ITO, WD-4(1), KOLKATA, Kolkata V. M/s Royal Nirman Pvt. Ltd., Kolkata

ITA 1211/KOL/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1621 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 17-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHUR Y
• Assessee Lawyers: M D SHAH
• Keywords: Opportunity of being heard; Onus to prove; Set aside
• Section: 143(3); 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI A. T. VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.1211/KOL/2015 ( / ASSESSMENT YEAR: 2012-13) ITO, WARD-4(1), KOLKATA VS. M/S ROYAL NIRMAN PVT. LTD. 9/12, LAL BAZAR STREET, BLOCK-D, 1 ST FLOOR, MERCANTILE BUILDING, KOLKATA-1. ./ ./PAN/GIR NO.: AAFCR 0063 G (ASSESSEE) .. (REVENUE) ASSESSEE BY :SHRI ROBIN CHOUDHURY, ADDL. CIT (DR) RESPONDENT BY :SHRI M. D. SHAH, AR / DATE OF HEARING : 19/06/2019 /DATE OF PRONOUNCEMENT : 06/09/2019 / O R D E R PER DR. A. L. SAINI, AM: THE CAPTIONED APPEAL FILED BY THE REVENUE, PERT AINING TO ASSESSMENT YEAR 2012-13 IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEAL)-2, KOLKATA, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT , 1961 (IN SHORT THE ACT) DATED 09.03.2015. 2. THE GROUNDS OF APPEAL OF REVENUE IS AGAINST THE ACTION OF LD CIT(A) IN CONFIRMING THE ADDITION OF RS. 1,55,00,000/- MADE O N ACCOUNT OF SHARE CAPITAL ALONG WITH PREMIUM RECEIVED U/S 68 OF THE INCOME TA X ACT, 1961. 3. AT THE OUTSET ITSELF, LD DR FOR THE REVENUE POIN TED OUT THAT THE ADDITIONS HAVE BEEN MADE BY THE AO BECAUSE OF NON-PARTICIPATION OF THE ASSESSEE AT THE ASSESSMENT STAGE AND NON-COMPLIANCE OF NOTICE UNDER SECTION 131 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE AR OF THE AS SESSEE COMPANY SUBMITTED M/S ROYAL NIRMAN PVT. LTD. ITA NO.1211/KOL/2015 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 2 22 2 STATEMENTS OF ACCOUNTS AND E-FILED RETURN OF INCOME OF THE ASSESSEE COMPANY. THE LD DR POINTED OUT THAT THE ASSESSEE COMPANY DURING THE ASSESSMENT PROCEEDINGS DID NOT RESPOND TO SUMMON U/S 131 OF THE ACT. BESID ES, SHARE SUBSCRIBING COMPANIES ALSO DID NOT RESPOND TO NOTICE U/S 133(6) OF THE ACT. THEREFORE, THE THREE INGREDIENTS OF SECTION 68 OF THE ACT, NAMELY: IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SHARE CAPITAL / PREMIUM REC EIVED FROM THE SHARE SUBSCRIBING COMPANIES HAVE NOT BEEN PROVED/SATISFIE D. THE LD. DRTHEN TOOK US THROUGH THE RELEVANT PARA OF ASSESSMENT ORDER, WHIC H IS GIVEN BELOW FOR READY REFERENCE: THE ASSESSEE COMPANY IS A CLOSELY HELD COMPANY IN WHICH PUBLIC ARE NOT SUBSTANTIALLY INTERESTED. KEEPING THIS IN CONSIDERA TION, NOTICE UNDER SECTION 131 WERE ISSUED AND SENT TO THE ASSESSEE REQUIRING IT T O APPEAR PERSONALLY ALONG WITH ALL THE PRINCIPAL OFFICERS, DIRECTORS OF ALL THE IN VESTOR COMPANIES AND/OR INDIVIDUAL INVESTORS AS THE CASE MAY BE FOR THE PUR POSE TO PRIMARILY VERIFY THE IDENTITY AND CREDITWORTHINESS OF THE SHAREHOLDERS A ND GENUINENESS OF THE TRANSACTION MADE BY THEM IN THE ASSESSEE COMPANY, A S WELL AS ANALYSIS OF VARIOUS ENTRIES IN BANK STATEMENTS, CASH BOOK, LEDGER ETC, FOR ASCERTAINMENT OF PRIMARY SOURCES, REASONS FOR RAISING CAPITAL, RATIONALITY OF REASONS FOR INVESTMENT BY THE INVESTORS, PROCEDURE AND CERTIFICATIONS INVOLVED IN RESPECT OF CALCULATION AND DETERMINATION OF SUCH A HIGH PREMIUM AMOUNT IN THE IR RESPECTIVE PARTS FOR BUSINESS AND FINANCIAL JUSTIFICATION ETC. IN PRESE NCE AND DISCUSSION WITH ALL THE DIRECTORS AT A TIME FOR THE PURPOSE OF PROVIDING TH E OPPORTUNITIES OF CROSS INTERACTION AND CROSS EXAMINATION REGARDING ABOVE E SPECIALLY FOR ASCERTAINING PRIMARY SOURCES ETC. HOWEVER, IN SPITE OF HAVING OP PORTUNITIES THE ASSESSEE FAILED TO JUSTIFY HIS RETURN WITH THE EVIDENCE AS DISCUSSE D WHICH WILL JUSTIFY THE PRIMARY SOURCES ETC OF ITS CAPITAL RAISED. THE LD DR SUBMITS BEFORE US THAT MERELY DUMPING OF PAPERS AND DOCUMENTS ON THE TABLE OF THE ASSESSING AUTHORITY DOES NOT IN ANY WA Y MEAN COMPLIANCE.THE BURDEN OF PROOF CANNOT BE SHIFTED ON THE REVENUE BY CART L OADS OF DOCUMENTS. THE DOCUMENTS SUBMITTED MUST BE EXPLAINED. 4. THE LD DR FURTHER SUBMITS THAT DURING THE APPELL ATE PROCEEDINGS ALSO THE LD CIT(A) DID NOT ISSUE NOTICE UNDER SECTION 131 OF TH E ACT TO THE ASSESSEE COMPANY AND NO NOTICES UNDER SECTION 133(6) WERE ISSUED TO THE SHARE SUBSCRIBING COMPANIES TO VERIFY THE IDENTITY, GENUINENESS AND C REDITWORTHINESS OF THE SHARE CAPITAL AND SHARE PREMIUM. THE LD CIT(A) ALSO DID N OT CALL REMAND REPORT FROM THE AO TO EXAMINE THE PAPER BOOK AND DOCUMENTS SUBMITTE D BY THE AR OF THE ASSESSEE COMPANY DURING THE APPELLATE PROCEEDINGS. THEREFORE, LD DR PRAYED THE M/S ROYAL NIRMAN PVT. LTD. ITA NO.1211/KOL/2015 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 3 33 3 BENCH THAT THE MATTER SHOULD BE REMITTED BACK TO TH E FILE OF THE AO FOR FRESH ASSESSMENT. 5. ON THE OTHER HAND, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE HAD FURNISHED BOOKS OF ACCOUNTS BEFORE AO, AS WELL AS B EFORE LD CIT(A). THE LD COUNSEL, THEREAFTER EXPLAINED THE REASONS BEFORE TH E BENCH ABOUT THE NON- COMPLIANCE OF NOTICES UNDER SECTION 133 AND 133(6) OF THE ACT. HE STATED THAT DIRECTOR OF THE SHARE SUBSCRIBING COMPANIES AS WELL AS ASSESSEE COMPANY WERE OUT OF STATION THEREFORE, THEY COULD NOT APPEAR BEFORE THE AO ON THE DATE OF COMPLIANCE. GIVEN AN OPPORTUNITY, ASSESSEE IS READY TO MAKE COMPLIANCE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE NOTE THAT NEITHER THE ASSESSEE NOR THE SHARE SUB SCRIBING COMPANIES MADE COMPLIANCE OF NOTICES UNDER SECTION 131/ 133(6) OF THE ACT.THEREFORE, WE ARE OF THE VIEW THAT ASSESSEE DID NOT GET PROPER OPPORTUNI TY TO REPRESENT ITS CASE AT THE ASSESSMENT STAGE. HENCE, WE ARE OF THE VIEW THAT ON E MORE OPPORTUNITY SHOULD BE GIVEN TO THE ASSESSEE TO PLEAD HIS CASE BEFORE THE ASSESSING OFFICER. THEREFORE, WE NOTE THATASSESSEE DID NOT GET OPPORTU NITY TO DISCHARGE THE ONUS CASTED UPON IT AS REQUIRED IN SECTION 68 MATTERS. SO, WE FIND FORCE IN THE SUBMISSION OF THE LD.DR ANDTHEREFORE WE ARE OF THE VIEW THAT THE ISSUE MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ASSESSMENT. FOR THAT WE RELY ON THE JUDGMENT OF THE HONBLE (THREE JUDGE BE NCH) OF THE HONBLE SUPREME COURT IN TIN BOX COMPANY VS. CIT (2001) 249 ITR 21 6 (SC) WHEREIN IT WAS HELD AS FOLLOWS: IT IS UNNECESSARY TO GO INTO GREAT DETAIL IN THESE MATTERS FOR THERE IS A STATEMENT IN THE ORDER OF THE TRIBUNAL, THE FACT-FI NDING AUTHORITY, THAT READS THUS : WE WILL STRAIGHTAWAY AGREE WITH THE ASSESSEES SUB MISSION THAT THE INCOME-TAX OFFICER HAD NOT GIVEN TO THE ASSESSEE PR OPER OPPORTUNITY OF BEING HEARD. THAT THE ASSESSEE COULD HAVE PLACED EVIDENCE BEFORE THE FIRST APPELLATE AUTHORITY OR BEFORE THE TRIBUNAL IS REALLY OF NO CO NSEQUENCE FOR IT IS THE ASSESSMENT ORDER THAT COUNTS. THAT ORDER MUST BE MA DE AFTER THE ASSESSEE M/S ROYAL NIRMAN PVT. LTD. ITA NO.1211/KOL/2015 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 4 44 4 HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF SETTING OUT HIS CASE. WE, THEREFORE, DO NOT AGREE WITH THE TRIBUNAL AND THE H IGH COURT THAT IT WAS NOT NECESSARY TO SET ASIDE THE ORDER OF ASSESSMENT AND REMAND THE MATTER TO THE ASSESSING AUTHORITY FOR FRESH ASSESSMENT AFT ER 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 T HUS : 1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN NOT SETTING ASIDE THE ASS ESSMENT ORDER IN SPITE OF A FINDING ARRIVED AT BY IT THAT THE INCOME-TAX OFFI CER HAD NOT GIVEN A PROPER OPPORTUNITY OF HEARING 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 A ND 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 REMANDE D TO THE ASSESSING AUTHORITY FOR FRESH CONSIDERATION, AS AFORESTATED. 7. IN VIEW OF THE ABOVE FACTS AND IN THE LIGHT OF T HE HONBLE SUPREME COURTS DECISION IN TIN BOX COMPANY (SUPRA), WE THINK IT FI T AND PROPER TO REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER. THE LD. DR FOR THE REVENUE AS WELL ASSESSEE DID NOT HAVE OBJECTION IF THE MATTER IS RE MITTED BACK TO THE FILE OF ASSESSING OFFICER. THEREFORE, IN THE INTEREST OF JU STICE AND FAIR PLAY FOR BOTH THE PARTIES, WE SET ASIDE THE ORDER OF LD. CIT(A) AND R EMIT THE MATTER BACK TO THE FILE OF ASSESSING OFFICER FOR DE NOVO ADJUDICATION, AND TO DECIDE THE MATTER IN ACCORDANCE TO LAW AFTER GIVING OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS TREA TED TO BE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 06.09.2019 SD/- ( A.T. VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 06/09/2019 ( SB, SR.PS ) M/S ROYAL NIRMAN PVT. LTD. ITA NO.1211/KOL/2015 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 5 55 5 COPY OF THE ORDER FORWARDED TO: 1. ITO, WARD-4(1), KOLKATA 2. M/S ROYAL NIRMAN PVT. LTD. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATABENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES