M/s. MGF Automobiles Ltd., New Delhi V. ACIT, New Delhi

ITA 4602/DEL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82131 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 16-09-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 17-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GUNJAN PRASHAD
• Assessee Lawyers: V K AGGARWAL
• Keywords: Search and seizure; Assessment record
• Section: 40A(3); 142(1); 131; 132

Judgement Text

ITA NO. 4602/DEL/2011 ASSTT. YEAR: 2008-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `E NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.4602/DEL/2011 ASSESSMENT YEAR : 2008-09 MGF AUTOMOBILES LTD., VS ASSTT.COMMIS SIONER OF INCOME TAX, 4/17-B, MGF HOUSE, CENTRAL C IRCLE-7, NEW DELHI. ASAF ALI ROAD, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI V.K. AGGARWAL RESPONDENT BY : SHRI GUNJAN PRASHAD, CIT DR O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF CIT(A)-I, NEW DELHI DATED 0.08.2011 IN APPEAL NO.37 8/09-10 FOR AY 2008-09. 2. GROUND NO. 1, 3 AND 4 OF THE ASSESSEE ARE GENERA L IN NATURE WHICH NEED NO ADJUDICATION ON MERITS. THE SOLE GROUND NO. 2 OF T HE ASSESSEE READS AS UNDER:- 2. THE LD. CIT (A) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN CONFIRMING THE ADDITION OF RS. 33,90,5 501- ON ACCOUNT OF CASH FOUND DURING THE SEARCH ESPECIALLY IN VIEW OF THE FOLLOWING: - A) BY HOLDING THAT DURING THE SEARCH, NEITHER CONFI RMATION WAS FILED NOR BOOKS OF ACCOUNT OF M/S MGF DEVELOPME NT LTD. WERE PRODUCED. ITA NO. 4602/DEL/2011 ASSTT. YEAR: 2008-09 2 B) IN IGNORING THE FACT THAT IMPREST WAS TAKEN FOR BUSINESS PURPOSES. C) IN HOLDING THAT THE APPELLANT HAS FAILED TO EXPL AIN WHY IMPREST WAS TAKEN WITHOUT PROVIDING ANY OPPORTUNITY TO EXPLAIN THE SAME. D) IN REFERRING TO SECTION 269SS AND 40A(3) WHICH ARE NOT APPLICABLE IN RESPECT OF IMPREST. 3 . BRIEFLY STATED, THE FACT GIVING RISE TO THIS APPEAL ARE THAT A SEARCH AND SEIZURE OPERATION U/S 132 OF THE INCOME TAX ACT WAS CARRIED OUT IN THE CASE OF THE ASSESSEE ON 12.09.2007. SUBSEQUENTLY, ALL RELA TED CASES OF THE ASSESSEE WERE TRANSFERRED AND CENTRALISED BY THE CIT, DELHI-II VI DE ORDER DATED 13.02.2008. THE ASSESSEE FILED A RETURN FOR THE YEAR UNDER CONS IDERATION ON 29.9.2008 DECLARING AN INCOME OF RS.68,21,192/- SHOWING INCOM E FROM BUSINESS AND PROFESSION. NOTICES U/S 143(2) AND 142(1) ALONG WI TH A QUESTIONNAIRE WERE SERVED ON THE ASSESSEE. THE AO NOTICED THAT DURING THE SEARCH AND SEIZURE OPERATION, CASH AMOUNTING TO RS.48,46,130 WAS FOUND FROM THE OFFICE PREMISES OF THE COMPANY. THE ASSESSEE WAS ASKED TO JUSTIFY THE CASH FOUND IN ITS PREMISES BY SHOWING CASH IN HAND IN THE BOOKS. THE AO FURTH ER OBSERVED THAT THE BOOKS PRODUCED IN SUPPORT OF THE SAME WERE NOT REFLECTING CASH IN HAND OF RS. 48,00,000/- DESPITE THE FACT THAT ASSESSEE WAS GIVE N SUFFICIENT OPPORTUNITY TO EXPLAIN THE EXISTENCE OF ABOVE CASH IN ITS PREMISES AS PER THE BOOKS OF ACCOUNTS. WITH THESE OBSERVATIONS, THE AO MADE AN ADDITION OF RS. 48 LAKH AS UNEXPLAINED CASH FOUND DURING THE SEARCH. ITA NO. 4602/DEL/2011 ASSTT. YEAR: 2008-09 3 4. THE AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFOR E THE CIT(A) WHICH WAS PARTLY ALLOWED DELETING THE ADDITION OF RS.14,09,45 0/- AND REMAINING AMOUNT OF ADDITION OF RS.33,90,550/- WAS UPHELD AND CONFIRMED . 5. NOW, THE AGGRIEVED ASSESSEE IS BEFORE THIS TRIBU NAL WITH THE MAIN GROUND AS REPRODUCED HEREINABOVE. 6. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CA REFULLY PERUSED THE RECORD. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THA T AS PER REMAND REPORT DATED 06.06.2011 SUBMITTED TO CIT(A) BY THE AO, IT HAS BE EN MENTIONED THAT REGARDING BALANCE CASH OF RS.33,90,550/-, THE ASSES SEE HAD FURNISHED CONFIRMATION DURING THE COURSE OF ASSESSMENT PROCEE DINGS TO THE EFFECT THAT THIS AMOUNT BELONGED TO M/S MGF DEVELOPMENT LTD. AND THE CONFIRMATORY LETTER DATED 13.11.2009 WAS PLACED ON RECORD. LD. COUNSEL VEHEMENTLY CONTENDED THAT THE AO, DESPITE THE CONFIRMATION, WRONGLY HELD THAT THE ALLEGED CONFIRMATION WAS FURNISHED MORE THAN TWO YEARS AFTER THE DATE OF SEARCH AND THE SAME APPEARS TO BE AN AFTERTHOUGHT ON THE PART OF THE ASSESSEE T O EXPLAIN THE CASH FOUND AT THE TIME OF SEARCH. 7. LD. COUNSEL SUBMITTED THAT THE AO COULD HAVE VER IFIED THIS VERY FACTUM FROM THE ASSESSMENT RECORD OF M/S MGF DEVELOPMENT L TD. WHO GAVE CONFIRMATION BUT WITHOUT MAKING ANY EXERCISE, THE A O WAS NOT JUSTIFIED IN REJECTING THE EXPLANATION AND CONFIRMATION OF THE A SSESSEE. LD. COUNSEL OF THE ASSESSEE HAS ALSO DRAWN OUR ATTENTION TOWARDS PAPER BOOK PAGE NO. 3 PARA 5 AND ITA NO. 4602/DEL/2011 ASSTT. YEAR: 2008-09 4 SUBMITTED THAT THE ASSESSEE ALSO SUBMITTED DURING T HE ASSESSMENT PROCEEDINGS THAT THE CASH BALANCE OF RS.33,90,550 BELONGED TO M GF DEVELOPERS LTD. AS THE SAID CASH OF THE COMPANY WAS FOUND LYING IN THE PRE MISES OF THE ASSESSEE COMPANY ON THE DATE OF SEARCH AS THE SAME WAS GIVEN TO THE ASSESSEE COMPANY AS IMPREST AMOUNT FOR BUSINESS PURPOSES. THIS LETT ER IS DATED 15.12.09. LD. COUNSEL FOR THE ASSESSEE HAS ALSO DRAWN OUR ATTENTI ON TOWARDS PAPER BOOK PAGE NO. 31 AND SUBMITTED THAT AS PER CASH IN HAND ACCOU NT OF M/S MGF DEVELOPERS LTD., THERE WAS AN ENTRY OF PAYMENT TO THE ASSESSEE ON 8.9.2007 WHICH CLEARLY REFLECTS THAT THE AMOUNT OF RS.33,90,450/- WAS GIVE N AS IMPREST TO THE ASSESSEE COMPANY WHICH FURTHER GETS CONFIRMED FROM THE IMPRE ST LEDGER ACCOUNT OF MGF AUTOMOBILE PAPER BOOK PAGE 33. 8. LD. COUNSEL OF THE ASSESSEE HAS FURTHER DRAWN OU R ATTENTION TOWARDS PAPER BOOK PAGE NO. 57 AND SUBMITTED THAT ON STATEMENT RE CORDED ON OATH ON 16.10.2007 U/S 131 OF THE ACT, SHRI SHRAVAN GUPTA S /O SHRI RAJEEV GUPTA, MD OF MGF GROUP OF COMPANIES STATED THAT THE CASH WITH DRAWAL IN THE VARIOUS COMPANIES HAS BEEN DONE FOR MEETING THE VARIOUS EXP ENSES RELATED TO LAND ACQUISITION AND WITH LAND ACQUISITION TEAM AS PER B OOKS OF ACCOUNTS. LD. COUNSEL FURTHER STATED THAT THE MR. SHRAVAN GUPTA C LEARLY REPLIED TO THE QUESTIONS OF THE REVENUE AUTHORITIES THAT THE RELEV ANT DETAILS WOULD BE PROVIDED FOR VERIFICATION. LD. COUNSEL HAS ALSO DRAWN OUR A TTENTION TOWARDS PAPER BOOK PAGE 42 AND SUBMITTED THAT THE SAME IMPUGNED AMOUNT HAS BEEN RETURNED BY THE ITA NO. 4602/DEL/2011 ASSTT. YEAR: 2008-09 5 ASSESSEE TO M/S MGF DEVELOPERS LTD. ON 15.2.2007 WH ICH ALSO FORTIFIES THE EXPLANATION OF THE ASSESSEE THAT THE IMPUGNED AMOUN T OF ADDITION UPHELD AND CONFIRMED BY THE CIT(A) WAS RETURNED BY THE ASSESSE E TO M/S MGF DEVELOPERS LTD. 9. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS FIRST APPELLATE P ROCEEDINGS, THE ASSESSEE CLEARLY SUBMITTED A SUSTAINABLE EXPLANATION THAT TH E AMOUNT OF CASH SEIZED WAS INCLUSIVE OF IMPREST AMOUNT RECEIVED FROM MGF DEVEL OPMENT LTD. AND THIS AMOUNT WAS RETURNED TO THE RESPECTIVE MGF DEVELOPME NT LTD. 15.2.2007. LD. COUNSEL SUBMITTED THAT THE ASSESSEE COULD GET AN OP PORTUNITY TO SUBMIT THE EXPLANATION BEFORE THE AUTHORITIES WHEN THE SAME WA S ASKED FOR DURING THE ASSESSMENT AND APPELLATE PROCEEDINGS. THE ASSESSE E CANNOT SUBMIT THE SAME ON HIS OWN WITHOUT ANY PROCEEDING. LD. COUNSEL HAS AG AIN DRAWN OUR ATTENTION TOWARDS PAPER BOOK PAGE NO. 57 AND SUBMITTED THAT M D OF THE COMPANY SHRI SHRAVAN GUPTA CLEARLY REPLIED THAT RELEVANT DETAIL WOULD BE PROVIDED FOR VERIFICATION. LD. COUNSEL FINALLY PRAYED THAT THE IMPUGNED ADDITION MAY KINDLY BE DELETED AND AO MAY BE DIRECTED ACCORDINGLY. 10. REPLYING TO THE ABOVE, LD. DR SUBMITTED THAT NO BOOKS OF ACCOUNTS WERE FOUND AT THE TIME OF SEARCH AND SEIZURE OPERATION. THE DR FURTHER SUBMITTED THAT TO VERIFY THE JUSTIFICATION OF CASH AMOUNT OF RS. 4 8 LAKH, THE ONUS WAS ON THE ASSESSEE TO SUBMIT PROPER AND JUSTIFIED EXPLANATIO N THAT THE IMPUGNED AMOUNT OF ITA NO. 4602/DEL/2011 ASSTT. YEAR: 2008-09 6 RS.33,90,450/- WAS IMPREST AMOUNT GIVEN BY M/S MGF DEVELOPMENT LTD. LD. DR VEHEMENTLY CONTENDED THAT THIS KIND OF EXPLANATI ON REQUIRES DEEP INQUIRY OF BOOKS OF ACCOUNTS AND BANK STATEMENT OF BOTH THE PA RTIES WHICH WERE NOT PRODUCED, THEREFORE, ADDITION WAS JUSTIFIED. 11. ON CAREFUL CONSIDERATION OF ABOVE, WE ARE OF TH E VIEW THAT DURING THE STATEMENT RECORDED U/S 131 OF THE ACT, THE MD OF TH E COMPANY MR. SHRAVAN GUPTA STATED THAT THE REQUIRED DETAIL AND OTHER INF ORMATION WILL BE SUBMITTED FOR VERIFICATION AS AND WHEN THE SAME WILL BE REQUIRED. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE STATED THAT THE CASH AMOU NT OF RS.33,90,550 BELONGED TO M/S MGF DEVELOPMENT LTD. THIS LETTER DATED 15.1 2.2009 WAS SUBMITTED TO THE AO. FURTHER, DURING FIRST APPELLATE PROCEEDING S, THE AO ADMITTED THAT THE ASSESSEE HAD FURNISHED CONFIRMATION DURING THE COUR SE OF ASSESSMENT PROCEEDING TO THE EFFECT THAT THE IMPUGNED AMOUNT OF CASH BELO NGED TO M/S MGF DEVELOPMENT LTD. AND THE AO ALSO ALLEGED THAT THE C ONFIRMATION HAS BEEN FURNISHED AFTER MORE THAN TWO YEARS OF SEARCH, THER EFORE, IT APPEARS TO BE AN AFTER THOUGHT WHICH CANNOT BE THE BASIS FOR REJECTION OF CONFIRMATION WITHOUT ANY FURTHER EXAMINATION AND VERIFICATION FROM THE ASSES SMENT RECORDS OF M/S MGF DEVELOPMENT LTD. 12. WE ALSO NOTE THAT THE DR HAS NOT DISPUTED THE P OINT THAT THE IMPUGNED AMOUNT WAS RETURNED BY THE ASSESSEE TO M/S MGF DEVE LOPMENT LTD. ON 15.9.2007 WHICH IS CLEARLY REFLECTED FROM THE BOOKS OF ACCOUNTS OF THE ASSESSEE ITA NO. 4602/DEL/2011 ASSTT. YEAR: 2008-09 7 AS WELL AS CASH IN HAND AND ASSESSEES ACCOUNT IN T HE BOOKS OF M/S MGF DEVELOPMENT LTD. UNDER THESE CIRCUMSTANCES, WE REA CH TO A CONCLUSION THAT THE ASSESSEE ALSO EXPLAINED THE AMOUNT OF CASH FOUND DU RING THE COURSE OF SEARCH THAT AN AMOUNT OF RS.33,90,450/- BELONGED TO M/S MG F DEVELOPMENT LTD. WHICH WAS RETURNED IN DUE COURSE OF BUSINESS. HENC E, WE ARE INCLINED TO HOLD THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN MA KING AND CONFIRMING THE ADDITION ON THIS AMOUNT IN THE HANDS OF THE ASSESSE E. ACCORDINGLY, SOLE GROUND OF THE ASSESSEE IS HEREBY ALLOWED. BEFORE WE PART WITH THE ORDER, WE ALSO MAKE IT CLEAR THAT THE ASSESSEE MADE A LEGAL OBJECTION T HAT REFERRING TO SECTION 269SS AND 40A(3) OF THE ACT IS WRONG AS THESE ARE NOT APP LICABLE IN RESPECT OF IMPREST. SINCE WE ARE HEARING THE APPEAL REGARDING QUANTUM P ROCEEDINGS, THEREFORE, WE REFUSE TO COMMENT ON THE APPLICABILITY OF THESE PRO VISIONS AND GROUND NO. 2(D) OF THE ASSESSEE IS DISMISSED AS IRRELEVANT AND PREM ATURE. REMAINING GROUND NO.2(A) (B) AND (C) ARE ALLOWED AS INDICATED ABOVE. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.11.2014. SD/- SD/- (G.D. AGRAWAL) (CHANDRAMOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT. 14 TH NOVEMBER, 2014 GS ITA NO. 4602/DEL/2011 ASSTT. YEAR: 2008-09 8 COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR