Shri Gadgil P. Yashwant,, Sangli v. ITO (Central),, Kolhapur

ITA 358/PUN/2009 | 2005-2006
Pronouncement Date: 27-01-2011

Appeal Details

RSA Number 35824514 RSA 2009
Assessee PAN ABDPG6297K
Bench Pune
Appeal Number ITA 358/PUN/2009
Duration Of Justice 1 year(s) 10 month(s) 3 day(s)
Appellant Shri Gadgil P. Yashwant,, Sangli
Respondent ITO (Central),, Kolhapur
Appeal Type Income Tax Appeal
Pronouncement Date 27-01-2011
Appeal Filed By Assessee
Bench Allotted A
Tribunal Order Date 27-01-2011
Assessment Year 2005-2006
Appeal Filed On 24-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI SHAILENDRAKUMAR YADAV AND SHRI D. KARUNAKARA RAO ITA NO. 358/PN/09 (A.Y 2005-06) SHRI GADGIL PURUSHOTTAM YASHWANT 132 SOUTH SHIVAJINAGAR SANGLI PAN NO. ABDPG6297K .... APPELLANT VS. ITO CENTRAL KOLHAPUR . RESPONDENT ITA NO. 314/PN/09 (A.Y 2005-06) ITO CENTRAL KOLHAPUR .... APPELLANT VS. SHRI PURUSHOTTAM YASHWANT GADGIL 132 SOUTH SHIVAJINAGAR SANGLI PAN NO. ABDPG6297K . RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK DEPARTMENT BY : SHRI HARESHWAR SHARMA ORDER PER D KARUNAKARA RAO AM THESE ARE THE CROSS APPEALS ASSESSEE AS WELL AS REV ENUE ARE IN CROSS APPEALS AGAINST THE ORDER OF CIT(A) KOLHAPUR IDENTICALLY D ATED 19-11-2008 FOR THE ASSESSMENT YEAR 2005-06. APPEAL WISE ADJUDICATION IS TAKEN UP IN THE PRECEDING PARAGRAPHS. ITA NO. 358 & 314/PN/09 A.Y 2005-06 PAGE 2 OF 5 ITA NO. 358/PN/09 (ASSESSEES APPEAL) 2. THE GROUNDS RAISED IN THIS APPEAL ARE AS UNDER:- 1. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF INTEREST OF RS. 81 361/- FROM DR. JAMADA R WHEN THE SAME INTEREST AMOUNT IS ALREADY ADDED/ ASSESSED IN THE ASSESSMENT OF MR. PARAG Y. GADGIL AND ON THE FOOTIN G THAT THE APPELLANT HAD ADVANCED THE AMOUNT OF RS. 15 00 000/ - TO DR. JAMADAR IN THE ASSESSMENT YEAR 2000-01. 2. THE ADDITION ON ACCOUNT OF INTEREST OF RS. 81 3 61/- BE DELETED. 3. AT THE VERY OUTSET LD. COUNSEL FOR THE ASSESSEE ST ATED THAT THE ISSUE IN THE RELATES TO THE ADDITION OF RS 81 361 ON ACCOUNT OF I NTEREST INCOME. IN THIS REGARD HE MENTIONED THAT THE INTEREST ISSUE WAS DISCUSSED BY T HE CIT(A) IN PARA 4 OF THE HIS ORDER. IN THIS REGARD WE TOOK US THROUGH THE SAID PARA A ND EARMARKED THE AMOUNT OF RS 81 361/- AGAINST THE YEAR 2005-06. RELEVANT PARA 4 IS AS UNDER. 4. CERTAIN PAPERS CONTAINING PAGES 2 TO 6 WERE FO UND IN THE RESIDENCE OF THE APPELLANT IN THE COURSE OF SEARCH CONDUCTED U/S . 132 OF THE ACT WHICH CONTAINED NOTHING OF TRANSACTIONS WITH ONE DR. J. J AMADAR. THE NOTINGS SHOWED AMOUNTS GIVEN TO DR. JAMADAR AGGREGATING TO RS. 30 66 658/- DURING THE PERIOD FROM 5/2/2000 TO 30/10/2004. THE PAPERS ALSO CONTAINED AMOUNTS OF INTEREST DUE ON THE ABOVE LOANS WHICH WORKED OUT TO A RATE OF APPROXIMATELY 1.5% PER MONTH. THE TOTAL INTEREST AS NOTICED IN TH E SEIZED MATERIAL WAS AS UNDER: 2000-01 RS. 72 152/- 2001-02 RS. 56 033/- 2002-03 RS. 21 074/- 2003-04 RS. 1 70 875/- 2004-05 RS. 1 32 515/- 2005-06 RS. 81 361/- _____________ RS. 5 34 010/- IN THIS REGARD AND IN ORDER TO DEMONSTRATE THAT THE IS SUE UNDER CONSIDERATION IS COVERED BY THE ORDER OF THE TRIBUNAL LD COUNSEL FILED A COPY OF AN ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NO. 356 357 & 360-362/PN/09 FOR THE ASSESSMENT YEAR 2000-01 TO 2004-05 AND IT IS DATED 2 9-10-2010. THEN HE MENTIONED THAT VIDE PARA 7 OF THIS ORDER THE GROUNDS RAISED BY THE ASSESSEE RELATING TO THE INTEREST OF SUM OF RS. 81 361/- IS COVERED IN FAVOUR OF THE ASSESSEE. REVENUE HAS NOTHING TO SAY EXCEPT RELYING ON THE ORDERS OF THE A. O AND THE CIT(A). 4. WE HAVE PERUSED PARA 7 OF THE SAID ORDER OF THE T RIBUNAL WHICH READS AS UNDER:- 7. AS RIGHTLY STATED BY THE LD. COUNSEL THE PRESUM PTIONS DRAWN ON THE SEIZED PAPERS ARE REBUTTABLE AND IN OUR VIEW TH E ASSESSEE ITA NO. 358 & 314/PN/09 A.Y 2005-06 PAGE 3 OF 5 DISCHARGED THE BURDEN EXPLAINING THE TRANSACTIONS BONAFIDELY. IN VIEW OF THESE WE ARE OF THE OPINION THAT THERE IS NO NEED TO BRING TO TAX THE AMOUNT OF RS. 15 00 000/- ADVANCED BY SHRI PARAG Y. GADGIL TO DR. JAMADAR AGAIN IN THE HANDS OF THE ASSESSEE. THE AMO UNT OF RS. 15 00 000 AND CONSEQUENT INTEREST THERE ON BROUGHT TO TAX IN THE RESPECTIVE ASSESSMENT YEARS WAS HEREBY DELETED. THE ASSESSEE GROUNDS ARE ALLOWED. 5. AS SEEN FROM ABOVE INTEREST AMOUNTING TO RS. 81 3 61/- RELATABLE TO AMOUNTS ADVANCED BY SHRI PURUSHOTTAM Y. GADGIL TO DR. JAMADAR N EED NOT TO BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE. CONSIDERING THE ABOVE RATIO WE ARE OF THE OPINION THAT THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL HAV E TO BE ALLOWED IN HIS FAVOUR. ACCORDINGLY THE GROUNDS ARE ALLOWED. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 314/PN/09 (REVENUES APPEAL) 7. THE GROUNDS RAISED IN THIS APPEAL ARE AS UNDER:- 1. THE LD. CIT(APPEALS) KOLHAPUR ERRED IN DELETI NG ADDITION OF RS. 950 000 MADE ON ACCOUNT OF CASH LOAN EACH OF RS. 47 5 000 GIVEN TO PRATHAMESH SECURITIES PVT. LTD. AND SHRI MADHAV JOGLEKAR DIRECTOR OF PRATHAMESH SECURITIES PVT. LT D. OUT OF BOOKS AND INTEREST THEREON OF RS. 25 000/-. 2. THE ORDER OF THE CIT(A) KOLHAPUR BE VACATED AN D THAT OF THE ASSESSING OFFICER BE RESTORED. 8. IN THIS REGARD LD DR FOR THE REVENUE READ OUT THE FA CTS FROM THE PARA 13 ONWARDS OF THE IMPUGNED ORDER OF THE CIT(A) AND RELIED ON THE ORDER OF THE AO. ON THE OTHER HAND LD COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT(A) IN PARTICULAR PARA 17 AND 18 OF THE SAID ORDER. WE HEARD T HE PARTIES AND PERUSED SAID PARAGRAPHS FOR THE SAKE OF COMPLETENESS THE SAME ARE RE PRODUCED AS UNDER. 13. THERE IS ANOTHER ISSUE WHICH IS RAISED ONLY IN A.Y. 2005-06. THIS IS AGAINST THE ADDITION OF RS. 9.50 LACS IN THE HANDS OF THE APPELLANT IN A.Y 2005-06. 14. IT IS MENTIONED IN THE ASSESSMENT ORDER THAT D URING THE SEARCH TWO CHEQUES WERE FOUND IN THE POSSESSION OF THE APPELLA NT FOR RS. 4 75 000/- EACH. THE CHEQUES WERE ISSUED IN THE NAME OF THE APPELLAN T BY PRATHMESH SECURITIES P. LTD. AND SHRI MADHAV JOGLEKAR DIRECTOR OF PRATH MESH SECURITIES RESPECTIVELY. COPY OF MOU EXECUTED BETWEEN THE APPELLANT AND PRAT HMESH SECURITIES WAS ALSO FOUND. THE MOU MENTIONED THAT CHEQUES WERE ISS UED AS A COLLATERAL AGAINST EQUITY SHARES HANDED OVER TO PRATHMESH SECU RITIES ON A LOAN BASIS. ITA NO. 358 & 314/PN/09 A.Y 2005-06 PAGE 4 OF 5 15. THE A.O FOUND THAT THE VALUE OF SHARES GIVEN A S PER THE STOCK SUMMARY AS ON 31/3/2005 WAS RS. 2 58 567/- WHEREAS THE MOU VALUED THE SHARE AT RS. 4 75 000/- ON 28/2/2005. THERE WAS NO MOU FOUND IN RESPECT OF THE TRANSACTION WITH SHRI MADHAV JOGLEKAR. IT WAS CONCL UDED THAT APPELLANT HAD GIVEN CASH LOAN TO BOTH THE PARTIES AGAINST THE SEC URITY OF POST DATED CHEQUES. IN ANOTHER WORDS LOANS AMOUNTING TO RS. 9.50 LACS EACH WERE GIVEN IN CASH TO THE COMPANY AND SHRI JOGLEKAR. AN ADDITION WAS MADE OF RS. 9.50 LACS PLUS RS. 25000/- AS INTEREST. 16. THE APPELLANT SUBMITTED THAT THE LOAN OF SHARE S WAS MADE BY TRANSFER THROUGH THE DEMAT ACCOUNT. THE MOU SIGNED WITH PRAT HMESH SECURITIES WAS FOUND DURING THE SEARCH AND THE APPELLANT IN HIS ST ATEMENT U/S. 132(4) HAD EXPLAINED THE TRANSACTIONS. AT PARA-16 OF THE MOU I TSELF IT WAS MENTIONED THAT CHEQUE NO. 476867 FOR RS. 4 75 000/- WAS HANDED OVE R TO THE APPELLANT AND THAT IT WAS FOR THE AMOUNT EQUAL TO THE MARKET VAL UE OF THE SHARES OF 28/2/05. THE CHEQUE WOULD BE DEPOSITED BY THE PARTY ONLY IN CASE OF FAILURE BY THE OTHER PARTY TO RETURN THE SHARES AFTER A CERTAIN TIME PER IOD. IT IS FURTHER MENTIONED IN THE SAME PARA THAT THE DIRECTOR OF THE PARTY HAD AL SO ISSUED A CHEQUE OF RS. 4 75 000/- AS ADDITIONAL PERSONAL GUARANTEE TO THE APPELLANT. THERE WAS THEREFORE NO DISPUTE AS TO THE NATURE OF TRANSACTI ON AND THE CHEQUE ISSUED TO THE APPELLANT. IT WAS FURTHER SUBMITTED THAT THE A. O HAD TAKEN THE VALUE APPEARING THE DEMAT STATEMENT WHEREAS THE RELEVANT M ARKET VALUE ON 28/2/05 WAS RS. 4 75 000/- AS MENTIONED AT ANNEXURE-1 OF TH E MOU. THE TRANSACTION WAS EXPLAINED PROPERLY BUT STILL THE AO HAD MADE AD DITION ON THE BASIS OF SURMISE. 17. IT IS MENTIONED IN THE ASSESSMENT ORDER ITSELF THAT THE MOU SIGNED WITH PRATHMESH SECURITIES WAS FOUND AT THE TIME OF SEARC H. AT PARA 16 OF THE MOU IT IS CLEARLY MENTIONED THAT TWO CHEQUES OF RS. 4 7 5 000/- HAVE BEEN HANDED OVER TO THE APPELLANT AS COLLATERAL BY THE COMPANY AND ADDITIONAL PERSONAL GUARANTEE BY SHRI JOGLEKAR. IN FACT THE MOU HAS BE EN SIGNED ON BEHALF OF THE PRATHMESH SECURITIES BY MR. JOGLEKAR. THE CONNECTIO N BETWEEN PRATHMESH SECURITIES AND SH JOGLEKAR IS THEREFORE QUITE CLEAR . THE PRESENCE OF THE CHEQUE FOUND WITH THE APPELLANT IS EXPLAINED QUITE CLEARLY . THERE IS NO EVIDENCE TO CONCLUDE THAT CASH LOANS WERE GIVEN TO PRATHMESH SE CURITIES AND MADHAV JOGLEKAR. THERE CAN BE NO ADDITION ON THE BASIS OF SURMISE WHICH IS NOT BASED ON SUPPORTING DOCUMENTS OR EVIDENCE. THE AO WAS HIM SELF NOT SURE WHEN HE WRITES THAT THE POSSIBILITY THAT CASH LOANS WERE G IVEN APPEARS MORE LOGICAL. THERE IS NO PLACE IN ASSESSMENT OF INCOME AFTER SEA RCH AND SEIZURE OPERATION FOR WORDS LIKE POSSIBILITY AND LOGIC. AGAIN WHEN TH E ADDITION WAS MADE THE AO WRITES THAT IT APPEARS THAT ASSESSEE HAD ADVANCED RS. 9 50 000/- INCASH THE WORD APPEARS IS NOT CONCLUSIVE. IN OTHER WORDS THE AO HAS TACITLY INDICATED THAT THERE WAS NO EVID ENCE TO SUPPORT THE CONCLUSION. MOREOVER THE TRANSACTION HAS BEEN CLEA RLY EXPLAINED IN THE MOU FOUND DURING THE SEARCH. THE CHEQUES WHICH ARE MENT IONED IN THE MOU AS BEING HANDED OVER THE APPELLANT WERE FOUND IN HIS P OSSESSION DURING THE SEARCH. THERE IS NO NECESSITY MAKE A SURMISE THAT C ASH LOANS WERE GIVEN TO PRATHMESH SECURITIES IN LIEU OF WHICH CHEQUES WERE HANDED OVER. 18. ONE OF THE REASONS FOR CONCLUDING THAT CASH LO ANS HAD BEEN ADVANCED TO PRATHMESH SECURITIES IS THAT THE CHEQUES SUPPOSEDLY TAKEN AS COLLATERAL WERE FOR AN AMOUNT MUCH HIGHER THAN VALUE OF THE SHARES LOANED TO THAT COMPANY. THE APPELLANT HAS SUBMITTED COPIES OF THE DEMAT ACC OUNT IN RESPECT OF SHARES. THE BILLING STATEMENT FOR THE PERIOD FROM 1/2/2005 TO 28/2/2005 IN WHICH THE TRANSFER OF THE ABOVE SHARES IS SHOWN MENTIONED MAR KET VALUE OF EACH SHARE. ITA NO. 358 & 314/PN/09 A.Y 2005-06 PAGE 5 OF 5 BASED ON THE MARKET VALUE MENTIONED IN THE BILLING STATEMENT THE VALUE OF SHARES LOANED TO PRATHMESH SECURITIES WORKS OUT TO RS. 4 78 533/- (AS PER ANNEXURE). MOST OF THE TRANSACTIONS IN THE WITH THE APPELLANT WHICH SHOWS THAT THE CHEQUES HAVE NOT BEEN ENCASHED AND THE MONEY WI THDRAWN BY THE APPELLANT. NO INCOME HAS ARISEN TO THE APPELLANT. 20. THE ADDITION WHICH IS MADE PRIMARILY ON SURMIS E AND NOT ON EVIDENCE FOUND DURING THE SEARCH CANNOT BE SUSTAINED. THE AD DITION IS DELETED. THE ADDITION OF NOTIONAL INTEREST OF RS. 25 000/- ON TH E ABOVE LOAN IS ALSO DELETED FOR THE SAME REASON. 9. FROM THE ABOVE IT IS EVIDENT THAT THE AMOUNT OF R S 4.75 LAKHS RELATES TO THE VALUE OF THE SHARES AT THE RELEVANT POINT OF TIME. AO HAS ERRED IN IGNORING THE RELEVANCE OF THE TIME FACTOR COMPLETELY. CONSIDERING THE ABOVE WE ARE OF THE OPINION THAT THE ORDER OF THE CIT(A) IS PROPER AND DOES NOT CAL L FOR ANY INTERFERENCE. ACCORDINGLY GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 10. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS ALLOWED AND THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JANUARY 2011. SD/- SD/- (SHAILENDRAKUMAR YADAV) (D.KARUNAKAR A RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 27 TH JANUARY 2011 R COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. ITO (CENTRAL) KOLHAPUR 3. CIT(A) KOLHAPUR 4. CIT-I KOLHAPUR 5. D.R. ITAT A BENCH BY ORDER ASSTT. REGISTRAR I.T.A.T PUNE