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Income Tax Appellate Tribunal, “C”, BENCH KOLKATA
Before: SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM
आदेश / O R D E R
Per Dr. A.L. Saini, AM:
The captioned appeal filed by the Revenue, pertaining to assessment year 2009-10, is directed against the order passed by the Commissioner of Income Tax (Appeal)-4, Kolkata, in appeal no. 467&440/CIT(A)-4/2015-16/16-17, which in turn arises out of an assessment order passed by the Assessing Officer u/s 147 / 143(3) / 263 of the Income Tax Act, 1961 (in short the “Act”) dated 05/12/2016.
The appeal filed by the assessee is barred by limitation by 2 days. The Revenue filed a petition for condonation of delay requesting the Bench to condone the delay. We have heard both the parties on this preliminary issue and having regard
Shri Goutam Mitra Assessment Year:2009-10 to the reasons given in the petition for condonation of delay, we condone the delay and admit the appeal of the revenue for hearing.
The grounds of appeal raised by the Revenue are as follows:
1. That on the fact and in the circumstances of the case CIT(A) erred in deleting the addition made by the A.O by overlooking the fact that no work order was there to support claim of the assessee that the impugned sum was received as job advance from M/s Tower Infotech Ltd. on behalf of M/s Indian Structural Engineering Co. Pvt Ltd as its Managing Director.
2. That on the fact and in the circumstances of the case CIT(A) erred in deleting the addition made by the AO without considering the fact that the accounts of M/s Tower Infotech Ltd did not indicate any advance given to M/s Indian Structural Engineering Co. Pvt .Ltd. 3. That on the fact and in the circumstances of the case CIT(A) erred in deleting the addition made by the AO without considering the fact that the said advance of Rs. 6.25 crs. Was deposited in the savings bank account of the assessee. 4. That on fact and in the circumstances of the case CIT(A) erred in deleting addition made by the AO by ignoring the fact that said advance of Rs.6.25 crs was kept in the form of fixed deposit and interests thereupon was disclosed as interest income in the hands of the assessee. 5. That on the fact and in the circumstances of the case CIT(A) erred in the deleting the addition made by the AO by ignoring the fact that no effort was undertaken by the assessee to transfer the said fund wither to M/s Tower Infotech Ltd or to M/s Indian Structural Engineering Co. Pvt Ltd, which clearly demonstrates that the assessee had all the intention to hold the money in his personal capacity. 6. That the appellant craves leave to add, alter/or amend any of the grounds of the appeal during the course of hearing.
Facts of the case which can be stated quite shortly are as follows:The assessee company filed its return of income for the assessment year 2009-10 on 29.07.2008 declaring total income of Rs.12,16,040/-. The assessment was completed u/s 143(3) of the Act on 25.11.2011 determining total income of Rs. 12,16,040/-. The assessment was subject to revision u/s 263, which was passed on 18.03.2014 by ld. CIT-4, Kolkata. Later on, an order u/s 143(3)/263 was passed by Assessing Officer on 31.03.2015 determining total income at Rs. 5,37,16,040/- after making addition
Shri Goutam Mitra Assessment Year:2009-10 of Rs. 5,25,00,000/- on account of unexplained income. Subsequently, the case was reopened and the reason for reopening the assessment is as under: “In this case, the amount of Rs.6.25 crore was shown in respect of Shri Goutam Mitra, by the company Tower Infotech Limited (TIL) in his balance sheet, but the assessee has shown only 5.25 crore in his account. The above amount shown by the assessee as project advance was highly irregular, since the assessee has not been assigned any work/project during the previous year. On the facts and circumstantial evidence, Rs. 1 crore represents escapement of income in the hands of the assessee. In view of the above, I have reason to believe that the assessee income to the extent of Rs. 1 crore chargeable to tax had escaped assessment within the meaning of section 147 of the I.T. Act, 1961.”
Afterward, notice u/s 148 of the I.T. Act, 1961 dated 21.03.2016 was issued to the assessee company. In response, the assessee vide its letter dated 15.04.2016 has asked for the reason of reopening the assessment. The copy of reason recorded for reopening the assessment along with notice u/s 143(2) of the I.T. Act, 1961 dated 28.11.2016 was issued to the assessee company fixing the case of hearing on02.12.2016. However, no compliance was made till date nor any explanation was filed. Hence, it is presumed that the assessee has nothing to say in this regard and the reassessment is being completed ex-parte on the basis of material evidence available on record. On perusal of the records, it was noticed by assessing officer that the amount of Rs. 6.25 crore was shown as advance in respect of Shri Goutam Mitra, by the company Tower Infotech Limbed (TlL) in his balance sheet, but the assessee has shown only 5.25 crore in his account. The above amount shown by the assessee as project advance was highly irregular, since the assessee has not been assigned any work/project during the previous year. The above facts remained unexplained since the amount was deposited in the assessee’s own accounts and interest on the said deposits have been offered for tax. The AO was of the view that the claim as project advance did not justify that it was received as advance. The entire amount received by the assessee had been kept in its own account. The AO noted that there is norule/ law in the Companies Act that the monies of the company are to be deposited in thename of Director/Managing Director in his own account in the form of savings bank account and fixed deposit. There is also no rule/law that money of the managing director is to be deposited in the account of company. On Shri Goutam Mitra Assessment Year:2009-10 the other hand, there was no any entry in the asset side of TIL as unsecured loan in the name of M/s Indian Structural Engineering Co. Pvt. Ltd. (ISECPL). The AO was of the view that individual and the company are separate legal entity and there are some rules and regulations framed upon the company and each and every accounts are maintained as per the Companies Act. A mere claim as project advance did not justify that it was received as advance by the assessee. The entire amount received by the assessee during the period and kept in his own account was treated as escaped income of Rs. 1 crores, which was disallowed by AO and added to the total income of the assessee company.
5. Aggrieved by the order passed by the Assessing Officer the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition observing the following:
“I have perused the submission of the assessee and the assessment order. As already discussed the entire payment of Rs. 6.3 crore as coming to project advance given by TIL, as discussed earlier that the identity, capacity, genuineness of the transaction is not in doubt, department has not brought on any evidence on record such total income from the Managing Director. Further dept has not brought any evidence on record to suggest that the claim of ISECPL on this money has ceases. Therefore, by no stretch of imagination this amount can be taxed either in the hands of ISECPL or in the hands of Shri Goutam Mitra. In the result, the appeal of the assessee is allowed.”
Aggrieved by the order of the ld. CIT(A), the revenue is in appeal before us.
The ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity and on the other hand the ld. Counsel for the assessee has relied on the order of the ld. CIT(A).
We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the Shri Goutam Mitra Assessment Year:2009-10 ldCIT(A) and other materials available on record. We note that inthe order passed u/s.147/143(3)/263 of the Act dated 15.12.2016,the Assessing Officer made addition of Rs. 1,00,00,000/- as unexplained income, which was also received by the appellant from M/s. Tower Infotech Ltd. (TIL). The ld. Counsel submitted that the said amount was received during the Financial Year 2007-08 relevant to the Assessment Year 2008-09 towards Loan/Advance and was duly reflected on the Liability Side of the appellant’s Balance Sheet as at 31.03.2008, therefore, the Assessing Officer wrongly issued Notice u/s.148 of the Act. That is, Rs. 5.25 crores and Rs. 1 crore, both amounts were received from M/s Tower Infotech Limited in different accounting period. Since the amount of Rs. 1,00,00,000/- was received in the assessment year 2008-09 towards loan / advance and duly recorded in the assessee’s balance sheet as on 31.03.2008, therefore, there is no tangible material for the Assessing Officer to reopen the assessment. Hence, we do not find any infirmity in the order of the ld. CIT(A). Hence, we confirm the order of ld. CIT(A) and dismiss the grounds of appeal raised by the Revenue.
Before parting, it is noted that the order is being pronounced after 90 days of hearing. However, taking note of the extraordinary situation in the light of the Covid-19 pandemic and lockdown, the period of lockdown days need to be excluded. For coming to such a conclusion, we rely upon the decision of the Co- ordinate Bench of the Mumbai Tribunal in the case of DCIT vs. JCB Limited in and ITA No. 6103/Mum/2018 for A.Y. 2013-14 order dated 14.05.2020.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the Court on 08.07.2020