M/s. Mahalaxmi Housing and Finstock Pvt.Ltd., Ahmedabad V. The ACIT.,Cent.Circle-1(4), Ahmedabad

ITSSA 15/AHD/2010

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7552 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-05-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 06-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B K S PANDYA
• Keywords: Unexplained cash credit; Business expenditure; Opportunity of being heard; Additional evidence
• Section: 153A; 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE SHRI D. K. TYAGI, JM AND A. MOHAN ALANKAMON Y, AM) IT (SS) A NO.14 AND 15/AHD/2010 A. Y. 2004-05 AND 2005-06 M/S. MAHALAXMI HOUSING & FINSTOCK PVT. LTD., 1, NARAYAN CHAMBERS, 2 ND FLOOR, NR. NEHRU BRIDGE CORNER, ASHRAM ROAD, AHMEDABAD PA NO. AABCM 0367 R VS THE ACIT, CENTRAL CIRCLE- 1(4), ROOM NO.337, 3 RD FLOOR, AAYAKAR BHAVAN, ASHRAM ROAD, AHMEDABAD (APPELLANT) (RESPONDENT) IT (SS) A NO.195 AND 196/AHD/2009 A. Y. 2004-05 AND 2005-06 THE ACIT, CENTRAL CIRCLE- 1(4), ROOM NO.337, 3 RD FLOOR, AAYAKAR BHAVAN, ASHRAM ROAD, AHMEDABAD VS M/S. MAHALAXMI HOUSING & FINSTOCK PVT. LTD., 1, NARAYAN CHAMBERS, 2 ND FLOOR, NR. NEHRU BRIDGE CORNER, ASHRAM ROAD, AHMEDABAD PA NO. AABCM 0367 R (APPELLANT) (RESPONDENT) DEPARTMENT BY SHRI B.K. S. PANDYA, CIT DR ASSESSEE BY SHRI PRITESH SHAH, AR DATE OF HEARING: 15-05-2012 DATE OF PRONOUNCEMENT:25-05-2012 O R D E R PER A. MOHAN ALANKAMONY: THESE FOUR APPEALS, TWO BY THE ASSESSEE AND OTHER TWO BY THE REVENUE ARE FILED AGGRIEVED BY THE ORDERS OF THE LEARNED CIT(A)-I, AHMEDABAD IN APPEAL NO. CIT(A)I/CC.1(4)/384/2008-09 DATED 12-011-2009 FOR A Y 2004-05 AND IT (SS)A NO.195 & 196/AHD/2009 (AY 2004-05 & 2005-0 6) IT(SS)A NO.14 & 15/AHD/2010 (AY: 2004-05 & 2005-06) M/S. MAHALAXMI HOUSING & FINSTOCK PVT. LTD. 2 IN APPEAL NO. CIT(A)-I/CC-1(4)/385/2008-09 DATED 12 -11-2009, FOR AY 2005-06. 2. FOR BOTH THE ASSESSMENT YEARS THE ASSESSEE HAS R AISED THE FOLLOWING GROUNDS: ASSESSMENT YEARS - 2004-05 & 2005-06: 1. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDIT ION OF RS.5,16,166/- FOR ASSESSMENT YEAR 2004-05 AND RS.54,84,927/- FOR ASSESSMENT YEAR 2005-06 OF UNSEC URED LOAN AS UNEXPLAINED CASH CREDIT U/S 68 IT ACT, 1961 IS REQUIRED TO BE QUASHED. ASSESSMENT YEAR -2004-05 2. THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE AC TION OF THE AO OF DISALLOWING OF BUSINESS EXPENDITURE OF RS.3,50,000/- WHICH IS REQUIRED TO BE DELETED. 3. THE REVENUE HAS RAISED THREE IDENTICAL GROUNDS I N BOTH THE APPEALS WHEREIN GROUND NO.3 IS GENERAL IN NATURE AN D DOES NOT SURVIVE FOR ADJUDICATION. THE OTHER TWO GROUNDS ARE EXTRACTED HEREIN BELOW: 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.40,84,425/- FOR ASSESSM ENT YEAR 2004-05 AND RS.44,95,591/- FOR ASSESSMENT YEAR 2005-06 RESPECTIVELY MADE U/S 68 OF THE IT ACT. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN ADMITTING ADDITIONAL EVIDENCES IN CONTRAVENTION OF RULE 46A OF THE IT RULES,1962 WITHOUT GRANTING THE AO AN Y OPPORTUNITY OF BEING HEARD TO REBUT THE EVIDENCE PR ODUCED BY THE ASSESSEE BEFORE HIM. IT (SS)A NO.195 & 196/AHD/2009 (AY 2004-05 & 2005-0 6) IT(SS)A NO.14 & 15/AHD/2010 (AY: 2004-05 & 2005-06) M/S. MAHALAXMI HOUSING & FINSTOCK PVT. LTD. 3 4. SINCE, THE ISSUES AND FACTS ARE IDENTICAL IN BOT H THE ASSESSMENT YEARS, FOR THE SAKE OF CONVENIENCE ALL THE FOUR APP EALS ARE TAKEN UP TOGETHER FOR DISPOSAL. 5. BRIEF FACTS: BASED ON THE ACTION U/S 132(1) OF T HE IT ACT AGAINST NEPTUNE GROUP CASES SEARCH WAS CONDUCTED INCLUDING THAT OF THE ASSESSEE ON 01-11-2006. THEREAFTER, PROCEEDINGS U/S 153A (1) OF THE ACT WAS INITIATED AGAINST THE ASSESSEE. IN RESPONSE TO THE SAME, THE ASSESSEE FILED ITS RETURN OF INCOME ON 10-04-2008 D ECLARING LOSS OF RS.3,39,455/- AND RS.7,32,729/- IN BOTH THE ASSESSM ENT YEARS. SUBSEQUENTLY, THE ASSESSEE WAS SERVED WITH NOTICE U /S 143(2) OF THE ACT ON 11-12-2008 REQUIRING IT TO FURNISH VARIOUS D ETAILS AND EXPLANATIONS FOR BOTH THE ASSESSMENT YEARS. IN RESP ONSE TO THE NOTICE, THE ASSESSEE VIDE ITS LETTER DATED 16-12-20 08 STATED THAT THE STATEMENT RECORDED DURING THE SEARCH AND THEREAFTER MAYBE CONSIDERED FOR ASSESSMENT PURPOSE. THEREAFTER THE L EARNED AO COMPLETED THE ASSESSMENTS U/S 144 OF THE ACT BASED ON THE MATERIALS AVAILABLE ON RECORD BY OBSERVING THAT THE ASSESSEE HAS NOT COMPLIED WITH VARIOUS STATUTORY NOTICES SERVED DURING THE AS SESSMENT PROCEEDINGS. 6. GROUND NO.1 OF BOTH THE ASSESSEES AND REVENUES APPEAL FOR THE ASSESSMENT YEAR 2004-05 AND 2005-06 (UNEXPLAINE D CASH CREDIT U/S 68 OF THE IT ACT, 1961 RS.5,16,166/- FOR ASSES SMENT YEAR 2004- 05 AND RS.54,84,927/- FOR ASSESSMENT YEAR 2005-06). ON EXAMINING THE BALANCE SHEET THE LEARNED AO NOTICED THAT THE A SSESSEE HAD OBTAINED UNSECURED LOAN OF RS.46,00,591/- AND RS.99 ,80,518/- FOR IT (SS)A NO.195 & 196/AHD/2009 (AY 2004-05 & 2005-0 6) IT(SS)A NO.14 & 15/AHD/2010 (AY: 2004-05 & 2005-06) M/S. MAHALAXMI HOUSING & FINSTOCK PVT. LTD. 4 ASSESSMENT YEAR 2004-05 AND 2005-06 RESPECTIVELY. T HE ASSESSEE DID NOT FURNISH ANY DETAILS AND CONFIRMATION LETTER S IN RESPECT OF THE LOAN OBTAINED. THE LEARNED AO, THEREFORE, ADDED THE SE AMOUNTS AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT FOR BOTH THE ASSESSMENT YEARS RESPECTIVELY. THE ASSESSEE CARRIED THE MATTER BEFORE THE FIRST APPELLATE AUTHORITY. 7. ASSESSMENT YEAR: 2004-05: ADDITION OF RS.5,16,16 6/- AFTER EXAMINING THE RECORDS THE LEARNED CIT(A) FOU ND THAT THE OPENING BALANCE OF LOAN FOR ASSESSMENT YEAR 2004-05 WAS RS.41,83,925/-. DURING THE YEAR, THE APPELLANT HAD REPAID AN AMOUNT OF RS.1,00,000/- AND TAKEN A FRESH DEPOSIT OF RS.5, 16,666/-. SINCE, THE ASSESSEE WAS NOT ABLE TO FURNISH ANY DETAILS FO R THE LOAN RECEIVED DURING THE YEAR OF RS.5,16,166/-, THE LEARNED CIT(A ) CONFIRMED THE SAME TO BE THE ADDITION MADE U/S 68 OF THE ACT. THE BALANCE AMOUNT OF ADDITION WAS DELETED BY THE LEARNED CIT(A) SINCE THE SAME PERTAINED TO THE OPENING BALANCE AND THE SAME CANNO T BE BROUGHT UNDER TAX FOR THE CURRENT ASSESSMENT YEAR AS PER TH E PROVISIONS OF SECTION 68 OF THE ACT. 7.1 ASSESSMENT YEAR: 2005-06: ADDITION OF RS.54,84, 927/- SIMILARLY, IT WAS NOTICED BY THE LEARNED CIT(A) TH AT IN THE ASSESSMENT YEAR 2005-06 THE OPENING BALANCE OF UNSE CURED LOAN STOOD AT RS.46,00,591/- AND FRESH DEPOSIT OF RS.54, 84,927/- WAS RECEIVED FROM AMBIKA OWNERS ASSOCIATION, BHOLABHAI B. PATEL, GHANSHYAMBHAI, KARNAMUKTESHWAR HOUSING SOCIETY, KRU PANIDHI IT (SS)A NO.195 & 196/AHD/2009 (AY 2004-05 & 2005-0 6) IT(SS)A NO.14 & 15/AHD/2010 (AY: 2004-05 & 2005-06) M/S. MAHALAXMI HOUSING & FINSTOCK PVT. LTD. 5 ASSOCIATION, MAHADEEP ASSOCIATION, MAHAVIJAY ASSOCI ATION, MANGAL SAGAR ASSOCIATION, MEET BUILDERS AND MULTIVISION IN FOTECH. SINCE, THE ASSESSEE COULD NOT PRODUCE CONFIRMATION LETTERS FOR THE LOAN RECEIVED DURING THE YEAR FOR RS.54,84,927/-, THE LEARNED CIT (A) CONFIRMED THE ADDITION TO THE EXTENT OF RS.54,84,927/-. THE BALAN CE AMOUNT PERTAINED TO THE OPENING BALANCE OF THE YEAR AND TH EREFORE, THE LEARNED CIT(A) DELETED THE SAME BECAUSE IT CANNOT B E TAXED FOR THE CURRENT YEAR UNDER THE PROVISIONS OF SECTION 68 OF THE ACT. 8. NOW, BOTH THE ASSESSEE AND THE REVENUE ARE IN AP PEAL BEFORE US AGAINST SUSTENANCE OF ADDITION AND DELETION OF T HE ADDITION BY THE LEARNED CIT(A). 9. THE LEARNED AR SUBMITTED THAT THE APPELLANT HAD FURNISHED THE DETAILS FROM WHOM THE AMOUNT WAS RECEIVED DURING TH E RELEVANT YEARS AND THEREFORE, THE SAME DESERVED TO BE DELETED WHIC H AMOUNTS TO RS.5,16,166/- FOR ASSESSMENT YEAR 2004-05 AND RS.54 ,84,927/- FOR ASSESSMENT YEAR 2005-06. FURTHER, THE LEARNED AR SU BMITTED THAT THE LEARNED CIT(A) HAD JUDICIOUSLY GIVEN RELIEF TO THE ASSESSEE TO THE EXTENT OF RS.40,84,425/- FOR ASSESSMENT YEAR 2004-0 5 AND RS.44,95,591/- FOR THE ASSESSMENT YEAR 2005-06, SIN CE THE SAME WERE RELATED TO THE OPENING BALANCE FOR THE RELEVAN T ASSESSMENT YEARS AND THE SAME CANNOT BE TAXED UNDER THE PROVIS IONS OF SECTION 68 OF THE ACT. 10. THE LEARNED DR ON THE OTHER HAND, STOUTLY OPPOS ED TO THE SUBMISSIONS OF THE LEARNED AR AND ARGUED STATING TH AT THE REASONS IT (SS)A NO.195 & 196/AHD/2009 (AY 2004-05 & 2005-0 6) IT(SS)A NO.14 & 15/AHD/2010 (AY: 2004-05 & 2005-06) M/S. MAHALAXMI HOUSING & FINSTOCK PVT. LTD. 6 SUBMITTED BY THE ASSESSEE FOR NON-PRODUCTION OF DET AILS ARE VAGUE AND PRIMA FACIE APPEAR TO BE INCORRECT. HE FURTHER, SUBMITTED THAT THE APPELLANT HAD NOT PRODUCED ANY EVIDENCE BEFORE THE LEARNED CIT(A) TO ESTABLISH THAT THE DELETED AMOUNTS PERTAINED TO THE OPENING BALANCE OF LOAN. THE LEARNED DR FURTHER OPPOSED TO THE SUGGESTION OF REMITTING BACK THE MATTER TO THE FILE OF THE AO FOR RE-EXAMINATION BECAUSE THE MATTER PERTAINS TO THE ASSESSMENT YEARS 2004-05 AND 2005-06 BEING TOO OLD MATTER FOR EXAMINING THE BONA FIDE OF THE CREDITORS. HE, THEREFORE, PRAYED THAT THE ADDITIONS MADE BY THE LEARNED AO MAY BE SUSTAINED. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY CONSIDERED THE MATERIALS BEFORE US. AS RIGHTLY POINTED OUT BY THE LEARNED AR AND THE LEARNED CIT(A) IN HIS ORDER, SECTION 68 OF THE ACT CAN BE INVOKED ONLY FOR THE UNEXPLAINED AMOUNT CREDITED IN THE BOO KS OF ACCOUNTS DURING THE PREVIOUS YEAR. THERE IS NO SCOPE U/S 68 OF THE ACT TO MAKE ADDITION OF THE OPENING BALANCE IN THE BOOKS OF ACC OUNTS. FURTHER, THE LEARNED CIT(A) HAS EXAMINED THE BOOKS OF ACCOUNTS, RELEVANT RECORDS AND CATEGORICALLY MADE A FINDING THAT THE AMOUNT OF RS.41,83,925/- AND RS.46,00,591/- WERE THE OPENING BALANCES OF TH E UNSECURED LOANS AS ON 01-04-2003 AND 01-04-2004 RESPECTIVELY. FURTHER, AFTER VERIFYING THE BOOKS THE LEARNED CIT(A) CAME TO THE CONCLUSION THAT THE UNEXPLAINED AMOUNTS CREDITED DURING THE ASSESSM ENT YEAR 2004- 05 AND 2005-06 WAS RS.5,16,166/- AND RS.54,84,927/- . WE, THEREFORE, DO NOT HAVE ANY HESITATION TO CONFIRM TH E ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. IT IS ORDERED ACCORDI NGLY. THUS, GROUND IT (SS)A NO.195 & 196/AHD/2009 (AY 2004-05 & 2005-0 6) IT(SS)A NO.14 & 15/AHD/2010 (AY: 2004-05 & 2005-06) M/S. MAHALAXMI HOUSING & FINSTOCK PVT. LTD. 7 NO.1 OF BOTH THE ASSESSEES APPEAL AND THE REVENUE S APPEAL FOR THE ASSESSMENT YEAR 2004-05 AND 2005-06 ARE DISMISSED. 12. GROUND NO.2 OF THE ASSESSEES APPEAL FOR ASSESS MENT YEAR 2004-05 RELATES TO DISALLOWANCE OF BUSINESS EXPENDI TURE OF RS.3,50,000/-:- THE LEARNED AO HAD DISALLOWED AN AM OUNT OF RS.3,50,000/- DEBITED TO THE PROFIT & LOSS ACCOUNT BECAUSE THE ASSESSEE DID NOT FURNISH ANY DETAILS OR EXPLANATION FOR THE EXPENSES INCURRED. THE LEARNED CIT(A) CONFIRMED THE SAME BEC AUSE THE ASSESSEE EVEN AT THIS STAGE COULD NOT FURNISH ANY E XPLANATION OR JUSTIFICATION FOR THE EXPENSES INCURRED FOR RS.3,50 ,000/-. 13. WE HAVE HEARD BOTH THE PARTIES. EVEN BEFORE US, NOTHING WAS BROUGHT FORTH TO ESTABLISH THAT THE ASSESSEE HAD IN CURRED EXPENSES OF RS.3,50,000/-. THEREFORE, WE HEREBY CONFIRM THE ORD ER OF THE LEARNED CIT(A) AND THE LEARNED AO ON THIS COUNT. 14. GROUND NO.2 OF THE REVENUES APPEAL FOR THE ASS ESSMENT YEAR 2004-05 AND 2005-06 RELATES TO THE REVENUE BEING AG GRIEVED ON THE ADMISSION OF ADDITIONAL EVIDENCES BY THE LEARNED CI T(A). THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED AN Y EVIDENCE TO JUSTIFY NON-PRODUCTION OF DETAILS BEFORE THE LEARNE D AO THOUGH THE SAME WAS FURNISHED BEFORE THE LEARNED CIT(A). HE SU BMITTED THAT THE LEARNED CIT(A) ADMITTED THE EVIDENCES FURNISHED BEF ORE HIM BY THE APPELLANT WITHOUT RECORDING ANY REASONS. 15. THE LEARNED AR ON THE OTHER HAND, SUBMITTED THA T THE ASSESSEE HAD FURNISHED THE REASON BEFORE THE LEARNED CIT(A) WHO AFTER IT (SS)A NO.195 & 196/AHD/2009 (AY 2004-05 & 2005-0 6) IT(SS)A NO.14 & 15/AHD/2010 (AY: 2004-05 & 2005-06) M/S. MAHALAXMI HOUSING & FINSTOCK PVT. LTD. 8 CONSIDERING THE SAME AND OBTAINING THE REMAND REPOR T FROM THE LEARNED AO PROCEEDED FOR ADJUDICATION. 16. WE HAVE HEARD BOTH THE SIDES AND EXAMINED THE M ATERIALS PRODUCED BEFORE US. IT IS APPARENT FROM THE ORDER O F THE LEARNED CIT(A) THAT THE ASSESSEE DID NOT FURNISH ANY DETAIL S WITH RESPECT TO THE LOANS RECEIVED DURING THE YEAR INCLUDING CONFIR MATION STATEMENT. ON EXAMINING THE BOOKS OF ACCOUNTS THE LEARNED CIT( A) EXCLUDED THE OPENING BALANCE OF LOANS AND BROUGHT TO TAX U/S 68 OF THE ACT FOR THE LOAN OBTAINED DURING THE YEAR FOR WANT OF DETAILS A ND CONFIRMATION. FROM THE LEARNED A.OS ORDER IT DOES NOT COME OUT T HAT THE ASSESSEE HAD NOT PRODUCED THE BOOKS OF ACCOUNTS BEFORE HIM. THEREFORE, IT IS VERY CLEAR THAT THE LEARNED CIT(A) HAD NOT DECIDED THE ISSUES BEFORE HIM BASED ON EVIDENCES WHICH WERE NOT PRODUCED BEFO RE THE LEARNED AO. IT COULD BE PRESUMED FROM THE INFORMATION AVAIL ABLE ON RECORD THAT THE BOOKS OF ACCOUNTS WERE BEFORE BOTH THE REV ENUE AUTHORITIES AND THE LEARNED CIT(A) ARRIVED AT HIS CONCLUSION BA SED ON THE BOOKS OF ACCOUNTS. THERE IS NOTHING ON RECORD TO SUBSTANT IATE THAT THE LEARNED CIT(A) HAD ADMITTED ADDITIONAL EVIDENCE IN ORDER TO ARRIVE AT HIS CONCLUSION. THEREFORE, WE DO NOT FIND ANY MERIT IN THE ARGUMENTS OF THE LEARNED DR ON THIS GROUND OF ADMITTING ADDIT IONAL EVIDENCES UNDER RULE 46A OF THE IT RULES, 1962. ACCORDINGLY, WE DISMISS THIS GROUND RAISED BY THE REVENUE. IT (SS)A NO.195 & 196/AHD/2009 (AY 2004-05 & 2005-0 6) IT(SS)A NO.14 & 15/AHD/2010 (AY: 2004-05 & 2005-06) M/S. MAHALAXMI HOUSING & FINSTOCK PVT. LTD. 9 17. IN THE RESULT, THE APPEALS OF THE ASSESSEE FOR ASSESSMENT YEAR 2004-05 AND ASSESSMENT YEAR 2005-06 ARE DISMISSED. SIMILARLY, THE APPEALS OF THE REVENUE FOR BOTH THE ASSESSMENT YEAR S 2004-05 AND 2005-06 ARE ALSO DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25-05-2012 SD/- SD/- (D. K. TYAGI) JUDICIAL MEMBER (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 15-05-12, 16-05-12 & 17-05-12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 18-05-12 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR.P.S ./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. 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 ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: