VITTRAG MINERALS & METALS EXCAVATION P.LT, MUMBAI V. ITO 8(3)(4), MUMBAI

ITA 1241/MUM/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0460 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 20-12-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 03-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business expenditure; Additional evidence; Reasonable cause
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL F , BENCH, MUMBAI , , , BEFORE SHRI RAJENDRA, AM AND SHRI RAM LAL NEGI, JM ./ ITA NO. 1241 / MUM/ 201 5 ( / ASSESSMENT YEAR: 2010 - 11 ) M/S VITTRAG MINERALS & METAL EXCAVATION PVT. LTD., OFFICE 15, 12 TH FLOOR, NEW AKHAND JYOTI SOCIETY, BUILDING NO. 1, MANIESH NAGAR, 4 BUNGALOW, ANDHERI (W), MUMBAI - 400053 VS. THE ITO 8( 3)(4), 2 ND FLOOR, AYAKAR BHAVAN, M.K. ROAD, CHURCHGATE, MUMBAI - 400020 ./ ./ PAN/GIR NO. : AACCV 7379 N ( / APPELLANT ) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI VIJAY MEHTA (AR) / REVENUE BY : SH RI SAURABH KUMAR RAI (DR) / DATE OF HEARING : 05/01 /201 8 / DATE OF PRONOUNCEMENT : 31 / 01/2018 / O R D E R PER RAM LAL NEGI, JM THIS APPEA L HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 05/12/2014 PASSED BY THE COMMISSIONER OF INCOME TAX [CIT(A)] (APPEALS) - 18 , MUMBAI , PERTAI NING TO THE ASSESSMENT YEAR 2010 - 11 , WHEREBY THE LD. CIT (A) HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED U/S 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING THE LOSS OF RS. 7,347/ - . SINCE, THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT, NOTICE U/S 143 (2) AND 142 (1) WERE ISSUED. IN RESPONSE THEREOF THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ATTENDED THE PROCEEDINGS, MADE SUBMISSIONS ON 2 ITA NO. 1241 /MUM/2015 ASSESSMENT YEAR: 2010 - 11 BEHALF OF THE ASSESSEE AND FURNISHED DETAILS CALLED FOR. ON PERUSAL OF THE BALANCE SHEET, IT WAS NOTICED THAT DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE C OMPANY HAD RECEIVED FRESH FUNDS BY WAY OF SHARE APPLICATION MONEY AMOUNTING TO RS. 5,30,00,000/ - . OUT OF WHICH RS. 5,20,00,000/ - WAS UTILIZED ON INVESTMENT IN THE SHARE WARRANTS OF TWO OTHER COMPANIES. THE PROFIT AND LOSS ACCOUNT CONTAINED ONLY EXPENDITURE TO THE EXTENT OF RS. 7,343/ - , WHICH WAS CLAIMED AS BUSINESS EXPENDITURE. THE ASSESSEE WAS ACCORDINGLY ASKED TO FURNISH THE PARTY WISE DETAILS OF SHARE APPLICATION MONEY. THE ASSESSEE FURNISHED ABSTRACT OF ITS BANK STATEMENTS , HOWEVER , FAILED TO FURNISH TH E COMPLETE DETAILS. A NOTICE U/S 133 (6) WAS ISSUED TO THE BANKER SEEKING INFORMATION REGARDING THE DETAILS, WHICH WAS FURNISHED BY THE BANK. ON PERUSAL OF THE DETAILS PROVIDED BY THE BANK , IT WAS OBSERVED THAT THE ASSESSEE COMPANY OPEN ED BANK ACCOUNT IN J ANUARY 2010 AND THERE WERE CREDIT ENTRIES AMOUNTING TO RS. 5,30,00,000/ UP TO 31.03.2010 - . ON THE BASIS OF THE SAID ENTRIES, THE AO CONCLUDED THAT THE ASSESSEE COMPANY GENERATED THE SHARE APPLICATION MONEY OF THE SAID AMOUNT BY OPENING A NEW BANK ACCOUNT IN ING VYSYA BANK. IT WAS FURTHER NOTICED THAT FOUR ENTRIES WERE RELATED TO TRANSFER OF FUNDS FROM BANK OF INDIA. THE AO ASKED THE BANK OF INDIA TO FURNISH THE DETAILS REGARDING THE FOUR ENTRIES. ON THE BASIS OF THE DETAILS PROVIDED BY THE BANK OF INDIA NO TICES U/S 133 (6) WERE SENT TO THE CONCERNED PERSONS AND THEY WERE ASKED TO FURNISH THE DETAILS. HOWEVER, T HE AO DID NOT RECEIVE ANY RESPONSE FROM THE PARTIES CONCERNED. 3 . IT WAS FURTHER NOTICED THAT THE ASSESSEE COMPANY RECEIVED RS. 5,64, 000/ - AS INT EREST FROM MANGALDEEP ENTERPRISES, WHEREAS THE ASSESSEE HAD NOT SHOWN ANY INCOME IN ITS P&L ACCOUNT FOR THE YEAR ENDING 31.03.2010. NOTICE U/S 133 (6) OF THE ACT WAS ISSUED TO MANGALDEEP ENTERPRISES TO SUBMIT THE DETAILS. ACCORDINGLY, MANGALDEEP ENTERPRISE S PROVIDED COPY OF LEDGER ACCOUNT OF THE ASSESSEE, COPY OF TDS CERTIFICATE ISSUED IN THE NAME OF ASSESSEE COMPANY AND STATEMENT OF BANK ACCOUNTS ETC. ON THE BASIS OF THE SAID DOCUMENTS, SHOW 3 ITA NO. 1241 /MUM/2015 ASSESSMENT YEAR: 2010 - 11 CAUSE NOTICE WAS ISSUED TO THE ASSESSEE, BUT NO RESPONSE WAS RECE IVED FROM THE ASSESSEE COMPANY. 4 . ON THE BASIS OF MATERIAL COLLECTED DURING ASSESSMENT PROCEEDINGS, THE AO MADE ADDITION OF RS. 5,64,000/ - AS INCOME FROM OTHER SOURCES AND RS. 5,30,00,000/ - AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS. 5,35,56,650/ - (ROUNDED OFF). THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT (A). THE LD. CIT (A) AFTER HEARING THE ASSESSEE AFFIRM ED THE ADDITIONS MADE BY THE AO AND DISMISSED THE APPEAL OF THE ASSESSEE . THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE SAID ORDER. 5 . THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUND S OF APPEAL AGAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT (A): - A) THE ORDER OF THE CIT (APPEAL) UPHOLDING THE ADDITION OF RS. 5,30,00,000/ - AS SHARE APPLICATION MONEY TAKEN FROM THREE PARTIES BE SET ASIDE/DELETED AS THE SAME IS DEFECTIVE, ILLEGAL AND VOID - AB - INITIO FOR WANT OF JURISDICTION. B) THE ORDER OF THE CIT (APPEAL) UPHOLDING THE ADDITION OF RS. 5,64,000/ - AS INTEREST I NCOME BE SET ASIDE/DELETED AS THE SAME IS DEFECTIVE, ILLEGAL AND VOID - AB - INITIO FOR WANT OF JURISDICTION. 6 . AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FILED AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE U NDER RULE 29 OF THE APPELLATE TRIBUNAL RULES, 1963. THE LD. COUNSEL FURTHER SUBMITTED THAT THE DOCUMENTS SUBMITTED ALONG WITH THE APPLICATION FOR PLACING OF RECORD AS ADDITIONAL EVIDENCE ARE VERY VITAL AND ESSENTIAL TO ADJUDICATE THE ISSUES INVOLVED IN THI S CASE. THE LD. COUNSEL FURTHER SUBMITTED THAT IN FACT THE APPELLANT COMPANY DID NOT HAVE ANY BUSINESS ACTIVITIES DURING THE RELEVANT TIME. SH. NIKHIL BAJAJ WAS PERSUADED TO BECOME A DIRECTOR OF THE COMPANY BY HIS FRIEND SH. AMIT SHARMA, WHO WAS WHOLE TIME DIRECTOR OF M/S RESURGERE GROUP WHICH USED TO CONTROL MANY ENTITIES INCLUDING THE APPELLANT COMPANY. SH. NIKHIL BAJAJ RESIGNED FROM THE POST OF THE DIRECTOR ON 16.08.2011, HOWEVER, 4 ITA NO. 1241 /MUM/2015 ASSESSMENT YEAR: 2010 - 11 HE USED TO SIGN THE DOCUMENTS PRESENTED TO HIM IN GOOD FAITH. THE APPELLAN T COMPANY WAS USED AS CONDUIT TO HANDLE TRANSACTIONS OF RESURGERE GROUP AND THE FUNDS WERE ROUTED THROUGH THE APPELLANT COMPANY. THE ASSESSEE WANTS TO ADDUCE ADDITIONAL EVIDENCE IN SUPPORT OF THE SAID CONTENTION. THE LD. COUNSEL RELIED ON THE JUDGMENT OF H ONBLE GUWAHATI HIGH COURT PASSED IN THE CASE OF JEYPORE TIMBER AND VENEER MILLS P. LTD. VS. CIT 137 ITR 415 . 7 . ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE OPPOSED THE APPLICATION FOR ADDITIONAL EVIDENCE ON THE GROUND THAT THE ASSESSEE HAS NO T POINTED OUT ANY REASONABLE CAUSE FOR NOT SUBMITTING THE DOCUMENTS IN QUESTION BEFORE THE AUTHORITIES BELOW. 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO GONE THROUGH THE ENTIRE MATERIAL ON THE RECORD. THE ASSESSEE WANTS TO RELY ON THE RELEVANT PAGE S OF RED HEARING PROSPECTUS OF M/S RESURGERE MILLS AND MINERALS INDIA LTD., FILED WITH STOCK EXCHANGE AND REGISTRAR OF COMPANIES IN THE YEAR 2008 FOR ITS IPO AS POINTED OUT BY THE LD. COUNSEL. AS POINTED OUT BY THE LD. COUNSEL, T HE SAID DOCUMENT IS A PUBLI C DOCUMENT BEYOND THE SCOPE OF TAMPERING NO PREJ UDICE IS GOING TO BE CAUSED IN CASE THE SAME IS ADMITTED AS ADDITIONAL EVIDENCE UNDER RULE 29 OF THE APPELLATE TRIBUNAL RULES, 1963. THE HONBLE GUJARAT HIGH COURT HAS HELD IN THE CASE OF JEYPORE TIMBER AND VENEER MILLS P. LTD. (SUPRA) THAT THE TRIBUNAL HAS DISCRETIONARY POWER TO ADMIT ADDITIONAL EVIDENCE AFTER RECORDING REASONS FOR ADMITTING THE SAME. THE BASIC OBJECT BEHIND THE PROVISIONS IS TO DISPENSE JUSTICE AND TO RECTIFY THE MISTAKES COMMITTED BY THE PARTIES. SINCE , THE DOCUMENTS IN QUESTION ARE ESSENTIAL FOR REACHING TO A LOGICAL CONCLUSION AND FOR THE JUST DECISION OF THE PRESENT APPEAL, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY TO PRESENT ITS CASE BEFORE THE AUTH ORITIES BELOW IN THE LIGHT OF THE ADDITIONAL EVIDENCE, IN THE INTEREST OF JUSTICE. WE, THEREFORE, ALLOW THE APPLICATION OF THE ASSESSEE AND ADMIT THE ADDITIONAL EVIDENCE AND SEND THE APPEAL BACK TO THE AO FOR PASSING ASSESSMENT ORDER AFRESH AFTER HEARING THE ASSESSEE IN THE LIGHT OF THE 5 ITA NO. 1241 /MUM/2015 ASSESSMENT YEAR: 2010 - 11 ADDITIONAL EVIDENCE ALLOWED BY US. THE ASSESSEE IS DIRECTED TO APPEAR BEFORE THE AO AND NOT TO SEEK ANY ADJOURNMENT ON FRIVOLOUS GROUNDS DURING THE ASSESSMENT PROCEEDINGS . THE APPEAL IS ACCORDINGLY DISPOSED OF. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2010 - 11 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY , 2018 . SD/ - SD/ - ( RAJENDRA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 31 / 01/2018 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MU MBAI