INCOME TAX OFFICER - 1(2)(3), MUMBAI V. MBP TECHNOLOGIES PVT. LTD., MUMBAI

ITA 5629/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1461 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 04-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHI RAMA KARTHIKEYAN LD
• Assessee Lawyers: KIRAN MEHTA LD
• Keywords: Unexplained investment
• Section: 143(3); 69

Judgement Text

I.T.A. NO.5629/MUM/2017 ASSESSMENT YEAR: 2014-15 M/S. MBP TECHN OLOGIES P.LTD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.5629/MUM/2017 ( / ASSESSMENT YEAR: 2014-15) INCOME TAX OFFICER - WARD - 1 (2) (3) 527, AAYKAR BHAVAN M.K. ROAD MUMBAI-400 020. / VS. M/S. MBP T ECHNOLOGIES P VT. LTD. VEER NARIMAN ROAD CHURCHGATE MUMBAI-400 020. ./ ./PAN/GIR NO. AADCM-5812-G ( ! /APPELLANT ) : ( '#! / RESPONDENT ) APPELLANT BY : ABHI RAMA KARTHIKEYAN- LD. DR RESPONDENT BY : KIRAN MEHTA-LD.AR / DATE OF HEARING : 18/03/2019 / DATE OF PRONOUNCEMENT : 22/03/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2014-15 CONTEST THE ORDER OF LD. COMMIS SIONER OF INCOME- TAX (APPEALS)-2, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-2/IT-10017(OL)/2016-17 DATED 29/06/2017 ON FOLLOWING GROUNDS OF APPEAL: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,31,43,945/- AS UNEXPL AINED INVESTMENT MADE BY THE AO I.T.A. NO.5629/MUM/2017 ASSESSMENT YEAR: 2014-15 M/S. MBP TECHN OLOGIES P.LTD. 2 WITHOUT APPRECIATING THE FACT THAT ASSESSEE FAILED TO PROVE THE IDENTITY OF PARTIES WHO REPAID THE ALLEGED LOAN AND THE GENUINENESS OF THE INVESTMENT MADE. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. IN COME TAX OFFICER-1(2)(3) U/S 143(3) ON 28/12/2016 WHEREIN TH E INCOME OF THE ASSESSEE WAS DETERMINED AT RS.311.61 LACS AFTER CER TAIN ADDITIONS AS AGAINST RETURNED LOSS OF RS.1.05 LACS E-FILED BY TH E ASSESSEE ON 30/09/2014. THE ASSESSEE BEING RESIDENT CORPORATE ENTITY WAS STATED TO BE ENGAGED IN THE BUSINESS OF RESEARCH, DEVELOPMENT, MARKETING AND CONSULTING TECHNOLOGIES ETC. AS EVIDENT FROM GROUNDS OF APPEAL, THE SOLE SUBJECT MATTER OF PRESENT APPEAL BEFORE US IS CERTA IN ADDITION U/S 69 FOR RS.131.43 LACS. 2. DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED THA T THE ASSESSEES NON-CURRENT INVESTMENT STOOD AT RS.345.55 LACS AS AGAINST RS.214.11 LACS IN THE IMMEDIATELY PRECEDING YEAR. ACCORDINGL Y, THE ASSESSEE WAS DIRECTED TO FURNISH THE DETAILS OF INVESTMENTS AND SOURCES THEREOF. SINCE THE ASSESSEE FAILED TO MAKE ANY SUBMISSIONS AGAINST THE SAME, LD. AO, TREATING THE SAME AS UNEXPLAINED INVESTMENT, ADDED THE DIFFERENTIAL AMOUNT OF RS.131.43 LACS TO THE INCOME OF THE ASSES SEE. 3. AGGRIEVED, THE ASSESSEE AGITATED THE SAME WITH S UCCESS BEFORE LD. FIRST APPELLATE AUTHORITY VIDE IMPUGNED ORDER DATED 29/06/2017 WHEREIN THE MATTER WAS CONCLUDED IN ASSESSEES FAVOR BY MAK ING FOLLOWING OBSERVATIONS: - THE AO HAS ADDED A SUM OF RS.1,31,22,980/- PARA 5 O F THE ASSESSMENT ORDER U/S 69 OF THE ACT STATING THE REASON THAT THE APPELLANT COMPA NY HAS SHOWN CURRENT INVESTMENT OF RS.345,55,699/- AS AGAINST RS.214,11,754/- OF THE P RECEDING YEAR. THE AO HAS ALSO STATED THAT NEITHER THE APPELLANT COMPANY NOR THE A R ATTENDED HEARING OR FILED DETAILS. DURING THE COURSE OF HEARING, THE DIRECTOR SHRI VIS HWAJIT DAHANUKAR APPEARED AND EXPLAINED THAT OUT OF THE LONG-TERM LOANS AND ADVAN CES OF RS.2,95,23,006/- AS ON I.T.A. NO.5629/MUM/2017 ASSESSMENT YEAR: 2014-15 M/S. MBP TECHN OLOGIES P.LTD. 3 31.03.2103, A SUM OF RS.1,25,00,000/- HAS BEEN CONV ERTED INTO NON-CURRENT IN THE FORM OF EQUITY SHARES OF HERITAGE AGRO PRODUCTS PVT. LTD . AND BALANCE OF RS.5,90,000/- HAS BEEN RETURNED AS LOANS. ACCORDINGLY, THE LONG-TERM LOANS AND ADVANCES HAS REDUCED TO RS.1,64,00,026/- AS ON 31.03.2014 AND THEREFORE THE RE IS NO FRESH MONEY INTRODUCED FROM OUTSIDE OR BORROWED FROM ANYBODY. I AM IN AGRE EMENT WITH THE DIRECTOR OF THE COMPANY AS THE FACTS ARE VERY CLEAR; IT IS ONLY TRA NSFER FROM ONE HEAD TO ANOTHER HEAD AND NO MONEY RECEIVED FROM OUTSIDE. ACCORDINGLY, I DIRECT THE AO TO DELETE THE ABOVE ADDITION OF RS.1,31,22,980/-. THIS GROUND OF APPEAL IS ALLOWED. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED TH E STAND OF LD. AO AND SUBMITTED THAT THE ASSESSEE FAILED TO PROVID E THE REQUISITE INFORMATION DURING ASSESSMENT PROCEEDINGS. PER CONTRA, LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE, DRAWING OUR ATTENTION TO THE FINANCIAL STATEMENTS AS PLACED ON RECORD, SUBMITTED THAT REQU ISITE EXPLANATION / DETAILS WAS ALREADY FURNISHED BEFORE LD. FIRST APPE LLATE AUTHORITY WHO, WITH DUE APPLICATION OF MIND, RIGHTLY DELETED THE I MPUGNED ADDITIONS. 5. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. AT THE OUTSET, IT IS N OTED THAT THE CORRECT AMOUNT UNDER DISPUTE IS RS.1,31,43,945/- AND NOT RS .1,31,22,980/- AS WRONGLY NOTED BY LD. CIT(A). NEVERTHELESS, WE PROCE ED TO ADJUDICATE THE SAME AS ARGUED BEFORE US. 6. UPON PERUSAL NOTE NO. 6 OF FINANCIAL STATEMENTS, WE FIND THAT THE MAJOR INCREASE IN NON-CURRENT INVESTMENTS ARISE FRO M THE FACT THAT THE ASSESSEE HAS ACQUIRED SHARES OF AN ENTITY NAMELY HERITAGE AGRO PRODUCTS PRIVATE LIMITED FOR RS.125 LACS. THE COMPLETE DETAILS OF NON- CURRENT INVESTMENTS INCLUDING SCRIPS HELD BY THE AS SESSEE DURING IMPUGNED AY HAS ALREADY BEEN PROVIDED ON PAGE NO. 22 OF THE PAPER- BOOK. THE ASSESSEE HAS PLACED ON RECORD LEDGER CONFIRMATI ON ACCOUNT OF M/S HERITAGE AGRO PRODUCTS PRIVATE LIMITED FOR THE PERIOD 01/04/2010 TO I.T.A. NO.5629/MUM/2017 ASSESSMENT YEAR: 2014-15 M/S. MBP TECHN OLOGIES P.LTD. 4 31/03/2014, THE PERUSAL OF WHICH REVEAL THAT THE AS SESSEE HAS ACQUIRED THE SHARES WORTH RS.125 LACS FROM THE SAID ENTITY O N 21/03/2014. THE AFORESAID FACTS LEND CERTAIN CREDENCE TO THE OBSERV ATION OF FIRST APPELLATE AUTHORITY THAT THERE WAS NO FRESH INVESTMENT BUT CH ANGE OF AMOUNT FROM ONE HEAD TO ANOTHER HEAD. THIS BEING THE CASE, WE F IND NO INFIRMITY IN THE IMPUGNED ORDER. 7. RESULTANTLY, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MARCH, 2019. SD/- SD/- (MAHAVIR SINGH) ( MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 22/03/2019 SR.PS, JAISY VARGHESE !'#$ # / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. +, '%- , - , / DR, ITAT, MUMBAI 6. ,./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.