Sanket jitendrabhai Shah, Ahmedabad V. DCIT Central Circle-1(2), Ahmedabad

ITSSA 235/AHD/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5227 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 06-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA; L P JAIN
• Keywords: Depreciation
• Section: 143(3); 153A

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD ( CONVENED THROUGH VIRTUAL COURT ) BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER () ./ I.T(SS).A. NO. 235/AHD/2018 ( ASSESSMENT YEARS : 2012-13) SANKET JITENDRABHAI SHAH C-104, PUSHKAR-3 APTT., P. T. COLLEGE ROAD, PALDI, AHMEDABAD - 380007 / VS. DCIT CENTRAL CIRCLE - 1(2), AHMEDABAD ROOM NO.305, 3 RD FLOOR, AAYAKAR BHAWAN, ASHRAM ROAD, AHMEDABAD - 380009 ./ ./ PAN/GIR NO. : BAIPS2298P ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI KETAN H. SHAH WITH SHRI AMAN K. SHAH, A.RS. / RESPONDENT BY : SHRI O. P. SHARMA, CIT.DR & SHRI L. P. JAIN, SR. D.R. !' DATE OF HEARING 19/08/2020 #$%& !' / DATE OF PRONOUNCEMENT 09/10/2020 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS)-11, AHMEDABAD (CIT(A) IN SHORT), DATED 15.06.2018 ARISING IN THE ASSESSMENT ORDER DATED 28.12.2016 PA SSED BY THE IT(SS)A NO. 235/AHD/18 (SANKET J. SHAH VS. DCIT) A.Y. 2012-13 - 2 - ASSESSING OFFICER (AO) UNDER S. 143(3) R.W.S. 153A( 1)(B) OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING AY 2012-1 3. 2. AS PER RECORDS, THE APPEAL BEFORE THE TRIBUNAL H AS BEEN FILED BELATEDLY. THE DELAY OF 20 DAYS IS CONDONED ON DUE CONSIDERATION OF FACTS AND OWING TO SMALLNESS OF DELAY CAUSING NO PERCEPTIBLE PREJUDICE TO OTHER SIDE. 3. THE GROUNDS OF APPEAL RAISED BY ASSESSEE READ HE REUNDER: 1 THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN PARTLY CONFIRMING THE ASSESSMENT ORDER PASSED BY THE ASSES SING OFFICER U/S. 143(3) OF THE ACT. 2 THE LD. C.I.T. (A) HAS ERRED IN FACTS AND CIRC UMSTANCES AND IN LAW IN CONFIRMING ADDITION OF RS.32,08,000/- OUT OF TOTAL ADDITION OF RS.45,11,546/- MADE BY THE A.O. ON ACCOUNT OF VA LUE OF BMW CAR ALLEGEDLY TRANSFERRED TO THE APPELLANT IN LIEU OF SALARY. 4. THE ASSESSEE HAS MOVED AN ADDITIONAL GROUND WHIC H READS AS UNDER: 1. BOTH THE LOWER AUTHORITIES ERRED IN LAW AND ON FACTS IN FRAMING ASSESSMENT UNDER SECTION 143(3) R.W.S. 153A IGNORIN G FACT THAT THE APPROVAL U/S.153D GIVEN BY THE JCIT IS WITHOUT APPLICATION OF MIND AND ACCORDINGLY ASSESSMENT IS REQUIRED TO B E QUASHED. IT BE SO HELD NOW. 5. THE PRAYER FOR ADMISSION OF ADDITIONAL GROUNDS N OTED ABOVE WHICH ARE NOT SET FORTH IN MEMORANDUM OF APPEAL ARE BEING ADMITTED FOR ADJUDICATION IN TERMS OF RULE 11 OF INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 OWING TO THE FACT THAT OBJECT IONS RAISED IN THE ADDITIONAL GROUND ARE LEGAL IN NATURE AND CHALLENGE S THE JURISDICTION OF THE AO FOR MAKING ADDITIONS/DISALLOWANCES AND FO R SUCH OBJECTIONS THE RELEVANT FACTS ARE STATED TO BE EMAN ATING FROM EXISTING RECORDS IN THE LIGHT OF DECISION OF THE HO NBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. V. CIT [1998] 229 ITR 383 (SC). IT(SS)A NO. 235/AHD/18 (SANKET J. SHAH VS. DCIT) A.Y. 2012-13 - 3 - 6. WITH REFERENCE TO ADDITIONAL GROUND ABOVE, THE L EARNED AR POINTED OUT THAT THE APPROVAL TAKEN BY THE AO AS MA NDATED UNDER S.153D OF THE ACT IS HOLLOW AND WITHOUT THE APPLICA TION OF MIND OF THE DESIGNATED AUTHORITY. ON BEING CALLED BY THE B ENCH TO SUPPORT THE ALLEGATION OF NON-APPLICATION OF MIND, THE LEAR NED AR FOR THE ASSESSEE SIMPLY MOOTED THAT THE APPROVAL WAS OBTAIN ED ON THE SAME DAY OF COMMUNICATION AND AS A COROLLARY, IT HAS TO BE PRESUMED TO BE WITHOUT DUE APPLICATION OF MIND. WE DISPOSE OF THE OBJECTIONS RAISED BY WAY OF ADDITIONAL GROUND STRAIGHTWAY AGAI NST THE ASSESSEE AS WE SEE NO MERIT IN SUCH LINE OF ARGUMENT. THE Q UANTIFICATION OF TIME FOR APPLICATION OF MIND IS A DIFFICULT TASK. NO PRESUMPTION CAN FLOW ADVERSE TO THE AUTHORIZED PERSON ONLY ON THE G ROUND THAT THE TASK HAS BEEN REPORTEDLY PERFORMED SWIFTLY. THE SUP ERVISING OFFICERS ARE NORMALLY KEPT ABREAST OF DEVELOPMENT I N THE ASSESSMENT ROUTINELY AND HAVE KNOWLEDGE OF FACTUAL ASPECTS. NO COGENT EVIDENCE DIRECT OR CIRCUMSTANTIAL IS BEFORE US TO H OLD AGAINST THE DESIGNATED AUTHORITY UNDER S.153D OF THE ACT. WE T HUS SEE NO SUBSTANCE IN THE PLEA RAISED ON BEHALF OF THE ASSES SEE AND THUS DISMISS THE ADDITIONAL GROUND IN SUMMARILY. 7. AS PER ITS GROUNDS OF APPEAL, THE ASSESSEE HAS C HALLENGED THE ACTION OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS.32,08,000/- OUT OF TOTAL ADDITION OF RS.45,11,546/- MADE BY THE AO ON ACCOUNT OF VALUE OF BMW CAR ALLEGEDLY TRANSFERRED TO THE AS SESSEE BY THE EMPLOYER IN LIEU OF SALARY. 8. BRIEFLY STATED, THE SEARCH ACTION UNDER S.132 OF THE ACT WAS CONDUCTED IN GROUP CASES WHERE THE ASSESSEE WAS ALS O COVERED UNDER SEARCH ACTION CARRIED ON 04.12.2014. PURSUANT THER ETO, A NOTICE UNDER S.153A OF THE ACT WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED RETURN UNDER S.153A OF THE ACT IT(SS)A NO. 235/AHD/18 (SANKET J. SHAH VS. DCIT) A.Y. 2012-13 - 4 - DECLARING TOTAL INCOME OF RS.1,91,344/-. IN COURSE OF ASSESSMENT PROCEEDINGS UNDER S. 153A OF THE ACT, IT WAS OBSERV ED BY THE AO THAT IN THE COURSE OF SEARCH, CERTAIN E-DATA FROM L APTOP OF THE ASSESSEE WERE FOUND AND SEIZED FROM RESIDENTIAL PRE MISES OF THE ASSESSEE WHICH REPRESENTED AN AGREEMENT MADE AND EN TERED INTO ON 07.09.2011 AT AHMEDABAD BETWEEN EYELID INFRASTRUCT URE PVT. LTD. (TRANSFEROR) AND THE ASSESSEE (TRANSFEREE). AS PER THE AFORESAID AGREEMENT, IT WAS NOTICED BY THE AO THAT THE CAR WA S TRANSFERRED TO THE ASSESSEE IN LIEU OF SALARY PAYMENT TO THE ASSES SEE WHO HAPPENED TO HOLD THE POSITION OF DIRECTOR. IN THE LIGHT OF AGREEMENT FOUND, THE AO ADDED RS.45,11,546/- TO THE TOTAL INCOME OF THE ASSESSEE COMPANY, BEING VALUE OF BMW CAR AS SALARY RECEIVED HAVING REGARD TO THE PROVISIONS OF SECTION 17 OF THE ACT. 9. AGGRIEVED BY THE AFORESAID ACTION, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) GRANTED PARTI AL RELIEF TO THE ASSESSEE AND CONFIRMED THE ADDITION OF THE DEPRECIA TED VALUE DETERMINED AT RS.32,08,000/- INSTEAD OF THE GROSS V ALUE. THE RELEVANT OPERATIVE PARA OF THE CIT(A) IS REPRODUCED HEREUNDER: 5. SUBMISSION OF THE APPELLANT AND ASSESSMENT ORDE R HAS BEEN CONSIDERED CAREFULLY. THE FIRST GROUND OF APPEAL IS AGAINST THE ADDITIONS OF RS.45,11,546/- MADE BY THE AO CONSIDER ING TOTAL .VALUE OF BMW CAR AS SALARY RECEIVED BY THE APPELLANT FROM EY ELID INFRASTRUCTURE P LTD. DURING THE SEARCH ON 4.12.2014 AT THE PREMIS ES OF THE APPELLANT, A COPY OF AN AGREEMENT DATED 7.9,2011 ENTERED INTO BETWEEN EYELID INFRASTRUCTURE P LTD (TRANSFEROR) AND THE APPELLANT (TRANSFEREE). AS PER THE SAID AGREEMENT TRANSFEROR TO TRANSFER BMW CAR B EARING NO.MH-04- ET-6651 TO THE TRANSFEREE IN LIEU OF PAYMENT OF HIS SALARY AS DIRECTOR IN THE TRANSFEROR COMPANY AND THE TRANSFEREE (APPELLAN T) HAD AGREED TO RECEIVE THE SAME IN LIEU OF HIS SALARY AS FULL & FI NAL PAYMENT. AS PER THE SAID AGREEMENT, THE APPELLANT WAS DIRECTOR FROM 28.9.2010 TO 20.12.2011. THE AO MADE THE ADDITIONS OF TOTAL VALU E OF CAR I.E. RS.45,11,546/-. THE APPELLANT CONTENDED THAT THE CA R WAS NEVER TRANSFERRED IN THE NAME OF THE APPELLANT AND IT IS STILL IN THE NAME OF EYELID INFRASTRUCTURE P LTD. THE APPELLANT FILED DO CUMENTARY EVIDENCE IN THE FORM OF RTO BOOK COPY & INSURANCE POLICY TO SUBSTANTIATE THIS CONTENTION. AS THIS AGREEMENT WAS NEVER ACTED UPON, HENCE, ADDITIONS SHOULD BE DELETED. THE APPELLANT ALTERNATIVELY CONT ENDED THAT EVEN IF, IT IS CONSIDERED IN THE APPELLANT'S HANDS, DEPRECIATIO N VALUE OF CAR SHOULD BE TAKEN AS PRICE AND NOT THE TOTAL PURCHASE VALUE, AS TAKEN BY THE AO. IT(SS)A NO. 235/AHD/18 (SANKET J. SHAH VS. DCIT) A.Y. 2012-13 - 5 - THE APPELLANT SUBMITTED COPY OF INSURANCE POLICY DA TED 25.4.2012 IN WHICH TOTAL SUM INSURED WAS RS.32,08,000/-. THE APP ELLANT'S CONTENTION THAT CAR WAS NOT TRANSFERRED IN APPELLANT'S NAME, T HEREFORE, ADDITIONS SHOULD BE DELETED, CANNOT BE ACCEPTED BECAUSE THE C AR IS MOVABLE ASSET AND ITS POSSESSION WAS NOT DENIED BY THE APPELLANT. THE AGREEMENT FOUND WAS SIGNED BY BOTH THE PARTIES, THUS, IT WAS ACTED UPON. REGARDING THE OTHER CONTENTION THAT DEPRECIATION VA LUE SHOULD BE TAKEN AS CORRECT CONSIDERATION, IS FOUND REASONABLE & LOG ICAL. ADDITION OF TOTAL VALUE OF THE CAR OF 2010 MODEL IS NOT JUSTIFI ED FOR THE YEAR UNDER CONSIDERATION AS PRICE OF THE CAR HAS BEEN DEPRECIA TED AS PER I.T. ACT & RULES. THE SUM INSURED HAS BEEN SHOWN AT RS.32,08,0 00/-, THEREFORE, IT IS REASONABLE TO CONSIDER THIS AMOUNT AS PRICE OF T HE CAR. THEREFORE, ADDITIONS OF RS.32,08,000/- ARE CONFIRMED AND REMAI NING ADDITIONS OF RS.14,03,546/- ARE DELETED. THIS GROUND OF APPEAL IS PARTLY ALLOWED . 10. FURTHER AGGRIEVED, THE ASSESSEE PREFERRED APPEA L BEFORE THE TRIBUNAL. 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS ON THE ISSUE. THE CONTROVERSY REVOLVES AROUND THE ADDITIO N OF VALUE ON ACCOUNT OF TRANSFER OF BMW CAR IN LIEU OF SALARY TO THE ASSESSEE HEREIN. IT IS THE CASE OF THE ASSESSEE THAT AGREEM ENT SO ENTERED WAS NEVER ACTED UPON BUT WAS ONLY ENTERED WITH A VIEW T O AVOID FRAUDULENT ACQUISITION OF ASSETS THE COMPANY IN WHI CH HE WAS A DIRECTOR. IT WAS POINTED OUT ON BEHALF OF THE ASSE SSEE THAT HE WAS A DIRECTOR OF THE COMPANY SINCE A LONG TIME BUT ONLY AS AUTHORIZED SIGNATORY AND WAS NOT GETTING ANY SALARY BEFORE OR AFTER MENTIONED PERIOD IN AGREEMENT I.E. 28.09.2010 TO 20.12.2011. IT WAS CONTENDED THAT THIS FACT ITSELF PROVES THAT THE AGR EEMENT WAS NOT REPRESENTING THE REAL STATE OF AFFAIRS. TO SUPPORT ITS CONTENTION, THE ASSESSEE HAS ADVERTED TO THE VEHICLE PARTICULARS IS SUED BY THE MOTOR VEHICLE DEPARTMENT OF GOVERNMENT OF MAHARASHTRA TO SHOW THAT THE CAR WAS CONTINUING TO BE HELD IN THE NAME OF THE CO MPANY. SIMILARLY, THE INSURANCE RECEIPT WAS REFERRED TO SH OW THAT THE CAR WAS IN THE NAME OF THE COMPANY, IN WHICH HE WAS A D IRECTOR AND THE CAR WAS EVENTUALLY TRANSFERRED IN THE NAME OF ONE M R. AVINASH SHAH IN 2015. IT(SS)A NO. 235/AHD/18 (SANKET J. SHAH VS. DCIT) A.Y. 2012-13 - 6 - 12. THESE DOCUMENTS PROVIDE NECESSARY SUPPORT TO TH E CONTENTION OF THE ASSESSEE. WE ALSO SIMULTANEOUSLY NOTE THAT THE AGREEMENT IS ASCRIBED TO BE EXECUTED ON 07.09.2011 WHICH MAKES A REFERENCE TO A PERIOD OF 28.09.2010 TO 20.12.2011 WHERE THE ASSESS EE WAS STATED TO BE THE DIRECTOR. HENCE, THE OSTENSIBLE INCONSISTEN CY IN AN AGREEMENT COVERING EVENT OF SUBSEQUENT PERIOD I.E. PERIOD OF DIRECTORSHIP WOULD CLEARLY SHOW THAT THE AGREEMENT IS ANTEDATED. THUS, THE VALIDITY OF THE AGREEMENT ITSELF IS IN JE OPARDY. THE ASSESSEE CANNOT BE EXPECTED TO PROVE A NEGATIVE POI NT OF NON-RECEIPT OF SALARY IN THE CIRCUMSTANCES EXISTING. IN THE LI GHT OF ANTECEDENTS ON NON-RECEIPT OF SALARY IN THE PAST, PRE-DATING OF AGREEMENT COUPLED WITH REGISTRATION CONTINUING TO BE IN THE N AME OF THE COMPANY, THE UNDUE SIGNIFICANCE CANNOT BE ATTACHED TO SUCH AN AGREEMENT WHICH IS STATED TO HAVE NOT BEEN CONSUMMA TED FOR VARIETY OF REASONS IN THE COURSE OF BUSINESS. WE THUS SEE SUBSTANTIAL MERIT IN THE CASE OF ASSESSEE. 13. IN THE RESULT, THE SUBSTANTIVE GROUND OF APPEAL OF ASSESSEE IS ALLOWED. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D IN PART. SD/- SD/- (RAJPAL YADAV) (PRADIP KUMA R KEDIA) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD: DATED 09/10/2020 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- ). / REVENUE 2. / ASSESSEE +. ,-.! /! / CONCERNED CIT THIS ORDER PRONOUNCED ON 09/10/2020 IT(SS)A NO. 235/AHD/18 (SANKET J. SHAH VS. DCIT) A.Y. 2012-13 - 7 - 4. /!- / CIT (A) 2. 345 6!6-.7 ' -.&7 89, / DR, ITAT, AHMEDABAD :. 5;< = / GUARD FILE. BY ORDER / 7 /8 ' -.&7 89,