DCIT Circle 18 (1), V. Uma Strips Ltd,

ITA 922/DEL/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2318 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2009
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 07-09-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 10-03-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V K TIWARI
• Keywords: Unexplained investment; Opportunity of being heard
• Section: 80G

Judgement Text

ITA NO. 922/DEL/08 A.Y. 2002-03 1 IN THE INCOMETAX APPELATE TRIBUNAL DELHI BENCH H: NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER & SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 922/DEL/2008 A.Y. : 2002-03 INCOME TAX OFFICER, M/S UMA STRIPS LTD., WARD-18(1), NEW DELHI VS. X-64, LOHA MANDI , NARAINA, ROOM NO. 27, CR BUILDING, NEW DELHI IP ESTATE, NEW DELHI (PAN: AAACU2078B) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SH. V.K. TIWARI, CIT(DR) O R D E R PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDERS OF THE LD. CIT(A) DATED 31.12.2007 AND PERTAINS TO ASSESSMENT YEAR 2002-03. 2. THE ISSUE RAISED ARE THAT THE LD. CIT(A) HAS ER RED IN DELETING THE ADDITION OF RS. 5,50,00,000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENT. IT HAS BEEN FUR THER URGED THAT THE LD. CIT(A) HAS ALSO ERRED IN DELETING THE ADDITION OF RS. 4,31,477/- MADE BY THE AO ON ACCOUNT OF PROFIT EARN ED ON UNEXPLAINED INVESTMENT. 3. THE ASSESSEE IN THIS CASE IS A COMPANY ENGAGED I N SALE AND PURCHASE OF GOLD AND SILVER. DURING THE COURSE OF ITA NO. 922/DEL/08 A.Y. 2002-03 2 ASSESSMENT AO NOTED THAT ASSESSEE MADE PURCHASES OF RS. 2,23,85,648/- FROM PRIVATE PARTIES. ONE SUCH PARTY WAS M/S SHIVA ENTERPRISES FROM WHOM IT HAD MADE THE PURCHA SES AND ALSO TO WHOM IT HAD MADE SALES DURING THE YEAR OF RS. 2,23,35,248/- AND RS. 1,22,43,641/- RESPECTIVELY. AO WANTED TO VERIFY THE GENUINENESS OF PURCHASES MADE FROM M/ S SHIVA ENTERPRISES. IN ALL HER EFFORTS AO FAILED TO TRACE THE SAID CONCERN. AO ELABORATELY DISCUSSED THE INVESTIGATION DONE. SHE NOTED THAT IT WAS FOUND THAT BOTH THE ASSESSEE AND M/S SHIVA ENTERPRISES HAS THE SAME ADDRESS. BOTH OF THEM HAV E AUTHROISED SOME COMMON PERSONS TO OBTAIN DELIVERY OF BULLION FROM BANKS. BOTH THE PARTIES ARE MAINTAINING BANK ACCOUNTS IN THE SAME BANK. AO WENT ON TO CONCLUDE THAT THE FIRM IS NOT TRACEABLE. THE PROPRIETOR IS NOT TRACEABLE AND TH E PERSONS WORKING IN THE COMPANY AS WELL AS FOR M/S SHIVA ENT ERPRISES ARE NOT TRACEABLE. AO CONCLUDED THAT M/S SHIVA ENT ERPRISES WAS NOTHING BUT WAS AN ENTITY CREATED BY THE ASSESS EE COMPANY TO CARRY OUT ITS OUT OF BOOKS ACTIVITIES. ON PERUSAL OF THE COPY OF ACCOUNT OF M/S SHIVA ENTERPRISES OBTAIN ED FROM HSBC BANK, AO NOTED THAT PEAK INVESTMENT IN M/S SHI VA ENTERPRISES WAS RS. 5.50 CRORES ON 4.6.2001 WHICH S HE ADDED TO THE INCOME OF THE ASSESSEE COMPANY AS UNEXPLAINE D INVESTMENT. AO ALSO COMPUTED GROSS PROFIT OF RS. 431477/- AND ADDED THE SAME ALSO. ITA NO. 922/DEL/08 A.Y. 2002-03 3 4. UPON ASSESSEES APPEAL THE LD. CIT(A) ELABORATEL Y NOTED THE SUBMISSIONS OF THE ASSESSEE AND ALSO REFERRED TO TH E COUNTER ARGUMENTS OF THE AO IN THIS REGARD. LD. CIT(A) FI NALLY CONCLUDED THAT THE ORDER ON THE ISSUE IS BASED ON THE FINDINGS OF THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS ON THE ISSUE OF CREDITS IN THE IMPUGNED HSBC BANK ACCOUNT OF M/S SHIVA ENTERPRISES IN WHICH ALL THE TRANSACTIONS OTHER THA N THOSE DECLARED BY THE ASSESSEE DO NOT PERTAIN TO IT. TH E ASSESSING OFFICER HAS ALSO NOT OBJECTED TO THE FINDING OF FAC T EMERGING ON THE ISSUE FROM THE COMMUNICATION RECEIVED FROM THE BANKS. I DO NOT CONSIDER IT NECESSARY TO GO AT LENGTH INTO T HE FURTHER ARGUMENTS AND COUNTER ARGUMENTS OF THE AO AND APPEL LANT RESPECTIVELY IN VIEW OF THE SAME NOT HAVING BEARING ON THE ADDITION AFTER RECEIPT OF CATEGORICAL INFORMATION T HAT ALL CREDITS IN HSBC BANK A/C OF SHIVA ENTERPRISES PERTAINING TO THE ASSESSEE WERE DISCLOSED AND ALL OTHER CREDITS PERT AINED TO DIFFERENT PARTIES WITH WHICH THE ASSESSEE COMPANY H AS NO CONNECTION. THE REVENUE HAS NOT POINTED OUT ANY RE LATION OF THE ASSESSEE COMPANY WITH ANY OF THE THREE PARTIES FROM WHOM CREDITS WERE RECEIVED IN THE HSBC BANK OF M/S SHIVA ENTERPRISES. IN MY OPINION THE APPELLANT HAS DISCHARGED ITS ONU S OF PROVING NO CONNECTION WITH SHIVA ENTERPRISES AND THE REVENUE HAS FAILED TO DISCHARGE ITS ONUS OF LINKING SHIVA E NTERPRISES AS ITA NO. 922/DEL/08 A.Y. 2002-03 4 A BENAMI UNIT OF THE APPELLANT COMPANY EITHER DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS OR REMAND PROCEEDI NGS, IN VIEW OF WHICH I DELETE THE ADDITION OF RS. 5.5 CORE S. 5. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEFO RE US. 6. WE HAVE HEARD THE LD. DR. NONE APPEARED ON BEHA LF OF THE ASSESSEE, DESPITE THE CASE HAVING BEEN POSTED ON S EVERAL OCCASIONS. UPON PERUSING THE RECORD, WE PROCEED TO ADJUDICATE THE ISSUE AS EX-PARTE. ON A CAREFUL CONSIDERATION OF THE RECORD IN THIS REGARD, WE FIND THAT LD. CIT(A) HAS BRUSHED ASIDE THE COMMENTS OF THE AO WITHOUT DEALING WITH IT PROPERLY . THE LD. CIT(A) INTER-ALIA MENTIONED THAT I DO NOT CONSIDER TO GO AT LENGTH INTO THE FURTHER ARGUMENTS AND COUNTER ARGUM ENTS OF AO AND APPELLANT RESPECTIVELY. IN VIEW OF THE SAM E NOT HAVING BEARING ON THE ADDITION. FURTHER, THE LD. CIT(A) MENTIONED THAT REVENUE HAS NOT POINTED OUT ANY RELATION OF TH E ASSESSEE COMPANY WITH ANY OF THE THREE PARTIES FROM WHOM CRE DITS WERE RECEIVED IN HSBC BANK OF M/S SHIVA ENTERPRISES. IN THIS REGARD, WE NOTE THAT IT IS NOT THE CASE THAT THE LD . CIT(A) HAS HIMSELF INVESTIGATED THE MATTER AND FOUND THAT THER E WAS NO RELATIONSHIP. IT IS A SETTLED LAW THAT LD. CIT(A) S POWERS ARE CO- TERMINUS WITH THAT OF AO AND HE SHOULD HAVE DONE TH E NECESSARY VERIFICATION WHICH WERE REQUIRED IN THIS REGARD. 6.1 IN THIS REGARD, WE DRAW SUPPORT FROM THE APEX COURT DECISION IN THE CASE OF KAPURCHAND SHRIMAL VS. CIT, 131 ITR ITA NO. 922/DEL/08 A.Y. 2002-03 5 451 WHEREIN IT WAS HELD THAT IT IS THE DUTY OF THE APPELLATE AUTHORITY TO CORRECT THE LACUNAE IN ORDER OF AUTHO RITY BELOW AND ISSUE APPROPRIATE DIRECTIONS WHEN NEEDED. 6.2 IN OUR CONSIDERED OPINION, IT WOULD BE APPROPRI ATE TO REFER THIS ISSUE TO THE FILES OF THE AO TO CONSIDER THE S AME AFRESH AND GIVE A FINDING THEREON. NEEDLESS TO ADD THAT THE ASSESSEE SHOULD BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD . 7. ANOTHER ISSUE RAISED IS THAT THE LD. CIT(A) ERRE D IN ALLOWING THE DEDUCTION OF RS. 15,500/- U/S 80G OF THE IT ACT . 7.1 ON THIS ISSUE THE AO NOTED THAT ASSESSEE HAS C LAIMED THE SAID SUM OF RS. 15,500/- BEING PAYMENT MADE TO PRI ME MINISTERS RELIEF FUND. IN THIS REGARD, HE ALS O REFERRED TO AUDIT REPORT IN FORM 3CD AT SERIAL NO. 26. IN THE ABSENCE OF ANY RECEIPT IN SUPPORT OF THE CLAIM THE AO MADE THE DISALLOWANCE. 7.2 UPON ASSESSEES APPEAL THE LD. CIT(A) NOTED THA T ASSESSEE HAS PAID A SUM OF RS. 31,000/- TO M/S AGARWAL SABHA , SHALIMAR BAGH (REG.) ON WHICH THE ASSESSEE HAD CLAI MED DEDUCTION OF RS. 15,500/- BEING 50% OF RS. 31,000/- UNDER SECTION 80G OF THE ACT. THE ASSESSEE ALSO FILED TH E RECEIPT IN THIS REGARD. ACCORDINGLY, LD. CIT(A) ALLOWED THE SAME. 7.3 AGAINST THIS THE REVENUE IS IN APPEAL BEFORE US . 7.4 WE HAVE CONSIDERED THE ISSUE, WE FIND THAT THE RE IS A DIAMETRIC OPPOSITE FINDING OF THE AO AND THE CIT( A). THE AO ITA NO. 922/DEL/08 A.Y. 2002-03 6 WITH REFERENCE TO THE AUDIT REPORT HAS FOUND THE PA YMENT IS CLAIMED TO HAVE BEEN MADE IN PRIME MINISTER RELIE F FUND. WHILE BEFORE THE LD. CIT(A) THE ASSESSEE IS SUBMITT ING THE RECEIPT OF PAYMENT TO AGARWAL SABHA, & LD. CIT(A) H AS ACCEPTED THE SAME. IN OUR CONSIDERED OPINION, IT WILL BE APPROPRIATE TO REMIT THIS ISSUE TO THE FILES OF THE AO TO EXAMINE THE ISSUE AFRESH. ACCORDINGLY WE REMIT THE SAME. NEEDLES S TO ADD THAT THE ASSESSEE SHOULD BE GIVEN ADEQUATE OPPORTUNITY O F BEING HEARD. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 09/12/2009 AFTER CONCLUSION OF THE HEARING. SD/- SD/- [R.P. TOLANI] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 09/12/2009 SRB COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCH