RESPECT OF TRADING ACTIVITI ES OF THE ASSESSEE. THE ASSESSEE HAD FILED NECESSARY DETAILS WITH SUPPORTING EVIDENCES TO DISCHARGE ITS ONUS. AFTER CONSIDERING THE REPLY OF THE ASSESSEE AND AFTER VERIFICATIONS AND ENQUIRIES MADE BY THE AO, THE AO FINALLY CAME TO THE ITA NO. 3854 & 3853 /M/13 M/S. TURAKHIA STEEL & METAL (I) PVT. LTD. & M/S. TURAKHIA STEELS PVT. LTD. 4 CONCLUSION THAT NO ADDITION WAS REQUIRED IN RESPECT OF SHARE APPLICATION MONEY. THE TRIBUNAL FURTHER OBSERVED THAT THE PREREQUISITE CONDITION FOR EXERCISE OF JURISDICTION BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT IS THAT THE ORDER OF THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT IS NECESSARY THAT THE COMMISSIONER SHOULD BE SA TISFIED WITH THE TWIN CONDITIONS (I) THE ORDER SOUGHT TO BE REVISED IS ERRONEOUS, (II) IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT HAS BEEN FURT HER OBSERVED BY THE TRIBUNAL THAT IF ONE OF THE CONDITIONS IS ABSENT , RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THE TRIBUNAL , AFTER RECORDING THE DETAILS OF VARIOUS NOTICES ISSUED AND ENQUIRIES MADE BY THE AO AND FURTHER THE REPLY AND EVIDENCES FURNISHED BY THE ASSESSEE , OBSERVED THAT THE FACTS OF THE CASE WE RE INDICATIVE THAT THE ASSESSMENT ORDER WAS PASSED BY THE AO AFTER CONSIDERING THE RELEVANT MATERIAL EVIDENCES BROUGHT ON RECORD AND AFTER DUE APPLICATION OF MIND AND EVEN AFTER MAKING NECES SARY ENQUIRIES AND SATISFYING HIMSELF ABOUT THE GENUINENESS OF THE TRANSACTIONS. IT WAS NOT THE CASE WHERE THE AO HAD MADE THE ASSESSMENT ORDER WITHOUT MAKING THE NECESSARY ENQUIRIES. IT HAS BEEN FURTHER OBSERVED BY THE TRIBUNAL THAT THE SCOPE OF IN TER FER ENCE UNDER SECTION 263 IS NOT TO SET ASIDE MERELY UNFAVOURABLE ORDERS AND BRING TO TAX SOME MORE MONEY TO THE TREASURY , N OR IS THE SECTION MEANT TO GET AT SHEER ESCAPEMENT OF REVENUE WHICH IS TAKEN CARE OF BY THE OTHER PROVISIONS OF THE ACT. IT HAS BEEN F URTHER OBSERVED THAT THERE WAS NEITHER INCORRECT ASSUMPTION OF FACTS NOR THERE WAS INCORRECT APPLICATION OF LAW BY THE A.O. WHILE PASSING THE ASSESSMENT ORDER, H ENCE THE SAID ORDER COULD NOT BE SAID TO BE ERRONEOUS. UNDER SUCH CIRCUMSTANCES THE INVOCATION OF JURISDICTION UNDER SECTION 263 OF THE ACT BY THE CIT WAS NOT JUSTIFIED AND HENCE THE SAME WAS SET ASIDE. 6 . THE FACTS OF THE CASE I N HAND ARE ALSO IDENTICAL OF THAT OF THE CASE OF GROUP CONCERN OF THE ASSESSEE NAMELY M/S. TURAKHIA FERROMET PVT. LTD . (SUPRA). IN THE CASE IN HAND ALSO A PERUSAL OF THE IMPUGNED ORDER AS WELL AS ITA NO. 3854 & 3853 /M/13 M/S. TURAKHIA STEEL & METAL (I) PVT. LTD. & M/S. TURAKHIA STEELS PVT. LTD. 5 ASSESSMENT ORDER AND THE VARIOUS DOCUMENTS RELIED UPON BY THE AR REVEAL S BEYOND DOUBT THAT THE ASSESSMENT ORDER WAS PASSED BY THE AO AFTER DUE APPLICATION OF MIND AND AFTER MAK ING NECESSARY ENQUIRIES AND AFTER BEING SATISFIED WITH THE REPLIES AND EVIDENCES GIVEN BY THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTIONS. THE ISSUE EMERGING OUT OF THE FACTS OF THE PRESENT CASE IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNA L PASSED IN THE CASE OF SISTER CONCERN OF THE ASSESSEE COMPANY NAMELY M/S. TURAKHIA FERROMET PVT. LTD. (SUPRA) INVOLVING IDENTICAL FACTS AND CIRCUMSTANCES. SO RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL , THE ORDER OF THE C IT INVOKING JURISDICTION UNDER SECTION 263 IS HEREBY SET ASIDE AND THAT OF AO IS HEREBY RESTORED. ITA NO. 3853/M/13 7. SINCE THE FACTS AND ISSUE INVOLVED IN THE PRESENT APPEAL IS IDENTICAL TO THE FACTS AND ISSUE INVOLVED IN ITA NO.3854/M/13, HENCE, IN VIEW OF OUR DISCUSSION AND OBSERVATION MADE ABOVE WHILE DISPOSING OFF ITA NO. 3854/M/13, THIS APPEAL OF THE ASSESSEE IS ALSO HEREBY ALLOWED AND THE ORDER OF THE CIT INVOKING JURISDICTION UNDER SECTION 263 IS HEREBY SET ASIDE AND THAT OF AO IS HEREBY RESTORED. 8. IN THE RESULT BOTH THE ABOVE NOTED APPEALS ARE HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.12 . 2 013. SD/ - SD/ - ( D. KARUNAKARA RAO ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 18.12. 2013. * KISHORE ITA NO. 3854 & 3853 /M/13 M/S. TURAKHIA STEEL & METAL (I) PVT. LTD. & M/S. TURAKHIA STEELS PVT. LTD. 6 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.