DCIT 10(1), MUMBAI V. GOLDEN CELLAR P. LTD, MUMBAI

ITSSA 22/MUM/2010

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7426 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 21-02-2012
• Assessment Year: misc
• Appeal Filed On: 11-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Search and seizure
• Section: 132; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI D. MANMOHAN (VICE-PRESIDENT) AND SHRI N.K. BILLAIYA (ACCOUNTANT MEMBER) IT(SS)A NO. 158/MUM/2007 BLOCK PERIOD- 01-04-1988 TO 12-08-1998 THE DCIT 10(1), AAYAKAR BHAVAN, MUMBAI-400 020 VS. M/S. DUTT MARKETING PVT. LTD., 323, JARIWALA STABLE, KALE MARG, BAIL BAZAR, KURLA (W), MUMBAI-400 070 PAN-AAACD 2257K IT(SS)A NO. 22/MUM/2010 BLOCK PERIOD- 01-04-1988 TO 12-08-1998 THE DCIT 10(1), AAYAKAR BHAVAN, MUMBAI-400 020 VS. M/S. GOLDEN CELLAR PVT. LTD., 323, JARIWALA STABLE, KALE MARG, BAIL BAZAR, KURLA (W), MUMBAI-400 070 PAN-AAACG 2430R (APPELLANT) (RESPONDENT) REVENUE BY: SHRI PAVAN VED ASSESSEE BY: SHRI K. GOPAL DATE OF HEARING : 11.04.2012 DATE OF PRONOUNCEMENT:30.4.12 O R D E R PER N.K. BILLAIYA (AM): THE DEPARTMENT HAS FILED THESE TWO APPEALS FOR BLOC K PERIOD 1.4.1988 TO 12.8.12998 AGAINST ORDERS OF LD CIT(A) DATED 3.10.2007 & 18.12.2009. SINCE FACTS AND GROUND OF A PPEAL ARE IDENTICAL, WE HEARD THESE APPEALS TOGETHER AND DISP OSE OF THE SAME BY THIS COMMON ORDER FOR THE SAKE OF CONVENIEN CE. IT(SS)A NOS. 158 & 22/M/10 2 2. FIRSTLY, WE TAKE UP APPEAL IN IT(SS)A.NO.158/M/0 7. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PR IVATE LIMITED COMPANY ENGAGED IN THE TRADING OF INDIAN MA DE FOREIGN LIQUOR (IMFL). ON 12.8.1998 A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE BUSINESS PREMISES O F THE ASSESSEE AND AT THE RESIDENTIAL PREMISES OF DIRECTO R OF ASSESSEE SHRI RAKESH N. DUTT. ON THE BASIS OF THE STATEMENT MADE BY DIRECTOR SHRI RAKESH DUTT, ADDITION OF RS. 60,00,0 00/- WERE MADE IN THE HANDS OF ASSESSEE ON PROTECTIVE BASIS A S UNEXPLAINED INVESTMENT TOWARDS SHARE CAPITAL OF THE COMPANY. THE ASSESSMENT WAS COMPLETED ON 25.2.2000 FOR THE BLOCK PERIOD. THE ASSESSEE CONTESTED THE ADDITIONS SO MA DE BY AO AND LD. CIT(A) ALLOWED THE APPEAL AND DELETED THE A DDITION. 4. THE REVENUE TOOK THE MATTER BEFORE ITAT. THE HO NBLE ITAT, MUMBAI BENCH B VIDE ITS ORDER DT. 28.7.2005 IN IT(SS)A NO. 133/M/2001 RESTORED THE MATTER BACK TO THE FILE OF AO WITH A DIRECTION TO PASS THE ASSESSMENT ORDER IN KEEPING THE DIRECTIONS AS IN THE CASE OF SHRI RAKESH DUTT AND A S PER LAW, AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE A SSESSEE. 5. ACCORDINGLY, NOTICE U/S. 143(2) WAS ISSUED AND S ERVED ON THE ASSESSEE. IN THE FRESH ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE DECISION OF ITA T IN THE CASE OF SHRI RAKESH DUTT HAS NOT BEEN ACCEPTED BY DEPART MENT WHICH HAS PREFERRED AN APPEAL AGAINST THE ORDER. I NSTEAD OF FOLLOWING THE DIRECTION OF THE ITAT, THE AO FINALLY CONCLUDED THAT IN VIEW OF THIS FACT, I HOLD THAT THE ADDITION SHO ULD BE MADE IN THE HANDS OF SHRI RAKESH DUTT ON SUBSTANTIV E BASIS. SINCE THE ENTRIES ARE REFLECTED IN THE BOOKS OF THE ASSESSEE COMPANY, ADDITION OF RS. 60,00,00/- IS MADE U/S. 68 OF THE I.T. IT(SS)A NOS. 158 & 22/M/10 3 ACT, 1961 IN THE HANDS OF THE ASSESSEE COMPANY TO P ROTECT THE INTEREST OF REVENUE, ON PROTECTIVE BASIS. ACCORDINGLY, THE AO ADDED RS. 60,00,000/- AS UNEXPLAINED CASH CREDIT. 6. THE ASSESSEE TOOK THE MATTER BEFORE THE LD. CIT( A) AND ONCE AGAIN EXPLAINED THE FACTS AS THEY WERE AT THE TIME OF FIRST ASSESSMENT PROCEEDINGS. THE LD. CIT(A) AFTER CONSI DERING THE FACTS HELD THAT THE AO HAS NOT COME UP WITH ANY FACTS TO SHOW THAT THERE WERE ANY SEIZED EVIDENCE, WITHIN TH E MEANING OF SECTION 158B(B), TO ASSESSEE THE CONCEALED INCOM E UNDER CHAPTER XIVB. IT WAS PRECISELY TO GIVE THE AO THIS OPPORTUNITY THAT THE MATTER WAS SET ASIDE BY THE ITAT IN ITS OR DER THE ITAT HAS QUOTED SEVERAL JUDICIAL PRONOUNCEMENTS ON THIS ISSUE. IN THE CIRCUMSTANCES, THE AO HAS ERRONEOUSLY ASSESSED THE INCOME U/S. 158BC. THIS ADDITION, IF AT ALL POSSIBLE, CAN ONLY BE MADE IN THE COURSE OF REGULAR ASSESSMENT/REASSESSMENT U/ S. 143(3)/147. THE LD. CIT(A) ACCORDINGLY ALLOWED THE APPEAL AND DELETED THE PROTECTIVE ADDITION OF UNDISCLOSED INCOME. 7. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUND OF APPEA L. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) HAS ERRED IN DELE TING THE ADDITION OF RS. 60,00,000/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE FORM OF SHARE CAPITAL IN THE ASSESSEE COMPANY. 8. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED TH E ORDER OF AO AND SUBMITTED THAT DIRECTOR SHRI RAKESH DUTT IN HIS STATEMENT DURING THE COURSE OF SEARCH HAS ACCEPTED THAT HE HA S INTRODUCED UNACCOUNTED MONEY IN THE FORM OF SHARE CAPITAL IN T WO COMPANIES. ONE IS THE ASSESSEE AND THE OTHER IS M/S. GOLDEN CE LLARS PVT. LTD. THE LD. DR FURTHER POINTED OUT THAT ALTHOUGH SUBSTA NTIVE ADDITIONS IT(SS)A NOS. 158 & 22/M/10 4 WERE MADE IN THE HANDS OF SHRI RAKESH DUTT AND ONLY PROTECTIVE ADDITIONS WERE MADE IN THE HANDS OF THE TWO COMPANI ES. HOWEVER, THE SUBSTANTIVE ADDITIONS MADE IN THE HANDS OF SHR I RAKESH DUTT WERE DELETED BY ITAT D BENCH IN IT (SS)A NO. 138/ MUM/2009 VIDE ORDER DT. 21 ST APRIL, 2005 AND CONCLUDED THAT WHILE DECIDING THE SAID APPEAL, THE TRIBUNAL HAS CATEGORICALLY HELD TH AT AS THE CREDITS APPEAR IN THE BOOKS OF M/S. DUTT MARKETING PVT. LTD . AND M/S. GOLDEN CELLARS PVT. LTD., THE ADDITION IF AT ALL BE PERMISSIBLE LEGALLY, THE SAME COULD BE CONSIDERED IN THE HANDS OF THOSE TWO COMPANIES ONLY AND NOT IN THE HANDS OF PRESENT ASSESSEE. BES IDES, THE LEGAL PRESUMPTION AVAILABLE U/S. 132(4A) OF THE ACT WILL ALSO BETRAY THE DEPARTMENT IN AS MUCH AS THE PRESUMPTION IS REGARDI NG THE CORRECTNESS OF THE CONTENTS OF THE ENTRIES AND THIS WILL CONSEQUENTIALLY IMPLY THAT THE ENTRIES OF LOANS TAK EN FROM TWO PARTIES ARE IN FACT LOANS FROM THOSE TWO PARTIES, A ND SO ALSO THE RECEIPTS OF SHARE APPLICATION MONEY FROM 5 PARTIES ARE IN FACT SUCH RECEIPTS FROM THE SAID PARTIES.. 9. LD. COUNSEL APPEARING FOR THE ASSESSEE ARGUED TH AT THE AO HAS NOT FOLLOWED WITH THE DIRECTION OF ITAT AND HAS SIMPLY ADDED THE AMOUNT AS WAS DONE IN THE FIRST ASSESSMENT. THE LD. COUNSEL ARGUED THAT THE FACTS OF THE CASE, PROVISIONS OF SEC. 68 ARE NOT AT ALL APPLICABLE. THE AR POINTED OUT T HAT AO HAS MADE ADDITION IN THE HANDS OF THE ASSESSEE MERELY ON THE BASIS OF THE ST ATEMENT OF SHRI RAKESH DUTT IGNORING THE MATERIAL EVIDENCE PROVIDED BY ASSESSEE . LD. AR CONCLUDED THAT THE ASSESSMENT HAS BEEN MADE UNDER CHAPTER XIVB OF THE ACT AND THE ITAT HAS GIVEN CATEGORICALLY THE FINDING THAT THE ADDITION CANNOT BE MADE FOR THE BLOCK PERIOD AS THE SAME IS NOT CONNECTED WITH ANY MATERIAL FOUND DURIN G THE SEARCH AND ACCORDINGLY PRAYED THAT THE ORDER OF LD. CIT(A) MAY BE CONFIRME D. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE INITIAL ASSES SMENT ORDER AND THE APPELLATE ORDER. THE ORIGINAL ASSESSMENT WHICH WENT UPTO ITA T WAS RESTORED BACK TO THE FILE IT(SS)A NOS. 158 & 22/M/10 5 OF AO. WE FIND THAT THE AO HAS ONCE AGAIN MADE PRO TECTIVE ASSESSMENT IN THE HANDS OF ASSESSEE. IT APPEARS FROM THE ASSESSMENT ORDER THAT THE AO IS STILL MORE KEEN IN MAKING ADDITION IN THE HANDS OF SHRI RAKESH DUTT IN SUBSTANTIVE BASIS VIDE OBSERVATION MADE BY AO AT PAGE-7, PARA-11 OF HIS OR DER. WE FIND THAT IN THE FRESH ASSESSMENT PROCEEDINGS, THE AO AS WELL AS LD. CIT(A ) MENTIONED NOTHING ON RECORD EXCEPT WHAT HE HAS DONE/SAID IN THE ORIGINAL ASSESS MENT PROCEEDINGS AS THE AO HAS NO COGENT MATERIAL EVIDENCE ON RECORD TO MADE SUBST ANTIVE ADDITION OF RS. 60,00,000/- AS UNEXPLAINED CREDIT ENTRIES. THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION. WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE ORDER OF LD. CIT(A) WHO HAS GIVEN A REASONED ORDER. WE THEREFORE, CONFIRM THE FINDING OF LD. CIT(A) AND DISMISS THE APPEAL FILED BY DEPARTMENT. IT(SS)A NO. 22/MUM/2010 11. THE ONLY GROUND RAISED BY THE REVENUE READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE UNACCOUNTED CASH O F RS. 15 LAKHS IS NOT TO BE ADDED U/S. 68 OF THE I.T. ACT IN TOTAL INCOME OF THE ASSESSEE COMPANY EVEN WHEN THE HONBLE ITAT MUMBAI VIDE ITS ORDER IN THE CASE OF IT(SS)A NO. 138/M/01 DT. 2.6.2005 HAS HELD THAT THE AMOUNT WAS NOT TAXABLE IN CASE OF SHRI RAKESH DUTT, WHO IS THE DIRECTOR OF THE COM PANY AND THE SAME SHOULD HAVE BEEN ADDED IN THE TOTAL INCOME OF THE COMPANY. 12. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT T HERE WAS A SEARCH OPERATION U/S. 132 OF THE ACT WAS CONDUCTED ON 12.8.1998 AT THE RE SIDENCE OF SHRI RAKESH DUTT, DIRECTOR OF THE ASSESSEE COMPANY AND BUSINESS PRE MISES OF THE ASSESSEE. THE ORIGINAL ASSESSMENT IN THIS CASE WAS MADE BY AO ON THE BASIS OF THE STATEMENT OF THE DIRECTOR OF SHRI RAKESH DUTT AND ADDITION OF RS. 15,00,000/- WERE MADE ON A PROTECTIVE BASIS AS UNEXPLAINED CASH CREDIT. SUBSTANTIVE ADDITIONS WERE MADE IN THE HANDS OF THE DIRECTOR SH RI RAKESH DUTT. 13. BOTH ASSESSEE AND SHRI RAKESH DUTT TOOK THE MAT TER UPTO ITAT. THE ITAT D BENCH IN IT(SS)A NO. 138/M/01 DELETED THE ADDITION FROM THE HANDS OF SHRI RAKESH DUTT BY OBSERVING AS UNDER: IT(SS)A NOS. 158 & 22/M/10 6 THERE APPEARS ONE MORE SITUATION IN FAVOUR OF ASS ESSEE. AS THE CREDITS APPEAR IN THE BOOKS OF M/S. DUTT MAR KETING PVT. LTD. AND M/S. GOLDEN CELLARS PVT. LTD., THE ADDITI ON IF AT ALL BE PERMISSIBLE LEGALLY, THE SAME COULD BE CONSIDERE D IN THE HANDS OF THOSE TWO COMPANIES ONLY AND NOT IN THE HA NDS OF PRESENT ASSESSEE. BESIDES, THE LEGAL PRESUMPTION A VAILABLE U/S. 132(4A) OF THE ACT WILL ALSO BETRAY THE DEPART MENT IN AS MUCH AS THE PRESUMPTION IS REGARDING THE CORRECTNES S OF THE CONTENTS OF THE ENTRIES AND THIS WILL CONSEQUENTIAL LY IMPLY THAT THE ENTRIES OF LOANS TAKEN FROM TWO PARTIES ARE IN FACT LOANS FROM THOSE TWO PARTIES, AND SO ALSO THE RECEIPTS OF SHARE APPLICATION MONEY FROM 5 PARTIES ARE IN FACT SUCH R ECEIPTS FROM THE SAID PARTIES.. 14. IN THE CASE OF ASSESSEE, T HE HONBLE ITAT, MUMBAI BENCH A VIDE ITS ORDER DT. 2.6.2005 RESTORED THE MATTER BACK TO THE FILE OF AO WITH A DIRECTION TO REFRAME THE ASSESSMENT KEEPING IN VIEW THE DIRECTIONS OF ITAT IN THE CASE OF SHRI RAKESH DUTT. ACCORDINGLY, FRESH ASSESSMENT PROCEEDINGS WERE STARTED. IN THE FRESH ASSESSMENT, THE AO TOOK THE SAME STAND AS WAS TAKEN BY HIM IN THE FIRST ASSESSM ENT PROCEEDINGS AND ONCE AGAIN MADE PROTECTIVE ADDITIONS OF RS. 15, 00,000/- IN THE HANDS OF ASSESSEE AS UNEXPLAINED CASH CREDIT. 15. THE ASSESSEE TOOK THE MATTER BEFORE LD. CIT(A). BEFORE THE LD. CIT(A) ASSESSEE SUBMITTED THE ORDER OF TRIBUNAL IN THE CASE OF M/S. DUTT MARKETING PVT. LTD. AND ITS OWN ORDER. LD. CI T(A) FOLLOWED THE FINDING OF THE ITAT IN THE CASE OF SHRI RAKESH DUTT AND ALSO FOLLOWED THE ORDER OF LD. CIT(A) IN THE CASE OF M/S. DUTT MA RKETING PVT. LTD AND DELETED THE ADDITION OF RS. 15 LAKHS. 16. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE I S IN APPEAL BEFORE US. 17. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED T HE ASSESSMENT ORDER AND ARGUED THAT ADDITIONS MADE BY AO IS AS PE R LAW AND DESERVES TO BE CONFIRMED. IT(SS)A NOS. 158 & 22/M/10 7 18. THE LD. AR POINTED OUT THAT THE AO HAS GROSSLY FAILED IN FOLLOWING THE DIRECTION OF ITAT AND HAS NOT BROUGHT ANY COGENT MATERIAL EVIDENCE ON RECORD. HE FURTHER POINTED OUT THAT IN ANOTHER CASE OF M/S. DUTT MARKETING PVT. LTD., LD. CIT(A) HAS DELETED THE AD DITION AND IN THE PRESENT APPEAL, LD. CIT(A) HAS FOLLOWED THE DECISION IN THE CASE OF M/S. DUTT MARKETING PVT. LTD., IN THE CASE OF DUTT MARKETING PVT. LTD., WE HAVE HEL D THAT THE ADDITIONS CANNOT BE MADE UNDER CHAPTER XIVB OF THE ACT AS NO UNDISCLOSE D INCOME HAS BEEN DEDUCTED AS A RESULT OF SEARCH. FOLLOWING THE SAME, WE CONF IRM THE ORDER OF LD. CIT(A) IN THE PRESENT APPEAL ALSO. 19. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 30 TH DAY OF APRIL, 2012 SD/- SD/ (D. MANMOHAN) (N.K. BILLAIYA ) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED 30 TH APRIL, 2012 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR G BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI