Humcha Impex Private Limited, Kolkata V. ITO, WD-12(3), KOLKATA, Kolkata

ITA 1413/KOL/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1370 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 01-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SAURABH BAGARIA; DEBOSMITA MITRA
• Keywords: Bogus purchase; Unexplained cash credit; Opportunity of being heard; Additional evidence; Revised return; Bonafide mistake
• Section: 143(3); 142(1); 10AA; 133(6); 10B; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH (A), KOLKATA [BEFORE SHRI P.M. JAGTAP, AM & SHRI A.T. VARKEY, JM] I.T.A. NO. 1413/KOL/2016 ASSESSMENT YEAR: 2009-10 HUMCHA IMPEX PVT. LTD...............................................APPELLANT P-17, KALAKAR STREET, 3 RD FLOOR, KOLKATA 700 007. [PAN: AABCC 3596 K] ITO WARD 12(3) KOLKATA.............................................................................................RESPONDENT P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069. APPEARANCES BY: SHRI SAURABH BAGARIA & DEBOSMITA MITRA ADVOCATE, APPEARING ON BEHALF OF THE ASSESSEE. SHRI KAPIL MONDAL, JCIT, SR. DR APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : SEPTEMBER 10, 2018 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 10, 2018 ORDER PER P.M. JAGTAP, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) 4, KOLKATA DATED 18.01.2018 WHEREBY HE CONFIRMED ALL THE 3 ADDITIONS MADE BY THE AO TO THE TOTAL INCOME OF THE ASSESSEE. 2. AT THE OUTSET, IT IS NOTED THAT THERE IS A DELAY OF 70 DAYS ON THE PART OF THE ASSESSEE IN FILING THIS APPEAL BEFORE THE TRIBUNAL. IN THIS REGARD, THE ASSESSEE HAS MOVED AN APPLICATION SEEKING CONDONATION OF THE SAID DELAY AND KEEPING IN VIEW THE REASONS GIVEN THEREIN, WE ARE SATISFIED THAT THERE WAS A SUFFICIENT CAUSE FOR THE DELAY ON THE PART OF THE ASSESSEE IN FILING THIS APPEAL BEFORE THE TRIBUNAL. EVEN THE LEARNED DR HAS NOT RAISED ANY OBJECTION IN THIS REGARD. WE, THEREFORE, CONDONE THE DELAY ON THE PART OF THE ASSESSEE IN FILING THIS APPEAL AND PROCEED TO DISPOSE OF THE SAME ON MERIT. 2 I.T.A. NOS. 1413/K/2016 ASSESSMENT YEAR: 2009-10 HUMCHA IMPEX PVT. LTD. 3. THE ASSESSEE IN THE PRESENT IS A COMPANY WHICH WAS CLAIMED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF GARMENTS DURING THE YEAR UNDER CONSIDERATION. IN THE RETURN OF INCOME FILED ON 24.09.2009, THE TOTAL INCOME OF RS. 65,202/- WAS DECLARED BY THE ASSESSEE. IN THE ASSESSMENT COMPLETED U/S 143(3) VIDE AN ORDER DATED 21.12.2011, THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED BY THE A.O. AT RS. 1,23,32,216/- AFTER MAKING THE FOLLOWING 3 ADDITIONS: 1. DISALLOWANCE OF ASSESSEES CLAIM U/S 10AA/10B RS. 44,10,514/- 2. ALLEGED BOGUS PURCHASES RS. 13,56,500/- 3. SHARE CAPITAL AS UNEXPLAINED CASH CREDIT U/S 68 RS. 65,00,000/- 4. AGAINST THE ORDER PASSED BY THE AO U/S 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(A) CONFIRMED ALL THE 3 ADDITIONS MADE BY THE AO TO THE TOTAL INCOME OF THE ASSESSEE FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORDER: DISALLOWANCE U/S 10AA/10B 4.2 I HAVE CONSIDERED THE SUBMISSION OF THE AR OF THE APPELLANT IN THE MATTER AND PERUSED THROUGH THE ASSESSMENT ORDER. I HAVE ALSO CONSIDERED ALL THE MATERIAL DOCUMENTS AND DETAILS ON RECORD IN DECIDING THE MATTER. THE RIVAL CONTENTIONS IN THE MATTER HAVE ALSO BEEN THOROUGHLY WEIGHED BASED ON THE MATERIAL FACTS ON RECORD. I FIND THAT THE AO HAD MADE THE DISALLOWANCE OF DEDUCTION AS CLAIMED U/S 10B BY THE APPELLANT PRIMARILY ON THE CRITERIA AS NARRATED IN PARA 4 (SUPRA) WHICH COULD BE SUMMARIZED AS FOLLOWS: THAT THERE WAS NO RESPONSE TO THE NOTICES ISSUED U/S 143(2) & 142(1) AND ONLY ON THE ISSUE OF A SUBSEQUENT NOTICE U/S 142(1) DID THE ASSESSEE REVERSE ITS CLAIM OF DEDUCTION U/S 10AA TO 10B OF THE ACT WITHOUT FILING A REVISED RETURN. RELYING ON THE CASE LAW OF GOETZE (LNDIA) LTD. VS. CIT (SC) 284 ITR 323, THE CLAIM WAS REJECTED THAT COMPARED WITH THE CERTIFICATE ISSUED BY THE ROC, THERE WAS VARIANCE IN THE DATE OF CHANGE OF NAME OF THE ASSESSEE WITH THAT AS 3 I.T.A. NOS. 1413/K/2016 ASSESSMENT YEAR: 2009-10 HUMCHA IMPEX PVT. LTD. CLAIMED BY THE ASSESSEE (SUPRA) AND THAT THE ASSESSEES' BUSINESS WAS NOT A NEWLY ESTABLISHED 100% EXPORT ORIENTED UNIT TO BE ELIGIBLE TO CLAIM THE IMPUGNED DEDUCTION. THAT NO EVIDENCE WAS PROVIDED FOR CLAIMING THE SAME FOR ANY OTHER ASSESSMENT YEAR. THAT NO EXPENDITURE ON WAGE ACCOUNT HAD BEEN CLAIMED AGAINST THE MACHINERIES ACQUIRED IN THE EARLIER YEAR I.E. FY 2007-08 AND UTILIZED IN FY 2008-09. THAT JOB CHARGES HAD BEEN PAID TO ONE M/S RADHA SERVICES WHICH REMAINED UNCONFIRMED INSPITE OF ISSUANCE OF SUMMON U/S 131 TO THE SAID PARTY. THE ASSESSEE COULD ALSO NOT PRODUCE THE SAID PARTY FOR NECESSARY VERIFICATION. INFERENCE ULTIMATELY DRAWN AS NARRATED IN THE ASSESSMENT ORDER WAS THAT BILLS FOR LABOUR CHARGES WERE PREPARED ON THE BASIS OF SALES MADE WHICH WAS AN AFTERTHOUGHT COUPLED WITH THE FACT THAT THERE WAS NO WORK-IN-PROGRESS SHOWN AS NARRATED IN THE ASSESSMENT ORDER. MOREOVER, NO ELECTRICITY CHARGES AS WELL AS LABOUR CHARGES WERE SHOWN TO HAVE BEEN INCURRED IN THE MANUFACTURING PROCESS VIS-A-VIS THE MACHINERIES INSTALLED IN THE PREMISES. AS TABULATED SUPRA, THE AO CAME TO THE CONCLUSION THAT THE ASSESSEE WAS AFTER ALL NOT ENGAGED IN THE ACTIVITY OF MANUFACTURING BUT ONLY IN THE ACTIVITY OF TRADING. THAT THE AO ULTIMATELY CAME TO HIS CONCLUSION, BASED ON THE AFORESAID FINDINGS, THAT THE ASSESSEE HAD CONDUCTED LIMITED ACTIVITY IN THE NATURE OF MANUFACTURING ENGAGEMENT AND THAT IT WAS BASICALLY ENGAGED IN TRADING ACTIVITIES. THAT THE ASSESSEE WAS NOT ENGAGED IN THE MANUFACTURING ACTIVITY FOR IT TO BE ELIGIBLE FOR CLAIMING DEDUCTION U/S 10B/10AA (SUPRA). 4.3. ON JUXTAPOSING THE RIVAL CONTENTIONS, I GIVE BELOW MY FINDINGS ON THE MATTER: AS FAR AS NON RESPONSE TO THE NOTICES IS CONCERNED, I DO NOT FIND MUCH MERIT IN SUBMISSIONS OF THE AR. FURTHER IT IS OBSERVED THAT THE AO HAS DEALT WITH THIS ISSUE FROM PAGES 2 TO 7 OF THE ASSESSMENT ORDER. THE AO HAS OBSERVED IN MANY WAYS THAT THE CLAIM OF ASSESSEE IS NOT ALLOWABLE. AO HAS POINTED OUT MANY DISCREPANCIES IN THE CLAIM MADE BY THE APPELLANT. BASED ON THE DETAILED FINDING IN THE ASSESSMENT ORDER THE AO CONCLUDED THAT THE APPELLANT HAS NOT FULFILLED THE CRITERION FOR ALLOWABILITY OF DEDUCTION U/S 10B OF THE ACT. THEREFORE AO DISALLOWED THE ENTIRE CLAIM OF THE APPELLANT AMOUNTING TO RS. 44,10,514/-. BEFORE ME, THE AR APPEARING ON BEHALF OF THE APPELLANT STATED THAT THE DISCREPANCIES POINTED OUT BY THE AO WERE MERE TECHNICAL MISTAKES POINTED OUT BY THE AO. ACCORDING TO THE AR, THE DISCREPANCIES POINTED OUT BY HIM WERE JUST CLERICAL AND BONAFIDE MISTAKES OF THE APPELLANT. HE MADE SUBMISSIONS THAT THE APPELLANT'S CLAIM SHOULD 4 I.T.A. NOS. 1413/K/2016 ASSESSMENT YEAR: 2009-10 HUMCHA IMPEX PVT. LTD. BE ALLOWED. HOWEVER THE AR COULD NOT SUPPORT HIS CLAIM WITH ANY DOCUMENTARY EVIDENCES. HE HAS FAILED TO CONTROVERT THE FINDINGS OF THE AO WITH DOCUMENTARY EVIDENCE. ON THE CONTRARY THE AO HAS BROUGHT OUT MANY ISSUES BEFORE DISALLOWING THE CLAIM OF THE APPELLANT. IN VIEW OF THE ABOVE, I AM NOT INCLINED TO ACCEPT THE CONTENTIONS OF THE APPELLANT AND THE ACTION OF AO IS UPHELD. THIS GROUND OF APPEAL IS DISMISSED. ALLEGED BOGUS PURCHASES 5.2 I HAVE CONSIDERED THE MATTER IN THE LIGHT OF BOTH THE ASSESSMENT ORDER AS WELL AS THE SUBMISSION OF THE APPELLANT. THE AR APPEARING ON BEHALF OF THE APPELLANT HAS NOT BEEN ABLE TO CONTROVERT THE FINDINGS OF THE AO AND, THEREFORE, THE ACTION OF AO IS UPHELD. THIS GROUND OF APPEAL IS DISMISSED. SHARE CAPITAL TREATED AS UNEXPLAINED CASH CREDIT 6.2 I HAVE CONSIDERED THE SUBMISSION OF THE AR OF THE APPELLANT IN THE BACKDROP OF THE ASSESSMENT ORDER. I HAVE ALSO CONSIDERED ALL THE MATERIAL FACTS ON RECORD IN DECIDING THE ISSUE AT HAND. I OBSERVE FROM THE ASSESSMENT ORDER THAT THE AO ISSUED NOTICES U/S 133(6) TO THE SHARE HOLDERS WHICH CAME BACK UNSERVED. AO REQUESTED THE APPELLANT TO FURNISH THE CLARIFICATION IN THIS REGARD. APPELLANT STATED THAT THE SHARE HOLDERS ADDRESS WAS CHANGED. THE AO RE-ISSUED NOTICES U/S 133(6) AND ALSO DEPUTED NOTICE SERVER AS WELL AS THE INSPECTOR ATTACHED TO HIS CHARGE TO SERVE THE NOTICE U/S 133(6) UPON SUCH SHARE APPLICANTS. BUT ACCORDING TO THE AO, THESE PARTIES WERE NON-EXISTENT AT THE REVISED ADDRESSES ALSO. THE APPELLANT WAS AGAIN CONFRONTED WITH THE NON SERVICES OF NOTICES TO THE SHARE HOLDERS, BUT THE APPELLANT FAILED TO FURNISH ANY EXPLANATION IN THIS REGARD. BEFORE ME ALSO THE AR APPEARING ON BEHALF OF THE APPELLANT COULD NOT EXPLAIN AS TO WHY THE NOTICES REMAINED UNSERVED IN SPITE OF REPEATED EFFORTS BY THE AO. THE DOCUMENTS FILED BY AR OF THE APPELLANT DO NOT ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE HOLDERS, NOR DO THE DOCUMENTS PROVE THE GENUINENESS OF THE TRANSACTIONS. THUS THE ACTION OF AO IS UPHELD. THIS GROUND OF APPEAL IS DISMISSED. THE LD. CIT(A) THUS DISMISSED THE APPEAL OF THE ASSESSEE AND AGGRIEVED BY THE SAME, THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL CHALLENGING ALL THE 3 ADDITIONS MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A). 5 I.T.A. NOS. 1413/K/2016 ASSESSMENT YEAR: 2009-10 HUMCHA IMPEX PVT. LTD. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ALL THE 3 ADDITIONS MADE BY THE AO WERE CONFIRMED BY THE LD. CIT(A) VIDE HIS IMPUGNED ORDER MAINLY FOR THE REASON THAT THE RELEVANT DOCUMENTARY EVIDENCE TO SUPPORT AND SUBSTANTIATE ITS EXPLANATION IN RESPECT OF ALL THE 3 ISSUES UNDER CONSIDERATION WAS NOT FILED BY THE ASSESSEE. HE HAS SUBMITTED THAT SUCH DOCUMENTARY EVIDENCE HOWEVER IS NOW COLLECTED BY THE ASSESSEE AND THE SAME IS BEING FILED BEFORE THE TRIBUNAL AS ADDITIONAL EVIDENCE WITH AN APPLICATION SEEKING ADMISSION OF THE SAME UNDER RULE 29 OF THE INCOME TAX APPELLATE TRIBUNAL RULES 1963. HE HAS TAKEN US THROUGH THE SAID ADDITIONAL EVIDENCE TO SHOW THAT THE SAME IS VERY MUCH RELEVANT FOR DECIDING ALL THE 3 ISSUES INVOLVED IN THE CASE OF THE ASSESSEE. THE LEARNED DR, ON THE OTHER HAND, HAS NOT DISPUTED THE RELEVANCE OF THE SAID ADDITIONAL EVIDENCE FOR DECIDING THE ISSUES INVOLVED IN THE CASE OF THE ASSESSEE. HE HOWEVER HAS CONTENDED THAT AN OPPORTUNITY SHOULD BE GIVEN TO THE AO TO VERIFY THE SAID ADDITIONAL EVIDENCE WHICH IS BEING FILED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE TRIBUNAL. WE FIND MERIT IN THE CONTENTION OF THE LEARNED DR. THE IMPUGNED ORDER OF THE LD. CIT(A) ON ALL THE 3 ISSUES UNDER CONSIDERATION IS ACCORDINGLY SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH IN THE LIGHT OF THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE WHICH IS ADMITTED BY US KEEPING IN VIEW THE RELEVANCE OF THE SAME. THE AO IS DIRECTED TO GIVE PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6 I.T.A. NOS. 1413/K/2016 ASSESSMENT YEAR: 2009-10 HUMCHA IMPEX PVT. LTD. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH SEPTEMBER, 2018. SD/- SD/- (A.T. VARKEY) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10/09/2018 BISWAJIT, SR. PS COPY OF ORDER FORWARDED TO: 1. HUMCHA IMPEX PVT. LTD., P-17, KALAKAR STREET, 3 RD FLOOR, KOLKATA 700 007. 2. ITO WARD 12(3), P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, SR. P.S. / H.O.O. ITAT, KOLKATA