ACME HOUSING (I) P. LTD, MUMBAI V. DCIT CEN CIR 9, MUMBAI

ITA 4661/MUM/2011

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2442 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 12-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 09-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VANDANA SAGAR
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO. 4661/MUM/2011 (ASSESSMENT YEAR : 2009-10) M/S. ACME HOUSING (INDIA) PVT. LTD., ACME GHAR, 19 K.D.ROAD, BEHIND RASRAJ RESTAURANT, VILE PARLE (WEST), MUMBAI 400 056 PAN: AADCA 0705E ... APPELLANT VS. THE DY. COMMISSIONER OF INCOME TAX, CEN. CIR.9, OLD CGO BUILDING , MK ROAD, MUMBAI 400 020 .... RESPONDENT APPELLANT BY : SHRI VIJAY MEHTA RESPONDENT BY : MS. VANDANA SAGAR DATE OF HEARING : 24/08/2015 DATE OF PRONOUNCEMENT : 18/11/2015 ORDER PER G.S. PANNU,AM: THE CAPTIONED APPEAL IS PREFERRED BY THE ASSES SEE AND IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 28/03/ 2011 PASSED BY CIT(A) -37, MUMBAI PERTAINING TO THE ASSESSMENT YEA R 2009-10, WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSI NG OFFICER DATED 15/12/2010 UNDER SECTION 143(3) OF THE INCOME TA X ACT, 1961( IN SHORT THE ACT). 2 ITA NO. 4661/MUM/2011 (ASSESSMENT YEAR : 2009-10) 2. THE FIRST ISSUE IN THIS APPEAL RELATES TO AN ADD ITION OF RS.4,68,847/- MADE BY THE INCOME TAX AUTHORITIES ON ACCOUNT OF UNEXPLAINED CASH UNDER SECTION 69A OF THE ACT. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE ASSES SEE IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND IS, INTER-ALIA, ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. THE ASSESSEE-COMPANY IS A PART OF ACME GROUP COMPRISIN G OF VARIOUS CONCERNS, WHICH WAS SUBJECT TO A SEARCH ACTION UNDE R SECTION 132(1) OF THE ACT ON 24/07/2008. IN THE ENSUING ASSESSMENT P ROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT AT THE TIME OF SEAR CH AT THE OFFICE PREMISES OF THE ASSESSEE-COMPANY, CASH OF RS.12,30 ,000/- WAS FOUND AS PER PANCHNAMA DATED 25/07/2008 AND 06/08/2 008, OUT OF WHICH CASH OF RS.12,00,000/- WAS SEIZED. ON BEING ASKED TO EXPLAIN THE SOURCE OF CASH FOUND, THE ASSESSEE EXPLAINED THAT THE CASH FOUND AT THE TIME OF SEARCH WAS DULY ACCOUNTED FOR IN TERMS OF THE CASH BALANCES AVAILABLE IN THE BOOKS OF ACCOUNT OF DIFFERENT GROUP ENTITIES, I NCLUDING THE ASSESSEE- COMPANY. IN PARA 5.1 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS REPRODUCED THE EXPLANATION OF THE ASSESSEE AND THE CASH BALANCE AVAILABLE AS PER THE BOOKS OF ACCOUNT OF DIFFERENT ENTITIES AS ON 24/07/2008. THE ASSESSING OFFICER ACCEPTED THE CO NTENTION OF THE ASSESSEE SO FAR AS IT RELATED TO THE CASH BALANCE A PPEARING IN THE ASSESSEE-COMPANYS BOOKS OF ACCOUNT OF RS.7,61,153/ -. THE ASSESSEES EXPLANATION BASED ON THE CASH BALANCE AVAILABLE IN THE ACCOUNT BOOKS OF THREE OTHER ENTITIES NAMELY, ACME ASSOCIATES R S.1,81,364/-; ACME COMBINES RS.1,30,607/- AND PARTH CONSTRUCTION- 2,66,055/- WAS NOT ACCEPTED. ACCORDINGLY, THE EXPLANATION REGARDING T HE CASH OF RS.4,68,847/- (I.E. 12,30,000 MINUS RS.7,61,153) WAS NOT FOUND 3 ITA NO. 4661/MUM/2011 (ASSESSMENT YEAR : 2009-10) SATISFACTORY AND THE SAME WAS CONSIDERED AS UNEXPLA INED CASH WITHIN THE MEANING OF SECTION 69A OF THE ACT. BEFORE CIT( A), ASSESSEE REITERATED ITS SUBMISSIONS MADE BEFORE THE ASSESSIN G OFFICER BUT CIT(A) HAS AFFIRMED THE STAND OF THE ASSESSING OFFICER. 4. BEFORE US, THE LD. REPRESENTATIVE FOR THE ASSESS EE POINTED OUT THAT THE PANCHNAMAS DATED 25/07/2008 AND 06/08/20 08, SHOWING INVENTORIES OF CASH FOUND ITSELF SHOW THAT THE CASH FOUND WAS BELONGING NOT ONLY TO THE ASSESSEE-COMPANY BUT ALSO TO OTHER GROUP CONCERNS EXISTING AT THE ADDRESS. IN THIS CONTEXT, OUR REFE RENCE HAS BEEN INVITED TO PAGES 35 TO 38 OF THE PAPER BOOK, WHEREIN IS PL ACED COPIES OF THE RELEVANT PANCHNAMAS. IT WAS, THEREFORE, CONTENDE D THAT THE CASH FOUND AT THE TIME OF SEARCH REQUIRES TO BE CONSIDER ED IN THE LIGHT OF THE CASH BALANCES AVAILABLE IN THE ACCOUNT BOOK OF THE VARIOUS GROUP ENTITIES AND, IF IT IS CONSIDERED IN THE SAID LIGHT , THERE WOULD REMAIN NO DIFFERENCE. APART THEREFROM, THE LD. REPRESENTATI VE FOR THE ASSESSEE ALSO REFERRED TO THE STATEMENT RECORDED UNDER SECTI ON 132(4) OF THE ACT ON 25/07/2008 OF SHRI KETAN JAYANTILAL MEHTA, WHO W AS A PARTNER IN THE ACME GROUP CONCERNS AND ALSO DIRECTOR IN SOME OF T HE GROUP COMPANIES. BY REFERRING TO THE ANSWER TO QUESTION NO.5, THE LD. REPRESENTATIVE FOR THE ASSESSEE EXPLAINED THAT TH E DETAILS OF CASH BALANCES APPEARING IN THE BOOKS OF ACCOUNT OF THE ACME GROUP WAS FURNISHED AS ANNEXURE-D, WHICH CLEARLY SHOWS THE AV AILABILITY OF CASH BALANCE IN THE THREE CONCERNS EXPLAINED DURING THE ASSESSMENT PROCEEDINGS. ON THE AFORESAID BASIS, IT IS SOUGHT TO BE CONTENDED THAT THE CASH BALANCE OF RS.4,68,847/- COULD NOT BE CONS IDERED AS UNEXPLAINED WITHIN THE MEANING OF SECTION 69A OF TH E ACT. 4 ITA NO. 4661/MUM/2011 (ASSESSMENT YEAR : 2009-10) 5. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE APPEARING FOR THE REVENUE HAS DEFENDED THE ACTION OF THE LOWE R AUTHORITIES BY POINTING OUT THAT NO SATISFACTORY EXPLANATION HAS B EEN RENDERED BY THE ASSESSEE WITH REGARD TO THE EXCESS CASH FOUND OF RS .4,68,847/-. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN OUR CONSIDERED OPINION, EXPLANATION RENDERED BY THE ASS ESSEE IN THE STATEMENT RECORDED AT THE TIME OF SEARCH AND ALSO THE MANNER IN WHICH THE PANCHNAMAS HAVE BEEN PREPARED INVENTORI SING THE CASH FOUND CLEARLY ESTABLISH THAT THE CASH BALANCE TO TH E EXTENT OF RS.4,68,847/- COULD NOT BE CONSIDERED AS UNEXPLAINE D WITHIN THE MEANING OF SECTION 69A OF THE ACT. QUITE CLEARLY, EVEN AS PER THE PANCHNAMAS PREPARED AT THE TIME OF SEARCH, THE INVENTORY OF CASH FOUND REVEALS THAT IT WAS MADE WITH RESPECT TO THE ASSESSEE COMPANY AS WELL AS OTHER GROUP CONCERNS. IN THE STATEMENT RE CORDED ON 25/07/2008, THE DETAILS OF CASH BALANCES IN THE CAS E OF GROUP CONCERNS WAS ALSO REFERRED, WHICH IS APPEARING AS ANNEXURE- D TO THE STATEMENT, A COPY OF WHICH IS PLACED IN THE PAPER BOOK. THE SAID STATEMENT SHOWS AS MUCH AS 40 CONCERNS AND SIX INDIVIDUALS BELONG ING TO THE GROUP AND THEIR RESPECTIVE CASH BALANCES. THEREFORE, THE CAS H FOUND IN THE PREMISES AT THE TIME OF SEARCH OUGHT TO BE EXAMINED WITH REFERENCE TO THE CASH BALANCES APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE GROUP, ESPECIALLY BECAUSE OF THE FACT THAT EVEN TH E PANCHNAMAS INVENTORISING THE CASH REFER TO ASSESSEE-COMPANY AS WELL AS OTHER GROUP CONCERNS. IN OUR CONSIDERED OPINION, THE ASS ESSING OFFICER AS WELL AS THE CIT(A) ERRED IN NOT CONSIDERING THE EXPLANA TION RENDERED BY THE ASSESSEE IN ITS PROPER PERSPECTIVE. CONSIDERING TH E AVAILABILITY OF CASH BALANCE IN THE BOOKS OF ACCOUNT OF OTHER GROUP CONC ERNS, NAMELY, ACME 5 ITA NO. 4661/MUM/2011 (ASSESSMENT YEAR : 2009-10) ASSOCIATES, ACME COMBINES AND PARTH CONSTRUCTIONS A S TABULATED IN PARA 5.1 OF THE ASSESSMENT ORDER, IN OUR VIEW, TH E ASSESSEE CAN BE SAID TO HAVE RENDERED A SATISFACTORY EXPLANATION WI TH REGARD TO THE CASH BALANCE OF RS.4,68,847/- ALSO. THEREFORE, WE SET A SIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE T HE ADDITION OF RS.4,68,847/- MADE UNDER SECTION 69A OF THE ACT. T HUS, ON THIS ASPECT ASSESSEE SUCCEEDS. 7. THE NEXT GRIEVANCE OF THE ASSESSEE IS WITH REGAR D TO A DISALLOWANCE OF RS.6,48,588- MADE BY THE INCOME TAX AUTHORITIES BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT. IN THIS CONTEXT, BRIEF FACTS ARE THAT ASSESSEE WAS FOUND TO HAVE MADE INVE STMENT OF RS.9,64,99,723/- IN SHARES AND SECURITIES, ON WHICH IT HAD EARNED EXEMPT DIVIDEND INCOME OF RS.2,48,712/-. THE ASSES SING OFFICER WAS OF THE VIEW THAT INTEREST EXPENDITURE AS WELL AS ADMI NISTRATIVE EXPENSES RELATABLE TO THE EARNING OF EXEMPT INCOME WAS DISAL LOWABLE UNDER SECTION 14A OF THE ACT, WHICH WAS QUANTIFIED AT RS. 6,48,588/-. THIS DISALLOWANCE HAS ALSO BEEN AFFIRMED BY THE CIT(A) I N A COMBINED ORDER FOR THE EARLIER ASSESSMENT YEAR OF 2008-09. 8. AT THE TIME OF HEARING, THE LD. REPRESENTATIVE F OR THE ASSESSEE CONTENDED THAT SIMILAR ISSUE HAD COME UP BEFORE TH E TRIBUNAL IN THE CASE OF THE ASSESSEE FOR THE EARLIER ASSESSMENT YEA R VIDE ORDER IN ITA NO.4662/MUM/2011 & OTHERS DATED 15/5/2013 AND THE I SSUE HAS BEEN HELD AGAINST THE ASSESSEE. FOLLOWING THE AFORESAID SUBMISSION OF THE ASSESSEE, THE ORDERS OF THE AUTHORITIES BELOW ON TH IS ASPECT ARE AFFIRMED. ACCORDINGLY, ASSESSEE FAILS ON THIS ISSU E. 6 ITA NO. 4661/MUM/2011 (ASSESSMENT YEAR : 2009-10) 9. THE LAST ISSUE IN THE APPEAL RELATES TO THE ACT ION OF THE CIT(A) IN CONFIRMING AN ADHOC DISALLOWANCE OF RS.2,65,803/-, BEING 10% OF VARIOUS EXPENSES ON ACCOUNT OF THEIR NON-BUSINESS P URPOSE FOR WANT OF VERIFICATION. ON THIS ASPECT ALSO, THE LD. REPRESE NTATIVE FOR THE ASSESSEE POINTED OUT THAT IN THE EARLIER YEARS VIDE ORDER DA TED 15/05/2013(SUPRA), THE MATTER HAS BEEN REMANDED BAC K TO THE FILE OF ASSESSING OFFICER FOR A DECISION AFRESH WITH CERTAI N DIRECTIONS. LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WOULD BE SATISFIED IF THE MATTER IS REMANDED BACK TO THE FIL E OF ASSESSING OFFICER IN THE SAME LIGHT. 10. LD. DEPARTMENTAL REPRESENTATIVE APPEARING FOR T HE REVENUE HAS NO OBJECTION TO THE AFORESAID PLEA OF THE ASSESSEE. 11. ACCORDINGLY, FOLLOWING THE PRECEDENT IN THE ASS ESSEES OWN CASE, BY WAY OF ORDER OF THE TRIBUNAL DATED 15/5/2013(SUP RA), WE RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER, WHO S HALL PASS AN ORDER AFRESH, KEEPING IN MIND THE DIRECTIONS OF THE TRIBU NAL IN ITS ORDER DATED 15/05/2013(SUPRA). THUS, ON THIS ASPECT ASSESSEE SU CCEEDS FOR STATISTICAL PURPOSES. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/11/2015. SD/- SD/- (SANDEEP GOSAIN) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI, DATED 18/11/2015 7 ITA NO. 4661/MUM/2011 (ASSESSMENT YEAR : 2009-10) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI VM , SR. PS