TMI Blog2015 (12) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... e, it is probable that either the Assessee or any other person related to the Assessee, would have paid for acquiring the vehicle in question. An investigation into the sources of the funds of Sanjay Bhandari/VKTT may perhaps have established a link between the funds used for the purchase of the vehicle and JCT/Sameer Thapar/the Assessee. However, no such link has been established. In absence of any material to show that the consideration for the vehicle had not been paid by Sanjay Bhandari/M/s History Logistics, it is not possible to conclude that the Assessee had made an investment in purchase of the vehicle in question. - Decided in favour of the Assessee and against the Revenue. - ITA 86/2013 - - - Dated:- 30-11-2015 - S. Muralidhar And Vibhu Bakhru, JJ. For the Appellant : Ms Suruchi Aggarwal, Senior Standing Counsel with Ms Lakshmi Gurung, Junior Standing Counsel For the Respondent : Mr S. Krishnan JUDGMENT Vibhu Bakhru, J. 1. The Revenue has filed the present appeal under Section 260A of the Income Tax Act, 1961 (hereafter the Act ) calling into question an order dated 13th July, 2012 passed by the Income Tax Appellate Tribunal (hereafter the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid controversy are briefly stated as under:- 4.1 The Assessee is a promoter of a public company JCT Ltd. (hereafter referred as JCT ) which belongs to the Thapar Group. Mr Sameer Thapar is the Vice-chairman-cum-Managing Director of JCT Ltd. He is also the Karta of Sameer Thapar Sons (HUF), which is stated to own 99% of the shareholding of the Assessee. The Department of Revenue Intelligence (Customs Department) (hereafter referred as DRI) conducted search and seizure operations on the premises of one Mr Sanjay Bhandari in the month of September 2005, in connection with the import of motor vehicles under the EPCG Scheme at a concessional rate of duty. 4.2 Pursuant to the search, notices were issued by the DRI for production of the vehicle in question, which was in possession of Mr Sameer Thapar. The vehicle in question was produced before the DRI on 10th September, 2005 and was seized by the DRI on that date for alleged violation of duty payment. 4.3 The vehicle in question had been imported in India by Mr Sanjay Bhandari in the name of his sole proprietorship concern. According to the Assessee, the said vehicle was purchased by Mr Sanjay Bhandari, proprietor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce for payment of insurance premium of ₹ 2,96,793/, custom duty for ₹ 4,89,968/-, commission for ₹ 42,978/- and other charges for ₹ 88,945 paid by VKTT; and confirmation from Mr Sanjay Bhandari regarding the purchase of the car and payment of the aforesaid amounts. The CIT(A) called for the comments of the AO. Although the AO opposed the production of additional evidence but the CIT(A) allowed the Assessee s application and called for a remand report. 4.8 After examining the application of the Assessee, the letters submitted by Mr Sanjay Bhandari as well as the order of the Settlement Commission, the CIT(A) upheld the assessment order for addition of the value of the car under Section 69 of the Act. However, the CIT(A) enhanced the quantum of addition by ₹ 2,92,694/- from ₹ 1,37,07,306/- to ₹ 1,40,00,000/-, which was the value computed by the Directorate of Revenue Intelligence (hereafter DRI ). 5. In the aforesaid context, it would be expedient to examine the explanation provided by the Assessee before the CIT(A) as well as the explanation of Mr Sanjay Bhandari in his letter submitted by the Assessee before the CIT(A). 6. The rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eased to the Appellant Company, although the vehicle was in its possession but the same was to be returned to M/s V.K. Tour and Transport once the duty amount paid by it is refunded. (viii) When the final duty amounting to ₹ 1,09,72,215/- (inclusive of ₹ 68,58,244/- which had already been paid during the year ended 31.03.2006) was subsequently paid, the entire amount comprising the duty, was paid by the Appellant Company during the year ended 31.03.2008 and capitalized under the head vehicle in the books of accounts. The balance comprising of penalty, redemption fine and interest on the differential duty amount was charged to the respective heads during the year ended March 31,2008. (ix) The Appellant Company has on date paid on aggregate sum of ₹ 1,39,01,449/- in respect of the said vehicle as per the details given below:- Date Amount Remarks 13.09.2005 65,00,000 Duty 15.09.2005 3,58,244 Duty 25.04.2007 41,13,971 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the related entity and, indisputably, the Assessee/Sameer Thapar has been in physical possession of the vehicle from May 2005 (except for the few days that the vehicle was in possession of the DRI). Although the Assessee claims that the vehicle was to be leased to the Assessee, its actions are clearly not consistent with this position. If the vehicle was provided to the Assessee only for a trial purpose, there was no occasion for the Assessee to file an application or move the Settlement Commission for settlement of the duties with respect to the said vehicle or seek release of the vehicle. However, the Assessee acted in complete variance with this position; it paid the duty for release of the vehicle, obtained possession of the same on superdari and continued to use the vehicle. During the relevant period, Assessee showed the payment of duty as a recoverable from VKTT even though there was no agreement with VKTT for payment of such duty at the time nor was it produced at any later stage. During the year ended 31st March, 2008, the Assessee capitalized the payments of duty under the head of vehicle in its books of accounts and the penalty, redemption fine and interest were debi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30 EPCG licenses. DRI's investigations have very clearly brought out that EPCG licenses were obtained by resorting to mis-declaration of premises with regard to their status vis- -vis the activity declared to be carried out from the said premises. Investigations have also clearly brought out that vehicles were transferred to other persons by resorting to different kinds of subterfuges and were not used for the purpose for which they were imported under the respective EPCG Licenses. It is immaterial whether the ownership of the vehicles was transferred or not in a legal manner. Perhaps legal transfer of the vehicles was not possible as it could have resulted in creation of evidence that the vehicles were not used for the purpose for which they were imported. Different kinds of deceptions were adopted by the firms and the company operating through Shri Sanjay Bhandari who was their Proprietor/Director to part with the vehicles and yet take advantage of duty concession under the EPCG Scheme and also to show fulfillment of export obligation. Evidence unearthed by DRI has very clearly proved that dishonest motive of evading duty was the sole objective behind the import of these 61 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2005 and it is apparent that even at the time of registration, it was known that the vehicle would be used by JCT, Sameer Thapar or any of the Thapar Group entities. The only explanation offered before the DRI for registering the car at the address of JCT is that this had been done to inspire confidence and secure the concerns of JCT. However, as per the version of the Assessee, there was no agreement in May 2005 for lease of the vehicle and the vehicle in question was handed over only for the purposes of a trial. According to the statement made by Mr Satish Kapoor (an officer of JCT) before the DRI, the vehicle continued to be in possession of Mr Sameer Thapar from May till 10th September, 2005 when it was seized by DRI. Thus, admittedly, the vehicle continued to be in possession of Mr Sameer Thapar from the month of its registration till its seizure but no agreement for lease or hire of the vehicle had been executed. Although, it is stated that in addition to lease rentals the Assessee/JCT Ltd. was also to place a security deposit with Mr Sanjay Bhandari/VKTT, concededly, no such deposit had been placed. It was also material to note that there is also a variance in the amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act can be applied to tax the value of the investment made. 17. In the present case, the threshold condition of the Assessee making an investment is not satisfied. Before the CIT(A), the Assessee had produced additional evidence. This included; (i) copy of the Invoice No.73015 dated 6th April, 2005 issued by London Country Club Ltd. in favour of M/s History Logistics (Prop. Sh. Sanjay Bhandari) for purchase of car; (ii) copy of Letter of Credit No.01790002340204 issued by Oriental Bank of Commerce, New Delhi for GBP 85395; (iii) copy of Bank Advice dated 15th April, 2005 for ₹ 17,89,972/- (enclosure of Bank Charges) towards payment of the purchase of car; (iv) copy of Marine Insurance Policy No. 1000025538 dated 24th November, 2004 for ₹ 23,419/-; (v) Copy of Invoice No. HL002/04-05 dated 31st March, 2005 for sale of ₹ 72,05,521/- for sale of car on High Sea Sale basis by M/s History Logistics to VKTT; (vi) Copy of challans/invoice for payment of Insurance of ₹ 2,96,763/-, Custom Duty of ₹ 4,89,668/-, Commission Agency Charges of ₹ 42,978/- and other charges of ₹ 88,945/-. The Assessee had also produced a letter from Sanjay Bhandari. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity deposit of ₹ 48lacs. Further it was also agreed that in case you decide to purchase the vehicle in the future, the security deposit of ₹ 48 lacs shall be appropriated and be treated as the payment of the vehicle otherwise the security deposit shall be released on the return of the car. However before the agreement could be executed, the DRI initiated an investigation of all firms of Shri. Sanjay Bhandari. Along with 54 vehicles, this vehicle was seized by DRI on 10/09/2005 and therefore the lease deed could not be finalized. 10. After the seizure of the vehicle by DRI, to take provisional release of the vehicle, you made a revenue deposit of ₹ 68,58,244/- toward the differential duty/duty forgone and also furnished the bank guarantee for ₹ 35 lacs favoring the Authorities. 11. Vide their Show Cause Notice, the DRI on 23/08/2006further additional payment of ₹ 41,13,971/- toward Custom Duty and the same was also paid on 26/04/2007 by you on our behalf after admission of my application with the Hon'ble Settlement Commission vide their order dated 28/12/2006. 12. The above payments were made by you with an understanding that as an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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