Promanada Reality Private Limited (formerly, Amber Tie-Up Private Limited), Kolkata V. ITO, Ward-1(1), Kolkata, Kolkata

ITA 1034/KOL/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4625 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 12-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K SRIHARI
• Assessee Lawyers: A K GUPTA
• Keywords: Opportunity of being heard; Principle of natural justice; Reassessment proceedings
• Section: 133(6); 263

Judgement Text

1 ITA NO. 1034/KOL/2017 PROMANADA REALITY PRIVATE LTD., AY 2012-13 , A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA ( ) BEFORE . . , /AND . , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI M. BALAGANESH , AM] I.T.A. NO. 1034/KOL/2017 ASSESSMENT YEAR: 2012-13 PROMANADA REALITY PRIVATE LTD. (FORMERLY AMBER TIE-UP PVT. LTD.) (PAN: AAFCA4746H) VS. INCOME-TAX OFFICER, WD-1(1), KOLKATA APPELLANT RESPONDENT DATE OF HEARING 24.09.2018 DATE OF PRONOUNCEMENT 16.10.2018 FOR THE APPELLANT SHRI A. K. GUPTA, FCA FOR THE RESPONDENT SHRI P. K. SRIHARI, CIT, DR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE ASSESSEE IS AGAINST TH E ORDER OF THE LD. CIT(A)-9, KOLKATA DATED 03.03.2017 FOR AY 2012-13 ON THE FOLL OWING GROUNDS: 1. FOR THAT THE EX PARTE ORDER DATED 3 MARCH 2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) (IN SHORT CIT(A)) IS ILLEGAL, ARBITRARY, ERRONEOUS AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND FAIR PLAY. 2. FOR THAT THE CIT(A) ERRED IN DISMISSING THE APPE AL EX-PARTE EVEN THOUGH AN ADJOURNMENT APPLICATION WAS FILED BEFORE HIM AND TH E SAME WAS IN RESPECT OF ONLY THE SECOND HEARING FIXED BEFORE HIM. THE CIT(A) SHOULD HAVE IN FORMED THE APPELLANT EVEN IF HE WANTED TO REFUSE THE ADJOURNMENT AND SHOULD HAVE GIVEN ANO THER CHANCE TO THE APPELLANT. 3. FOR THAT FURTHER AND IN ANY EVENT AND WITHOUT PR EJUDICE TO THE ABOVE, THE CIT(A) SHOULD NOT HAVE DISMISSED THE APPEAL WITHOUT DECIDI NG THE ISSUE ON MERITS. THE CIT(A) SHOULD HAVE DECIDED THE ISSUE ON MERITS BASED ON TH E STATEMENT OF FACTS AND GROUNDS OF APPEAL FILED BEFORE HIM AND ERRED IN DISMISSING THE APPEAL IN LIMINI AND WITHOUT GIVING ANY REASON. 2 ITA NO. 1034/KOL/2017 PROMANADA REALITY PRIVATE LTD., AY 2012-13 4. FOR THAT THE ORDER OF THE CIT(A) DISMISSING THE APPEAL EX-PARTE AND WITHOUT ANY DECISION ON MERITS, IS ERRONEOUS, ILLEGAL AND LIABL E TO BE CANCELLED AND RECALLED. 2. AT THE OUTSET, THE LD. AR BROUGHT TO OUR NOTICE THAT NO PROPER OPPORTUNITY WAS GIVEN TO THE ASSESSEE BY THE NEW AO WHO FRAMED THE ASSESS MENT IGNORING THE ENQUIRY MADE BY ITO, WARD-9. HAVING HEARD RIVAL SUBMISSIONS ON THI S POINT WE NOTE FROM PERUSAL OF PAGE 1 OF THE ASSESSMENT ORDER THAT THE AO HAS ACKNOWLEDGE D THAT THE ENQUIRIES U/S. 133(6) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT) MADE BY THE AO HAS BEEN REPLIED BY THE RESPECTIVE PARTIES. IN THIS CASE, I T WAS BROUGHT TO OUR NOTICE THAT THE AO WHO HAD PASSED THE ORDER WAS ITO, WD-1(1), KOLKATA WHER EAS IT WAS BROUGHT TO OUR NOTICE THAT ITO, WD-9(1), KOLKATA HAD MADE ENQUIRIES PRIOR TO T HE ITO, WD-1(1), KOLKATA THE RESULTS OF THE SAID ENQUIRY HAS NOT BEEN TAKEN INTO BY THE ITO , WARD-1(1), KOLKATA BEFORE FRAMING THE ASSESSMENT. IT WAS BROUGHT TO OUR NOTICE FROM PAGE 2 OF THE PAPER BOOK THAT ITO, WD-9(1), KOLKATA HAD ISSUED NOTICES TO THE ASSESSEE AND THE SAME WERE REPLIED TO IN DETAIL. IT WAS BROUGHT TO OUR NOTICE BY THE LD. AR THAT THE ASSESS EE IS A RUNNING COMPANY AND BEFORE ISSUING THE SHARES THE BREAK-UP VALUE OF THE SHARES WAS COMPUTED AT RS.250/-. ACCORDING TO LD. AR, NEITHER PROPER OPPORTUNITY WAS GIVEN TO THE ASSESSEE BY THE ITO, WD-1(1), KOLKATA TO DISCHARGE THE ONUS CASTED UPON IT TO PROVE THE I DENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION OF SHARES INTRODUCED IN THE ASSESSEE COMPANY NOR THE RESULTS OF THE ENQUIRY CONCLUDED BY ITO, WARD-9(1), KOLKATA, WAS TAKEN NOT E OF WHILE FRAMING THE ASSESSMENT. THEREFORE, HE PLEADS THAT THE MATTER MAY BE REMANDE D BACK TO THE AO FOR DE NOVO ASSESSMENT. ON THE OTHER HAND, TAKING INTO CONSIDE RATION THESE FACTS THE LD. CIT, DR HAS NO OBJECTION TO THE MATTER BEING REMITTED BACK TO THE AO BUT HE WANTS THE LD. AR TO UNDERTAKE TO COOPERATE BEFORE THE AO IN THE DE NOVO ASSESSMEN T. THE LD. AR UNDERTAKES BEFORE US THAT THE ASSESSEE WILL COOPERATE FULLY WITH THE AO. WE NOTE THAT THE ASSESSEE HAD REPLIED TO THE NOTICE ISSUED BY THE EARLIER AO I.E. ITO, WD-9 (1), KOLKATA. HOWEVER, THE CASE WAS TRANSFERRED TO JURISDICTION TO ITO, WD-1(1), KOLKAT A WHO DREW ADVERSE INFERENCE AGAINST THE ASSESSEE ONLY ON THE GROUND THAT THE ASSESSEE COMPA NY FAILED TO PRODUCE THE DIRECTORS OF THE SHARE SUBSCRIBER COMPANY AND THEREFORE HAS CONCLUDE D THAT THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE IS BOGUS. WE FIND THAT SI NCE THE ASSESSEE HAD COMPLIED WITH THE 3 ITA NO. 1034/KOL/2017 PROMANADA REALITY PRIVATE LTD., AY 2012-13 QUESTIONNAIRE THAT HAS BEEN RAISED BY THE ITO, WD-9 (1), KOLKATA IN THE INTEREST OF JUSTICE AND FAIR PLAY THE ITO, WD-1(1), KOLKATA OUGHT TO HAVE D ISCUSSED THE PAPERS/DOCUMENTS FILED BY THE ASSESSEE BEFORE ITO, WD-9(1), KOLKATA WITHOUT D OING SO, WE ARE OF THE OPINION THAT NO PROPER OPPORTUNITY HAS BEEN GRANTED TO THE ASSESSEE BY THE ITO, WD-1(1), KOLKATA. IN THE LIGHT OF THE ABOVE, WE FIND THAT NO PROPER OPPORTUN ITY WAS GIVEN TO ASSESSEE BY AO DURING THE REASSESSMENT PROCEEDINGS AND SO WE ARE, THEREFO RE, OF THE OPINION THAT ASSESSEE DID NOT GET PROPER OPPORTUNITY BEFORE THE AO DURING ASSESSM ENT PROCEEDINGS. THE HONBLE (THREE JUDGE BENCH) OF THE HONBLE SUPREME COURT IN TIN BO X COMPANY VS. CIT (2001) 249 ITR 216 (SC) HAS HELD AS UNDER: IT IS UNNECESSARY TO GO INTO GREAT DETAIL IN THESE MATTERS FOR THERE IS A STATEMENT IN THE ORDER OF T HE TRIBUNAL, THE FACT-FINDING AUTHORITY, THAT READS TH US : WE WILL STRAIGHTAWAY AGREE WITH THE ASSESSEES SUB MISSION THAT THE INCOME-TAX OFFICER HAD NOT GIVEN TO THE ASSESSEE PROPER OPPORTUNITY OF BEI NG HEARD. THAT THE ASSESSEE COULD HAVE PLACED EVIDENCE BEFORE THE FIRST APPELLATE AUTHORITY OR BEFORE THE TRIBUNAL IS REALLY OF NO CONSEQUENCE FOR IT IS THE ASSESSMENT ORDER THAT COUNTS. THAT ORDER MUST BE MADE AFTER THE ASSESSEE HAS BEEN GIVEN A RE ASONABLE OPPORTUNITY OF SETTING OUT HIS CASE. WE, THEREFORE, DO NOT AGREE WITH THE TRIBUNAL AND THE HIGH COURT THAT IT WAS NOT NECESSARY TO SET ASIDE THE ORDER OF ASSESSMENT AND REMAND THE MATTER TO THE ASSESSING AUTHORITY FOR FRESH ASSESSMENT AFTER GIVING TO THE ASSESSEE A PROPER OPPORTUNITY OF BEING HEARD. TWO QUESTIONS WERE PLACED BEFORE THE HIGH COURT, OF WHICH THE SECOND QUESTION IS NOT PRESSED. THE FIRST QUESTION READS THUS : 1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN NOT SETTING ASIDE THE ASSESSMENT ORDER IN SPITE OF A FINDING ARRIVED AT BY IT THAT THE INCOME- TAX OFFICER HAD NOT GIVEN A PROPER OPPORTUNITY OF H EARING TO THE ASSESSEE ? IN OUR OPINION, THERE CAN ONLY BE ONE ANSWER TO THI S QUESTION WHICH IS INHERENT IN THE QUESTION ITSELF : IN THE NEGATIVE AND IN FAVOUR OF THE ASSESSEE. THE APPEALS ARE ALLOWED. THE ORDER UNDER CHALLENGE IS SET ASIDE. THE ASSESSMENT ORDER, THAT OF THE COMMISSIONER (APPEALS) AND OF THE TRIBUNAL A RE ALSO SET ASIDE. THE MATTER SHALL NOW BE REMANDED TO THE ASSESSING AUTHORITY FOR FRESH CO NSIDERATION, AS AFORESTATED. 3. IN SIMILAR CASE THIS TRIBUNAL IN ITA NO.393/KOL/ 2016 IN M/S. STAR GRIHA (P) LTD. VS. ITO FOR AY 2008-09 DATED 15.12.2017 HAS OBSERVED AS UNDER:- WE ALSO NOTE THAT THE LD. CIT AFTER LOOKING INT O THE PERNICIOUS PRACTICE OF CONVERTING BLACK MONEY INTO WHITE MONEY HAS GIVEN THE GUIDELIN ES TO AO AS TO HOW THE INVESTIGATION 4 ITA NO. 1034/KOL/2017 PROMANADA REALITY PRIVATE LTD., AY 2012-13 SHOULD BE CONDUCTED TO FIND OUT THE SOURCE. SINCE SIMILAR ORDER OF THE LD. CIT PASSED U/S. 263 OF THE ACT HAS BEEN UPHELD BY THE TRIBUNAL AS WELL AS BY THE HONBLE CALCUTTA HIGH COURT AS WELL AS THE SLP HAS BEEN DISMISSED BY THE HONBLE S UPREME COURT, SIMILAR ORDER OF THE LD. CIT HAS TO BE GIVEN EFFECT TO AS DIRECTED BY THE LD . CIT. WE TAKE NOTE THAT THE LD. CIT WITH HIS EXPERIENCE AND WISDOM HAS GIVEN CERTAIN GUIDELINES IN THE BACKDROP OF BLACK MONEY MENACE SHOULD HAVE BEEN PROPERLY ENQUIRED INTO AS DIRECTED BY HIM. THE AO OUGHT TO HAVE FOLLOWED THE INVESTIGATING GUIDELINES AND METHOD AS DIRECTED BY HIM TO UNEARTH THE FACTS TO DETERMINE WHETHER THE IDENTITY, GENUINENESS AND CREDITWORTHIN ESS OF THE SHARE SUBSCRIBERS. WE NOTE THAT THE HONBLE SUPREME COURT (THREE JUDGES BENCH) IN THE CASE OF TIN BOX, (SUPRA), HAS HELD THAT SINCE THERE WAS LACK OF OPPORTUNITY TO THE ASSESSEE AT THE ASSESSMENT STAGE ITSELF, THE ASSESSMENT NEEDS TO BE DONE AFRESH AND THEREBY REVE RSED THE HONBLE HIGH COURT, TRIBUNAL AND CIT(A)S ORDERS AND REMANDED THE MATTER BACK T O AO FOR FRESH ASSESSMENT. SO, SINCE THERE WAS LACK OF OPPORTUNITY AS AFORESTATED IT HAS TO GO BACK TO AO. 4. WE ALSO NOTE THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JANSAMPARK ADVERTISING & MARKETING PVT. LTD. IN ITA NO. 525/20 14 DATED 11.03.2015 WHEREIN AFTER NOTICING INADEQUATE ENQUIRY BY AUTHORITIES BELOW HA VE HELD AS UNDER: 41. WE ARE INCLINED TO AGREE WITH THE CIT(APPEALS) , AND CONSEQUENTLY WITH ITAT, TO THE EXTENT OF THEIR CONCLUSION THAT THE ASSESSEE HEREIN HAD COME UP WITH SOME PROOF OF IDENTITY OF SOME OF THE ENTRIES IN QUESTION. BUT, FROM THIS INF ERENCE, OR FORM THE FACT THAT THE TRANSACTIONS WERE THROUGH BANKING CHANNELS, IT DOES NOT NECESSAR ILY FOLLOWING THAT SATISFACTION AS TO THE CREDITWORTHINESS OF THE PARTIES OR THE GENUINENESS OF THE TRANSACTIONS IN QUESTION WOULD ALSO HAVE BEEN ESTABLISHED. 42. THE AO HERE MAY HAVE FAILED TO DISCHARGE HIS OB LIGATION TO CONDUCT A PROPER INQUIRY TO TAKE THE MATTER TO LOGICAL CONCLUSION. BUT CIT(APPE ALS), HAVING NOTICED WANT OF PROPER INQUIRY, COULD NOT HAVE CLOSED THE CHAPTER SIMPLY B Y ALLOWING THE APPEAL AND DELETING THE ADDITIONS MADE. IT WAS ALSO THE OBLIGATION OF THE F IRST APPELLATE AUTHORITY, AS INDEED OF ITAT, TO HAVE ENSURED THAT EFFECTIVE INQUIRY WAS CARRIED OUT, PARTICULARLY IN THE FACT OF THE ALLEGATIONS OF THE REVENUE THAT THE ACCOUNT STATEME NTS REVEAL UNIFORM PATTERN OF CASH DEPOSITS OF EQUAL AMOUNTS IN THE RESPECTIVE ACCOUNTS PRECEDI NG THE TRANSACTIONS IN QUESTION. THIS NECESSITATED A DETAILED SCRUTINY OF THE MATERIAL SU BMITTED BY THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION148 ISSUED BY THE AO, AS ALSO T HE MATERIAL SUBMITTED AT THE STAGE OF APPEALS, IF DEEMED PROPER BY WAY OF MAKING OR CAUSI NG TO BE MADE A 'FURTHER INQUIRY IN EXERCISE OF THE POWER UNDER SECTION 250(4). HIS APP ROACH NOT HAVING BEEN ADOPTED, THE IMPUGNED ORDER OF ITAT, AND CONSEQUENTLY THAT OF CI T(APPEALS), CANNOT BE APPROVED OR UPHELD.' 5. IN VIEW OF THE AFORESAID ORDER AND IN THE LIGHT OF THE HONBLE SUPREME COURTS DECISION IN TIN BOX COMPANY (SUPRA) AND TAKING INTO CONSIDERATION THE FACT THE ORDER OF THE AO IN SIMILAR CASES BEING UPHELD UP TO THE LEVEL OF APEX COURT, AND TAKING NOTE OF HONBLE DELHI HIGH COURTS ORDER IN JANSAMPARK ADVERTISING & MARKETING PVT. LTD. (SUPRA), AND THE LD DR ACCEPTED THAT ASSESSEE DID NOT GET PROPER OP PORTUNITY BEFORE THE AO DURING 5 ITA NO. 1034/KOL/2017 PROMANADA REALITY PRIVATE LTD., AY 2012-13 ASSESSMENT PROCEEDINGS, WE SET ASIDE THE ORDER OF T HE LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF AO FOR DE NOVO ASSESSMENT AND T O DECIDE THE MATTER IN ACCORDANCE TO LAW AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. 6. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 16/10/201 8 SD/- SD/- (M. BALAGANESH) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16TH OCTOBER, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT PROMANADA REALITY PRIVATE LTD. (FORMERL Y AMBER TIE-UP PVT. LTD.), C/O A. C. BHUTORIA & CO., 2, INDIA EXCHANGE PLACE, 2 ND FLOOR, KOLKATA-700 001. 2 RESPONDENT ITO, WARD-1(1), KOLKATA. 3 4 5 CIT(A)-9, KOLKATA. (SENT THROUGH E-MAIL) CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY