New Tools Pvt. Ltd., V. ACIT, CC-4,

ITSSA 63/DEL/2005

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8251 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 26-05-2011
• Assessment Year: misc
• Appeal Filed On: 04-02-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H L DIHANA
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Search and seizure; Block assessment
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T(SS)A NO. 63/DEL/05 BLOCK PERIOD 1.4.90 TO 21.03.2001 M/S. MEW TOOLS PVT. LTD. FLAT NO. 103, POCKET A-1, SECTOR-3, ROHINI DELHI- 110 085. VS. ACIT, CENTRAL CIRCLE-14, NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ASHWANI TANEJA, ADVOCATE RESPONDENT BY: SHRI H.L. DIHANA, CIT (DR) ORDER PER RAJPAL YADAV, JM: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A) DATED 15.12.2004 PASSED IN THE BLOCK PERIOD STARTING FROM 1 ST APRIL 1990 AND ENDING ON 21 ST MARCH, 2001. THE FIRST GRIEVANCE OF THE ASSESSEE IS THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF ` 16 LACS. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE COMPANY AT THE RELEVANT TIME WAS ENGAGED IN THE BUSINESS OF MANUFA CTURING OF IT(SS)A 63/DEL/05 B.P.1.4.90 TO 21.3.01 2 AUTOMOBILE PARTS. IT WAS DOING JOB WORK FOR OTHER G ROUP COMPANIES NAMELY M/S. JAY YUHSHIN LTD. SHRI J.P. MINDA AND HI S TWO SONS NAMELY SHRI ANIL MINDA AND SHRI ASHWINI MINDA ARE THE CONT ROLLING PERSONS. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED U/S 132( 1) OF THE ACT ON THIS GROUP. A NOTICE U/S 158BC WAS ISSUED ON 6 TH MAY, 2002 AND RETURN FOR BLOCK PERIOD IN FORM NO. 2B WAS FILED ON 24.6. 2002, DECLARING UNDISCLOSED INCOME OF ` 26,054/-. THE AO HAD ISSUED NOTICES U/S 143(2) AND 142 OF THE INCOME TAX. ON SCRUTINY OF THE SEIZE D MATERIAL, IT REVEALED TO THE AO THAT M/S. CONSORTIUM VYAAPAAR PV T. LTD.(HEREINAFTER REFERRED AS CVL) IS AN INVESTMENT COMPANY, INDEPEND ENTLY LISTED IN CALCUTTA STOCK EXCHANGE. IT PURCHASED 25,000 SHARE S OF THE ASSESSEE COMPANY FROM THE OPEN MARKET AT MARKET RATE. THE AO WAS OF THE OPINION THAT ASSESSEE ALONG WITH MR. J.P. MINDA AND FAMILY MEMBERS WAS IN THE PROCESS OF ACQUIRING THE CONTROL OF M/S. CVL. THEY HAVE PURCHASED HE SHARES OF M/S. CVL. THE DETAILS OF SHA RES PURCHASED BY SHRI J P MINDA AND HIS FAMILY MEMBERS OF M/S CVL WE RE NOTICED BY THE LD. REVENUE AUTHORITIES BELOW. THE ULTIMATE CONCLUS ION OF THE AO IS THAT PURCHASE TRANSACTION OF SHARES BY M/S. CVL IS NOT GENUINE. IT IS THE ASSESSEES MONEY WHICH HAS BEEN ROUTED AS A SHARE A PPLICATION MONEY THROUGH M/S. CVL. IN THIS WAY, ADDITION OF ` 16,16,000/- WAS MADE. IT(SS)A 63/DEL/05 B.P.1.4.90 TO 21.3.01 3 2. APPEAL TO THE LD. CIT(A) DID NOT BRING ANY RELIE F TO THE ASSESSEE. 3. LD. COUNSEL FOR THE ASSESSEE, AT THE VERY OUTSET SUBMITTED THAT A SIMILAR ADDITION WAS MADE IN THE CASE OF M/S JPM AU TOMOBILE, ANU AUTO INDUSTRIES PVT. LTD. AND M/S. JAY YUSHIN LTD.. THE DISPUTE IN THESE CASES TRAVELED UP TO THE TRIBUNAL AND ADDITIONS WERE DELE TED. HE PLACED ON RECORD COPY OF THE TRIBUNALS ORDER IN THE CASE OF M/S. JPM AUTOMOBILE, M/S. JAY YUSHIN LTD. AND ANU AUTO INDUSTRIES LD. DR WAS UNABLE TO CONTROVERT THE CONTENTION OF LD. COUNSEL FOR THE AS SESSEE. 4. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT AN ADDITION OF ` 12,12,000/- WAS MADE IN THE HANDS OF M/S. JPM AUTOMOBILE UNDER THE SIMIL AR CIRCUMSTANCES. THIS ADDITION HAS BEEN DELETED BY THE TRIBUNAL IN I T(SS) NO. 60/D/2004. THE RELEVANT FINDING RECORDED BY THE TRIBUNAL INCLU DING THE FACTS READ AS UNDER :- 17. THE BRIEF FACTS OF THE CASE ARE THAT M/S. CONS ORTIUM VYAPAR LTD. (IN SHORT CVL) IS AN INVESTMENT COMPANY INDEPENDENT LY LISTED IN THE CALCUTTA STOCK EXCHANGE. IT IS ENGAGED IN INVESTMEN T ACTIVITY INCLUDING INVESTMENT IN THE SHARES. IT HAS PURCHASED 1,25,000 SHARES OF THE ASSESSSEES COMPANY FROM OPEN MARKET AT MARKET RATE AND TENDERED THE AMOUNT INVOLVED TO THE BROKER. THE ASSESSEE COM PANY IN TURN TRANSFERRED THESE SHARES IN FAVOUR OF M/S. CVL. THE ASSESSIGN OFFICER FOUND THAT MINDA FAMILY HAS PURCHASED ROUGHLY 1,54, 000/- SHARES OF M/S. CVL IN BETWEEN 16 TH OCTOBER TO 26 TH DECEMBER, 2000. THE ASSESSING OFFICER FORMED AN OPINION THAT ASSESSEE H AS ADOPTED A IT(SS)A 63/DEL/05 B.P.1.4.90 TO 21.3.01 4 MODUS OPERANDI WHEREIN THE MONEY OF MINDA FAMILY HA S BEEN ROUTED THROUGH THIS COMPANY BY WAY OF A SHARE CAPITAL MONE Y. HE DOUBTED THE INVESTMENT OF M/S. CVL IN THE ASSESSEE. THE CONTENT ION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT THE MINDA GROUP WAS IN THE PROCESS OF ACQUIRING SHARES OF M/S. CVL WITH THE ULTIMATE AIM OF TAKING IT OVER AND TOWARDS THIS PURCHASES OF SHARES WERE MADE. THE ASSESSING OFFICER DISBELIEVED THE CONTENTIONS OF TH E ASSESSEE. HE TREATED THE ALLEGED INVESTMENT IN SHARES BY M/S. CV L AS BOGUS ONE AND MADE THE ADDITION OF RS. 12,12,000/- I.E. RS. 1 2 LACS FOR SHARE CAPITAL AMOUNT AND RS. 12,000/- ON ACCOUNT OF COMMI SSION FOR ARRANGING SUCH TRANSACTION. HE SEPARATELY MADE THE ADDITION OF THIS AMOUNT IN THE HANDS OF SHRI JP MINDA AND HIS SONS A LSO. XXX 20. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS A ND GONE THROUGH THE RECORDS CAREFULLY. IN OUR OPINION, THE FACTS OF THE PRESENT TRANSACTION ARE ALSO SIMILAR TO THE FACTS OF OTHER TRANSACTIONS DISCUSSED BY US IN THE FOREGOING PARAGRAPHS. THE ORDERS OF THE ITAT PASSE D IN ANU INDUSTRIES AND MEW TOLLS ARE ALSO APPLICABLE ON THE SE FACTS. THE REASON ASSIGNED BY THE LEARNED CIT(APPEALS) IS THAT MESSAGES AND LETTERS SENT BY M/S. CVL ASKING FOR REIMBURSEMENT A ND ADMINISTRATIVE AND MAINTENANCE EXPENSES INCURRED BY M/S. CVL SUGGE STS THAT COMPANY HAS ALREADY BEEN TAKEN OVER BY MINDA GROUP. IN OUR OPINION, THIS CIRCUMSTANCE CANNOT GOAD ANY AUTHORITY TO SAY THAT ASSESSEE COMPANY HAD GIVEN MONEY TO M/S. CVL FOR MAKING INVE STMENT. THE ASSESSING OFFICER HIMSELF OBSERVED THAT THE MONEY M IGHT BE BELONGED TO JP MINA AND SONS AND HE HAS TAXED THAT AMOUNT IN THEIR HANDS ALSO. HE NOWHERE RECORDED A FINDING THAT THIS IS THE ASSE SSEES MONEY. THE IDENTITY OF M/S. CVL HAS NOT BEEN DOUBTED. THE ONLY CIRCUMSTANCE POINTED OUT IS THAT ITS AFFAIRS MIGHT BE CONTROLLED BY MINDA GROUP. THUS, THE YARDSTICK ADOPTED FOR UPHOLDING THE DELETION OF OTHER SHARES APPLICATION MONEYS ON ADDITIONS ARE SQUARELY APPLIC ATION ON THIS TRANSACTION ALSO. WE, THEREFORE, ALLOW THIS GROUND OF APPEAL AND DELETE THE ADDITION OF RS. 12 LACS CONFIRMED BY THE CIT(AP PEALS) ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED FROM M/S. CVL. 5. WE FIND THAT THERE IS NO DISPARITY ON FACTS. THE AO HAS MADE THE ADDITION BY HARBORING THE BELIEF THAT M/S. CVL IS T O BE TAKEN OVER BY THE ASSESSEE OR THE FAMILY MEMBERS OF SHRI J.P. MINDA. THEY HAVE PURCHASED THE SHARES OF M/S. CVL. THE AO TOOK THIS STEP AS IF MONEY IT(SS)A 63/DEL/05 B.P.1.4.90 TO 21.3.01 5 WAS GIVEN BY THE ASSESSEE TO M/S CVL FOR MAKING INV ESTMENT. IF CERTAIN INDIVIDUALS HAVE PURCHASED THE SHARES OF CVL AND CV L HAS SOURCE OF MONEY FROM SALE OF ITS SHARES FOR MAKING INVESTMENT IN THE PURCHASE OF ASSESSEES SHARE THEN HOW THAT WOULD BECOME UNEXPLA INED MONEY OF THE ASSESSEE COMPANY. RESPECTFULLY FOLLOWING OUR OR DER IN THE CASE OF JP AUTOMOBILE AND ANU INDUSTRIES, THIS ADDITION IS NOT SUSTAINABLE. THIS GROUND OF APPEAL IS ALLOWED AND ADDITION OF ` 16 LAC IS DELETED. 6. IN GROUND NO. 2 , ASSESSEE IS IMPUGNING CONFIRMATION OF ADDITION AT ` 4,000/-. LD. COUNSEL FOR THE ASSESSEE DID NOT PRES S THIS GROUND OF APPEAL HENCE IT IS REJECTED. GROUND NO. 3 7. IN THIS GROUND OF APPEAL, ASSESSEE IS IMPUGNING THE ADDITION OF ` 3,50,000/-. THE BRIEF FACTS OF THE CASE ARE THAT AO HAS NOTICED THE FOLLOWING LOANS FROM THE BALANCE SHEET. 1. CONSORTIUM VAYAPAAR LTD. 11,00,000 2. PAWAN KUMAR & SONS 2,50,000 3. MS. RAJ BALA 1,00,000 ___________ 14,50,000 IT(SS)A 63/DEL/05 B.P.1.4.90 TO 21.3.01 6 8. ACCORDING TO THE AO, ASSESSEE DID NOT FILE CONFI RMATION AND OTHER DETAILS. HE TREATED THE LOAN AS UNEXPLAINED AND MAD E THE ADDITION OF ` 14,50,000/- ON APPEAL, LD. CIT(A) DELETED THE ADDIT ION OF ` 11 LACS ON THE GROUND THAT LOAN FROM M/S. CVL HAS ALREADY BEEN DISCLOSED BY THE ASSESSEE. IT WAS RECEIVED THROUGH ACCOUNT PAYEE CHE QUE. IT IS DULY ACCOUNTED IN THE BOOKS OF ACCOUNTS. HENCE, THIS AMO UNT CANNOT BE CONSIDERED AS UNDISCLOSED INCOME FOR THE BLOCK PERI OD WITHIN THE MEANING OF SECTION 158B(B). LD. CIT(A) HAS FAILED T O RECORD ANY FINDING WITH RESPECT TO OTHER TWO AMOUNTS, WHETHER THESE WE RE TAKEN THROUGH ACCOUNT PAYEE CHEQUE OR NOT?. THESE WERE FORMING PA RT OF REGULAR BOOKS OF ACCOUNTS OR NOT, SAME YARDSTICK WOULD BE A PPLICABLE OR NOT. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT LD. CIT(A) HAS NOT DECIDED THE ISSUE, THEREFORE, MATTER BE REMITTED BACK TO THE FI LE OF LD. CIT(A). LD. DR ON THE OTHER HAND SUBMITTED THAT ASSESSEE FAILED TO GIVE ANY EXPLANATION ABOUT LOANS AVAILABLE IN THE BOOKS. HENCE, AO HAS R IGHTLY MADE THE ADDITION. 9. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES, WE ARE OF THE VIEW THAT LD. AO HAS TO FIRST DECIDE WHETHER IT IS AN UNDISCLOSED INCOME FOR THE PURPOSE OF THE BLOCK ASSESSMENT, BECAUSE HE IS NOT RELYING UPON ANY SEIZED MATERIAL RATHER HE IS REFERRING TO BALAN CE SHEET FILED BY THE ASSESSEE. LD. CIT(A) HAS NOT CONSIDERED THESE TWO A MOUNTS. THE IT(SS)A 63/DEL/05 B.P.1.4.90 TO 21.3.01 7 EXPLANATION OF THE ASSESSEE FOR THE PURPOSE OF SECT ION 68 WOULD BE RELEVANT ONLY, IF IT IS ESTABLISHED THAT IT IS UNDI SCLOSED INCOME AND TAXABLE IN THE BLOCK ASSESSMENT. IN VIEW OF THE ABOVE DISCU SSION, WE SET ASIDE THIS ISSUE TO THE FILE OF LD. CIT(A) FOR READJUDICA TION. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.6.2011. SD/- SD/- [K.G. BANSAL] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17.6.2011 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT