Swift Response Private Limited, Mumbai v. ACIT, CHENNAI

IN THE INCOMETAX APPELLATE TRIBUNAL: B - BENCH:CHEN NAI (BEFORE SHRI ABRAHAM P. GEORGE. ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN JUDICIAL MEM BER) ITA NO. 2089/ MDS/10 ASST. YEAR 2003-04 M/S SWIFT RESPONSE P. LTD. ESSAR HOUSE 11 KASHAVARAO KHADYA MARG MAHALAXMI MUMBAI 400034 PAN AAECS 7010D VS. THE ACIT CO. CIR.VI(4) CHENNAI (APPELLANT) (RESPONDENT) APPELLANT BY RESPONDENT BY: SHRI. V.SRINIVASAN SHRI P.B. SEKARAN CIT(DR) ORDER PER SHRI ABRAHAM P.GEORGE A.M: IN THIS APPEAL BY THE ASSESSEE ITS GRIEVANCE IS T HAT THE CIT(A) DISMISSED THE APPEAL IGNORING VARIOUS EVIDENCES PRO DUCED BY IT TO PROVE THE RECEIPT OF SHARE APPLICATION MONEY AND LOAN FR OM ONE SRI V.NAGARJUN WHICH AMOUNTS WERE CONSIDERED BY THE AO AS UNEXPLAI NED CREDITS IN THE BOOKS OF THE ASSESSEE. 2. SHORT FACTS APROPOS ARE THAT ASSESSEE ENGAGED I N SOFTWARE SERVICES HAD FILED ITS RETURN DECLARING A LOSS OF ` 1 24 78 345/- FOR THE IMPUGNED ASSESSMENT YEAR. DURING THE COURSE OF ASSE SSMENT IT WAS NOTED ITA NO. 2089/MDS /10 2 BY THE AO THAT ASSESSEE HAD SHOWN RECEIPT OF SHARE APPLICATION MONEY OF ` 10 LAKHS AND LOAN OF ` 1 14 00 000/-. DETAILS WERE SOUGHT FROM THE ASSESSEE. NEVERTHELESS IT SEEMS ASSESSEE FAILED TO FILE SUCH DETAILS BEFORE THE AO. THOUGH ASSESSEE SOUGHT TIME TILL 01- 02-2006 HE FAILED TO GIVE THE REQUIRED DETAILS REGARDING THE SOURCE OF C REDIT EVEN UP TO THE DATE OF ASSESSMENT VIZ. 01-03-2006.AO THEREFORE CONSIDER ED THE SHARE APPLICATION MONEY OF ` 10 LAKHS AND LOAN OF ` 1.14 CRORES AS UNEXPLAINED CREDIT AND MADE ADDITION UNDER SEC.68 OF THE INCOME -TAX ACT 1961 (THE ACT FOR SHORT). 3. IN ITS APPEAL BEFORE THE CIT(A) SUBMISSION OF TH E ASSESSEE WAS THAT BOTH THESE AMOUNTS WERE RECEIVED FROM ONE SRI V.NA GARJUN. ASSESSEE ALSO FILED A COPY OF THE RETURN OF SHRI V.NAGARJUN ALONGWITH HIS PERMANENT ACCOUNT NUMBER AND COPIES OF HIS BANK ACCOUNT WITH M/S CANARA BANK FOR PROVING THE CREDIT. CIT(A) ADMITTED SUCH EVIDEN CE BUT WAS OF THE OPINION THAT THE GROSS TOTAL INCOME SHOWN BY SRI V. NAGARJUN WAS ONLY ` .1 01 122/- AND TAXABLE INCOME ONLY ` 89 112/-. ACCORDING TO HIM IT WAS NOT ACCEPTABLE THAT SUCH A PERSON COULD HAVE PROVID ED A LOAN OF ` 1.14 CRORES AND SHARE APPLICATION MONEY OF ` 10 LAKHS TO THE ASSESSEE. HE THEREFORE RELYING ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. DURGA PRASAD MORE (82 ITR 540) CONFIRMED THE A CTION OF THE AO. ITA NO. 2089/MDS /10 3 4. NOW BEFORE US LD. AR SUBMITTED THAT BUT FOR THE CONFIRMATION LETTER ALL DETAILS WERE FILED BY ASSESSEE BEFORE THE AO. A CCORDING TO THE LD. AR IT WAS MENTIONED BY THE ASSESSEE BEFORE THE AO THAT SR I V.NAGARJUN ALIAS ARJUN VALLURIPALLI WAS OUT OF INDIA AND IT WAS FO R THIS REASON CONFIRMATION LETTER COULD NOT BE FILED BY IT. AS PER LD. AR SUC H CONFIRMATION WAS FILED BEFORE THE CIT(A) ALONGWITH BANK PASS BOOK OF THE S AID SRI V.NAGARJUN WHICH CLEARLY SHOWED WITHDRAWAL AND TRANSFER OF FUN D FOR SHARE APPLICATION MONEY AND LOAN. TAKING US THROUGH THE COPY OF THE R ETURN OF SRI V.NAGARJUN LD. COUNSEL POINTED OUT THAT THE SAID P ERSON HAD RECEIVED SALE CONSIDERATION OF ` 75 LAKHS ON SALE OF A PLOT OF LAND OWNED BY HIM WH ICH AFTER DEDUCTION OF INDEXED COST OF ACQUISITION RESU LTED IN A CAPITAL LOSS. HENCE IT WAS ARGUED THAT THE SAID PERSON HAD SUFFI CIENT FUNDS FOR GIVING THE LOAN TO THE ASSESSEE AS ALSO IN MAKING THE SHAR E APPLICATION. 5. PER CONTRA LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE PERUSED THE ORDERS AND HEARD BOTH THE PA RTIES. THERE IS NO DISPUTE THAT ASSESSEE WAS UNABLE TO PLACE ANY EVIDE NCE BEFORE AO FOR PROVING THAT CREDIT OF SHARE APPLICATION MONEY ` 10 LAKHS AND LOAN OF ` 1.14 CRORES. BUT NEVERTHELESS ASSESSEE HAD PLACED BEFOR E THE CIT(A) CONFIRMATION FROM ONE SRI V. NAGARJUN FOR BOTH THES E AMOUNTS. UNDISPUTEDLY ASSESSEE HAD ALSO PLACED BEFORE THE C IT(A) COPY OF THE ITA NO. 2089/MDS /10 4 RETURN OF SRI V.NAGARJUN AS ALSO HIS PERMANENT ACCO UNT NUMBER ALONG WITH HIS BANK STATEMENT. CIT(A) SUMMARILY REJECTED THESE EVIDENCE FOR A REASON THAT TOTAL INCOME RETURNED BY THE SAID PERSO N WAS ONLY ` 89 120/-. NOW IF WE TAKE A LOOK AT THE COMPUTATION STATEMENT OF SRI V.NAGARJUN HE HAD RENT RECEIPT OF ` 21 09 425/- AND HAD ALSO RECEIVED SALE CONSIDERATIO N OF ` 75 LAKHS DURING THE RELEVANT PREVIOUS YEAR. NO DOU BT AFTER CLAIMING VARIOUS DEDUCTION THEREFROM HE HAD ONLY RETURNED A TOTAL INCOME OF ` 89 120/-. IN OUR OPINION LD. CIT(A) FELL IN ERROR W HEN HE WENT BY THE TOTAL INCOME ALONE WITHOUT CONSIDERING THE COMPUTATION OF SHRI V.NAGARJUN AS A WHOLE. HE HAD SUBSTANTIAL RECEIPT FROM SALE OF LAND AS WELL AS RENTALS. ASSESSEE HAD ALL ALONG STATED THAT THE SAID PERSON WAS ABROAD AND IT WAS ON ACCOUNT OF THIS REASON THAT HE WAS UNABLE TO PRO DUCE NECESSARY RECORD BEFORE THE AO. WE ARE OF THE OPINION THAT A PROPER APPRECIATION OF THE EVIDENCE FURNISHED BY ASSESSEE HAD NOT BEEN DONE BY THE CIT(A) AND THESE EVIDENCES WERE NEVER BEFORE THE AO. THEREFORE IN THE INTEREST OF JUSTICE WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND REMIT THE ISSUE BACK TO THE FILE OF THE AO FOR CONSIDERATION AFRESH . AO SHALL CONSIDER THE EVIDENCE PLACED BY THE ASSESSEE BEFORE THE CIT(A) A S ALSO ANY OTHER EVIDENCE PRODUCED BY ASSESSEE AND DECIDE ON THE GE NUINENESS OF THE CLAIM OF THE ASSESSEE REGARDING THE LOAN AS WELL AS SHARE APPLICATION MONEY RECEIVED FROM SHRI V.NAGARJUN. WITH THE ABOVE DIRECTION WE ALLOW THE APPEAL OF THE ASSESSEE. ITA NO. 2089/MDS /10 5 7. TO SUMMARISE THE RESULT APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 01-02-2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI: 2ND FEBRUARY 2011. NBR CC: ASSESSEE/ ASSESSING OFFICER/ CIT(A)/ CIT/ D .R/ GUARD FILE.