Balvinder Singh Bagga, Hyd, Hyderabad V. DCIT, Central Circle-1, Hyderabad

ITA 450/HYD/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2250 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 17-08-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 20-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Reopening of assessment; Additional evidence; Block assessment
• Section: 148

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS. A.Y APPELLANT RESPONDENT 450/HYD/2012 2001-02 BALVINDER SINGH BAGGA, HYDERABAD. PAN-ABXPB9331K DY. CIT, CENTRAL CIRCLE-1, HYDERABAD 710/HYD/2006 2002-03 BALVINDER SINGH BAGGA, HYDERABAD. PAN-ABXPB9331K ASST. CIT, CENTRAL CIRCLE-1, HYDERABAD 766/HYD/2007 2003-04 BALVINDER SINGH BAGGA, HYDERABAD. PAN-ABXPB9331K DY. CIT, CENTRAL CIRCLE-1, HYDERABAD 904/HYD/2008 2004-05 BALVINDER SINGH BAGGA, HYDERABAD. PAN-ABXPB9331K DY. CIT, CENTRAL CIRCLE-1, HYDERABAD ASSESSEE BY : SHRI P. MURALI MOHAN RAO REVENUE BY : SMT N. SWAPNA DATE OF HEARING : 12-10-2017 DATE OF PRONOUNCEMENT : 15-12-2017 ORDER PER P. MADHAVI DEVI, J.M.: THESE APPEALS ARE FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2002-03, 2003-04 AND 2004-05 RESPECTIVELY. ITA NOS. 710/HYD/2006, 766/HYD/2007 AND 904/HYD/2008, WERE EARLIER HEARD AND DISPOSED OF BY THE COORDINATE BENCH OF THIS TRIBUNAL ON 03-08-2012. SUBSEQUENTLY, VIDE MA NOS. 111, 112 & 113/HYD/2013 DATED 30.07.2015, THE LIMITED ISSUE INVOLVED IN PARA 102 OF THE ITAT ORDER HAS BEEN RECALLED. CONSEQUENT THERETO, 2 SHRI BALVINDER SINGH BAGGA, HYDERABAD. THESE APPEALS WERE FIXED FOR HEARING BEFORE US. ON GOING THROUGH THE ORDER OF THE TRIBUNAL IN MA NOS. 111,112 & 113/HYD/2013, WE FIND THAT ONLY THE ISSUE OF INTEREST PAYABLE BY THE ASSESSEE TO M/S INTRA PORT INDIA LTD., DURING THE RELEVANT ASSESSMENT YEARS IS INVOLVED IN PARA 102 OF THE ITAT ORDER DATED 03-08-2012. 2. BRIEF FACTS RELATING TO THIS ISSUE ARE THAT, THE ASSESSEE IS THE PROPRIETOR OF M/S RAM LAKSHMAN MARKETING AGENCIES. THIS CONCERN ENTERED INTO A MARKETING AGREEMENT DATED 28.05.1999 WITH M/S INTRA PORT INDIA LTD., FOR SALE OF THEIR PRODUCT SNOW BUDGE BEER. AS PER THE AGREEMENT, THE COMPANY M/S INTRA PORT INDIA LTD., WAS SUPPOSED TO PROVIDE NON-REFUNDABLE INTEREST FREE DEPOSITS TO THE ASSESSEE AND ACCORDINGLY, NO INTEREST WAS PAID / CREDITED TO M/S INTRA PORT INDIA LTD., DURING THE F.Y 1999- 2000. HOWEVER, DURING THE COURSE OF SEARCH, CERTAIN DOCUMENTS, BEARING NO. 191 AND 192 OF ANNEXURE A/GD/PO/1, WERE SEIZED WHICH ARE SUPPOSEDLY WRITTEN BY M/S. RAM LAKSHMAN MARKETING AGENCIES TO M/S INTRA PORT INDIA LTD., CLAIMING THAT SINCE M/S. INTRA PORT INDIA LTD., FAILED TO SUPPLY THE BEER AS PER THE AGREEMENT, IT WOULD FORFEIT THE DEPOSITS OF THE COMPANY. IT ALSO CLAIMED VARIOUS 3 SHRI BALVINDER SINGH BAGGA, HYDERABAD. EXPENDITURE INCURRED BY IT FOR MARKETING OF THE PRODUCT OF M/S INTRA PORT INDIA LTD. THE CLAIM FOR FORFEITURE OF DEPOSITS WAS DISPUTED BY THE COMPANY, WHICH MADE A COUNTER CLAIM THAT THE DEPOSITS SHOULD BE REFUNDED ALONG WITH INTEREST @ 24% PER ANNUM. NEITHER WERE THE DEPOSITS REFUNDED NOR WAS THE INTEREST ACTUALLY PAID TO M/S INTRA PORT INDIA LTD. THE A.O OBSERVED THAT, THE ASSESSEE COMPANY WAS TAKEN OVER BY THE ASSESSEE GROUP ON 17-11- 2001 AND THE OFFICE WAS SHIFTED TO GREATER KAILASH, DELHI THEREAFTER. THE A.O WAS OF THE OPINION THAT THE INTEREST ON DEPOSITS WAS SHOWN AS PAYABLE TO M/S INTRA PORT INDIA LTD., ONLY AFTER SUCH TAKEOVER AND FOR THE F.YS 2000-01 AND 2001-02, THE INTEREST OF RS. 1,07,51,283/- AND 1,01,53,923/- RESPECTIVELY WERE SHOWN AS PAYABLE TO M/S INTRA PORT INDIA LTD. BECAUSE OF THESE FACTS, THE A.O CONCLUDED THAT THE SAME IS NOT ALLOWABLE AND THAT IT IS UNDISCLOSED INCOME OF THE BLOCK PERIOD. ON APPEAL BY THE ASSESSEE, THE CIT (A), IN THE BLOCK ASSESSMENT ORDER, DELETED THE ADDITION BY HOLDING THAT IT SHOULD BE CONSIDERED ONLY IN THE REGULAR ASSESSMENTS. IN THE REGULAR ASSESSMENT FOR THE A.YS 2001-02 TO 2004-05, THE A.O DISALLOWED THE CLAIM OF INTEREST FOR THE RESPECTIVE ASSESSMENT YEARS AND THE ASSESSEES APPEAL BEFORE THE CIT 4 SHRI BALVINDER SINGH BAGGA, HYDERABAD. (A) WAS ALSO DISMISSED. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT, THE A.O HAS ERRONEOUSLY RECORDED THAT M/S INTRA PORT INDIA LTD., WAS TAKEN OVER BY THE ASSESSEES GROUP ON 17.11.2001 AND ON THAT PREMISE, HAS MADE THE DISALLOWANCE OF THE INTEREST PAYABLE TO M/S INTRA PORT INDIA LTD. HE SUBMITTED THAT THE ASSESSEE WAS IN NO WAY CONCERNED OR CONNECTED WITH M/S INTRA PORT INDIA LTD., TILL IT WAS TAKEN OVER BY THE BAGGA W.E.F 24.04.2004, RELEVANT TO THE A.Y 2005-06. HE SUBMITTED THAT THE RELEVANT INFORMATION, THAT THE ASSESSEES BROTHER SHRI SATPAL SINGH BAGGA HAS BECOME THE ADDITIONAL DIRECTOR OF THE SAID COMPANY ON 24-04-2004, WAS FILED AS ADDITIONAL EVIDENCE BEFORE THE ITAT AND THE ITAT, VIDE PARA NO. 93, HAS ADMITTED THE ADDITIONAL EVIDENCE, CONTAINING THE BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND OTHER RELEVANT DETAILS OF M/S INTRA PORT INDIA LTD. BUT, ERRONEOUSLY THE TRIBUNAL HAS NOT CONSIDERED THE SAME FOR THE PURPOSE OF ADJUDICATION VIDE ORDERS DATED 03.08.2012. HE HAS DRAWN OUR ATTENTION TO VARIOUS DOCUMENTS FILED BEFORE THE TRIBUNAL TO DEMONSTRATE THAT NO PERSON FROM THE ASSESSEES GROUP WAS A DIRECTOR OF M/S 5 SHRI BALVINDER SINGH BAGGA, HYDERABAD. INTRA PORT INDIA LTD., TILL 24.04.2004. HE, THEREFORE, PRAYED THAT THE ISSUE MAY BE REMANDED TO THE FILE OF THE A.O FOR CONSIDERATION OF THE ISSUE ON MERITS IN THE LIGHT OF THE ADDITIONAL EVIDENCE FILED BY HIM. 4. THE LD. DR, HOWEVER OPPOSED THE REMAND OF THE MATTER TO THE FILE OF THE A.O. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND MATERIAL ON RECORD, WE FIND THAT THE TRIBUNAL HAS ALREADY ADMITTED THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. WE HAVE GONE THROUGH THE ADDITIONAL EVIDENCE AND FIND THAT NONE OF THE PERSONS OF THE ASSESSEES GROUP WAS THE DIRECTOR OF THE M/S INTRA PORT INDIA LTD., PRIOR TO 24.04.2004. THE INTEREST SHOWN AS PAYABLE TO M/S INTRA PORT INDIA LTD., WAS DISALLOWED BY THE A.O FOR THE A.YS 2001-02 TO 2004-05. ALL THESE A.YS ARE PRIOR TO THE COMPANY BEING TAKEN OVER BY THE ASSEESSEES GROUP. THEREFORE, THE A.O IS NOT RIGHT IN HOLDING THAT IN ORDER TO SET OFF THE LOSS OF M/S INTRA PORT INDIA LTD., THE INTEREST IS BEING CLAIMED TO HAVE BEEN PAYABLE TO M/S INTRA PORT INDIA LTD. BOTH THE AUTHORITIES BELOW HAVE PROCEEDED ON THE PREMISE THAT M/S INTRA PORT INDIA LTD., HAS BEEN TAKEN OVER BY THE ASSESSEE GROUP AND THAT IT IS THEREAFTER, THAT THE CLAIM IS BEING MADE. A SEARCH 6 SHRI BALVINDER SINGH BAGGA, HYDERABAD. HAS TAKEN PLACE IN THE CASE OF THE ASSESSEE GROUP ON 03.01.2002, WHEREAS M/S INTRA PORT INDIA LTD., IS ALLEGEDLY TAKEN OVER BY THE ASSESSEE GROUP ONLY FROM 24.04.2004. THEREFORE, THERE CANNOT BE ANY POSSIBILITY OF RAISING THE CLAIM OF INTEREST PAYABLE TO M/S INTRA PORT INDIA LTD., FOR THE A.Y 2001-02 TO 2004-05 AFTER TAKING OVER THE SAID COMPANY. IN VIEW OF THE SAME, WE ARE INCLINED TO REMIT THE ISSUE TO THE FILE OF THE A.O WITH A DIRECTION TO VERIFY AND DETERMINE AS TO WHEN THE COMPANY, M/S INTRA PORT INDIA LTD., WAS TAKEN OVER BY THE BAGGA GROUP, AFTER TAKING INTO CONSIDERATION ALL EVIDENCE FILED BY THE ASSESSEE INCLUDING THE ADDITIONAL EVIDENCE ADMITTED BY THE TRIBUNAL AND THEREAFTER TO DECIDE THE ISSUE OF ALLOWABILITY OF INTEREST. NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE GIVEN FAIR OPPORTUNITY OF HEARING. 6. IN THE RESULT THE ASSESSEES GROUNDS OF APPEAL NO. 4 IN ITA NO. 710 OF 2006, GROUND NO. 3 IN ITA NO. 766 OF 2007 AND GROUND NO. 3 IN ITA NO. 904 OF 2008 ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 450/HYD/2012: 7. THIS APPEAL IS NOT A RECALLED MATTER BUT HAS COME UP FOR HEARING IN THE REGULAR COURSE. IN THIS APPEAL, THE 7 SHRI BALVINDER SINGH BAGGA, HYDERABAD. ASSESSEE IS CHALLENGING BOTH, THE REOPENING OF THE ASSESSMENT U/S 148 OF THE IT ACT, AND ALSO THE DISALLOWANCE OF INTEREST PAYABLE TO M/S INTRA PORT INDIA LTD. SINCE, WE HAVE ALREADY REMITTED THE ISSUE OF ALLOWABILITY OF INTEREST PAYABLE TO M/S INTRA PORT INDIA LTD., FOR THE A.Y 2002-03 TO 2004-05 TO THE FILE OF THE A.O AND SINCE, THE FACTS AND CIRCUMSTANCES ARE SAME FOR THIS ASSESSMENT YEAR ALSO, WE ARE INCLINED TO REMAND THE GROUNDS OF APPEAL NOS. 4 TO 7 TO THE FILE OF THE A.O WITH SIMILAR DIRECTIONS AS GIVEN IN THE A.YS 2002-03 TO 2004-05. THE LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT IN VIEW OF THE ABOVE REMAND, GROUNDS NO. 1 TO 3, AGAINST REOPENING OF ASSESSMENT, ARE NOT BEING PRESSED AT THIS STAGE. THEREFORE, GROUNDS 4 TO 7 ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES AND GROUNDS NO. 1 TO 3 AND 8 ARE REJECTED AS NOT PRESSED. 8. IN THE RESULT, ALL THE ASSESSEES APPEALS ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 15 TH DECEMBER, 2017. SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 15 TH DECEMBER, 2017 KRK 8 SHRI BALVINDER SINGH BAGGA, HYDERABAD. 1 SHRI BALVINDER SINGH BAGGA, C/O MURALI & CO., CAS, 6- 3-655/2/3, IST FLOOR, SOMAJIGUDA, HYDERABAD 2 3 ASST CIT, CENTRAL CIRCLE-1, HYDERABAD. DY. CIT, CENTRAL CIRCLE-1, HYDERABAD 4 CIT(A)-1, HYDERABAD 5 ADDL. CIT, RANGE-1, HYDERABAD. 6 THE DR, ITAT HYDERABAD 7 GUARD FILE