PRABHAT TELECOM (INDIA) LTD, MUMBAI V. DCIT 13(1)(2), MUMBAI

ITA 1751/MUM/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4628 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 14-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Search and seizure; Accommodation entries; Capital expenditure
• Section: 234B; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , C BENCH MUMBAI BEFORE : SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI M.BALAGANESH, A CCOUNTANT MEMBER ITA NO. 1751 /MUM/ 20 17 ( ASSESSMENT YEAR : 2012 - 13 ) M/S. PRABHAT TELECOM (INDIA) LTD., 402, WESTE RN EDGE - 1 WESTERN EXPRESS HIGHWAY BORIVALI (E) MUMBAI 400 066 VS. DCIT - 13(1)(2) MUMBAI PAN/GIR NO. AAECP2288G (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY NONE REVENUE BY MS. SHREEKALA PARDESHI DATE OF HEARING 0 5 /0 8 /2021 DATE OF PRONOUNCEMENT 30 / 09 /202 1 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 1751/MUM/2017 FOR A.Y. 2012 - 13 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 21, MUMBAI IN APPEAL NO. CIT(A) - 21/DCIT - 13(1)(2)/IT - 257/2015 - 16 D ATED 24/01/2017 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 31/03/2015 BY THE LD. DY. COMMISSIONER OF INCOME TAX, CIRCLE - 13(1)(2), MUMBAI (HEREINAFTER REFERRED T O AS LD. AO). ITA NO . 1751/MUM/2017 M/S. PRABHAT TELECOM (INDIA) LTD., 2 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE FIND THAT THE NOTICE HAS BEEN SENT TO THE ASSESSEE ON SEVERAL OCCASIONS. IN FACT CHARTERED ACCOUNTANT OF THE ASSESSEE HAD EVEN SOUGHT ADJOURNMENT BEFORE THIS TRIBUNAL. THE LAST ADJOURNMENT WAS TA KEN ON 03/02/2020 BY THE CHARTERED ACCOUNTANT OF THE ASSESSEE. THEREAFTER, THE NOTICE OF HEARING ON 26/03/2020, 17/06/2020, 19/0 8/2020 WAS SENT TO THE ASSESSEE BUT ON THOSE DATES BENCH DID NOT FUNCTION. LATER, FRESH NOTICES WERE SENT TO THE ASSESSEE FOR HE ARING SCHEDULED ON 20/10/2020, 03/12/2020, 25/02/2021, 16/06/2021 AND 05/08/2021. ON ALL THESE OCCASIONS, THERE IS ABSOLUTELY NO COMPLIANCE FROM THE SIDE OF THE ASSESSEE. HENCE, WE ARE INCLINED TO DISPOSE OF THIS APPEAL DUE TO CONTINUOUS NON - COOPERATIO N FR OM THE SIDE OF THE ASSESSEE AND ON HEARING THE LD. DR AND AFTER PERUSING THE MATERIALS AVAILABLE ON RECORD. 3. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF DESIGNING, MANUFACTU RING, ASSEMBLING AND CUSTOMISATION OF MOBILE PHONES, ACCESSORIES AND DATA PRODUCTS. THE RETURN OF INCOME FOR THE A.Y.2012 - 13 WAS FILED BY THE ASSESSEE COMPANY ON 29/09/2012 DECLARING TOTAL INCOME OF RS.2,34,62,490/ - . THE ASSESSEE IS ALSO IN THE SALE AND DI STRIBUTION OF ITS OWN PRODUCT AND MANY MORE BRANDS THROUGH ITS ORGANISED DISTRIBUTION CHANNEL. THE COMPANY HAS AN IN - HOUSE PRODUCT DEVELOPMENT TEAM WHICH DESIGNS AND DEVELOPS NEW PRODUCTS AS PER THE MARKET REQUIREMENT ON ECONOMICAL RATES. FURTHER THE COMPA NY ALSO HAS A SMALL ASSEMBLED UNIT AT BHIWANDI AND ROORKIE. THE COMPANY IS ALSO INTO TRADING OF OWN BRAND PRODUCTS, MULTIPLE BRAND MOBILE ACCESSORIES THROUGH SET OF CORPORATE CUSTOMERS. THE LD. AO IN THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT ASSE SSEE HAD TAKEN LOAN FROM M/S. NAKSHATRA BUSINESS PRIVATE LIMITED AMOUNTING TO RS.3,65,00,000/ - AND YEAR END BALANCE OF THE SAID ITA NO . 1751/MUM/2017 M/S. PRABHAT TELECOM (INDIA) LTD., 3 LOAN WAS RS.1,00,00,000/ - . THE LD. AO OBSERVED THAT THE SAID LOAN CREDITOR WAS ONE OF THE PAPER COMPANIES OPERATED BY SHRI PRAVI N KUMAR JAIN. FURTHER , ON PERUSAL OF THE TAX AUDIT REPORT IN FORM 3CD, THE LD. AO OBSERVED THAT ASSESSEE COMPANY HAD ACCEPTED LOAN OF RS.50,00,000/ - FROM ONE CONCERN NAMELY HEMA TRADING COMPANY WHICH LOAN WAS ALSO REPAID DURING THE YEAR. EVEN THIS CONCERN WAS STATED TO BE ONE OF THE PAPER COMPAN IES OPERATED BY SHRI PRAVIN KUMAR JAIN. THE LD. AO BASED ON THE EVIDENCES GATHERED IN THE COURSE OF SEARCH AND SEIZURE OPERATION CONDUCTED IN THE PREMISES OF SHRI PRAVIN KUMAR JAIN U/S.132 OF THE ACT CAME TO THE CONC LUSION THAT THESE LOAN CREDITORS WHICH ARE ENGAGED ONLY IN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PARTIES AS INSTRUCTED BY SHRI PRAVIN KUMAR JAIN, WHICH ARE ACCOMMODATION ENTRIES AND ACCORDINGLY , TREATED THE SAME AS UNEXPLAINED CASH CREDIT U/S.68 OF TH E ACT IN THE ASSESSMENT. THE LD. CIT(A) CONFIRMED THE ADDITION TO THE EXTENT OF RS.3,80,00,000/ - BY TREATING THE SAME AS ACCOMMODATION ENTR IES RECEIVED BY THE ASSESSEE IN THE FORM OF UNSECURED LOANS. BOTH THE LOWER AUTHORITIES HAD CATEGORICALLY OBSERVED TH AT ASSESSEE HAD FAILED TO PROVE THREE NECESSARY INGREDIENTS I.E. IDENTITY OF THE LOAN CREDITOR S , CREDITWORTHINESS OF THE LOAN CREDITORS AND GENUINENESS OF THE TRANSACTION. THE ASSESSEE HAD NOT TAKEN ANY EFFORTS TO PROVE THE AFORESAID THREE NECESSARY INGRED IENTS BEFORE THE LOWER AUTHORITIES BY PROVIDING MATERIAL EVIDENCES. WE FIND THAT THE LD. CIT(A) HAD OBSERVED THAT A SUM OF RS. 50,00,000/ - RECEIVED THROUGH RTGS FROM M/S. HEMA TRADING COMPANY AND ON THE SAME DATE OF RECEIPT, THE SAME WAS SHOWN TO BE TRANSF ERRED TO M/S. AAROHI COMMODITIES PVT. LTD., THE LD. CIT(A) OBSERVED THAT NO EXPLANATION WAS OFFERED BY THE ASSESSEE AS TO WHY THE AMOUNT IS TRANSFERRED FROM M/S. HEMA TRADING COMPANY TO M/S. AAROHI COMMODITIES PVT. LTD. AS REGARDS THE TRANSACTIONS WITH M/S . NAKSHATRA BUSINESS PRIVATE LIMITED, THE LD. CIT(A) OBSERVED THAT AN AMOUNT OF ITA NO . 1751/MUM/2017 M/S. PRABHAT TELECOM (INDIA) LTD., 4 RS.3,65,00,000/ - WAS RECEIVED DURING THE PERIOD APRIL TO AUGUST 2011 BY THE ASSESSEE. AN AMOUNT OF RS.2,65,00,000/ - WAS REPAID BETWEEN MAY 2011 TO MARCH 2012, THEREBY LEAVING T HE BALANCE OF RS.1,00,00,000/ - AT THE END OF THE YEAR. IN THE CASE OF M/S. KESHAVA ENTERPRISES , AN AMOUNT OF RS.50,00,000/ - WAS RECEIVED BY THE ASSESSEE IN THE MONTH OF FEBRUARY 2012 WHICH REMAINED OUTSTANDING TILL THE END OF THE YEAR. THE LD. CIT(A) ALSO OBSERVED THAT IN THE CASE OF M/S. NAKSHATRA BUSINESS PRIVATE LIMITED, ITS SHARE CAPITAL HAD BEEN COMPLETELY ERODED AND IT HAD A NEGATIVE SHARE CAPITAL AND RESERVES OF RS.4.79 CRORES AS ON 31/03/2012 AND HAD SHOWN LOSS OF RS.7,00,59,000/ - DURING THE YEAR. B Y THIS, THE LD. CIT(A) HAD CATEGORICALLY OBSERVED THAT THE SAID LOAN CREDITOR DID NOT HAVE SUFFICIENT CREDITWORTHINESS TO ADVANCE MONIES TO THE ASSESSEE. THIS FACT REMAINED UNCONTROVERTED BY THE ASSESSEE WITH MATERIAL EVIDENCES. 3.1. IN RESPECT OF LOAN R ECEIVED FROM M/S. KESHAV A ENTERPRISES, THE LOAN HAD BEEN DULY CONFIRMED BY MS. SHUBHANGI MANJAREKAR, PROPRIETOR OF M/S. KESHAV ENTERPRISES. ACCORDINGLY, THE LD. CIT(A) DELETED THE ADDITION MADE IN THE SUM OF RS.50,00,000/ - IN RESPECT OF KESHAV A ENTERPRISES . AGAINST THIS, THE REVENUE IS NOT IN APPEAL BEFORE US. 3.2. IN RESPECT OF LOAN RECEIVED FROM M/S. HEMA TRADING COMPANY IN THE SUM OF RS.50,00,000/ - , NO EVIDENCES TO PROVE THE CREDITWORTHINESS OF THE LOAN CREDITOR AND GENUINENESS OF THE TRANSACTIONS WERE FURNISHED BY THE ASSESSEE. THE LD. CIT(A) ALSO OBSERVED THAT AT THE INSTANCE OF ASSESSEE, A REMAND REPORT WAS CALLED FOR FROM THE LD. AO AND EVEN IN THE REMAND PROCEEDINGS IN RESPONSE TO NOTICE ISSUED BY THE LD. AO TO SECURE PRESENCE OF THESE LOAN CREDITOR S, THESE LOAN CREDITORS DID NOT APPEAR BEFORE THE LD. AO . WE FIND THAT THE LD. CIT(A) CONSIDERING THE FACT THAT CERTAIN LOANS WERE RECEIVED DURING THE YEAR AND ALSO REPAID DURING THE ITA NO . 1751/MUM/2017 M/S. PRABHAT TELECOM (INDIA) LTD., 5 YEAR IN RESPECT OF M/S. NAKSHATRA BUSINESS PRIVATE LIMITED RESTRICTED THE ADDITION IN THE SUM OF RS.3,30,00,000/ - THEREON U/S.68 OF THE ACT INSTEAD OF RS.3,65,00,000/ - MADE BY THE LD. AO. APART FROM THIS, THE LD. CIT(A) SUSTAINED THE ADDITION MADE IN THE SUM OF RS.50,00,000/ - IN RESPECT OF M/S. HEMA TRADING COMPANY. IN EFFECT, THE LD. CIT(A) HA D SUSTAINED THE ADDITION OF RS 3,80,00,000/ - U/S.68 OF THE ACT AS AGAINST RS.4,15,00,000 . NO EVIDENCES WHATSOEVER HAVE BEEN FILED TO CONTROVERT THE SAME BY THE ASSESSEE BEFORE US. HENCE, WE HOLD THAT THE LD. CIT(A) HAD ELABORATELY DISCUSSE D THE ISSUE IN DISPUTE AND HAD OBSERVED THAT ASSESSEE HAD NOT PROVED THE CREDITWORTHINESS OF THE LOAN CREDITORS AND GENUINENESS OF THE TRANSACTIONS IN RESPECT OF LOANS RECEIVED FROM M/S. NAKSHATRA BUSINESS PRIVATE LIMITED AND HEMA TRADING COMPANY. HENCE, W E DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN THIS REGARD. ACCORDINGLY, THE GROUND NO.1 RAISED BY THE ASSESSEE BEFORE US IS DISMISSED. 4. THE SECOND ISSUE RAISED BY THE ASSESSEE IS CHALLENGING THE CONFIRMATION OF DISALLOWANCE OF ROC CHARGE S OF RS.1,55,811/ - . 4.1. WE HAVE HEARD LD. DR AND PERUSED THE MATERIALS AVAILABLE ON RECORDS. WE FIND THAT THE LD. AO HAD DISALLOWED A SUM OF RS.1,55,811/ - ON ACCOUNT OF ROC CHARGES ON THE BASIS WITH THE SAME IS RELATED TO INCREASE IN AUTHORISED SHARE CAPITAL AND HENCE, IT IS CAPITAL EXPENDITURE. THIS DISALLOWANCE HAS BEEN UPHELD BY THE LD. CIT(A). 4.2. WE FIND THAT THIS ISSUE IS NO LONGER RES INTEGRA IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF B ROOKE BOND INDIA LTD. V. CIT (199 7) REPORTED IN 225 ITR 798 , WHEREIN IT WAS HELD THAT FEES PAID TO ROC FOR INCREASE IN AUTHORISED SHARE CAPITAL IS CAPITAL EXPENDITURE ITA NO . 1751/MUM/2017 M/S. PRABHAT TELECOM (INDIA) LTD., 6 AND CANNOT BE ALLOWED AS A DEDUCTION. ACCORDINGLY, THE GROUND NO.2 RAISED BY THE ASSESSEE IS DISMISSED. 5. THE GROUND NO. 3 RAISED BY THE ASSESSEE IS WITH REGARD TO LEVY OF INTEREST U/S.234A, 234B & 234C WHICH IS CONSEQUENTIAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 6. WITH REGARD TO GROUND RAISED FOR INITIATION OF PENALTY U/S.271(1)(C) OF THE ACT, THE SAM E WOULD BE PREMATURE FOR ADJUDICATION AT THIS STAGE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 30 / 09 /202 1 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( VIKAS AWASTHY ) SD/ - (M.BAL AGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 30 / 09 / 2021 KARUNA , SR.PS ITA NO . 1751/MUM/2017 M/S. PRABHAT TELECOM (INDIA) LTD., 7 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MU MBAI 6. GUARD FILE. //TRUE COPY//