ITO, Ward-1(2), Bhubaneswar V. Sree Mahabahu Agricultural & Construction Pvt. Ltd., Bhubaneswar

ITA 402/CTK/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 7766 (ITAT-CUTTACK)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-09-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 20-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MIHIR KUMAR SAHU
• Keywords: Unexplained investment
• Section: 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PA V AN KUMAR GADALE, JM . / ITA NO. 402 /CTK/201 7 ( [ [ / ASSESSMENT YEAR : 2013 - 2014 ) ITO, WARD - 1(2), BHUBAN ESWAR VS. SREE MAHABAHU AGRICULTURAL & CONSTRUCTION PVT. LTD., SREE MAHABAHU HOUSE, SOUBHAGYA NAGAR, BARAMUNDA, BHUBANESWAR - 751003 ./ ./ PAN/GIR NO. : A A JCS 6093 D ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI SUBHENDU DUTTA, CITDR [ /AS SESSEE BY : SHRI MIHIR KUMAR SAHU, AR / DATE OF HEARING : 11 / 0 9 /201 8 / DATE OF PRONOUNCEMENT 27 / 0 9 /201 8 / O R D E R PER SHRI PA V AN KUMAR GADALE, JM : TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT( A ) - 1 , BHUBANESWAR , DATED 03.07.2017 , PASSED IN I.T.APPEAL NO.0509/15 - 16. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOU S ON FACTS AND IN LAW. 2. THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.37,02,854/ - MADE BY AO BY THE WAY OF DISALLOWING THE CLAIM OF AGRICULTURAL INCOME, WHEN THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE CLAIM OF RECEIPT OF AN AMOU NT OF RS. 37,02,854/ - FROM AGRICULTURE INCOME DURING THE PREVIOUS YEAR RELEVANT TO THE A.Y. 2013 - 14. 3. THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 37,02,854/ - MADE BY THE AO TOWARDS INCOME FROM OTHER SOURCES AFTER REJECTING THE CLAIM OF AGRICU LTURE INCOME AND FURTHER WHEN IN THE REMAND REPORT DATED 25.04.2017 FURNISHED BY THE PRESENT AO, IT HAS NOT BEEN PROVED THAT THE ASSESSEE HAD EARNED INCOME FROM AGRICULTURE ACTIVITY ITA NO. 402 /CTK/201 7 2 AMOUNTING RS. 37,02,854/ - DURING THE PREVIOUS YEAR RELEVANT TO THE A.Y. 20 13 - 14. 4. THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 18,00,000/ - MADE BY THE AO TOWARDS UNEXPLAINED INVESTMENT WHEN THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE CLAIM OF INVESTMENT IN SHARE APPLICATION MONEY STATED TO BE MADE IN CASH IN ITS SISTER CONCERN I.E. R.D. COMMERCIAL PVT. LTD., AS MADE OUT OF AGRICULTURE INCOME DURING THE PREVIOUS - YEAR - RELEVANT TO THE A.Y. 2013 - 14. 5. THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 18,00,000/ - TOWARDS THE INVESTMENT MADE IN SHARE APPLICATION MONEY STATED TO BE IN CASH DURING THE PREVIOUS YEAR RELEVANT TO THE A.Y. 2013 - 14, WHEN THE ASSESSEE HAS NOT BEEN ABLE TO PROVE WITH DOCUMENTARY EVIDENCE THE SOURCE OF THE SAME DURING THE PREVIOUS ' YEAR RELEVANT TO THE A.Y. 2013 - 14. 6. T HE APPELLANT CRAVES TO ALTER, AMEND OR ADD ANY OTHER GROUND THAT MAY BE CONSIDERED NECESSARY IN COURSE OF THE APPEAL PROCEEDINGS. 3 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF AGRICULTURE AND CARRYING ON BUSINESS IN THE TR ADE NAME AND STYLE M/S SREE MAHABAHU AGRICULTURE AND CONSTRUCTION PVT. LTD., BHUBANESWAR AND FILED THE RETURN OF INCOME ELECTRONICALLY ON 14.12.2013 FOR THE A.Y.2013 - 2014 DECLARING TOTAL INCOME AT RS.NIL. THE RETURN OF INCOME WAS PROCESSED U/S.143(1) OF TH E ACT. SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICES U/S.143(2) & 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WERE ISSUED. IN COMPLIANCE OF THE SAME, LD. AR APPEARED BEFORE THE AO AND CASE WAS DISCUSSED. SUBSEQUENTLY THE AO COMPLETE D THE ASSESSMENT ASSESSING TOTAL INCOME AT RS. 55,02,850/ - AND PASSED ORDER U/S.143(3) OF THE ACT, DATED 22.02.2016 MAKING ADDITIONS ON ACCOUNT OF AGRICULTURAL INCOME AND UNEXPLAINED INVESTMENT IN SHARE APPLICATION MONEY . ITA NO. 402 /CTK/201 7 3 4 . AGGRIEVED BY THE ORDER OF AO, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). IN THE APPELLATE PROCEEDINGS, THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE IN THE APPELLATE PROCEEDINGS AND FINDINGS OF THE AO, AL LOWED THE APPEAL OF THE ASSESSEE. 5 . AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVENUE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. 6 . BEFORE US, LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). 7 . CONTRA, LD.DR RELIED ON THE ORDER OF AO AND SUBMITTED T HAT THE ASSESSEE COULD NOT PROVE THAT IT HAD EARNED INCOME FROM AGRICULTURE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. LD. DR FURTHER SUBMITTED THAT THE ASSESSEE COULD NOT ESTABLISH THE CLAIM OF INVESTMENT IN SHARE APPLICATION MONEY STATED TO BE MADE IN CASH IN SISTER CONCERN I.E. R.D. COMMERCIAL PVT. LTD., OUT OF AGRICULTURE INCOME DURING THE PREVIOUS - YEAR - RELEVANT TO THE A.Y. 2013 - 14 AND PRAYED FOR ALLOWING THE APPEAL. 8 . WE HAVE HEARD RIVAL SUBMIS SIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD . WE F OUND THAT THE LD. CIT(A) WHILE DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF AGRICULTURAL INCOME, HAS OBSERVED AS UNDER : - 3.2 I HAVE PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE REMAND REPORT OF THE AO. CONSIDERING THE REMAND REPORT OF THE A O, THE CLAIM OF THE AGRICULTURAL INCOME OF RS.37,02,854/ - IS ACCEPTED. HENCE, THE ADDITION OF EQUAL AMOUNT MADE AS INCOME FROM OTHER SOURCES IS DELETED. WITH REGARD TO ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT, THE CIT(A) OBSERVED AS UNDER : - ITA NO. 402 /CTK/201 7 4 4 .2 I HAVE GIVEN CAREFUL CONSIDERATIO N TO THE MATTER. THE AO APPEARS NOT TO HAVE APPRECIATED THE FACTS OF THE CASE BEFORE CONSIDERING THE INVESTMENT IN QUESTION AS UNEXPLAINED. THE ASSESSEE HAS ADEQUATE AGRICULTURAL INCOME AND THE INVESTMENT OF RS.18,00,000 / - IS WELL EXPLAINED BEING OUT OF THAT INCOME. GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE PARTY ARE RELEVANT ONLY WHEN CASH CREDITS ARE INVOLVED. THE AO APPEARS NOT TO HAVE APPRECIATED THE FACT THAT THE ASSESSEE HAS NOT RECEIVED ANY MONEY FROM ANYBODY BUT HAS GIVEN MONEY TO M/S R.D. COMMERCIAL (P) LTD. TO BUY THE SHARES OF THAT COMPANY. THE SOURCE OF THE MONEY GIVEN TO M/S R.D. COMMERCIAL (P) LTD. HAVING BEEN FULLY EXPLAINED, THERE IS NO WARRANT TO MAKE ANY DISALLOWANCE. HENCE, THE ADDITION OF RS.18,00,000/ - IS DELETED. 9 . FROM THE ABOVE OBSERVATIONS OF THE CIT(A), WE FIND THAT THE CIT(A) WHILE DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF AGRICULTURAL INCOME, HAS CALLED FOR THE REMAND REPORT FROM THE AO . T HE CIT(A) CONSIDERING THE RE MAND REPORT AND SUBMISSIONS OF THE ASSESSEE ACCEPTED THE AGRICULTURAL INCOME DISCLOSED BY THE ASSESSEE AND DELETED THE ADDITION. AND W ITH REGARD TO ADDITION MADE ON AC COUNT OF UNEXPLAINED INVESTMENT, THE CIT(A) OBSERVED THAT THE SOURCE OF THE INVESTMENT IS WELL EXPLAINED BEING THE INCOME OF THE ASSESSEE AND THE SAME IS OUT OF AGRICULTURAL INCOME. THE CIT(A) FURTHER OPINED THAT THE ASSESSEE HAS NOT RECEIVED ANY MONEY FROM ANYBODY BUT HAS GIVEN MONEY TO M/S R.D. COMMERCIAL (P) LTD. TO BUY THE SHARES OF TH E CO MPANY, THEREFORE, THE SOURCE OF THE MONEY GIVEN TO M/S R.D. COMMERCIAL (P) LTD. H A S BEEN FULLY EXPLAINED. THE L D. DR COULD NOT BRING ANY NEW MATERIAL FACT OR ANY COGENT MATERIAL TO CONTROVERT THE ABOVE FINDINGS OF THE CIT(A). ACCORDINGLY, WE DO NOT FIND AN Y GOOD REASON TO INTERFERE WITH THE ABOVE FINDINGS OF THE CIT(A) AND WE UPHOLD THE SAME AND DISMISS THE GROUNDS OF APPEAL OF THE REVENUE. 10 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 402 /CTK/201 7 5 O RDER PRONOUNCED IN THE OPEN COURT ON THIS 27 / 09 / 201 8 . SD/ - ( N.S.SAINI ) SD/ - ( PAVAN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 27 / 09 /201 8 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - ITO, W ARD - 1(2), BHUBANESWAR 2. / THE RESPONDENT - SREE MAHABAHU AGRICULTURAL & CONSTRUCTION PVT. LTD., SREE MAHABAHU HOUSE, SOUBHAGYA NAGAR, BARAMUNDA, BHUBANESWAR - 751003 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. [ / GUARD FILE. //TRUE COPY//