PRESTIGE HM POLYCONTAINERS LTD, MUMBAI V. ITO 7(1)(4), MUMBAI

ITA 1057/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1492 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 21-04-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 16-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K R DAS
• Assessee Lawyers: HARSHAVARDHANA DATAR
• Keywords: Unexplained cash credit; Opportunity of being heard; Onus to prove; Set aside
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI PRAMOD KUM AR ,(AM) ITA NO.1057/MUM/2009 ASSESSMENT YEAR : 2005-06 M/S. PRESTIGE HM POLYCONTAINERS LTD. JAYESH SANGHRAJKA & CO. UNIT NO.405, HIND RAJASTHAN BLDG. D.S. PHALKE ROAD, DADAR(E) MUMBAI-400 014. ..( APPELLANT ) P.A. NO. (AABCP 7958 C) VS. INCOME TAX OFFICER-7(1)(4) AAYAKAR BHAVAN MUMBAI. ..( RESPONDENT ) APPELLANT BY : SHRI HARSHAVARDHANA DATAR RESPONDENT BY : SHRI K. R. DAS O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 26.11.2008 PASSED BY THE LD. CIT(A) FOR T HE ASSESSMENT YEAR 2005-06. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE COM PANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF HM- HDPE CONT AINERS. THE RETURN WAS FILED DECLARING A LOSS OF RS.21.97 LACS. D URING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE ASSESSIN G OFFICER THAT THERE WAS AN INCREASE IN UNSECURED LOANS. TH E ASSESSEES REPRESENTATIVE WAS ASKED TO EXPLAIN THE SAME. HOWEVER , IN THE ITA NO.1057/M/09 A.Y:05-06 2 ABSENCE OF ANY MATERIAL /EXPLANATION ABOUT THE NATURE AND SOURCE OF THE UNSECURED LOAN THE ASSESSING OFFICER TREATED THE ENTI RE AMOUNT OF RS.17,10,92,000/- AS UNEXPLAINED CASH CREDIT U/S.68 OF T HE INCOME TAX ACT, 1961 (THE ACT). THE ASSESSING OFFICER AFTER MAKI NG SOME OTHER DISALLOWANCES COMPLETED THE ASSESSMENT AT AN INCOME OF RS.16,96,80,150/- VIDE ORDER DATED 27.12.2007 PASSED U /S.143(3) OF THE ACT. ON APPEAL, BEFORE THE LD. CIT(A) IT WAS CONT ENDED BY THE ASSESSEE [PARA 1.3 OF THE ORDER OF THE LD. CIT(A)] .. THAT FOR THE FIRST TIME THE ASSESSING OFFICER ASKED THE ASSESSEE VIDE THE NOTICE DATED 20.12.2007 TO PRODUCE THE CONFIRMATION LETTERS FROM TH E PARTIES CONCERNED. THIS NOTICE WAS SERVED ON THE ASSESSEE ON 24.12. 2007 WHICH ALSO COVERED THE XMAS PUBLIC HOLIDAY ON 25.12.200 7. THE ASSESSING OFFICER DID NOT WAIT FURTHER AND PASSED THE ASSESSM ENT ORDER ON 27.12.2007. THUS THE ASSESSING OFFICER DID NOT APPLY MIND AND HENCE THE ORDER SHOULD BE TREATED AS BAD BECAUSE A REASON ABLE OPPORTUNITY OF BEING HEARD COULD NOT BE GIVEN TO IT. FOR SUCH A PLEA, THE ASSESSEE RELIED ON 116 TAXMAN 491 (SC), 79 ITR 540 (ALL), 62 ITR 109(CAL), ETC. THE LEARNED CIT(A) AFTER CONSIDERING T HE ASSESSEES SUBMISSION/DETAILS FURNISHED DURING THE APPELLATE PROCEED INGS CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER. THE LE ARNED CIT(A) AFTER HEARING THE ASSESSEE AND AFTER CONSIDERING THE REM AND REPORTS FURNISHED BY THE ASSESSING OFFICER INCLUDING FINAL REMAND REPORT DATED 5.11.2008 OBSERVED VIDE PARA 1.26 IBID., THAT THE ASSESSING OFFICER HIGHLIGHTED THE POSTAL REMARKS ON THE SPEED POST ENVELO PES ADDRESS TO ABOVE LOAN CREDITORS. IT WAS STATED THAT THE POSTAL REM ARKS WERE MADE AS REFUSED. IT MEANS THAT THESE PARTIES OR THEIR REPRESENTATIVES WERE VERY MUCH AVAILABLE AT TALASAHI BUT THEY HAD NO INCLINATION TO FURNISH THE DETAILS CALLED FOR OR TO CO-OPERATE WITH T HE DEPARTMENT. THE REMARK REFUSED THEREFORE MEANT AS THE PERSON AV AILABLE BUT NOT ITA NO.1057/M/09 A.Y:05-06 3 ACCEPTING THE LETTERS. THE ASSESSING OFFICER MEANT THAT IF THE PARITIES WERE ACTUALLY NOT AVAILABLE, THE POSTAL REMARKS MIGHT HAVE BEEN AS NOT AVAILABLE OR LEFT. THEREFORE ACCORDING TO T HE ASSESSING OFFICER, THE APPELLANT FAILED TO JUSTIFY THE GENUINENESS, SOURCE, ETC. OF THE NEW UNSECURED LOAN CREDITORS, AND HELD THAT THE ASSESSING OFFI CER WAS FULLY JUSTIFIED IN TREATING THE ABOVE MENTIONED UNPROVED N EW UNSECURED LOANS OF RS.17,10,92,000/- AS UNEXPLAINED CASH CREDIT BY INVOKING THE PROVISIONS OF SECTION 68 OF THE IT ACT SINCE THE APPELLANT REPEATEDLY FAILED IN ITS ONUS TO PROVE THEIR GENUINENESS, CREDITWOR THINESS. HENCE, HE CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SU STENANCE OF ADDITION OF RS.17,10,92,000/- ON ACCOUNT OF UNEXPLAINE D CREDIT U/S.68 OF THE ACT IN CONTRAVENTION TO THE PRINCIPLE OF NATURA L JUSTICE. 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSE SSEE AT THE OUTSET, SUBMITS THAT THE ASSESSEE COMPANY HAS BEEN DECLARED A S A SICK UNIT BY BIFR. HE FURTHER SUBMITS THAT THE CASE WAS R EMANDED BACK TO THE ASSESSING OFFICER BY THE LD. CIT(A) VII. THE ASSES SING OFFICER ISSUED NOTICES U/S.133(6) OF THE ACT, TO M/S. CANDY HOLDI NGS LTD. AND M/S. AMALGAMATED COMMERCIAL TRADING PVT. LTD., TO THE ADDRESSES THAT WERE ATTACHED BY DEPARTMENT OF REVENUE - MAHARASHTRA GOVERNMENT, WHERE THE REPRESENTATIVES OF THE TAHASILDAR WERE PRES ENT AND REFUSED TO ACCEPT THE IMPUGNED NOTICES SENT BY THE ASSESSING OFFICER. HE FURTHER SUBMITS THAT THE FACT OF SUCH ATTACHMENT INSTI GATED BY THE REVENUE DEPARTMENT MAHARASHTRA GOVERNMENT WAS SUBMI TTED TO THE ASSESSING OFFICER AND FURTHER SUPPLICATED THE ASSESSING OFFI CER TO SERVE NOTICES U/S.133(6) OF THE ACT ON THE NEW ADDRESSES OF THE ITA NO.1057/M/09 A.Y:05-06 4 IMPUGNED LENDERS AND FURNISHED THE BREAK UP OF THE IM PUGNED ADDITION. THE ASSESSING OFFICER HAS FAILED TO SERVE THE NOTICES U/S.133(6) OF THE ACT ON THE NEW ADDRESSES, AND INSTEAD NOTICES WERE SERVED ON THE OLD ADDRESSES ONLY, WHICH WERE SENT BACK STA TING REFUSED TO ACCEPT STAMP BY THE DEPARTMENT OF REVENUE MAHARASHTRA GOVERNMENT AND NOT BY THE IMPUGNED ADDRE SSES BEING TARGETED BY THE ASSESSING OFFICER. SUCH FACT HAS BEEN AMPLY ESTABLISHED BY THE STATEMENT IN THE FIRST PARAGRAPH O F THE SECOND PAGE OF THE IMPUGNED REMAND REPORT BEING SENT BY THE ASSESSI NG OFFICER TO THE LD. CIT(A)-VII, DATED 06.11.2008. IN THE LIGHT OF THE ABOVE HE SUBMITS THAT IN THE INTEREST OF JUSTICE THE MATTER MAY B E SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. 5. ON THE OTHER HAND THE LD. DR WHILE RELYING ON TH E ORDER OF THE ASSESSING OFFICER AND THE LD. CIT(A) FURTHER SUBMITS THAT HE HAS NO OBJECTION IF THE ISSUE IS RESTORED BACK TO THE FILE OF T HE ASSESSING OFFICER. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE VIEW THAT IN THIS CASE NEEDS FURTHER EXAMINATION AT THE END OF THE ASSESSING OFFICER IN RESPECT OF UNSECURED LOANS OF RS.17,10,92,000/-, THEREFO RE WE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE THE MATTER SHO ULD GO BACK TO THE FILE OF THE ASSESSING OFFICER AND ACCORDINGLY WE SET ASIDE T HE ORDER PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEN D BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER WHO SHALL DECI DE THE SAME AFRESH AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF ITA NO.1057/M/09 A.Y:05-06 5 BEING HEARD TO THE ASSESSEE. THE GROUNDS TAKEN BY THE ASSE SSEE ARE, THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, ASSESSEES APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18.6.2010 SD/- SD/- (PRAMOD KUMAR) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 18.6.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.