Income Tax Appellate Tribunal - Ahmedabad
Sanket Jitendrabhai Shah, Ahmedabad vs Dcit Central Circle-1(2), Ahmedabad on 9 October, 2020
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ 'C' अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH, AHMEDABAD (Convened through Virtual Court) BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER आयकर अपील (एसएस) सं./I.T(SS).A. No. 235/Ahd/2018 ( नधा रण वष / Assessment Years : 2012-13) Sanket Jitendrabhai Shah बनाम/ DCIT C-104, Pushkar-3 Aptt., P. Vs. Central Circle - 1(2), T. College Road, Paldi, Ahmedabad Ahmedabad - 380007 Room No.305, 3 r d Floor, Aayakar Bhawan, Ashram Road, Ahmedabad -
380009 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : BAIPS2298P (अपीलाथ /Appellant) .. ( यथ / Respondent) अपीलाथ ओर से /Appellant by : Shri Ketan H. Shah with Shri Aman K. Shah, A.Rs.
यथ क ओर से / Shri O. P. Sharma, CIT.DR
& Shri L. P. Jain, Sr. D.R.
Respondent by :
सन
ु वाई क तार"ख / Date of
19/08/2020
Hearing
घोषणा क तार"ख /Date of
09/10/2020
Pronouncement
आदे श/O R D E R
PER PRADIP KUMAR KEDIA - AM:
The captioned appeal has been filed at the instance of the Assessee against the order of the Commissioner of Income Tax (Appeals)-11, Ahmedabad ('CIT(A)' in short), dated 15.06.2018 arising in the assessment order dated 28.12.2016 passed by the I T ( S S ) A N o . 2 3 5 / Ah d / 1 8 ( S a n k e t J . S h a h Vs. DC IT) A.Y. 2012-13 - 2 -
Assessing Officer (AO) under s. 143(3) r.w.s. 153A(1)(b) of the Income Tax Act, 1961 (the Act) concerning AY 2012-13.
2. As per records, the appeal before the Tribunal has been filed belatedly. The delay of 20 days is condoned on due consideration of facts and owing to smallness of delay causing no perceptible prejudice to other side.
3. The grounds of appeal raised by assessee read hereunder:
"1 The Ld. CIT (A) has erred in law and on facts in partly confirming the assess ment order passed by the Assessing Officer u/s. 143(3) of the Act.
2 The Ld. C.I .T. (A) has erred in facts and circumstances and in law in confirming addi tion of Rs.32,08,000/- out of total addition of Rs.45,11,546/- made by the A.O. on account of value of BM W car allegedly transferr ed to the appellant in lieu of salary.
4. The assessee has moved an additional ground which reads as under:
"1. Both the lower author ities erred in law and on facts in framing assessment under sect ion 143(3) r.w.s. 153A ignoring fact that the approval u/s.153D given by the JCIT is without application of mind and accordingly assessment is required to be quashed. It be so held now."
5. The prayer for admission of additional grounds noted above which are not set forth in memorandum of appeal are being admitted for adjudication in terms of Rule 11 of Income Tax (Appellate Tribunal) Rules, 1963 owing to the fact that objections raised in the additional ground are legal in nature and challenges the jurisdiction of the AO for making additions/disallowances and for such objections the relevant facts are stated to be emanating from existing records in the light of decision of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC).
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6. With reference to additional ground above, the learned AR pointed out that the approval taken by the AO as mandated under s.153D of the Act is hollow and without the application of mind of the designated authority. On being called by the Bench to support the allegation of non-application of mind, the learned AR for the assessee simply mooted that the approval was obtained on the same day of communication and as a corollary, it has to be presumed to be without due application of mind. We dispose of the objections raised by way of additional ground straightway against the assessee as we see no merit in such line of argument. The quantification of time for application of mind is a difficult task. No presumption can flow adverse to the authorized person only on the ground that the task has been reportedly performed swiftly. The Supervising Officers are normally kept abreast of development in the assessment routinely and have knowledge of factual aspects. No cogent evidence direct or circumstantial is before us to hold against the designated authority under s.153D of the Act. We thus see no substance in the plea raised on behalf of the assessee and thus dismiss the additional ground in summarily.
7. As per its grounds of appeal, the assessee has challenged the action of the CIT(A) in confirming the addition of Rs.32,08,000/- out of total addition of Rs.45,11,546/- made by the AO on account of value of BMW car allegedly transferred to the assessee by the employer in lieu of salary.
8. Briefly stated, the search action under s.132 of the Act was conducted in group cases where the assessee was also covered under search action carried on 04.12.2014. Pursuant thereto, a notice under s.153A of the Act was issued to the assessee. In response to the notice, the assessee filed return under s.153A of the Act I T ( S S ) A N o . 2 3 5 / Ah d / 1 8 ( S a n k e t J . S h a h Vs. DC IT) A.Y. 2012-13 - 4 -
declaring total income of Rs.1,91,344/-. In course of assessment proceedings under s. 153A of the Act, it was observed by the AO that in the course of search, certain e-data from laptop of the assessee were found and seized from residential premises of the assessee which represented an agreement made and entered into on 07.09.2011 at Ahmedabad between 'Eyelid Infrastructure Pvt. Ltd.' (transferor) and the assessee (transferee). As per the aforesaid agreement, it was noticed by the AO that the car was transferred to the assessee in lieu of salary payment to the assessee who happened to hold the position of Director. In the light of agreement found, the AO added Rs.45,11,546/- to the total income of the assessee company, being value of BMW car as salary received having regard to the provisions of Section 17 of the Act.
9. Aggrieved by the aforesaid action, the assessee preferred appeal before the CIT(A). The CIT(A) granted partial relief to the assessee and confirmed the addition of the depreciated value determined at Rs.32,08,000/- instead of the gross value. The relevant operative para of the CIT(A) is reproduced hereunder:
"5. Submission of t he appellant and as sessment order has been considered carefully. The First ground of appeal is agains t the additions of Rs.45,11,546/- made by the AO considering total .val ue of BM W car as salary received by the appellant from Eyelid Infrastructure P Ltd. During the sear ch on 4.12.2014 at the premises of the appellant, a copy of an agreement dated 7.9,2011 entered into between Eyelid Infrastructure P Ltd (transferor) and the appellant (transferee). As per the said agreement transferor to transfer BMW car bearing No.M H-04- ET-6651 to the transferee in lieu of payment of his salary as direct or in the transferor company and the transferee (appellant) had agreed to receive the same in lieu of his salary as full & final payment. As per the said agreement, the appellant was di rector from 28.9.2010 to 20.12.2011. The AO made the additions of total value of car i.e. Rs.45,11,546/-. The appellant contended that the car was never transferred in the name of the appellant and it is still in the name of Eyelid Infrastructure P Ltd. The appellant filed documentary evi dence in the form of RTO book copy & insurance policy to substantiate this contention. As this agreement was never acted upon, hence, addi tions should be deleted. The appellant alternatively contended that even if, it is considered in the appellant's hands, depr eciation value of car should be taken as price and not the total purchase value, as taken by the AO.
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The appellant submitt ed copy of insurance policy dated 25.4.2012 in which total sum insur ed was Rs .32,08,000/- . The appellant's contention that car was not transferred in appellant's name, therefore, additions should be deleted, cannot be accepted because the car is movable asset and its possession was not denied by the appellant. The agreement found was signed by both the parties, thus, it was acted upon. Regarding the other contention that depreciation value should be taken as correct consideration, is found reasonable & logical. Addition of total value of the car of 2010 model is not justified for the year under consideration as price of the car has been depreciated as per I.T. Act & Rules. The sum insured has been shown at Rs.32,08,000/-, theref ore, it is reasonable to consider this amount as price of the car. Therefore, additions of Rs.32,08,000/- are confirm ed and rem aining additions of Rs.14,03,546/- are del eted. This ground of appeal is partly allowed."
10. Further aggrieved, the assessee preferred appeal before the Tribunal.
11. We have carefully considered the rival submissions on the issue. The controversy revolves around the addition of value on account of transfer of BMW car in lieu of salary to the assessee herein. It is the case of the assessee that agreement so entered was never acted upon but was only entered with a view to avoid fraudulent acquisition of assets the company in which he was a Director. It was pointed out on behalf of the assessee that he was a Director of the company since a long time but only as authorized signatory and was not getting any salary before or after mentioned period in agreement i.e. 28.09.2010 to 20.12.2011. It was contended that this fact itself proves that the agreement was not representing the real state of affairs. To support its contention, the assessee has adverted to the vehicle particulars issued by the Motor Vehicle Department of Government of Maharashtra to show that the car was continuing to be held in the name of the company. Similarly, the insurance receipt was referred to show that the car was in the name of the company, in which he was a Director and the car was eventually transferred in the name of one Mr. Avinash Shah in 2015.
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12. These documents provide necessary support to the contention of the assessee. We also simultaneously note that the agreement is ascribed to be executed on 07.09.2011 which makes a reference to a period of 28.09.2010 to 20.12.2011 where the assessee was stated to be the Director. Hence, the ostensible inconsistency in an agreement covering event of subsequent period i.e. period of directorship would clearly show that the agreement is antedated. Thus, the validity of the agreement itself is in jeopardy. The assessee cannot be expected to prove a negative point of non-receipt of salary in the circumstances existing. In the light of antecedents on non-receipt of salary in the past, pre-dating of agreement coupled with registration continuing to be in the name of the company, the undue significance cannot be attached to such an agreement which is stated to have not been consummated for variety of reasons in the course of business. We thus see substantial merit in the case of assessee.
13. In the result, the substantive ground of appeal of assessee is allowed.
14. In the result, appeal of the assessee is allowed in part.
This Order pronounced on 09/10/2020
Sd/- Sd/-
(RAJPAL YADAV) (PRADIP KUMAR KEDIA)
VICE PRESIDENT ACCOUNTANT MEMBER
Ahmedabad: Dated 09/10/2020
True Copy
S. K. SINHA
आदे श क त!ल"प अ#े"षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं-धत आयकर आयु/त / Concerned CIT
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Vs. DC IT) A.Y. 2012-13 - 7 -
4. आयकर आय/
ु त- अपील / CIT (A)
5. 3वभागीय 6त6न-ध, आयकर अपील"य अ-धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड< फाइल / Guard file.
By order/आदे श से, उप/सहायक पंजीकार आयकर अपील"य अ-धकरण, अहमदाबाद ।