ITO 9(3)(3), MUMBAI V. VAIJAYANTI INVESTMENT & REALTY P. LTD, MUMBAI

ITA 4572/MUM/2010

• Counselvise Citation: 457219914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 29-08-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 02-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAMTAM BOSE
• Assessee Lawyers: VIJAY MEHTA
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AN D SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. 4572/MUM./2010 (ASSESSEE YEAR : 2005-06 ) INCOME TAX OFFICER WARD-9(3)(3), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. APPELLANT V/S M/S. VIJAYANTI INVESTMENT & REALTY P. LTD. SAHARA INDIA POINT CTS, 40-44, S.V. ROAD GOREGAON (W), MUMBAI 400 104 PAN AABCV7747H .... RESPONDENT REVENUE BY : MR. SHAMTAM BOSE ASSESSEE BY : MR. VIJAY MEHTA DATE OF HEARING 08.09.2011 DATE OF ORDER 16.09.2011 O R D E R PER J. SUDHAKAR REDDY, A.M. THIS APPEAL PREFERRED BY THE ASSESSEE, IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 16 TH MARCH 2010, PASSED BY THE COMMISSIONER (APPEALS)-XX, MUMBAI, FOR ASSESSMENT YEAR 2005-06. 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF REAL ESTATE AND CONSULTANCY SERVICE S. DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2005-06, THE ASSES SEE PURCHASED LAND AT VIJAYANTI INVESTMENT & REALTY P. LTD. ITA NO.4572/M./2010 2 FIROZABAD FOR REAL ESTATE DEVELOPMENT AT A TOTAL CO ST OF ` 1,64,08,840. THE LAND WAS PURCHASED THROUGH SAHARA INDIA COMMERCIAL CORPORATION LTD. (FOR SHORT SICCL ). SICCL ISSUED A CERTIFICATE THAT PAYMENTS WERE MA DE DIRECTLY BY IT AND ITS ASSOCIATES FOR THE PURCHASE OF LAND. THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 133(6) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) TO PUNJAB NATIONAL BANK, ALIGANJ BRANCH, LUCKNOW, FOR OBTAINING CONFIRMATION IN RESPECT OF REMITTENCES MADE BY SICC L ON BEHALF OF THE ASSESSEE COMPANY TO THE LANDLORD FOR PURCHASE OF LA ND. THE BANKERS HAD CONFIRMED THE ISSUANCE OF DEMAND DRAFT IN SEVEN INS TANCES ON 4 TH FEBRUARY 2005. AS FAR AS DEMAND DRAFTS ISSUED ON 14 TH FEBRUARY 2005, AMOUNTING TO ` 5,62,100 AND ` 11,24,200, PUNJAB NATIONAL BANK STATED THAT NO SUC H DEMAND DRAFTS WERE ISSUED BY IT. THE ASSESSING OFFI CER ISSUED NOTICE UNDER SECTION 133(6) TO SICCL AND IN REPLY ON 15 TH NOVEMBER 2007, SICCL CONFIRMED THAT IT HAS ADVANCED A LOAN TO ASSESSEE C OMPANY. ITS PERMANENT ACCOUNT NUMBER HAD BEEN GIVEN AND THE ADDRESS OF TH E ASSESSING OFFICER WITH WHOM IT FILES ITS RETURN OF INCOME, HAD BEEN G IVEN. IN SHORT, THE SICCL HAS DIRECTLY CONFIRMED TO THE ASSESSING OFFICER THA T IT HAS ADVANCED A LOAN OF ` 1,64,08,840 AND SICCL HAS ALSO ISSUED CERTIFICATE DATED 26 TH FEBRUARY 2007, CONFIRMING THE ADVANCING OF UN-SECURED LOAN O F ` 1,64,08,840, TO THE COMPANY. THE ASSESSING OFFICER, WHILE ACKNOWLEDGING THE CONFIRMATION MADE BY THE SICCL, OBSERVED THAT THE ASSESSEE HAS NOT FU RNISHED THE NAMES AND ADDRESSES OF THE TWO ASSOCIATES OF SICCL WHICH HAVE REMITTED THE MONEY TO THE ASSESSEE COMPANY. HE HELD THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE LOCUS STANDI OF THESE ASSOCIATES IN THE ENTIRE TRAN SACTIONS AND MADE AN ADDITION ON THE GROUND THAT THE INVESTMENT IN QUEST ION IS FROM UNEXPLAINED SOURCE. 3. THE ASSESSEE, BEING AGGRIEVED, CARRIED THE MATTER B EFORE THE FIRST APPELLATE AUTHORITY, WHEREIN THE COMMISSIONER (APPE ALS) ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING THAT WHEN THESE TWO DE MAND DRAFTS HAVE BEEN ISSUED BY PHIROZABAD MAIN BRANCH OF PUNJAB NATIONAL BANK, THE ASSESSING OFFICER ERRED IN MAKING AN ENQUIRY WITH ALIGANJ BRA NCH OF PUNJAB NATIONAL VIJAYANTI INVESTMENT & REALTY P. LTD. ITA NO.4572/M./2010 3 BANK AND COMING TO AN OBVIOUS CONCLUSION THAT ALIGA NJ BRANCH HAS NOT ISSUED THESE DEMAND DRAFTS. HE OBSERVED THAT THE ASSESSING OFFICER HAS NOT DISPUTED THE CONFIRMATION FILED BY SICCL WHICH HAS FUNDED THE INVESTMENT. ACCORDINGLY, THE COMMISSIONER (APPEALS) GRANTED REL IEF TO THE ASSESSEE. THE REVENUE, BEING AGGRIEVED BY THE ORDER PASSED BY THE COMMISSIONER (APPEALS), IS IN APPEAL BEFORE THE TRIBUNAL. 4. BEFORE US, LEARNED DEPARTMENTAL REPRESENTATIVE, MR. SHANTAM BOSE, ON BEHALF OF THE REVENUE, SUBMITTED THAT THE BASIS ON WHICH THE ASSESSING OFFICER MADE THE ADDITION WAS TOTALLY DISREGARDED B Y THE COMMISSIONER (APPEALS). HE POINTED OUT THAT THE ASSESSEE HAS NOT GIVEN THE NAMES AND ADDRESSES OF THE ASSOCIATE CONCERNS WHICH HAVE REMI TTED THE AMOUNTS TO THE LANDLORD FOR/ON BEHALF OF SICCL. HE VEHEMENTLY CONT ENDED THAT THE IDENTITY OF THE ASSOCIATE CONCERNS SHOULD HAVE BEEN FURNISHE D. HE REFERRED TO THE FINDINGS OF THE COMMISSIONER (APPEALS) AND SUBMITTE D THAT GENERAL EXPLANATIONS HAVE BEEN ACCEPTED AND NO EFFORTS HAS BEEN MADE TO IDENTIFY THE ASSOCIATES OF SICCL WHO HAS REMITTED THE MONEY. 5. LEARNED COUNSEL, MR. VIJAY MEHTA, ON BEHALF OF THE ASSESSEE, SUBMITTED THAT THE ENTIRE FUND BELONGS TO SICCL AND THAT THIS FACT WAS CONFIRMED BY THEM BY FILING NOT ONLY ACCOUNT COPIES BUT ALSO CONFIRMATION LETTERS. HE POINTED OUT THAT THE ASSESSING OFFICER MADE DIRECT ENQUIRIES WITH SICCL AND SICCL HAD DIRECTLY REPLIED TO THE ASSESSI NG OFFICER CONFIRMING THE ADVANCING OF THE LOAN. HE VEHEMENTLY CONTENDED THAT THE PERSONS THROUGH WHOM SICCL HAD ADVANCED THE LOAN IS OF NO CONSEQUEN CE AS LONG AS THE FUND BELONGS TO SICCL AND ITS CONFIRMATION THEREOF. HE P OINTED OUT THAT THE ASSESSING OFFICER HAD, AT THE FAG END OF TIME BARRI NG PERIOD, RAISE THIS ISSUE AND HAD NOT GIVEN SUFFICIENT TIME TO THE ASSESSEE. HE POINTED OUT THAT BEFORE THE COMMISSIONER (APPEALS), THE ASSESSEE FURNISHED THE DETAILS OF ASSOCIATES ALONG WITH ADDRESSES AND PERMANENT ACCOUNT NUMBER. LEARNED COUNSEL SUPPORTED THE ORDER OF THE COMMISSIONER (APPEALS). VIJAYANTI INVESTMENT & REALTY P. LTD. ITA NO.4572/M./2010 4 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE, IN REPLY, SUBMITTED THAT THE COMMISSIONER (APPEALS) SHOULD HAVE CALLED FOR THE R EMAND REPORT AND SHOULD NOT HAVE ACCEPTED THE EXPLANATION OF THE ASS ESSEE. HE SUBMITTED THAT THE ISSUE MAY BE RESTORED TO THE FILE OF ASSESSING OFFICER. LEARNED COUNSEL OPPOSED THESE CONTENTIONS BY RELYING ON CERTAIN DEC ISIONS. 7. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON PERUSAL OF THE PAP ERS ON RECORD, WE FIND THAT THE FUND IN QUESTION WAS GIVEN BY SICCL. SICCL GAVE CONFIRMATION LETTER DATED 26 TH FEBRUARY 2007, TO THAT EXTENT. ON AN ENQUIRY MADE DIRECTLY BY THE ASSESSING OFFICER, SICCL NOT ONLY CONFIRMED THE TRA NSACTIONS BUT ALSO ENCLOSED A COPY OF THE ASSESSEE COMPANYS ACCOUNT A S APPEARING IN ITS BOOKS OF ACCOUNT. THIS ASPECT HAS NOT BEEN DISPUTED BY TH E ASSESSING OFFICER. THE MERE FACT THAT CERTAIN OPERATIONS OF THE LOAN HAVE BEEN ROUTED THROUGH AN ASSOCIATE MR. ASHUTOSH AWASTHI, DO NOT RESULT IN LO AN BECOMING UNEXPLAINED. AS BOTH SICCL AND MR. ASHUTOSH AWASTHI, ARE INCOME TAX ASSESSEE AND AS ALL THE DETAILS WERE AVAILABLE WITH THE ASSESSING OFFIC ER, QUESTION OF TREATING THE AMOUNT RECEIVED FROM THEM AS UNEXPLAINED DOES NOT A RISE. AS ALREADY STATED, SINCE THE SICCL HAS CONFIRMED THE FACT OF A DVANCING THE LOAN AND AS THE ENTIRE AMOUNT HAS BEEN RECORDED IN ITS BOOKS OF ACCOUNT, THE QUESTION OF MAKING AN ADDITION DOES NOT ARISE. CONSEQUENTLY, WE UPHOLD THE ORDER PASSED BY THE COMMISSIONER (APPEALS) AND DISMISS TH E GROUND RAISED BY THE REVENUE. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER 2011 SD/- V. DURGA RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 16 TH SEPTEMBER 2011 VIJAYANTI INVESTMENT & REALTY P. LTD. ITA NO.4572/M./2010 5 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, F BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI DATE INITIAL 1. DRAFT DICTATED ON 6.9.2011 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 8.9.2011 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 9.9.2011 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 9.9.2011 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 9.9.2011 SR.PS 6. DATE OF PRONOUNCEMENT 16.9.2011 SR.PS 7. FILE SENT TO THE BENCH CLERK 16.9.2011 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER