Mehul Ratilal Shah, Bangalore V. DCIT, Bangalore

CO 60/BANG/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1372 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-09-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 30-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: H N KHINCHA
• Keywords: Unexplained cash credit; Opportunity of being heard; Additional evidence
• Section: 143(3); 234B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SHRI VIJAYPAL RAO, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER CO NO.60/BANG/2014 (IN ITA NO.1604/BANG/2013) (ASST. YEAR 2010-2011) SHRI MEHUL RATILAL SHAH, 146/14/6, NIJAGUNA GOWDA INDL. ESTATE, SAJJEPALTA, BANGALORE. . APPELLANT VS. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-2(1), BANGALORE. . RESPONDENT APPELLANT BY : H.N KHINCHA, C.A RESPONDENT BY : SHRI SARAVANAN B, JCIT DATE OF HEARING : 15-09-2015 DATE OF PRONOUNCEMENT : 09-10-2015 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : THIS IS A RECALLED CROSS-OBJECTION (CO IN SHORT) ORIGINALLY PREFERRED IN RESPECT OF ORDER OF COMMISSIONER OF IN COME-TAX (APPEAL) III, BANGALORE DATED 26/8/2013 FOR ASST. YEAR 201 0-11. CO NO.60/B/14 2 2. IN THE CASE ON HAND, AN ORDER OF ASSESSMENT WAS PASSED U/S 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT) VIDE ORDER DATED 31/3/2013 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.5,36,76,530/- AS AGAINST THE RETURNED INCOME OF RS.4,58,78,90/-, IN VIEW OF ADDITIONS BEING MADE U/ S 68 OF THE ACT AMOUNTING TO RS.77,97,635/- ON ACCOUNT OF FOUR NON- GENUINE LOAN AND TRADE CREDITORS, WHOSE DETAILS ARE AS UNDER: 1) RAMESH L SHAH (LOAN CREDITOR) - RS.14,25,000/- 2) BUREAU OF INDIA STANDARDS (TRADE CREDITOR) - RS.11,58,560/- 3) CHIU TA HYDRAULIC MACHINE MFG. CO. LTD. (TRADE CREDITOR) - RS.48,60,000/ - 4) PARASUM METALS PVT. LTD., - RS. 3,54,075/- RS.77,97,645/- 3. AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASST. Y EAR 2010- 11 DATED 31/3/2013, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE CIT(A)-I, BLORE. THE LEARNED CIT(A) DISPOSED THE ASSESSEES APPEAL ALLOWING THE ASSESSEE PARTIAL RELIEF BY DELE TING THE ADDITIONS U/S 68 OF THE ACT IN RESPECT OF THE LOAN/ TRADE CREDITORS LISTED AT SL.NO.1,2, AND 4 AT PARA 2 OF THIS ORDER (SUPRA) BUT CO NO.60/B/14 3 UPHELD THE ADDITION U/S 68 OF THE ACT IN RESPECT OF THE TRADE CREDITOR AT SL.NO.3 M/S CHIU TA HYDRAULIC MACHINE M FG. CO. 4.1 REVENUE, BEING AGGRIEVED BY THE ORDER OF THE CI T(A)-I, BLORE DATED 26/8/2013, CAME UP IN APPEAL BEFORE TH E TRIBUNAL CHALLENGING THE DELETION OF ADDITION U/S 68 OF THE ACT IN RESPECT OF 2 PARTIES; I.E 1) RAMESH L SHAH AND PRASUM METALS PVT. LTD. THE ASSESSEE FILED CROSS-OBJECTION. BOTH, REVENUE S APPEAL AND THE ASSESSEES CROSS OBJECTIONS WERE POSTED FOR HEA RING AND HEARD ON 7/10/2014 AND THE TRIBUNAL PASSED ITS ORDER ON 24/10/2014 IN ITA NO.1604/BANG/2013. IN ITS ORDER, THE TRIBUNAL ALLOWED REVENUES APPEAL FOR STATISTICAL PURPOSES, HOLDING AS UNDER AT PARA 6.3 THEREOF: 6.3 WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE AND HAVE PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. ON AN APPRECIATION THEREOF, WE FIND THAT THE ASSESSING OF FICER IN THE ORDER OF ASSESSMENT HAD, INTER ALIA, ADDED B ACK UNDER SECTION 68 OF THE ACT RS.14,25,000 IN THE NAM E OF SRI RAMESH L SHAH (LOAN CREDITOR) AND RS.3,54,075 I N THE NAME OF M/S. PARASUM METALS PVT. LTD. (TRADE CRED ITOR) AS NON-GENUINE DUE TO NON-FILING OF CONFIRMATIONS B Y THESE CO NO.60/B/14 4 PARTIES FOR THEIR TRANSACTIONS AND BALANCE. ON APPE AL, WE FIND THAT THE LEARNED CIT (APPEALS) HAS DELETED THE AFORESAID ADDITIONS UNDER SECTION 68 OF THE ACT IN RESPECT OF SRI RAMESH L SHAH AND M/S. PARASUM METAL S PVT. LTD. ON THE BASIS OF LEDGER ACCOUNTS, INVOICES , PAYMENT DETAILS, ETC. WHICH WERE FILED BEFORE HIM WHILE AT THE SAME TIME ACKNOWLEDGING THAT THE CONFIRMATIO NS OF THE BALANCES OF THESE PARTIES APPEARING IN THE ASSE SSEE'S BOOKS WERE NOT FILED BEFORE THE ASSESSING OFFICER. A PERUSAL OF THE IMPUGNED ORDER OF THE LEARNED CIT (APPEALS) INDICATES AND EVIDENCE CLEARLY THAT THESE EVIDENCES THAT THE LEARNED CIT (APPEALS) ACTED UPON TO GIVE THE ASSESSEE RELIEF WERE NOT BEFORE THE ASSESS ING OFFICER FOR CONSIDERATION, IN ASSESSMENT PROCEEDING S. WE ALSO FIND FROM THE IMPUGNED ORDER THAT THE EVIDE NCES FILED BY THE ASSESSEE BEFORE THE LEARNED CIT (APPEA LS) AND ACTED UPON BY HIM TO GRANT RELIEF TO THE ASSESS EE WERE NOT PUT TO THE ASSESSING OFFICER FOR HIS EXAMINATION AND REBUTTAL AS WAS REQUIRED UNDER RULE 46A OF THE RULES. SUB-RULE (3) OF RULE 46A CONTEMPLATE S THAT IF ADDITIONAL EVIDENCE IS TAKEN ON RECORD, THEN IT CANNOT BE CONSIDERED ON MERITS, UNLESS THE ASSESSING OFFIC ER BE GIVEN AN OPPORTUNITY TO PRODUCE ANY EVIDENCE OR DOCUMENTS OR SUBMISSION IN REBUTTAL OF THE EVIDENCE IN REBUTTAL. IN THE LIGHT OF THE ABOVE FACTUAL MATRI X, IN THE CASE ON HAND, WE FIND THAT THE LEARNED CIT (APPEALS ) FAILED TO AFFORD ADEQUATE OPPORTUNITY TO THE ASSESS ING CO NO.60/B/14 5 OFFICER AS CONTEMPLATED UNDER RULE 46A(3) OF THE R ULES. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDER OF THE LEARNED CIT (APPEALS), IN RESPECT OF THE GROUNDS RA ISED BY REVENUE AT S.NOS.3 & 4 OF THIS APPEAL, ON THE DE LETION OF THE ADDITIONS UNDER SECTION 68 OF THE ACT PERTAI NING TO SRI RAMESH L SHAH OF RS.14,25,000 AND M/S. PARASUM METALS PVT. LTD. OF RS.3,54,075 AND RESTORE THE MAT TER TO THE FILE OF THE LEARNED CIT (APPEALS) TO BE EXAMINE D AND ADJUDICATED AFRESH AFTER AFFORDING ADEQUATE OPPORTU NITY TO THE ASSESSING OFFICER UNDER RULE 46A OF THE I.T. RULES, 1962 FOR HIM TO EXAMINE AND REBUT THE EVIDE NCES BROUGHT O RECORD BY THE ASSESSEE BEFORE THE LEARNED CIT (APPEALS) IN APPELLATE PROCEEDINGS. IT IS ORDERED ACCORDINGLY. 4.2 SINCE NONE APPEARED ON BEHALF OF THE ASSESSEE, THE CO OF THE ASSESSEE WAS DISMISSED FOR NON-PROSECUTION. 4.3 THEREAFTER, THE ASSESSEE FILED A MISC. PETITION AND THE TRIBUNAL VIDE ITS ORDER IN M.P NO.6/BANG/2015 DATED 6/2/2015 RECALLED ITS EARLIER ORDER IN CO NO.60/BANG/2014 DA TED 24/10/2014 FOR FRESH HEARING. THIS IS HOW THIS CRO SS OBJECTION IS BEFORE US FOR CONSIDERATION. CO NO.60/B/14 6 5.1 THE GROUNDS RAISED BY ASSESSEE IN ITS CO ARE AS UNDER:- 1. THE LEARNED ASSESSING OFFICER HAS ERRED IN PA SSING THE ORDER IN THE MANNER PASSED BY HIM AND THE LEARN ED CIT (APPEALS) HAS ERRED IN PARTIALLY CONFIRMING THE SAME. THE ORDER PASSED BY CIT (APPEALS) TO THE EXTENT CONFIRMING THE ASSESSMENT ORDER IS LIABLE TO BE QUASHED. 2. IN ANY CASE AND WITHOUT PREJUDICE, THE LEARNED ASSESSING OFFICER, HAD ERRED IN MAKING ADDITION UND ER SECTION 68 OF THE INCOME TAX ACT, AND THE LEARNED C IT (APPEALS), INSTEAD OF DELETING IN TOTO THE ADDITION S MADE BY ASSESSING OFFICER, HAS ERRED IN PARTIALLY CONFIRMING THE SAME. 3. THE LOWER AUTHORITIES HAVE ERRED IN NOT PROPE RLY APPRECIATING THE FACTS OF THE CASE. ; ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THERE IS NO UNEXPLAINED CREDIT AT ALL. THE ADDITION AS MADE / CONFIRMED BE ING CONTRARY TO AVAILABLE FACTS AND EVIDENCE IS TO BE DELETED. 4. THE CROSS OBJECTOR DENIES THE LIABILITY TO PA Y INTEREST UNDER SECTION 234B AND 234C OF THE ACT. T HE INTEREST HAVING BEEN LEVIED ERRONEOUSLY IS TO BE DELETED. 5. IN VIEW OF THE ABOVE AND ON OTHER GROUNDS TO B E ADDUCED AT THE TIME OF HEARING IT IS REQUESTED THAT THE ORDER PASSED BE QUASHED OR ATLEAST THE ADDITION AS CO NO.60/B/14 7 SUSTAINED BY CIT (APPEALS) BE DELETED AND INTEREST LEVIED BE ALSO DELETED. 5.2 THE ONLY ADDITION U/S 68 OF THE ACT SUSTAINED B Y THE LEARNED CIT(A) IN THE IMPUGNED ORDER WAS IN RESPECT OF A SUM OF RS.48,60,000/- DUE TO CHIU TA HYDRAULIC MACHINE MFG . CO. THAIWAN. THE ASSESSING OFFICER HAD MADE THE ADDIT ION ON THE GROUND THAT THE ASSESSEE HAD FAILED TO FILE THE CON FIRMATION FROM THE PARTY IN REGARD TO THE TRANSACTION AND OUTSTAND ING BALANCE. THE LEARNED CIT(A) UPHELD THE ADDITION BY HOLDING A S UNDER AT PARA 3.6 OF THE HIS ORDER:- ACCORDING TO THE DETAILS FURNISHED REVEALS THAT THE APPELLANT IMPORTED MACHINERY FROM CHIU TA HYDRAULIC MACHINE MFG CO. LTD., TAIWAN VIDE INVOICE NO.090911 DATED 11.9.2009 AT A COST US $ 1,00,000 EQUIVALENT TO INDIAN RS.47,45,997/-. FURTHER, AN AMOUNT OF RS.1,14,002/- ALSO INCURRED TOWARDS CURRENCY FLUCTUATION. THUS TOTAL LIABILITY APPEARS AS ON 31.3.2010 FOR RS.48,60,000/-. A CLOS E VERIFICATION OF THE INVOICE AND BANKS LETTER INDIC ATE THAT THE MACHINERY WAS IMPORTED UNDER THE LETTER OF CREDIT ARRANGEMENT WITH HDFC BANK AND COST OF THE MACHINERY WAS PAID BY THE BANK, CORRESPONDINGLY CO NO.60/B/14 8 SIMILAR AMOUNT DEBITED IN APPELLANTS ACCOUNT ON 7.10.2009. THUS, COST OF MACHINERY WAS FULLY PAID ON 7.10.2009 HENCE, NO OUTSTANDING REMAINED WITH, CHIU TA HYDRAULIC MACHINE MFG. CO. LTD. AND IF AT ALL, LIABILITY WOULD BE WITH THE BANK. FURTHER, IT IS S EEN THAT THE APPELLANT HAS SHOWN LIABILITY WITH HDFC BANK ON ACCOUNT OF OVERDRAFT OF RS.10,48,544/- AND HDFC BANK ACCOUNT RS.65,26,426/- AS ON 31.3.2010. THE FACTS DISCUSSED ABOVE SINCE, NO LIABILITY EXIST WITH CHIU TA HYDRAULIC MACHINE MFG CO. LTD. AS ON31/3/2010 HENCE, OUTSTANDING OF RS.48,60,000/- REMAIN UNEXPLAINED. THE ADDITION OF RS.48,60,000/- IS THEREFORE CONFIRMED. 5.3 THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD IMPORTED MACHINERY FROM A COMPANY IN T AIWAN, NAMELY CHIU TA HYDRAULIC MACHINE MFG. CO. THROUGH A N ARRANGEMENT OF A LETTER OF CREDIT FROM IS BANKER, H DFC BANK LTD. IT WAS SUBMITTED THAT THE ASSESSEES BANKER HAD AN ARRANGEMENT OF BUYERS CREDIT WITH THE FOREIGN BANK WHICH HAD MADE PAYMENT TO THE SUPPLIER OF MACHINERY. THE ASSESSEES BANKER H AD DEBITED THE AMOUNT IN THE ASSESSEES ACCOUNT ONLY ON 2/7/2010 W HICH FELL IN THE SUBSEQUENT YEAR AND THE ASSESSEE ACCORDINGLY MA DE ENTRIES IN HIS BOOKS OF ACCOUNT. THEREFORE, AT THE END OF THE YEAR I.E AS ON CO NO.60/B/14 9 31/3/2010, THE ASSESSEES BOOKS SHOWED THAT THE AMO UNT IS STILL DUE TO THE SUPPLIER. IN SUPPORT OF THE ASSESSEES CLAIM, THE LEARNED AR FILED A PAPER BOOK BEFORE US WHICH, INTE R ALIA, INCLUDES COPY OF THE INVOICE OF THE SUPPLIER, LEDGE R ACCOUNT OF THE SUPPLIER IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, C OPY OF THE BANK STATEMENT OF HDFC BANK LTD, WHERE THE DEBIT TO THE ASSESSEES ACCOUNT IS REFLECTED AND DETAILS OF THE LETTER OF CREDIT ISSUED BY THE BANKER OF THE ASSESSEE. 5.4 THE LEARNED DR, HOWEVER, PLEADED STRONG RELIANC E ON THE FINDING OF THE LEARNED CIT(A) IN THE IMPUGNED ORDER , CONTENDING THAT AT THE YEAR END THE ASSESSEE OWED LARGE AMOUNT S TO ITS BANKERS AND, THEREFORE, THERE WAS A POSSIBILITY OF THIS AMOUNT HAVING BEEN PAID TO THE SUPPLIER BEFORE THE YEAR EN D. THE LEARNED DR SUBMITTED THAT SINCE THE SUBMISSIONS AND DETAILS/DOCUMENTATION FURNISHED BY THE LEARNED AR I N THE COURSE OF THE PRESENT APPELLATE PROCEEDINGS, WERE NEVER BE FORE THE AUTHORITIES BELOW, THIS ISSUE TOO REQUIRES TO BE RE STORED TO THE FILE OF THE LEARNED CIT(A)/ASSESSING OFFICER FOR FRESH E XAMINATION AND VERIFICATION, AS HAD BEEN DIRECTED BY THE TRIBU NAL IN RESPECT OF CO NO.60/B/14 10 THE OTHER TWO CREDITORS, I.E RAMESH L SHAH AND PARA SUM METALS PVT. LTD., IN REVENUES APPEAL 5.4 WE HAVE HEARD BOTH PARTIES AND PERUSED AND CARE FULLY CONSIDERED THE MATERIAL ON RECORD. WE FIND FROM TH E RECORD THAT THE MATERIAL NOW PLACED BEFORE US BY THE ASSESSEE I N THE FORM OF PAPER BOOK-I (PG 1 TO 12) AND PAPER BOOK II (PG 1 T O 119) WERE NEVER PLACED BEFORE THE AUTHORITIES BELOW FOR THEIR EXAMINATION AND CONSIDERATION. IN THIS FACTUAL MATRIX, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE OF THE TRADE CREDITOR M/S CHIU TA HYDRAULIC MACHINE MFG. CO. AND RESTORE THE MATTER TO THE FILE OF THE LEARNED CIT(A) FOR EXAMINATION AND ADJUDICATION AFRESH AFTER AFFORDING THE ASSESSING OFFICER ADEQUA TE OPPORTUNITY TO EXAMINE AND REBUT THE EVIDENCE BROUGHT ON RECORD BY THE ASSESSEE. WE HAVE RESTORED THE MATTER TO THE FILE OF THE LEARNED CIT(A) FOR THE REASON WE HAD ALSO SET ASIDE TO THE FILE OF THE LEARNED CIT(A) THE MATTERS OF THE EXAMINATION IN RESPECT OF THE CREDITS OF RAMESH L SHAH AND PARA SUM METALS PVT. LTD., WHICH DECIDING REVENUES APPEAL IN ITA NO.1604/BANG/2013. NEEDLESS TO ADD, THAT THE LEARN ED CIT(A) SHALL ALSO AFFORD THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD CO NO.60/B/14 11 AND TO FILE DETAILS/SUBMISSIONS REQUIRED BEFORE ADJ UDICATING THE MATTER IN ACCORDANCE WITH LAW. IT IS ACCORDINGLY O RDERED. THE CO IS DISPOSED OFF AS INDICATED ABOVE. 6. IN THE RESULT, THE ASSESSEES CROSS-OBJECTIONS F OR ASST. YEAR 2010- 11 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH OCT, 2015. SD/- SD/- (VIJAYPAL RAO) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER VMS. BANGALORE DATED : 9 /10/2015 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGISTRAR, I TAT, BANGALORE.