The ITO, Ward-4(1), Ahmedabad V. Global Securities Ltd., Ahmedabad

ITA 648/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0224 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 26-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 07-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Additional evidence; Corroborative evidences
• Section: 14A

Judgement Text

I.T.A. NO . 648 /AHD/201 3 A SSESSMENT Y EAR: 200 8 - 09 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH, SMC , AHMEDABAD [CORAM: PRAMOD KUMAR AM] I.T.A. NO. 648 /A HD/ 20 1 3 ASSESSMENT Y EAR : 200 8 - 09 INCOME TAX OFFICER, WARD 4(1), AHMEDABAD. . . . APPLICANT VS. GLOBAL SECURITIES LIMITED, .... ... .. RESPONDENT 502, SHAGUN COMPLEX, B/H. XAVIER S LADIES HOSTEL, OFF. CG ROAD, AHMEDABAD 380 0 09 . [P AN: AA CCG 3465 C ] APPEARANCES BY: SATISH SOLANKI , FOR THE APPELLANT ASEEM L . THAKKAR , FOR THE RESPONDENT D ATE OF CONCLUDING THE HE ARING : 26 .0 7 .2016 DATE OF PRONOUNCING THE ORDER : 25 .10.2016 O R D E R 1. THIS APPEAL, FILED BY THE ASSESSING OFFICER, IS DIRECTED AGAINST THE ORDER DATED 7 TH DECEMBER, 2012, PASSED BY THE LEARNED CIT(A), FOR THE ASSESSMENT YEAR 2008 - 09 . 2. IN THE FIRST GROUND OF APPEAL, THE APPELLANT HAS RAISED THE FOLLOWING GRIEVANCE; - 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOW ANCE OF RS.2,98,642/ - MADE U/S. 14A OF THE ACT WITH OUT APPRECIATING THE FACT THAT THE ASSESSEE CO MPANY HAD MADE HUGE INVESTMENT N SHARES WITHOUT MAKING ANY DISALLOWANCE U/S. 14A OF THE CT. THE EXPENDITURE INCURRED FOR EARNING THE EXEMPT INCOME OF RS.2,98,642/ - WAS, THEREFORE, DISALLOWED U/S. 14A OF THE ACT R.W. RULE - 8D. 3. LEARNED REPRESENTATIVES, HOWEVER, FAIRLY AGREE THAT THIS ISSUE IS NOW COVERED, IN FAVOUR OF THE ASSESS E E, BY HON BLE JURISDICTIONAL HIGH COURT S JUDGEMENT IN THE CASE OF CIT VS. CORRTECH ENERGY PVT . LTD . [(2014) 372 ITR 97 ( GUJ.)] INASMUCH AS SINCE THERE IS I.T.A. NO . 648 /AHD/201 3 A SSESSMENT Y EAR: 200 8 - 09 PAGE 2 OF 5 NO TAX EXEMPT INCOME I N THE HANDS OF THE ASSESSEE THIS YEAR, THERE CANNOT BE ANY DISALLOWANCE UNDER SECTION 14A EITHER. LEARNED D EPARTMENTAL REPRESENTTIVE , HOWEVER, RELIED UPON THE STAND OF THE ASSESSING OFFICER. 4. RESPECTFULLY FOLLOWING THE ESTEEMED VIEWS OF HON BLE JURISDIC TIONAL HIGH COURT, I UPHOLD THE RELIEF GRANTED BY THE LEARNED CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 5. GROUND NO.1 IS THUS DISMISSED. 6. IN GROUND NO.2, THE ASSESSING OFFICER HAS RAISED THE FOLLOWING GRIEVANCE: 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING HE ADDITION OF RS.22,77,910/ - MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF BAD DEBT WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE COULD NOT PRODUCE ANY SUPPORTING EVIDENCE TO SUBSTANTIATE ITS CLAIM. 7. ON THIS ISSUE ALSO, THE LEGAL POSITION IS FAIRLY WELL SETTLED. AS HELD BY HON BLE SUPREME COURT, IN THE CASE OF TRF LIMITED VS. CIT [(2010) 323 ITR 397 (SC)], IT IS NOT NECESSARY FOR THE ASSESSEE TO SHOW THAT DEBT HAS ACTUALLY BECOME BAD AND THAT A MERE WRITE OF F IS SUFFICIENT TO MAKE THE CLAIM FOR BAD DEBT. GRIEVANCE OF THE ASSESSING OFFICER IS, THEREFORE, ILL CONCEIVED. 8. G ROUND NO.2 IS THUS DISMISSED 9. I N GROUND NO. 3 , THE ASSESSING OFFICER HAS RAISED THE FOLLOWING GRIEVANCE: 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN D ELETING THE ADDITION OF RS.7,58,700/ - MADE BY TH E A O BY ESTIMATING GP A T THE RATE OF 2.7% ON THE TRANSACTIONS ALLEGED TO HAVE BEEN CARRIED OUT BY THE ASSESSEE WITH M/S. S.J. SECURITIES LIMITED WITHOUT APPRECIATING THE FACT THAT TH E WHOLE TRANSACTION W AS BOGUS AS THE ASSESSEE COULD NOT PROVIDE ANY DOCUMENTARY EVIDENCE TO PROVE THE TRANSACTION AS GENUINE AND NO SUCH PARTY EXISTED AT THE GIVEN ADDRESS. 10. S O FAR AS THIS GRIEVANCE OF THE ASSESSING OFFICER IS CONCERNED, THE RELEVANT MATERIAL FACTS ARE LI KE THIS. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS , THE A SSESSING OFFICER BROUGHT TO TAX AN AMOUNT OF RS.7,58,700/ - ON THE BASIS OF FOLLOWING REASONING: - I.T.A. NO . 648 /AHD/201 3 A SSESSMENT Y EAR: 200 8 - 09 PAGE 3 OF 5 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO PRODUCE THE BOOK S OF ACCOUNT FOR VERIFICATION ALONG WITH THE PURCHASE AND SALE BILLS. THE ASSESSEE FOR THE REASONS BEST KNOW TO THEM, HAVE NOT FURNISHED THE BOOKS OF ACCOUNT NOR THE PURCHASE AND SALE BILLS FOR VERIFICATION. THE ASSESSEE HAS ALSO NOT FURNISHED ANY DETAILS IN RESPECT OF SERVICE TAX PAID BY THEM ON THE TRANSACTIONS CARRIED OUT DURING THE YEAR UNDER ASSESSMENT. AS THE ASSESSEE HAS FAILED TO FURNISH ANY CORROBORATIVE EVIDENCE IN SUPPORT OF THE BUSINESS CARRIED OUT BY THEM, I HEREBY REJECT THE BOOKS RESULTS SHOW N BY THEM FOR THE YEAR UNDER REFERENCE. 7. AS STATED HEREINABOVE, THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE WHATSOEVER IN CONNECTION WITH THE TRANSACTIONS ALLEGED TO HAVE BEEN CARRIED OUT WITH M/S. S . J. SECURITIES LTD., I CONSIDER THE WHOLE TRANSACT ION AS BOGUS. ON VERIFICATION OF THE COPY OF ACCOUNTS SUBMITTED BY THE ASSESSEE, IF IS NOTICED THAT THERE IS AN OPENING DEBIT BALANCE OF RS. 3,02,77,910 / - IN THE ACCOUNT OF M/S. S . J. SECURITIES LTD. AGAINST THAT DEBIT BALANCE, THE ASSESSEE HAS ALLEGED TO HA VE PURCHASED SHARES FROM THE ABOVE PARTY AMOU NTING TO RS. 2,81,00,000/ - . NO SUPPORTING EVIDENCE WHATSOEVER WAS PRODUCED IN SUPPORT OF THE ABOVE TRANSACTIONS BY THE ASSESSEE COMPANY. IN ABSENCE OF ANY SUPPORTING EVIDENCES SUCH AS BILLS , CHA L LANS, PAYMENT DET AILS MENTIONING THE CHEQUE NOS,, DATE, AMOUNT PAID ETC., THE TRANSACTIONS ALLEGED TO HAVE BEEN CARRIED OUT WITH THE ABOVE PARTY CANNOT BE CONSIDERED AS GENUINE ONE. I, THEREFORE, TREAT THE WHOLE TRANSACTION AS BOGUS. ACCORDINGLY, I ESTIMATE THE G.P. ON THE ABOVE TRANSACTIONS OF RS.2,81,00,000 / - @ 2.7% (AVERAGE G.P. DISCLOSED BY THE ASSESSEE FOR THE IMMEDIATE THREE YEARS ) AND WORKS OUT THE G.P. TO RS. 7,58,700/ - . PENALTY PROCEEDINGS U/S. 271( 1) (C) OF THE ACT IS BEING INITIATED SEPARATELY FOR FURNISHING INACCU RATE PARTICULARS OF INCOME . (ADDITION RS. 7,58,7007 - ) 11. AGGRIEVED, ASSESSEE CARRIED THE MA T TER IN APPEAL BEFORE THE LEARNED CIT(A) WHO DELETED THE AFORESAID ADDITION. WHILE DOING SO, HE TOOK NOTE OF THE CORRESPONDENCE THAT THE ASSESSEE HAD ENTERED INT O IN RESPECT OF S . J . SECURITIES L IMITED, COPY OF ACCOUNT IN SUPPORT OF SALES MADE TO THEM AND TRANSACTION DETAILS IN SUBSEQUENT YEARS WHICH WERE ACCEPTED AS GENUINE IN THE ASSESSMENT PROCEEDINGS. ALL THE SUBMISSIONS OF THE ASSESSEE, ALONG WITH ADDITIONAL EVIDENCES, WERE FORWARDED TO THE ASSESSING OFFICER FOR REMAND REPORT. IT WAS IN THIS BACKDROP THAT THE LEARNED CIT(A) DELETED THE DISALLOWANCE BY OBSERVING AS FOLLOWS : - 9.3 I HAVE GIVEN CAREFUL CONSIDERATION TO THE APPELLANT'S SUBMISSIONS REPRODUCED HE REINABOVE AND HAVE ALSO CAREFULLY GONE THROUGH THE ASSESSMENT ORDER. I FIND CONSIDERABLE FORCE IN THE APPELLANT'S SUBMISSIONS WHICH WOULD MERIT ACCEPTANCE. THE DOCUMENTARY EVIDENCE ADDUCED IN THE COURSE OF APPELLANT I.T.A. NO . 648 /AHD/201 3 A SSESSMENT Y EAR: 200 8 - 09 PAGE 4 OF 5 PROCEEDING COPY OF WHICH WERE MADE AVAIL ABLE TO THE AO CLEARLY BRINGS OUT THE FACT THAT THE TRANSACTIONS CARRIED OUT BY THE ASSESSEE WITH S J SECURITIES LTD. ARE GENUINE AND SUCH TRANSACTIONS ARE CORROBORATED BY DOCUMENTARY EVIDENCE. HAVING REGARD TO THE TOTALITY OF THE FACTS AND EVIDENCE ON REC ORD I HOLD THAT THE ADDITION MADE BY THE AO FOR A SUM OF RS.7,58,700/ - BY ESTIMATING GP AT THE RATE OF 2.7% ON THE TRANSACTIONS OF RS.2,81,00,000/ - CARRIED OUT BY THE APPELLANT WITH M/S. S J SECURITIES LTD. IS NOT MAINTAINABLE IN LAW. ACCORDINGLY, THE IMPU GNED ADDITION IS HEREBY DELETED. THIS GROUND IS DECIDED IN FAVOUR OF THE APPELLANT. 12. THE A SSESSING OFFICER IS AGGRIEVED AND IS IN APPEAL BEFORE ME. 13. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION. 14. I FIND THAT FAIRLY GRIEVANCE OF THE ASSESSING OFFICER IS THAT VERIFICATIONS COULD NOT BE CARRIED OUT AS THE SAID S . J . SECURITIES LIMITED WAS NOT AVAILABLE ON THE GIVEN ADDRESS. HOWEVER, THE ASSESSEE HAS GIVEN REASONABLE EVIDENCE IN SUPPORT OF GENUINENESS AND IN THE SUBSEQUENT YEARS TRANSACTIONS WITH THE SAME ENTITY HAVE BEEN HELD TO BE GENUINE. AS SUCH, IN MY CONSIDERED VIEW , THERE IS NO JUSTIFICATION FOR ESTIMATING PROFIT AND DISREGARDING THE ACTUAL TR ANSACTION. I , THEREFORE , UPHOLD THE RELIEF GRANTED BY THE LEARNED CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 15. GROUND NO.3 IS THUS DISMISSED. 16. GROUND NOS . 4 & 5 ARE GENERAL IN NATURE AND DO NOT CALL FOR ANY SPECIFIC ADJUDICATION. 17. IN THE RESUL T, THE APPEAL IS DISMISSED. P P R ONOUNCED IN THE OPEN COURT TODAY ON 25 TH DAY OF OCTOBER , 2016. SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: THE 25 TH DAY OF OCTOBER , 2016. PBN/* I.T.A. NO . 648 /AHD/201 3 A SSESSMENT Y EAR: 200 8 - 09 PAGE 5 OF 5 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD