Trishna Real estate Pvt. Ltd, Bhubaneswar v. ACIT, Bhubaneswar

ITA 212/CTK/2010 | 2005-2006
Pronouncement Date: 25-02-2011

Appeal Details

RSA Number 21222114 RSA 2010
Assessee PAN AABCT7854M
Bench Cuttack
Appeal Number ITA 212/CTK/2010
Duration Of Justice 8 month(s) 29 day(s)
Appellant Trishna Real estate Pvt. Ltd, Bhubaneswar
Respondent ACIT, Bhubaneswar
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Assessee
Bench Allotted DB
Date Of Final Hearing 22-02-2011
Next Hearing Date 22-02-2011
Assessment Year 2005-2006
Appeal Filed On 26-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK ( ) BEFORE . . HONBLE SHRI K.K.GUPTA ACCOUNTANT MEMBER. /AND . . . S HRI K.S.S.PRASAD RAO JUDICIAL MEMBER / I.T.A.NO. 212/CTK/2010 / ASSESSMENT YEAR 2005 - 06 TRISHNA REAL ESTATE PVT. LTD. N - 3/336 IRC VILLAGE BHUBANESWAR 751 015 PAAABCT 7854 M - - - VERSUS - ASST. COMMISSIONER OF INCOME - TAX CI RCLD 2(1) BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI A.K.ROY AR / FOR THE RESPONDENT: / SHRI S.K.DASH DR / ORDER . . SHRI K.K.GU PTA ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE AGITATES THE ACTION OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IN CONFIRMING THE ADDITION OF 30 LAKHS BEING THE SHARE APPLICATION MONEY BROUGHT TO TAX BY THE ASSESSING OFFICER AS AMOUNT OF INC OME UNDISCLOSED BY THE ASSESSEE UNDER THE PROVISIONS OF SECTION 68 OF THE I.T.ACT 1961. ANOTHER DISALLOWANCE ON ACCOUNT OF ESTIMATED EXPENSES NOT INCURRED FOR THE BUSINESS OF THE ASSESSE E BEING A REAL ESTATE DEVELOPER HAS BEEN AGITATED BY THE ASSESSEE AMOU NTING TO 10 70 827. 2. THE ASSESSEE BEING A REAL ESTATE DEVELOPER FILED RETURN OF 12 79 240 INCOME . A SURVEY WAS CONDUCTED ON THE ASSESSEE ON 22.11.2006 WHEN CERTAIN BOOKS OF ACCOUNT AND DOCUMENTS WERE IMPOUNDED AND WERE CROSS CHECKED WITH THE BOOKS OF ACCOUNT DU RING THE COURSE OF SCRUTINY ASSESSMENT. THE ASSESSING OFFICER VERIFIED TH AT SHARE APPLICATION MONEY APPLICANTS HAD NOT BEEN ESTABLISHED AS GENUINE CREDITWORTHY AND THEIR IDENTITY HAD NOT BEEN ESTABLISHED AS PER THE PROVISIONS OF SECTION 68. HE ADDED A SUM OF 30 LAKHS I.T.A.NO. 212/CTK/2010 2 TO THE INCOME OF THE ASSESSEE AND ALSO INTER ALIA DISALLOWED EXPENSES UNDER THE HEAD LABOUR CHARGES DIRECT EXPENSES PURCHASE OF BUILDING MATERIALS DONATION AND SUBSCRIPTION STAFF WELFARE RANGING FROM 5 TO 10% DISALLOWING 100% DONATIONS ALL TO TALING TO 10 70 827. THERE WERE OTHER DISALLOWANCES WHICH TOGETHER WERE APPEALED AGAINST BEFORE THE FIRST APPELLATE AUTHORITY WHO SUSTAINED THE ADDITIONS WITH RESPECT TO 30 LAKHS AND THE ESTIMAT ED DISALLOWANCE OF EXPENDITURES AS MENTIONED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE US HAS FURNISHED THE COPIES OF DOCUMENTS INDICATING THE IDENTITY GENUINENESS AND CREDITWORTHINESS OF THE SHARE APPLICANTS APART FROM RELYING ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT V. LOVELY EXPORTS P. LTD (216 CTR 195) . H E ALSO RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. STELLAR INVESTMENT LIMITED ( 192 ITR 287) WHICH HAS BEEN CONFIRMED BY THE HONBLE SUPREME COURT .FURTHER MORE HE RELIED ON THE FACTS OF THE ASSESSEES CASE INSOFAR AS THAT ALL THESE DOCUMENTS WERE NOT PRODUCED BEFORE THE AUTHORITIES BELOW WHICH MAY BE CONSIDERED ACCORDINGLY. ON THE ISSUE OF DISALLOWANCE OF EXPENSES CONFIRMED BY THE LEARNED CIT(A) HE CONTENDE D THAT THE LEARNED CIT(A) HAS U PHELD THE DISALLOWA NCE AS REASONABLE WHICH IS NOT THE FACTS OF THE ASSESSEES CASE AS IT BEING A PRIVATE LIMITED COMPANY THE ASSESSEE COULD NOT BE SAID TO HAVE INCURRED THESE EXPENSES ON PERSONAL COUNT WHICH ARE PRIMARILY TO BE HELD BY THE ASSESSING AUTHORITIES OF HAVING BEE N INCURRED FOR THE ASSESSEES BUSINESS. HE POINTED OUT THAT ADHOC DISALLOWANCE CANNOT BE MADE IN CASE OF NON - PERSONAL ENTITIES WHOSE ACCOUNTS ARE AUDITED AND ARE UNDER CONTROL OF MORE THAN ONE EMPLOYEE. HE SUBMITTED THAT THE AUTHORITIES BELOW FAILED TO BRI NG ON RECORD ANY PARTICULAR ITEM OF EXPENDITURE NOT RELATED TO THE BUSINESS BUT OTHERWISE CLAIMED IN THE PROFIT & LOSS ACCOUNT. I.T.A.NO. 212/CTK/2010 3 4. THE LEARNED DR OPPOSED THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE INDICATING THAT THE FURNISHING OF DOCUMENTS REL ATING TO ESTABLISHING THE IDENTITY CREDITWORTHINESS AND GENUINENESS WERE NOT SUBMITTED EITHER TO THE ASSESSING OFFICER OR TO THE LEARNED CIT(A) WAS THEREFORE RIGHTLY CONFIRMED IN THE HANDS OF THE ASSESSEE. THE CASE LAWS CITED NOW BY THE LEARNED COUNSEL CO ULD ONLY BE CONSIDERED AFTER THE ASSESSING OFFICER HA D VERIFIED THESE DOCUMENTS WHICH ENABLE THE ASSESSING OFFICER TO HOLD THAT THE SHARE HOLDERS ARE BOGUS TO BE TAXED IN THE HANDS OF THE ASSESSEE. HE HAD NO OBJECTION IF THE ISSUE OF DISALLOWANCE IS RESTOR ED TO THE FILE OF THE ASSESSING OFFICER ON THE BASIS OF ASSESSEE FURNISHING DETAILS OF ALL THE EXPENSES INCURRED FOR THE ASSESSEES BUSINESS LEAVING NO ROOM FOR AD HOC DISALLOWANCE AS CONSIDERED BY THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL CONTENTI ONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE DO FIND THAT THE ASSESSEE HAS BEEN ABLE TO PROCURE THE DETAILS OF SHARE APPLICANTS IN THE FORM OF THEM HAVING PAN ESTABLISHING THEIR IDENTITY CREDITWORTHI NESS AND GENUINITY OF THE TRANSACTIONS HAVE BEEN ESTABLISHED IN THE FORM OF APPLICANTS MAKING PAYMENTS IN CHEQUES BUT THE PAYMENTS RECEIVED IN CASH AS OTHERWISE WHICH BEEN CONSIDERED BY THE ASSESSING OFFICER ON VERIFICATION OF THE EXPENSES UNDER THE PROVIS IONS OF SECTION 40A(3).WE FIND FORCE IN THE CONTENTION OF THE LEARNED DR THAT THE APPLICABILITY OF CASE LAWS WILL BE ONLY ARISE ONLY AFTER THE ASSESSING OFFICER HAVING SATISFIED HIMSELF THAT THE SHARE APPLICANTS ARE NOT BOGUS WHICH OPPORTUNITY HAS TO BE G RANTED TO THE ASSESSEE TO EXPLAIN BEFORE THE ASSESSING OFFICER. THE ORDER OF THE LEARNED CIT(A) IS SET ASIDE ON BOTH THE ISSUES VIZ. ADDITION U/S.68 AND SUSTAINING THE DISALLOWANCE OF EXPENDITURE ON ESTIMATION AND THE ISSUES ARE RESTORED TO THE FILE OF TH E ASSESSING OFFICER TO GRANT A FAIR AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TO SUBSTANTIATE ITS I.T.A.NO. 212/CTK/2010 4 CLAIM AS RETURNED BY IT IN THE FIRST PLACE. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 25 TH FEBRUARY 2011 SD/ - SD/ - ( . . . ) ( K.S.S.PRASAD RAO) JUDICIAL MEMBER ( . . ) (K.K.GUPTA) ACCOUNTANT MEMBER. ( ) DAT E: 25 TH FEBRUARY 2011 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : TRISHNA REAL ESTATE PVT. LTD. N - 3/336 IRC VILL AGE BHUBANESWAR 751 015 2 / THE RESPONDENT: ASST. COMMISSIONER OF INCOME - TAX CIRCLD 2(1) BHUBANESWAR. 3 . / THE CIT 4 . ( )/ THE CIT(A) 5 . / DR CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY / BY ORDER [ ] SENIOR PRIVATE SECRETARY ( ) ( H.K.PADHEE ) SENIOR.PRIVATE SECRETARY.