WALL STREET FINANCE LTD, MUMBAI V. ITO 9(3)(4), MUMBAI

ITA 4481/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6798 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 28-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KISHOR PATEL
• Keywords: Unexplained investment; Depreciation; Additional evidence
• Section: 143(3); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI BEFORE SHRI G S PANNU, ACCOUNTANT MEMBER & SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO.4481/MUM/2016 ASSESSMENT YEAR : 2011-12 WALL STREET FINANCE LTD., CTS R10, PHASE II, SPICE TOWER, ANAND NAGAR, NEW LINK ROAD, JOGESHWARI, MUMBAI 400 102 PAN AAACW1258P VS. ITO 9(3)(4), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KISHOR PATEL RESPONDENT BY : SHRI SAURABHKUMAR RAI DATE OF HEARING : 22.05.2018 DATE OF PRONOUNCEMEN T : 22.05.2018 O R D E R PER G S PANNU, ACCOUNTANT MEMBER THIS APPEAL IS DIRECTED AGAINST THE ORDER OF THE C IT(A)-21, MUMBAI, DATED 04.04.2016, WHICH IN TURN HAS ARISEN OUT OF THE ORD ER PASSED BY THE ASSESSING OFFICER U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT) RELATING TO A.Y. 2011-12. 2. IN THIS APPEAL, THE ONLY ISSUE IS WITH REGARD T O ADDITION OF ` 89,40,500/- MADE TO THE RETURNED INCOME ON ACCOUNT OF UNEXPLAIN ED INVESTMENT U/S. 69 OF THE ACT. BRIEFLY PUT RELEVANT FACTS ARE THAT THE APPEL LANT IS A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956, INTER ALIA, ENGAGED IN THE BUSINESS OF FINANCIAL SERVICES WITH FOREX AND MONEY REMITTANCES AS ITS CO RE ACTIVITIES. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, IT FILED ITS RETURN OF IN COME DECLARING NIL INCOME BUT IN ASSESSMENT FINALISED U/S. 143(3)(II) OF THE ACT THE TOTAL INCOME WAS ASSESSED BY MAKING A DISALLOWANCE OF ` 89,40,500/- ON ACCOUNT OF UNEXPLAINED INVESTMENT. ITA NO.4481/MUM/2016 WALL STREET FINANCE LTD 2 ON THIS ASPECT RELEVANT FACTS ARE THAT IN THE PAST ASSESSEE WAS OWNER OF THE PROPERTIES SITUATED AT HYDERABAD, ANKLESHWAR AND IN DORE. IT TRANSPIRES THAT THE ASSESSEE ENTERED INTO AN AGREEMENT FOR SALE OF PROP ERTIES AT INDORE WITH MR. ASGAR SHAKOOR PATEL (PROMOTER, EX-CHAIRMAN AND EX-DIRECTO R OF THE ASSESSEE COMPANY) FOR A TOTAL CONSIDERATION OF ` 1,00,00,000/- (RUPEES ONE CRORE) DURING THE F.Y. 2006-07 RELEVANT TO EARLIER A.Y. 2007-08. HOWEVER, AS PER AIR INFORMATION RECEIVED BY THE ASSESSING OFFICER FROM THE REGISTRATION AUTH ORITIES, INDORE (MADHYA PRADESH), ASSESSEE WAS STATED TO HAVE ENTERED INTO SALE TRANSACTIONS OF TWO IMMOVABLE PROPERTIES FOR A SUM OF ` 89,40,500/- IN JULY 2010, AS PER DETAILS IN PARA 4 OF THE ASSESSMENT ORDER. ON BEING SHOW CAUSED, A SSESSEE EXPLAINED THAT THE TWO PROPERTIES IN QUESTION WERE SOLD DURING THE A.Y. 20 07-08 AND THE SAME HAS ALSO BEEN PROPERLY DISCLOSED IN THE RETURN OF INCOME FIL ED FOR A.Y. 2007-08. THE REPLY OF THE ASSESSEE IN THIS REGARD IS REPRODUCED BY THE AS SESSING OFFICER IN PARA 4.1 OF THE ORDER. THE ASSESSING OFFICER HOWEVER, WAS NOT SATI SFIED, AS ACCORDING TO HIM, THE AIR INFORMATION SPECIFICALLY MENTIONED ABOUT THE PR OPERTIES BEING SOLD ON 07.07.2010 AND FOR THAT REASON DID NOT ACCEPT THE P LEA OF THE ASSESSEE THAT THE SALE TRANSACTION TOOK PLACE IN A.Y. 2007-08. HE, THERE FORE, BASED ON THE AIR INFORMATION, TREATED THE SALE TRANSACTION OF ` 89,40,500/- AS UNEXPLAINED INVESTMENT U/S. 69 OF THE ACT. THIS ACTION OF THE ASSESSING OFFICER HAS SINCE BEING CONFIRMED BY THE CIT(A) ALSO, AGAINST WHICH THE ASS ESSEE IS IN FURTHER APPEAL BEFORE US. 3. BEFORE US LEARNED REPRESENTATIVE FOR THE ASSESSE E VEHEMENTLY POINTED OUT THAT BOTH THE LOWER AUTHORITIES HAVE FAILED TO APPR ECIATE THE FACTS IN THEIR PROPER PERSPECTIVE AND, THAT, THE ADDITION IS UNCALLED FOR . THE LEARNED REPRESENTATIVE POINTED OUT THAT BEFORE THE ASSESSING OFFICER ASSES SEE HAD CLEARLY BROUGHT OUT THAT THE CONCERNED PROPERTIES SITUATED AT INDORE WERE SO LD BY THE ASSESSEE COMPANY IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2007-08 ITSELF A ND THE ASSET WAS REDUCED IN THE BLOCK OF FIXED ASSETS. OUR ATTENTION WAS DRAWN TO PARA 9 OF THE ORDER OF THE CIT(A), WHEREIN CIT(A) HAD CALLED FOR REMAND REPORT FROM TH E ASSESSING OFFICER QUA THE ASSESSEES CLAIM OF HAVING SOLD THE ASSET AND ITS R EFLECTION IN THE ACCOUNTS RELATING ITA NO.4481/MUM/2016 WALL STREET FINANCE LTD 3 TO A.Y. 2007-08 ITSELF. THE LEARNED REPRESENTATIVE POINTED OUT THAT CIT(A) HAS WRONGLY NOTED THAT THE ASSESSEE DID NOT APPEAR BEFO RE THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS. ON THE CONTRARY, OUR ATTENTION WAS INVITED TO PAGE A-45 TO A- 47 OF THE PAPER-BOOK WHEREIN, IS PLACED A COPY OF T HE ORDER SHEET OF THE REMAND PROCEEDINGS CONDUCTED BY THE ASSESSING OFFICER, WHI CH CLEARLY SHOW THAT ALL REQUISITE DETAILS WERE FURNISHED BY THE ASSESSEE AF TER PUTTING IN DUE APPEARANCES BEFORE HIM. BE THAT AS IT MAY, THE LEARNED REPRESE NTATIVE REFERRED TO AN APPLICATION DATED 05.04.2018 SEEKING ADMISSION OF ADDITIONAL EV IDENCE UNDER RULE 29 OF THE APPELLATE TRIBUNAL RULES, 1963, IN SUPPORT OF THE C ONTENTION THAT THE SAID PROPERTIES WERE SOLD BY THE ASSESSEE IN A.Y. 2007-08 ITSELF AN D THE TRANSACTIONS WERE DECLARED IN BOOKS OF ACCOUNT OF THE RELEVANT PERIOD. THE AD DITIONAL EVIDENCE IS IN THE FORM OF A COPY OF THE PETITION FILED BY MR. ASGAR SHAKOOR P ATEL IN MISCELLANEOUS CRIMINAL CASE BEFORE THE HONBLE MADHYA PRADESH HIGH COURT, INDORE BENCH, WHEREIN AVERMENTS HAVE BEEN MADE BY HIM THAT THE SAID PROPE RTIES AT INDORE HAVE BEEN SOLD TO HIM BY THE ASSESSEE DURING THE PERIOD RELEV ANT TO A.Y. 2007-08 ITSELF. IN THE SAID PETITION, MR. ASGAR SHAKOOR PATEL HAS ALSO AVE RRED THAT HE HAS FURTHER SOLD THE PROPERTIES AS PER THE SALE AGREEMENT DATED 28.06.20 10, WHICH HAS BEEN REFERRED IN THE AIR INFORMATION, AND THE FACT OF SAID SALE HAS BEEN DISCLOSED IN HIS INCOME TAX RETURN FILED FOR A.Y. 2011-12 AT THE STAMP DUTY REA DY RECKONER VALUE OF ` 89,40,500/-. IN SUM AND SUBSTANCE, THE PLEA OF THE APPELLANT IS THAT THE SAID ADDITIONAL EVIDENCE BE ADMITTED AS IT SUPPORTS THE ASSERTIONS MADE BY THE ASSESSEE ALL ALONG THAT THE TRANSACTION OF SALE REPORTED IN THE AIR INFORMATION IS NOT RELATABLE TO THE ASSESSEE AS SELLER SINCE THE ASSESSEE HAS SO LD THE TWO PROPERTIES AND ACCOUNTED FOR THE SAME IN THE PREVIOUS YEAR RELEVAN T TO A.Y. 2007-08 ITSELF. THEREFORE, IT IS POINTED OUT THAT IF THE SAID ADDIT IONAL EVIDENCE IS ADMITTED, THE MATTER MAY BE REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR AN APPRAISAL AFRESH. 4. ON THE OTHER HAND, THE LEARNED DR APPEARING FOR THE REVENUE DEFENDED THE ACTION OF THE ASSESSING OFFICER BUT DID NOT OPPOSE THE PLEA FOR ADMISSION OF ADDITIONAL EVIDENCE AND THE REMANDING THE MATTER BA CK TO THE FILE OF THE ASSESSING OFFICER. ITA NO.4481/MUM/2016 WALL STREET FINANCE LTD 4 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE SUM AND SUBSTANCE OF THE DISPUTE IN THIS CASE ARISES FROM AIR INFORMA TION RECEIVED BY THE ASSESSING OFFICER FROM THE REGISTRATION AUTHORITY, INDORE, MA DHYA PRADESH, IN CONNECTION WITH SALE TRANSACTIONS OF TWO PROPERTIES DATED 07.07.201 0 AMOUNTING TO ` 89,40,500/-. THE PLEA OF THE ASSESSEE BEFORE THE L OWER AUTHORITIES AS WELL AS BEFORE US CONTINUES TO BE THAT THE SALE TRANSACTION S DATED JULY 2010, DO NOT PERTAIN TO IT, IN AS MUCH AS, ASSESSEE HAD SOLD THESE TWO P ROPERTIES TO MR. ASGAR SHAKOOR PATEL DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 200 7-08. IN SUPPORT, ASSESSEE ALSO ASSERTED THAT THE PROPERTY BEING DEPRECIABLE ASSET, WAS CLASSIFIED FOR DEPRECIATION PURPOSE IN BLOCK OF BUILDING HAVING DEPRECIATION RA TE OF 10% AND, THUS, ON ITS SALE THE SALE CONSIDERATION HAVE BEEN REDUCED FROM THE R ESPECTIVE BLOCK. THE REPLY OF THE ASSESSEE BEFORE THE ASSESSING OFFICER REVEALS T HAT THE RELEVANT EXTRACT OF THE BOOKS OF ACCOUNT GIVING EFFECT TO THE AFORESAID TRA NSACTION WAS ALSO FURNISHED, WHICH SHOWED THAT THE TOTAL SALE CONSIDERATION WAS TO THE TUNE OF ` 1 CRORE (RUPEES ONE CRORE). HOWEVER, THE ASSESSING OFFICER AS WELL AS THE CIT(A) DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND HAVE PRIMARILY GONE BY AIR INFORMATION. AT THE TIME OF HEARING, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE WAS ASKED TO TAKE US THROUGH THE SALE AGREEMENT BY WHICH THE ASSESSEE HA D SOLD THE PROPERTIES, A COPY OF WHICH HAS BEEN PLACED AT PAGES A55 TO A60 OF THE PAPER-BOOK AS ALSO THE SALE AGREEMENT OBTAINED BY THE ASSESSING OFFICER IN THE AIR INFORMATION, WHICH SHOWED THE SALE OF THE PROPERTIES DURING THE INSTANT YEAR. COPY OF THE LATTER SALE AGREEMENT HAVE BEEN PLACED AT PAGES A74 TO A91 OF THE PAPER-B OOK. A PERUSAL OF THE SALE AGREEMENT OBTAINED IN THE AIR INFORMATION SHOWS THE NAME OF THE ASSESSEE COMPANY AS THE SELLER. ON BEING CONFRONTED, THE LE ARNED REPRESENTATIVE POINTED OUT THAT THE ASSESSEE COMPANY HAS BEEN MENTIONED AS A C ONFIRMING PARTY BUT THIS TOO HAS BEEN DONE IN A FRAUDULENT MANNER. IT WAS POINT ED OUT THAT MR. ASGAR SHAKOOR PATEL WAS A PROMOTER, DIRECTOR AND HOLDER OF 70% OF THE SHARE HOLDING, WHICH WAS SOLD TO THE PRESENT MANAGEMENT IN 2009 AND, THEREAF TER THE CONTROL OF THE ASSESSEE COMPANY IS WITH THE PRESENT MANAGEMENT SINCE THEN. IT WAS POINTED OUT THAT THE SALE DEEDS OBTAINED IN THE AIR INFORMATION CONTAINI NG NAME OF THE ASSESSEE AS ITA NO.4481/MUM/2016 WALL STREET FINANCE LTD 5 CONFIRMING PARTY HAS BEEN FRAUDULENTLY EXECUTED BY SAID MR. ASGAR SHAKOOR PATEL ON A DAY WHEN HE HAD NO LOCUS STANDI VIZ-A-VIZ THE COM PANY HAVING GIVEN UP THE MANAGEMENT POSITION CONTROL FROM OCTOBER 2009 ITSEL F. IN SUPPORT OF SAID ASSERTIONS REFERENCE HAS BEEN MADE TO THE COPY OF T HE PETITION FILED MR. ASGAR SHAKOOR PATEL, BEFORE THE HONBLE MADHYA PRADESH HI GH COURT, A MATERIAL WHICH IS SOUGHT TO BE ADMITTED AS ADDITIONAL EVIDENCE. FURT HER, OUR ATTENTION WAS ALSO INVITED TO THE EARLIER SALE AGREEMENT PERTAINING TO A.Y. 2007-08, WHEREBY THE ASSESSEE HAD SOLD THE TWO PROPERTIES TO MR. ASGAR S HAKOOR PATEL. OUR ATTENTION WAS ALSO INVITED TO PAGE A61 AND A62 OF THE PAPER-BOOK, WHICH SHOW THAT SALE TRANSACTIONS HAVE BEEN GIVEN EFFECT TO BY THE ASSES SEE IN A.Y. 2007-08 ITSELF. ON A PRIMA FACIE BASIS, IN OUR VIEW, WE FIND ENOUGH MERI T IN THE PLEA OF THE ASSESSEE THAT ADDITIONAL EVIDENCE SOUGHT TO BE PRODUCED UNDER RUL E 29 OF THE APPELLATE TRIBUNAL RULES, DESERVES TO BE ADMITTED AS THE SAME IS GERMA NE TO DECIDE THE PURCHASE OF PROPERTIES BY MR. ASGAR SHAKOOR PATEL FROM THE ASSE SSEE; PAYMENT OF CONSIDERATION BY MR. ASGAR SHAKOOR PATEL TO THE ASSESSEE; AND, SU BSEQUENT SALE OF PROPERTIES BY MR. ASGAR SHAKOOR PATEL IN JUNE 2010 AND DISCLOSURE OF SAME IN HIS RETURN OF INCOME FOR A.Y. 2011-12. ALL THE AFORESAID ASPECTS GO TO SUPPORT ASSESSEES SUBMISSIONS THAT IT HAD SOLD TWO PROPERTIES AND PROPERLY ACCOUNTED FOR SAID SALE IN ITS BOOKS OF ACCOUNT IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2007-08 ITSELF. SIN CE THE ADDITIONAL EVIDENCE WAS NOT AVAILABLE TO THE LOWER AUTHORITIES, IN THE FITNESS OF THINGS, THE SAME IS ADMITTED AND MATTER IS REMANDED TO THE FILE OF THE ASSESSING OFF ICER FOR DECISION AFRESH, OF COURSE, AFTER TAKING INTO ACCOUNT THE ADDITIONAL EVIDENCE N OW BOUGHT OUT BY THE ASSESSEE. WE, THEREFORE, IN CONCLUSION SET ASIDE THE ORDER OF THE CIT(A) AND REMAND THE MATTER TO THE ASSESSING OFFICER, WHO SHALL REVISIT THE ENTIRE CONTROVERSY BY TAKING INTO CONSIDERATION THE SUBMISSIONS OF THE ASSESSEE INCLUDING THE ADDITIONAL EVIDENCE THAT THE ASSESSEE MAY SEEK TO RELY ON IN SUPPORT OF ITS STAND IN THE RETURN OF INCOME QUA THE AIR INFORMATION IN QUESTION. THUS, WITHOUT GOING INTO THE MERITS OF THE DISPUTE, THE MATTER IS REMANDED BACK TO THE ASSESSI NG OFFICER, WHO SHALL PASS AN ORDER AFRESH IN THE LIGHT OF THE AFORESAID DIRECTIO NS IN ACCORDANCE WITH LAW. ITA NO.4481/MUM/2016 WALL STREET FINANCE LTD 6 6. IN THE RESULT, FOR STATISTICAL PURPOSES THE APPE AL OF THE ASSESSEE IS ALLOWED AS ABOVE. THE ABOVE DECISION WAS PRONOUNCED IN THE OPEN COURT AT THE CONCLUSION OF HEARING IN THE PRESENCE OF BOTH THE PARTIES TODAY I .E. 22 ND MAY, 2018. SD/- SD/- (SANDEEP GOSAIN) (G S PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED : 22 ND MAY, 2018. SA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C I T(A), MUMBAI. 4. THE C I T , MUMBAI. 5. THE DR, I BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI