Odisha Aqua Traders & Marine Exports Limited, Bhubaneswar V. ACIT, Corporater Circle-1(2), Bhubaneswar

ITA 152/CTK/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8514 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 24-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURESH SIVA NANDA
• Assessee Lawyers: D PARIDAC PARIDA ARS
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 143(3); 201; 13

Judgement Text

P A G E 1 | 7 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK SMC BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG , JUDICIAL MEMBER ITA NO . 152 /CTK/20 19 ASSESSMENT YEAR : 201 4 - 15 ODISHA AQUA TRADERS & MARINE EXPORTERS PVT LTD., PLOT NO.81, INDRAPRASTHA, PHASE - II, BHUBANESWAR - 20. VS. ACIT, CORPORATE CIRCLE - 1(2), BHUBANESWAR. PAN/GIR NO. (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI D.PARIDA/C.PARIDA , AR S REVENUE BY : SHRI SURESH SIVA NANDA, DR DATE OF HEARING : 2 9 / 0 6 / 20 20 DATE OF PRONOUNCEMENT : 13 / 0 7 /20 20 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A),1, BHUBANESWAR DATED 29.3.2019 FOR THE ASSESSMENT YEAR 2014 - 15 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. FOR THAT, ASSESSMENT ORDER PASSED U/S 143(3) OF I.T. ACT, 1961 BY THE LEARNED ASST. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE - L(2),BHUBANESWAR IS UNJUST, IMPROPER AND BAD IN LAW. 2. FOR THAT, THE ASSESSEE COMPANY HAS ENGAGED IN PROCESSING OF SHRIMPS AND EXPORT THE SAME TO DIFFERENT COUNTRIES. 3. FOR THAT, THE ASSESSEE COMPANY HAS PAID PROCESSING CHARGES AGAINST THE BILL RAISED BY M/S UTKAL EXPORTS,C - 57,SAHID NAGAR, BHUBANESWAR. M/S UTKAL EXPORTS HAS RAISED BILLS A TUNE OF RS. 57,91,795/ - AND TAX HAS BEEN DEDUCTED AT SOURCE DURING THE YEAR. BUT THREE BILLS DETAILS AS UNDER : ITA NO. 152/CTK/2019 ASSESSMENT YEAR : 2014 - 15 P A G E 2 | 7 DATE _________________ AMOUNT 30/09/2013 2,64,801.00 01/11/2013 7,81,801.00 02/12/2013 9,29,542.00 RAISED BY THE M/S UTKAL EXPORTS AMOUNTING TO RS. 19,76,144/ - ON WHICH TAX HAS BEEN DEDUCTED AT SOURCE BUT ASSESSEE COMPANY HAS FOUND SOME MISTAKE IN BILLS, SO THAT THE ASSESSEE COMPANY HAS PAID THAT AMOUNT IN NEXT FINANCIAL YEAR I.E. 2014 - 15. 4. FOR THAT, LEARNED ASSESSING OFFICER HAS NOT APPLYING HIS MIND AND ADD BACK THE CASH PAYMENT OF RS.5,71,812/ - TO M/S UTKAL EXPORTS ON WHICH NO BILL WAS RAISED BY THE M/S UTKAL EXPORTS AGAINST THE CASH PAYMENT OF RS. 5,71,81 2/ - .THAT THE ASSESSEE COMPANY HAS NO CASH TRANSACTION WITH M/S UTKAL EXPORTS AND THE ASSESSEE COMPANY HAS MAINTAINED THEIR BOOKS OF ACCOUNTS PROPERLY BUT ASSESSING OFFICER HAS NOT REJECT THE BOOKS OF ACCOUNTS AND ADD BACK THE ABOVE MENTIONED AMOUNT FOR INT EREST OF REVENUE. 5. FOR THAT, THE COMMISSIONER OF INCOME - TAX (APPEALS) - 1,BHUBANESWAR ALSO NOT CONSIDERING THE PROCESSING CHARGES OF RS. 19,76,144/ - WHICH HAS PAID IN THE NEXT FINANCIAL YEAR AND TAX HAS DEDUCTED IN THE CURRENT YEAR AND ALSO CASH PAYMENT OF RS. 5,71,812/ - TOWARDS PROCESSING CHARGES, WHICH HAS NOT PAID ANYWHERE IN OUR CASH BOOK. 6. FOR THAT, NO NEXUS HAS BEEN ATTRIBUTED FOR MAKING THE ADDITION ON TOTAL INCOME WHICH HAS TO BE RESTORED TO RETURN FIGURE. 3. THE ASSESSEE VIDE ITS LETTER DAT ED 17.6.2020 HAS ALSO RAISED ADDITIONAL GROUND, WHICH READS AS UNDER: WITHOUT PREJUDICING TO OTHER GROUNDS AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THAT THE AO HAS GROSSLY ERRED IN MAKING STRAIGHTWAY ADDITION OF PROCESSING CHARGES BILL ALLEGED TO BE PAID OUTSIDE THE BOOKS OF ACCOUNTS AMOUNTING TO RS.19,76, 144/ - & PROCESSING CHARGES PAID IN CASH OF RS.5,71,812/ - UNDER THE HEAD UNEXPLAINED INCOME U/S.69A OF THE I.T.ACT, 1961, WHEN THESE AMOUNTS ARE NOT FOUND IN THE APPELLANTS BOOK, BY R ELYING UPON THE DOCUMENTS OF THE PROCESSOR M/S. UTKAL EXPORT WITHOUT PROVIDING ANY OPPORTUNITY TO THE APPELLANT TO EXPLAIN THE SAME OR TO CROSS EXAMINE THE THIRD PARTY IS UNJUST, ILLEGAL BAD IN LAW AND THUS THE ASSESSMENT ORDER IS LIABLE TO BE QU A SHED. ITA NO. 152/CTK/2019 ASSESSMENT YEAR : 2014 - 15 P A G E 3 | 7 4. A.R. SUBMITTED THAT THE ADDITIONAL GROUND RAISED BY THE APPELLANT GOES TO THE ROOT OF THE MATTER AND, TH EREFORE, THE ADDITIONAL GROUND MAY KINDLY BE ADMITTED FOR ADJUDICATION AS THE SAME CAN BE CONSIDERED AND DECIDED ON THE BASIS OF MATERIAL A LREADY AVAILABLE ON RECORD WITHOUT ANY FURTHER RECORD OR DOCUMENTS. 5 . REPLYING TO ABOVE , LD DR OPPOSED TO THE ADMISSION OF ADDITIONAL GROUND. HOWEVER, IN ALL FAIRNESS, LD DR SUBMITTED THAT THE ADDITIONAL GROUND IS NOTHING BUT ONLY THE REPETITION OF ISSUES TAKEN IN ORIGINAL GROUND OF THE ASSESSEE. THEREFORE, THE DEPARTMENT HAS NO SERIOUS OBJECTION IF THE SAME IS ADMITTED FOR CONSIDERATION AND ADJUDICATION. 6 . IN VIEW OF ABOVE AND RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY HONBLE SUP REME COURT IN THE CASE OF CIT VS NTPC, 229 ITR 383 (SC), THE ADDITIONAL GROUND OF THE ASSESSEE IS ADMITTED FOR CONSIDERATION AND ADJUDICATION. 7 . LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS GROSSLY ERRED IN MAKING STRAIGHTAWAY ADDITION OF PROCESSING CHARGES BILL ALLEGED TO BE PAID OUTSIDE THE BOOKS OF ACCOUNT AMOUNTING TO RS.19,76,144/ - & PROCESSING CHARGES PAID IN CASH OF RS.5,71,812/ - UNDER THE SAME AS UNEXPLAINED INCOME U/S.69A OF THE ACT. LD A.R. STRENUOUSLY CONTENDED THAT THESE AMOUNTS WERE FOUND RECORDED IN THE ASSESSEES BOOKS OF ACCOUNT AND THE ASSESSING OFFICER BY ONLY RELYING UPON REPLY & U/S.131 ITA NO. 152/CTK/2019 ASSESSMENT YEAR : 2014 - 15 P A G E 4 | 7 OF THE ACT OF M/S. UTKAL EXPORT MADE SAID ADDITION U/S.69A OF THE ACT WITHOUT PROVIDING ANY OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE SAME OR TO C ROSS EXAMINE THE OWNER/PARTNER/ACCOUNTANT OF M/S. UTKAL EXPORT S . THEREFORE, ADDITION SO MADE BY THE AO AND CONFIRMED BY THE LD CIT(A) IS NOT JUSTIFIED AND CORRECT. LD A.R. SUBMITTED THAT THE ASSESSING OFFICER HAS M ADE ADDITION IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE, THEREFORE, SAME HAS TO BE HELD UNJUST, ILLEGAL AND BAD IN LAW AND ONLY ON THIS COUNT THE ASSESSMENT ORDER IS LIABLE TO BE QUASHED. HE REFERRED TO PARAS 2.3 TO 3.2 OF THE ASSESSMENT ORDER AND SUBM ITTED THAT ON RECEIPT OF REPLY OF M/S. UTKAL EXPORT ALONGWITH DOCUMENTS, THE ASSESSING OFFICER SIMPLY MADE ADDITION WITHOUT SHOW CAUSING THE ASSESSEE AND WITHOUT ALLOWING DUE OPPORTUNITY OF HEARING TO EXPLAIN THE DIFFERENTIAL AMOUNT AS PER REPLY OF UTKAL E XPORT AND OTHER FINANCIAL STATEMENTS & BOOKS OF ACCOUNT OF THE ASSESSEE. 8. REPLYING TO ABOVE, LD DR SUBMITTED THAT AS PER REPLY RECEIVED BY THE AO IN RESPONSE TO NOTICE U/S.131 OF THE ACT, IT WAS CLEARLY REVEALED THAT THE ASSESSEE PAID AN AMOUNT OF RS.1 9,76,144/ - AS PROCESSING CHARGES IN RESPECT OF THREE BILLS RAISED BY M/S. UTKAL EXPORT AND FROM THE REPLY OF M/S. UTKAL EXPORT, IT WAS ALSO REVEALED THAT THE ASSESSEE HAS ALSO PAID AN AMOUNT OF RS.5,71,812/ - AS PROCESSING CHARGES IN CASH TO UTKAL EXPORT, WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THEREFORE, THE AO WAS RIGHT IN MAKING ADDITION U/S.69A OF THE ACT ON BOTH THE AMOUNTS. ITA NO. 152/CTK/2019 ASSESSMENT YEAR : 2014 - 15 P A G E 5 | 7 9. ON CAREFUL CONSIDERAT ION OF THE RIVAL SUBMISSIONS, FROM PARAS 2.3 TO 3.2 OF THE ASSESSMENT ORDER, I CLEARLY OBSERVE THAT THE AO ISSUED NOTICE U/S.131 OF THE ACT TO M/S. UTKAL EXPORT, WHICH WAS REPLIED BY M/S. UTKAL EXPORT ALONGWITH FOUR ANNEXURES OF 34 PAGES. FROM THE REPLY O F UTKAL EXPORT, THE AO OBSERVED THAT THE ASSESSEE HAD PAID AN AMOUNT OF RS.19,76,144/ - IN RESPECT OF THREE BILLS RAISED BY M/S. UTKAL EXPORT AND THESE BILLS DID NOT APPEAR IN THE ACCOUNTS OF PROCESSING CHARGES AND THE AO MADE ADDITION SAID AMOUNT U/S.69 A OF THE ACT TO THE INCOME OF THE ASSESSEE. FURTHER, FROM PARA 3.1 TO 3.2 OF THE ASSESSMENT ORDER, I ALSO OBSERVE THAT THE AO MADE ADDITION OF RS.5,71,812/ - AS PROCESSING CHARGES PAID IN CASH TO M/S. UTKAL EXPORT ON EIGHT OCCASIONS AND THIS ADDITION WAS MAD E U/S.69A OF THE ACT. BE THAT AS IT MAY, FROM THE RELEVANT PART OF THE ASSESSMENT ORDER AS WELL AS THE IMPUGNED ORDER OF THE LD CIT(A), I CLEARLY OBSERVE THAT ON RECEIPT OF REPLY ALONGWITH 34 DOCUMENTS FROM M/S. UTKAL EXPORT , NEITHER THE AO OR THE LD CIT (A) SHOW CAUSED THE ASSESSEE BY WAY OF WRITTEN NOTICE OR NOTE SHEET ENTRY AND PROCEEDED TO MAKE ADDITION U/S.69 A OF THE ACT BY TREATING THE IMPUGNED AMOUNT OF THREE BILLS AND PROCESSING CHARGES PAID TO THE ASSESSEE IN CASH. THIS ACT OF THE REVENUE AUTHOR ITIES IS CLEARLY CONTRARY TO THE PRINCIPLES OF NATURAL JUSTICE AS ON RECEIPT OF REPLY FROM M/S. UTKAL EXPORT BEFORE MAKING ADDITION, THE ASSESSEE SHOULD HAVE BEEN SHOW CAUSED INFORMING HIM REGARDING REPLY RECEIVED FROM M/S. UTKAL EXPORT AND ASKING THE AS SESSEE TO RECONCILE THE SAME. IF ITA NO. 152/CTK/2019 ASSESSMENT YEAR : 2014 - 15 P A G E 6 | 7 THE ASSESSEE FAILS TO EXPLAIN AND RECONCILE THE DIFFERENTIAL AMOUNT, THE REVENUE AUTHORITIES WERE WELL EMPOWERED TO MAKE ADDITION IN THE HANDS OF THE ASSESSEE U/S.69A OF THE ACT. THEREFORE, I HAVE NO HESITATION TO HOLD TH AT THE ADDITION HAS BEEN MADE IN CLEAR VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND THE LD CIT(A) WAS NOT JUSTIFIED AND CORRECT IN UPHOLDING THE SAME. 10. CONSIDERING THE TOTALITY OF THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDER ING OPINION THAT THE ASSESSEE SHOULD HAVE BEEN ALLOWED TO RECONCILE AND EXPLAIN THE DIFFERENTIAL AMOUNT OF ALL THE BILLS AND PROCESSING CHARGES OF RS.5,71,812/ - PAID TO THE ASSESSEE IN CASH AS PER REPLY OF M/S. UTKAL EXPORTS FURNISHED BEFORE THE AO. THERE FORE, ISSUE RELATED TO ADDITIONS MADE BY THE AO ON BOTH THE ISSUES REQUIRED RE - VERIFICATION BY THE AO AFTER ALLOWING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, THUS BOTH THE ISSUES ARE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR LIMITED PURPOSES W ITH THE DIRECTION THAT THE AO SHALL RE - EXAMINE THE BILLS AND REPLY OF M/S. UTKAL EXPORTS KEEPING IN VIEW STAND AND EXPLANATION OF THE ASSESSEE AND REDECIDE THE ISSUE AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. ITA NO. 152/CTK/2019 ASSESSMENT YEAR : 2014 - 15 P A G E 7 | 7 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 13 / 0 7 /20 20 . SD/ - ( CHANDRA MOHAN GARG) JUDICIAL MEMBER CUTTACK; DATED 13 / 0 7 /20 20 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR . PVT. S ECRETARY ITAT, CUTTACK 1. THE APPELLANT : ODISHA AQUA TRADERS & MARINE EXPORTERS PVT LTD., PLOT NO.81, INDRAPRASTHA, PHASE - II, BHUBANESWAR - 20 2. THE RESPONDENT. ACIT, CORPORATE CIRCLE - 1(2), BHUBANESWAR 3. THE CIT(A) - 1 , BHUBANESWAR 4. PR.CIT - 1 , BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//