M/s Khambhalia Traders Pvt. Ltd., Kolkata V. ITO, WD-1(3), KOLKATA, Kolkata

ITA 140/KOL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4391 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 01-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MD USMAN
• Keywords: Opportunity of being heard; Source of fund; Corroborative evidences; Reassessment proceedings
• Section: 142(1); 133(6); 131; 68

Judgement Text

1 ITA NO. 140/KOL/2016 M/S. KHAMBHALIA TRADERS PVT. LTD., AY 2011-12 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) BEFORE . . , /AND . , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI M. BALAGANESH , AM] I.T.A. NO. 140/KOL/2016 ASSESSMENT YEAR: 2011-12 M/S. KHAMBHALIA TRADERS PVT. LTD. (PAN: AAECK1237C) VS. INCOME-TAX OFFICER, WD-1(3), KOLKATA APPELLANT RESPONDENT DATE OF HEARING 10.10.2018 DATE OF PRONOUNCEMENT 31.10.2018 FOR THE APPELLANT SHRI RAVI TULSIYAN, FCA FOR THE RESPONDENT MD. USMAN, CIT, DR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE ASSESSEE IS AGAINST TH E ORDER OF THE LD. CIT(A)-3, KOLKATA DATED 10.12.2015 FOR AY 2011-12. 2. AT THE OUTSET THE LD. AR BROUGHT TO OUR NOTICE T HAT THE ASSESSEE COMPANY WAS INCORPORATED ON 15.09.2010 SO THE ACCOUNTS FOR THE PERIOD BETWEEN 15.09.2010 AND 31.03.2011 (I.E. AY 2011-12 WAS THE FIRST PERIOD OF OPERATION OF THE ASSESSEE COMPANY). THE AO NOTED THAT THIS WAS THE FIRST YEAR OF THE OP ERATION OF THE ASSESSEE COMPANY AND HAD DECLARED TOTAL INCOME OF RS.2851/-. THE CASE WAS S ELECTED FOR SCRUTINY THROUGH CASS FOR THE REASON THAT HUGE SHARE CAPITAL WAS INTRODUCED. THE AO NOTED THAT THE ASSESSEE HAD ISSUED SHARES OF FACE VALUE OF RS. 1/- AT A PREMIUM OF RS.99/- AND THOUGH THE ASSESSEE COMPANY HAD FURNISHED THE LIST OF SHAREHOLDERS TO W HOM THE SHARES WERE ALLOTTED ALONG WITH THE PREMIUM AND THE NOTICE U/S. 133(6) DATED 29.11. 2013 WAS ISSUED BY THE AO TO THE SHAREHOLDERS AND HAVING RECEIVED THE REPLIES FROM T HE SHAREHOLDERS, THEREAFTER THE AO ISSUED NOTICE U/S. 131 OF THE ACT ON 13.03.2014 TO THE DIR ECTORS OF THE ASSESSEE COMPANY FOR RECORDING THEIR STATEMENT ON OATH. HOWEVER, SINCE THE DIRECTOR OF ASSESSEE COMPANY DID NOT 2 ITA NO. 140/KOL/2016 M/S. KHAMBHALIA TRADERS PVT. LTD., AY 2011-12 TURN UP, THE AO ADDED THE ENTIRE SHARE APPLICATION MONEY ALONG WITH THE PREMIUM TO THE TUNE OF RS.91,35,00,000/- U/S. 68 OF THE ACT. AGGR IEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ACTION OF A O. AGGRIEVED, ASSESSEE IS BEFORE US. 3. ACCORDING TO LD. AR, THE ASSESSEE COMPANY SINCE WAS INCORPORATED ONLY ON 15.09.2010 AS A PRIVATE LTD. COMPANY UNDER THE COMP ANIES ACT, 1956 AND THIS ASSESSMENT YEAR BEING THE FIRST YEAR OF ITS OPERATION EARNED G ROSS INCOME OF RS.59,491/- FROM COMMODITIES TRADING PROFIT THROUGH THE MCX. THE CO MPANY WAS INCORPORATED WITH AUTHORIZED SHARE CAPITAL OF RS.2,00,00,000/- DIVIDE D INTO 2,00,00,000 EQUITY SHARES OF RS. 1 EACH. ACCORDING TO HIM THE ISSUED/SUBSCRIBED PAID UP SHARE CAPITAL WAS RS.1,41,35,000/- DIVIDED INTO 1,41,35,000 EQUITY SHARES OF RS. 1 EAC H FULLY PAID UP, RESERVE AND SURPLUS AS ON 31.03.2011 INCLUDES SHARE PREMIUM OF RS.90,43,65 ,000/-. IT WAS BROUGHT TO OUR NOTICE BY THE LD. AR THAT PROMOTERS INITIALLY SUBSCRIBED T O 1,00,000 EQUITY SHARES OF RS.1 EACH WHEREBY PAID UP EQUITY SHARE CAPITAL WAS RAISED TO RS. 50 LAKHS. ON 29.03.2011, THE ASSESSEE COMPANY ISSUED 91,35,000 EQUITY SHARES OF RS. 1 EACH AT A PREMIUM OF RS. 99/- EACH TO EIGHT SHAREHOLDERS. THUS, SHARE PREMIUM AM OUNT STOOD AT RS.90,43,65,000/- BEING RS.99/- PER SHARE OF 91,35,000 EQUITY SHARES. THE NAMES OF THE SHAREHOLDERS TO WHOM 91,35,000 SHARES WERE ISSUED ARE GIVEN AS UNDER: SL. NO. NAME OF THE SHAREHOLDER NO. OF SHARES SHARE CAPITAL (AMOUNT)(RS.) SHARE PREMIUM (AMOUNT)(RS.) TOTAL SHARE CAPITAL (AMOUNT) (RS.) 1 NEWAGE VINIMAY PVT LTD 8,00,000 8,00,000 7,92,00,000 8,00,00,000 2. GAURAV VINIMAY PVT. LTD. 4,50,000 4,50,000 4,45,50,000 4,50,00,000 3. GUJARAT NRE ENERGY RESOURCES LTD. 8,60,000 8,60,000 8,51,40,000 8,60,00,000 4. CRITICAL MASS MULTILINK LTD 7,25,000 7,25,000 7,17,75,000 7,25,00,000 5. MADHUR COAL MINING PVT LTD 3,00,000 3,00,000 2,97,00,000 3,00,00,000 6. WONGA TRADERS PVT LTD. 20,00,000 20,00,000 19,80,00,000 20,00,00,000 7. MAHANIDHI VYAPAAR PVT. LTD. 20,00,000 20,00,000 19,80,00,000 20,00,00,000 8. BHACHAU TRADERS PVT. LTD. 20,00,000 20,00,000 19,80,00,000 20,00,00,000 TOTAL 91,35,000 91,35,000 90,43,65,000 91,35,00,000 3 ITA NO. 140/KOL/2016 M/S. KHAMBHALIA TRADERS PVT. LTD., AY 2011-12 4. THE LD. AR POINTED OUT THAT ALL 91,35,000 SHARES WERE ALLOTTED TO THE GROUP CONCERNS OF THE ASSESSEE. THE FRESH ISSUE ALONG WITH EARLIER ISSUES INCREASED THE PAID UP CAPITAL TO RS. 1,41,35,000/- DIVIDED INTO 1,41,35,000 EQUITY SHARE S OF RE.1/- EACH AND SHARE PREMIUM OF RS. 99/- PER SHARE. 5. ACCORDING TO LD. AR, POST THE EQUITY SHARE ALLO TMENT DURING THE YEAR, FOLLOWING WAS THE POSITION OF SHAREHOLDING PATTERN IN THE BOOKS O F THE ASSESSEE: NAME OF THE SHAREHOLDER % OF HOLDING NO. OF SHARES HELD VALUE OF SHARES @ 1 SHARE PREMIUM RS.99 TOTAL SHARE APPLICATION MONEY RECEIVED ARUN KUMAR JAGATRARMKA 7 10,00,000 10,00,000 10,00,000 ARUN KUMAR FAMILY TRUST 10 15,00,000 15,00,000 15,00,000 GIRDHARILAL ARUN KUMAR FAMILY TRUST 10 15,00,000 15,00,000 15,00,000 MONA JAGATRARMKA 7 10,00,000 10,00,000 10,00,000 NEWAGE VINIMAY PVT LTD 6 8,00,000 8,00,000 7,92,00,000 8,00,00,000 GAURAV VINIMAY PVT LTD. 4 4,50,000 4,50, 000 4,45,50,000 4,50,00,000 GUJARAT NRE ENERGY RESOURCES LTD. 7 8,60,000 8,60,000 8,51,40,000 8,60,0 0,000 CRITICAL MASS MULTILINK LTD 5 7,25,000 7,25, 000 7,17,75,000 7,25,00,000 MADHUR COAL MINING PVT. LTD 3 3,00,000 3,00,000 2,97,00,000 3,00,0 0,000 WONGA TRADERS PVT LTD 14 20,00,000 20,00,000 19,80,00,000 20,00,00,000 MAHANIDHI VYAPAAR PVT LTD. 14 20,00,000 20,00,000 19,80,00,000 20,00,00,000 BHACHAU TRADERS PVT LTD. 14 20,00,000 20,00,000 19,80,00,000 20,00,00,000 TOTAL 100 1,41,35,000 1,41,35,000 90,43,65,000 91,85,00,000 6. THE LD. AR POINTED OUT THAT THE ASSESSEE COMPAN Y AND ALL ITS SHARE APPLICANT COMPANIES ARE GROUP CONCERNS AND THE INDIVIDUAL SHA RE APPLICANTS ARE EITHER COMMON DIRECTORS OR MANAGERS OF THE GROUP TO MANAGE DAY TO DAY ACTIVITIES OF THE ASSESSEE COMPANY AND ITS GROUP COMPANIES. THEREFORE, IT IS SUBMITTED THAT SINCE ALL THE SHARE APPLICANTS ARE 4 ITA NO. 140/KOL/2016 M/S. KHAMBHALIA TRADERS PVT. LTD., AY 2011-12 EITHER GROUP CONCERNS OR COMMON DIRECTORS, NO OUTSI DE FUNDING WAS INVOLVED IN THE ASSESSEE COMPANY. 7. THE LD. AR DREW OUR ATTENTION TO A CHART WHICH S HOWS THE DIRECTORS OF ALL THE CONCERNED COMPANIES FOR THE SUBJECT ASSESSMENT YEAR ARE AS UNDER: KHAMBALIA TRADER PVT. LTD. NEWAGE VINIMAY PVT LTD GAURAV VINIMA Y PVT LTD GUJARAT NRE ENERGY RESOURCES LTD. CRITICAL MASS MULTILINK LTD MADHUR COAL MINING PVT. LTD WONGA TRADERS PVT LTD MAHANIDHI VYAPAAR PVT LTD. BHACHAU TRADERS PVT LTD. A.K.JAGATRA MKA P.R. KANNAN P.R. KANNAN A.K.JAGATRA MKA A.K.JAGATRA MKA P.K.AGAR WAL P.K.AGAR WAL A.K.JAGATRA MKA A.K.JAGATRA MKA MONA JAGATRAMKA P.K.AGAR WAL S.R.SAR KER MONA JAGATRAMKA P.K.AGARW AL B.N.AGAR WAL B.N.AGAR WAL B.N.AGARW AL MONA JAGATRAMKA 8. DRAWING OUR ATTENTION TO THE AFORESAID CHART, TH E LD. AR EXPLAINED AND BROUGHT TO OUR NOTICE THE FOLLOWING FACTS: A.K. JAGATRAMKA IS A COMMON DIRECTOR IN KHAMB HALIA TRADERS PVT LTD, GUJARAT NRE ENERGY RESOURCES LTD, CRITICAL MASS MULTILINK LTD, MAHANID HI TRADERS PVT LTD AND BHACHAU TRADERS PVT LTD AND IS THE CHAIRMAN CUM MANAGING DIRECTOR IN GUJARAT NRE C OKE LTD BEING THE FLAGSHIP COMPANY OF THE GROUP. MONA JAGATRAMKA IS COMMON DIRECTOR IN KHAMB HALIA TRADERS PVT LTD, GUJARAT NRE ENERGY RESOURCES LTD AND BHACHAU TRADERS PVT LTD AND IS A DIRECTOR GUJARAT NRE COKE LTD BEING THE FLAGSHIP COMPANY OF THE GROUP. P.R. KANNAN IS A COMMON DIRECTOR IN NEWAGE VI NIMAY PVT LTD AND GAURAV VINIMAY PVT LTD. AND IS TH E CFO IN GUJARAT NRE COKE LTD BEING THE FLAGSHIP COMP ANY OF THE GROUP. P.K. AGARWAL IS A COMMON DIRECTOR IN NEWAGE VINIMAY PVT LTD, CRITICAL MASS MULTILINK LTD, MADHUR COAL MINING PVT LTD, WONGA TRADERS PVT LTD A ND WAS THE SENIOR VICE PRESIDENT OF GUJARAT NRE COKE LTD BEING THE FLAGSHIP COMPANY OF THE GROUP. B.N. AGARWAL IS A COMMON DIRECTOR IN MADHUR COAL MINING PVT LTD, WONGA TRADERS PVT LTD, MAHANIDHI VYAPAAR PVT LTD AND WAS THE EX- EMPLOYEE OF GUJARAT NRE COKE LTD BEING THE FLAGSHIP COMPANY OF THE GROUP. 9. THUS THE LD. AR SUBMITTED FROM THE AFORESAID FA CTS THAT ALL THE SHARE APPLICANTS ARE GROUP CONCERNS AND HAVE COMMON DIRECTORS AND THEREF ORE IDENTITY IS PROVED. 5 ITA NO. 140/KOL/2016 M/S. KHAMBHALIA TRADERS PVT. LTD., AY 2011-12 10. THEREAFTER, OUR ATTENTION WAS DRAWN TO THE FOL LOWING TABLE WHICH WILL GIVE A PICTURE OF THE FUNDS RECEIVED BY THE ASSESSEE COMPANY IN TH E FORM OF SHARE CAPITAL FROM VARIOUS SHARE APPLICANTS: SL.NO. NAME OF THE COMPANY AMOUNT (RS IN CRORES) 1. BHACHAU TRADERS PVT LTD (BTPL) 20.00 2. CRITICAL MASS MULTILINK LTD (CMM) 7.25 3. GAURAV VINIMAY PVT LTD (GVPL) 4.50 4. GUJARAT NRE ENERGY RESOURCES LTD (GNERL) 8 .60 5. MADHUR COAL MINING PVT LTD (MCMPL) 3.00 6. NEWAGE VINIMAY PVT LTD (NVPL) 8.00 7. W ONGA TRADERS PVT LTD (WTPL) 20.00 8. MAHANIDHI VYAPAAR PVT LTD (MVPL) 20.00 TOTAL 91.35 11. IT WAS ALSO BROUGHT TO OUR NOTICE THAT DURING T HE COURSE OF ASSESSMENT PROCEEDINGS IN RESPONSE TO NOTICE DATED 29.07.2013 U/S. 142(1) SER VED BY THE LD. A.O., THE ASSESSEE COMPANY VIDE REPLY DATED 12.08.2013 SUBMITTED THE F OLLOWING DOCUMENTS: BRIEF NOTE IN RESPECT OF BUSINESS ACTIVITIES OF T HE COMPANY LIST OF SHAREHOLDERS WITH THEIR NAMES, ADDRESS AN D PAN COPIES OF SHARE APPLICATION RECEIVED FROM SHAREHO LDERS COPY OF FORM -2 (RETURN OF ALLOTMENT) FILED WITH REGISTRAR OF COMPANIES LIST OF INVESTMENTS SHOWING NAME OF COMPANY, FACE VALUE, COST PRICE AND NUMBER OF SHARES, COPIES OF COMPANY'S APPLICATION ALONG WI TH ALLOTMENT ADVICE. DETAILS OF SUNDRY CREDITORS OF RS.11,030/- BASIS OF WRITING OFF PRELIMINARY EXPENSES ALONGWI TH SUPPORTING EVIDENCE DETAILS OF MISCELLANEOUS INCOME CREDITED IN THE P ROFIT & LOSS ACCOUNT COPY OF BANK STATEMENT ALONG WITH BANK RECONCILIA TION STATEMENT. 12. IT WAS ALSO SUBMITTED THAT PURSUANT TO NOTICE U/S. 133(6) OF THE ACT ISSUED UPON ALL SHAREHOLDERS ON 29.11.2013 WHICH WAS SERVED ON 14.1 2.2013 THE AO CALLED FOR THE FOLLOWING INFORMATION: 6 ITA NO. 140/KOL/2016 M/S. KHAMBHALIA TRADERS PVT. LTD., AY 2011-12 NATURE AND PURPOSE OF TRANSACTION WITH COPY OF LE DGER ACCOUNT FOR THE PERIOD FROM 01.04.2010 TO 31.03.2011 NUMBER OF SHARES APPLIED FOR AND ALLOTTED ALONGWI TH DETAILS OF PAYMENT OF SHARE PREMIUM WITH COPY OF SHARE APPLICATION. PARTICULARS OF PAYMENT SHOWING CHEQUE NO, DATE OF PAYMENT, AMOUNT WITH COPY OF BANK STATEMENTS REFLECTING SUCH AMOUNT. SOURCE OF FUND FOR SUCH INVESTMENT COPY OF PROFIT & LOSS ACCOUNT, BALANCE SHEET, SCH EDULE OF INVESTMENT, AND COPY OF RECEIPT OF FILING IT RETURN. REASON BEHIND PURCHASE OF SHARES WITH SUCH HIGH P REMIUM WHETHER SHARES ARE STILL BEING HELD. 13. IN RESPONSE TO THE SAID NOTICE, THE SHAREHOLDE RS VIDE LETTER DATED 19.12.2013 FURNISHED INFORMATION AND CONFIRMED THAT THE SHARES ARE STILL BEING HELD. CHEQUE NUMBER, DATE OF PAYMENT, AMOUNT AND COPY OF BANK STATEMENT WAS FURN ISHED. BALANCE SHEET, PROFIT & LOSS ACCOUNT, ACKNOWLEDGMENT OF IT RETURN WERE ALSO FILE D ALONG WITH LEDGER ACCOUNT OF TRANSACTIONS. 14. ON 13.03.2014, THE LD. A.O. ISSUED SUMMONS U/S . 131 OF THE ACT UPON THE DIRECTORS OF SHAREHOLDING COMPANIES TO APPEAR PERSONALLY AND TO PRODUCE: ADDRESS PROOF OF COMPANY BY WAY OF ELECTRICITY BI LL, WATER BILL ETC PERSONAL PHOTO IDENTITY AND RESIDENTIAL PROOF PERSONAL IT RETURN, PROFIT & LOSS ACCOUNT, BALANC E SHEET WITH BANK STATEMENT BANK STATEMENTS OF COMPANY ALONGWITH BOOKS OF ACC OUNTS ESPECIALLY THE DOCUMENTS TO SUBSTANTIATE THE TRANSACTIONS WITH THE ASSESSEE COMPANY IN F.Y. 2010-11 COPY OF ANNUAL RETURN OF THE COMPANY FILED BEFORE ROC FOR F.Y. 2010-11 ONWARDS IN CASE OF CHANGE OF DIRECTOR, APPEARANCE SHALL H AVE TO BE MADE WITH THE PREVIOUS DIRECTOR 7 ITA NO. 140/KOL/2016 M/S. KHAMBHALIA TRADERS PVT. LTD., AY 2011-12 15. IT WAS BROUGHT TO OUR NOTICE THAT THE SUMMONS ALLEGED TO HAVE BEEN ISSUED ON 13.03.2014 WAS ACTUALLY SERVED IN THE OFFICE OF RES PECTIVE COMPANY SHAREHOLDER ON 19.03.2014 AFTERNOON WITH A DIRECTION TO MAKE APPEA RANCE ON 20.03.2014. FURTHER, SINCE THE SAID NOTICE U/S. 131 OF THE ACT WAS SERVED ON 19.03 .2014, IT WAS NOT POSSIBLE FOR THE DIRECTORS TO PREPARE WITH ALL THE DOCUMENTS WITHIN A SHORT SPAN OF HALF A DAY AND REPRESENT BEFORE THE A.O. ON 20.03.2014. IN RESPONSE TO THE S AID NOTICE, THE DIRECTORS OF THE SHARE APPLICANT COMPANIES VIDE LETTER DATED 20.03.2014 SU BMITTED THAT DETAILS SUCH AS NUMBER OF SHARES APPLIED AND ALLOTTED, DETAILS OF PAYMENTS MA DE ALONG WITH BANK STATEMENT, BALANCE SHEET, PROFIT & LOSS ACCOUNT AND IT RETURN ACKNOWLE DGMENT FOR A.Y. 2011-12 WERE ALREADY PROVIDED VIDE LETTER DATED 23.12.2013. 16. IT WAS POINTED OUT THAT AFTER THE SAID REPLY D ATED 20.03.2014, THE INCOME TAX OFFICER ISSUED NO FURTHER NOTICE TO THE DIRECTORS OF THE SH ARE APPLICANT COMPANIES TO COMPLY WITH THE SUMMON U/S 131 OF THE ACT OR TO PERSONALLY REPRESEN T BEFORE THE A.O. AFTER EXAMINING ALL THE DETAILS FILED BY THE ASSESSEE COMPANY, SHAREHOL DERS OF THE ASSESSEE COMPANY AND THE DIRECTORS OF THE SHARE APPLICANT COMPANIES THE A.O. OPINED THAT VERIFICATION OF IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SHARE APPLI CANTS COULD NOT BE DONE BECAUSE THE ASSESSEE COMPANY AND THE SHAREHOLDERS FAILED TO COM PLY TO THE SUMMONS. THUS THE ENTIRE AMOUNT OF SHARE APPLICATION MONEY RECEIVED ALONG WI TH PREMIUM TO THE TUNE OF RS.91,35,00,000/- WAS ADDED U/S 68 OF THE ACT. 17. IN THE LIGHT OF THE AFORESAID FACTS IT WAS CONT ENDED BEFORE US THAT THE ASSESSEE HAD SUCCESSFULLY EXPLAINED THE SOURCE OF SOURCE OF RECE IPT BY MATCHING EACH ENTRY WITH THE BANK STATEMENT AND THUS, THE ASSESSEE HAS SUCCESSFULLY P ROVEN THE SOURCE OF SOURCE AND ORIGIN OF ORIGIN OF THE RECEIPTS AS ENVISAGED U/S. 68 OF THE ACT. IT WAS REITERATED BY THE LD. AR THAT THE BALANCE SHEET AND ITR ACKNOWLEDGEMENT WERE ALSO SUBMITTED AT THE TIME OF HEARING. HOWEVER, WE NOTE THAT THE BANK STATEMENT SHOWING TH E SOURCES OF FUND WAS BEING SUBMITTED BEFORE US FOR THE FIRST TIME. IN SUCH A SCENARIO, FOR THE ENDS OF JUSTICE AND FAIR PLAY FOR BOTH THE PARTIES AND SINCE THE ASSESSEE COULD NOT PRODUC E THE DIRECTORS AT THE FAG END OF THE ASSESSMENT, ON WHICH GROUND ALONE THE SHARE CAPITAL ALONG WITH THE PREMIUM WAS ADDED U/S. 8 ITA NO. 140/KOL/2016 M/S. KHAMBHALIA TRADERS PVT. LTD., AY 2011-12 68 OF THE ACT, THEREFORE, WE HOLD THAT PROPER OPPOR TUNITY WAS NOT 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 R EADS THUS : WE WILL STRAIGHTAWAY AGREE WITH THE ASSESSEES SUB MISSION THAT THE INCOME-TAX OFFICER HAD NOT GIVEN TO THE ASSESSEE PROPER OPPORTUNITY OF BEI NG 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 RE ASONABLE 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 : 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 H EARING 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 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 A RE ALSO SET ASIDE. THE MATTER SHALL NOW BE REMANDED TO THE ASSESSING AUTHORITY FOR FRESH CO NSIDERATION, AS AFORESTATED. 18. WE ALSO NOTE THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JANSAMPARK ADVERTISING & MARKETING PVT. LTD. IN ITA NO. 525/20 14 DATED 11.03.2015 WHEREIN AFTER NOTICING INADEQUATE ENQUIRY BY AUTHORITIES BELOW HA VE 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 INF ERENCE, OR FORM THE FACT THAT THE TRANSACTIONS WERE THROUGH BANKING CHANNELS, IT DOES NOT NECESSAR ILY 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 OB LIGATION TO CONDUCT A PROPER INQUIRY TO TAKE THE MATTER TO LOGICAL CONCLUSION. BUT CIT(APPE ALS), HAVING NOTICED WANT OF PROPER INQUIRY, COULD NOT HAVE CLOSED THE CHAPTER SIMPLY B Y ALLOWING THE APPEAL AND DELETING THE 9 ITA NO. 140/KOL/2016 M/S. KHAMBHALIA TRADERS PVT. LTD., AY 2011-12 ADDITIONS MADE. IT WAS ALSO THE OBLIGATION OF THE F IRST 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 STATEME NTS REVEAL UNIFORM PATTERN OF CASH DEPOSITS OF EQUAL AMOUNTS IN THE RESPECTIVE ACCOUNTS PRECEDI NG THE TRANSACTIONS IN QUESTION. THIS NECESSITATED A DETAILED SCRUTINY OF THE MATERIAL SU BMITTED BY THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION148 ISSUED BY THE AO, AS ALSO T HE MATERIAL SUBMITTED AT THE STAGE OF APPEALS, IF DEEMED PROPER BY WAY OF MAKING OR CAUSI NG TO BE MADE A 'FURTHER INQUIRY IN EXERCISE OF THE POWER UNDER SECTION 250(4). HIS APP ROACH NOT HAVING BEEN ADOPTED, THE IMPUGNED ORDER OF ITAT, AND CONSEQUENTLY THAT OF CI T(APPEALS), CANNOT BE APPROVED OR UPHELD.' 19. IN VIEW OF THE AFORESAID ORDER AND IN THE LIGHT OF THE HONBLE SUPREME COURTS DECISION IN TIN BOX COMPANY (SUPRA), AND TAKING NOT E OF HONBLE DELHI HIGH COURTS ORDER IN JANSAMPARK ADVERTISING & MARKETING PVT. LTD. (SU PRA), 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 TH E MATTER BACK TO THE FILE OF AO FOR DE NOVO ASSESSMENT AND TO DECIDE THE MATTER IN ACCORDA NCE TO LAW AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 20. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 31/10/201 8 SD/- SD/- (M. BALAGANESH) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31ST OCTOBER, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT M/S. KHAMBHALIA TRADERS PVT. LTD., BLOC K C, 5 TH FLOOR, 22, CAMAC STREET, KOLKATA-700 016. 2 RESPONDENT ITO, WARD-1(3), KOLKATA. 3 4 5 CIT(A)-3, KOLKATA. (SENT THROUGH E-MAIL) CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY