ITO3(1) , Indore V. M/s Parametric Trading P Ltd, Mumbai

ITA 543/Ind/2018

AI Insights

The case involves the Income Tax Officer-3(1), Indore as the appellant and M/s. Parametric Trading Pvt. Ltd. as the respondent. The appeal by the Revenue was directed against the order passed by the CIT(A), which arose from the assessment order by the ITO under Section 143(3) of the Income Tax Act, 1961 for the Assessment Year 2011-12. The primary issues in the appeal included the admission of additional evidence under Rule 46A and the deletion of various additions made by the ITO, which were contested by the Revenue. The Tribunal examined the merits of each contested addition and the procedural aspects of evidence admission, ultimately dismissing the Revenue's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122523 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-11-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 06-06-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 68; 143(3); 143(2); 43

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE (Convened through Virtual Court) BEFORE Ms. MADHUMITA ROY, JUDICIAL MEMBER & SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT MEMBER I.T .A . No .5 43 /I nd/ 20 18 (As se ss me nt Y ea r: 20 11- 12 ) In co me T ax Of fi ce r-3 (1 ) Ind or e Vs. M / s. Pa ra me tr ic T ra di ng Pvt . Lt d. 20 5, Su ja ta C ha mb ers , 2 n d Fl oor , 1/ 3 Ab hi ch a nd Ga nd hi Ma rg , Of f . Kat ha Baz ar M as ji d ( W ) , Mu mb ai - 40 00 09 PA N No . AA GC A4 20 7J (Appellant) .. (Respondent) Appellant by : Shri P. K. Mishra, CIT.D.R. Respondent by : Shri Sumit Nema, Sr. Advocate Dat e of H ea ri ng 22.11.2022 Dat e of P ro no un ce me nt 14.02.2023 O R D E R PER Ms. MADHUMITA ROY - JM: The instant appeal filed by the Revenue is directed against the order dated 07.03.2018 passed by the Commissioner of Income-Tax (Appeals)-II, Indore, (‘CIT(A)’ in short), arising out of the order dated 31.03.2014 passed by the ITO-3(1), Indore, under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for Assessment Year 2011- 12. 2. The Revenue has questioned the admission of additional evidence under Rule 46A of IT Rules by the Ld. CIT(A). ITA No. 543/Ind/2018 [ITO vs. M/s. Parametric Trading Pvt. Ltd.] Asst.Year.– 2011-12 - 2 - 3. On this aspect, we have heard both the parties. We do not find any strong submission on behalf of the Revenue on this count of admission of additional evidence under Rule 46A of the IT Rules. Rather the Ld. DR chose to counter the order passed by the Ld. CIT(A) on merit. Hence, this ground of appeal preferred by the Revenue is dismissed. 4. On merit, the deletion of addition made on the following counts has been challenged before us by the Revenue: i. Rs.23,67,56,210/- on account of outstanding for A.Y. 2009-10 recovered as per BRS ii. Rs.79,60,000/- on account of advances received iii. Rs.24,85,75,000/- on account of advances received against order iv. Rs.76,43,79,291/- on account of received against advances given 5. Apart from that deletion of addition of Rs.13,53,654/- on account of short term capital gain treating as business income. 6. The brief facts leading to this case is this that the assessee is a Private Limited Company engaged in the business of trade for pulses and other commodity, filed return of income electronically on 28.09.2011 declaring total income at Rs.11,22,487/- which was subsequently revised on 31.03.2013 by declaring revised total income at Rs.25,97,320/- for the year under consideration. The assessee company was incorporated on 31.03.2007 under the provision of Companies Act, 1956. 7. The case was selected for scrutiny. Notice under Section 143(2) of the Act dated 14.08.2013 was issued and served upon the assessee. On ITA No. 543/Ind/2018 [ITO vs. M/s. Parametric Trading Pvt. Ltd.] Asst.Year.– 2011-12 - 3 - 31.03.2014, the Ld. AO finalized assessment upon making addition under Section 68 of the Act to the tune of Rs.1,48,92,31,583/- in regard to the amount deposited in the bank account of the assessee. Further, addition of Rs.13,53,654/- has also been made by the Ld. AO treating the short term capital gain declared by the assessee in respect of sale of shares as profit from share trading activity. This particular addition is a double addition as the assessee has already disclosed short term capital gain in respect of the transaction of sale of shares as claimed by the assessee. The Ld. AO further made the addition of Rs.2,86,40,600/- in respect of share capital/share application, money treating the same as unexplained cash credit under Section 68 of the Act. So far as the first two additions are concerned these were deleted by the Ld. CIT(A) on 07.03.2018. Hence, the instant appeal preferred by the Revenue before us. 8. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. The Ld. AO made the addition of Rs.1,48,92,31,583/-. The brief facts leading to this case is that the assessee in the year under consideration received certain amounts from various parties for the purpose of its business. The name of parties, date of amount received, amount and nature of transactions has been duly reproduced by the Ld. CIT(A). The total amount received by the assessee was Rs.1,48,92,31,583/- as reflecting at Page Nos. 11 & 12 of the order passed by the Ld. CIT(A). 9. After careful consideration of the entire set of papers, we find that the addition made by the Ld. AO to the tune of Rs.1,48,92,31,583/- is having following components: S.N. Particulars Amount in Rs a. Application money for share 66,60,000 ITA No. 543/Ind/2018 [ITO vs. M/s. Parametric Trading Pvt. Ltd.] Asst.Year.– 2011-12 - 4 - b. Outstanding for 2009-10 recovered as per BRS 23,67,56,210 c. Advances received 79,60,000 d. Advances received against order 24,85,75,000 e. Received against Advances given 76,43,79,291 f. Received towards material sales 17,49,01,082 g. Wrongly repeated addition 5,00,00,000 Total 1,48,92,31,583 10. The addition in respect of the item mentioned in Clause b, c, d and e of the above table is under challenge before us. 11. In regard to the outstanding amount of Rs.23,67,56,210/- for A.Y 2009-10 recovered as per BRS, we find that a remand report was called for from the Ld. AO whereupon the Ld. AO in its remand report duly accepted these entries represented the amount of cheque deposited in the bank accounts in the earlier year and duly accounted in the books of account in the earlier year but the same was admittedly cleared in the current year. As the result whereof the assessee’s case made out to this effect that the said amount could not be added in the hands of the assessee in the current year as the same was not received in the current year seems to be acceptable. 12. Having regard to the acceptance made by the Ld. AO in regard to the facts as narrated hereinabove, the addition was not found to be sustainable and therefore, deleted by the Ld. CIT(A). We do not find any ambiguity in such order of deletion of addition for the reason already discussed hereinabove. The same is, therefore, upheld. 13. We further find that the remand report contains the acceptance of the Ld. AO of this particular fact of receiving advance and/or loan from various parties by the assessee to the tune of Rs.79,60,000/-, the said fact was further confirmed by the entries shown in the books of account of the ITA No. 543/Ind/2018 [ITO vs. M/s. Parametric Trading Pvt. Ltd.] Asst.Year.– 2011-12 - 5 - assessee which is also filed before us and verified by us too. In that view of the matter, the addition was found to be not sustainable and thus deleted which according to us is just and proper so as to warrant interference. The same is, thus, upheld. 14. So far as the advance received against the order to the tune of Rs.24,85,75,000/- is concerned, it is apparent on record that the Ld. AO examined the bank statement and found that these were entries for payments and receipts and somewhere journal entries. Furthermore, these entries were duly recorded in the books of the assessee in respect to sale/purchase or advances against sale/purchase receipt/return. When the said fact has been admitted by the Ld. AO in his remand report, upon verification of the said entries and found the same in the books of accounts of the assessee, in our considered opinion, the Ld. CIT(A) rightly deleted the addition made by the Ld. AO. There is no reason to interfere with the said order. This ground of appeal is, thus, found to be devoid of any merit and dismissed. 15. In respect of received against advances given of Rs.76,43,79,291/-, the Ld. AO admitted in his remand report that the assessee has duly accounted sale transactions in the books. Same was further confirmed by various parties. Relevant to mention that Ld. AO further noted the remand report that the total of credit entries cannot be considered as total income of the assessee company. As the Ld. AO has duly examined the debit and credit entry in the bank statement and admitted in its remand report that the assessee duly accounted the said transaction in the books of accounts, the addition made by the Ld. AO has been found to be not sustainable and, therefore, deleted by the Ld. CIT(A) found to be justified without any ITA No. 543/Ind/2018 [ITO vs. M/s. Parametric Trading Pvt. Ltd.] Asst.Year.– 2011-12 - 6 - ambiguity so as to warrant interference. This ground of appeal is, thus, dismissed. 16. The deletion of addition of Rs.13,53,654/- on account of short term capital gain upon treating it as business income is the subject matter before us. 17. We have heard the rival submissions made by the respective parties, we have also perused the relevant materials available on records including the order passed by the authorities below. 18. The impugned amount was offered as short term capital gain in the return of income for the year under consideration which is part of the paper book filed before us. The same was also appearing in the computation of income filed by the assessee. In order to establish this fact that the transactions were done through proper banking channel, sufficient document to that effect duly filed by the assessee alongwith the copy of contract and other supporting documents in respect of purchase and sale of shares. These were filed before the First Appellate Authority and before us as well. A remand report was called for by the Ld. CIT(A) whereupon the Ld. AO mentioned that the assessee has not furnished any document in respect of the above addition. However, as we have already said, in the remand proceeding, the assessee duly submitted the detailed working of short term capital gain with the date of purchase of shares, date of sale of shares, quantity purchase cost and sale price etc. Perusal of the contract notes establishes this particular fact that the assessee had entered into above transaction during the year under consideration and from the aforesaid transaction, the assessee had earned profit of Rs.13,53,654/-. Furthermore, the assessee has shown the shares as investment in the balance sheet. The ITA No. 543/Ind/2018 [ITO vs. M/s. Parametric Trading Pvt. Ltd.] Asst.Year.– 2011-12 - 7 - assessee further filed the computation of income and the return of income for the year under consideration, from which, it further appears that the assessee had offered the said profit as short term capital gain. In that view of the matter, the addition of Rs.13,53,654/- is found to be no longer sustainable as the same was offered by the assessee as short term capital gain in the return of income. This is nothing but double taxation. Having regard to the facts and circumstances of the case, the deletion of the impugned addition made by the Ld. CIT(A) is, therefore, found to be just and proper so as to warrant interference. Thus, this ground of appeal is found to be devoid of any merit and hence dismissed. 19. In the result, Revenue’s appeal is dismissed. This Order pronounced on 14/02/2023 Sd/- Sd/- (BHAGIRATH MAL BIYANI) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore; Dated 14/02/2023 S. K. Sinha, Sr. PS True Copy आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. िवभागीय ितिनिध, / DR, ITAT, Indore 6. गाड फाईल / Guard file. आदेशान ु सार/ BY ORDER, (Sr. Private Secretary) ITAT, Indore 1 . D a t e o f d i c t a t i o n o n 2 5 . 0 1 . 2 0 2 3 2 . D a t e o n w h i c h t h e t y p e d d r a f t i s p l a c e d b e f o r e t he D i c t a t i n g M e m b e r 2 5 . 0 1 . 2 0 2 3 3 . D a t e o n w h i c h t h e a p p r o v e d d r a f t c o m e s t o t h e S r .P . S . / P . S . 4 . D a t e o n w h i c h t h e f a i r o r d e r i s p l a c e d b e f o r e t h e D i c t a t i n g M e m b e r f o r p r o n o u n c e m e n t