INCOME TAX OFFICER 2(2)(3), MUMBAI V. M/S.NICCO SECURITES PRIVATE LIMITED, MUMBAI

ITA 5873/MUM/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 6791 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 14-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K K TIWARI
• Keywords: Unexplained investment; Difference of opinion; Tax effect; Change of opinion
• Section: 142(1); 143(1); 69B; 69

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, VICE PRESIDENT, AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NOS.5871 TO 5873/MUM/2017 ASSESSMENT YEARS: 2007-08, 2009-10 & 2010-11 INCOME TAX OFFICER-2(2)(3), ROOM NO.542, 5 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 / VS. M/S NICCO SECURITIES PVT. LTD K.K. TIWARI, ADVOCATE, 16, GROUND FLOOR, ARUN CHAMBERS, TARDEO ROAD, MUMBAI-400034 ( $ / REVENUE) ( %&'() * /ASSESSEE) P.A. NO.AABCN1737D $ / REVENUE BY SHRI S. K. MISHRA-DR %&'() * / ASSESSEE BY SHRI K. K. TIWARI + &$, - * . / DATE OF HEARING : 20/12/2018 - * . / DATE OF PRONOUNCEMENT 11/01/2019 / O R D E R PER JOGINDER SINGH (VICE PRESIDENT) THIS BUNCH OF THREE APPEALS IS BY THE REVENUE AGAINST THE IMPUGNED ORDER ALL DATED 12/06/2017 OF THE FIRST APPELLATE AUTHORITY, MUMBAI. FIRST, WE SHALL TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2007- 08 (ITA ITA NOS.5871 TO 5873/MUM/2017 NICCO SECURITIES PVT. LTD. 2 NO.5871/MUM/2017), WHEREIN, THE ONLY GROUND RAISED WITH RESPECT TO HOLDING THAT INVESTMENT IN M/S MISTRY CONSTRUCTION PVT. LTD. WAS MADE IN FINANCIAL YEAR 2 008-09 AND NOT IN ASSESSMENT YEAR 2007-08 AS HAS BEEN HELD BY THE LD. ASSESSING OFFICER WITHOUT APPRECIATING THE FACT AND FURTHER THAT THE FUNDS OBTAINED THROUGH THE BROKER M/S S. S. SECURITIES IS NOT GENUINE, SINCE IT WAS NOT REGI STERED AS SUB-BROKER. 2. DURING HEARING, THE LD. DR, SHRI S. K. MISHRA, ADVANCED ARGUMENTS, WHICH IS IDENTICAL TO THE GROUN D RAISED, WHEREAS, SHRI K. K. TIWARI, LD. COUNSEL FOR THE ASSESSEE, DEFENDED THE IMPUGNED ORDER BY INVITING O UR ATTENTION TO PARA-6 OF THE ORDER OF THE LD. COMMISS IONER OF INCOME TAX (APPEAL). 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE DECLARED INCOME OF RS.4,720/- IN ITS RETURN FILED ON 31/10/2007, WHICH WAS PROCESSED UND ER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (HEREINA FTER THE ITA NOS.5871 TO 5873/MUM/2017 NICCO SECURITIES PVT. LTD. 3 ACT). SUBSEQUENTLY, AS PER THE REVENUE, THE LD. ASS ESSING OFFICER RECEIVED INFORMATION THAT THE ASSESSEE PAID RUPEES ONE CRORES TOWARDS SHARE APPLICATION MONEY TO M/S M ISTRY CONSTRUCTION COMPANY LTD. DURING THE PERIOD RELEVAN T TO ASSESSMENT YEAR 2007-08. BASED UPON THIS INFORMATIO N, THE ASSESSMENT WAS REOPENED UNDER SECTION 147/148 OF TH E ACT. IN RESPONSE TO NOTICE UNDER SECTION 142(1) ALONG WI TH QUESTIONNAIRE, THE ASSESSEE CLAIMED THAT IT HAS ALR EADY FILED ITS RETURN ON 31/10/2007 AND THE IMPUGNED AMOUNT WA S INVESTED TOWARDS SHARE APPLICATION MONEY DURING THE FINANCIAL YEAR 2007-08. THE ASSESSEE ALSO FURNISHED THE COPY OF THE BANK STATEMENT REFLECTING THE SAID TRAN SACTION AS MADE IN FINANCIAL YEAR 2007-08. THE ASSESSEE ALSO V IDE LETTER DATED 29/01/2014 PROVIDED THE BROKER NOTE FR OM M/S S. S. SECURITIES SHOWING CERTAIN INVESTMENT/SECURIT IES, SOLD DURING THE FINANCIAL YEAR 2007-08. THE ASSESSEE CLA IMED THAT THE COMPANY HAS NOT INVESTED IN FINANCIAL YEAR 2006- 07, HOWEVER, THE LD. ASSESSING OFFICER MADE THE ADD ITION AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE ITA NOS.5871 TO 5873/MUM/2017 NICCO SECURITIES PVT. LTD. 4 2.2. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCO ME TAX (APPEAL), THE FACTUAL MATRIX, THE SUBMISSIONS O F THE ASSESSEE ALONG WITH THE OBSERVATION MADE IN THE ASS ESSMENT ORDER WERE CONSIDERED AND FINALLY ON EXAMINATION OF THE DETAILS OF INVESTMENT AND SOURCE THEREOF THE ADDITI ON SO MADE WAS DELETED. THE BALANCE SHEET OF THE ASSESSEE IS AVAILABLE AT PAGE-9 ONWARDS OF THE ASSESSEE. IT WAS FOUND BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) THAT TH E INVESTMENT MADE BY THE ASSESSEE IN MITRY CONSTRUCTI ON PVT. LTD. WAS MADE IN FINANCIAL YEAR 2007-08 (RELEVANT T O ASSESSMENT YEAR 2008-09), WHEREAS, THE LD. ASSESSIN G OFFICER ADDED THIS AMOUNT IN FINANCIAL YEAR 2006-07 (RELEVANT TO ASSESSMENT YEAR 2007-08). IF THIS FACT UAL MATRIX IS ANALYZED WITH THE PROVISION OF SECTION 69 OF THE ACT, IT IS OUR DUTY TO EXAMINE THE SECTION, WHICH IS REPRODUCE D HEREUNDER:- WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING T HE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS W HICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, M AINTAINED BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE O FFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INVE STMENTS OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OP INION OF THE ASSESSING OFFICER, SATISFACTORY, THE VALUE OF T HE ITA NOS.5871 TO 5873/MUM/2017 NICCO SECURITIES PVT. LTD. 5 INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE A SSESSEE OF SUCH FINANCIAL YEAR. IF THE AFORESAID SECTION IS ANALYZED, IT SPEAKS ABOUT IN THE FINANCIAL YEAR WHERE THE ASSESSEE MA DE INVESTMENT AND RECORDED IN THE BOOKS OF ACCOUNTS AN D THE ASSESSEE OFFERS NO EXPLANATION, IT WILL DEEMED TO B E THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR. T HE LD. ASSESSING OFFICER MADE THE ADDITION IN DIFFERENT AS SESSMENT YEAR, WHICH CANNOT SAID TO BE AS PER THE PROVISION OF SECTION 69 OF THE ACT. THE HON'BLE RAJASTHAN HIGH COURT IN LAKSHMAN SWAROOP GUPTA & BROS (1975) 100 ITR 222 (RAJASTHAN) AND HON'BLE ALLAHABAD HIGH COURT IN RAM SWARUP COLD STORAGE AND ALLIED INDUSTRIES (1991) 19 2 ITR 537, 542 (ALL.) HELD THAT THE INVESTMENT IN THAT FI NANCIAL YEAR CAN BE ADDED IN THE FINANCIAL YEAR IN WHICH IN VESTMENT WERE MADE. THE HON'BLE ALLAHABAD HIGH COURT OBSERVE D THAT T HE LEARNED COUNSEL FOR THE PETITIONER-ASSESSEE ARGU ES THAT THIS IS A CASE OF MERE CHANGE OF OPINION. HE SUBMITS THAT THE COMMISS IONER WAS OF THE OPINION, AT THE TIME OF COMPLETING THE ASSESSMENT F OR THE ASSESSMENT YEAR 1980-81, THAT THE COST OF CONSTRUCTION SHOULD BE CO NSIDERED IN THE ASSESSMENT YEAR 1981-82, WHICH OPINION HE HAS NOW CHANGED. HE NOW WANTS TO INCLUDE THE COST OF CONSTRUCTION IN THE ASSESSMENT YEAR 198 0-81 ON THE BASIS OF SUCH ITA NOS.5871 TO 5873/MUM/2017 NICCO SECURITIES PVT. LTD. 6 CHANGE OF OPINION, SAYS THE COUNSEL. BUT, THERE IS ONE ASPECT, WHICH THE LEARNED COUNSEL IS IGNORING. ACCORDING TO SECTIONS 69 AND 69B, UNEXPLAINED INVESTMENTS IN ANY FINANCIAL YEAR HAVE TO BE INCLUD ED IN THE RELEVANT ASSESSMENT YEAR. IN THIS CASE, THE CONSTRUCTION WAS COMMENCED IN JANUARY 1979 AND COMPLETED IN MARCH. THE PETITIONER WAS OBS ERVING THE CALENDAR YEAR AS HIS 'PREVIOUS YEAR'. FOR THAT REASON, THE PREVIO US YEAR FOR THE ASSESSMENT YEAR 1980-81 WAS THE CALENDAR YEAR 1979 (1-1-1979 T O 31-12-1979), WHICH' MEANS THAT THE PERIOD 1-1-1980 TO 31-3-1980 WAS NOT INCLUDED IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1980-81. IT WO ULD FALL WITHIN THE 'PREVIOUS YEAR' RELEVANT TO THE ASSESSMENT YEAR 1981-82. BUT, THE DIFFICULTY IS THAT THE UNEXPLAINED INVESTMENT MADE DURING 1-1 -1980 TO 31- 3-1980 CANNOT BE INCLUDED IN THE ASSESSMENT YEAR 1981-82 IN VIEW OF THE LANGUAGE EMPLOYED IN SECTIONS 69 AND 69B. IT CAN BE INCLUDED IN THE ASSE SSMENT YEAR 1980-81 ONLY. IT IS THIS ASPECT WHICH IS PRESENTING US WITH A GOO D AMOUNT OF DIFFICULTY. WE MAY SET OUT SECTIONS 69 AND 69B TO EMPHASISE OUR PO INT. THUS, RESPECTFULLY, FOLLOWING THE AFORESAID DECISIONS, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LD. COMMIS SIONER OF INCOME TAX (APPEAL), RESULTANTLY, THIS APPEAL OF THE REVENUE IS DISMISSED. 3. NOW, WE SHALL TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2009-10 (ITA NO.5872/MUM/2017). AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE, POINT ED OUT THAT ITA NOS.5871 TO 5873/MUM/2017 NICCO SECURITIES PVT. LTD. 7 THE TAX EFFECT IN THE PRESENT APPEAL IS BELOW PRESC RIBED MONETARY LIMIT. THE LD. DR DID NOT DISPUTE THE MONE TARY LIMIT TO BE BELOW TAX EFFECT. THUS, CONSIDERING INSTRUCTION/CIRCULAR NO.3 OF 2018, ISSUED BY CBDT ( F NO.279/MISC./142/ 2007-ITJ(PT) DATED 11/07/2018, T HE APPEAL OF THE REVENUE IS HELD TO BE NOT MAINTAINABL E AND DISMISSED AS SUCH. 4. NOW, WE SHALL TAKE UP APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2010-11 (ITA NO.5873/MUM/2017). THE LD. DR RELIED UPON THE ASSESSMENT ORDER BY ADVANCIN G ARGUMENTS WHICH IS IDENTICAL TO THE GROUND RAISED. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE DEFEND ED THE IMPUGNED ORDER. 4.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT WHILE MAKING THE ADDITION, THE LD. ASSESSI NG OFFICER SUSPECTED THE TRANSACTION WITH M/S S. S. SECURITIES . THE STAND OF THE ASSESSEE IS THAT PURCHASE AND SALE OF SHARES WAS THROUGH M/S S. S. SECURITIES, WHICH IS UNLISTED ITA NOS.5871 TO 5873/MUM/2017 NICCO SECURITIES PVT. LTD. 8 COMPANY, THEREFORE, NOT TRADED ON EXCHANGE. THE STA ND OF THE REVENUE IS THAT THE FULL DETAILS WERE NOT FILED BY THE ASSESSEE. IT IS NOTED THAT THE LD. ASSESSING OFFICE R EVEN SUSPECTED THE BANK STATEMENT FILED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS. THE LD. COMMISSIONER OF INC OME TAX (APPEAL) EXAMINED THE FACTUAL MATRIX AND FOUND THAT THE ASSESSEE INVESTED RUPEES ONE CRORES IN MNR SHARES A ND INVESTMENTS MADE BY CHEQUE OF M/S KOTAK MAHINDRA BA NK ON 25/06/2009 AND THESE TRANSACTIONS ARE VISIBLE IN THE BANK STATEMENT. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) ALSO EXAMINED THE SOURCE OF INVESTMENT AMO UNT AS HAS BEEN DISCUSSED IN THE IMPUGNED ORDER. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) CLEARLY OBSERVE D THAT THE ASSESSEE RECEIVED DEPOSIT FROM SALE OF SHARES A ND THE ASSESSEE WAS HAVING ENOUGH SOURCES TO MAKE THE INVESTMENT IN MNR SHARES AND THIS AMOUNT WAS DRAWN FROM KOTAK MAHINDRA BANK AND THUS SOURCE IS EXPLAINED. T HESE TRANSACTIONS ARE CARRIED THROUGH BANKING CHANNEL AN D THE INVESTMENT IS FULLY EXPLAINED WITH REGARD TO ADVANC ES TO M/S AKASH NATURAL RESOURCES PVT. LTD. AND NO CONTRARY EVIDENCE/FACTS WERE BROUGHT TO OUR NOTICE BY THE RE VENUE, ITA NOS.5871 TO 5873/MUM/2017 NICCO SECURITIES PVT. LTD. 9 THEREFORE, WE FIND NO INFIRMITY IN THE CONCLUSION D RAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL), CONSEQ UENTLY, THIS APPEAL OF THE REVENUE IS ALSO HAVING NO MERIT, THEREFORE, DISMISSED. FINALLY, THE APPEALS OF THE REVENUE ARE DISMISSED. THIS ORDER WAS PRONOUNCED IN OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVE FROM BOTH SIDES AT T HE CONCLUSION OF THE HEARING ON 20/12/2018. SD/ - (M. BALAGANESH) SD/ - (JOGINDER SINGH) / ACCOUNTANT MEMBER #$% / VICE PRESIDENT + , MUMBAI; 1& DATED : 11/01//2019 F{X~{T? P.S/. %&. . &'()*+*,( / COPY OF THE ORDER FORWARDED TO : 1. 234 / THE APPELLANT 2. 5634 / THE RESPONDENT. 3. 7 7 + 8* , ( 2 ) / THE CIT, MUMBAI. 4. 7 7 + 8* / CIT(A)- , MUMBAI 5. :$; 5%*%& ' , 7 2. 2' , + , / DR, ITAT, MUMBAI 6. <( =, / GUARD FILE. / BY ORDER, #/ (DY./ASSTT. REGISTRAR) , + , / ITAT, MUMBAI