Kumar Nirman & Nivesh Pvt. Ltd.,, Bangalore v. ACIT, Bangalore

ITA 947/BANG/2009 | 2005-2006
Pronouncement Date: 05-03-2010 | Result: Allowed

Appeal Details

RSA Number 94721114 RSA 2009
Assessee PAN AXACT1961R
Bench Bangalore
Appeal Number ITA 947/BANG/2009
Duration Of Justice 5 month(s) 10 day(s)
Appellant Kumar Nirman & Nivesh Pvt. Ltd.,, Bangalore
Respondent ACIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 05-03-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 05-03-2010
Assessment Year 2005-2006
Appeal Filed On 25-09-2009
Judgment Text
THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE DR. O.K NARAYANAN VICE PRESIDENT AND SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER ITA NO.947 /BANG/200 9 (ASST. YEA R -2005-06) M/S KUMAR NIRMAN & NIVESH PVT. LTD. #485/9 14 TH CROSS 4 TH PHASE PEENYA INDUSTRAIL AREA BANGALORE-58. BANGALORE-560 058. . APPELLANT VS. THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE-11(5) BANGALORE. . RESPONDENT ITA NO.1010 /BANG/2009 (ASST. YE AR -2005-06) THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE-11(5) BANGALORE. . APPELLANT VS. M/S KUMAR NIRMAN & NIVESH PVT. LTD. #485/9 14 TH CROSS 4 TH PHASE PEENYA INDUSTRAIL AREA BANGALORE-58. . RESPONDEN T ASSESSEE BY : SHRI H.N KHINCHA CHARTERED ACCOUNTANT REVENUE BY : SHRI JASON P BOAZ COMMISSIONER OF INCOME-TAX O R D E R PER DR. O.K NARAYANAN VICE PRESIDENT THESE ARE TWO CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE RESPECTIVELY. THE RELEVANT ASSESSMENT YEAR IS 2005-06. THESE APPEALS ARE DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-I AT ITA NOS.947 & 1010/B/09 2 BANGALORE DATED 24.08.2009. THESE APPEALS ARISE OU T OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME-TAX A CT 1961. 2. THE ASSESSEE COMPANY IS CARRYING ON MAINLY THE BUSINESS OF CONSTRUCTION CONTRACTING. THE ASSESSEE COMPANY DEC LARED A TOTAL INCOME OF RS.38 11 543/- FOR THE ASSESSMENT YEAR UN DER APPEAL. WHILE COMPLETING THE ASSESSMENT THE AO MADE AN ADD ITION OF RS.55 LAKHS TOWARDS UNEXPLAINED CASH CREDITS REFLECTED IN THE ACCOUNTS OF THE ASSESSEE COMPANY. ACCORDING TO THE ASSESSEE COMPAN Y AMOUNTS WERE RECEIVED FROM M/S BHUWANIA BROTHERS PVT. LTD. CALCUTTA TOTALING TO RS.55 LAKHS ON VARIOUS DATES AGAINST A PROPOSED CONTRACT FOR SALE. THE SALE WAS NOT EXECUTED FOR SOME REASO NS. THEREFORE THE ACCOUNTS OF THE ASSESSEE COMPANY ALSO SHOWED THE RE PAYMENT OF THE SAID AMOUNT IN DIFFERENT DATES TO M/S BHUWANIA BROT HERS PVT. LTD. THE ACCOUNT OF THE ASSESSEE WITH M/S BHUWANIA BROTH ERS PVT. LTD WAS SQUARED UP DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR ITSELF. FOR THE DETAILED REASONS DISCUSSED IN THE ASSESSMENT ORDER THE EXPLANATIONS OF THE ASSESSEE WERE REJECTED BY THE A SSESSING AUTHORITY AND THE TOTAL SUM OF RS.55 LAKHS WAS TREATED AS UNE XPLAINED CASH CREDITS IN THE HANDS OF THE ASSESSEE. IT WAS ACCOR DINGLY ADDED TO THE RETURNED INCOME. ITA NOS.947 & 1010/B/09 3 3. THE ASSESSEE HAD SOLD PROPERTIES TO FOUR PARTIES IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. ON VERIFICATION OF THE DETAILS THE ASSESSING OFFICER FOUND THAT THE S ALE VALUE OF THE LAND HAS BEEN RECORDED MUCH LESS THAN THE GUIDANCE VALUE PRESCRIBED BY THE STATE GOVERNMENT FOR THE PURPOSE OF REGISTRATIO N. THE ASSESSEE EXPLAINED THAT THE GUIDANCE VALUE ISSUED BY THE S TATE GOVERNMENT WAS ACTED UPON JUST FOR THE PURPOSE FOR REGISTRATIO N AND FOR THE ACTUAL DEAL. THE CONSIDERATION RECEIVED BY THE ASSESSEE C OMPANY WAS MUCH LESS FOR THE REASONS THAT THE PROPERTY WAS NOT THAT MUCH ATTRACTIVE IN THE OPEN MARKET. THE ASSESSEE COMPANY ALSO OBJECTE D THE REFERENCE MADE BY THE ASSESSING AUTHORITY TO THE PROVISIONS O F LAW STATED U/S 50C. ACCORDING TO THE ASSESSEE SEC. 50C APPLIES TO THE MATTERS RELATING TO COMPUTATION OF CAPITAL GAINS AND DOES N OT APPLY TO COMPUTATION OF BUSINESS INCOME. THE ASSESSING OFFI CER ANY HOW REJECTED THE CONTENTION OF THE ASSESSEE AND ADOPTED THE GUIDANCE VALUE AS THE SALE CONSIDERATION AND MADE ADDITION OF THE DIFFERENTIAL AMOUNT TO THE INCOME OF THE ASSESSEE. THE ADDITIONS WORKE D OUT TO RS.45 37 800/-. THUS THE ASSESSING OFFICER HAS MA DE A TOTAL ADDITION OF RS.1 00 37 800/- TO THE INCOME RETURNED BY THE A SSESSEE COMPANY. ULTIMATELY INCOME HAS BEEN DETERMINED AT RS.1 38 4 9 343/- AS AGAINST THE RETURN OF INCOME OF RS.38 11 543/-. ITA NOS.947 & 1010/B/09 4 4. IN FIRST APPEAL THE CIT(A) DELETED THE CASH CRE DITS ADDITION OF RS.55 LAKHS MADE BY THE ASSESSING OFFICER. HE ALSO MODIFIED THE SALE VALUE OF THE PROPERTIES. THE ASSESSING OFFICER HAS ADOPTED RS.200/SFT WHICH HAS BEEN MODIFIED TO RS.150/SFT BY THE CIT(A) . THE REVENUE IS AGGRIEVED ON BOTH OF THE MODIFICATIONS ORDERED BY T HE CIT(A). 5. THE ASSESSEE IS AGGRIEVED AGAINST THE ORDER OF T HE CIT(A) IN SUSTAINING THE VALUE OF RS.150/SFT FOR THE SALE OF PROPERTY. THAT IS HOW THESE CROSS-OBJECTIONS ARE PLACED BEFORE US. 6. FIRST WE WILL CONSIDER THE APPEAL FILED BY THE ASSESSEE COMPANY IN ITA NO.947/BANG/2009. 7. THE GROUNDS RAISED BY THE ASSESSEE ARE EXTRACTED BELOW : (I) THE LEARNED AO HAD ERRED IN MAKING AN ADDITION OF RS.45 37 800/- AS UNDISCLOSED INCOME BY APPLYING THE PROVISIONS OF SECTION 50C OF INCOME-TA X ACT 1961 BY ASSUMING THE SALE VALUE OF LAND AT THE RATE OF RS.200/- PER SQUARE FEET AN THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN ITA NOS.947 & 1010/B/09 5 APPROVING THE STAND TAKEN BY THE ASSESSING OFFICER ALBEIT REDUCING THE ASSUMED RATE FROM RS.200 PER SQUARE FEET TO RS.150 PER SQUARE FEET THUS CONFIR MING THE ADDITION TO THE EXTENT OF RS.24 30 600/- (II) THE APPELLANT HAVING SOLD ITS STOCK IN TRADE AND HAVING COMPUTED THE INCOME ON SALE OF LAND UNDER THE HEAD INCOME FROM BUSINESS THE LOWER AUTHORITIE S HAVE ERRED IN LAW IN HOLDING AND APPROVING THAT THE PROVISIONS OF SEC. 50C OF THE INCOME-TAX ACT 1961 ARE ATTRACTED TO THE FACTS OF THE CASE. SUCH A VIEW BE ING TOTALLY AGAINST THE PROVISIONS OF LAW IS TO BE REJE CTED. (III) THE LEARNED CIT(A) HAS ALSO ERRED IN HOLDING THAT THE ASSESSING OFFICER DID NOT RESORT TO SEC. 5 0 OF INCOME-TAX ACT 1961 AND THAT THIS SECTION WAS TAKE N ONLY AS GUIDANCE. SUCH FINDING AND CONCLUSION BEIN G OPPOSED TO THE FACT IS TO BE REJECTED. (IV) EVEN OTHERWISE THE LOWER AUTHORITIES HAVE ERRED IN CONCLUDING THAT IN CASE OF SALE OF STOCK I N TRADE THE ACTUAL VALUE CAN BE DISREGARDED AND ASSUMED SALE VALUE CAN BE ADOPTED WITHOUT AN IOTA OF ANY OTHER EVIDENCE. (V) WITHOUT FURTHER PREJUDICE AND WITHOUT CONCEDING THE APPELLANT ALSO PRAYS THE ADOPTION OF UNIFORM VALUE OF RS.200 PER SQUARE FEET BY THE ASSESSING OFFICER (AS AGAINST THE ACTUAL SALE PRICE OF ITA NOS.947 & 1010/B/09 6 RS.75 TO RS.104 PER SQUARE FEET) AND THE REDUCTION THEREOF TO RS.150 PER SQUARE FEE BY THE LEARNED CIT(A) HAVE NO BASIS AND ARE PURELY BASED ON SURMISES AND IMAGINATIONS. IN ANY CASE AND ON THE FACTS OF THE CASE THE VALUE AS PER SALE DEED BEING CORRECT ARE TO BE ADOPTED AND ANY OTHER VALUE IS TO DISREGARDED. 7.1 THE GUIDE LINE VALUE NOTIFIED BY THE STATE GOVE RNMENT IS RS.200/SFT IN RESPECT OF THE PROPERTIES SOLD BY THE ASSESSEE COMPANY. EVEN THOUGH THE SAID VALUE WAS ADOPTED FOR STAMP V ALUE IN GETTING THE DOCUMENT REGISTERED THE ASSESSEE HAS STATED TH AT THE ACTUAL SALE VALUE RECEIVED BY ASSESSEE WAS ONLY RS.75 TO 104/SF T. THE ASSESSING OFFICER HAS ADOPTED THE GUIDELINE VALUE OF RS.200/S FT RELYING ON THE PROVISIONS OF LAW CONTAINED IN SEC. 50C. THE CIT(A ) HAS MODIFIED THE VALUE TO RS.150/SFT. 7.2 WE AGREE WITH THE ARGUMENTS OF THE LEARNED CHAR TERED ACCOUNTANT THAT SEC. 50C HAS NO APPLICATION IN T HE PRESENT CASE. SECTION 50C IS PROVIDED IN CHAPTER IV OF THE INCOME -TAX ACT 1961 RELATING TO COMPUTATION OF INCOME FROM CAPITAL GAINS AND FURTHER IN SUB SEC. OF SEC. 50C IT HAS BEEN PROVIDED THAT THE ADOPTION OF STAMP VALUE IS TO BE MADE IN THE CA SE OF THE TRANSFER ITA NOS.947 & 1010/B/09 7 BY AN ASSESSEE OF A CAPITAL ASSET . THEREFORE IT IS CLEAR THAT SEC.50C IS TO BE INITIATED IN MATTERS OF COMPUTING THE SURPLUS OR DEFICIT ON TRANSFER OF A CAPITAL ASSET AND FOR THE PURPOSE OF LAW STATED IN CHAPTER-IV WHICH OBVIOUSLY CONFINES TO THE COMPUTAT ION OF INCOME FROM CAPITAL GAINS. 7.3 THEREFORE WITHOUT MUCH EXPLANATION IT IS VERY EVIDENT THAT SEC. 50C IS AN OPERATIVE SECTION IN THE CONTEXT OF THE C OMPUTATION OF INCOME FROM CAPITAL GAINS. IN THE PRESENT CASE TH E ASSESSEE SOLD THE PLOTS TO DIFFERENT PARTIES AS A PART OF ITS REGULAR BUSINESS ACTIVITY AND THE PROPERTIES SOLD BY THE ASSESSEE WERE IN THE NAT URE OF STOCK-IN-TRADE. WHAT HAS BEEN SOLD BY THE ASSESSEE WAS STOCK-IN-TRA DE AND NOT CAPITAL ASSET. ANY SURPLUS OR DEFICIT ON SALE OF STOCK IN TRADE WOULD FORM PART OF THE COMPUTATION OF BUSINESS INCOME. IN SUCH CIR CUMSTANCES THE PROVISIONS OF LAW CONTAINED IN SEC. 50C INCORPORAT ED FOR THE PURPOSE OF COMPUTING CAPITAL GAINS HAS NO RELEVANCE IN COMP UTING BUSINESS INCOME OF THE ASSESSEE. 7.4 COMING TO THE FACTS OF THE ISSUE THE AO HAS AD OPTED A SALE VALUE AT RS.200/SFT ONLY ON THE GROUND THAT THE SAL E VALUE RECORDED BY THE ASSESSEE WAS LESS THAN THE GUIDANCE VALUE NOTIF IED BY THE STATE ITA NOS.947 & 1010/B/09 8 GOVERNMENT. BUT FOR THIS THE ASSESSING AUTHORITY DID NOT HAVE ANY MATERIAL EVIDENCE BEFORE HIM TO HOLD A VIEW THAT TH E PROPERTIES WERE IN FACT SOLD FOR A CONSIDERATION HIGHER THAN THE CO NSIDERATION STATED IN THE BOOKS OF ACCOUNTS. IT IS ALSO TO BE NOTICED T HAT THE ASSESSING AUTHORITY HAS NOT CONDUCTED ANY ENQUIRY WITH THE BU YERS OF THE PROPERTIES TO REBUT THE CONSIDERATION ACCOUNTED BY THE ASSESSEE. IN THESE CIRCUMSTANCES WE ARE OF THE CONSIDERED VIEW THAT THE AO HAS ADOPTED A HIGHER SALE VALUE ONLY OUT OF THE COMPULS ION INDUCED BY A MISREADING OF STATUTORY PROVISION CONTAINED IN SEC. 50C. THERE IS NO MATERIAL ON RECORD TO DISCREDIT THE VERSION OF THE ASSESSEE ON THIS POINT OF SALE CONSIDERATION. 7.5 IN THE FACTS AND CIRCUMSTANCES OF THE CASE WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS POINT AND D IRECT THE AO TO COMPUTE THE PROFITS ON SALE OF PLOTS AS PER SALES C ONSIDERATION ACCOUNTED BY THE ASSESSEE. 8. THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND THE ASSESSEE SUCCEEDS IN ITS APPEAL FILED BEFORE US. ITA NOS.947 & 1010/B/09 9 9. NEXT WE WILL CONSIDER THE APPEAL FILED BY THE R EVENUE IN ITA NO.1010/BANG/2009. 9.1 THE FIRST ISSUE IS THE DELETION OF RS.55 LAKHS MADE BY THE CIT(A) AGAINST THE ADDITION MADE BY THE ASSESSING A UTHORITY U/S 68. THE RELEVANT GROUNDS ARE EXTRACTED BELOW : (I) THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.55 LAKHS MADE BY THE ASSESSING OFFICER U/S 68 OF THE I.T ACT 1961 WITHO UT APPRECIATING THE FACTS STATED IN THE ASSESSMENT ORDER. (II) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT APART FROM THE IDENTITY AND CREDIT WORTHINESS OF THE CONCERNED PARTY VIZ M/S BHUWANIA BROTHERS PVT. LTD. THE ONUS LIES ON THE ASSESSEE TO ESTABLI SH THE GENUINENESS OF THE TRANSACTION TO THE SATISFACT ION OF THE ASSESSING OFFICER. 9.2 DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESS MENT YEAR UNDER APPEAL THE ASSESSEE HAD RECEIVED A TOTAL AMOUNT OF RS.55 LAKHS FROM M/S BHUWANIA BROTHERS PVT. LTD. AT CALCUTTA IN THRE E DIFFERENT OCCASIONS IN THE MONTH OF AUG AND OCT 2004. THESE AMOUNTS HAD ITA NOS.947 & 1010/B/09 10 BEEN RETURNED IN THE SAME PREVIOUS YEAR IN THE MONT HS OF FEB AND MAR 2005. THE RELEVANT ENTRIES ARE REFLECTED IN THE CA SH BOOK MAINTAINED BY THE ASSESSEE. 9.3 ALL THESE RECEIPTS AND REPAYMENTS WERE CASH TRA NSACTIONS. WHEN ASKED FOR THE EXPLANATION OF THE ASSESSEE WAS THAT M/S BHUWANIA BROTHERS PVT. LTD. HAD GIVEN THIS MUCH MONEY BY WAY OF ADVANCE TO THE ASSESSEE FOR THE PURCHASE OF LAN D MEASURING ABOUT 45369/SFT SITUATED AT NO.485/2 13 TH CROSS 4 TH PHASE PEENYA INDUSTRIAL AREA AT BANGALOE-58. THE ASSESSEE HAS FURTHER STAT ED THAT EVEN THOUGH THERE WAS AN UNDERSTANDING FOR THE ABOVE TR ANSACTION THE DEAL WAS CANCELLED AND THE AMOUNT WAS RETURNED BACK TO M /S BHUWANIA BROTHERS PVT. LTD.. 9.4 THE ASSESSING AUTHORITY ASKED THE ASSESSEE HOW THESE AMOUNTS WERE PHYSICALLY BROUGHT FROM CALCUTTA AND PAID TO T HE ASSESSEE AT BANGALORE. THE ASSESSEE EXPLAINED THAT THE PAYMENT S WERE MADE AND REPAYMENTS WERE ALSO MADE DURING THE VISITS OF THE PARTIES AT CALCUTTA TO BANGALORE AND ASSESSEE FROM BANGALROE TO CALCUTT A. REGARDING THE IDENTITY GENUINENESS AND CREDITWORTHINESS OF M/S B HUWANIA BROTHERS PVT. LTD. THE ASSESSEE COULD PRODUCE ONLY A COPY O F THE RETURN OF ITA NOS.947 & 1010/B/09 11 INCOME OF THE SAID PARTY IN WHICH THE INCOME RETUR NED WAS RS.26 646/-. THE AO THEREAFTER CALLED FOR INFORMAT ION U/S 133(6) FROM M/S BHUWANIA BROTHERS PVT. LTD.. BUT NO REPLY WAS RECEIVED. 9.5 THE ASSESSING AUTHORITY AGAIN ISSUED A COMMISSI ON U/S 131 TO ASST. DIRECTOR OF INCOME-TAX (INVESTIGATION) AT CAL CUTTA TO VERIFY THE ABOVE TRANSACTIONS IN THE BOOKS OF M/S BHUWANIA BRO THERS PVT. LTD. THE ADIT AT CALCUTTA INFORMED THE ASSESSING AUTHORI TY THAT EVEN THOUGH THE SUMMONS WAS SERVED ON 19.12.07 NOBODY HAS COMPLIED WITH THE SUMMONS. FINALLY THE ASSESSING AUTHORITY ISSUED A FINAL SHOW CAUSE NOTICE ASKING THE ASSESSEE TO EXPLAIN TH E WHEREABOUTS OF THE CREDITORS FAILING WHICH THE AMOUNT WOULD BE T REATED AS UNEXPLAINED CASH CREDITS U/S 68. IN REPLY TO THE S AID FINAL NOTICE THE ASSESSEE FILED A COPY OF THE BALANCE SHEET AND PROF IT AND LOSS ACCOUNT OF M/S BHUWANIA BROTHERS PVT. LTD. WHICH ACCORDING TO THE AO DID NOT SUPPORT THE CREDITWORTHINESS OF THE SAID PARTY. 9.6. IN THE ABOVE CIRCUMSTANCES HE ADDED THE AMOUN T OF RS.55 LAKHS INCOME AS UNEXPLAINED CASH CREDITS U/S 68. ITA NOS.947 & 1010/B/09 12 9.7. THE CIT(A) ON THE OTHER HAND OBSERVED THAT TH E IDENTITY OF THE CREDITOR M/S BHUWANIA BROTHERS PVT. LTD. IS ESTABLI SHED AND THE GENUINENESS OF THE TRANSACTIONS HAS ALSO BEEN ESTAB LISHED. THE CIT(A) FURTHER FELT THAT IF THERE WAS ANY DOUBT IN THE MIND OF THE ASSESSING AUTHORITY HE SHOULD HAVE GONE FOR FURTHE R ENQUIRIES TO REBUT THE EXPLANATIONS OF THE ASSESSEE. FINALLY HE CONC LUDED THAT M/S BHUWANIA BROTHERS PVT. LTD. WAS SOUND ENOUGH TO GIVE THAT MUCH AMOUNT TO THE ASSESSEE AS THEY HAD A CAPITAL OF RS .24 CRORES IN THEIR BALANCE SHEET. ACCORDINGLY HE ACCEPTED THE CONTEN TIONS OF THE ASSESSEE AND DELETED THE ADDITION OF RS.55 LAKHS MA DE BY THE ASSESSING AUTHORITY. 9.8. ON A CAREFUL EXAMINATION OF THE CIRCUMSTANCES SURROUNDING THE ISSUE WE FIND THAT THE AO HAS CALLED FOR ALL THE R ELEVANT DETAILS FROM THE ASSESSEE REGARDING THE CASH ADVANCES OF RS.55 L AKHS SAID TO BE RECEIVED FROM M/S BHUWANIA BROTHERS PVT. LTD.. THE TRANSACTIONS WERE RECORDED TO BE MADE IN CASH. THEREFORE ABSOLU TELY THERE IS NO DOCUMENTARY EVIDENCE TO ESTABLISH THE MOVEMENT OF F UNDS FROM M/S BHUWANIA BROTHERS PVT. LTD. IN CALACUTTA TO THE ASS ESEE IN BANGALORE. THE PRIME LITMUS TEST EXPECTED IN A HUGE TRANSACTIO N OF RS.55 LAKHS IS ITA NOS.947 & 1010/B/09 13 AT LEAST THE RECORDS RELATING TO THE TRANSFER OF FU NDS THROUGH BANKING CHANNELS. THIS CRUCIAL EVIDENCE IS MISSING IN THIS CASE. 9.9 THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT O F M/S BHUWANIA BROTHERS PVT. LTD. FILED BY THE ASSESSEE BEFORE THE ASSESSING AUTHORITY DID NOT GIVE A PICTURE OF THE FUND POSITION AVAILAB LE IN THE HANDS OF M/S BHUWANIA BROTHERS PVT. LTD. AT THE TIME OF TH E RELEVANT TRANSACTIONS. THE BALANCE SHEET PORTRAYED ONLY THE CLOSING BALANCES ON THE LAST DAY OF THE PREVIOUS YEAR UNDER DIFFEREN T HEADS OF ACCOUNT. THE BALANCE SHEET AS SUCH DOES NOT SHOW THE AVAILA BILITY OF CASH AT THE RELEVANT TIME FOR MAKING CASH ADVANCES TO THE A SSESSEE. THE PROFIT AND LOSS ACCOUNT ALSO DOES NOT SPEAK ABOUT ANYTHING ON THE QUESTION OF AVAILABILITY OF CASH FUNDS AT THE RELEVANT TIME. 9.10 THE SUMMONS SERVED BY THE ASSESSING AUTHORITY THROUGH ADIT AT CALCUTTA WAS NOT COMPLIED WITH BY M/S BHUWANIA B ROTHERS PVT. LTD. THE COUNTER PART IN THE TRANSACTIONS M/S BHUWA NIA BROTHERS PVT. LTD. NEVER CAME INTO THE PICTURE EITHER BEFORE THE ASSESSING AUTHORITY OR BEFORE THE CIT(A) TO SUPPORT THE GENUINENESS OF THE TRANSACTIONS. THEY WERE NOT SEEN AND THEY WERE NOT HEARD . ALL THE EXPLANATIONS OFFERED BY THE ASSESSEE IN THIS CASE WERE UNILATERA L AND CAME OUT OF THE ITA NOS.947 & 1010/B/09 14 ASSESSEE ITSELF WHICH WERE NEVER CORROBORATED BY M /S BHUWANIA BROTHERS PVT. LTD.. THEREFORE THE MUTUALITY OF TH E TRANSACTION IS NOT REFLECTED ANY WHERE IN THE EXPLANATIONS OFFERED BY THE ASSESSEE. WE FIND THAT IN THESE CIRCUMSTANCES THE ONE MAN EXPLA NATION OFFERED BY THE ASSESSEE DOES NOT SATISFY THE REQUIREMENTS OF N ORMAL HUMAN REASONING. 9.11 IT IS THE CONTENTION OF THE ASSESSEE THAT THE ADVANCES WERE MADE BY M/S BHUWANIA BROTHERS PVT. LTD. IN PURSUANCE OF AN AGREEMENT ARRIVED AT TO PURCHASE THE PROPERTY IN BANGALORE. WHEN WE SPECIFICALLY ASKED AT THE TIME OF HEARING FOR A COP Y OF THE SAID AGREEMENT IT WAS FAIRLY CONCEDED BEFORE US THAT T HE ASSESSEE DID NOT HAVE ANY SUCH COPY AT PRESENT AND THE AGREEMENT WAS NOT PRODUCED EITHER BEFORE THE AO OR BEFORE THE CIT(A). NOT ONL Y THE ORIGINAL AGREEMENT BUT THE REVOCATION AGREEMENT ALSO WAS NO T PRODUCED BEFORE THE LOWER AUTHORITIES OR BEFORE THE TRIBUNAL. 9.12 THE FINDING OF THE CIT(A) THAT THE IDENTITY OF THE CREDITOR IS ESTABLISHED HAS BEEN ARRIVED AT WITHOUT READING THE FACTS OF THE CASE. THE ENTRIES MADE BY THE ASSESSEE IN ITS BOOKS OF AC COUNT ARE SELF- SERVING EVIDENCES. THEY WERE PROVED TO BE GENUINE. JUST FOR THE ITA NOS.947 & 1010/B/09 15 REASON THAT THE ASSESSEE HAS ACCOUNTED SOME CASH CR EDITS IN THE NAME OF A PARTY. JUST THE NAME IS SUFFICIENT ? DOES IT MEAN THAT THE IDENTIFY OF THE CREDITOR IS ESTABLISHED? BY FILING THE BALA NCE SHEET IS IT SAFE TO SAY THAT THE IDENTITY OF THE PARTY IS ESTABLISHED? AS ALREADY OBSERVED BY US M/S BHUWANIA BROTHERS PVT. LTD. AT CALCUTTA WAS NEVER SEEN AND NEVER HEARD . THE CIT(A) HAS ERRED IN COMING TO THE CONCLUSION THAT THE IDENTITY OF THE PARTY WAS ESTABLISHED JUST FOR THE REASON THAT THE NAME OF THE PARTY IS REFLECTED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. 9.13 THE CIT(A) HAS CONCLUDED THAT M/S BHUWANIA BRO THERS PVT. LTD. HAD ENOUGH RESOURCES WITH THEM TO MAKE ADVANCE S OF RS.55 LAKHS TO THE ASSESSEE COMPANY. HE HAS STATED THAT THE CAPITAL OF M/S BHUWANIA BROTHERS PVT. LTD. WAS 24 CRORES IN THE BA LANCE SHEET AND THEREFORE IT HAD RESOURCEFULNESS TO ADVANCE AN AMO UNT OF RS.55 LAKHS TO THE ASSESSEE. HE HAS NOT EXAMINED HOW THAT MUCH CAPITAL WAS CREATED IN THE BOOKS OF ACCOUNT OF M/S BHUWANIA BRO THERS PVT. LTD? IS THE CAPITAL CREATED BY CONTRIBUTING CASH SHARE CAPITAL OR BY REVALUATION OF ASSETS OR BY OVER ESTIMATING THE VA LUE OF ANY ASSETS? HE HAS NOT EXAMINED THESE ASPECTS. HE HAS ALSO NOT EXAMINED HOW THIS MUCH CAPITAL IS SUPPORTED BY VARIOUS ITEMS REF LECTED IN THE ASSET ITA NOS.947 & 1010/B/09 16 SIDE OF THE BALANCE SHEET WHETHER BY CURRENT LIQUID ASSETS OR LOSS? THEREFORE WITHOUT MAKING A MEANINGFUL STUDY OF THE BALANCE SHEET FIGURES THAT THE CIT(A) HAS JUMPED INTO A CONCLUSI ON THAT M/S BHUWANIA BROTHERS PVT. LTD. HAD ENOUGH RESOURCES TO MAKE AN ADVANCE OF RS.55 LAKHS TO THE ASSESSEE COMPANY. 10. BY GOING THROUGH THE FACTS AS STATED IN THE ABO VE LINES WE FIND THAT THE EXPLANATIONS OFFERED BY THE ASSSSEE ARE UN BELIEVABLE THEY ARE ONLY SELF SERVING. THE FINDINGS ARRIVED AT BY THE C IT(A) ARE UNSUSTAINABLE IN LAW. WE VACATE THE ORDER OF THE C IT(A) ON THIS POINT AND RESTORE THE ADDITION OF RS.55 LAKHS MADE BY THE ASSESSING AUTHORITY. 11. THE NEXT GROUND BY THE REVENUE IS REGARDING THE RELIEF GRANTED BY THE CIT(A) IN THE MATTER OF SALE CONSIDERATION R ELATING TO THE PROPERTIES SOLD BY ASSESSEE. THIS ISSUE IS ALREADY DECIDED IN THE CROSS APPEAL FILED BY THE ASSESSEE. WE HAVE ACCEPTED THE CONTENTION OF THE ASSESSEE IN THIS REGARD. 12. THEREFORE THIS GROUND RAISED BY THE REVENUE FA ILS. ITA NOS.947 & 1010/B/09 17 13. IN RESULT THE APPEAL FILED BY THE ASSESSEE I S ALLOWED AND APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED ON FRIDAY THE 5TH DAY OF MARCH 2010 AT BANGALORE. SD/- SD/- (SHAILENDRA KUMAR YADAV) (DR. O.K NARAYA NAN) JUDICIAL MEMBER VICE PR ESIDENT VMS. COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF 7..GF ITAT NEW DELHI. BY ORDER ASST. REGISTRAR ITAT BANGALOR E.