KEYMAN ADVISORY SERVICES PVT LTD, MUMBAI V. DY. COMMISSIONER OF INCOME TAX, CENTRA CIRCLE-7(1), MUMBAI

ITA 1495/MUM/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9375 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 11-10-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 30-05-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Additional evidence; Difference of opinion; Accommodation entries; Non compliance; Reason to believe; Change of opinion; Reassessment proceedings; Set aside
• Section: 68; 148; 144; 143(3); 234B; 133(6); 274; 145(3)

Judgement Text

ITA No. 1495/Mum/2022 A.Y. 2013-14 Keyman Advisory Services Pvt. Ltd. Vs. DCIT,CC-7(1) 1 IN THE INCOME TAX APPELLATE TRIBUNAL “H” BENCH, MUMBAI BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No.1495/Mum/2022 (A.Y. 2013-14) Keyman Advisory Services Pvt. Ltd. Floor-3, Plot-90, Ganpati Niwas, Dhirubhai Parekh Marg, Ladwadi, Kalbadevi Mumbai – 400002 Vs. Dy. Commissioner of Income Tax, Central Circle-7(1), Aayakar Bhavan, Mumbai – 400 020 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AADCK2215K Appellant .. Respondent Appellant by : Vimal Punmiya Respondent by : Jagdish Jangid Date of Hearing 12.10.2022 Date of Pronouncement 31.10.2022 आदेश / O R D E R Per Amarjit Singh (AM): The present appeal filed by the assessee is directed against the order passed by the ld. CIT(A)-49, Mumbai which in turn arises from the order passed by the A.O u/s 143(3) r.w.s 147 of the Act. The assessee has raised the following grounds before us: “1. The order of the Ld. CIT (A) is erroneous on the facts and in the law. On the facts and in the circumstances of the case he erred in reopening the case u/s 147 of the Income Tax Act, 1961 beyond a period of 4 years an assessment already completed u/s 143(3) r.w.s. 147 of the Act and without having reason to believe that the income has escaped assessment and therefore, the reopening is bad in law. ITA No. 1495/Mum/2022 A.Y. 2013-14 Keyman Advisory Services Pvt. Ltd. Vs. DCIT,CC-7(1) 2 2. On the facts and in the circumstances of the case and in law, the Ld. A.O. erred in completing the reassessment proceedings on the same grounds and facts and on the basis of same records and materials available during the assessment proceedings u/s 144 r.w.s 147 of the Act. In other words, the Ld. A.O. erred in completing the reassessment proceedings with a change of opinion. 3. On the facts and in the circumstances of the case and in law, the Ld. A.O. erred in reassessing the income of the appellant at Rs. 74,05,62,790/- as against NIL income. The appellant disputes wrongful additions and submits that NIL income be accepted as correct. 4. On the facts and in the circumstances of the case and in law, the Ld. A.O. erred in making a high pitched reassessment and made an addition of the amount of Rs. 74,01,62,790/- as unexplained cash credit u/s 68 of the Income Tax Act, 1961 on account of the amount credited to the bank account of the assessee/ appellant ignoring the fact that there are multiple transactions and without rejecting the books of accounts u/s 145(3) of the Act. 5. On the facts and in the circumstances of the case and in law, the Ld. A.O. erred in completing the reassessment proceedings on the basis of credits in the bank account which is in violation of sec 2(12A) of the Act which provides that bank statement can never be a basis for making an addition. 6. On the facts and in the circumstances of the case and in law, the Ld. A.O. erred in completing the reassessment proceedings without issuing any further notice asking for submissions of documents and records including recorded reasons, approval from higher authority which were not received by the assessee/appellant till the completion of reassessment proceedings. 7. On the facts and in the circumstances of the case and in law, the Ld. A.O. erred in reopening the case on the basis of statements recorded on oath u/s 131 of the Act without providing an opportunity for Cross examination to the Appellant and did not communicate to the Appellant that a statement on oath has been recorded. 8. Looking to the facts and in the circumstances of your Appellant's case the said addition made by the Ld. A.O. is incorrect and invalid and ought to be deleted. 9. In reaching to the conclusion and making the aforesaid additions/ disallowances, the Ld. CIT (A) omitted to consider relevant factors, considerations, principles and evidences while he was overwhelmed, influenced and prejudiced by irrelevant considerations and factors. 10. The reassessment is made in gross violation of principles of natural justice and hence bad in law and void and ought to be quashed. 11. The Ld. A. O. erred in charging interest u/s. 234A, 234B and 234C of the Income Tax Act, 1961. 12. The Ld. A.O. erred in initiating penalty proceedings u/s. 274 r.w.s. 271(1)(c) of the Income Tax Act, 1961. ITA No. 1495/Mum/2022 A.Y. 2013-14 Keyman Advisory Services Pvt. Ltd. Vs. DCIT,CC-7(1) 3 13. The appellant craves leave to add to, alter, amend, modify and/ or delete any or all of the above said ground(s) of appeal. The appellant reserves its right to file further submissions in the appeal.” 2. The assessee had not filed any return of income for the year under consideration. In this case information was received from the investigation wing that there were large value of funds credited by transfer and RTGS and debit by cash, transfers and RTGS in the bank account of the assessee during the year under consideration. After recording reasons for reopening of the assessment and after obtaining necessary approval, the A.O issued notice u/s 148 of the Act to the assessee on 28.03.2019. In response to the said notice the assessee did not file any return of income. Thereafter the A.O also provided the reasons recorded for reopening of the assessment to the assessee but the assessee did not object to the same. Thereafter the A.O issued notice u/s 142(1) of the Act requiring the assessee to furnish various details and explanation regarding the credit and debit entries appearing in its bank account. The same were not furnished by the assessee. The assessee has not made any compliance to explain the nature of transaction, source of funds application and utilization of funds. Thereafter, the A.O has obtained information from the bank manager of the ICICI bank Kalbadevi by issuing of notice u/s 133(6) of the Act. The bank had furnished copies of bank statement of the account held by the assessee. On perusal of the bank statement the AO noticed that there were large amount credited and debited to the bank account of the assessee i.e a sum of Rs.74,01,62,790/-. The assessment u/s 143(3) r.w.s 147 of the Act was completed on 21.12.2019, the total income of the assessee for the year under consideration was assessed at Rs.74,05,62,790/-. ITA No. 1495/Mum/2022 A.Y. 2013-14 Keyman Advisory Services Pvt. Ltd. Vs. DCIT,CC-7(1) 4 3. Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) had dismissed the appeal of the assessee holding that there was no evidence filed during the reassessment proceedings or even as additional evidences before him in appeal to explain nature and source of impugned cash credit in the bank account. The ld. CIT(A) observed that the transactions of the assessee company was not genuine and other group concern were used by one of Shri Manoj Punamiya for providing accommodation entries. The ld. CIT(A) has also stated that assessee has not filed any submission to negate the findings appearing in the report of investigation wing as well as in the assessment order, therefore, creditworthiness and the genuineness of transaction cannot be said to have been proved so as to shift the onus on the revenue. 4. During the course of appellate proceedings before us the ld. Counsel submitted that due to search action in the group concern of the assessee company many employees including the chartered accountant Mr. Manish Panwar who was attending to the assessment proceeding and handling income tax matter of the assessee company had left the organization, therefore, he had not communicated to the director of the assessee company about the pending detail to be furnished before the A.O. Regarding non compliance made before ld. CIT(A) during the course of appellate proceedings the ld. Counsel submitted that since the chartered accounted had left the organization, therefore, there was nobody to guide the assessee company to make compliance in the faceless appellate proceedings taken place before the department. Therefore, the ld. Counsel pleaded to provide more opportunities to the assessee for adjudicating its case on merit after hearing the assessee and considering the relevant detais. ITA No. 1495/Mum/2022 A.Y. 2013-14 Keyman Advisory Services Pvt. Ltd. Vs. DCIT,CC-7(1) 5 On the other hand, the ld. D.R supported the order of lower authorities. 5. Heard both the sides and perused the material on record. Without reiterating the facts it is undisputed fact that the assessee has neither made compliance during the course assessment proceedings before the A.O nor before the ld. CIT(A) at the time of appellate proceedings to explain the nature of transactions reflected in the bank account maintained with ICICI bank as referred supra in this order. During the course of appellate proceedings before us the assessee has filed paper book comprising copies of various document, however, contended that the required information and detail asked during the course of assessment proceedings and appellate proceedings could not be filed before the A.O and CIT(A) because chartered accountant of the assessee company had left the organization, therefore, compliance could not be made. After taking into consideration the huge amount of additions and unverified volume of the document furnished by the ld. Counsel we consider these are required to be examined by the lower authorities after affording adequate opportunity to the assessee. Normally, whenever any irregularity crept in the proceeding then after removing the irregularity proceedings is to be initiated from that stage but by remitting the issue to first appellate authority we would be multiplying litigation because the ld. CIT(A) would call for a remand report from the A.O and the proceedings would commence in two stages, in order to avoid that situation we would deem it proper to set aside the order to the A.O for deciding it on merit after examination/verification of the detail filed by the assessee and after providing adequate opportunities to the assessee. The assessee is also directed to make due compliance before the assessing officer during the ITA No. 1495/Mum/2022 A.Y. 2013-14 Keyman Advisory Services Pvt. Ltd. Vs. DCIT,CC-7(1) 6 course of set aside proceedings without any failure. Therefore, appeal of the assessee is allowed for statistical purposes. 6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 31.10.2022 Sd/- Sd/- (Aby T Varkey) (Amarjit Singh) Judicial Member Accountant Member Place: Mumbai Date 31.10.2022 Rohit: PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A)- 4. आयकर आयुक्त / CIT 5. विभागीय प्रविवनवध, आयकर अपीलीय अवधकरण DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण/ ITAT, Bench, Mumbai.