The ACIT, 1 (2), V. Mr Prashant Agrawal,

ITSSA 193/IND/2008

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 8789 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-09-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 29-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K SINGH
• Assessee Lawyers: H P VERMA
• Keywords: Capital asset converted into stock in trade
• Section: 143(3); 142(1); 153A; 68; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C.SHARMA, ACCOUNTANT MEMBER PAN NO. : AATPA4605N I.T.(SS).A.NO. 193/IND/2008 A.Y.: 2002-03 ACIT, MR.PRASHANT AGRAWAL, 1(2), VS E-1/168, ARERA COLONY, BHOPAL. BHOPAL APPELLANT RESPONDENT APPELLANT BY : SHRI K.K.SINGH, SR. DR RESPONDENT BY : SHRI H.P.VERMA AND SHRI ASHISH GOYAL, C.A. O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-I, BHOPAL, DATED 11.7.2008 FOR THE ASSESS MENT YEAR 2002-03 IN THE MATTER OF ORDER PASSED U/S 153A/143( 3) OF THE INCOME-TAX ACT, 1961. 2.1 RIVAL CONTENTIONS HAVE BEEN HERD AND RECORDS PERUSED. 2.2 FACTS IN BRIEF ARE THAT THERE WAS A SEARCH AT AGRAW AL GROUP ,MECH & FAB AND GTV GROUP U/S 132 ON 16.9.200 5. VARIOUS ADDITIONS WERE MADE BY THE ASSESSING OFFICE R WHILE -: 2: - 2 FRAMING ASSESSMENT U/S 153A. IN THE APPEAL FILED BE FORE THE CIT(A), VARIOUS ADDITIONS WERE DELETED AND SOME OF THE ADDITIONS WERE CONFIRMED. BOTH REVENUE AND ASSESSEE ARE IN APPEALS/CROSS OBJECTION BEFORE US. THE BASIC GRIEV ANCE OF THE LD. CIT DR IN ALL THESE CASES PERTAINS TO ASSESSEE S FAILURE TO FILE RETURN OF INCOME WITHIN TIME, THEREFORE, THE A O DID NOT FIND SUFFICIENT TIME TO ENQUIRE INTO THE MATTER. HE FURT HER SUBMITTED THAT EVEN THE QUESTIONNAIRE ISSUED WAS NO T PROPERLY REPLIED BY THE ASSESSEE AND THE AO WAS LEFT WITH NO OPTION BUT TO COMPLETE THE ASSESSMENT WITHOUT VERIFYING THE TH INGS. AS PER THE LD. CIT DR, THE LD. CIT(A) HAS DISPOSED THE MATTER AND ALLOWED THE ASSESSEES APPEAL IN A SUMMARY MANNER A ND WITHOUT GIVING RELEVANT FINDINGS, THEREFORE, IT WAS SUBMITTED THAT THE ORDER OF LD. CIT(A) SHOULD BE SET-ASIDE AN D THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF AO FOR DECID ING AFRESH. 2.3 ON THE OTHER HAND, THE LD. AUTHORIZED REPRESENTATI VE DREW OUR ATTENTION TO THE RESPECTIVE DATES OF ISSUE OF NOTICES U/S 153A, U/S 143(2) AND 142(1) AND ALSO DATE OF IS SUE OF THE QUESTIONNAIRE AND THE RESPECTIVE REPLIES FILED BY T HE ASSESSEE. AS PER LD. AUTHORIZED REPRESENTATIVE, ALL THE FINAL ACCOUNTS AND RECORDS WERE BEFORE THE AO AND HE HAS MADE THE ASSESSMENT AS PROVIDED U/S 143(3) AND NOT U/S 144. BY HIGHLIGHTING THE RELEVANT DATES, THE LD. AUTHORIZED REPRESENTATIVE EMPHASIZED THAT THE DELAY WAS ATTRIB UTABLE TO THE LD. AO FOR WHICH THE ASSESSEE HAS BEEN MADE TO SUFFER UNREASONABLY AND HIGH PITCHED ASSESSMENTS WERE MADE . BY -: 3: - 3 REFERRING TO THE VARIOUS ADDITIONS MADE BY THE ASSE SSING OFFICER, THE LD. AUTHORIZED REPRESENTATIVE CONTENDE D THAT GLANCE OF THE ADDITION ITSELF WOULD REVEAL THAT THE RE WAS NO REASON TO MAKE THE IMPUGNED ADDITIONS. THE ADDITION S WERE MADE AND THE LD. AO PREFERRED NOT TO GIVE ANY NOTIC E TO THE ASSESSEE BEFORE DOING SO. IN REPLY TO THE LD. CIT D RS REQUEST FOR RESTORING THE MATTER BACK TO THE FILE OF THE AO BY SETTING ASIDE ORDER OF CIT(A), THE LD. AUTHORIZED REPRESENT ATIVE CONTENDED THAT AN APPEAL WAS FILED AGAINST THE ORDE R OF AO BEFORE THE LD. CIT(A) IN DUPLICATE AND IN TURN A CO PY OF IT WITH I.T.N.S. 51 WAS SENT BY HIM TO THE LD. AO. ONE OF T HE COLUMNS OF THE I.T.N.S. 51 IS WHETHER LD. AO WANTS TO APPEA R BEFORE THE LD. CIT(A). AGAIN WHEN CASES WERE FIXED BEFORE HEAR ING, ONE COPY OF SUCH NOTICE WAS SENT TO THE LD. AO. LD. AUT HORIZED REPRESENTATIVE ALSO INVITED OUR ATTENTION TO THE OR DER OF THE LD. CIT(A), WHEREIN HE HAS REQUISITIONED THE CASE RECOR DS FROM THE LD. AO. RECORDS WERE DULY SUPPLIED BY HIM. HOWEVER, THE AO DID NOT PREFER TO APPEAR BEFORE THE AO WHEN THE HEA RING WAS GOING ON. UNDER THESE CIRCUMSTANCES, THE ASSESSEE C ANNOT BE PENALIZED BY RESTORING THE MATTER BACK TO THE FILE OF THE AO IN SO FAR AS AFTER GIVING DETAILED FINDING, THE LD. CI T(A) HAS DELETED THE ADDITIONS WHICH WERE MADE BY THE ASSESSING OFFI CER WITHOUT GIVING COGENT REASONS. 2.4 WE HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE AND LD. SENIOR D.R. AND F IND FROM THE RECORD THAT THERE WAS A SEARCH AT AGRAWAL GROUP , MECH & -: 4: - 4 FAB, AND GTV GROUPS U/S 132 ON 16.9.2005. NOTICE WA S ISSUED BY THE DEPARTMENT AFTER MORE THAN 6 MONTHS O F THE SEARCH U/S 153A. WE FOUND THAT IN ALL THE YEARS EXC EPT FOR ASSESSMENT YEAR 2006-07, NOTICE U/S 153A WAS ISSUED ON ALL THE ASSESSEES ON 22.3.2006, WHICH WAS SERVED ON THE ASSESSEE ON 25.3.2006. THEREAFTER, FORMAL NOTICE U/S 145(2) WAS ISSUED ON 13.6.2006 FIXING THE CASE FOR 20 TH JUNE, 2006. NOTICES U/S 143(2) AND 142(1) WAS ISSUED ON 31.8.2007 AND WAS S ERVED ON THE ASSESSEE ON 12.9.2007. WE FOUND THAT THIS IS AF TER MORE THAN ONE YEAR AND FOUR MONTHS AFTER FILING THE RETU RN. SUCH NOTICE WAS ISSUED TO ALL THE ASSESSEES FALLING IN T HE SAME GROUP ON WHICH SEARCH WAS CONDUCTED. DETAILS WERE FILED B Y THE ASSESSEE ON 18.12.2007. HOWEVER, THE AO DID NOT RAI SE ANY QUERY AND COMPLETED THE ASSESSMENT U/S 143(3). HAD THE AO ANY GRIEVANCE WITH RESPECT TO NON-COOPERATION OF TH E ASSESSEE AND NON-FURNISHING OF THE RELEVANT DETAILS/INFORMAT ION CALLED FOR, HE SHOULD HAVE COMPLETED THE ASSESSMENT U/S 14 4 RATHER U/S 143(3). NOTICES U/S 143(2) & 142(1) WERE ISSUED AFTER MORE THAN ONE YEAR AND FOUR MONTHS AFTER FILING THE RETU RN. THE DELAY IS ATTRIBUTABLE TO THE AO FOR WHICH ASSESSEE HAS BEEN MADE TO SUFFER. AFTER GOING THROUGH THE ORDER OF TH E LD. CIT(A), WE FOUND THAT THE ADDITIONS WERE DELETED AFTER RECO RDING DETAILED FINDINGS. IN NONE OF THE APPEALS, THE REVE NUE HAS RAISED ANY GROUND WITH REGARD TO VIOLATION OF RULE 46A. IT IS NOT THE CASE OF THE DEPARTMENT THAT THE LD. CIT(A) RELIED ON DOCUMENTS WHILE DELETING THE ADDITION, WHICH WAS NO T MADE -: 5: - 5 AVAILABLE TO THE AO OR WHICH WERE IN CONTRAVENTION OF RULE 46A. THEREFORE, THE ORDER OF THE LD. CIT(A) CANNOT BE SET-ASIDE AND MATTER CANNOT BE RESTORED TO THE AO FOR DECIDIN G AFRESH. 3. IN THIS APPEAL, THE REVENUE IS AGGRIEVED FOR D ELETION OF ADDITION OF RS. 8 LAKHS MADE BY THE ASSESSING OFFIC ER ON ACCOUNT OF CREDIT IN THE BANK ACCOUNT OF ASSESSEE. WHILE VERIFYING THE BANK ACCOUNT OF THE ASSESSEE, THE AO FOUND THAT THERE WAS CREDIT ENTRY OF RS. 8 LAKHS. BY STATING T HAT THE ASSESSEE DID NOT GIVE ANY EXPLANATION FOR THE SAME, THE AO ADDED THE AMOUNT U/S 68 OF THE INCOME-TAX ACT, 1961 . BY THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE ADDITION AFTER HAVING THE FOLLOWING OBSERVATIONS :- I HAVE SEEN THE ASSESSMENT ORDER AND ALSO THE MANNER IN WHICH ASSESSMENT HAS BEEN COMPLETED BRINGING THE SAID UNSECURED LOANS OF RS. 8,00,000/- TO TAX, WHERE THE AO HAS NOT MADE ANY DISCUSSION IN THE BODY OF THE ORDER. AS FAR AS THIS UNSECURED LOAN IS CONCERNED, IT WAS OBTAINED ON 31.7.2001 AND THE SAID LOAN HAS BEEN RETURNED THROUGH DDS OF RS. 5,00,000/- AND RS. 3,00,000/- ON 7.2.2007 AND 9.2.2007 RESPECTIVELY FROM THE ACCOUNTS OF THE APPELLANT IN M/S. MECHMEN MOTORS LIMITED. IT IS ALSO EMPHASIZED BY THE AR THAT IN THE ABSENCE OF -: 6: - 6 ANY ADVERSE MATERIAL FOUND EITHER DURING THE COURSE OF ACTION U/S 132 OR IN THE POST INVESTIGATION ENQUIRIES, THE AO WAS NOT JUSTIFIED IN SUBJECTING I T TO TAX. THUS, IN CONCLUSION THIS ADDITION OF RS. 9,00,000/- IS NOT SUSTAINABLE. IN THE CIRCUMSTANCES , THIS GROUND OF THE APPELLANT IS ALLOWED. 4. AGGRIEVED BY THE SAID DELETION, THE REVENUE IS IN F URTHER APPEAL BEFORE US. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULL Y GONE THROUGH THE MATERIALS PLACED BEFORE US AND FOUND TH AT THE ASSESSEE HAS RECEIVED A LOAN FROM M/S. M. D. OVERSE AS LIMITED, NEW DELHI, THROUGH D. D. NO. 509978 DATED 31.7.2001 AND THE SAID LOAN HAS ALSO BEEN REPAID TH ROUGH DD NO. 60588 DATED 7.2.2002 OF RS. 5 LAKHS AND RS. 3 L AKHS FROM ACCOUNT OF THE ASSESSEE IN M/S. MECHMEN MOTORS LIMI TED. THE SAID COMPANY WAS ASSESSED TO TAX AT CIRCLE 6(1), NE W DELHI, WITH PAN NO. AACCM9507-F AND THE TRANSACTION WAS TH ROUGH BANKING CHANNELS. THE CONTENTION OF THE LD. CIT DR. WAS THAT THE ASSESSEE FILED THE RETURN OF INCOME VERY BELATE DLY, THEREFORE, THE AO DID NOT FIND SUFFICIENT TIME TO V ERIFY THE ITEMS -: 7: - 7 APPEARING IN THE BALANCE SHEET AND IN THE RETURN OF INCOME AND SINCE IT WAS A TIME BARRING CASE, HE HAD TO COM PLETE THE ASSESSMENT. ON THE OTHER HAND, THE CONTENTION OF TH E LD. AUTHORIZED REPRESENTATIVE WAS THAT DURING THE COURS E OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO F ILE COPIES OF THE BANK ACCOUNT OPERATED BY HIM AND HIS FAMILY MEMBERS AS PER QUESTION NO.4 OF THE QUESTIONNAIRE AND HE WA S NEVER ASKED TO EXPLAIN THE CREDITS IN THE SAID BANK ACCOU NT. IN THE ABSENCE OF ANY QUERY FROM THE AO, THERE WAS NO REAS ON TO RESPOND THE SAME AND THE ASSESSEE WAS NOT HAVING AN Y IDEA AS TO WHAT IS GOING ON IN THE MIND OF THE AO. 6. THE LD. CIT(A) DELETED THE SAME AFTER HAVING A DET AILED FINDING, WHICH IS AS PER MATERIAL ON RECORD AND OUR OBSERVATION MADE HEREINABOVE. SINCE THE AMOUNT WAS RECEIVED THROUGH DD AND ALSO REPAID THROUGH DD, THE SOURCE O F WHICH WAS DULY EXPLAINED AND WAS FROM A CONCERN HAVING IN COME TAX RECORDS, NO ADDITION WAS WARRANTED. NO INCRIMINATIN G MATERIAL WAS FOUND DURING COURSE OF SEARCH OR IN THE POST SE ARCH INQUIRIES INDICATING ADVERSELY THE GENUINENESS OF T RANSACTION. FURTHER, THE FINDING RECORDED BY THE LD. CIT(A) HAS NOT BEEN -: 8: - 8 CONTROVERTED BY THE DEPARTMENT. WE, THEREFORE, DO N OT FIND ANY REASON TO INTERFERE IN THE DELETION OF ADDITION OF RS. 9 LAKHS BY THE LD. CIT(A). 7. IN THE RESULT, THE REVENUES APPEAL IN I.T.(SS).A .NO. 193/IND/2008 IS DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2010. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH NOVEMBER,2010. CPU* 2630