LAXMI VENTURES (BOMBAY)PVT.LTD., V. ITO-6(3)(2), MUMBAI

ITA 5796/MUM/2011

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9819 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 09-08-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 16-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Assessment record
• Section: 50C; 133(6); 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD , JUDICIAL MEMBER ITA NO. 5796 /MUM/201 1 : (A.Y : 20 05 - 06 ) LAXMI VENTURES (BOMBAY) PVT. LTD., 1/45, NEHRU NAGAR (EAST), BHILLAI, DISTRICT DURG (C.G) 490 020 PAN : AAACD2339Q (APPELLANT) VS. ITO - 6(3)(2), MUMBAI (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI RAJESH KUMAR YADAV DATE OF HEARING : 19 / 03 /201 8 DATE OF PRONOUNCEMENT : 23 /0 3 /201 8 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 12 , MUMBAI DATED 11.05.2011 , PERTAINING TO THE ASSESSMENT YEAR 2005 - 06 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 29.12.2008 UNDER SECTION 144 R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN ITS APPEAL , THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ADDITION ON ACCOUNT OF SALE OF PROPERTY SITUATED AT ANDH E RI, MUMBAI 2 ITA NO. 5796/MUM/2011 LAXMI VENTURES (BOMBAY) PVT. LTD. TO BE DEALT WITH HEAD OFFICE MUMBAI SITUATED AT 36/40, MAHALAXMI BRIDGE ARCADE, POST BOX NO.7979, MAHALAXMI, MUMBAI - 400034. 2. ADDITION OF RS.54860/ - AS PROFIT ON SALE OF VEHICLE: THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [ LD. CIT (A)] ERRED IN UPHOLDING AD DITION OF PROFIT ON SALE OF VEHICLE MADE BY ASSESSING OFFICER. HE SHOULD HAVE APPRECIATED THE FACT THAT PROFIT SHOWING IN PROFIT AND LOSS ACCOUNT IS BOOK PROFIT AND NOT TAXABLE PROFIT. FURTHER, THE L D. CIT (A) OUGHT TO HAVE CONSIDERED THAT PROCEEDS FROM SA LE OF VEHICLE DOES NOT EXCEEDS BLOCK OF ASSETS (VEHICLE) IN THE AY 2005 - 06, HENCE THERE IS NO TAXABLE PROFIT. 3. DISALLOWANCE OF EXPENSES (STATUTORY DUES) OF RS.2 , 72 , 225/: THE LD. CIT(A) ERRED IN RELYING ON THE ORDER OF THE ASSESSING OFFICER AND DISALLOW ED THE STATUTORY ASSESSMENT DUES SUCH AS SALES TAX, E XCISE DUTY AND ENTRY TAX PAID DURING THE F.Y. 2004 - 05 WHICH AR E OTHERWISE ALLOWABLE EXPENSES. 3. BEFORE WE COME TO THE SPECIFIC GROUNDS OF APPEAL RAISED, WE MAY BRIEFLY REFER TO THE BACKGROUND OF THE DISPUTE. IN THIS CASE, THE ASSESSING OFFICER NOTED THAT NO RETURN OF INCOME WAS FILED BY THE ASSESSEE U/S 139(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICER INITIATED PROCEEDINGS UNDER SEC. 147/148 OF THE ACT IN ORDER TO BRING TO TAX CAPITAL GAINS ON SALE OF PROPERTY WHICH HAD ESCAPED ASSESSMENT. THE ASSESSING OFFICER NOTES THAT EVEN IN RESPO NSE TO THE NOTICE ISSUED U/S 148 OF THE ACT DATED 12.02.2008, NO RETURN OF INCOME WAS FILED BY THE ASSESSEE. THE RELEVANT DISCUSSION IN THE ASSESSMENT ORDER REV EALS THAT SHOW CAUSE NOTICES WERE ISSUED TO THE DIRECTORS OF THE COMPANY, SHRI ANIL AG A RWAL AND SHRI SUNIL AG A RWAL WHO ALSO EXPRESSED INABILITY IN THE MATTER ON THE GROUND THAT THERE WAS A DISPUTE GOING ON WITHIN THE FAMILY AND INTRA - COMPANY , THE MATTER WA S BEFORE THE 3 ITA NO. 5796/MUM/2011 LAXMI VENTURES (BOMBAY) PVT. LTD. COMPANY LAW BOARD (CLB). IT TRANSPIRES THAT THE CLB HAD APPOINTED ONE, SHRI DEEPAK BATRA , C.A FOR AUDIT AND PREPARATION OF ACCOUNTS FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2005 - 06, I.E., THE ASSESSMENT YEAR UNDER CONSIDERATION. FOR THE SAID REASON, THE ASSESSING OFFICER ISSUED A COMMUNICATION TO THE C.A, SHRI DEEPAK BATRA U/S 133(6) OF THE ACT CALLING FOR DETAILS INCLUDING THE BALANCE - SHEET AND PROFIT & LOSS ACCOUNT ALONG WITH THE SCHEDULES IN ORDER TO COMPLETE THE ASSESSMENT. THE ASSESSING OFFICER ALSO ISSUED LETTERS TO BOTH THE DIRECTORS TO FURNISH COPIES OF DETAILS AND RELEVANT INFORMATION AVAILABLE WITH THEM WITH RESPECT TO THE UNITS UNDER THEIR RESPECTIVE CONTROL. THE ASSESSING OFFICER RECORDS THAT IN RESPONSE, ONE DIRECTO R, SHRI ANIL AGA R WAL RESPONDED AND, INTER - ALIA , FURNISHED COPIES OF THE BANK STATEMENT OF HDFC BANK AS ALSO THE SALE AGREEMENT OF GALA SOLD ON 24.02.2005 TO SHRI CHHOTELAL AGRAWAL AND SHRI V RIJESH C HHOTELAL AGA R WAL . THE OTHER DIRECTOR, SHRI SUNIL AGA R WAL DID NOT SUBMIT ANY DETAILS. THE ASSESSING OFFICER ALSO RECEIVED CERTAIN DETAILS AND INFORMATION FROM THE C.A, WHICH HE HAS DETAILED IN PARA 3 OF THE ASSESSMENT ORDER. THEREAFTER, THE ASSESSING OFFICER ISSUED DETAILED SHOW CAUSE NOTICES TO BOTH THE DI RECTORS OF THE COMPANY, WHICH HAS BEEN REPRODUCED IN PARA 4 OF THE ASSESSMENT ORDER AND, IN RESPONSE, NO EXPLANATION WHATSOEVER WAS RECEIVED. IN THIS BACKGROUND, THE ASSESSING OFFICER PROCEEDED TO FINALISE THE ASSESSMENT EX PARTE AND ON THE BASIS OF THE M ATERIAL AVAILABLE ON RECORD. WITH REGARD TO SALE OF TWO GALAS ON 24.02.2005, THE TOTAL CONSIDERATION OF RS.65,62,000/ - WAS BROUGHT TO TAX IN THE ABSENCE OF ANY DETAILS OF THE WDV OF THE SAID ASSETS. SECONDLY, THE ASSESSING OFFICER NOTED FROM THE SCHEDULE OF FIXED ASSETS THAT THE M/C DIVISION WAS SOLD TO NEWTECH FOUNDRY WHICH INCLUDED BUILDING FACTORY, ELECTRICAL INSTALLATION, FURNITURE AND FIXTURES AND H . T FURNACE FOR A CONSIDERATION OF RS.15,00,000/ - . THE ASSESSING OFFICER NOTES THAT IN THE 4 ITA NO. 5796/MUM/2011 LAXMI VENTURES (BOMBAY) PVT. LTD. ABSENCE OF T HE REQUISITE DOCUMENTS EVIDENCING THE TRANSACTION, APPLICABILITY OF SEC. 50C OF THE ACT TO THE SALE OF THE IMMOVEABLE PROPERTY COULD NOT BE ASCERTAINED AND, THEREFORE, HE ESTIMATED THE PROFIT @ RS. 19,3 4 ,884 / - . THIRDLY, PROFIT ON SALE OF VEHICLES AT JABALP UR WAS TAXED AT RS.54,860/ - IN TERMS OF SCHEDULE OF FIXED ASSETS. THE EXPENSES DEBITED TO THE PROFIT & LOSS ACCOUNT OF RS.2,95,325/ - WAS DISALLOWED IN THE ABSENCE OF THE REQUISITE DETAILS. IN THIS MANNER, THE TOTAL INCOME WAS ASSESSED AT RS.85,09,744/ - , WHICH WAS CARRIED IN APPEAL BEFORE THE CIT(A). THE ORDER OF THE CIT(A) REVEALS THAT THERE WAS NO EFFECTIVE COMPLIANCE PUT IN BY THE APPELLANT - ASSESSEE AND THE CIT(A) PROCEEDED TO DISPOSE OFF THE APPEAL ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. TH E CIT(A) DISPOSED - OFF THE APPEAL BY CONFIRMING THE ADDITIONS, EXCEPT IN RELATION TO ADDITION OF RS.19,34,884/ - MADE ON ACCOUNT OF SALE OF FIXED ASSETS OF M/C DIVISION TO NEWTECH FOUNDRY, WHICH WAS RESTRICTED TO RS.4,34,883/ - . AGAINST SUCH AN ACTION OF CIT (A), ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. THE CAPTIONED APPEAL BEFORE THE TRIBUNAL WAS FILED IN THE YEAR 2011 AND SINCE JULY, 2012, THE APPEAL HAS COME UP FOR HEARING SEVERAL TIMES. ON EACH OF THE OCCASION, ADJOURNMENT HAS BEEN SOUGHT ON BEHALF OF THE APPELLANT CITING THE DISPUTE BETWEEN THE DIRECTOR BROTHERS REGARDING MANAGEMENT OF THE AFFAIRS OF THE COMPANY. ACCORDINGLY, IT HAS BEEN STATED THAT ASSESSEE WAS NOT IN A POSITION TO PROCEED TO ARGUE THE GROUNDS RAISED IN THE APPEAL. EVEN ON THE ABOVEMENTIONED APPOINTED DATE OF HEARING, I.E. 19.03.2018, A REQUEST HAS BEEN MADE THAT THE RELEVANT RECORDS WERE NOT FORTHCOMING AS THE OTHER DIRECTOR, SHRI ANIL AGARWAL AND FAMILY WAS NOT CO - OPERATING IN PROVIDING THE REQUISITE RECORDS. NOTABLY, APART FROM A WRITTEN COMMUNICATION DATED 16.03.2018, NO AUTHORISED REPRESENTATIVE APPEARED 5 ITA NO. 5796/MUM/2011 LAXMI VENTURES (BOMBAY) PVT. LTD. ON BEHALF OF THE APPELLANT. NOTICING THE ABOVE STATE OF AFFAIRS, THE LD. DR PUT FORTH THAT NO USEFUL PURPOSE WOULD BE SERVED BY ALLO WING MORE TIME TO THE APPELLANT AND KEEPING THE APPEAL PENDING BEFORE THE TRIBUNAL. 5. CONSIDERING THE RECORD OF PROCEEDINGS AS ALSO THE ORDERS OF THE AUTHORITIES BELOW, WE CONCUR WITH THE POINT MADE OUT BY THE LD. DR THAT NO USEFUL PURPOSE WOULD BE SERVED BY ADJOURNING THE MATTER FOR A FUTURE DATE. IT IS ALSO NOTICEABLE THAT EVEN BEFORE THE LOWER AUTHORITIES, THE REQUISITE DETAILS COULD NOT BE FURNISHED BY THE ASSESSEE, WHICH HAS LED TO MAKING OF AN EX PARTE AND BEST JUDGEMENT ASSESSMENT IN TERMS OF SEC. 144 OF THE ACT . THE INCAPACIT Y OF THE APPELLANT TO MAKE ANY MEANINGFUL ARGUMENT IN THE APPEAL IS OTHERWISE ALSO STARKLY EVIDENT FROM THE MANNER IN WHICH GROUND OF APPEAL NO. 1 HAS BEEN WORDED. NEVERTHELESS, CERTAIN AMOUNT OF ERROR IN DETERMINATION OF TAXABLE INCOME IS ALSO EMERGING F ROM RECORD. THE INCOME - TAX AUTHORITIES HAVE BROUGHT TO TAX ENTIRE CONSIDERATION ON SALE OF GALAS IN ABSENCE OF THE FIGURE OF OPENING WDV. WHILE IT IS NO DOUBT TRUE THAT IT IS THE DUTY OF THE ASSESSEE TO PROVIDE THE DETAILS, BUT SUCH DETAILS WAS ALSO AVAI LABLE IN THE PAST ASSESSMENT RECORD AVAILABLE WITH THE ASSESSING OFFICER HIMSELF. IN ITS LETTER DATED 16.03.2008 IT IS, INTER - ALIA , AVERRED THAT THE MATTER BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER AND ASSESSEE SHALL MAKE ALL ENDEAVOUR S TO PRO VIDE THE NECESSARY INFORMATION/DETAILS/ DOCUMENTS TO COMPLETE THE ASSESSMENT EXPEDITIOUSLY. HAVING REGARD TO THE ENTIRE CONSPECTUS OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DEEM IT FIT AND PROPER TO RESTORE THE APPEAL BACK TO THE FILE OF THE ASSESSING OF FICER, WHO SHALL MAKE A DE NOVO ASSESSMENT IN ACCORDANCE WITH LAW. OF COURSE, THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD AND ONLY THEREAFTER PASS AN ORDER AFRESH, AS PER LAW. WE MAY CLARIFY 6 ITA NO. 5796/MUM/2011 LAXMI VENTURES (BOMBAY) PVT. LTD. HERE THAT OUR ACTION TO REMIT THE MATTER BACK TO THE FILE OF ASSESSING OFFICER IS NO REFLECTION ON MERITS OF THE MATTER AND THE ASSESSING OFFICER SHALL BE FREE TO DECIDE AS PER LAW. 6. IN THE RESULT, FOR STATISTICAL PURPOSES, APPEAL OF ASSESSEE IS TREATED AS PARTLY ALLOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 2 3 R D MARCH, 2018. SD/ - SD/ - (RAVISH SOOD) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATE : 2 3 R D MARCH, 2018 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, A BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI