Clio Infotech Ltd., Ahmedabad V. The ACIT.,Cent.Circle-2(3), Ahmedabad

ITSSA 329/AHD/2010

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 8710 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-03-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-01-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 20-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D S KALYAN
• Keywords: Opportunity of being heard; Onus to prove; Documents seized
• Section: 153A; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI G.C.GUPTA , VICE PRESIDENT AND SHRI T.R. MEENA, ACCOUNTANT MEMBER IT(SS)A NO. 329/AHD/2010 ASSESSMENT YEAR :2004-05 CLIO INFOTECH LTD. A-64, PARISEEMA COMPLEX, OPP. LAL BUNGALOW, C.G.ROAD, AHMEDABAD V/S . ACIT, CENTRAL CIRCLE 2(3), AHMEDABAD PAN NO. AA A C C1 8 09Q (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI S. N. SOPARKAR, SR. ADV. WITH SHRI P.M. MEHTA /BY RESPONDENT SHRI D. S. KALYAN, CIT. D.R. /DATE OF HEARING 24.01.2013 /DATE OF PRONOUNCEMENT 08.03.2013 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WHI CH HAS EMANATED FROM THE ORDER OF CIT(A)-III, AHMEDABAD, DATED 15.0 2.2010 FOR ASSESSMENT YEAR 2004-05. THE SOLE GROUND OF APPEAL IS AGAINST SUSTAINING THE DISALLOWANCE OF BUSINESS LOSS OF RS. 22,87,500/-. 2. THE A.O. OBSERVED THAT THE ASSESSEE HAD CLAIMED LOSS IN NAHAR AMRIT SHAKTI PROJECT OF RS. 22,87,500/-. THE ASSESSEE WA S GIVEN REASONABLE OPPORTUNITY OF BEING HEARD BY THE A.O., WHICH WAS R EPLIED BY IT ON 28.12.2007. IT WAS CLAIMED BEFORE THE A.O. THAT THE ASSESSEES MAIN BUSINESS WAS FINANCING AND INVESTING. THE APPELLANT HAD MADE IN VESTMENT IN SCHEME BY IT(SS)A NO. 329/AHD/2010 A.Y. 04-05 PAGE 2 PURCHASING SOME FLATS IN F.Y. 2000-01. DURING THIS FINANCIAL YEAR, THE ASSESSEE HAD SUBSTANTIAL FREE FUNDS AND WITH THE IN TENTION OF EFFECTIVE UTILIZATION OF THE SAME AND TO EARN DECENT RETURNS ON SUCH FUNDS, INVESTED IN THE FLATS OF SUCH SCHEME. THESE FLATS WERE SOLD IN F.Y. 03-04 HOLDING PERIOD OF THREE YEARS. IT WAS SUBMITTED BEFORE THE A.O., DURING THE F.Y. 03-04, THE PROPERTIES PRICES IN THE AREA OF THE SCHEME WENT D OWN AND THEREFORE, IT INCURRED THE LOSS IN THE SAID TRANSACTIONS. THE AS SESSEES REPLY WAS CONSIDERED BY THE A.O. BUT THE ASSESSEE DID NOT FUR NISH ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM OF LOSS IN CASE OF NAHAR AMRIT SHAKTI PROJECT. THE APPELLANT HAD NOT STATED THE NUMBERS OF FLAT PU RCHASED, THE COST AND DATE ON WHICH IT WAS PURCHASED, NOR THE PRICE AND DATE O N WHICH IT WAS SOLD. IN VIEW OF THE FACTS, THE LOSS OF RS.22,87,500/- IS HE REBY DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE BY THE A.O. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A), WHO HAD ALSO CONFIRMED TH E ADDITION BY OBSERVING AS UNDER: 7. A PLAIN READING OF THE AFORESAID SECTIONS SHOWS THAT SECTION 153A EMPOWERS THE A.O. TO ASSESS OR REASSESS THE TO TAL INCOME O SIX ASSESSMENT YEARS PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED. SIGNIF ICANTLY, THERE IS NO MENTION IN SECTION 153A REGARDING DETECTION OF UNDI SCLOSED INCOME ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH. THIS MEANS THAT THE A.O. HAS BEEN VESTED WITH PLENARY AN D OMNIBUS POWERS TO ASSESS OR REASSESS THE TOTAL INCOME FOR P RECEDING SIX ASSESSMENT YEARS EVEN THOUGH NOTHING WAS FOUND AGAI NST THE ASSESSEE DURING THE COURSE OF SEARCH. ON THE OTHER HAND THE A.O. IT(SS)A NO. 329/AHD/2010 A.Y. 04-05 PAGE 3 CAN INVOKE HIS POWERS U/S.153C ONLY WHEN HE IS SATI SFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE S OR BOOKS OF ACCOUNT OF DOCUMENTS SEIZED BELONG TO A PERSON OTHE R THAN THE PERSON REFERRED TO IN SECTION 153A. IF THE A.O. IS SO SATISFIED, THEN THE BOOKS OF ACCOUNT ETC. SHALL BE HANDED OVER TO T HE A.O. HAVING JURISDICTION OF SUCH OTHER PERSON AND ONLY THEREAFT ER THAT A.O. SHALL PROCEED AGAINST SUCH OTHER PERSON U/S. 153C. IT IS TO BE NOTED THAT WHILE SECTION 153A DOES NOT PRESCRIBE ANY PRECONDIT ION REGARDING SEIZURE OF ANY BOOKS OF ACCOUNT OR DOCUMENTS OR ASS ETS ETC., SECTION 153C BECOMES INOPERATIVE IN THE ABSENCE OF ANY SUCH SEIZURE. IF THE TWO SECTIONS NAMELY 153A AND 153C ARE READ IN J UXTAPOSITION, IT WOULD BECOME CLEAR THAT THE ASSESSES FALLING U/S.15 3A HAVE BEEN GROSSLY DISCRIMINATED AGAINST, VIS--VIS THE PERSON S WHO COME UNDER THE AMBIT OF SECTION 153C. WHEN THE INCOME TAX AUT HORITIES CANNOT TAKE ANY ACTION U/S. 153C IN THE ABSENCE OF ANY SEI ZED MATERIAL, IT IS BEYOND COMPREHENSION AS TO HOW SECTION 153A EMPOWER S THE INCOME TAX AUTHORITIES TO REOPEN SIX COMPLETED ASSE SSMENTS AND REASSESS THE INCOME EVEN THOUGH NOTHING HAS BEEN FO UND AGAINST THE CONCERNED ASSESSEE DURING THE COURSE OF SEARCH. IT IS, THEREFORE, SUBMITTED THAT PROVISIONS OF SECTION 153A ARE DISCR IMINATORY IN NATURE AND ACCORDINGLY THE PROVISIONS OF SECTION 15 3A ARE LIABLE TO BE STRUCK DOWN AS UNCONSTITUTIONAL. 4. NOW THE ASSESSEE IS BEFORE US. LD. COUNSEL FOR THE APPELLANT CONTENDED THAT THIS LOSS WAS INCURRED AGAINST SALE OF THE FLATS BEING BUSINESS LOSS. HE HAS DRAWN OUR ATTENTION ON PAGE NO. 20 OF THE PAPER BOOK WHICH SHOWS THAT THE APPELLANT BOOKED TEN FLATS. THE PAY MENTS WERE MADE FROM F.Y. 2000-01 TO F.Y. 01-02 AT RS. 1,92,85,000/- THR OUGH ACCOUNT PAYEE CHEQUES. THE COMPANY HAD INCURRED THE LOSS AT RS.2 2,87,500/- IN THE YEAR IT(SS)A NO. 329/AHD/2010 A.Y. 04-05 PAGE 4 UNDER CONSIDERATION ON SURRENDERING THE RIGHTS ON T HESE TEN FLATS AND IT WAS DUE TO MARKET PRICE HAS GONE DOWN IN THAT AREA. TH US, HE CLAIMED BUSINESS LOSS. LD. A.R. RELIED UPON FOLLOWING CASES: I. SUMATI DAYAL VS. CIT, 214 ITR 801 (SC) ON BURD EN OF PROOF IS ON ASSESSEE ABOUT AMOUNT CREDITED IN ACCOUNT AS INCOME . II. CIT VS. K. MAHIM UDMA, 242 ITR 133 (KERLA) ON BENAMI TRANSACTION AND BURDEN OF PROOF ON REVENUE. III. CIT VS. DAULAT RAM RAWALMULL, 87 ITR 349 (SC) ON APPARENT WAS NOT REAL. IV. CIT VS. NEW DELHI HOTELS LTD., 345 ITR 1(DELHI) ON AMOUNT PAID FOR PURCHASE OF PROPERTY AND NOT REPAID LOSS DEDUCTAB LE. 5. AT THE OUTSET, LD. CIT D.R. RELIED UPON THE ORDE R OF THE A.O. AND CIT(A) AND CLAIMED THAT NO EVIDENCE FOR PURCHASE OF FLATS HAVE BEEN FILED BY THE APPELLANT BEFORE ANY AUTHORITY, SUCH AS, AGREEMENT SALE, THE LOCATION, NAME AND ADDRESS OF THE PROJECT, NO CONFIRMATION FROM TH E NAHAR AMRIT SHAKTI PROJECT. FURTHER, CLOSING BALANCE OF RS.73,35,00/- HAS BEEN SHOWN AND WHICH WAS RECOVERED IN F.Y. 04-05 RELEVANT TO A.Y. 05-06. THUS, THERE WAS NO BASIS OF RECORDING LOSS OF RS.22,87,500/-. IN MARKET ALS O, THERE IS NO DECLINE IN REAL ESTATE INVESTMENT IN BOMBAY. THUS, HE REQUESTED TO CONFIRM THE ADDITION. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE APPELLANT HAD NOT PRODUCED ANY COPY OF AGREEMENT TO SALE ONLY HAD SHOWN PAYMENT AND BOOKED THE LOSS WITHOUT ANY B ASIS EVEN REMAINING PAYMENTS WERE RECEIVED IN THE SUBSEQUENT YEAR. THE RE IS NO CONFIRMATION FROM THE SELLER AND NO PARTICULARS, NAMES AND ADDRE SS OF THE PROJECT HAS BEEN GIVEN. WHAT WAS NECESSITY TO CANCEL THE TRANSACTIO N, IS NOT EVIDENCED BY THE IT(SS)A NO. 329/AHD/2010 A.Y. 04-05 PAGE 5 APPELLANT. THE CASE LAWS REFERRED BY THE LD. COUNS EL, ARE NOT SQUARELY APPLICABLE. THE ASSESSEE, IN FINANCE AS WELL AS IN VESTMENT, IT IS NOT CLEAR WHETHER MEMORANDUM ARTICLE OF THE COMPANY AUTHORIZE D TO INVEST THE EXCESS FOUND IN THE REAL ESTATE. THE ONUS IS ON THE ASSES SEE TO PROVE THE GENUINENESS OF THE TRANSACTION WITH EVIDENCE. HE H AD FILED SELF GENERATED EVIDENCE NOT THIRD PARTY EVIDENCE IN THIS CASE. TH EREFORE, WE CONFIRM THE ORDER OF THE CIT(A). 7. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. THIS ORDER PRONOUNCED IN OPEN COURT ON 08.03.2013 SD/- SD/- (G.C.GUPTA) (T.R. MEENA) VICE PRESIDENT ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;