The DCIT, Central Circle-1(4), Ahmedabad V. M/s. Arihant Avenue & Credit Ltd., Ahmedabad

ITSSA 104/AHD/2007

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8682 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-01-2011
• Assessment Year: misc
• Appeal Filed On: 04-06-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment
• Section: 132

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI MUKUL KR. SHRAWAT, JM AND D.C.AGRAWAL , AM DY. CIT, CEN. CIRCLE 1(4), ROOM NO.305, 3 RD FLOOR, AAYKAR BHAVAN, ASHRAM ROAD, AHMEDABAD. VS. M/S ARIHANT AVENUE & CREDIT LTD., 3, RAJESH APARTMENT, B/H NAV GUJARAT COLLEGE, ASHRAM ROAD, AHMEDABAD. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI K. MADHUSUDAN, SR.D.R. RESPONDENT BY:- SHRI SAKAR SHARMA, AR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE RAISING FOL LOWING GROUND :- (1) THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS.45,58,000/- MADE BY THE AO ON ACCOUN T OF UNEXPLAINED INVESTMENT IN SHARES ON PROTECTIVE BASI S. 2. THE FACTS OF THE CASE ARE THAT SEARCH UNDER SECT ION 132 OF THE ACT WAS CONDUCTED IN THE CASE OF KABRA GROUP ON 12.7.20 01. THE ASSESSEE COMPANY IS A CLOSELY HELD COMPANY OF THE KABRA GROU P. DURING THE COURSE OF SEARCH IN THE KABRA GROUP SHARES OF THE V ALUE OF RS.47,98,000/- OF ARIHANT SECURITIES WERE SEIZED AS PER ANNEXURE- O TO THE PANCHNAMA DATED 7.11.2001. THESE SHARES WERE IN THE NAMES OF SHRI SHYAMSUNDER BADRINARAYAN KABRA HUF, RAMAVATAR KABRA, BADRINARAY AN BANKATLAL KABRA HUF & BANKAT BADRINARAYAN KABRA HUF. IT WAS E XPLAINED THAT IT(SS)A NO.104/AHD/2007 BLOCK PERIOD 12.07.2001 IT(SS)A NO.104/AHD/2007 BLOCK PERIOD 12/07/2001 2 THESE SHARES HAD COME TO THE REGISTRAR OF COMPANIES FOR TRANSFER. THE DETAILS OF THE SHARES, THEIR HOLDERS, WERE PROVIDED BY THE ASSESSEE AS UNDER: SL. NO. NAME & ADDRESS NO. OF SHARES PAN 1. SHRI RAMAVATAR KABRA 4,SYNAGOGUE STREET, KOLKATA-1. 80000 AEVPK0448R 2. SHRI BANKAT BADRINARAYAN KABRA HUF 3, RAJESH APARTMENT, NR. AJANTA CENTRE, ASHRAM ROAD, AHMEDABAD. 100000 AAOHB7149H 3. SHRI SHYAMSUNDER BADRINARAYAN KABRA HUF, 3, RAJESH APARTMENT, NR. AJANTA CENTRE ASHRAM ROAD, AHMEDABAD 199800 AAGHS7697F 4. SHRI BADRINARAYAN BANKAT KABRA HUF 3, RAJESH APARTMENT, NR. AJANTA CENTRE, ASHRAM ROAD, AHMEDABAD. 100000 AACHB7174K TOTAL 479800 IN ADDITION TO ABOVE, FOLLOWING SUBMISSIONS WERE FU RTHER MADE BY THE ASSESSEE:- I) ALL ABOVE SHARE HOLDERS ARE REGULARLY FILING IT RET URNS AND INVESTMENT OF THE ABOVE SHARES HAVE BEEN DULY REFLE CTED IN THEIR REGULAR BOOKS OF ACCOUNTS. II) IT IS FURTHER SUBMITTED THAT SHARES ARE TRANSFERRED IN THE YEAR 1999-2000 AND WERE KEPT HERE BECAUSE COMPANY WAS IN THE PROCESS OF DEMATERIALIZATION OF ITS SHARES. IT(SS)A NO.104/AHD/2007 BLOCK PERIOD 12/07/2001 3 III) FURTHER EXCEPT ONLY ONE SHAREHOLDER, ALL OTHER THRE E SHAREHOLDERS ARE FROM SAME ADDRESS, SO NATURALLY THEIR SHARES WI LL REMAIN HERE ONLY AND ONLY ONE SHARE HOLDER SHRI RAMAVATAR KABRA WHO BELONGS TO KOLKATTA TO WHOM SHARES HAVE NOT BEEN DI SPATCHED. IV) LATER ON SHARES OF ABOVE SHARES HOLDERS WERE DEMATE RIALIZED INTO THEIR DEMATE ACCOUNT AND THESE SHARES WERE ONL Y TO BE CANCELLED. THE AO FURTHER FOUND THAT EVEN FACE VALUE OF THE SH ARES WAS AT RS.10/- BUT THEY WERE SOUGHT TO BE TRANSFERRED @ RS.0.50 PE R SHARE. THESE SHARES WERE TRANSFERRED IN THE NAMES OF FOUR PERSONS THROU GH AKSHAR SHARE SERVICES (P) LTD. THE AO ALSO FOUND THAT RATE OF SH ARES FLUCTUATED FROM RS.10/- TO RS.15/- DURING THE RELEVANT PERIOD. HE T REATED THE RATE OF SHARES ON THE DATE OF TRANSFER BEING 15.06.99 AND 03.11.99 AT RS.10/- BEING THE FACE VALUE. FINALLY HE HELD THAT ALL THE SHARES WOU LD BELONG TO SHRI S. N. KABRA IN WHOSE PREMISES THEY WERE FOUND AND THEREFO RE, SUBSTANTIVE ADDITION HAS TO BE MADE IN HIS CASE WHEREAS PROTECT IVE ADDITION OF RS.45,58,000/- HAS TO BE MADE IN THE CASE OF THE AS SESSEE. HE FINALLY OBSERVED AS UNDER :- IN VIEW OF THE ABOVE, IT IS SAFELY CONCLUDED THAT ASSESSEE COMPANY HAS TRANSFERRED ONLY SHARES OF RS.2,40,000/- AND BALANC E SHARES OF RS.45,58,000 (RS.47,98,000 RS.2,40,000) HAS NOT B EEN TRANSFERRED AT ALL. THEREFORE, DIFFERENCE OF SHARE NOT TRANSFERRED IS TREATED AS UNEXPLAINED INVESTMENT AND ADDED TO THE TOTAL INCOM E OF THE ASSESSEE COMPANY. HOWEVER, ADDITION OF RS.47,98,000 HAS ALRE ADY BEEN MADE ON ACCOUNT OF THESE SHARES IN THE CASE OF SHRI SATYANA RAYAN J. KABRA, DIFFERENTIAL AMOUNT OF RS.45,58,000 IS ADDED IN THE CASE OF ASSESSEE ON PROTECTIVE BASIS. 3. THE LD. CIT(A) DELETED THE ADDITION ON THE GROUN D THAT ADDITIONS WERE CONSIDERED SUBSTANTIVELY IN THE CASE OF SHRI S . N. KABRA AND, THEREFORE, NO PROTECTIVE ADDITION NEED BE MADE. HE OBSERVED IN THIS REGARD AS UNDER :- IT(SS)A NO.104/AHD/2007 BLOCK PERIOD 12/07/2001 4 3. THE SECOND AND THIRD GROUNDS OF APPEAL ARE REGA RDING THE APPELLANT COMPANY HAS BEEN HELD LIABLE TO PAY TAX O N THE DIFFERENTIAL AMOUNT ON SHARES WHICH WERE FOUND IN THE PREMISES O F KABRA GROUP, WHICH WAS TREATED AS UNDISCLOSED INCOME OF THE APPE LLANT COMPANY. ON PERUSAL OF ASSESSMENT ORDER, IT HAS BEEN NOTICED TH AT THE SAME ADDITION WAS MADE IN THE CASE OF SHRI SATYANARAYAN J. KABRA ON SUBSTANTIVE BASIS AS MENTIONED IN THE ASSESSMENT ORDER. THE ADDITIONS IN CASE OF SHRI SATYANARAYAN J. KABRA WERE ADJUDICATED UPON ON MERI TS [VIDE PARA 3.3.1] BY THE CIT(A)-I, AHMEDABAD IN APPEAL NO.CIT( A)-1/CENTRAL CIRCLE.1(4)/31/03-04, DTD. 29/12/2004 ON THE GROUND THAT THESE SHARES WERE ALREADY TRANSFERRED IN THE RESPECTIVE NAMES OF THE PERSONS ON 1/6/99 AND 20.8.2000. SINCE ADDITIONS WERE ALREADY CONSIDE RED ON MERITS, SUBSTANTIVELY IN CASE OF SHRI SATYANARAYAN J. KABRA , THEREFORE, ADDITIONS ON PROTECTIVE BASIS IN THE CASE OF THE APPELLANT CA NNOT BE UPHELD SINCE APPELLANT IS A PUBLIC LIMITED COMPANY WHO HAS TO TR ANSFER THESE SHARES IN THE RESPECTIVE NAMES OF THE PERSONS HOLDING THEM. K EEPING IN VIEW THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE SECO ND AND THIRD GROUNDS OF APPEAL ARE ALLOWED. 4. BEFORE US, THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNAL IN IT (SS)A NO.59/AHD/2005 BLOCK PERIOD 1.4.95 TO 1 2.7.2001 IN THE CASE OF DCIT, CENTRAL CIRCLE 1(4) VS. SHRI SATYANARAYAN J. KABRA, IN IT(SS)A NO.71/AHD/2005 BLOCK PERIOD 1.4.95 TO 12.7.2001 IN THE CASE OF SHRI SATYANARAYAN J. KABRA VS. ACIT, CENTRAL CIRCLE 1(4) AND OTHERS, PRONOUNCED ON 9.10.2009 HAS HELD AS UNDER :- 62. AFTER HEARING THE RIVAL CONTENTIONS AND GONG TH ROUGH THE CASE RECORDS, WE FIND THAT THE CIT(A) HAS DELETED THE ADDITION BY STATING THAT SHARES ADMITTEDLY TRANSFERRED IN THE NAME OF FAMILY MEMBERS AS FAR BACK AS 1 ST JUNE, 1999 AND 20 TH AUGUST, 2000 AND MERE FINDING THESE SHARES OF THE ASSESSEE WHO I S IN THE BUSINESS OF DEALING OF SHARES, CANNOT BE INTERPRETED ADVERSELY TO HOLD THA T THESE BELONG TO THE ASSESSEE. FOR THIS, THE CIT(A) HAS GIVEN HIS FINDINGS IN PARA-3.3.1(A) AS UNDER:- (A) REGARDING THE SHARES OF ARIHANT AVENUE & CREDI T LTD. OF RS.47,98,000/- AND STANDING IN THE NAME OF SHRI RAMAVATAR KABRA, S HRI BANKATLAL BADRINARAYAN KABRA HUF, SHRI SATYAMSUNDER BADRINARA YAN KABRA HUF AND SHRI BADRINARAYAN BANKATLAL KABRA HUF,(ALL THE HUFS HAVING THE SAME OFFICE ADDRESS AS 3,RAJESH APPARTMENTS,NR.AJANTA CO MM.CENTRE, ASHRAM ROAD, AHMEDABAD), THE ONLY REASON GIVEN BY THE A.O. FOR MAKING THIS ADDITION IS THAT THESE HUFS ARE EITHER BOGUS OR BEN AMI. THERE IS IN FACT NO EVIDENCE BROUGHT ON RECORD BY THE A.O. TO SUPP ORT SUCH A CLAIM. ON THE IT(SS)A NO.104/AHD/2007 BLOCK PERIOD 12/07/2001 5 CONTRARY, IT IS THE ARGUMENT OF THE APPELLANT THAT THESE HUFS HAVE BEEN IN EXISTENCE FOR PAST SEVERAL YEARS AND SO THEY EXI ST ON THE RECORDS OF THE I.T.DEPTT. ALSO AND THEREFORE, THERE IS NO JUSTIFI CATION FOR THE A.O.S FINDING THAT SHARES STANDING IN THEIR NAMES ARE TO BE INCLU DED IN THE HANDS OF THE APPELLANT, TREATING THEM AS UNEXPLAINED INVESTMENT. SINCE THE SHARES ARE ADMITTEDLY TRANSFERRED IN THE NAMES OF THESE PERSON S AS FAR BACK AS 1 ST JUNE, 1999 AND 20 TH AUGUST, 2000, MERE FINDING OF THESE SHARES WITH TH E APPELLANT WHO IS A FAMILY MEMBER AND RELATIVE OF THE VARIOUS MEMBERS OF THESE HUFS AND WHO IS IN THE BUSINESS OF DEALING WITH SHARES A ND SECURITIES, CANNOT BE INTERPRETED ADVERSELY TO HOLD THESE AS BELONGING TO THE APPELLANT. ACCORDINGLY THEREFORE, I DO NOT FIND THERE TO BE JUSTIFICATION IN THE A.O.S QUERIES AS TO WHY SHARES FOR DEMATERIALIZATION WERE LYING IN THE APPE LLANTS CUSTODY OR THE FINDING THAT THESE HUFS WERE BOGUS OR BENAMI FOR TH E ASSESSEE. THE ADDITION MADE IS THEREFORE, DIRECTED TO BE DELETED. FACTUALLY, THE REVENUE COULD NOT CONTROVERT THE FIN DINGS OF CIT(A), WE FIND NO INFIRMITY IN THE ORDER AND THE SAME IS UPHELD. THI S ISSUE OF THE REVENUES APPEAL IS DISMISSED. 63. THE SECOND ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF CIT(A) IN DIRECTING TO ASSESSING OFFICER TO DELETE THE ADD ITION OF RS.50,07,806/- MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN SHARES. 64. AFTER HEARING THE RIVAL CONTENTIONS AND GOING T HROUGH THE CASE RECORDS, WE FIND THAT WE HAVE ALREADY DEALT WITH THIS ISSUE IN THE A SSESSEES APPEAL AT PARAS-18 TO 25 OF THIS ORDER, WHERE THE CIT(A) HAS ALREADY DELETED TH E ADDITION BY TREATING THIS ADDITION AS DOUBLE ADDITION IN THE TOTAL ADDITION OF RS.2,02 ,91,460/-. AS THE ISSUE HAS ALREADY BEEN ALLOWED IN FAVOUR OF THE ASSESSEE, THIS ISSUE OF THE REVENUES APPEAL IS DISMISSED. THUS THE TRIBUNAL HAD CONFIRMED THE ORDER OF LD. CI T(A) IN THE CASE OF SHRI S. N. KABRA BY HOLDING THAT THERE IS NO JUSTIF ICATION FOR TREATING THE SHARES AS UNEXPLAINED IN THE CASE OF THE ASSESSEE. 5. HE SUBMITTED THAT THERE IS NO REASON NOW TO MAKE ANY ADDITION IN THE CASE OF THE ASSESSEE. 6. THE LD. DR ON THE OTHER HAND, RELIED ON THE ORDE R OF THE ASSESSING OFFICER. 7. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THERE IS NO CASE FOR INTERFERENCE IN THE IT(SS)A NO.104/AHD/2007 BLOCK PERIOD 12/07/2001 6 ORDER OF LD. CIT(A). THE REASONS ARE THAT AT THE TI ME OF SEARCH SHARES WERE FOUND IN THE NAMES OF FOUR PERSONS AS ABOVE. IT IS FOR THEM TO EXPLAIN THE INVESTMENT MADE THEREIN. IF EXPLANATION IS NOT FOUN D SATISFACTORY THE ADDITION CAN BE MADE IN THEIR HANDS. SO FAR AS THE ASSESSEE COMPANY IS CONCERNED IT HAS APPARENTLY NO OCCASION TO THE HOLD ING OF SHARES. THERE IS NO MATERIAL TO HOLD THAT INVESTMENT WAS MADE BY THE ASSESSEE COMPANY IN THOSE SHARES EVEN THOUGH THEY ARE STANDING IN THE N AMES OF FOUR PERSONS. THUS THE INGREDIENTS OF BENAMI NATURE HAS NOT BEEN ESTABLISHED. THIS FINDING HAS BEEN CONFIRMED BY THE TRIBUNAL AND THER E IS NO REASON TO TAKE A DIFFERENT VIEW THAN WHAT THE TRIBUNAL HAS TAKEN. IN ABSENCE OF ANY MATERIAL TO THE CONTRARY WE UPHOLD THE FINDINGS OF THE LD. CIT(A) AND DISMISS THE APPEAL OF REVENUE. THE APPEAL FILED BY THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 21.1.11. SD/- SD/- (MUKUL KR. SHRAWAT) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED : 21.1.11. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD IT(SS)A NO.104/AHD/2007 BLOCK PERIOD 12/07/2001 7 1.DATE OF DICTATION 11/1/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 13/1/ 2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..