ITO, WD-5(4), KOLKATA, Kolkata V. M/s Vatan Enclave Pvt. Ltd., Kolkata

ITA 1169/KOL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2609 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 15-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR CIT DR REVENU
• Assessee Lawyers: MANISH TIWARI
• Keywords: Opportunity of being heard; Reassessment proceedings
• Section: 131; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA C BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER) ITA NO. 1169/KOL/2015 ASSESSMENT YEAR: 2012-13 INCOME TAX OFFICER, WARD-5(4), KOLKATA................................................................APPELLANT M/S. VATAN ENCLAVE PVT. LTD.........................RESPONDENT 5, LUCAS LANE KOLKATA 700 001 [PAN: AACCV 3740 M] APPEARANCES BY: SHRI MANISH TIWARI, A/R, APPEARED ON BEHALF OF THE ASSESSEE. SHRI SAURABH KUMAR, ADDL. CIT, D/R. APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : SEPTEMBER 12 TH , 2018 DATE OF PRONOUNCING THE ORDER : NOVEMBER 09 TH , 2018 ORDER PER J. SUDHAKAR REDDY, AM :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 2, KOLKATA, (HEREINAFTER THE LD. CIT(A)), DT. 30/06/2015, PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT), RELATING TO ASSESSMENT YEAR 2012-13. 2. THE ASSESSEE IS A COMPANY AND FILED ITS RETURN ELECTRONICALLY ON 06/12/2012, SHOWING TOTAL INCOME OF RS.246/-. DURING THE YEAR, THE ASSESSEE ISSUED 6,700 EQUITY SHARES @ RS.10/- EACH, ON A PREMIUM OF RS.1,990/-. IT HAD RECEIVED AN AMOUNT OF RS.1,34,00,000/- AGAINST SUCH SHARES. IN ORDER TO VERIFY THE TRANSACTIONS, NOTICES U/S 131 OF THE ACT WERE ISSUED TO THE DIRECTORS OF THE ASSESSEE COMPANY, WHO FAILED TO APPEAR. THE ASSESSING OFFICER ISSUED A SHOW-CAUSE LETTER TO THE ASSESSEE ON 13/03/2015, AND THEREAFTER MADE AN ADDITION OF RS.1,34,00,000/- U/S 68 OF THE ACT. THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE LD. FIRST APPELLATE AUTHORITY, FOR THE VARIOUS REASONS GIVEN IN HIS ORDER, DELETED THE ADDITION AND ALLOWED THE APPEAL OF THE ASSESSEE. 3. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 2 ITA NO. 1169/KOL/2015 ASSESSMENT YEAR: 2012-13 M/S. VATAN ENCLAVE PVT. LTD 4. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS:- 5. THE ASSESSING OFFICER IN THIS CASE ISSUED A SHOWCAUSE NOTICE TO THE ASSESSEE ON 13/03/2015 AND WITHIN 10 DAYS COMPLETED THE ASSESSMENT, WITHOUT GIVING PROPER OPPORTUNITY TO THE ASSESSEE. HE PASSED A NON-SPEAKING ORDER. THE LD. CIT(A) HAS NOT GIVEN THE ASSESSING OFFICER ANY OPPORTUNITY TO VERIFY THE DOCUMENTS SUBMITTED BY THE ASSESSEE. 5.1. WE FIND THAT THIS BENCH OF THE TRIBUNAL UNDER IDENTICAL CIRCUMSTANCES IN THE CASE OF DHENU MERCHANDISE PVT. LTD VS. ITO, IN I.T.A. NO. 1745/KOL/2017 ASSESSMENT YEAR: 2008- 09 HAS HELD AS FOLLOWS:- ..WE NOTE THAT NO OTHER INVESTIGATION WAS CONDUCTED BY AO IS DISCERNIBLE FROM THE ORDER. SO, WE FIND FORCE IN THE SUBMISSION OF THE LD. AR THAT NO PROPER OPPORTUNITY BEFORE THE AO DURING THE REASSESSMENT PROCEEDINGS BECAUSE ONLY ONE DATE WAS FIXED FOR HEARING ON 16.12.2013 TO ASSESSEE COMPANY. WE NOTE THAT SINCE THE DIRECTORS OF ASSESSEE COMPANY COULD NOT APPEAR BEFORE THE AO IN PURSUANCE OF THE SUMMONS U/S. 131 (THIS FACT OF SUMMONS ISSUED IS CONTESTED BY ASSESSEE), THE AO SADDLED THE ADDITION BY DRAWING ADVERSE INFERENCE IS PER-SE WITHOUT APPLICATION OF MIND, WHICH ACTION OF A.O. CANNOT BE COUNTENANCED. SO, WE FIND FORCE IN THE SUBMISSION OF THE LD. AR THAT NO PROPER OPPORTUNITY WAS GIVEN TO ASSESSEE BY AO DURING THE REASSESSMENT PROCEEDINGS AND SO WE ARE, THEREFORE, OF THE OPINION THAT ASSESSEE DID NOT GET PROPER OPPORTUNITY BEFORE THE AO DURING REASSESSMENT PROCEEDINGS. THE HONBLE (THREE JUDGE BENCH) OF THE HONBLE SUPREME COURT IN TIN BOX 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 THE TRIBUNAL, THE FACT-FINDING AUTHORITY, THAT READS THUS : WE WILL STRAIGHTAWAY AGREE WITH THE ASSESSEES SUBMISSION THAT THE INCOME- TAX OFFICER HAD NOT GIVEN TO THE ASSESSEE PROPER OPPORTUNITY OF BEING 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 REASONABLE 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 : 3 ITA NO. 1169/KOL/2015 ASSESSMENT YEAR: 2012-13 M/S. VATAN ENCLAVE PVT. LTD 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 HEARING TO THE ASSESSEE ? IN OUR OPINION, THERE CAN ONLY BE ONE ANSWER TO THIS 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 ARE ALSO SET ASIDE. THE MATTER SHALL NOW BE REMANDED TO THE ASSESSING AUTHORITY FOR FRESH CONSIDERATION, AS AFORESTATED. 6. 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 INTO THE PERNICIOUS PRACTICE OF CONVERTING BLACK MONEY INTO WHITE MONEY HAS GIVEN THE GUIDELINES TO AO AS TO HOW THE INVESTIGATION 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 SUPREME 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 CREDITWORTHINESS 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 REVERSED THE HONBLE HIGH COURT, TRIBUNAL AND CIT(A)S ORDERS AND REMANDED THE MATTER BACK TO AO FOR FRESH ASSESSMENT. SO, SINCE THERE WAS LACK OF OPPORTUNITY AS AFORESTATED IT HAS TO GO BACK TO AO. 7. WE ALSO NOTE THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JANSAMPARK ADVERTISING & MARKETING PVT. LTD. IN ITA NO. 525/2014 DATED 11.03.2015 WHEREIN AFTER NOTICING INADEQUATE ENQUIRY BY AUTHORITIES BELOW HAVE 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 INFERENCE, OR FORM THE FACT THAT THE TRANSACTIONS WERE THROUGH BANKING CHANNELS, IT DOES NOT NECESSARILY 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 OBLIGATION TO CONDUCT A PROPER INQUIRY TO TAKE THE MATTER TO LOGICAL CONCLUSION. BUT CIT(APPEALS), 4 ITA NO. 1169/KOL/2015 ASSESSMENT YEAR: 2012-13 M/S. VATAN ENCLAVE PVT. LTD HAVING NOTICED WANT OF PROPER INQUIRY, COULD NOT HAVE CLOSED THE CHAPTER SIMPLY BY ALLOWING THE APPEAL AND DELETING THE ADDITIONS MADE. IT WAS ALSO THE OBLIGATION OF THE FIRST 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 STATEMENTS REVEAL UNIFORM PATTERN OF CASH DEPOSITS OF EQUAL AMOUNTS IN THE RESPECTIVE ACCOUNTS PRECEDING THE TRANSACTIONS IN QUESTION. THIS NECESSITATED A DETAILED SCRUTINY OF THE MATERIAL SUBMITTED BY THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION148 ISSUED BY THE AO, AS ALSO THE MATERIAL SUBMITTED AT THE STAGE OF APPEALS, IF DEEMED PROPER BY WAY OF MAKING OR CAUSING TO BE MADE A 'FURTHER INQUIRY IN EXERCISE OF THE POWER UNDER SECTION 250(4). HIS APPROACH NOT HAVING BEEN ADOPTED, THE IMPUGNED ORDER OF ITAT, AND CONSEQUENTLY THAT OF CIT(APPEALS), CANNOT BE APPROVED OR UPHELD.' 8. 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 OPPORTUNITY BEFORE THE AO DURING REASSESSMENT PROCEEDINGS, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF AO FOR DE NOVO ASSESSMENT AND TO DECIDE THE MATTER IN ACCORDANCE TO LAW AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6. CONSISTENT WITH THE VIEW TAKEN THEREIN, AND APPLYING THE PROPOSITIONS OF LAW LAID DOWN DISCUSSED IN THE ABOVE CASE-LAW, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO ASSESSMENT AND TO DECIDE THE MATTER IN ACCORDANCE WITH LAW. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. KOLKATA, THE 9 TH DAY OF NOVEMBER, 2018. SD/- SD/- [ MADHUMITA ROY] [ J. SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 09.11.2018 {SC SPS} 5 ITA NO. 1169/KOL/2015 ASSESSMENT YEAR: 2012-13 M/S. VATAN ENCLAVE PVT. LTD COPY OF THE ORDER FORWARDED TO: 1. M/S. VATAN ENCLAVE PVT. LTD 5, LUCAS LANE KOLKATA 700 001 2. INCOME TAX OFFICER, WARD-5(4), KOLKATA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES