Income Tax Appellate Tribunal - Mumbai
Atlas Automative Components P.Ltd, ... vs Department Of Income Tax on 25 April, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
"A" Bench, Mumbai
Before Shri D. Manmohan, Vice President
and Shri Sanjay Arora, Accountant Member
ITA No. 2422/Mum/2012
(Assessment Year: 2008-09)
ACIT, Circle 6(1) M/s. Atlas Automative Components
Room No. 506, 5th Floor Vs. Pvt. Ltd., Udyog Mandir Compound
Aayakar Bhavan, M.K. Road 7C, Bhagoji Keer Marg, Mahim
Mumbai 400020 Mumbai 400016
PAN - AABCA 0742 K
Appellant Respondent
Appellant by: Miss Neeraja Pradhan
Respondent by: Shri Sanjeev V. Joshi
Date of Hearing: 25.04.2013
Date of Pronouncement: 25.04.2013
ORDER
Per D. Manmohan, V.P. This is an appeal filed at the instance of Revenue and it pertains to A.Y. 2008-09.
2. The only ground urged before us reads as under: -
"1. On the facts and in the circumstances of the case, Ld. CIT(A) erred in holding that Rs.35 lakhs was not undisclosed investment u/s 69 of the Act ignoring the facts that assessee during the course of scrutiny proceedings could not submit any evidence regarding its claim of payment of Rs.35 lakhs as security deposit to M/s Silicon Meadows Engineering Services P. Ltd."
3. The facts necessary for disposal of the appeal are stated in brief. The assessee is engaged in the business of manufacture and sales of aluminium castings. For the year under consideration it declared a total income of `1.89 crores. The case having been selected for scrutiny, the AO called for details of the amounts advanced by the assessee as well as the interest bearing loans obtained. In particular, it was noticed that the assessee advanced a sum of `35 lakhs in the form of rent deposit to M/s Silicon 2 ITA No. 2422/Mum/2012 M/s. Atlas Automative Components Pvt. Ltd.
Meadows Engineering Services P. Ltd. According to the assessee the deposit was made for taking the premises on lease from the said party and hence no interest was charged on the said deposit. The AO, however, noticed that as per the rent agreement between M/s Silicon Meadows Engineering Services P. Ltd. and the assessee company there were no such terms and conditions of interest free deposit and hence there was no need for making such deposit. Since the assessee company borrowed huge amounts, which was interest bearing, according to the AO the assessee should not have deposited `35 lakhs with M/s Silicon Meadows Engineering Services P. Ltd. In response to the show cause notice the assessee submitted that it had made the deposit though it was not mentioned in the agreement. During the course of assessment proceedings the assessee was asked to prove the genuineness of the deposit given and why the same may not be treated as unexplained investment, in the absence of any details filed by the assessee. The assessee could not prove the genuineness of the deposit and hence the AO sought to make an addition under section 69 of the Income Tax Act. It may be noticed that section 69 of the Act gets attracted in respect of investments which are not recorded in the books of account and with regard to the source of income, no explanation about the nature and source of investment is offered; Then the value of the investment can be deemed to be the income of the assessee of such financial year. The AO was of the opinion that the amount of `35 lakhs can be brought to tax in the year under consideration under section 69 of the Income Tax Act.
4. Aggrieved, assessee contended before the CIT(A) that the AO has wrongly invoked provisions of section 69 of the Act. Explaining further, it was submitted that section 69 gets attracted only when an investment is not duly recorded in the books of account whereas, in the instant case, the amount of advance in the form of deposit was recorded in its books of account and hence section 69 is not applicable. It was also contended that M/s Silicon Meadows Engineering Services P. Ltd. is an associated company and the fact remains that the deposit was made out of the amounts available with the assessee which was not questioned and the same was also recorded in the books. Reliance was also placed on several case laws in 3 ITA No. 2422/Mum/2012 M/s. Atlas Automative Components Pvt. Ltd.
support of his contention that section 69 is not applicable to the instant case.
5. The learned CIT(A) examined the facts of the case while coming to the conclusion that section 69 was wrongly invoked by the AO. In this regard he observed as under: -
"3.5 I have considered the submissions of the appellant, case laws cited as well as the facts and circumstances of the case. It is evident that the amount of deposit of Rs.35 Lacs is not an undisclosed investment of the appellant because the same is recorded in the books of account of the appellant. The only reason for the AO for making this addition was that there was no stipulation regarding the said deposit in the rent agreement. In my opinion, this reason is not sufficient. It is immaterial whether or not the rent agreement provides for a deposit. So far as, the appellant has made an investment from out of its disclosed source and so far as, it is recorded in the books of account, no addition of this sort can be made. Furthermore, it is seen that the deposit does not pertain to the current year; rather it pertains to the earlier year. The case laws cited by the appellant also support the contention of the appellant in this regard. Therefore, the addition of Rs.35 Lacs is not justified and the same is hereby deleted."
6. Aggrieved by the order of the CIT(A) Revenue preferred an appeal in a routine fashion wherein it was merely contended that the learned CIT(A) erred in holding that the sum of `35 lakhs was not an undisclosed investment within the meaning of section 69 of the Income Tax Act. The contention of the AO appears to be on the premise that even if it is recorded in the books of account, if the payment/deposit is not proved, addition can be made under section 69 of the Act. At the time of hearing the learned D.R. was unable to contradict the findings of the learned CIT(A). Though reliance was heavily placed upon the conclusions reached by the AO, it could not be shown as to how section 69 can be made applicable to the instant case. It was also pointed out from the Bench that the learned CIT(A) categorically pointed out that the deposit does not pertain to the current year but it pertains to the earlier year. Even on this aspect the learned D.R. could not furnish any material to contradict the findings of the learned CIT(A). It can thus be seen that the Revenue has preferred the appeal in a mere routine fashion without application of mind and without any basic understanding of provisions of section 69 of the Act, more so when the finding of the learned 4 ITA No. 2422/Mum/2012 M/s. Atlas Automative Components Pvt. Ltd.
CIT(A) that the deposit does not pertain to this year is not controverted either in the grounds of appeal or by any material, whatsoever, in the form of additional evidence.
7. Having regard to the circumstances of the case we have no other alternative except to hold that the appellant has not made out a case under section 69 of the Act since the payment was recorded in the books of account and the source of investment is not disputed apart from the fact that the payment was stated to have not been made in the previous year relevant to the assessment year under consideration. We, therefore, uphold the order of the CIT(A) and dismiss the appeal filed by the Revenue.
Order pronounced in the open court on 25th April, 2013.
Sd/- Sd/-
(Sanjay Arora) (D. Manmohan)
Accountant Member Vice President
Mumbai, Dated: 25th April, 2013
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A) - 14, Mumbai
4. The CIT- VI, Mumbai City
5. The DR, "A" Bench, ITAT, Mumbai
By Order
//True Copy//
Assistant Registrar
ITAT, Mumbai Benches, Mumbai
n.p.