ITO 15(3)(1), MUMBAI V. SWASTIK VALUE ENTERPRISES, MUMBAI

ITA 4376/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0346 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 14-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 31-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Section: 69C; 143(3); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E, MU MBAI BEFORE SHRI P.K. BANSAL, VICE-PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 4376/MUM/2013 (ASSESSMENT YEAR- 2006-07) ITO WARD- 15(3)(1) ROOM NO.106, MATRU MANDIR, 1 ST FLOOR, TARDEO ROAD, MUMBAI-400007 VS. M/S SWASTIK VALUE ENTERPRISES VALLABH APARTMENTS, JOSHI LANE, GHATKOPAR, MUMBAI-400077. PAN: ABBFS1832N (APPELLANT) (RESPONDENT) REVENUE BY : SHRI A.K. NAYAK (DR) ASSESSEE BY : NONE DATE OF HEARING : 14.06.2017 DATE OF PRONOUNCEMENT : 16.06.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY REVENUE U/S. 253 OF THE INCOME-TAX A CT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-28 [THE CIT(A)], MUMBAI DATED 11.03.2013 FOR THE ASSESSMENT YEAR (AY) 2006-07. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL: I. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS. 48,04,167/- MADE BY THE ASSESSING OFFICER AS UNEXPLAINED INVEST MENTS U/S. 69 OF THE ACT, AND NOT APPRECIATING THE FACT THAT THE SAI D AMOUNT WAS NOT RECORDED IN ITS BOOKS OF ACCOUNTS. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS EN GAGED IN THE BUSINESS OF CONSTRUCTION, FILED RETURN OF INCOME FOR RELEVANT A Y ON 30.10.2016 DECLARING ITA NO.4376/M/2013- M/S SWASTIK VALUE ENTERPRISES. 2 NIL INCOME. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 24.12.2008. THE ASSESSING OFFICER (AO) WHILE FRAMIN G THE ASSESSMENT ORDER, MADE THE ADDITION OF RS. 48,04,167/- U/S 69 OF THE ACT. THE ADDITION WAS MADE ON THE BASIS THAT THERE WAS DISCREPANCY IN THE ASSESSEES TRANSACTION WITH M/S SHREE GANESH CONSTRUCTION COMP ANY FROM WHOM THE ASSESSEE HAS TAKEN A PROJECT FOR DEVELOPMENT. ON AP PEAL BEFORE THE LD. CIT(A), THE ENTIRE ADDITION WAS DELETED. THUS, AGGR IEVED BY THE ORDER OF LD. CIT(A), THE REVENUE HAS FILED THE PRESENT APPEAL BE FORE US. 3. NONE APPEARED ON BEHALF OF ASSESSEE DESPITE REPEATE D CALLS AND WAITING FOR SUFFICIENT TIME. PERUSAL OF THE RECORDS REVEALS THA T THE AUTHORITY OF SHRI JAYANT R. BHATT, C.A., SANJAY JAIN, C.A. ETC. ARE O N RECORD. AS NONE APPEARED ON BEHALF OF ASSESSEE, WE LEFT NO OPTION EXCEPT TO HEAR THE LD. DR FOR THE REVENUE AND TO PROCEED ON THE BASIS OF MATERIAL AVA ILABLE ON RECORD. THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF AO. IT WA S FURTHER ARGUED THAT MHADA ALLOTTED THE PLOT OF LAND TO SHRI ANIL SHANTI LAL MEHTA. FOR A CONSIDERATION OF RS. 2,40,00,842/-. SHRI ANIL SHANT ILAL MEHTA COULD NOT ARRANGE THE FUND TO PAY THE MHADA AND MADE ARRANGEM ENT WITH M/S SHREE GANESH CONSTRUCTION COMPANY BUT M/S SHREE GANESH CO NSTRUCTION COMPANY IS ALSO NOT MADE THE ENTIRE PAYMENT TO MHAD A. THEREAFTER, M/S. SHREE GANESH CONSTRUCTION COMPANY ENTERED INTO AN A GREEMENT WITH ASSESSEE TO TAKE OVER THE PROJECT TO MAKE THE BALAN CE PAYMENT TO MHADA ITA NO.4376/M/2013- M/S SWASTIK VALUE ENTERPRISES. 3 BESIDES THE PAYMENT ALREADY MADE BY ANIL S. MEHTA A ND M/S. SHRI GANESH CONSTRUCTION COMPANY. IT WAS ALSO AGREED THAT THE A SSESSEE WOULD PAY AN AMOUNT OF RS. 1,20,00,000/- TO M/S. SHRI GANESH CON STRUCTION COMPANY AND REST RS. 10,00,000/- TO ANIL S. MEHTA. THE AO DURIN G THE ASSESSMENT PROCEEDING DISCOVERED THE DISCREPANCY OF RS. 48,04, 167/- IN RESPECT OF PAYMENT MADE BY ASSESSEE TO M/S. SHRI GANESH CONSTR UCTION COMPANY AND THE ASSESSEE COULD NOT SUBSTANTIATE THE DISCREPANCI ES. ACCORDINGLY, ADDITION U/S 69C OF THE ACT WAS MADE. THE LD. CIT(A) DELETED THE ADDITION WITHOUT APPRECIATING THE FACT. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED DEPAR TMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAIL ABLE ON RECORD. THE ASSESSING OFFICER MADE THE ADDITION UNDER SECTION 6 9 FOR RS. 48,04,167/- HOLDING THAT THERE ARE CERTAIN ACCOUNTING INFIRMITI ES AND TERM OF RECORDING OF THE TRANSACTION IN THE BOOKS OF M/S SHREE GANESH C ONSTRUCTION COMPANY. THE ASSESSEE HAS INVESTED RS.48,04,167/- IN A PLOT LEASED TO THEM BY MAHADA AND THE SAME IS NOT RECORDED IN THEIR BOOKS OF ACCOUNT. THE EXPLANATION WAS CALLED FROM THE ASSESSEE AND THAT T HE EXPLANATION OFFERED BY THE ASSESSEE ON 4 DECEMBER 2008 IS NOT ACCEPTABLE. THE ASSESSING OFFICER HOLD THAT THE INVESTMENT OF RS.48,04,167/- AS UNEXP LAINED INVESTMENT WITHIN THE MEANING OF SECTION 69 OF INCOME TAX ACT. BEFORE THE LD COMMISSIONER (APPEALS) THE ASSESSEE FILED WRITTEN SUBMISSION EXP LAINING THE DETAILS FACTS ITA NO.4376/M/2013- M/S SWASTIK VALUE ENTERPRISES. 4 OF THE CASE. THE SUBMISSION OF THE ASSESSEE WAS REM ANDED TO THE ASSESSING OFFICER UNDER RULE 46A OF INCOME TAX RULES 1962 FOR VERIFICATION AND EXAMINATION OF CERTAIN FACTS AND ISSUES RAISED BY A SSESSEE. THE ASSESSING OFFICER FURNISHED HIS REMAND REPORT VIDE REPORT DAT ED 10 TH MARCH 2011. IN THE REMAND REPORT THE ASSESSING OFFICER CONTENDED THAT ASSESSEE HAS NOT ACCOUNTED THE ENTIRE VALUE OF INVESTMENT IN THE PLO T. THE ASSESSEE HIMSELF ACCEPTED THAT DUE TO SOME DISPUTE WITH M/S SHREE GA NESH CONSTRUCTION COMPANY RS.48,04,167/- LIABLE TO BE PAID TO THEM IS NOT RECORDED IN THE BOOKS OF ACCOUNT. THE AO FURTHER CONTENDED THAT TH E ASSESSEE AGREED THAT THE AMOUNT PAYABLE TO M/S SHREE GANESH CONSTRUCTION COMPANY SHOULD HAVE BEEN RECORDED IN THE BOOKS OF ACCOUNT BUT FOR SOME REASONS, IT WAS NOT RECORDED. THE REASONS DISCLOSED BY ASSESSEE WITH TH AT PARTY WAS FOR NON RECORDING OF THE AMOUNT PAYABLE TO M/S SHREE GANESH CONSTRUCTION COMPANY CANNOT BE ACCEPTED AS PER THE ACT. THE REMA ND REPORT WAS FORWARDED TO THE ASSESSEE ON WHICH, THE ASSESSEE FI LED HIS FURTHER SUBMISSION ON 21 ST MARCH 2011. IN THE REPLY THE ASSESSEE CONTENDED TH AT AS PER THE AGREEMENT WITH MAHADA DATED 18 OCTOBER 2005 AND REC ORDED IN THE BOOKS OF ACCOUNT THE INVESTMENT MADE BY ASSESSEE TH E ASSESSEE SPECIFICALLY CONTENDED THAT THE AMOUNT OF RS. 48,04,167/- WAS PA YABLE AND /OR TO BE REIMBURSED TO IT THUS IN THEIR OPINION THIS AMOUNT WAS NOT ABLE AND WHATEVER AMOUNT THEY HAD PAID TO MAHADA AND SHREE GANESH CON STRUCTION ITA NO.4376/M/2013- M/S SWASTIK VALUE ENTERPRISES. 5 COMPANY WAS ONLY THE AMOUNT THEY HAD TO PAY. THE AS SESSEE SPECIFICALLY CONTENDED THAT THE NO FURTHER PAYMENTS HAVE BEEN MA DE TO SHREE GANESH CONSTRUCTION COMPANY. ON THE REPLY OF ASSESSEE FURT HER CLASSIFICATION WAS SOUGHT FROM THE ASSESSING OFFICER, THE ASSESSING OF FICER FURNISHED HIS REPLY VIDE NOTICE DATED 18 APRIL 2012. AFTER CONSIDERING THE CONTENTION OF ASSESSEE AND THE REMAND REPORT AND FURTHER CLARIFICATION FUR NISHED BY ASSESSEE RELENTED COMMISSIONER (APPEALS) CONCLUDED AS UNDER: 9. I HAVE CONSIDERED THE FACTS OF THE CASE. FROM TH E FACTS STATED HEREINABOVE, IT APPEARS THAT MHADA HAD ALLOTTED A PLOT OF LAND TO S HRI ANIL S. MEHTA VIDE ALLOTMENT LETTER DATED 07.0L.2004 IN RESPECT OF WHI CH SHRI ANIL MEHTA MADE A PAYMENT OF RS.10,00,000/- TO MHADA AND COULD NOT FU LFILL FURTHER OBLIGATIONS IN THIS REGARD. THEREFORE, HE ENTERED INTO AN AGREEMEN T WITH M/ S. SHREE GANESH CONSTRUCTION CO. WHO MADE FURTHER PAYMENT OF RS.1,6 8,04,167/- TO MHADA. HOWEVER, EVEN M/S. SHREE GANESH CONSTRUCTION CO. CO ULD NOT MADE THE FULL PAYMENT AND THEREFORE IT GOT IN TOUCH WITH M/ S. SW ASTIK VALUE ENTERPRISES WHO AGREED TO TAKE OVER THE PROJECT AND AGREED TO MADE THE BALANCE PAYMENT OF RS.62,96,675/ - TO MHADA. M/S. SWASTIK VALUE ENTERP RISES, THE ASSESSEE IN THE PRESENT CASE, REIMBURSED THE PAYMENT OF RS.10,00,00 0/- TO SHRI. ANIL MEHTA AND FURTHER PAYMENT OF RS.1,20,00,000/- TO M/S. SHREE G ANESH CONSTRUCTION CO., OUT OF THE TOTAL PAYMENT OF RS. 1,68,04,167/- AND THEREFOR E THERE WAS BALANCE AMOUNT OF RS. 48,04,167/-TO BE PAID TO M/S. SHREE GANESH CONS TRUCTION CO. BY THE M/S. SHREE GANESH CONSTRUCTION CO. AND M/S. SWASTIK VALUE ENTE RPRISES HAVE ACCEPTED. THERE ARE CERTAIN ACCOUNTING INFIRMITIES IN TERMS OF RECO RDING OF THE TRANSACTIONS IN THE BOOKS OF M/S. SHREE GANESH CONSTRUCTION CO. IN AS M UCH AS CERTAIN TRANSACTIONS HAVE BEEN MENTIONED BY THEM IN THEIR BOOKS, WITH WH ICH THEY HAD NO CONNECTION. SIMILARLY, IS THE PROBLEM IN THE ACCOUNTING MADE BY M/ S. SWASTIK VALUE ENTERPRISES AS THEY HAVE NOT SHOWN BALANCE PAYABLE AMOUNTING TO RS.48,04,167/- TO BE PAID TO M/S. SHREE GANESH CONSTRUCTION CO. IN THE BALANCE SHEET. IN THIS REGARD, M/S. SWASTIK VALUE ENTERPRISES HAS STATED T HAT THERE WAS SOME DISPUTE REGARDING MAKING OF PAYMENT TO M/S. SHREE GANESH CO NSTRUCTION CO. AS THEY HAD MADE PAYMENTS TO MHADA ON ACCOUNT OF REGISTRATION E TC. M/S. SHREE GANESH CONSTRUCTION CO. HAS ACCEPTED THIS FACT IN RESPONSE TO QUESTION NO.6 OF THE STATEMENT ON OATH TAKEN BY THE AO DURING THE CURSE OF REMAND PROCEEDINGS WHEREIN THEY HAVE STATED THAT AN AMOUNT OF RS.48,04,167/- I S STILL OUTSTANDING FROM M/S. SWASTIK VALUE FACTS HAVE BEEN CONFIRMED BY M/S. SWA STIK VALUE ENTERPRISES ALSO. IF ITA NO.4376/M/2013- M/S SWASTIK VALUE ENTERPRISES. 6 THAT BE THE CASE, THEN THERE IS NO DIFFERENCE IN TH E STAND TAKEN BY TWO CONCERNS. THERE IS NO PROOF THAT M/S. SWASTIK VALUE ENTERPRIS ES HAD PAID CERTAIN AMOUNT OF M/S. SHREE GANESH CONSTRUCTION CO. OUTSIDE THE BOOK S OF ACCOUNT, SOURCES OF WHICH WAS UNEXPLAINED. THE AO HAS EXAMINED THIS ISSUE IN DETAIL, IN REMAND PROCEEDINGS AS IS REFLECTED FROM HIS REMAND REPORT AND IN THE C ONCLUDING PARA HAS STATED THAT THE DIFFERENCE APPEARING IN BOOKS OF EITHER PARTY I S ON ACCOUNT OF ACCOUNTING ENTRIES. 10. IN VIEW OF THE ABOVE FACTS, IT APPEARS THAT THE RE IS NO SUFFICIENT BASIS FOR THE AO TO MAKE AN ADDITION OF RS.48,04,167/ - AS UNEXPLAIN ED INVESTMENTS U/S.69 OF THE ACT. THE SAME IS THEREFORE DIRECTED TO BE DELETED. 5. CONSIDERING, THE FINDING OF LEARNED COMMISSIONER (A PPEALS) THAT M/S GANESH CONSTRUCTION COMPANY HAS ACCEPTED IN THEIR STATEMEN T RECORDED BY ASSESSING OFFICER DURING THE COURSE OF REMAND PROCEEDING THAT AN AMOUNT OF RS. 48,04,167/- IS OUTSTANDING FROM THE ASSESSEE, THE DEFERENCE IS BECAUSE OF ACCOUNTING ENTRIES, ON THE BASIS OF WHICH THE ADDIT IONS WAS DELETED. HENCE, WE DO NOT FIND ANY GOOD REASON TO INTERFERE IN THE FIN DING OF LD COMMISSIONER (APPEALS), THUS THE GROUNDS OF APPEAL RAISED BY REV ENUE IS DISMISSED. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH DAY OF JUNE 2017. SD/- SD/- (P.K. BANSAL) (PAWAN SINGH) VICE-PRESIDENT JUDICIAL MEMBER MUMBAI; DATED 16/06/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/