DCIT, Central Circle - XX, Kolkata, Kolkata V. M/s. Dolby Traders Pvt. Ltd., Kolkata

ITA 751/KOL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99827 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 1995-1996
• Appeal Filed On: 16-05-2011
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Additional evidence; Block assessment
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , KOLKATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M.BALAGANESH, AM ] ITA NO. 751/KOL/2011 ASSESSMENT YEAR : 1995 - 96 ( A PPELLANT ) (RESPONDENT) D.C.I.T., CENTRAL CIRCLE - XX, - VERSUS - M/S. DO LBY TRADERS PVT. LTD., KOLKATA KOLKATA (PAN: AAACD 9818 J) FOR THE APPELLANT : SHRI D.BANERJEE, JCIT FOR THE RESPONDENT : SHRI V.N.PUROHIT, FCA DATE OF HEARING : 23 .09 .2015. DATE OF PRONOUNCEMENT : 28.09.2015. ORDER PER SHRI M.BALAGANESH, AM 1. THIS APPEAL OF THE REVENUE ARISES OUT OF THE ORDER OF THE LEARNED CIT ( A ) IN APPEAL NO. 230 /CIT(A ),C - I/CC - XX/08 - 09 DATED 09.02.1011 FOR THE ASST YEAR 1995 - 96 ARISING OUT OF THE ORDER OF THE LEARNED ASSESSING OFFICER FRAMED U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). 2. SHRI.V.N.PUROHIT, FCA, THE LEARNED AR ARGUED ON BEHALF OF THE ASSESSEE AND SHRI. D.BANERJEE, JCIT, THE LEARNED DR ARGUED ON BEHALF OF THE REVENUE. 3. THE ONLY ISSUE TO BE DECIDED IN THI S ISSUE IS AS TO WHETHER THE LEARNED CIT ( A ) IS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT TO THE TUNE OF RS. 36,91,400/ - IN RESPECT OF AMOUNTS RECEIVED FROM THREE SUNDRY CREDITORS WHO WERE THE FRONT FIRM S OF KCDIL. 4. THE BRIEF FACTS OF THIS ISSUE IS THAT THE RETURN OF INCOME FOR ASST YEAR 1995 - 96 WAS FILED BY THE ASSESSEE ON 31.3.1997 DECLARING TOTAL LOSS OF RS. 1,05,520/ - . THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 9.2.1998 ASS ESSING TOTAL ITA NO. 751/KOL/2011 M/S. DOLBY TRADERS PVT. LTD. . A.YR. 1995 - 96 2 INCOME AT RS. 1,40,03,400/ - . IN THE SAID ASSESSMENT, THE SUMS RECEIVED FROM THE FOLLOWING THREE PARTIES WERE ADDED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT : - M/S SURYA TRADERS 7,10,400 M/S SURYA PAPER UDYOG 19,84,000 M/S KIRAN ENTERPR ISES 9,97,000 36,91,400 4.1. IN THE COURSE OF SEARCH IN THE CASE OF KEDIA GROUP, M/S KEDIA CASTLE DELLEON INDUSTRIES LTD ( IN SHORT KCDIL ), ONE OF THE GROUP CONCERNS, HAD ADMITTED THE OWNERSHIP OF THE A BOVE NAMED THREE FIRMS AND THAT THOSE FIRMS ARE ITS FRONT FIRMS, BEFORE THE ADIT (INV.) MUMBAI. BASED ON THIS, BLOCK ASSESSMENT WAS COMPLETED IN THE HANDS OF M/S KCDIL MAKING NECESSARY ADDITIONS / DISALLOWANCES IN RESPECT OF ALL THE FRONT FIRMS OWNED UP B Y IT U/S 158BC OF THE ACT ON 31.12.1997 WHICH WAS SUBSEQUENTLY AFFIRMED BY THE ORDER OF THIS TRIBUNAL IN IT (SS) A NO. 65 & 18 / CAL / 1998 DATED 19.10.2001. 4.2. M/S DOLBY TRADERS PVT LTD BELONGS TO KEDIA GROUP. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS OF THE ASSESSEE HEREIN, SIMILAR CLAIM WAS MADE THAT THE AFORESAID THREE FIRMS WERE THE FRONT FIRMS OF KCDIL AND THOSE WERE OWNED BY IT. ACCORDINGLY, THE ASSESSEE CLAIMED THAT THE TOTAL SUM OF RS. 36,91,400/ - CREDITED IN THE NAME OF THOSE FRONT F IRMS IN ITS BOOKS MAY BE TREATED AS THE SUM CREDITED IN THE NAME OF KCDIL. IT WAS ALSO EXPLAINED THAT THE AMOUNTS RECEIVED WERE UTILIZED FOR PURCHASE OF 11700 SHARES OF KEDIA DISTILLERIES LTD. BUT THIS WAS NOT CONSIDERED AND AMOUNTS LYING IN THE NAME OF THREE CONCERNS WERE ADDED AS UNEXPLAINED CASH CREDIT U/S 68 IN THE ORIGINAL ASSESSMENT FOR THE ASST YEAR 1995 - 96 I N THE HANDS OF THE ASSESSEE. ON FIRST APPEAL, THE LEARNED CIT ( A ) DELETED THE ENTIRE ADDITION OF RS. 36,91,400/ - VIDE HIS ORDER IN ITA NO. 46 DATED 28.3.2003 ON THE GROUND THAT THE ASSESSEE HAD RECEIVED THE ADVANCES FROM THE THREE PARTIES AND MADE INVESTMENT IN SHARES OF KEDIA DISTILLERIES LTD AND THOSE THREE CONCERNS HAD ACTUALLY RECEIVED ADVANCES FROM VARIOUS PARTIES AND ALL THE TRANSACTIONS ARE ROUTED THROUGH CHEQUES AND SOURCE AND SOURCE OF SOURCE HAVE BEEN DULY PROVED BY THE ASSESSEE. ON AN APPEAL PREFERRED BY THE REVENUE BEFORE THIS ITA NO. 751/KOL/2011 M/S. DOLBY TRADERS PVT. LTD. . A.YR. 1995 - 96 3 TRIBUNAL, THE ISSUE WAS SE T ASIDE TO THE FILE OF THE LEARN ED AO FOR FRESH ADJUDICATION IN ITA NO. 1577/K/20 04 DATED 29.3.2005 WITH A DIRECTION TO ASCERTAIN WHETHER THE AFORESAID THREE FIRMS ARE FRONT FIRMS OF KCDIL AND THAT THE AMOUNT OF CREDITS SHOWN IN THEIR NAMES AS SUNDRY CREDITORS WER E ACCOUNTED FOR BY M/S KCDIL. THIS DIRECTION WAS GIVEN IN THE SAME LINE A S WAS EARLIER GIVEN BY THE TRIBUNAL IN ITS ORDER IN ITA NO. 7901/K/2001 DATED 15.4.2004 PASSED IN THE CASE OF M/S TALBROS INVESTMENT PVT LTD. 4.3. IN THE COURSE OF SET ASIDE ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED ALL THE RELEVANT DOCUMENTS TO PROVE THE BONA FIDES AND GENUINENESS OF THE TRANSACTIONS. THE LEARNED AO ALSO ACCEPTED THE FACT IN PAGE 4 PARA 6(B) OF THE ASSESSMENT ORDER THAT THE AFORESAID THREE SUNDRY CREDITORS AR E INDEED FRONT FIRMS OF KCDIL . THE LEARNED AO HAVING STATED THE SAME SOUGHT TO ADD THE CREDITS LYING IN THEIR NAMES AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT BY COMING TO A CONCLUSION THAT NO EVIDENCE HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE THREE FRONT FIRMS HAD ACTUALLY PAID THE AMOUNT DIRECTLY TO M/S PATAN DEVI & CO (SHA RE BROKER) THROUGH WHOM SHARES OF KEDIA DISTILLERIES LTD WERE PURCHASED BY ASSESSEE. ON FIRST APPEAL, THE LEARNED CIT ( A ) HELD THAT ALL THE FACTS HAVE BEEN DULY BROUGHT ON RECORD BY THE ASSESSEE AND COMPLETE FLOW OF TRANSACTIONS THROUGH CHEQUES HAVE BEEN PROVED BEYOND DOUBT BY THE ASSESSEE BY EXPLAINING THE RESPECTIVE SOURCES AND ALSO STATED THAT THE THREE CONCERNS ARE ONLY FRONT FIRMS OF KCDIL WHICH FACT IS ALSO ACCEPTED UPTO ITAT LEVEL IN THE BLOCK ASSESSMENT PROCEEDINGS OF KCDIL U/S 158BC OF THE ACT A ND FURTHER STATED THAT THE LEARNED AO HAD ACTUALLY TRAVELLED BEYOND HIS JURISDICTION IN MAKING UNWANTED INVESTIGATIONS WITH M/S PATAN DEVI & CO WHICH WAS NOT THE SUBJECT MATTER OF DIRECTIONS BY THE ITAT IN THE FIRST ROUND OF APPELLATE PROCEEDINGS IN THIS C ASE. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS: - 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.36,91,400/ - MADE ON ACCOUNT OF UNEXPLAINED INVESTME NT IN SHARES OF M/S. KEDIA DIS TILLIERIES LTD. WITHOUT PROPER CONSIDERATION OF THE FACT THAT RELEVANT BOOKS OF M/S KCDIL COULD NOT BE PRODUCED BY THE ASSESSEE TO ENABLE A.O. TO ASCERTAIN WHETHER THE AMOUNTS SHOWN TO HAVE BEEN PAID BY THE THREE FIRMS, E.G. M /S. SURYA TRADERS, M/S. SURYA PAPER UDYOG, M/S. KIRAN ENTERPRISES HAVE BEEN ACCOUNTED FOR BY M/S. KCDIL AS DIRECTED BY HON BLE ITAT, KOLKATA IN ITS ORDER DT. 29.3.2005 IN ITA NO.1577/KOL/2004. ITA NO. 751/KOL/2011 M/S. DOLBY TRADERS PVT. LTD. . A.YR. 1995 - 96 4 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW T HE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.36,91,400/ - MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN SHARES OF M/S DISTILLERIES LTD WITHOUT PROPER CONSIDERATION OF THE FACT THAT PAYMENTS CLAIMED TO HAVE BEEN MADE BY THE THREE CREDITOR FIRMS, E.G. M/S. SURYA TRADERS, M/S. SURYA PAPR UDYOG, M/S. KIRAN ENTERPRISES TO THE BROKER, VIZ. M/S. PATAN DEVI & CO WERE NOT ESTABLISHED AS THOSE THREE FIRMS AND ALSO THE BROKER FIRM WERE NOT TRACEABLE. 3. THAT THE DEPARTMENT CRAVES LEAVE TO ADD, MODIFY OR AL TER ANY OF THE GROUND(S) OF APPEAL AND/OR ADDUCE ADDITIONAL EVIDENCE AT THE TIME OF HEARING OF THE CASE. 5. THE LEARNED DR ARGUED THAT THE BOOKS OF ACCOUNTS OF KCDIL AS DIRECTED BY THIS TRIBUNAL WERE NOT PRODUCED BY THE ASSESSEE TO VERIFY WHETHER THES E CONCERNS ARE FRONT FIRMS OF KCDIL AND ACCORDINGLY DISTINGUISHED THE TRIBUNAL ORDER PASSED IN THE CASE OF M/S TALBROS INVESTMENTS PVT LTD. HE ARGUED THAT IN THE CASE OF M/S TALBROS INVESTMENTS PVT LTD, THE BOOKS OF ACCOUNTS OF KCDIL WERE PRODUCED BY THA T ASSESSEE TO PROVE CERTAIN CONCERNS AS FRONT FIRMS OF KCDIL. BUT IN THE INSTANT CASE, THE BOOKS OF KCDIL WERE NOT PRODUCED BY THE ASSESSEE AND HENCE THE LEARNED AO COULD NOT MEET OUT THE DIRECTIONS OF THIS TRIBUNAL IN FULL AND ACCORDINGLY HAD TO TRAVEL B EYOND HIS JURISDICTION OF MAKING VERIFICATIONS WITH THE SHARE BROKER REGARDING THE PURCHASE OF SHARES OF KEDIA DISTILLERIES LTD. IN RESPONSE TO THIS, THE LEARNED AR ARGUED THAT THE LEARNED AO HAD DULY ACCEPTED THE FACT THAT THE AFORESAID THREE SUNDRY CRE DITORS ARE INDEED FRONT FIRMS OF KCDIL WHICH IS CLEARLY MENTIONED IN PARA 6 (B) OF THE ASSESSMENT ORDER. HE ARGUED THAT MOREOVER, IN THE BLOCK ASSESSMENT PROCEEDINGS U/S 158BC OF THE ACT WHICH HAS BEEN UPHELD UPTO ITAT LEVEL, KCDIL HAD ALREADY OWNED UP IT S BENAMI CONCERNS (WHICH ADMITTEDLY INCLUDED THE AFORESAID THREE CONCERNS) AS ITS INCOME AND ASSESSMENTS COMPLETED ACCORDINGLY. HE ARGUED THAT WHEN KCDIL HAD COME FORWARD TO OWN UP THE ENTIRE TRANSACTIONS OF THE AFORESAID THREE CONCERNS WHICH POINT IS NOT DISPUTED BY THE REVENUE, THEN WHERE IS THE NEED FOR THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNTS OF KCDIL. HE FURTHER ARGUED THAT THE SAID CONCERNS ARE ONLY FRONT FIRMS OF KCDIL. IN ANY CASE, THOSE TRANSACTIONS COULD NOT HAVE BEEN REFLECTED IN THE BOOK S OF KCDIL EVEN IF THE BOOKS OF ACCOUNTS WERE PRODUCED. HE ARGUED THAT THOSE ADVANCES LYING IN THE NAMES OF THE AFORESAID THREE SUNDRY CREDITORS WERE ACTUALLY SETTLED BY KCDIL WHICH FACT IS ALSO NOT DISPUTED BY THE REVENUE. HE FURTHER ARGUED THAT THE A DDIT I ONS HAVE BEEN MADE BY THE LEARNED AO TREATING THE AMOUNTS RECEIVED ITA NO. 751/KOL/2011 M/S. DOLBY TRADERS PVT. LTD. . A.YR. 1995 - 96 5 FROM THREE PARTIES AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT , BUT WHEREAS THE REVENUE HAS COME ON APPEAL BEFORE THIS TRIBUNAL ON THE APPLICATION OF THOSE MONIES NAMELY THE INVESTME NT IN SHARES OF KEDIA DISTILLERIES LTD WHICH IS NOT AT ALL THE DISPUTE BEFORE THE LOWER AUTHORITIES. HE PLEADED THAT ON THIS GROUND ITSELF, THE APPEAL OF THE REVENUE DESERVES TO BE DISMISSED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MA TERIALS AVAILABLE ON RECORD. WE FIND LOT OF FORCE IN THE ARGUMENTS OF THE LEARNED AR AS STATED ABOVE. WE FIND THAT THE AFORESAID THREE SUNDRY CREDITORS VIZ M/S SURYA TRADERS, M/S SURYA PAPER UDYOG AND M/S KIRAN ENTERPRISES ARE INDEED FRONT FIRMS OF KCDIL WHICH FACT IS NOT DISPUTED BY THE REVENUE. WE HOLD THAT THE LEARNED AO HAVING ACCEPTED THE SAME OUGHT NOT TO HAVE TRAVELLED BEYOND HIS JURISDICTION TO MAKE UNWANTED INVESTIGATIONS INTO THE APPLICATION OF THE AMOUNTS RECEIVED FROM THESE THREE PARTIES NAME LY INVESTMENT IN SHARES OF KEDIA DISTILLERIES LTD. THIS WAS NOT THE DIRECTIONS GIVEN BY THIS TRIBUNAL IN THE FIRST INNINGS OF APPEAL TO THE LEARNED AO. WE ALSO FIND THAT THE AFORESAID THREE SUNDRY CREDITORS WERE DULY SETTLED BY KCDIL WHICH FACT IS ALSO NOT DISPUTED BY THE REVENUE. WE FIND THAT IN CASE THOSE THREE CONCERNS ARE NOT FRONT FIRMS OF KCDIL, THEN KCDIL WOULD NOT HAVE COME FORWARD TO SETTLE THE DUES TO THE SAID CREDITORS. IT IS ALSO SEEN FROM THE RECORDS THAT THE TRANSACTIONS PERTAINING TO T HESE THREE SUNDRY CREDITORS WERE DULY ADDED IN THE BLOCK ASSESSMENT COMPLETED IN THE HANDS OF KCDIL U/S 158BC OF THE ACT WHICH IS UPHELD UPTO ITAT LEVEL. BY KCDIL OWNING UP THE TRANSACTIONS OF THESE THREE SUNDRY CREDITORS, ALL THE INGREDIENTS OF SECTION 68 STANDS PROVED BEYOND DOUBT AND HENCE NO ADDITION COULD BE MADE U/S 68 OF THE ACT IN THE SUM OF RS. 36,91,400/ - IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6.1. WE ALSO FIND THAT THE ADDITION WAS MAD E U/S 68 OF THE ACT IN RESPECT OF AMOUNTS RECEIVED FROM THREE SUNDRY CREDITORS BUT WHEREAS THE REVENUE HAS RAISED TOTALLY IRRELEVANT GROUNDS BEFORE US ON THE APPLICATION OF THE SAID RECEIPTS FROM THREE CREDITORS. THE APPEAL OF THE REVENUE DESERVES TO BE DI SMISSED EVEN ON THIS COUNT. ITA NO. 751/KOL/2011 M/S. DOLBY TRADERS PVT. LTD. . A.YR. 1995 - 96 6 IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNC ED IN TH E COURT ON 2 8.09.2015. SD/ - SD/ - [MAHAVIR SINGH] [M.BALAG ANESH] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 28.09.2015. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO : 1 . M/S. DOLBY TRADERS PVT. LTD., EXPRESS TOWER, 42A, SHAKESPEARE SARANI, KOLKATA - 700017. 2 THE D.C.I.T., CENTRAL CIRCLE - XX, KOLKATA. 3 . THE CIT - CENTRAL - I II , KOLKATA , 4. T HE CIT(A) - CENTRAL - I, KOLKATA . 5 . DR, KOLKATA BENCHES, KOLKATA TRUE COPY , BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES