ITO,Ward-1(1), Kolkata, Kolkata V. M/s STARTRADE GOODS (P) Ltd., Kolkata

ITA 567/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91960 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 11-04-2012
• Court: TRIBUNAL
• Department Lawyers: K L KANAK
• Assessee Lawyers: AMITAVA BOSE
• Keywords: Unexplained investment; Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA [BEFORE SHRI P. K. BANSAL, AM & SHRI MAHAVIR SINGH, JM ] I.T.A NO. 56 7 /KOL/201 2 ASSESSMENT YEAR : 200 7 - 0 8 INCOME - TAX OFFICER, WD - 1(1), KOLKATA. VS. M/S. STARTRADE GOODS (P) LTD. (PAN: AAJCS8856N) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 1 9 .0 5 .2015 DATE OF PRONOUNCEMENT: 22. 0 5 . 2015 FOR THE APPELLANT: SHRI K . L. KANAK , JCIT , SR. DR FOR THE RESPONDENT: S HRI AMITAVA BOSE , ADVOCATE ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER PASSED BY CIT (A) - I , KOLKATA VIDE APPEAL NO. 3 87 /CIT(A) - I/ WD - 1 (1) /0 9 - 1 0 DATED 05 . 0 1 .201 2 . ASSESSMENT WAS FRAMED BY ITO, WARD - 1(1), KOLKATA U/S. 14 3(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSESSMENT YEAR 200 7 - 0 8 VIDE HIS ORDER DATED 31 . 12 .20 0 9 . 2. THIS APPEAL BY REVENUE IS FILED BELATEDLY BY EIGHT DAYS AND REVENUE HAS FILED C ONDONATION PETITION STATING THE REASONS. LD. COUNSEL FOR THE ASSESSEE HAS NOT OBJECTED TO THE CONDONATION OF DELAY AND HE HAS CONCEDED THE POSITION. IN VIEW OF THE ABOVE AND REASONS STATED IN THE CONDONATION PETITION, WE CONDONE THE DELAY AND ADMIT THE A PPEAL. 3. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION OF UNEXPLAINED INVESTMENT OF RS.54,94,400/ - . FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.1: 1 . THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.54,94,400/ - ON ACCOUNT OF UNEXPLAINED INVESTMENT DESPITE THE FACT THAT ASSESSEE COMPANY FAILED TO PRODUCE THE COGENT EVIDENCES IN SUPPORT OF THE CLAIM. FURTHER, ASSESSEE COMPANY FAILED TO JUSTIFY THE P URCHASE OF SHARES AT A RATE HIGHER THAN THE BOOK VALUE. 4. BRIEFLY STATED FACTS ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED FROM THE BALANCE SHEET OF THE ASSESSEE THAT IT HAD SHOWN INVESTMENT IN THE 2 ITA NO .56 7 /K/201 2 STARTRADE GOODS (P) LTD. . AY 200 7 - 0 8 SHARES OF TIVOLI PARK APARTMENT PVT. LTD. AT A SUM OF RS.1,02,20,000/ - BY WAY OF PURCHASE OF SHARES. THE AO HAS EXTRACTED THE DETAILS OF PURCHASE OF SHARES AS UNDER: NO. OF SHARES PURCHASED FROM COST (RS.) REMARKS OF THE AO 19054 TODI BROTHERS AS PER AGREEMENT 74,00,000/ - ACTUAL NUMBER OF SHARES 19056 @ RS.100/ - PER SHARES = RS.19,05,600/ - BALANCE RS.74,00,000/ - MINUS RS.19,05,600/ - I.E. RS.54,94,400/ - IN FORM OF COMPENSATION PAID TO THE SHARE HOLDERS FROM WHOM IT CLAIMED TO HAVE PURCHASE THE SHARES. 2000 FROM SRI RAM TEA COMPANY PVT. LTD. RS.10,20,000/ - PURCHASED ON 19.03.2007 @ RS.510 PER SHARE 18000 DIRECT ALLOTMENT BY THE COMPANY RS.18,00,000/ - 39054 TOTAL RS.1,02,20,000/ - FROM THE ABOVE, T HE AO NOTED THAT THE ASSESSEE HAS PURCHASED SHARES FOR A SUM OF RS.74,00,000/ - FROM TODI BROTHERS AND FOR THIS, THE AO REQUIRED THE ASSESSEE TO FILE DETAILS. THE ASSESSEE FILED COPY OF AGREEMENT DATED 06.11.2006 MADE BETWEEN TODI BROTHERS AND ASSESSEE COMP ANY FOR SALE OF SHARES. THE AO HAS REPRODUCED THE EXTRACTS OF SCHEDULE OF PAYMENT AS AGAINST PURCHASE OF SHARES AS UNDER: PART 1 DETAILS OF PAYMENT MADE TO BE MADE TO NANDALAL TODI NAME OF THE SHAREHOLDER NO. OF SHARES RATE (RS.) AMOUNT (RS.) NANDALA L TODI ACME CREDIT PVT. LTD. RANI LEASINGS AND FINANCE LTD. NADIA PRINTING & PACKAGINGS PVT. LTD. COMPENSATION TO NAND LAL TODI 2 200 18450 200 TOTAL : 18852 100/ - 100/ - 100/ - 100/ - 200/ - 20,000/ - 18,45,200/ - 20,000/ - 18,85,200/ - 18,14,800/ - TOTAL : 37,00,000/ - PART - II DETAILS OF PAYMENT TO BE MADE TO S. K. TODI NAME OF THE SHAREHOLDER NO. OF SHARES RATE (RS.) AMOUNT (RS.) SHRAWAN KUMAR TODI CALCUTTA BECON & ENGG. PVT. LTD. COMPENSATION TO SHRAWAN KUMAR TODI 2 200 TOTAL : 202 100/ - 100/ - 200/ - 20,000/ - 20,200/ - 18,29,800/ - TOTAL : 18,50,000/ - PART - III DETAILS OF PAYMENT TO BE MADE TO NIRANJAN LAL TODI 3 ITA NO .56 7 /K/201 2 STARTRADE GOODS (P) LTD. . AY 200 7 - 0 8 NAME OF THE SHAREHOLDER NO. OF SHARES RATE (RS.) AMOUNT (RS.) NIRANJAN TODI COMPENSATION TO NIRANJAN TODI 2 100/ - 200/ - 18,49,800/ - TOTAL :18,50,000/ - PART - IV DETAIL OF PAYMENT TO BE MADE TO GOBIN PRASAD TODI COMPENSATION PAID TO GOBIN PRASAD TODI TOTAL RS.18,50,000/ - 5 . THE AO REQUIRED THE ASSESSEE TO PRODUCE TODI BROTHERS BUT ONLY CONFIRMATIONS WERE FILED FROM THESE TWO PARTIES. AS THE ASSESSEE FAILED TO PRODUCE TODI BROTHERS , AO CONCLUDED THAT THE ASSESSEE FAILED TO JUSTIFY THE REAL VALUE OF SHARES OF TIVOLI PARK APART MENT PVT. LTD. AND ASSESSEE HAS PAID HIGHER VALUE OF THE SHARES. ACCORDING TO AO, THIS COMPENSATION OR HIGHER VALUE OF SHARES PAID IN LIEU OF SHARES OF TIVOLI PARK APARTMENT PVT. LTD. IS UNEXPLAINED INVESTMENT AMOUNTING TO RS.54,94,400/ - . AGGRIEVED, ASSE SSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE ADDITION BY OBSERVING IN PARA 4. 4 AND 4. 5 AS UNDER: 4.4 I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT. THE A.O HAS MADE THE ADDITION OF RS.54,94,400/ - BEING THE COST OF THE SHARES AS UNREASONABLE AND AS UNEXPLAINED INVESTMENT. THE APPELLANT HAS SUBMITTED THAT I T HAD FILED THE DETAILS OF PURCHASE, COPY OF AGREEMENT AND THE INCOME- TAX DETAILS OF THE PERSONS FROM WHOM SHARES HAVE BEEN PURCHASED. THE PAYMENT HAS BEEN DONE THROUGH CHEQUE AND ALL THE RECIPIENTS ARE ASSESSED TO TAX AND PAN OF ALL THE RECIPIENTS HAVE B EEN GIVEN TO THE A.A. IT WAS SUBMITTED BY THE APPELLANT THAT SOURCE OF THE FUNDS WERE EXPLAINED TO THE A.O. THE APPELLANT HAS FURTHER SUBMITTED THAT THE PAYMENT FOR THE PURCHASE OF THE SHARES HAVE BEEN DONE ON THE BASIS OF THE REAL WORTH OF THE ASSETS OF T HE COMPANY WHOSE SHARES HAVE BEEN PURCHASED AND THERE IS NO JUSTIFICATION ON THE PART OF THE A.O. TO TREAT THE AMOUNT AS UNEXPLAINED INVESTMENT, SOURCE OF WHICH IS EXPLAINED. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE US. 4.5 THERE IS SUBSTANCE IN THE SUBM ISSIONS OF THE APPELLANT, THE APPELLANT HAS MADE THE PAYMENT THROUGH CHEQUE, THE SOURCE OF WHICH IS EXPLAINED AND THE RECIPIENTS ARE BEING ASSESSED TO TAX. FURTHER, THE PAYMENT WERE MADE FOR THE PURCHASE OF THE SHARES OF THE COMPANY HAVING SUBSTANTIAL VALU E OF THE PROPERTY IN ITS BALANCE SHEET. THUS, THE ADDITION MADE BY THE A.O. IS WITHOUT ANY BASIS AND HENCE THE APPELLANT GETS RELIEF ON THIS ISSUE OF UNEXPLAINED INVESTMENT. THE A.O. IS DIRECTED TO DELETE THIS ADDITION OF RS.54,94,400/ - . AGGRIEVED, REVEN UE CAME IN APPEAL BEFORE US. 6 . WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT IN RESPONSE TO SHOW CAUSE NOTICE THE ASSESSEE FILED EXPLANATION DATED 4 ITA NO .56 7 /K/201 2 STARTRADE GOODS (P) LTD. . AY 200 7 - 0 8 07.12.2009 AND IN THE SAID EXPLANATION THE ASSESSEE EXPLAIN ING DETAILS OF PAYMENT MADE TO TODIS AND ALSO ENCLOSED COPIES OF AGREEMENT FOR PURCHASE OF SHARES OF TIVOLI PARK APARTMENTS PVT. LTD. EXECUTED ON 16 .11.2006. THE COPY OF AGREEMENT WAS PRODUCED. ACCORDING TO ASSESSEE, ALL THE TODIS ARE ASSESSED TO INCOME TAX AND ARE HAVING FOLLOWING PAN: NAME PAN SHRI NANDLAL TODI ABNPT6269L SHRI SHRASWSAN KUMAR TODI ABWPT5345P SHRI GOVIND PRASAD TODI ABNPT6418R LD. COUNSEL FOR THE ASSESSEE BEFORE US ARGUED THAT THE AO HAS FRAMED ASSESSMENT JUST ON THE BASIS OF CONJECTURE AND SURMISES. THE AO WAS OF THE VIEW THAT THE ASSESSEE FAILED TO JUSTIFY THE CLAIM OF PURCHASE OF SHARES OF TIVOLI PARK APARTMENT PVT. LTD. AS THE BOOK VALUE OF THE COMPANY IS MUCH LOWER THAN THE COST OF SHARES AS CLAIMED. THE ASSESSEE EXPLAINED THAT IT HAS ONE ASSET I.E. LAND MEASURING 180 COTTAHS AT PRIME LOCATION OF 225, A.J.C. BOSE ROAD, KOLKATA VALUED AT RS.4,35,01,577/ - . ACCORDING TO ASSESSEE, THIS IS A PRIME LOCATION LAND AND WHEN THE COMPANY WILL DEVELOP THE SAID L AND INTO BUILDING AND SELL THEM, THERE WILL BE SUBSTANTIAL EARNINGS. ACCORDINGLY, THE VALUATION OF SHARES SOLD BY THE COMPANY IS HIGHER. EVEN OTHERWISE, THERE IS NO PROVISION BY VIRTUE OF WHICH HIGHER PRICE CAN BE ADDED AS UNEXPLAINED INVESTMENT REASON B EING THE ASSESSEE HAS PAID FROM HIS CAPITAL AND THERE IS NO EXPLAINED CAPITAL INVESTED FOR THE PURCHASE OF SHARES. WE FIND THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION AND WE CONFIRM THE SAME. THIS APPEAL OF REVENUE IS DISMISSED. 7 . IN THE RESULT, AP PEAL OF REVENUE IS DISMISSED. 8 . ORDER IS PRONOUNCED IN THE OPEN COURT ON 22.05.2015 . SD/ - SD/ - ( P. K. BANSAL ) (MAHAVIR SINGH) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED : 22ND MAY , 201 5 JD.(SR.P.S.) 5 ITA NO .56 7 /K/201 2 STARTRADE GOODS (P) LTD. . AY 200 7 - 0 8 COPY OF THE ORDER FORWARDED TO: 1 . A PPELLANT ITO, WARD - 1(1), KOLKATA . 2 RESPONDENT M/S. STARTRADE GOODS (P) LTD., 16A, BRABOURNE ROAD, 9 TH FLOOR, KOLKATA - 700 001. 3 . THE CIT (A), KOLKATA 4. 5. THE CIT, KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .