The Assistant Commissioner of Income Tax, Circle-1, Margao., Margao V. M/s Rukminirama Steel Rolling Pvt. Ltd., Goa

ITA 111/PAN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1241 (ITAT-PANAJI)
• Duration Of Justice: 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-09-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 15-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAVIRAJ Y V
• Assessee Lawyers: NAGARAJ KALE
• Keywords: Principle of natural justice; Assessment record; Onus to prove; Condonation of delay
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 11 1 /P A N/201 6 (ASST. YEAR : 20 1 2 - 1 3 ) ACIT, CIRCLE - 1, MARGAO GOA. VS. M/S. RUKMINIRAMA STEEL ROLLINGS PVT. LTD., L - 26, CIIRD, CUNCOLIM INDUSTRIAL ESTATE, CUNCOLIM, SALCETE, GOA. PAN NO. AABCR 3425 L (APPELLANT) (RESPONDENT) C.O.NO. 110/PAN/2016 ( ITA NO. 111 /P A N/201 6) (ASST. YEAR : 20 12 - 1 3 ) M/S. RUKMINIRAMA STEEL ROLLINGS PVT. LTD., L - 26, CIIRD, CUNCOLIM INDUSTRIAL ESTATE, CUNCOLIM, SALCETE, GOA. VS. ACIT, CIRCLE - 1, MARGAO GOA. PAN NO. AABCR 3425 L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NAGARAJ KALE C A DEPARTMENT BY : SHRI RAVIRAJ Y.V. - DR DATE OF HEARING : 07 / 0 9 /201 6 . DATE OF PRONOUNCEMENT : 07 / 0 9 /201 6 . O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) , PANAJI - 1 IN APPEAL NO. 72/CIT(A)/PNJ - 1/15 - 16 , DATED 17 /0 3 /201 6 FOR THE ASSESSMENT YEAR 2 ITA NO. 111/PAN/2016 & C.O.NO.110/PAN/2016 2012 - 13 . C.O.NO. 110/PAN/2016 IS A CROSS OBJECTION FILED BY THE ASSESSEE IN REVENUES APPEAL IN ITA NO. 111/PAN/2016. 2. SHRI RAVIRAJ Y.V. LEARNED STANDING COUNSEL REPRESENTED ON BEHALF OF THE REVENUE AND SHRI NAGARAJ KALE, CA REPRESENTED ON BEHALF OF THE ASSESSEE . 3 . THE REV E NUES APPEAL HAD ORIGINALLY BEEN POSTED ON 23/08/2016, ON WHICH DATE , THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAD BEEN DIRECTED TO FILE PAPER BOOK, IF ANY, AND THE DEPARTMENTAL REPRESENTATIVE HAD BEEN DIRECTED TO PRODUCE ASSESSMENT RECORDS ALONG WITH THE STATEMENTS RECORDED REFERRED TO IN THE ASSESSMENT ORDER. THE RE VENUE HAS PRODUCED THE ASSESSMENT RECORDS ALONG WITH STATEMENTS RECORDED. THE ASSESSEE HAS FILED CROSS OBJECTION ON 29/08/2016 AND THE SAME IS DELAYED BY 37 DAYS. THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY IN FILING THE CROSS OBJECTIO N WHEREIN IT I S MENTIONED THAT THE CROSS OBJECTION WAS FILED AS THE SUBMISSIONS MADE BY THE DEPARTMENTAL REPRESENTATIVE IN THE OPEN COURT WERE MISLEADING A N D IT WAS ESSENTIAL TO PLACE ON RECORD , T HE CROSS OBJECTION TO PROTECT THE INTEREST OF THE ASSESSEE. 4 . ADMITTEDLY, THE REASONS GIVEN FOR FILING OF THE CROSS OBJECTION ARE NOT SUBSTANTI A T E D NOR A GROUND FOR CONDONATION , C ONSEQUENTLY THE APPLICATION FOR CONDONATION OF DELAY STANDS REJECTED. CONSEQUENTLY, THE CROSS OBJECTION FILED BY THE AS SESSEE STANDS DISMISSED IN LIMINI ON ACCOUNT OF NON - CONDONATION OF DELAY. 5. IT WAS SUBMITTED BY THE LEARNED STANDING COUNSEL ON BEHALF OF THE REVENUE THAT THE ASSESSMENT YEAR INVOLVED IS ASSESSMENT YEAR 2012 - 13 . T HE ASSESSEE IS A PRIVATE LIMITED COMPANY. THE ASSESSEE HAS ALLOTTED EQUITY SHARES AND RECEIVED 95 LAC AS SHARE APPLICATION MONEY 3 ITA NO. 111/PAN/2016 & C.O.NO.110/PAN/2016 FROM VARIOUS COMPANIES IN KOLKATA . THE ISSUE IN THE CURRENT ASSESSMENT YEAR RELATES TO SHARE APPLICATION M ONEY RECEIVED TO THE EXTENT OF 70 LAC. IT WAS THE SUBMISSION THAT IN THE COURSE OF ASSESSMENT, THE ASSESSEE WAS ASKED TO PROVE THE GENUINENESS OF THE SHARE CAPITAL RECEIVED , AS TWO OF THE PERSONS , WHO WERE RESPONSIBLE FOR MAKING THE SHARE APPLICATION BEING SHRI GOVIND PRASAD AGRAWAL AND SHRI RAJ KUMAR THARAD, BOTH RESIDING IN KOLKATA , HAD CONFIRMED THAT THEY WERE ENTRY OPERATORS IN THE STATEMENTS RECORDED UNDER OATH IN THE CASE OF SHRI GOVIND PRAS AD AGRAWAL TAKEN ON 21/11/2014 AND IN THE CASE OF SHRI RAJ KUMAR THARAD ON 15/01/2014 . SUBSTANTIAL PORTIONS OF THE STATEMENTS RECORDED HAVE BEEN EXTRACTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER . H OWEVER, IT WAS FAIRLY CONCEDED BY THE LEARNED STA NDING COUNSEL THAT THE STATEMENTS RECORDED HAD NOT BEEN GIVEN TO THE ASSESSEE BEFORE COMPLETION OF THE ASSESSMENT ORDER, BUT WAS ONLY SHOWN TO THE ASSESSEE , W HEN THE STATEMENT OF THE DIRECTI OR OF THE ASSESSEE SHRI B. RAGHAVENDRA WAS RECORDED ON 10/03/2015. IT WAS THE SUBMISSION THAT THE ASSESSMENT ORDER WAS PASSED ON 30/03/2015 AND THE COPY OF THE STATEMENT HAD BEEN G I V E N TO THE ASSESSEE ONLY ON 17/04/2015 . IT WAS THE SUBMISSION THAT AS BOTH THE P E R S O N S , W H O A R E DIRECTORS OF THE COMPANIES WHO WERE THE SHARE APPLICANTS IN THE ASSESSEE COMPANY HAD CONFIRMED THAT THEY WERE ENTRY OPERATORS/ PROVIDERS , T HE ASSESSING OFFICER HAD TREATED THE SHARE APPLICATION MONEY RECEIVED TO THE EXTENT OF 70 LAC AS UNEXPL AINED INCOME OF THE ASSESSEE FOR THE RELEVANT A SSESSMENT Y EAR . 6 . IT WAS THE SUBMISSION THAT ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) HAD DELETED THE ADDITION ON THE GR O UND THAT THE SHARE APPLICATION MONEY HAD BEEN RECEIVED FROM COMPANIES, WHOSE PAN NUMBERS HAVE BEEN GIVE N TO THE ASSESSING OFFICER AND THE AMOUNTS HAD BEEN RECEIVED THROUGH BANKING CHANNEL AND THEREBY, IT HAS DISCHARGED ITS PRIMARY ONUS TO PROVE THE IDENTI T Y, CREDIT WORTHINESS AND 4 ITA NO. 111/PAN/2016 & C.O.NO.110/PAN/2016 GENUINENESS OF THE TRANSACTIONS AND THE STATEMENTS RECORDED BEHIND BACK OF THE ASSESSEE O F T H E DIRECTORS OF THE SHARE APPLICANT COMPANIES HAD NOT BEEN GIVEN TO THE ASSESSEE FOR CROSS EXAMINATION AND CONSEQUENTLY IT COULD NOT BE USED AGAINST THE A SSESSEE AS EVIDENCE. FOR THIS PROPOSITION, COMMISSIONER OF INCOME TAX (APPEALS) HAD ALSO RELIED UPON THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. PARADISE SHIPPING PVT. LTD. IN ITA NO. 327/PNJ/2015. IT WAS THE SUBMISSION THAT THE ASSESSEE HAS NOT PROVED THE GENUINENESS AND CREDITWORTHINESS OF THE SHARE APPLICANTS. IT WAS THE SUBMISSION THAT THE PROVIDING OF THE PAN NUMBERS AND THE ADDRESSES ONLY PROVED THE IDENTITY. IT WAS THE SUBMISSION THAT A PERUSAL OF THE BANK ACCOUNTS OF THE SHARE APPLICANTS CLEARLY SHOWED THE MONIES COMING IN AND GOING OUT AS SHARE APPLICATION MONIES MAINTAINING A MINIMUM BALANCE , WHICH QUESTION ED THE GENUINENESS OF THE TRANSACTION S. IT WAS THE SUBMI SSION THAT THE ASSESSEE HAD NOT PRODUCED ANY CONFIRMATIONS FROM THE SHARE APPLICANTS. THERE WAS A NOTE WHICH WAS CALLED FOR AS TO HOW THE SHARE APPLICANT COMPANIES CAME TO KNOW ABOUT THE SHARE APPLICATION BEING CALLED FOR BY THE ASSESSEE COMPANY NOR WAS THE ORIGINAL SHARE APPLICATION COPIES PRODUCED BEFORE THE ASSESSING OFFICER. IT WAS THE SUBMISSION THAT CONSEQUENTLY EVEN THE CREDITWORT HINESS AND THE GENUINENESS OF THE TRANSACTIONS WERE DOUBTFUL. IT WAS THE SUBMISSION THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WAS LIABLE TO BE REVERSED . 7 . IN REPLY , AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD BEEN ASK E D TO PROVIDE THE DETAILS OF SHARE APPLICATION MONEY, BANK TRANSACTIONS, NOTE, NAME AND ADDRESSES AND THE ORIGINAL SHARE APPLICATION MONEY VIDE LETTER DATED 24/10/2014. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD PROVIDED THE DETAILS VIDE LETT ER DATED 02/12/2014. IT WAS THE SUBMISSION THAT NOTHING ELSE WAS ASKED FOR BY THE ASSESSING OFFICER AND CONSEQUENTLY IT COULD NOT BE HELD 5 ITA NO. 111/PAN/2016 & C.O.NO.110/PAN/2016 THAT THE ASSESSEE DID NOT PROVIDE THE DETAILS. IT WAS THE SUBMISSION THAT THE STATEMENT S WHICH HA VE BEEN RECORDED FROM SHRI GOVIND PRASAD AGRAWAL AND SHRI RAJ KUMAR THARAD COULD NOT BE USED AGAINST THE ASSESSEE INSOFAR AS THE SAME HAD NOT BEEN GRANTED TO THE ASSESSEE. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS REPORTED IN 216 CTR 195 (SC) WHEREIN IT HAS BEEN HELD THAT EVEN IF SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM THE ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER , THEN NO ADDITI ON UNDER SECTION 68 CAN BE MADE TO THE ASSESSEE. HE ALSO PLACED RELIANCE UPON THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL DELHI BENCHES IN THE CASE OF IME INTERNATIONAL PVT. LTD. IN ITA NO. 1873/DEL/2012 , ORDER DATED 08/01/2016 FOR THE ASSESSMENT YEAR 2003 - 04 . IT WAS THE SUBMISSION THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WAS LIABLE TO BE CONFIRMED. 8 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERU S ED THE ASSESSMENT RECORDS. IT IS AN ADMITTED F ACT TH A T THE STATEMENTS RECORDED FROM SHRI GOVIND PRASAD AGRAWAL AND SHRI RAJ KUMAR THARAD HA VE BEEN GIVEN TO THE ASSESSEE ONLY AFTER COMPLETION OF THE ASSESSMENT. HOWEVER, A PERUSAL OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) SHOWS THAT THIS FACT HAS NOT BEEN CONSIDERED BY THE COMMISSIONER OF INCOME TAX (APPEALS) WHEN HE CAME TO THE C ONCLUSION THAT THE STATEMENTS WERE NOT AVAILABLE TO THE ASSESSEE AND CONSEQUENTLY COULD NOT BE RELIED UPON . A PERUSAL OF THE LETTER OF THE ASSESSEE DATED 02/12/2014 , IN RESPONSE TO THE LETTER DATED 24/10/2014 FROM THE ASSESSING OFFICER SHOWS THAT THE ORIG INAL SHARE APPLICATIONS HAVE NOT BEEN PRODUCED . N OTE REGARDING H O W THE SHARE APPLICANT COMPANIES IN KOLKATA CAME TO KNOW ABOUT THE SHARE S ISSUED BY THE ASSESSEE COMPANY IS NOT PROVIDED . ALL IT SAYS, THAT WAS THROUGH WORD OF MOUTH AND TALKS WITH THE FRIENDS O F THE ASSESSEE COMPANY DIRECTORS. 6 ITA NO. 111/PAN/2016 & C.O.NO.110/PAN/2016 THE DETAILS OF THE COMMUNICATIONS BETWEEN THE ASSESSEE COMPANY AND THE SHARE APPLICANT COMPANIES WERE ALSO NOT PRODUCED. FURTHER, A PERUSAL OF THE A D D R E S S DETAILS OF THE SHARE APPLICANT COMPANIES PROVIDED BY T HE ASSESSEE ALSO SHOW THAT THE PAN NUMBERS ARE ALSO NOT AVAILABLE. THE PAN NUMBERS OF THE COMPANIES ARE AVAILABLE ONLY IN THE LETTERS DATED 14/01/2012, 24/01/2012 ETC. OF THE SHARE APPLICANT COMPANIES. HOWEVER , INTERESTINGLY, THESE LETTERS ARE ON THE LET TER - HEAD OF THE ASSESSEE COMPANY . HOW THIS HAS HAPPENED THAT A SHARE APPLICANT COMPANY IN KOLKATA WRITES A LETTER TO THE BOARD OF DIRECTORS TO THE ASSESSEE COMPANY ON THE LETTER - HEAD OF THE ASSESSEE COMPANY SUBMITTING THAT THEY ARE APPLYING FOR THE SHARES OF THE ASSESSEE COMPANY. THIS ITSELF SHOWS ALL IS NOT WELL WITH THE TRANSACTIONS IN RESPECT OF THE SHARE APPLICATION MONEY. EVEN ASSUMING THAT THE ASSESSEE HAS IN HIS LETTER DATED 0 2/12/214 MENTIONED IN ITEM NO.4 THAT THE SH A RE APPLICATIONS IN ORIGINAL ARE NOT AVAILABLE AND WERE MISPLACED AND THESE LETTERS ON THE LETTER - HEAD OF THE ASSESSEE COMPANY ARE SUBSEQUENT PRINT - OUTS , T HE QUESTION WOULD REMAIN AS TO HOW THE SAID LETTERS CONTA IN THE SEAL AND SIGNATURE S OF THE DIRECTORS OF THE SHARE APPLICANT COMPANIES. THE DECISIONS RELIED UPON BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE IN RESPECT OF LOVELY EXPORTS PVT. LTD. (SUPRA) AS ALSO THE DECISION IN THE CASE OF IME INTERNATIONAL PVT. LTD. (SUPRA) WOULD NOT APPLY TO THE FACTS OF THE PRESENT CASE INSOFAR AS HERE THE GENUINENESS AND THE CREDITWORTHINESS OF THE TRANSACTIONS HAVE NOT BEEN PROVED AND THE DECISIONS REFERRED TO ARE NOT APPLICABLE TO THE FACTS IN THE PRESENT CASE. OUR VIE W FINDS SUPPORT FROM THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF RAJMANDIR ESTATES PVT. LTD. REPORTED IN [2016] 386 ITR 162 . IN ANY CASE, WE DO NOT DEEM IT APPROPRIATE TO GO INTO THE INTEGRITY OF THE EVIDENCE AND ADMITTEDLY AS THERE HAS BEEN SUBSTANTIAL VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE , IN THE INTEREST OF JUSTICE , GRANTING THE ASSESSEE AN OPPORTUNITY TO PROVIDE ALL THE DETAILS TO SUBSTANTIATE ITS CASE OF THE RECEIPT OF SHARE 7 ITA NO. 111/PAN/2016 & C.O.NO.110/PAN/2016 APPLICATION MONEY FROM THE SAID SHARE APPLICAN TS I S T H E A P P R O P R I A T E R E M E D Y . T HE ISSUES IN THIS APPEAL ARE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJUD I CATION AFTER GRANTING THE ASSESSEE ADEQUATE OPPORTUNITY TO SUBSTANTIATE ITS CASE. THE ASSESSING OFFICER SHALL GRANT THE ASSESSEE ADEQUAT E TIME TO PRODUCE THE DIRECTORS OF THE SHARE APPLICANT COMPANIES ALONG WITH THEIR DETAILS AND SUCH OTHER EVIDENCE AS ARE REQUIRED TO PROVE THE RECEIPT OF SHARE APPLICATION MONEY. IN THESE CIRCUMSTA N CES, IN THE INTEREST OF JUSTICE, THE ISSUES IN THIS APPEAL ARE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJUD I CATION. 9. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE AND THE CROSS OBJECTION OF THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON WEDNESDAY , THE 0 7 TH DAY OF SEPTEMBER , 201 6 AT GOA . S D / - S D / - (N.S.SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 0 7 TH SEPTEMBER , 201 6 . VR/ - COPY TO: 1 . THE ASSESSEE. M/S. RUKMINIRAMA STEEL ROLLINGS PVT. LTD., L - 26, CIIRD, CUNCOLIM INDUSTRIAL ESTATE, CUNCOLIM, SALCETE, GOA. 2 . THE REVENUE : ACIT, CIRCLE - 1, MARGAO GOA. 3 . THE PR. CIT, PANAJI. 4 . THE CIT(A) , PANAJI - 1, 5 . THE D.R . 6 . GUARD FILE. BY ORDER