Om Shivashakti Iron Industries Private Limited , Hyderabad V. Income Tax Officer, Ward-16(4), Hyderabad

ITA 1604/Hyd/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7468 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2009-2010
• Appeal Filed On: 30-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KIRAN KATTA
• Assessee Lawyers: SYED JAMEELUDDIN
• Keywords: Income from undisclosed sources; Search and seizure; Principle of natural justice; Accommodation entries; Reason to believe
• Section: 147; 148; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B ', HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN , ACCOUNTANT MEMBER ITA NO. 1604 / HYD/201 8 ASSESSMENT YEAR S : 20 09 - 10 OM SHIVSHAKTI IRON INDUSTRIES PVT. LTD., HYDERABAD. PAN AA CCK 3181 F VS. INCOME - TAX OFFICER, WARD 16 ( 4 ), HYDERABAD. APPELLANT RESPONDENT A SSESSEE BY: S HRI SYED JAMEELUDDIN RE VENUE BY: SHRI KIRAN KATTA DATE OF HEARING: 04 / 1 2 / 201 8 DATE OF PRONOUNCEMENT: 11 / 01 /201 9 O R D E R PER S. RIFAUR RAHMAN , AM: T H IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) 4 , HYDERABAD, DATED, 31/08/2016 FOR AY 20 1 1 - 1 2 . 2. BRIEF FACTS OF THE CASE ARE THAT THE A SSESSEE COMPANY , FILED ITS RETURN OF INCOME FOR THE AY 20 09 - 10 ON 30 /09/20 09 ADMITTING LOSS AT RS. ( - ) 33,18,975 / - . SUBSEQUENTLY, THE CASE WAS REOPENED U/S 147 OF THE INCOME - TAX ACT, 1961 ( IN SHORT THE ACT) AFTER OBTAINING PRIOR APPROVAL OF THE PR. CIT IV, HYDERABAD AND A NOTICE U/S 148 DATED 08/03/2016 WAS ISSUED. IN RESPONSE TO THE SAID NOTICE, AR OF THE ASSESSEE FURNISHED THE INFORMATION CALLED FOR. 2.1 THE AO OBSERVED THAT DURING THE FY 2008 - 09 RELEVANT TO AY 2009 - 10, ASSESSEE HAD RECEIVED RS. 25,00,000/ - AS SHARE APPLICATION MONEY FROM M/S SARANG CHEMICALS LTD. HE I.T.A. NO. 1604 /HYD/1 8 OM SHIVSHAKTI IRON INDUSTRIES PVT. LTD., HYD. 2 OBSERVED THAT SEARCH AND SEIZURE OPERATION CONDUCTED IN THE CASE OF M/S SARANG CHEMICALS L TD. BY THE ADDL. DIT (INV.), UNIT 1, AHMADABAD, IN WHICH, STATEMENTS DATED 01/05/2013 WAS RECORDED FROM SRI PRATIK R. SHAH AND SRI LALITH KANTILAL RATHOD , DIRECTOR S OF M/S SARANG CHEMICALS LTD. WHEREIN BOTH THE DIRECTORS HAVE ADMITTED THAT THERE IS NO B USINESS ACTIVITY OF THE COMPANY AND THE COMPANY M/S SARANG CHEMICALS LTD. IS PROVIDING ACCOMMODATION ENTRIES TO OTHER COMPANIES. THEREFORE, AO ISSUED A SHOW CAUSE NOTICES ON 02/12/2016 AND 27/12/2016 TO THE ASSESSEE ASKING TO EXPLAIN AS TO WHY RS. 25,00,00 0/ - RECEIVED FROM M/S SARANG CHEMICALS LTD. SHOULD NOT BE TREATED AS UNACCOUNTED INCOME OF THE ASSESSEE, IN THE LIGHT OF THE INFORMATION GATHERED DURING THE SEARCH AND SEIZURE OPERATION IN THE CASE OF M/S SARANG CHEMICALS LTD., ENCLOSING THE COPIES OF STAT EMENTS OF THE DIRECTORS ALONG WITH THE SHOW CAUSE NOTICE. 2.2 IN RESPONSE TO THE SHOW CAUSE NOTICES, THE ASSESSEE STATED THAT IN THE STATEMENTS, THE DIRECTORS OF M/S SARANG CHEMICALS LTD., NEVER TAKEN THE NAME OF THE ASSESSEE I.E. M/S OM SHIV SHAKTI IRON INDUSTRIES LTD., AND REQUESTED NOT TO TREAT RS. 25,00,000/ - AS UNACCOUNTED INCOME OF THE ASSESSEE. 2.3. REJECTING THE SUBMISSIONS OF THE ASSESSEE, THE AO TREATED THE AMOUNT OF RS. 25,00,000/ - , WHICH WAS INVESTED BY M/S SARANG CHEMICALS LTD. AS SHARE APP LICATION MONEY IN ASSESSEE COMPANY, BASED ON THE STATEMENTS OF DIRECTORS OF M/S SARANG CHEMICALS LTD. THAT THE COMPANY IS NOT DOING ANY BUSINESS AND IS PROVIDING ACCOMMODATION ENTRIES TO OTHER COMPANIES. 2.4 WHEN THE ASSESSEE QUESTIONED ABOUT THE VAL IDITY OF NOTICE U/S 147, THE SAME WAS ALSO REJECTED BY AO ON THE I.T.A. NO. 1604 /HYD/1 8 OM SHIVSHAKTI IRON INDUSTRIES PVT. LTD., HYD. 3 GROUND THAT BASED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING, AHMADABAD THAT HE HAS REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), WHO CONFIRMED THE ORDER OF AO. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1) THE ORDER OF THE C.1.T. (APPEALS) - 4 , DT. 11 - 05 - 2018, IS ERRONEOUS IN LAW AND IS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2) THE C. I . T. (APPEALS) IS WRONG AND IS HIGHLY UNJUSTIFIED IN REJECTING THE SUBMISSIONS OF THE APPELLANT AND IN DISMISSING THE GROUND NOS.2,3,6 AND 7, BY SIMPLY STATING, IN PARA - 3 OF THE ORDER, THAT THE REASON FOR RE - OPENING THE ASSESSMENT WAS COMMUNICATED AND THE APPELLANT'S A.R. HAS APPEARED BEFORE THE ASSESSING OFFICER. 3) WITH REGARD TO THE ADDITION OF RS.25,00,000/ - URGED IN GROUND NOS . 4 AND 5, THE C. I .T.( APPEALS) IS WRONG AND IS HIGHLY UNJUSTIFIED IN SIMPLY STATING, IN PARA 6.3 OF THE ORDER, THAT THE WRITTEN SUBMISSIONS FILED WERE VERIFIED AND NOT CONSIDERED SINCE NO EVIDENCE FILED. 4) THE C.I.T. (APPEALS) IS WRONG IN NOT STATING, IN PARA - 6.3 OF THE ORD ER, AS TO WHAT EVIDENCE WAS REQUIRED AND WHAT EVIDENCE WAS NOT FILED BY THE APPELLANT. S) THE C.I.T. (APPEALS) IS WRONG IN NOT ADJUDICATING EACH GROUND SEPARATELY SINCE THE ISSUES INVOLVED ARE DIFFERENT. 6) THE C. I T. (APPEALS) IS WRONG IN NOT CONSIDERI NG THE DECISIONS OF THE HIGH COURTS AND THE I.T.A.T., CITED BY THE APPELLANT IN SUPPORT OF THE GROUNDS URGED AND IN NOT STATING THE REASONS AS TO WHY THE DECISIONS CITED ARE NOT APPLICABLE. 7) ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT OR BEFORE TH E TIME OF HEARING. I.T.A. NO. 1604 /HYD/1 8 OM SHIVSHAKTI IRON INDUSTRIES PVT. LTD., HYD. 4 5. BEFORE US , LD. AR OF THE ASSESSEE SUBMITTED THAT THE ADDITION WAS MADE BASED ON THE STATEMENTS GIVEN BY THE DIRECTORS OF M/S SARANG CHEMICALS LTD. BEING A THIRD PARTY AND THE ASSESSEE WAS NOT GIVEN ANY OPPORTUNITY TO CROSS - EXAMINE THE DIRECTORS OF THE SAID COMPANY. FURTHER, HE SUBMITTED THAT NON - PROVIDING OF CROSS - EXAMINATION OF THE PERSONS CONCERNED CLEARLY CONSTITUTES INFRACTION OF RIGHT CONFERRED ON THE ASSESSEE AND VITIATES THE ORDER OF ASSESSMENT MADE AGAINST THE ASSESSEE. FINALLY, HE SUBMITTED THAT THE ADDITI ON WAS MADE PURELY ON SUSPICION AND WITHOUT ANY CORROBORATIVE EVIDENCE. 6. LD. DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 7. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND FORCE IN THE SUBMISSIONS OF THE ASSESSEE. THE AO OUGHT TO HAVE GIVEN OPPORTUNITY TO ASSESSEE TO CROSS - EXAMINE THE DIRECTORS OF M/S SARANG CHEMICALS LTD, BEFORE MAKING THE ADDITION. THEREFORE, WE ARE OF THE VIEW THAT THE AO BREACHED THE PRINCIPLES OF NATURAL JUSTICE BY WAY OF NOT P ROVIDING OPPORTUNITY TO ASSESSEE TO CROSS - EXAMINE THE DIRECTORS OF M/S SARANG CHEMICALS LTD. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDER OF CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF AO WITH A DIRECTION TO PROVIDE OPPORTUNITY TO ASSESSEE TO CRO SS - EXAMINE THE DIRECTORS OF M/S SARANG CHEMICALS LTD., ON WHOSE STATEMENTS, THE ADDITION WAS MADE, AND DECIDE THE MATTER IN ACCORDANCE WITH LAW. I.T.A. NO. 1604 /HYD/1 8 OM SHIVSHAKTI IRON INDUSTRIES PVT. LTD., HYD. 5 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUN CED IN THE OPEN COURT ON 11 TH JANUARY , 20 19. SD/ - ( P. MADHAVI DEVI ) JUDICIAL MEMBER SD/ - ( S. RIFAUR RAHMAN ) ACCOUNTANT MEMBER HYDERABAD, DATED 11 TH JANUARY , 201 9. KV COPY FORWARDED TO: 1. M/S OM SHIVSHAKTI IRON INDUSTRIES PVT. LTD., C/O SYED JAMEELUDDIN, INCOME - TAX CONSULTANT, 16 - 7 - 302, ERRAM COTTAGE, HYDERABAD 500 02 4 . 2 . ITO, WARD 16 ( 4 ), HYDERABAD . 3 . CIT (A) - 4 , HYDERABAD 4. PR. CIT 4 , HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE