M/s. Microsun Solar Tech Private Limited, Bangalore V. Income Tax Officer, Ward- 4(1)(3), Bangalore

ITA 156/BANG/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6548 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 03-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GANESH GHALE
• Assessee Lawyers: V. SRINIVASAN
• Keywords: Principle of natural justice; Opportunity of cross examination; Reasonable cause; Accommodation entries; Bogus loan; TDS; Set aside; Bogus
• Section: 68; 148; 271(1)(c); 143(1); 119

Judgement Text

ITA NO.156/BANG/2020 M/S. MICROSUN SOLAR TECH PVT. LTD., BENGALURU IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: BANGALORE BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER SMC ITA NO.156/BANG/2020 ASSESSMENT YEAR: 2015- 16 M/S. MICROSUN SOLAR TECH PVT. LTD. #74/2-B, 16 TH CROSS SRIGANDHANAGAR, HEGGANAHALLI NEAR PEENYA BENGALURU 560 091. PAN NO : AAFCM1837P VS. ITO WARD-4(1)(3) BENGALURU APPELLANT RESPONDENT APPELLANT BY : SHRI V. SRINIVASAN, A.R. RESPONDENT BY : SHRI GANESH GHALE, STANDING COUNSEL DATE OF HEARING : 29.03.2021 DATE OF PRONOUNCEMENT : 16.04.2021 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER DATED 8.7.2019 PASSED BY LD. CIT(A)-4, BENGALURU AN D IT RELATES TO THE ASSESSMENT YEAR 2015-16. THE ASSESSEE IS AGGRI EVED BY THE DECISION OF LD. CIT(A) IN CONFIRMING THE ADDITION O F RS.15 LAKHS MADE BY THE A.O. U/S 68 OF THE ACT. 2. THE APPEAL IS BARRED BY LIMITATION BY 119 DAYS. THE ASSESSEE HAS FILED AN APPLICATION REQUESTING THE BENCH TO CO NDONE THE DELAY. IT IS STATED IN THE PETITION THAT THE ASSESSEE HAD HANDED OVER THE ORDER OF LD. CIT(A) TO ITS AUTHORIZED REPRESENTATIV E FOR TAKING FURTHER ITA NO.156/BANG/2020 M/S. MICROSUN SOLAR TECH PVT. LTD., BENGALURU PAGE 2 OF 6 ACTION. HOWEVER, DUE TO PROFESSIONAL PRESSURE, THE AUTHORIZED REPRESENTATIVE OMITTED TO FILE THE APPEAL IN TIME. WHEN THE ASSESSEE RECEIVED ORDER OF PENALTY U/S 271(1)(C) OF THE ACT, IT CAME TO THE NOTICE OF THE ASSESSEE THAT THE APPEAL HAS NOT BEEN FILED BEFORE THE TRIBUNAL. ACCORDINGLY, IT WAS SUBMITTED THAT THE D ELAY HAS OCCURRED DUE TO REASONS BEYOND CONTROL OF THE ASSES SEE. ACCORDINGLY, IT WAS PRAYED THAT THE DELAY MAY BE CO NDONED. 3. I HEARD LD. D.R. AND PERUSED THE RECORD. HAVI NG REGARD TO THE SUBMISSIONS MADE BY THE ASSESSEE IN HIS PETITION, I AM OF THE VIEW THAT THERE IS REASONABLE CAUSE FOR THE ASSESSEE IN NOT FILING APPEAL IN TIME. ACCORDINGLY, I CONDONE THE DELAY AND ADMI T THE APPEAL FOR HEARING. 4. ON MERITS, I HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF SOLAR PANELS. THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE A.O. RECEIVED INFORMATION FROM DDIT (INV.), UNI T 7(4), MUMBAI THAT A PERSON NAMED SHRI VIPUL VIDUR BHAT HAS FLOAT ED BOGUS ENTITIES AND PROVIDED ACCOMMODATION ENTRIES BY WAY OF BOGUS LOAN ENTRIES. ONE OF THE CONCERNS FLOATED BY THE ABOVE SAID PERSON WAS M/S. SAMPADA CHEMICALS LTD. IT WAS NOTICED THAT TH E ASSESSEE HEREIN HAS AVAILED LOAN OF RS.15 LAKHS FROM THE ABO VE SAID CONCERN. SINCE IT WAS REPORTED THAT THE ABOVE SAID COMPANY I S A PAPER COMPANY PROVIDING ONLY ACCOMMODATION ENTRIES, THE A .O. REOPENED THE ASSESSMENT OF THE YEAR UNDER CONSIDERATION BY I SSUING NOTICE U/S 148 OF THE ACT. 5. IN THE REOPENED ASSESSMENT, THE A.O. BROUGHT TO THE NOTICE OF THE ASSESSEE, THE RELEVANT REPLY GIVEN BY SHRI VIPU L VIDUR BHAT, ITA NO.156/BANG/2020 M/S. MICROSUN SOLAR TECH PVT. LTD., BENGALURU PAGE 3 OF 6 WHEREIN HE HAS STATED THAT M/S SAMPADA CHEMICALS LT D. IS A PAPER COMPANY USED TO PROVIDE BOGUS ACCOMMODATION ENTRIES TO VARIOUS BENEFICIARIES. THE ASSESSEE, HOWEVER, SUBMITTED TH AT IT HAS AVAILED LOAN FROM M/S. SAMPADA CHEMICALS LTD IN THE NORMAL COURSE AND IT HAS ALSO REPAID THE SAME ALONG WITH INTEREST. THE TDS WAS ALSO DEDUCTED FROM THE INTEREST PAYMENTS. THE ASSESSEE FURTHER SUBMITTED THAT IT WAS A GENUINE LOAN AND IT WAS TAK EN ON ORAL AGREEMENT. THE A.O WAS NOT CONVINCED WITH THE EXPL ANATIONS OF THE ASSESSEE. HE TOOK THE VIEW THAT LOAN WAS NOT GENUI NE LOAN. IN THIS REGARD, THE A.O. PLACED RELIANCE ON THE DECISION RE NDERED BY HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. BIKRAM S INGH (ITA 55/2017). ACCORDINGLY, THE A.O. MADE THE ADDITION OF RS.15 LAKHS TO THE TOTAL INCOME U/S 68 OF THE ACT. THE LD. CIT (A) ALSO CONFIRMED THE SAME. 6. THE LD. A.R. SUBMITTED THAT THE ASSESSEE HAS AVA ILED LOAN THROUGH BANKING CHANNELS AND IT HAS ALSO REPAID THE SAME THROUGH BANKING CHANNELS ALONG WITH INTEREST WITHIN ONE YEA R OF TAKING THE LOAN. THE ASSESSEE HAS ALSO DEDUCTED TDS ON THE IN TEREST AMOUNT OF RS.1,37,250/- PAID BY THE ASSESSEE. HE SUBMITTE D THAT IN THE CASE OF ACCOMMODATION ENTRIES, THERE WILL NOT NORMA LLY BE REPAYMENT OF LOAN AND ALSO SOMETIMES THERE WILL NOT BE PAYMENT OF INTEREST ALSO. THE LD. A.R. FURTHER SUBMITTED THAT THE A.O. HAS TAKEN A GENERALIZED VIEW IN RESPECT OF THE IMPUGNED LOAN TRANSACTION WITHOUT CONSIDERING THE FACTUAL ASPECTS AVAILABLE IN THE INSTANT CASE. HE SUBMITTED THAT THE ASSESSEE HAS FU RNISHED LEDGER ACCOUNT COPIES BEFORE THE A.O. SINCE THE ASSESSEE HAS COMPLETED THE TRANSACTION IN MARCH, 2016 ITSELF, IT COULD NOT GET CONFIRMATION FROM M/S. SAMPADA CHEMICALS LTD., DURING THE COURSE OF RE- ASSESSMENT PROCEEDINGS THAT HAPPENED IN 2018. THE LD. A.R. FURTHER SUBMITTED THAT THE A.O. HAS PLACED RELIANCE ON THE GENERAL ITA NO.156/BANG/2020 M/S. MICROSUN SOLAR TECH PVT. LTD., BENGALURU PAGE 4 OF 6 STATEMENT GIVEN BY SHRI VIPUL VIDUR BHAT AND THE A. O HAS NOT SHOWN THAT THE LOAN TRANSACTION ENTERED BY THE ASSE SSEE WITH M/S. SAMPADA CHEMICALS LTD., WAS POINTED OUT TO BE BOGUS ACCOMMODATION ENTRIES BY SHRI VIPUL VIDUR BHAT. HE FURTHER SUBMITTED THAT THE A.O. DID NOT ALLOW THE OPPORTUNI TY OF CROSS EXAMINATION TO THE ASSESSEE WHEN HE IS PLACING RELI ANCE ON THE STATEMENT GIVEN BY SHRI VIPUL VIDUR BHAT. HE SUBMI TTED THAT THE HONBLE SUPREME COURT, IN THE CASE OF ANDAMAN TIMBE R INDUSTRIES VS. CIT (2015) 127 DTR 241, HAS HELD THAT NON-PROVI DING OF OPPORTUNITY FOR CROSS EXAMINATION IS A SERIOUS FLAW RENDERING THE ORDER A NULLITY IN AS MUCH AS IT AMOUNTED TO VIOLAT ION OF PRINCIPLES OF NATURAL JUSTICE. 7. ON THE CONTRARY, THE LD. D.R. SUBMITTED THAT TH E ASSESSEE DID NOT ASK FOR OPPORTUNITY OF CROSS EXAMINATION BEFORE THE A.O. AND IT IS URGED FOR THE FIRST TIME BEFORE THE TRIBUNAL. H E FURTHER SUBMITTED THAT M/S. SAMPADA CHEMICALS LTD., IS CONTROLLED BY SHRI VIPUL VIDUR BHAT AND HE HAS ADMITTED THAT THE ABOVE SAID COMPANY IS A BOGUS/PAPER COMPANY PROVIDING ONLY ACCOMMODATION EN TRIES. FURTHER, THE ASSESSEE HAS ALSO HAS FAILED TO PROVE THE GENUINENESS OF THE LOAN AND HENCE THE ADDITION CONFIRMED BY LD. CIT(A) WAS JUSTIFIED. 8. I NOTICE FROM THE ASSESSMENT ORDER THAT THE A.O. HAS MADE THE ADDITION ON THE BASIS OF INFORMATION RECEIVED FROM DDIT, MUMBAI AND HE DID NOT EXAMINE THE EXPLANATIONS GIVEN BY TH E ASSESSEE VIS- A-VIS THE BOOKS OF ACCOUNTS. IT IS THE SUBMISSION OF THE ASSESSEE THAT THE LOAN WAS TAKEN BY WAY OF CHEQUE AND THE SA ME HAS BEEN REPAID WITHIN A PERIOD OF ONE YEAR ALONG WITH INTER EST. IT IS STATED THAT THE ASSESSEE HAS DEDUCTED TDS ALSO FROM THE IN TEREST PAYMENT. FURTHER, THE A.O. HAS RELIED ON THE GENERALIZED STA TEMENT GIVEN BY ITA NO.156/BANG/2020 M/S. MICROSUN SOLAR TECH PVT. LTD., BENGALURU PAGE 5 OF 6 SHRI VIPUL VIDUR BHAT. IT IS THE CONTENTION OF THE LD. A.R. THAT THE ASSESSEE WAS NOT GIVEN OPPORTUNITY TO CROSS EXAMINE SHRI VIPUL VIDUR BHAT, EVEN THOUGH THE A.O. HAS PLACED ENTIRE RELIANCE ON HIS STATEMENT DISREGARDING THE EXPLANATIONS GIVEN BY TH E ASSESSEE. 9. UNDER THESE SET OF FACTS, I AM OF THE VIEW THAT THE A.O. WAS NOT JUSTIFIED IN MAKING THE ADDITION WHOLLY PLACING REL IANCE ON THE STATEMENT GIVEN BY SHRI VIPUL VIDUR BHAT AND WITHOU T CONSIDERING THE EXPLANATIONS FURNISHED BY THE ASSESSEE. IN MY VIEW, THE A.O. SHOULD HAVE EXAMINED THE LEDGER ACCOUNTS OF THE ASS ESSEE AND ALSO EXPLANATIONS FURNISHED BY IT, SURROUNDING CIRCUMSTA NCES ETC. TO FIND OUT THE GENUINENESS OF THE TRANSACTIONS. AS C ONTENDED BY THE ASSESSEE, I AM OF THE VIEW THAT THE A.O. SHOULD HAV E PROVIDED OPPORTUNITY FOR CROSS EXAMINATION. UNDER THESE SET OF FACTS, I AM OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE A.O. ACCORDINGLY, I SET ASIDE THE ORDER PASSED BY LD. CIT(A) AND RESTORE THIS ISSUE TO THE FILE OF THE A.O. WITH A D IRECTION TO EXAMINE IT AFRESH AFTER AFFORDING ADEQUATE OPPORTUNITY TO T HE ASSESSEE. IN CASE THE ASSESSEE DEMANDS OPPORTUNITY FOR CROSS EXA MINATION OF SHRI VIPUL VIDUR BHAT, THE A.O. SHOULD PROVIDE FOR THE SAME. AFTER THAT, THE A.O. MAY TAKE APPROPRIATE DECISION IN ACC ORDANCE WITH LAW. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH APR, 2021 SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 16 TH APR, 2021. VG/SPS ITA NO.156/BANG/2020 M/S. MICROSUN SOLAR TECH PVT. LTD., BENGALURU PAGE 6 OF 6 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.