The ACIT, Circle-1, Bhavnagar V. Virat Ship Breaking Corporation, Bharuch

ITSSA 268/AHD/2010

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8102 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 29-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: B R POPAT
• Keywords: Unexplained expenditure; Retraction
• Section: 260A; 68; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.(SS) A. NO.268, 269 & 270 / AHD/2010 (BLOCK PERIOD ENDING ON 7.12.1999) ACIT, CIRCLE 1, BHAVNAGAR VS. VIRAT SHIP BREAKING CORPN., C/O MANSINGH CHAUDHARY, B/10, MILLENNIUM MARKET, PANEH BHATI, BHARUCH PAN/GIR NO. : (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI B L YADAV, SR. DR RESPONDENT BY: SHRI B R POPAT, AR DATE OF HEARING: 24.05.2012 DATE OF PRONOUNCEMENT: 15. 06.2012 O R D E R PER SHRI A. K. GARODIA, AM:- ALL THESE THREE APPEALS ARE FILED BY THE REVENUE F OR THE SAME BLOCK PERIOD I.E. BLOCK PERIOD ENDING 07.12.1999. THESE THREE APPEALS ARE DIRECTED AGAINST THREE SEPARATE ORDERS OF LD. CIT(A ) II, AHMEDABAD ALL DATED 11.12.2009. THE FIRST APPEAL IS IN RESPECT O F QUANTUM ADDITION DELETED BY LD. CIT(A) I.E. I.T.A.NO. 268/AHD/2010. THE SECOND APPEAL IN I.T.A.NO. 269/AHD/2010 IS WITH REGARD TO ORDER O F THE A.O. U/S 154 FOR LEVY OF SURCHARGE ON TAX @ 10% WHICH HAS BEEN DELET ED BY LD. CIT(A) AS PER THE IMPUGNED ORDER. THE 3 RD APPEAL IN I.T.A.NO. 270/AHD/2010 IS DIRECTED AGAINST THE ORDER OF CIT(A) FOR DELETING P ENALTY IMPOSED BY THE A.O. OF RS.30 LACS U/S 158BFA(2) OF THE INCOME TAX ACT, 1961. ALL THESE I.T.A.NO. 268.269.270 /AHD/2010 2 APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE APPEAL NO.268/AHD/2010. T HE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: THE LD. CIT(A)-XX, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING .THE ADDITION OF RS.44,00,000/-MADE U/S.68 OF THE ACT 1961, BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CRED ITS, WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD BY THE AO. IN DOING SO, THE LD CIT(A), HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE ASSESSEE COULD NOT DISCHARGE THE ONUS WHICH LAY UPON IT OF ESTABLISHING THE GENUINENESS OF THE SAID CREDIT ENTRIES. THE LD. CIT,(A)XXI, AHMEDABAD HAS ERRED IN LAW AN D ON FACTS IN DELETING THE ADDITION OF RS.13,200/- MADE BY THE AO AS UNEXPLAINED EXPENDITURE U/J.69C OF THE IT ACT 1961 ON ACCOUNT OF COMMISSION PAYMENT WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD BY THE AO. THE LD CIT(A) WHILE ALLOWING THE AFORESAID RELIEF T O THE ASSESSEE ON THE BASIS OF THE DECISION OF HON'BLE TRIBUNAL; R EFERRED TO IN PARA 7.2 OF THE APPELLATE ORDER HAS NOT APPRECIATED THE FACT THAT THE AFORESAID DECISIONS OF THE HON'BLE TRIBUNAL HAVE NO T BEEN ACCEPTED BY THE DEPARTMENT AND THE APPEALS U/S. 260A OF DE PARTMENT ARE) PENDING BEFORE THE HONBLE HIGH COURT. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD. C IT(A) BE SET SIDE AND THAT OF A.O. BE RESTORED TO THE ABOVE EXTENT. 2.1 BRIEF FACTS REGARDING THE FIRST ISSUE TILL THE ASSESSMENT STAGE ARE NOTED BY LD. CIT(A) IN PARA 7.1 OF HIS ORDER WHICH IS REPRODUCED BELOW: 7.1 THE AO HAS MENTIONED THAT PERUSAL OF SEIZ ED .MATERIAL IN THE CASE OF MADHUPURI CORPORATION REVEALS THAT THE CONCERN WAS NEVER CREDITWORTHY. THIS CONCERN WAS ONLY ENGAGED I N PROVIDING LOAN ENTRIES AND THAT THE AMOUNTS RECEIVED FROM MAD HUPURI CORPORATION WERE IN THE NATURE OF LOAN. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NO CONFIRMATION OF CREDITO R PARTY HAS BEEN FILED. SHRI MAHENDRA H. SHAH, ONE OF THE DIREC TORS ADMITTED I.T.A.NO. 268.269.270 /AHD/2010 3 IN HIS STATEMENT RECORDED U/S.132(4) THAT NATURE OF HIS BUSINESS WAS TO ISSUE CHEQUE AGAINST CASH. HE ALSO ADMITTED THAT HE HAD DONE BUSINESS IN VARIOUS NAMES, HOWEVER, THE SAME ARE CL OSED AT PRESENT. IT IS ALSO MENTIONED THAT BY LETTER DATED 20-01-2000, SHRI MAHENDRA H. SHAH INTIMATED TO THE DCIT(INV,), BHAVN AGAR WHO CONDUCTED THE SEARCH THAT HE RETRACTS THE STATEMENT S RECORDED DURING THE COURSE OF SEARCH AS THESE STATEMENTS WER E RECORDED AFTER MIDNIGHT AND WERE GIVEN UNDER PHYSICAL STRAIN. THE AO REJECTED THE RETRACTION AND STATED THAT SHRI MAHENDRA H. SHA H WAS ACTING AS A HAWALA AGENT PROVIDING FICTITIOUS ENTRIES OF LOAN / PURCHASES/SALES TO VARIOUS NEEDY PARTIES AGAINST CA SH RECEIVED FROM THEM ON THEIR BEHALF. HE HAD NO CAPACITY TO LEND MO NEY. THE AO AFTER DISCUSSING THE PROVISIONS OF SECTION 68 OF TH E IT. ACT AND RELYING ON VARIOUS CASE LAWS MADE ADDITION OF RS.40 LACS AND RS.4 LACS U/S 68 AS UNEXPLAINED LOAN FOR F.Y. 1998-99 AN D 1999-2000. 2.1.1 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE LD. CIT(A). LD. CIT(A) DELETED THIS ADDITION BY FO LLOWING THE TRIBUNAL DECISION RENDERED IN THE CASE OF RAJENDRA SHIP BREA KERS PVT. LTD. IN IT(SS)A NO.79/RJT/2004 DELIVERED BY AHMEDABAD BENCH OF THE TRIBUNAL AND IN THE CASE OF INTERNATIONAL STEEL CORPORATION VS DCIT IN IT(SS) A NO.111/RJT/2003 AND 119/RJT/2009 RESPECTIVELY. NOW , THE REVENUE IS IN APPEAL BEFORE US. 2.1.2 LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHERE AS LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). HE ALSO SUBMITT ED THAT THE RELEVANT TRIBUNAL DECISIONS FOLLOWED BY LD. CIT(A) ARE AVAIL ABLE IN THE PAPER BOOK ON PAGES 8-17 AND 18-25. 2.1.3 WE HAVE CONSIDERED RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE TRIBUNAL DECISIONS CITED BY THE LD. A.R. WE FIND T HAT IN THE PRESENT CASE, THE ADDITION WAS MADE BY THE A.O. ON THE BASIS OF T HE STATEMENT OF SHRI MAHENDRA H SHAH RECORDED ON 7.12.1999. IN THE CASE OF RAJENDRA SHIP BREAKING PVT. LTD. (SUPRA) ALSO, ADDITION WAS MADE BY THE A.O. ON THE I.T.A.NO. 268.269.270 /AHD/2010 4 BASIS OF THE SAME STATEMENT OF SHRI M H SHAH RECORD ED ON 07.12.1999. IN THAT CASE, THE TRIBUNAL DELETED THE ADDITION BY OBS ERVING THAT SHRI M H SHAH HAS NOT SPECIFICALLY STATED THE NAME OF THE AS SESSEE. HENCE, THE FACTS ARE IDENTICAL AND, THEREFORE, THIS DECISION I S SQUARELY APPLICABLE IN THE PRESENT CASE. LD. D.R. ALSO COULD NOT POINT O UT ANY DIFFERENCE IN FACTS AND HENCE, WE DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW IN THE PRESENT CASE. RESPECTFULLY FOLLOWING THESE TRIBUNA L DECISIONS, WE DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISS UE. GROUND NO.1 & 2 ARE REJECTED. 2.2 REGARDING GROUND NO.3, LD. D.R. SUPPORTED THE A SSESSMENT ORDER WHEREAS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT (A). WE FIND THAT LD. CIT(A) HAS DELETED THE ADDITION ON THIS BASIS T HAT ESTIMATION CAN NEVER BE SUBJECT MATTER OF ADDITION IN BLOCK ASSESS MENT. HE HAS FOLLOWED THE JUDGEMENT O HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF N.R. PAPER AND BOARD LTD. AND OTHERS VS DCIT AS REPORTE D IN 234 ITR 733. MOREOVER, SINCE THE ADDITION OF RS.44 LACS WAS DELE TED, THIS CONSEQUENTIAL ADDITION IN RESPECT OF COMMISSION FOR OBTAINING BOO K ENTRY IS NOT SUSTAINABLE AND, THEREFORE, ON THIS ISSUE ALSO, WE DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A). GROUNDS NO.3 & 4 ARE ALSO REJ ECTED. 2.3 IN THE RESULT, THIS APPEAL OF THE REVENUE IS DI SMISSED. 3. NOW, WE TAKE UP THE REVENUES REMAINING TWO APPE ALS. IT WAS AGREED BY BOTH THE SIDES THAT IF THE QUANTUM APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE THEN THESE TWO APPEALS OF THE REVENUE ARE LIABLE TO BE DISMISSED BECAUSE THE SAME ARE CONSEQUENTIAL. BECA USE THE TOTAL ADDITION MADE BY THE A.O. IS OF RS.44,13,200/- AND IF THE SA ME IS DELETED THEN THERE IS NO CASE FOR LEVY ON ACCOUNT OF SURCHARGE O R PENALTY. AS PER OUR DECISION WITH REGARD TO QUANTUM APPEAL OF THE REVEN UE AS PER PARA 2.3 I.T.A.NO. 268.269.270 /AHD/2010 5 ABOVE, WE HAVE DECIDED THAT BOTH THE ADDITIONS MADE BY THE A.O. ARE NOT SUSTAINABLE AND WE HAVE DISMISSED THE APPEAL OF THE REVENUE AND HENCE, THESE TWO APPEALS OF THE REVENUE ARE ALSO LIABLE TO BE DISMISSED BEING OF CONSEQUENTIAL NATURE. WE, THEREFORE, DISMISS THESE TWO APPEALS OF THE REVENUE ALSO. 4. IN THE RESULT, ALL THE THREE APPEALS OF THE REVE NUE ARE DISMISSED. 5. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 4/6 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 6/6 .OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.8/6 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 15/6 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.15/6 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 15/6 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .