SATIDHAM SYNTEX LTD, BANGALORE V. ITO WD 5(3)(2), MUMBAI

ITA 635/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0398 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 08-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Unexplained investment
• Section: 69C; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI BEFORE S HRI SHAMIM YAHYA (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 635 /MUM/2016 ASSESSMENT YEAR: 2010 - 11 M/S SATIDHAM SYNTEX LTD., VAJRAS NO. 1445, 28 MAIN SOUTH END, A CROSS, JAYA NAGAR, 9 TH BLOCK, BANGALORE - 560069 PAN: AAFCS6656N VS. THE INCOME TAX OFFICER, WARD 5 ( 3)(2 ), MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAKESH JOSHI ( A R) REVENUE BY : SHRI V. JUSTIN ( D R ) DATE OF HEARING: 06 /02 /201 8 DATE OF PRONOUNCEMENT: 23 / 0 2 /201 8 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 26.11.2015 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)10 , MUMBAI , FOR THE A S S ESSMENT YEAR 2010 - 11 , WHEREBY THE LD. CIT (A) HAS PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED U/S 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE A CT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPAN Y FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING LOSS OF RS. 79,268/. THE RETURN WAS PROCESSED U/S 143 (1) AND NOTICE U/S 143 (2) AND 142 (1) WERE ISSUED CALLING THE DETAILS. IN RESPONSE TO THE SAID NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED BEFORE THE AO AND FILED THE DETAILS . AFTER HEARING THE ASSESSEE, THE AO INTER ALIA MADE ADDITION OF RS. 2 ITA NO. 63 5 / MUM/2016 ASSESSMENT YEAR: 2010 - 11 41,91,163/ - ON ACCOUNT OF UNEXPLAINED SOURCE OF REGISTRATION EXPENSES OF LAND AT MADHURVADA. IN THE FIRST APPEA L THE LD.CIT (A) CONFIRMED THE ADDITION MADE U/S 69 OF THE ACT WITH REGARD TO THE REGISTRATION EXPENSES OF RS. 41,91,163/ - . THE ASSESSEE HAS FILED THE PRESENT APPEAL CHALLENGING THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) BY RAISING THE FOLLOWING EFFECTIV E GROUND OF APPEAL: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN DISALLOWING THE CLAIM OF REGISTRATION EXPENSES OF RS. 41,91,163/ - U/S 69 OF THE INCO ME TAX ACT, 1961 BY TREATING THE SAME AS ALLEGED UNEXPLAINED INVESTMENT, WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE ASSESSMENT YEAR 2009 - 10, THE ITAT HAS RES TORED THE SIMILAR ISSUE TO THE FILE OF ASSESSING OFFICER FOR EXAMINING THE ISSUE AFRESH IN ACCORDANCE WITH THE LAW. THE LD . COUNSEL FURTHER SUBMITTED THAT AS PER THE SETTLED LAW AN INVESTMENT MADE IN A PARTICULAR FINANCIAL YEAR CANNOT BE TREATED AS UNEXPLA INED INVESTMENT IN THE SUBSEQUENT FINANCIAL YEAR. THE LD. COUNSEL FURTHER POINTED OUT THAT THE AO HAS MADE ADDITION U/S 69 ON THE GROUND THAT IN THE PREVIOUS ASSESSMENT YEAR 2009 - 10, THE ASS ESSEE COMPANY FAILED TO GIVE THE SOURCE OF INVESTMENT OF MADHURVAD A LAND PURCHASE AND THE ACIT - 5 HAD MADE THE ADDITION IN QUESTION. THE ULTIMATE SOURCE FOR ACQUISITION OF LAND WAS NOT EXPLAINED NOR THE SOURCE OF MONEY FOR PAYMENT OF STAMP DUTY AND REGISTRATION CLAIMED OF RS. 41,91,163/ - WAS EXPLAINED IN THE YEAR 2010 - 11. 4. ON THE OTHER HAND THE LD. DEPARTMENTAL REP RESENTATIVE (DR) RELYING ON THE FINDINGS OF THE LD. CIT (A) SUBMITTED THAT SINCE THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF EXPENSES INCURRED ON REGISTRATION OF LAND PURCHASED AT MADHURAWADA, THE LD. CIT (A) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE AO. 3 ITA NO. 63 5 / MUM/2016 ASSESSMENT YEAR: 2010 - 11 IN THE LIGHT OF THE RIVAL CONTENTIONS OF THE PARTIES, W E HAVE PERUSED THE MATERIAL ON RECORD INCLUDING THE ORDERS PASSED BY THE AUTHORITIES BELOW FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE O RDER OF COORDINATE BENCH PASSED IN THE ASSESSEES OWN CASE ITA NO. 2341/MUM/2013, A.Y. 2009 - 10. WE NOTICE THAT THE COORDINATE BENCH HAS RESTORED THE MATTER TO THE FILE OF AO FOR EXAMINING THE ISSUE RELATING TO UNEXPLAINED INVESTMENT S AFRESH, HOLDING AS UND ER: - 21. THE HONBLE HIGH COURT ALSO HELD THAT AN INVESTMENT MADE IN A PARTICULAR FINANCIAL YEAR, THE SAME, CANNOT BE TREATED AS UNEXPLAINED INVESTMENT IN THE SUBSEQUENT FINANCIAL YEAR. IN OTHER WORDS, IT SHOULD BE TREATED AS INVESTMENT IN THE YEAR IN WHI CH IT IS RECORDED IN THE BOOKS OF ACCOUNTS RELEVANT TO THAT PARTICULAR FINANCIAL YEAR. AS COULD BE SEEN FORM THE ABOVE THE HONBLE HIGH COURT HELD THAT FOR APPLYING SECTION 69 OF THE ACT THE ASSESSING OFFICER MUST FIRST COME TO A FINDING THAT THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS AND THEREAFTER CALL FOR AN EXPLANATION FROM THE ASSESSEE ABOUT THE NATURE AND SOURCE OF INVESTMENTS. IN THE CASE ON HAND THE ASSESSING OFFICER WITHOUT EXAMINI NG THE BOOKS OF ACCOUNTS PROP ER TY AND WITHOUT GIVING A FINDING THAT THE TRANSACTIONS OCCURRED OUTSIDE THE BOOKS OF ACCOUNTS INVOKED PROVISIONS OF SECTION 69C OF THE ACT. WE ALSO FIND THAT THE ASSESSMENT YEAR 2008 - 09 AS THE SALE AGREEMENT ENTERED INTO IS IN THE FINANCIAL YEAR 2007 - 08 A ND IN SUCH CIRCUMSTANCES, WHETHER THE ADDITION CAN BE MADE IN THE ASSESSMENT YEAR 2009 - 10 IS ALSO NOT EXAMINED BY THE ASSESSING OFFICER. 5. THE COORDINATE BENCH HAS OBSERVED THAT THE ASSESSEE HAD ENTERED INTO AN AGREEMENT FOR SALE OF PROPERTY IN THE FINA NCIAL YEAR 2007 - 08 AND THE AO HAS MADE ADDITION IN THE ASSESSMENT YEAR 2009 - 10. SIMILARLY, THE AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT AS PER THE ASSESSEE THE AMOUNT IN QUESTION WAS PAID BY VASAVI INDUSTRIES LTD. O N BEHALF THE COMPANY AS THE SAID AMO UNT WAS DUE FROM THAT COMPANY, HOWEVER, THE ASSESSEE FAILED TO ADDUCE ANY EVIDENCE TO ESTABLISH THE SAID FACTS. THE AO 4 ITA NO. 63 5 / MUM/2016 ASSESSMENT YEAR: 2010 - 11 HAS NOT MENTIONED THE DATE AND YEAR OF THE TRANSACTION. SINCE, THE COORDINATE BENCH HAS RESTORED THE MATTER PERTAINING TO THE TRANSACTION IN QUESTION TO THE FILE OF AO FOR PASSING THE ORDER AFRESH AFTER VERIFYING THE FACTS IN ITS ORDER PASSED IN ITA NO. 2341/MUM/2013 FOR THE ASSESSMENT YEAR 2009 - 10 AND SINCE THE DISALLOWANCE IN QUESTION IN THIS CASE IS CONNECTED WITH THE ASSESSMENT YEAR 200 9 - 10, WE ALSO RESTORE THE ISSUE RAISED BY THE ASSESSEE IN THE PRESENT APPEAL TO THE FILE OF AO TO EXAMINE THE MATTER AFRESH IN TERMS OF THE ORDER THE AFORESAID ORDER OF THE COORDINATE BENCH AND PASS THE ORDER AFRESH. HENCE, WE SET ASIDE THE ORDER OF THE LD . CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE FOR THE STATISTICAL PURPOSES. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR A SSESSMENT YEAR 2010 - 20 11 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD FEBRUARY , 201 8 . SD/ - SD/ - ( SHAMIM YAHYA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 23 / 02 / 201 8 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . 5 ITA NO. 63 5 / MUM/2016 ASSESSMENT YEAR: 2010 - 11 / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI