ACIT, CIR-1, BURDWAN, Burdwan V. Khalishpur Cold Storeage (P) Ltd., Burdwan

ITA 1055/KOL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2087 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 16-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C J SINGH
• Assessee Lawyers: A K GUPTA
• Keywords: Opportunity of being heard; Principle of natural justice; Source of fund; Set aside
• Section: 131; 145; 148; 139

Judgement Text

1 ITA NOS. 1794, 1662, 1055/KOL/2016 KHALISHPUR COLD STORAGE PVT. LTD. AYS. 2006-07, 2007-08 & 2011-12 , A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA ( ) . . , . [ , ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, AM] I.T.A NO. 1662/KOL/2016 ASSESSMENT YEAR: 2006-07 & I.T.A. NO. 1794/KOL/2016 ASSESSMENT YEAR: 2007-08 & I.T.A. NO. 1055/KOL/2016 ASSESSMENT YEAR: 2011-12 ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, BURDWAN VS. KHALISHPUR COLD STORAGE PVT. LTD. (PAN: AACCK1738J) APPELLANT RESPONDENT DATE OF HEARING 08.04.2019 DATE OF PRONOUNCEMENT 19.06.2019 FOR THE APPELLANT SHRI C. J. SINGH, JCIT, SR. DR FOR THE ASSESSEE SHRI A. K. GUPTA, FCA ORDER PER SHRI A.T.VARKEY, JM ALL THESE APPEALS PREFERRED BY THE REVENUE ARE AGAINST THE SEPARATE ORDERS OF LD. CIT(A), BURDWAN DATED 30.05.2016 , 29.06.2016, AND 29.02.2016 FOR AYS 2006-07, 2007- 08, AND 2011-12 RESPECTIVELY. SINCE GROUNDS ARE IDENTICAL EXCEPT VARIANCE IN AMOUNT AND FACTS ARE COMMON, WE DISPOSE OF ALL THESE APPEALS BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. THE APPEAL FOR AY 2006-07 IS TAKEN AS THE LEAD CASE AND THE RESULT WILL BE FOLLOWED FOR ALL THE TWO ASSESSMENT YEARS. 2 ITA NOS. 1794, 1662, 1055/KOL/2016 KHALISHPUR COLD STORAGE PVT. LTD. AYS. 2006-07, 2007-08 & 2011-12 2. THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE ACTION OF LD. CIT(A) IN DELETING THE ADDITION MADE FOR UNDISCLOSED INCOME OF RS. 70,00,000/- FOR AYS. 2006-07 AND 2007-08 AND RS.99,99,000/- FOR AY 2011-12. 3. AT THE OUTSET IT IS NOTED THAT THIS IS THE SECOND ROUND BEFORE THIS TRIBUNAL. BRIEF FACTS OF THE CASE AS NOTED BY THE AO FOR AY 2006-07 IS THAT (IN THE FIRST ROUND / ORIGINAL) PURSUNT TO THE AO RECEIVING CERTAIN INFORMATION IN THE FORM OF A TAX EVASION PETITION (TEP) FILED BY SMT. BIMALA SARKAR, ONE OF THE SHAREHOLDERS OF THE ASSESSEE COMPANY, NOTICE FOR REOPENING U/S. 148 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS ISSUED AGAINST THE ASSESSEE COMPANY ON 30.03.2011. ACCORDING TO AO, THE INFORMATION AS PER THE TAX EVASION PETITION WAS THAT THE ASSESSEE COMPANY PAID DIVIDEND OF RS. 70,00,000/- TO ITS SHAREHOLDERS IN CASH BUT THE DIVIDEND HAS NOT BEEN ACCOUNTED FOR IN THE ACCOUNTS OF THE COMPANY [HOWEVER IN THE TEP SMT. BIMALA SARKAR HAS ADMITTED THAT SHE HAS NOT RECEIVED THE DIVIDEND BECAUSE SHE INSISTED PAYMENT BY CHEQUE INSTEAD OF CASH]. AFTER CERTAIN ENQUIRIES, THE AO MADE THE ADDITION OF RS.70,00,000/- AGAINST THE ASSESSEE WHICH WAS CONTESTED BY THE ASSESSEE BEFORE THE LD. CIT(A), DURGAPUR, WHO UPHELD THE ADDITION MADE BY THE AO. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THIS TRIBUNAL AND A BENCH OF THIS TRIBUNAL VIDE ORDER DATED 19.12.2013 IN ITA NO. 1037 TO 1040/KOL/2013 WAS PLEASED TO REMIT THE MATTER BACK TO THE FILE OF THE AO WITH THE FOLLOWING OBSERVATION: WE HAVE HEARD RIVAL CONTENTION AND GONE THROUGH THE MATERIALS PRODUCED BEFORE US. WE HAVE ALSO CONSIDERED THE ARGUMENTS OF LD. COUNSEL FOR THE ASSESSEE AND FIND FROM THE ORDERS OF LOWER AUTHORITIES THAT OPPORTUNITY OF BEING CROSS-EXAMINED TO SIX SHAREHOLDERS WAS NOT ALLOWED, WHO HAD DENIED THE RECEIPT OF DIVIDENDS. THE ASSESSEE HAS CONFIRMED AND THOSE PERSONS WERE NEVER DENIED RECEIPT OF DIVIDEND. SECONDLY, EVEN THE ALLEGED TEP WAS NOT CONFRONTED TO THE ASSESSEE AND IN SUCH SITUATION, WE HAVE NO ALTERNATIVE EXCEPT TO SET ASIDE THE ISSUE BACK TO THE FILE OF AO AND REFRAMED THE ASSESSMENT DE NOVO AFTER ALLOWING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN THE INTEREST OF NATURAL JUSTICE. THE AO SHOULD SUPPLY THE COPIES OF TEP AS WELL AS ALLOW CROSS-EXAMINATION OF THE DIVIDEND RECIPIENTS WHO HAVE DENIED THE RECEIPT OF DIVIDEND. IN SUCH CIRCUMSTANCES WE REMIT THIS ISSUE BACK TO THE FILE OF AO WHO DECIDED DE NOVO. PURSUANT TO THE TRIBUNALS ORDER THE AO HAS PASSED AN ORDER DATED 19.03.2015 (SECOND ROUND) WHEREIN HE REITERATED THE ADDITION MADE EARLIER. AGGRIEVED, THE ASSESSEE PREFERRED AN 3 ITA NOS. 1794, 1662, 1055/KOL/2016 KHALISHPUR COLD STORAGE PVT. LTD. AYS. 2006-07, 2007-08 & 2011-12 APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO DELETE THE ADDITION. AGGRIEVED, THE REVENUE IS BEFORE US IN THE SECOND ROUND. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ENTIRE REOPENING AND REASSESSMENT WAS AFTER THE DEPARTMENT RECEIVED TAX EVASION PETITION FROM SMT. BIMALA SARKAR DATED 28.02.2011, WHEREIN SHE ALLEGED THAT ASSESSEE COMPANY HAD DISTRIBUTED DIVIDEND IN THE FORM OF CASH HOWEVER IN THE TEP SHE STATED THAT SHE DID NOT ACCEPT CASH AS DIVIDEND AND INSISTED ON PAYMENT THROUGH HER BANK ACCOUNT. THEREAFTER A.O FRAMED REASSESSMENT ORDERS, WHICH HAD BEEN REMANDED BACK TO A.O FOR FRAMING DE NOVO ASSESSMENT. WE NOTE THAT DURING THE SECOND ROUND AFTER THE TRIBUNAL ORDERED DE NOVO ASSESSMENT TO BE FRAMED ON 04.02.2015, THE AO SUMMONED THE TAX EVASION PETITIONER /(TEP) COMPLAINANT SMT. BIMALA SARKAR WHO DID NOT REITERATE OR EVEN SUPPORT THE ALLEGATION MADE BY HER IN THE TEP THAT DIVIDEND HAS BEEN PAID BY CASH TO OTHER SHARE HOLDERS. SHE ALSO REITERATED THAT SHE DID NOT RECEIVE THE DIVIDEND IN CASH. EVEN WE NOTE THAT IN THE TEP COMPLAINT DATED 28.02.2011, (PAPER BOOK PAGE 2), SHE ALLEGED THAT OTHER SHARE-HOLDERS RECEIVED CASH AS DIVIDEND AND ADMITTED THAT SHE DID NOT ACCEPT IT (CASH) BECAUSE IT WAS NOT GIVEN BY ACCOUNT PAYEE CHEQUE. HOWEVER NOWHERE IN THE TEP SHE SAYS ABOUT THE PROOF OF ANY OFFER MADE BY THE ASSESSEE COMPANY EITHER IN THE TEP NOR DURING HER EXAMINATION U/S 131 ON OATH BY THE AO ON 04.02.2015. IT WAS ALSO BROUGHT TO OUR NOTICE THAT IN THE ANNUAL GENERAL MEETING (AGM) OF THE COMPANY WHICH WAS HELD ON 29 TH SEPTEMBER, 2011 FOR AY 2011-12 DIVIDEND WAS DECLARED FOR THE FIRST TIME IN THE HISTORY OF THE COMPANY AFTER ITS INCORPORATION AND IN THAT AGM SMT. BIMALA SARKARS HUSBAND WAS PRESENT AS A PROXY ON BEHALF OF SMT. BIMALA SARKAR AND DID NOT RAISE ANY ISSUE/COMPLAINT/ALLEGATION AGAINST THE ASSESSEE COMPANY IN RESPECT OF ANY DIVIDEND BEING DECLARED IN THE PAST WHICH HAS BEEN PURPORTEDLY DISBURSED BY MODE OF CASH. IN THE RESULT THE ALLEGATION IN THE TEP CAN AT BEST BE TERMED AS HEARSAY OR BASED ON SUSPICION AS WELL AS STATEMENT OF BIMALA SARKAR RECORDED UNDER OATH U/S 131 OF THE ACT BY A.O AS DISCUSSED (SUPRA) CANNOT BE TERMED ADVERSE AGAINST ASSESSEE COMPANY ON THIS ISSUE. 4 ITA NOS. 1794, 1662, 1055/KOL/2016 KHALISHPUR COLD STORAGE PVT. LTD. AYS. 2006-07, 2007-08 & 2011-12 5. FURTHER WHEN WE LOOK FOR MATERIAL/EVIDENCE TO SUBSTANTIATE THE ALLEGATION THAT ASSESSEE-COMPANY HAS DISBURSED CASH AS DIVIDEND, WE NOTE FROM A PERUSAL OF THE PAPER BOOK FILED BY THE DEPARTMENT SIGNED BY J.T. NARAWARS, ASST. COMMISSIONER OF INCOME TAX, CIRCLE-1. BURDWAN AT PAGE 2 HAS CLEARLY STATED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO HAD RECORDED STATEMENT OF TWENTY TWO (22) SHARE-HOLDERS OF THE ASSESSEE COMPANY U/S 131 OF THE ACT AND OUT OF THESE SHARE-HOLDERS ONLY TWO (2) SHARE- HOLDERS ALLEGED THAT ASSESSEE COMPANY DISTRIBUTED CASH AS DIVIDEND. THAT FACT IS EVIDENT FROM A PERUSAL OF THE EXHIBIT C OF PAPER BOOK OF DEPARTMENT WHICH IS THE FINAL SHOW CAUSE NOTICE OF AO TO ASSESSEE DATED 07.02.2014. MOREOVER THE ASSESSEE HAS FURNISHED BEFORE AO THE DECLARATION OF FORTY ONE (41) SHARE HOLDERS WHO DECLARED THAT NO CASH AS DIVIDEND WAS RECEIVED BY THEM. THUS, IT IS NOTED THAT AMONG THE TOTAL FORTY SEVEN (47) SHARE-HOLDERS ONLY TWO SHARE-HOLDERS I.E. HUSBAND & WIFE HAVE MADE THE ALLEGATION THAT ASSESSEE COMPANY HAS DISBURSED CASH AS DIVIDEND. WHEN WE ANALYZE THEIR STATEMENT GIVEN BEFORE AO WHICH WAS RECORDED U/S 131 OF THE ACT, AND THEIR STATEMENT GIVEN TO ROC, WE NOTE THAT THE COUPLE NAMED SHRI ABDUL ROUF AND HIS WIFE SMT. NURUNNESSA BEGUM HAVE ONLY GIVEN STATEMENT U/S. 131 OF THE ACT TO THE AO TO THE EFFECT THAT THEY HAVE RECEIVED DIVIDEND IN THE FORM OF CASH. WE NOTE FROM THE STATEMENT RECORDED ON 29.09.2011 OF SMT. NURUNNESSA BEGUM WHICH IS PLACED AT PAGES 37 TO 40 OF PAPER BOOK, WHEREIN IT HAS BEEN STATED BY HER WHICH IS FOUND RECORDED AT PAGE 39 (PAPER BOOK) THAT SHE HAS RECEIVED ALL THE DIVIDEND IN CASH FROM AY 2004-05 TO AY 2009-10 (PAGE 39 PAPER BOOK). TO THE QUESTION NO. 8 PLEASE STATE ANY MONEY RECEIPT SIGNED BY YOU AT THE TIME OF DIVIDEND PAYMENT SHE HAS ANSWERED NO, I SIGNED IN A DAILY REGISTER BOOK (SCANNED COPY INFRA) WHEREAS IN THE COMPLAINT BEFORE THE REGISTRAR OF COMPANIES (ROC) SHE HAS STATED THAT SHE HAS SIGNED VOUCHER AFFIXED WITH THE REVENUE STAMP WHICH CONTRADICTION HAS NOT BEEN EXPLAINED AND WHICH IS VITAL FOR PROVING THE ALLEGATION MADE AGAINST THE ASSESSEE. MOREOVER WE NOTE FROM THE PAPER BOOK FILED BY THE DEPARTMENT FOR AY 2011-12, (PAGE 7-11), WHEREIN THE STATEMENT OF SMT. N. BEGAM WAS RECORDED AND COPY ALONG WITH SHOW CAUSE NOTICE DATED 07.02.2014 WAS SENT BY AO TO ASSESSEE COMPANY, WE NOTE AT PAGE 9, QUESTION NO. 9 OF AO PLEASE STATE, HAD YOU SIGNED 5 ITA NOS. 1794, 1662, 1055/KOL/2016 KHALISHPUR COLD STORAGE PVT. LTD. AYS. 2006-07, 2007-08 & 2011-12 ANY MONEY RECEIPTS TO RECEIVE DIVIDEND MONEY FOR THE FY 2009-10 & 2010-11. ANSWER BY SMT. N. BEGUM, NO, I DID NOT SIGN A MONEY RECEIPT BUT MY HUSBAND SIGNED AT A DAILY REGISTER TO RECEIVED DIVIDEND MONEY ON BEHALF OF ME. SO THIS FACTUAL CONTRADICTION ON ONE OF THE MOST CRUCIAL EVIDENCE OF RECEIPT OF MONEY IS RIDDLED WITH CONTRADICTIONS AND CREATES DOUBTS REGARDING THE VERACITY OF THE TESTIMONY. EVEN IN THE STATEMENT OF SHRI ABDUL ROUF WHICH IS RECORDED ON THE SAME DATE WHICH IS FOUND PLACED AT PAGES 41 TO 45 (PAPER BOOK), WE NOTE THAT AT PAGE 43 HE ALSO HAS STATED TO HAVE RECEIVED THE DIVIDEND IN CASH BUT TO QUESTION NO. 9 IN RESPECT OF THE MONEY RECEIPT WHILE RECEIVING THE PAYMENT IN CASH, HAS ANSWERED THAT HE HAS SIGNED A DAILY REGISTRAR WHILE TAKING THE DIVIDEND. WHEREAS FOR THIS QUESTION BEFORE THE ROC HE HAS MADE A SIMILAR STATEMENT WHICH WAS MADE BY HIS WIFE THAT HE HAS SIGNED ON A VOUCHER WITH REVENUE STAMP AFFIXED ON IT. OTHER THAN THIS ORAL TESTIMONY OF THE COUPLE THAT ALSO RIDDLED WITH CONTRADICTIONS, WHICH ALLEGATION HAS BEEN NEGATED BY FORTY-ONE SHAREHOLDERS (OUT OF 47 SHAREHOLDERS). WE NOTE THAT THE ADDITION HAS BEEN BASED MERELY ON THE ASSUMPTION BY THE AO ON THE BASIS OF QUESTION NO. 9 ASKED TO SMT. NURUNNESSA BEGUM AND QUESTION NO. 7 ASKED TO SHRI ABDUL ROUF, ANSWERS ARE SIMILAR EVEN THE CUTTING ON THE PAGE 39 AND 44 ARE SIMILAR. FOR BETTER APPRECIATING AND UNDERSTANDING THE SAME, PAGE NO. 39 WHERE SMT. N BEGUMS STATEMENT IS RECORDED THAT OF SHRI ABDUL ROUF IS RECORDED IS SCANNED AND REPRODUCED AS UNDER: 6 ITA NOS. 1794, 1662, 1055/KOL/2016 KHALISHPUR COLD STORAGE PVT. LTD. AYS. 2006-07, 2007-08 & 2011-12 7 ITA NOS. 1794, 1662, 1055/KOL/2016 KHALISHPUR COLD STORAGE PVT. LTD. AYS. 2006-07, 2007-08 & 2011-12 WHEN THIS FACT OF CUTTING & OVERWRITING WAS CONFRONTED TO THE LD. DR AND ALSO AS TO HOW THE AO ARRIVED / ESTIMATED THE FIGURE OF RS. 70 LACS FROM THESE TWO TESTIMONIES, HE COULD NOT EXPLAIN AND WE NOTE THAT THE AO HAS NOT SPELT OUT ANY REASON AS TO HOW THIS MAGICAL FIGURES OF RS. 70 LACS FOR AYS 2006-07 AND 2007-08 HAS BEEN COMPUTED/ESTIMATED BY HIM. THE ESTIMATION IS BASED ONLY ON THE STATEMENT OF THESE TWO TESTIMONIES WHICH IS RIDDLED WITH CONTRADICTIONS. 6. OTHER THAN THE ORAL ASSERTION, IT WAS POINTED OUT THAT THEY [SMT N. BEGUM & SHRI ABDUL ROUF] DID NOT HAD ANY PROOF/MATERIAL TO PROVE THAT THE DIVIDEND HAS BEEN GIVEN BY ASSESSEE AS CASH TO THEM OR TO ANY OTHER SHARE HOLDERS. IT WAS BROUGHT TO OUR KNOWLEDGE THAT BOTH THESE PERSONS HAD NEITHER DISCLOSED THE PURPORTED AMOUNTS RECEIVED AS CASH IN THEIR RESPECTIVE RETURN OF INCOME FILED U/S 139 FOR THE ASSESSMENT YEARS BEFORE US (AY 2006-07, AY 2007-08 AND AY 2011-12) NOR HAS EVEN PROVED THIS FACT BY PRODUCING THEIR BANK STATEMENT TO CORROBORATE RECEIPTS AND THEREAFTER DEPOSITED IT IN THEIR BANK ACCOUNTS FROM AY 2003-04 TO AY 2011-12. WE NOTE THAT SMT. NURUNNESSA BEGUM AND SHRI ABDUL ROUF WERE NOT PRESENT IN THE ANNUAL GENERAL MEETING (AGM) HELD ON 29.09.2011 FOR THE AGM FOR AY 2011-12 HOWEVER IT HAS BEEN BROUGHT TO THE NOTICE OF THE ASSESSEE COMPANY BY THE AO VIDE LETTER DATED 07.02.2014 ABOUT THE RECORDED STATEMENT U/S 131 OF BOTH COUPLE AND TO QUESTION NO. 7 BY SMT. NURUNNESSA BEGUM AND QUESTION NO. 7 TO SHRI ABDUL ROUF ARE REPRODUCED BELOW AS UNDER (SIMILAR/IDENTICAL QUESTION AND ANSWER HAS BEEN RECORDED IN RESPECT OF ABDUL ROUF SO IS NOT REPRODUCED AGAIN FOR SAKE OF REVENUE) : 8 ITA NOS. 1794, 1662, 1055/KOL/2016 KHALISHPUR COLD STORAGE PVT. LTD. AYS. 2006-07, 2007-08 & 2011-12 7. SO FROM A PERUSAL OF THE AFORESAID STATEMENT IT IS REVEALED THAT IN THE NOTICE FOR THE AGM FOR ADOPTIONS OF BALANCE SHEET AND P& L A/C FOR THE YEAR ENDED 31.03.2011 IT HAD THE AGENDA OF DECLARATION OF DIVIDEND AND DURING THE AGM IT WAS DECLARED OFFICIALLY THAT A DIVIDEND OF RS.10/- PER SHARE BY CHEQUE AND UNOFFICIALLY RS. 36.36 PER SHARE BY CASH WAS GIVEN TO BOTH THE COUPLES INCLUDING OTHER SHARE HOLDERS. HOWEVER IT WAS BROUGHT TO OUR NOTICE THAT BOTH OF THEM WERE ABSENT DURING THE AGM HELD ON 29 TH SEPTEMBER 2011 (COPY OF MINUTE BOOK PLACED AT PAGE A15 OF PAPER BOOK AND IT IS NOTED THAT 19 SHAREHOLDERS AND EVEN TEP COMPLAINANT SMT. BIMALA SARKAR PROXY ATTENDED AND NOT THE COUPLE SMT. N. BEGUM AND SHRI ABDUL ROUF) AND THEREFORE BOTH THESE STATEMENT OF SHRI ABDUL ROUF AND SMT. NURUNNESSA BEGUM WHEN THEY HAVE NOT ATTENDED THE AGM COULD AT BEST BE CALLED AS AN HEARSAY EVIDENCE AND CANNOT BE ACTED UPON SOLELY ON THEIR STATEMENT AND WHICH FACT WAS BELIED BY OTHER SHARE HOLDERS WHO ATTENDED THE AGM ON 29 TH SEPTEMBER 2011 WHOSE 9 ITA NOS. 1794, 1662, 1055/KOL/2016 KHALISHPUR COLD STORAGE PVT. LTD. AYS. 2006-07, 2007-08 & 2011-12 STATEMENTS HAVE BEEN RECORDED BY AO U/S 131 OF THE ACT AND DECLARATIONS OF 41 SHAREHOLDERS. MOREOVER BOTH COUPLES FAILED TO BRING ANY EVIDENCE TO SHOW THAT THE ALLEGED AMOUNT RECEIVED AS DIVIDEND WAS DEPOSITED THAT IS (RS. 18.18 PER SHARE FOR AY 2010-11 AND RS. 46.46 PER SHARE IN FY 2010-11) IMMEDIATELY IN THEIR BANK ACCOUNT AND DULY RETURNED IN THEIR RESPECTIVE RETURN OF INCOME U/S 139(1) OF THE ACT AND NOT LATER UPON NOTICE U/S 148 OF THE ACT, WHICH CAN BE TERMED AS AN AFTERTHOUGHT, IN THE LIGHT OF OTHER OVER WHELMING EVIDENCE DISCUSSED SUPRA. SO THEIR ALLEGATIONS THAT DURING AGM FOR AY 2011-12 ON 29 TH SEPTEMBER, 2011 DECLARATIONS OF DIVIDEND WAS MADE ONLY FOR RS. 10 PER SHARE BY CHEQUE, FOLLOWED BY UNOFFICIAL DECLARATION OF DIVIDEND WAS MADE OF RS. 36.60/- BY CASH SEEMS DIFFICULT TO BELIEVE WHEN THEY WERE ABSENT IN THE AGM CAST DOUBT IN RESPECT TO THEIR TESTIMONY AND CANNOT BE ACTED UPON IN THE LIGHT OF THE FACT THAT SHARE-HOLDERS PRESENT IN THE AGM ON 29 TH SEPTEMBER, 2011, NINETEEN (19) IN NUMBER DID NOT CORROBORATE THE ALLEGATIONS AND HAD SPECIFICALLY DENIED HAVING RECEIVED ANY DIVIDEND AS CASH FROM ASSESSEE WHICH ARE DIRECT EVIDENCE OF WHAT HAPPENED AT THE AGM HELD ON 29 TH SEPTEMBER 2011, WHERE THEY ATTENDED AND PARTICIPATED IN IT. 8. MOREOVER WE NOTE THAT THE AO ONLY ON THE BASIS OF THE STATEMENT OF THESE TWO PERSONS HAD MADE ADDITIONS, HOWEVER HAS NOT BOTHERED TO LOOK INTO THE NATURE AND SOURCE OF SUCH UNDISCLOSED INCOME I.E. HOW IT WAS EARNED BY THE ASSESSEE COMPANY SO THAT THEY COULD IN TURN DISBURSE IT. HE INSTEAD SIMPLY TOOK THE STATEMENT OF TWO SHAREHOLDERS AS AUTHENTIC AND CONSIDERED THE DIVIDEND STATED TO HAVE BEEN DISBURSED AS UNDISCLOSED INCOME WITHOUT EXPLAINING THE NATURE AND SOURCE OF SUCH INCOME BRUSHING ASIDE THE EVIDENCE OF FORTY ONE (41) SHAREHOLDERS WHO WERE EQUALLY PLACED WHICH ACTION SMACKS OF ARBITRARINESS AND EXPOSES NON APPLICATION OF MIND. THE ASSESSING OFFICER HAD NOT GIVEN ANY COGENT REASONS NOT TO CONSIDER THE DECLARATION MADE BY FORTY ONE (41) SHAREHOLDERS AS RELIABLE EVIDENCE AND ACCORDING TO US WITHOUT DOING SO HE CANNOT DISCARD THE DECLARATION OF FORTY ONE (41) SHAREHOLDERS. IN THE PRESENT CASES BEFORE US, WE NOTE THAT OTHER THAN THE BALD STATEMENT OF SHRI ABDUL ROUF AND MRS. NURUNNESSA BEGUM WITHOUT ANY CORROBORATING MATERIAL COULD NOT 10 ITA NOS. 1794, 1662, 1055/KOL/2016 KHALISHPUR COLD STORAGE PVT. LTD. AYS. 2006-07, 2007-08 & 2011-12 HAVE BEEN THE BASIS FOR MAKING THE ADDITIONS. WE NOTE THAT BOTH THESE PERSONS (SHRI ABDUL AND MRS. NURUNNESSA BEGUM) AS WELL AS SMT. BIMALA SARKAR WHO FILED THE TEP HAS NOT BROUGHT ANY OTHER MATERIAL / EVIDENCE TO SHOW THAT ASSESSEE COMPANY HAD DISBURSED DIVIDEND BY WAY OF CASH TO THEMSELVES OR OTHER. THE ONLY FACT WHICH EMERGES FROM THE STATEMENTS GIVEN BY TWENTY TWO (22) SHAREHOLDERS BEFORE THE AO WHICH WAS RECORDED U/S. 131 OF THE ACT AND THE DECLARATIONS MADE BY 41 SHAREHOLDERS GOES ON TO SHOW THAT THE DIVIDEND FOR THE FIRST TIME WAS DECLARED BY THE ASSESSEE COMPANY AFTER INCORPORATION ONLY IN AY 2011-12 AND THE SAME WAS DISBURSED BY MODE OF CHEQUE PAYMENT. 9. WE NOTE THAT THE LD. CIT(A) HAS TAKEN NOTE OF THE CHART GIVEN BELOW:- SL. NO. SHAREHOLDERS NOS. SHARES HELD RATIO REMARKS 1. DECLARATION MADE ON 02.05.11 (REF. ANNEXURE NO. D 41 241916 87.97% DECLARED THAT NO DIVIDEND HAS BEEN RECEIVED 2. DECLARATIONS NOT MADE 3 23965 8.71% NO DECLARATION 3. DECEASED 2 6699 2.44% TRANSMISSION WAS PENDING AT THAT TIME 4. ABSENTEE 1 2420 0.88% 47 275000 100% AND HAS RECORDED A FINDING OF FACT THAT OUT OF FORTY-SEVEN (47) SHAREHOLDERS FORTY-ONE (41) SHAREHOLDERS HOLDING 87.97% SHARES OF THE COMPANY HAS MADE A DECLARATION TO THE EFFECT THAT THEY HAVE NOT RECEIVED DIVIDEND TILL AY 2010-11 AND THAT THEY HAVE RECEIVED DIVIDEND ONLY IN THE AY 2011-12 AND THAT ALSO BY MODE OF CHEQUE AND HAS NEGATED THE ALLEGATION MADE BY THE COUPLE SMT. N. BEGUM & SHRI ABDUL ROUF THAT THEY AS WELL AS OTHER SHAREHOLDERS WERE RECEIVING DIVIDEND BY WAY OF CASH. 10. WE NOTE THAT LD. CIT(A) HAS TAKEN NOTE OF THE FACT THAT ASSESSEE COMPANY COULD NOT HAVE EARNED UNDISCLOSED INCOME WHEREIN HE HAS TAKEN NOTE OF THE FACT THAT THE COLD STORAGE RUNS UNDER THE STRICT CONTROL AND REGULATIONS OF THE GOVT. OF WEST BENGAL AND THE COMPANY HAS BEEN GIVEN LICENSE FOR THE CAPACITY WHICH IT CAN LOAD. AND THAT THE LOADING AND UNLOADING CHARGES ARE FIXED BY THE ASSOCIATION AND INSURANCE ARE FIXED BY THE INSURANCE COMPANY. IT WAS BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT ONE OF THE MAIN EXPENDITURE IS 11 ITA NOS. 1794, 1662, 1055/KOL/2016 KHALISHPUR COLD STORAGE PVT. LTD. AYS. 2006-07, 2007-08 & 2011-12 ELECTRICITY CHARGES WHICH WERE SUPPLIED BY THE STATE ELECTRICITY BOARD. IT WAS POINTED OUT TO THE LD. CIT(A) THAT REGULARLY STOCK STATEMENTS WERE SUBMITTED BY ASSESSEE TO VARIOUS GOVT. DEPARTMENTS FOR RELEASE OF POTATOES. THE LD. CIT(A) AFTER TAKING INTO CONSIDERATION ALL THE FACTS OBSERVED THAT THOUGH THESE ARE REBUTTAL IN NATURE, HOWEVER, AO HAS NOT MADE ANY ATTEMPT TO BRING OUT THAT THE ASSESSEE WAS ONLY INVOLVED IN THE COLD STORAGE BUSINESS BUT IT HAD ANY OTHER SOURCES OF INCOME FROM WHICH IT GENERATED THE UNDISCLOSED INCOME FOR DISBURSEMENT OF DIVIDEND IN CASH IT TO THE SHAREHOLDERS AS SAID BY THE COUPLE. 11. WE NOTE THAT THE COMPANYS BOOKS OF ACCOUNT ARE STATUTORILY AUDITED. WE NOTE THAT THE BOOKS OF ACCOUNT WERE MAINTAINED BY THE ASSESSEE IN ACCORDANCE WITH THE SYSTEM OF ACCOUNTING. THE AO HAS NO WHERE GIVEN A FINDING THAT ASSESSEE HAS NOT REGULARLY FOLLOWED THE METHOD OF ACCOUNTING AS PRESCRIBED U/S. 145(1) OF THE ACT. IT IS ALSO NOT THE CASE OF THE AO THAT ASSESSEE HAS NOT COMPUTED THE INCOME IN ACCORDANCE WITH THE ACCOUNTING STANDARD NOTIFIED U/S. 145(2) OF THE ACT. NEITHER THE AO POINTED OUT ANY DEFECTS AS PRESCRIBED U/S. 145 OF THE ACT AND REJECTED THE BOOKS OF ACCOUNT, SO THE AO OUGHT NOT TO HAVE ESTIMATED THE INCOME OF THE ASSESSEE. FOR THE AFORESAID PROPOSITION OF LAW, WE RELY ON THE ORDER OF HONBLE HIGH COURT OF KARNATAKA IN CIT, BELGAUM VS. ANIL KUMAR & CO. 67 TAXMAN.COM 278 (KARNATAKA) AND HONBLE HIGH COURT OF MADRAS IN PCIT, CHENNAI VS. MARG LTD. 84 TAXMAN.COM 52 (MAD). 12. TO SUM UP WE NOTE THAT BASED ON TEP OF SMT. BIMALA SARKAR, THE A.O REOPENED THE ASSESSMENT OF ASSESSEE COMPANY AND CONDUCTED INQUIRY BY SUMMONING 22 SHAREHOLDERS OUT OF 47 SHARE-HOLDERS OF ASSESSEE COMPANY AND HAS RECORDED STATEMENTS U/S 131 OF THE ACT. FROM THE RECORDED STATEMENTS U/S 131, ONLY A COUPLE NAME, SHRI ABDUL ROUF AND SMT. NURUNNESSA BEGUM HAS ALLEGED THAT ASSESSEE COMPANY DISBURSED DIVIDEND IN CASH. HOWEVER WE HAVE NOTED THAT THEIR STATEMENT ABOUT AGM OF AY 2011-12 AND UNOFFICIAL DECLARATIONS OF CASH AS DIVIDEND OF RS.36.36 PER SHARE WAS DISTRIBUTED TO THEM, WHEN THEY WERE ABSENT DURING THE AGM WAS ITSELF HEARSAY AND SO CANNOT BE ACTED UPON BECAUSE THEY WERE ABSENT 12 ITA NOS. 1794, 1662, 1055/KOL/2016 KHALISHPUR COLD STORAGE PVT. LTD. AYS. 2006-07, 2007-08 & 2011-12 DURING THAT AGM AND NO OTHER SHAREHOLDERS PRESENT IN THE AGM SUPPORTED THEM IN THEIR ALLEGATIONS AND NO OTHER EVIDENCE DIRECT/INDIRECT/CIRCUMSTANTIAL WAS ADDUCED BY THEM TO PROVE THAT ASSESSEE COMPANY DISBURSED CASH AS DIVIDEND IN ANY OF THE ASSESSMENT YEARS BEFORE US AND THEIR STATEMENTS ARE RIDDLED BY CONTRADICTIONS NOTED (SUPRA) AND SO CANNOT BE ACTED UPON WITHOUT INDEPENDENT, RELIABLE, SUPPORTING/CORROBORATIVE EVIDENCE, WHICH IS ABSENT IN THIS CASE. EVEN THE TEP SMT. BIMALA SARKAR FAILED TO ADDUCE ANY EVIDENCE AGAINST THE ASSESSEE COMPANY. MOREOVER SHE ADMITTED IN THE STATEMENT RECORDED U/S 131 THAT SHE NEITHER RECEIVED ANY CASH AS DIVIDEND FROM ASSESSEE COMPANY NOR HAD KNOWLEDGE OF ANY OTHER PERSON HAVING RECEIVED DIVIDEND IN THE FORM OF CASH FROM ASSESSEE-COMPANY. THUS WE FIND THAT BASED ON THESE THREE PERSONS TESTIMONIES, NO ADDITIONS COULD HAVE BEEN LEGALLY MADE ON THE ASSESSEE COMPANY. FURTHER WE NOTE THAT ESTIMATIONS OF INCOME COULD NOT HAVE BEEN CARRIED OUT BY THE AO WITHOUT REJECTING THE AUDITED BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. MOREOVER THE AO FAILED TO UNEARTH ANY OTHER SOURCE OF INCOME WHICH COULD HAVE BEEN THE SOURCE OF THE PURPORTED UNDISCLOSED INCOME, WHICH ASSESSEE ALLEGEDLY PASSED ON TO SHAREHOLDERS AS DIVIDEND IN CASH. THUS WE NOTE THAT ADDITIONS/ESTIMATED INCOME OF ASSESSEE IN THE AFORESAID FACTS AND CIRCUMSTANCES WAS RIGHTLY DELETED BY THE CIT(A) WHICH DECISION IS HEREBY UPHELD. SO REVENUES APPEALS ARE DISMISSED. 13. IN THE RESULT, ALL THE APPEALS OF REVENUE ARE DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 19.06.2019 SD/- SD/- (DR. A. L. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19 JUNE, 2019 JD.(SR. P.S.) 13 ITA NOS. 1794, 1662, 1055/KOL/2016 KHALISHPUR COLD STORAGE PVT. LTD. AYS. 2006-07, 2007-08 & 2011-12 COPY OF THE ORDER FORWARDED TO: 1 APPELLANT ACIT, CIRCLE-1, BURDWAN. 2 RESPONDENT M/S. KHALISHPUR COLD STORAGE PVT. LTD., VILL & P.O. KHALISPUR, DIST. BURDWAN-713422. 3 4 5 CIT (A), BURDWAN. CIT , BURDWAN. DR, KOLKATA BENC HES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR