Patil Anil Arvind, Pune V. Income-tax Officer,

MA 94/PUN/2014

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 3714 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 07-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Gift
• Section: 68; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , . . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . /MA NO. 94 /PN/ 20 1 4 ARISING OUT OF ITA NO. 2470 /PN/ 20 1 2 / ASSESSMENT YEAR : 200 7 - 0 8 PATIL ANIL ARVIND, PROP. SUNIL STAMPING & ASSEMBLIES, J - 244, K BLOCK, MIDC, BHOSA R I, PUNE - 411026 APPLICANT PAN: AODPP7533A VS. THE INCOME - TAX O FFICER, WARD 8(3) , PUNE RESPONDENT WARD 8(3) , PUNE RESPONDENT APPLICANT BY : SHRI KISHORE PHADKE RESPONDENT BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 1 1 .0 9 .2015 / DATE OF PRONOUNCEMENT: 16 . 1 0.2015 / ORDER PER S USHMA CHOWLA , JM : THE APPLICANT HAS FILED THE PRESENT MISCELLANEOUS APPLICATION AGAINST THE ORDER OF TRIBUNAL IN ITA NO.2470/PN/2012, DATED 21.03.2014 . 2. THE APPLICANT IS AGGRIEVED BY THE ORDER OF TRIBUNAL IN OBSERVING THAT THE CLAIM OF RELINQUISHMENT OF AMOUNT RECEIVABLE FROM THE ASSESSEE ON ACCOUNT OF MOU WAS NOT 2 M A NO. 94 /PN/20 1 4 ARISING O UT OF ITA NO. 2470 /PN/ 20 1 2 SUPPORTED BY NECESSARY ENTRIES IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FIRM. THE CASE OF THE APPLICANT BEFORE US WAS THAT THE ACCOUNTING ENTRIES FOR RELINQUISHMENT OF CLAIM OF MACHINERY VALU E WERE PASSED AND RECORDED ACCORDINGLY AND IN SPITE OF SUCH SPECIFIC ACCOUNTING ENTRIES PASSED BY BOTH THE PARTIES, THE TRIBUNAL HAD OBSERVED THAT THE CLAIM OF RELINQUISHMENT WAS NOT SUPPORTED BY NECESSARY ENTRIES IN THE BOOKS OF ACCOUNT. THE APPLICANT FU RTHER POINTED OUT THAT THE TRIBUNAL BY AN ERROR HAD CONSIDERED THE OUTSTANDING BALANCE IN THE SAID ACCOUNT, BUT HAD NOT CONSIDERED THE CORRESPONDING ENTRIES PASSED IN THE BOOKS OF ACCOUNT. OUR ATTENTION WAS DRAWN TO THE DOCUMENTS PLACED AT PAGES 11 AND 13 OF THE PAPER BOOK TO SHOW THAT NECESSARY ENTRIES WERE PASSED IN THE BOOKS OF ACCOUNT AND ALSO THE FATHER OF ASSESSEE HAD TRANSFERRED AMOUNT DUE TO SON TO HIS CAPITAL ACCOUNT. 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, P LACED RELIANCE ON THE ORDER OF TRIBUNAL. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT MISCELLANEOUS APPLICATION FILED BY THE APPLICANT IS IN RELATION TO AN ADDITION OF RS. 24,70,636/ - MADE UNDER SECTION 6 8 OF THE ACT. THE BREAK - UP OF SUM OF RS. 24,70,636/ - WAS AMOUNT OF RS.20,53,899/ - I.E. THE CONSIDERATION PAYABLE BY THE ASSESSEE FOR PURCHASE OF MACHINERY FROM M/S. SUNIL ENTERPRISES , PROPRIETARY CONCERN OF THE FATHER OF APPLICANT. AS PER M O U DATED 25.08. 2006 , THE SAID CONSIDERATION WAS RELINQUISHED BY THE FATHER IN FAVOUR OF THE SON. FURTHER, VAT COMPONENT PAYABLE BY THE ASSESSEE ON THE ABOVE TRANSFER OF MACHINERY WAS RS. 2,57,737/ - AND INTRODUCTION OF CASH IN CAPITAL ACCOUNT RS. 1,60,000/ - , TOTALLING RS.2 4,70,636/ - . THE A PPLICANT HAD CLAIMED TO HAVE PURCHASED THE MACHINERY FROM HIS FATHER FOR SUM OF RS.20,53,899/ - AND AS PER MOU DATED 25.08.2006, TWO PARTIES HAD AGREED THAT THE FATHER WOULD TREAT THE AMOUNT RECEIVABLE FROM HIS SON AS HIS CAPITAL CONTRIBUT ION TO THE SON, SINCE HE WAS RETIRING FROM THE BUSINESS. AS PER THE SAID MOU , THE FATHER HAD RELINQUISHED HIS RIGHTS 3 M A NO. 94 /PN/20 1 4 ARISING O UT OF ITA NO. 2470 /PN/ 20 1 2 ON THE S AME. IN OTHER WORDS, THE FATHER HAD GIFTED THE MACHINERY VALUED AT RS.20,53,899/ - TO HIS SON. HOWEVER, THE AMOUNT WAS CARRIED OU T BY WAY OF SALES INVOICE AND VAT WAS PAYABLE ON THE SAID TRANSACTION , WHICH WAS PAID BY THE APPLICANT TO HIS FATHER. THE TRIBUNAL WHILE DECIDING THE ISSUE VIDE CONTINUING PARA AT PAGE 3 HAD OBSERVED AS UNDER: - 3. ...... COMING TO THE MERIT OF THE ISSUE, IT WAS FOUND FROM THE COPY OF ACCOUNTS OF ASSESSEE, I.E. M/S. SUNIL STAMPING AND ASSEMBLIES IN THE BOOKS OF M/S. SUNIL ENTERPRISES FOR THE PERIOD 1 - 4 - 2006 TO 31 - 03 - 2007 THAT AMOUNT OF RS.2,57,621/ - WAS PAYABLE BY M/S. SUNIL ENTERPRISES TO ASSESSEE. IN THIS LEDGER ACCOUNT, THERE WAS A DEBIT OF RS.23,10,636/ - (RS.20,53,899/ - MACHINERY + RS.2,57,737/ - VAT) ON ACCOUNT OF TRANSFER OF MACHINERY. THEREFORE, FROM BALANCE SHEET AS ON 31 - 03 - 2007, IT WAS OBSERVED THAT AMOUNT OF RS.2,57,621/ - HAS BEEN SHOWN AS OUTSTAN DING AS ON 31 - 03 - 2007. THIS BEING SO, THE CLAIM OF RELINQUISHING OF THE AMOUNT RECEIVABLE FROM ASSESSEE AMOUNTING TO RS.20,53,899/ - ON ACCOUNT OF MOU WAS NOT SUPPORTED BY NECESSARY ENTRIES IN BOOKS OF ACCOUNTS OF THE ASSESSEE FIRM AS AMOUNT OF RS.2,57,621 / - WAS STILL SHOWN AS OUTSTANDING FROM ASSESSEE. THEREFORE, THE ASSESSEES CONTENTION THAT CAPITAL CONTRIBUTION OF RS.20,53,899/ - WAS ON ACCOUNT OF RELINQUISHMENT OF THE AMOUNT PAYABLE TO HIS FATHER ON ACCOUNT OF TRANSFER OF MACHINERY WAS NOT PROVED AND THEREFORE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER ON THE ISSUE. THIS REASONED FINDING OF CIT(A) NEED NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 5. WE HAVE PERUSED THE RELEVANT DOCUMENTS FILED BY THE APPLICANT DURING THE COURSE OF HEARING OF APPEAL AND WE FIND THAT AN ERROR HAS CREPT IN THE ORDER OF TRIBUNAL IN OBSERVING THAT THE CLAIM OF RELINQUISHMENT OF AMOUNT RECEIVABLE FROM THE APPLICANT BY THE FATHER OF APPLICANT WAS NOT SUPPORTED BY THE NECESSARY ENTRIES IN THE BOOKS OF ACCOUNT. THE APPLICANT AND HIS FATHER HAD A RUNNING ACCOUNT AND THERE WAS A BALANCE OF RS.2,57,621/ - SHOWN AS OUTSTANDING FROM THE APPLICANT. HOWEVER, THE PERUSAL OF CAPITAL ACCOUNT ITSELF REFLECTS TH AT THE CORRESPONDING ENTRIES OF RELINQUISHMENT OF RS. 20,53,899/ - HA D BEEN PASSED IN THE BOOKS OF ACCOUNT. THOUGH, THERE WAS AN OUTSTANDING BALANCE OF RS. 2,57,621/ - AT THE CLOSE OF THE YEAR, BUT THE RELINQUISHMENT OF THE AMOUNT PAYABLE TO THE FATHER BY THE APPLICANT ON ACCOUNT OF TRANSFER OF MACHINERY IS APPROVED BY WAY O F ACCOUNTING ENTRIES PASSED IN THE BOOKS OF ACCOUNT. THE REVENUE HAS FAILED TO PRODUCE ANY EVIDENCE TO THE CONTRARY . IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE RECALL OUR ORDER DATED 21.03.2014 AND HOLD THAT IN VIEW OF THE CORRESPONDIN G ENTRIES HAVING BEEN PASSED IN THE BOOKS OF ACCOUNT, NO ADDITION IS 4 M A NO. 94 /PN/20 1 4 ARISING O UT OF ITA NO. 2470 /PN/ 20 1 2 WARRANTED UNDER SECTION 68 OF THE ACT AT RS.20,53,899/ - . THE CONCLUSION IN PARA 3 OF THE ORDER THUS STANDS MODIFIED. 6 . IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE ASSESS EE IS ALLOWED AS INDICATED ABOVE . ORDER P RONOUNCED ON THIS THE 16 TH DAY OF OCTOBER , 201 5 . SD/ - SD/ - ( R.K. PANDA ) ( SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 16 TH OCTOBER , 2015 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APP LICANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - V , PUNE; 4. / THE CIT - V , PUNE ; 4. / THE CIT - V , PUNE ; 5. , , / DR B, ITAT, PUNE; 6. / GUARD FILE . / BY ORDER, // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE