ITO 21(1)(2), MUMBAI v. KABIR M. LUTHRIA, MUMBAI

ITA 5741/MUM/2009 | 2005-2006
Pronouncement Date: 21-01-2011 | Result: Allowed

Appeal Details

RSA Number 574119914 RSA 2009
Assessee PAN AANPL3769J
Bench Mumbai
Appeal Number ITA 5741/MUM/2009
Duration Of Justice 1 year(s) 2 month(s) 23 day(s)
Appellant ITO 21(1)(2), MUMBAI
Respondent KABIR M. LUTHRIA, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted D
Tribunal Order Date 21-01-2011
Date Of Final Hearing 01-11-2010
Next Hearing Date 01-11-2010
Assessment Year 2005-2006
Appeal Filed On 28-10-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI BEFORE SHRI N. V. VASUDEVAN J.M. AND SHRI T.R. SOO D A.M. I.T.A. NO.5741/MUM/2009 ASSESSMENT YEAR: 2005-06 INCOME TAX OFFICER 21 (1)(2) ROOM NO.604 6 TH FLOOR PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX BANDRA MUMBAI MR. KABIR M. LUTHRIA LUTHRIA HOUSE A.D. ROAD MUMBAI-400 049 PAN NO : AANPL3769J (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI DR.B. SENTHIL KUMAR RESPONDENT BY : SHRI K. GOPAL & SHRI SATENDRA PANDEY ORDER PER N. V. VASUDEVAN (JM) : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGA INST THE ORDER DATED 31.08.2009 OF COMMISSIONER OF INCOME TAX (APPEALS) - XXI MUMBAI RELATING TO THE ASSESSMENT YEAR 2005-06. THE GROUNDS APPEAL OF THE REVENUE READS AS FOLLOWS :- 1. (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LEARNED CIT(A) ERRED IN NOT THOROUGHLY EXA MINING THE CLAIM OF THE ASSESSEE AS REGARDS INVESTMENT IN CAPI TAL GAIN SCHEME. (II) IN DOING SO THE CIT(A) HAS IGNORED THE FOLLO WING MENTIONED BY THE AO IN THE REMAND REPORTS. (III) THE ASSESSEES CLAIM OF INVESTING THE AMOUNT OF CAPITAL GAINS IN CAPITAL GAINS INVESTMENT SCHEME AS PER SEC .54F OF THE 2 I.T. ACT IS BEYOND TIME AND HENCE ASSESSEE IS NOT E LIGIBLE FOR THE SAID DEDUCTION. (IV) THE LEARNED CIT(A) SHOULD HAVE PROPERLY EXAMI NED THE CLAIM OF THE ASSESSEE AS REGARDS INVESTMENT IN CAPI TAL GAINS SCHEME OR SHOULD HAVE DIRECTED THE A.O. TO VERITY T HE COMPUTATION OF CAPITAL GAIN OF THE ASSESSEE AS THE SOURCE OF IN VESTMENT ORIGINALLY ASSESSED AS UNEXPLAINED INCOME HAS BEEN EXPLAINED. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSIN G OFFICER RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR TO ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. THE ASSESSEE IS AN INDIVIDUAL. FOR ASSESSMENT YEAR 2005-06 HE FILED A RETURN OF INCOME DECLARING INCOME OF RS.1 8 8 800/-. THERE WAS NO PROPER COMPLIANCES BY THE ASSESSEE BEFORE THE AO AND THER EFORE THE AO PROCEED TO FRAME THE ASSESSMENT U/S.144 OF THE ACT NAMELY TO B E BEST OF HIS JUDGEMENT. THE AO NOTICED FROM THE INFORMATION THAT PERCOLATED THROUGH ANNUAL INFORMATION RETURN FILLED BY THE FINANCIAL INSTITUT ION AND BANKING COMPANIES THAT THE ASSESSEE HAS MADE INVESTMENT TO THE TUNE OF RS. 2 30 97 543/- IN HDFC MUTUAL FUNDS ON 15.03.2005. SINCE NO EVIDENCE IN RE SPECT OF SOURCE OF SUCH INVESTMENT WAS FILED THE AO HELD THAT THIS INVESTM ENT MADE BY THE ASSESSEE WAS NOT PROPERLY EXPLAINED AND HE THEREFORE ADDED THE SAID SUM AS UNEXPLAINED INVESTMENT U/S.69 OF THE ACT. 3. BEFORE THE LEARNED CIT (APPEALS) THE ASSESSEE S UBMITTED THAT HE HELD SHARES OF THE COMPANY BY NAME M/S. BAWBEE INVE STMENTS AND TRADING COMPANY PVT (BIT). BIT IN TURN HELD SHARES OF ELEL HOTELS AND INVESTMENTS LTD. (ELEL). THE ASSESSEE TOGETHER WITH THE OTHER S HAREHOLDERS OF BIT AND ELEL SOLD THEIR SHARE HOLDING TO THIRD PARTIES. IN RESPE CT OF SUCH SALE THE ASSESSEES RECEIVED A SUM OF RS.2 30 97 543/-. A COPY OF THE A GREEMENT FOR SALE OF SHARES 3 DATED 04.03.2005 WAS FILED BEFORE THE LEARNED CIT ( APPEALS). THIS SUM WAS DEPOSITED BY THE ASSESSEE IN HIS BANK ACCOUNT OF HD FC BANK ON 10.03.2006. ON 14.03.2005 THE ASSESSEE HAD UTILISED THESE FUNDS FO R PURCHASE OF HDFC MUTUAL FUNDS. THE ASSESSEE THUS EXPLAINED THE SOURCE OF PU RCHASE OF UNITS OF HDFC MUTUAL FUNDS. 4. SINCE THE ADDITIONAL EVIDENCE WAS FILED THE LEA RNED CIT (APPEALS) CALLED FOR REMAND REPORT FROM THE AO. THE OBJECTION OF THE AO WAS THAT THE ASSESSEE COULD NOT ESTABLISH THE SOURCE OF FUNDS FO R MAKING INVESTMENT IN THE SHARES OF INVESTMENT ON BIT. THE ASSESSEE IN THE RE JOINDER TO THE REMAND REPORT OF THE AO SUBMITTED BEFORE THE LEARNED CIT (APPEALS ) THAT THE INVESTMENT IN THE SHARES OF BIT WAS MADE BY THE ASSESSEE WAY BACK IN 1979. THE ASSESSEE ALSO FURNISHED A COPY OF THE SHARE CERTIFICATE OF BIT WH ICH SHOW THAT THE ASSESSEE HELD SHARES OF BIT SINCE 1979. ON A CONSIDERATION O F THE ABOVE THE LEARNED CIT (APPEALS) HELD AS FOLLOWS:- 15. AFTER CAREFUL CONSIDERATION OF THE ISSUE RAISE D IN THE ASSESSMENT ORDER AND SUBSEQUENTLY IN THE REMAND REP ORT AND THE LD. A. RS SUBMISSIONS IN THIS REGARD I AM OF THE CONSIDERED OPINION THAT THE APPELLANTS INVESTMENT IN HDFC FUN D IS CLEARLY RELATABLE TO THE CONSIDERATION RECEIVED BY THE APPE LLANT BY SALE OF 3750 SHARES OF M/S. BOBBY INVESTMENT & TRADING CO. PVT. LTD. THE SAID SHARES ARE BEING HELD BY THE APPELLANT SINCE A LONG TIME AND NO MATERIAL HAS BEEN BROUGHT ON RECORD DURING THE A SSESSMENT PROCEEDINGS OR THE REMAND PROCEEDINGS TO DISPROVE T HIS BASIC FACT. UNDER THE CIRCUMSTANCES THE TREATMENT OF THE INVES TMENT IN HDFC FUND TO THE EXTEND OF RS.2 30 97 563/- AS UNEXPLAIN ED INVESTMENTS U/S.69 CANNOT BE UPHELD. THE A.O. IS DIRECTED TO DE LETE THE SAID ADDITION. THIS GROUND OF APPEAL IS ACCORDINGLY ALL OWED. 5. AGGRIEVED BY THE ORDER OF THE LEARNED CIT (APPE ALS) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AND HAS RAISED THE FO LLOWING GROUNDS OF APPEAL:- 4 1. THE LEARNED ASSESSING OFFICER (A.O.) HAS ERRED IN PASSING ORDER U/S.143 (3) R.W.S. 144 OF THE I.T. ACT WITHOU T GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT AND WITHOUT CONSIDERIN G THE FACTS OF THE CASES & DETAILS FILED BY THE ASSESSEE THROUGH H IS AUTHORISED REPRESENTATIVE. 2. THE LEARNED A.O. HAS ERRED IN DISALLOWING EXPENS ES DEBITED AGAINST TRUCK HIRE CHARGES AT RS.71 077/- BEING 15% OF THE AGGREGATE EXPENSES OF RS.4 73 848/-. THE LEARNED A. O. HAS DISALLOWED 15% OF THE DEPRECIATION CLAIMED OF RS.5 41 561/- AT RS.81 234/- U/S.38(2) OF THE ACT WITHOUT ASSIGNING ANY REASON. 3. THE LEARNED A.O. HAS ERRED IN DISALLOWING EXPENS ES DEBITED FOR BUSINESS CARRIED ON UNDER THE NAME & STYLE OF M ESSRES. KINO ENVIRONMENT SYSTEM AT RS.9 838/- BEING 10% OF TOTAL EXPENSES OF RS.98 385/- DEBITED AGAINST THE INCOME OF RS.5 63 4 85/- WITHOUT ASSIGNING ANY REASONS. 4. THE LEARNED A.O. HAS ERRED IN MAKING ADDITION OF RS.2 30 97 543/- TO THE RETURNED INCOME BY TREATING INVESTMENT MADE IN MUTUAL FUND AS UNEXPLAINED INVESTMENT U/S.6 9 OF THE IT ACT WITHOUT CALLING FOR THE INFORMATION FROM THE APPELL ANT & NO REASONS HAVE BEEN GIVEN BY THE LEARNED A.O. JUSTIFY ING THE UNJUST ADDITIONS MADE BY HIM. 5. THE APPELLANT CRAVES LEAVE TO ADD ALTER MODIFY DELETE ANY OF THE GROUNDS OF APPEAL. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LEARNE D DR SUBMITTED THAT THE EVIDENCE REGARDING THE SALE OF SHARES BY T HE ASSESSEE AND RECEIPT OF SUM OF RS.2 30 97 543/- IS EVIDENCED BY DOCUMENTS. BUT THE INVESTMENT IN UNITS OF HDFC MUTUAL FUNDS HAVE NOT BEEN ESTABLISHED TO HAVE BEEN MADE FROM THE SALE PROCEEDS OF THE SHARES. ACCORDING TO HIM THIS EVIDENCES WAS NOT FILED BEFORE THE LEARNED CIT (APPEALS). ON THE ABOVE SUBM ISSION WE FIND THAT IN THE BANK STATEMENT OF HDFC BANK ON 14.03.2005 THERE IS AN ENTRY REGARDING ISSUE OF A CHEQUE OF RS.2 30 97 543/-. AS TO WHETHER THI S IS THE CHEQUE GIVEN FOR PURCHASE OF UNITS OF HDFC MUTUAL FUNDS IS NOT KNOW N. WE THEREFORE SET ASIDE THE ORDER OF THE LEARNED CIT (APPEALS) AND REMAND T HE ISSUE OF THE AO FOR FRESH 5 CONSIDERATION GIVING ASSESSEE THE LIBERTY TO SUBSTA NTIATE HIS CASE WITH SUCH EVIDENCE AS MAY BE NECESSARY. WE ALSO FIND THAT IN THE PRESENT CASE THE ASSESSEE HAD FILED A LETTER BEFORE THE LEARNED CIT (APPEALS) CLAIMING EXEMPTION U/S.54 OF THE ACT IN RESPECT OF THE CAPITAL GAIN ON SALE OF THE SHARES OF BIT. IF IN THE REMAND PROCEEDINGS BEFORE THE ASSESSEE IS ABLE TO EXPLAIN THE SOURCE OF INVESTMENT U/S.69 OF THE ACT IN RESPECT OF PURCHASE OF UNITS OF HDFC MUTUAL FUNDS THEN THE QUESTION OF TAXING THE CAPITAL GAIN ON SALE OF THE SHARES OF SHARES OF BIT WOULD CAME UP FOR CONSIDERATION. WE ARE OF T HE VIEW THAT THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY TO EXPLAIN AS TO HOW THE CAPITAL GAIN ON SALE OF SHARES OF BIT IS NOT CHARGEABLE TO TAX OR AS TO WHY THE ASSESSEE SHOULD BE EXEMPTED FROM CHARGE OF CAPITAL GAIN TAX ON SALE OF SHARES OF BIT. IN THIS REGARD THE ASSESSEE HAS ALSO FILED BANK STATEMENT SHOWING INVESTMENT OF THE CAPITAL GAIN IN SPECIFIED ACCOUNT WITHIN THE PERIOD OF 6 MO NTHS. WE HAVE NOT EXAMINED THESE DOCUMENTS AND WE FEEL THAT THE ASSESSEE CAN M AKE HIS CLAIM BEFORE THE AO IN THIS REGARD IN THE SET ASIDE PROCEEDINGS. WI TH THESE OBSERVATIONS WE ALLOW THE APPEAL OF THE REVENUE FOR STATISTICAL PUR POSE. 7. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THIS 21 ST DAY OF JANUARY 2011. SD/- SD/- ( T.R. SOOD ) ( N. V. VASUDEVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DT: 21/01/2011 6 COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T. 4. CIT (A) 5. THE DR D- BENCH ITAT MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI ROSHANI