Deputy Commissioner of Income-tax, Circle - 1, Jalgaon V. Manvi Holdings Pvt.Ltd, Jalgaon

ITA 992/PUN/2018

AI Insights

The case involves Manvi Holdings Pvt. Ltd., a company engaged in the business of gold bullion and ornaments, which faced additions to its income for the assessment year 2009-10 under section 40A(2)(b) and for diversion of profit. The Assessing Officer made these additions, which were later contested. The CIT(A) deleted these additions, following the Tribunal's earlier directive to align with the decision in the case of M/s. Rajmal Lakhichand, which also involved similar issues of book rejection and profit diversion. The Revenue appealed against the CIT(A)'s decision, but the Tribunal found no reason to interfere, noting that the CIT(A) had correctly applied the Tribunal's previous rulings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137708 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-02-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 31-05-2018
• Other Referred Cases: M/s. Rajmal Lakhichand
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, ‘A’ PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER आयकर अपीऱ सं. / ITA. No.992/PUN/2018 निर्धारण वषा / Assessment Year : 2009-10 DCIT, Circle – 1, Jalgaon Vs. Manvi Holdings Pvt. Ltd., 169, Balaji Peth, Jalgaon – 425001 PAN: AAECM0026B Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP : This appeal by the Revenue is directed against the order passed by the ld. CIT(A)-2, Nashik dated 30.03.2018 in relation to assessment year 2009-10. 2. The Revenue is aggrieved by the deletion of addition of Rs.2,89,47,407 made by the Assessing Officer (AO) u/s 40A(2)(b) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) and also by another deletion of addition of Rs.10,44,96,803 on account of diversion of profit. Assessee by Shri Nikhil S. Pathak Revenue by Shri Keyur Patel, CIR-DR Date of hearing 20-02-2023 Date of pronouncement 20-02-2023 ITA No.992/PUN/2018 Manvi Holdings Pvt. Ltd. 2 3. Succinctly, the facts of the case are that the assessee is one of the group companies of M/s. Rajmal Lakhichand, engaged in the business of purchase and sale of gold bullion, gold ornaments, etc. Return was filed declaring total loss at Rs.1.65 crore and unabsorbed depreciation of Rs.1.15 lac. The assessment was completed on a total income of Rs.13.24 crore, making additions, inter-alia, on account of 40A(2)(b) of Rs.2.89 crore and diversion of profit of Rs.10.44 crore. The matter was eventually taken up before the Tribunal. Vide its order dated 28.07.2017, the Tribunal in ITA Nos.782/PUN/2013 etc., held that the books of account were rightly rejected and the addition on account of profit should be increased by 0.07%. Eventually, it remitted the matter to the ld. CIT(A) for afresh adjudication in conformity with the Tribunal order in the case of M/s. Rajmal Lakhichand. 4. In the instant round of proceedings, the ld. CIT(A) followed the mandate given by the Tribunal and deleted the addition u/s 40A(2)(b) as well as addition made on account of diversion of profit. Aggrieved thereby, the Revenue has come up in appeal before the Tribunal. 5. Having heard the rival contentions and perused the material on record, it is seen that the Tribunal, in the first round, upheld ITA No.992/PUN/2018 Manvi Holdings Pvt. Ltd. 3 the rejection of books of account. When books are rejected, they cannot be approached for making separate additions and issue remains about the rate of profit to be applied after such rejection. Here is a case in which the Tribunal upheld the rejection of books of account. In that view of the matter, the ld. CIT(A) was right in not sustaining the addition u/s 40A(2)(b) of the Act and also the diversion of profit, which is in consonance with the decision taken by the Tribunal in the first round and in the case of M/s. Rajmal Lakhichand. 6. The ld. DR submitted that the orders passed by the Tribunal in the case of the assessee in the first round and in M/s. Rajmal Lakhichand are sub judice before the Hon’ble Bombay High Court. In view of the fact that the ld. CIT(A) has simply given effect to the directions by the Tribunal in the first round, we do not find any reason to interfere in the impugned order. 7. In the result, the appeal is dismissed. Order pronounced in the Open Court on 20 th February, 2023. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 20 th February, 2023 GCVSR ITA No.992/PUN/2018 Manvi Holdings Pvt. Ltd. 4 आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. 5. 6. The CIT(A)-2, Nashik The Pr. CIT-2, Nashik DR, ITAT, ‘A’ Bench, Pune Guard file आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 20-02-2023 Sr.PS 2. Draft placed before author 20-02-2023 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *