ITO, Ward 3(3), Latur V. Shri Gurushantappa Nagappa Lature, Latur

ITA 787/PUN/2013

• Counselvise Citation: 78724514 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 04-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Opportunity of being heard; Deemed to accrue or arise in india
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 787/PN/2013 (ASSESSMENT YEAR 2009-10) ITO, WARD-3(3), LATUR .. APPELLANT VS. SHRI GURUSHANTAPPA NAGAPPA LATURE, SIGNAL CAMP, LATUR PAN NO.AAIPL4744N .. RESPONDENT ASSESSEE BY : SHRI S.N. PURANIK REVENUE BY : SHRI B.C. MALAKAR DATE OF HEARING : 11-11-2014 DATE OF PRONOUNCEMENT : 26-11-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 01-01-2013 OF THE CIT(A), AURANGABAD RELATING TO A.Y. 2009- 10. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF LAND DEVELOPERS. HE FIL ED HIS RETURN OF INCOME ON 31-07-2009 DECLARING TOTAL INCOME OF RS.4 ,89,720/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THE ASSESSEE HAS TAKEN UNSECURED LOAN OF RS.35,71,420/- FROM SUYOG URJA PVT. LTD. THE ASSESSEE FILED THE CONFIRMATION LETT ER AND UNAUDITED BALANCE SHEET OF THE SAID COMPANY. HOWEVER, THE AS SESSEE DID NOT FURNISH THE RETURN OF INCOME IN THE CASE OF THE SAI D COMPANY. IT WAS 2 SUBMITTED THAT SUYOG URJA PVT. LTD HAS BEEN FORMED AND INCORPORATED IN F.Y. 2008-09 AND NO RETURN OF INCOME HAS BEEN FI LED BY THE SAID COMPANY. THE AO, ON VERIFICATION OF THE UNAUDITED BALANCE SHEET OF THE SAID COMPANY, NOTED THAT THE SAID COMPANY HAS N O SUBSCRIBED OR PAID UP CAPITAL AND THE CAPITAL ACCOUNT OF THE COM PANY IS NIL. THE COMPANY HAS SHOWN UNSECURED LOANS. FURTHER, THE CO MPANY HAS NOT DONE ANY BUSINESS ACTIVITIES DURING THE YEAR AND NE T WORTH OF THE SAID COMPANY IS NIL. THEREFORE, HE DOUBTED THE CREDIT W ORTHINESS AND GENUINENESS OF THE TRANSACTION AND ASKED THE ASSESS EE TO PROVE THE CREDIT WORTHINESS OF SUYOG URJA PVT. LTD. NOTICE U /S.133(6) ISSUED TO SUYOG URJA PVT. LTD WAS ALSO NOT RESPONDED BY THE S AID COMPANY. THE SAME WAS ALSO BROUGHT TO THE NOTICE OF THE AUTH ORIZED REPRESENTATIVE OF THE ASSESSEE COMPANY. THE ASSESS EE SUBMITTED THAT IT HAS ALREADY SUBMITTED THE CONFIRMATION LETTER OF TH E SAID COMPANY AND THE UNAUDITED BALANCE SHEET TO SUBSTANTIATE THE CRE DIT WORTHINESS AND GENUINENESS OF THE TRANSACTION. HOWEVER, THE AO RE JECTED THE ABOVE EXPLANATION OF THE ASSESSEE. INVOKING THE PROVISIO NS OF SECTION 68 THE AO MADE ADDITION OF RS.35,71,420/- AS DEEMED INCOME OF THE ASSESSEE WHICH WAS SHOWN AS UNSECURED LOAN. 3. BEFORE THE CIT(A) THE ASSESSEE FILED THE FOLLOWI NG DOCUMENTS : I. COPY OF CONFIRMATION LETTER FROM SUYOG URJA PVT. LTD (SUPL), MUMBAI. II. COPY OF ACCOUNT OF SUPL IN THE BOOKS OF THE ASSESSE E. III. COPY OF BANK ACCOUNT OF SUPL IV. COPY OF UNAUDITED BALANCE SHEET OF SUPL V. COPY OF PAN OF SUPL VI. COPY OF ARTICLES AND MEMORANDUM OF ASSOCIATION OF SUPL 3 3.1 SUBSEQUENTLY, THE ASSESSEE ALSO FILED COPIES OF THE AUDIT REPORTS FOR THE A.YRS. 2009-10, 2010-11 AND 2011-12 AND COP IES OF ACKNOWLEDGEMENT OF RETURNS OF INCOME FOR A.YRS. 201 0-11 AND 2011- 12 ALONG WITH COMPUTATION OF INCOME OF THE SAID COM PANY. VARIOUS DECISIONS WERE ALSO RELIED ON BY THE ASSESSEE BEFOR E THE CIT(A). 3.2 THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM T HE AO AND ALSO SENT NOTICE OF HEARING TO THE AO. THE AO DID NOT A VAIL THE OPPORTUNITY OF BEING HEARD BEFORE THE LD.CIT(A). HOWEVER, HE FILED A REPLY REITERATING THE CONTENTIONS OF THE EARLIER AO. THE AO ALSO RELIED ON VARIOUS DECISIONS TO SUPPORT THE ADDITION MADE BY HIS PREDECESSOR. 3.3 THE LD.CIT(A) FORWARDED A COPY OF THE SAME TO T HE ASSESSEE FOR HIS COUNTER COMMENTS. IT WAS SUBMITTED THAT THE AM OUNTS WERE ACCEPTED BY ACCOUNT PAYEE CHEQUES. CERTAIN AMOUNTS WERE GIVEN ON 38 OCCASIONS TO THE SAID COMPANY DURING FORMATION S TAGE WHICH HAS BEEN DULY CONFIRMED BY THE SAID COMPANY. IT WAS SU BMITTED THAT THE ASSESSEE HAD NO DIFFICULTY IN PRODUCING THE DIRECTO RS OF THE SAID COMPANY BEFORE THE AO. HOWEVER, THERE WAS NO SUCH REQUISITION FROM THE AO. IT WAS SUBMITTED THAT THE SAID COMPAN Y HAD SUFFICIENT BANK BALANCES FROM WHICH THE AMOUNTS WERE GIVEN TO THE ASSESSEE COMPANY. THE FUNDS WERE RAISED BY THE SAID COMPANY AND THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE OF THE SOURCE. VARIOUS DECISIONS RELIED ON BY THE AO WERE DISTINGUISHED BY THE ASSESSEE. 4 4. AFTER CONSIDERING THE REMAND REPORT AND COUNTER COMMENTS OF THE ASSESSEE TO SUCH REMAND REPORT, THE LD.CIT(A) D ELETED THE ADDITION BY OBSERVING AS UNDER : 10. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND RIVAL CONTENTION. ON PERUSAL OF THE SAME, IT HAS BEEN NOTICED THAT M/S SUYOG URJA PVT.LTD. IS A COMPANY REGISTERED UNDER COMPANIES ACT AND IS HAVING PAN AND BANK ACCOUNT. THE BOOKS OF ACCOUNTS OF THE COMPANY ARE DULY AUDITED AND CERTIFIED TO BE TR UE AND CORRECT BY A CHARTERED ACCOUNTANT. THE APPELLANT COMPANY HA S FILED RETURNS OF INCOME FOR A.Y.2010-11 AND 2011-12. IN TH E AUDITED BALANCE SHEETS OF THE COMPANY, THE LOAN GIVEN TO THE APPELLANT HAS BEEN REFLECTED. IT HAS ALSO BEEN NOTICED THAT THE AP PELLANT HAS INCURRED VARIOUS EXPENSES FOR THE COMPANY TO THE EXTE NT OF RS.28,28,700/- AND THE SAID COMPANY HAS PAID RS.64,00 ,120/- BY BANK CHEQUES TO THE APPELLANT. THE SAID COMPANY HAS PAID FOLLOWING CHEQUES TO THE APPELLANT FROM STATE BANK O F HYDERABAD, LATUR A/C NO.62080830683 DATE CHEQUE NO. AMOUNT RS. 15/12/2008 149504 24,00,000/- 26/03/2009 149506 40,00,000/- THESE CHEQUES ARE REFLECTED IN THE BANK ACCOUNT STA TEMENT OF SUYOG URJA PVT.LTD. AND ALSO IN THE BOOKS OF ACCOUNTS OF THE APPELLANT. IN VIEW OF THE ABOVE FACTS, I AM OF THE C ONSIDERED VIEW THAT THE APPELLANT HAS PROVED THE IDENTITY AND CREDI TWORTHINESS OF SUYOG URJA PVT.LTD. AND ALSO GENUINENESS OF THE TRA NSACTION. IT IS SETTLED LAW THAT THE A.O. CANNOT ASK THE ASSESSEE TO PRO VE SOURCE OF SOURCE OF LOAN AND IN CASE OF DOUBT, IF ANY, THE NECESSARY ACTION CAN BE TAKEN IN THE CASE OF THE LENDER. THE CONTENTI ON OF THE APPELLANT IS ALSO SUPPORTED BY PLETHORA OF DECISIONS INC LUDING THE RATIO LAID DOWN BY THE DECISIONS RELIED ON BY THE APP ELLANT. THE DECISIONS RELIED ON BY THE A.O. ARE DISTINGUISHABLE ON FACTS AS POINTED OUT BY THE AR OF THE APPELLANT IN HIS WRITTE N SUBMISSION REPRODUCED IN THE EARLIER PARAGRAPH. IN VIEW OF THE ABOVE FACTS AND DISCUSSION, I AM OF THE CONSIDERED VIEW THAT THE A.O. IS NOT JUSTIFIED IN MAKI NG ADDITION OF RS.35,71,420/- TOWARDS UNEXPLAINED LOAN. THE ADDITION OF RS.35,71,420/- IS, THEREFORE, DELETED. THE A.O. IS DI RECTED ACCORDINGLY. GROUND NO.2 STANDS ALLOWED. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : ON THE FACTS AND CIRCUMSTANCES OF THE CASE: 1. HONBLE CIT(A), AURANGABAD HAS ERRED IN ALLOWING THE APPEAL ON THE GROUND TAKEN BY THE ASSESSEE THAT THE BOOKS OF ACCOUNTS OF THE CREDITOR COMPANY IS AUDITED IN SPITE OF THE FACT THAT THESE ARE NOT AUDITED DURING THE ASSTT. PROCEEDINGS. 5 2. THAT THE CIT(A) IS RELIED ON THE DECISION ON WHI CH THE ASSESSEE RELIED UPON. 3. THAT THE HONBLE CIT(A) HAS NOT CONSIDERED THE F ACTS WHICH THE HON'BLE COURT HAS CONSIDERED WHILE DECIDING THE APPE AL IN THE CASE OF CIT CALCUTTA VS. BIJU PATNAIK (SC) 160 ITR 674 THAT THE CREDITOR TRUST KALINGA FOUNDATION TRUST HAS NOT FUNDS OF ITS OWN. SIMI LAR IS THE FACTS IN THE CASE OF SUYOG URJA PVT. LTD. YOUR APPELLANT PRAYS:- A) THAT THE ORDER OF THE CIT APPEAL MAY PLEASE BE VA CATED AND THAT OF THE A.O. MAY PLEASE BE RESTORED. B) TO ALLOW, ADD, ALTER, DELETE ANY GROUNDS OF APPEA L DURING THE APPELLATE PROCEEDINGS. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. FROM T HE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE, WE FIND ALTHOUGH THE ASS ESSEE HAD NOT SUBMITTED AUDITED BALANCE SHEET OF SUYOG URJA PVT. LTD BEFORE THE AO, HOWEVER, AUDITED ACCOUNTS OF THE SAID COMPANY W ERE FILED BEFORE THE CIT(A) WHICH WERE FORWARDED TO THE AO DURING TH E REMAND PROCEEDINGS. THE SAID COMPANY HAD FILED RETURN OF INCOME FOR A.YRS. 2010-11 AND 2011-12 AND IN THE SAID AUDITED ACCOUNT S THE LOAN GIVEN TO THE ASSESSEE HAS BEEN REFLECTED. FURTHER, THE FINDING OF THE LD.CIT(A) THAT THE ASSESSEE COMPANY HAS INCURRED VA RIOUS EXPENSES TO THE EXTENT OF RS.28,28,700/- AND THE SAID COMPANY H AS PAID RS.64,00,120/- BY BANK CHEQUE TO THE ASSESSEE COULD NOT BE CONTROVERTED BY THE LD. DEPARTMENTAL REPRESENTATIVE . FURTHER, WE FIND SUYOG URJA PVT. LTD HAS PAID THE AMOUNT OF RS. 64 LAKHS TO THE ASSESSEE COMPANY VIDE CHEQUE NO.149504 DATED 15-12- 2008 FOR RS.24 LAKHS AND CHEQUE NO. 149506 DATED 26-03-2009 FOR RS.40 LAKHS. THERE IS ALSO AN ENTRY OF RS.120/- RECEIVED FROM THE SAID 6 COMPANY. SINCE THE AMOUNT OF RS.64,00,120/- HAS BE EN RECEIVED BY THE ASSESSEE COMPANY FROM SUYOG URJA PVT. LTD OUT O F WHICH AN AMOUNT OF RS.28,28,700/- IS ACCEPTED BY THE AO AS G ENUINE, THEREFORE, WE FIND NO REASON AS TO HOW THE AO IS DOUBTING THE REMAINING AMOUNT OF RS.35,71,420/- ESPECIALLY WHEN MONEY HAS COME FR OM THE SAME BANK ACCOUNT DURING THE SAME YEAR. FROM THE ABOVE, IT IS CLEAR THAT AS AGAINST RS.64,00,120/- RECEIVED BY THE ASSESSEE COM PANY FROM SUYOG URJA PVT. LTD THE AO IS DISPUTING RS.35,71,420/- ON LY. IN OTHER WORDS, HE IS ACCEPTING THE BALANCE AMOUNT OF RS.28,28,700/ -. THE VARIOUS DECISIONS RELIED ON BY THE REVENUE ARE DISTINGUISHA BLE AND ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN TH IS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED REASONING GIVEN BY THE LD.CIT(A), WE FIND NO INFIRMITY IN HIS ORDER DELETING THE ADDITION. W E ACCORDINGLY UPHOLD THE SAME. GROUNDS RAISED BY THE REVENUE ARE ACCORD INGLY DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. PRONOUNCED IN THE OPEN COURT ON 26-11-2014. SD/- SD/- (SUSHMA CHOWLA) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEM BER PUNE DATED: 26 TH NOVEMBER, 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A), AURANGABAD 4. THE CIT, AURANGABAD 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE