North Bengal Cereals Pvt. Ltd., Siliguri V. ACIT, Circle - 3, Siliguri

ITA 1782/KOL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9188 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2011
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 28-01-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 23-10-2009
• Result in Favour of: Set Aside
• Court: TRIBUNAL
• Department Lawyers: S K MALAKAR
• Keywords: Opportunity of being heard; Principle of natural justice

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH A, KOLKATA () BEFORE . .. . . .. . , , , , , SHRI D.K.TYAGI, JUDICIAL MEMBER. !' !' !' !' /AND . .. . . .. .! !! ! , # SHRI C.D.RAO, ACCOUNTANT MEMBER '$ '$ '$ '$ / ITA NO . 1782/KOL/2009 %&' !()/ ASSESSMENT YEAR : 2004-05 (+, / APPELLANT ) NORTH BENGAL CEREALS PVT.LTD.,SILIGURI (PAN : AABCN 8107 B) - !& - - VERSUS - . (.+,/ RESPONDENT ) A.C.I.T., CIRCLE-3, SILIGURI. +, / 0 / FOR THE APPELLANT: SHRI SUBHAS AGARWAL .+, / 0 / FOR THE RESPONDENT: SHRI S.K.MALAKAR 1 / ORDER ( (( ( . .. . . .. .! !! !) )) ), , , , # PER SHRI C.D.RAO, AM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 09/06/2009 OF THE CIT(A)-SILIGURI PERTAINING TO ASSESSMENT YEAR 2004- 05. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED FOUR GRO UNDS OF APPEAL RELATING TO TWO ISSUES ONE IS IN RESPECT OF CONFIRMATION OF ADDITIO N OF RS.7,95,000/- ON ACCOUNT OF SHARE APPLICATION MONEY AND THE SECOND ISSUE IS REL ATING TO DISALLOWANCE OF RS.58,080/- UNDER THE HEAD ALLOTMENT CHARGES. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT WHILE DOI NG THE ASSESSMENT THE A.O. HAS DISALLOWED SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE IN RESPECT OF THE FOUR SHARE HOLDERS OF THE ASSESSEE NAMELY : A) SMT. BIJAYA ROY B) SHRI PURNA MOHAN ROY 2 C) SHRI SHIB NATH GHOSH D) SHRI ASHIM RAHA BY OBSERVING THAT THOUGH NONE OF THE SHARE HOLDERS/ APPLICANTS WERE PRODUCED FOR EXAMINATION BUT TO GIVE A FAIR DEAL TO THE ASSESSEE AND FOR THE SAKE OF NATURAL JUSTICE THE CREDITWORTHINESS AND GENUINENESS IS BEING JUDGE D ON MERIT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND NOT ON THE SOLE BASIS OF NO N-PRODUCTION OF THE SHARE APPLICANTS/HOLDERS FOR EXAMINATION. HE FURTHER DISC USSED THAT VARIOUS REASONS FOR DISALLOWING THE SAME. THE MAIN CONTENTION OF THE AS SESSING OFFICER IS THAT ALL THE FOUR PERSONS ARE HAVING MINOR CAPITAL BALANCE I.E. RS.2, 88,000/- IN THE NAME OF SMT. BIJAYA ROY WHEREAS SHE APPEARS TO HAVE INVESTED RS.2,00,00 0/- IN THE ASSESSE COMPANY. SIMILARLY SHRI PURNA MOHAN ROY IS HAVING CAPITAL OF RS.2,24,675/- AND INVESTED RS.1,30,000/- IN THE ASSESSEE COMPANY. AGAIN SHRI S HIB NATH GHOSH IS HAVING A CAPITAL OF RS.2,70,425/- WHEREAS HE HAS INVESTED RS .2,20,000/- IN THE ASSESSEES COMPANY. AGAIN SHRI ASHIM RAHA IS HAVING A CAPITAL OF RS.2,68,120/- WHEREAS HE HAS INVESTED RS.2,00,000/- IN THE ASSESSEE COMPANY. HE FURTHER ANALYSED THE INCOME OF THE ABOVE FOUR PERSONS AS WELL AS THE BANK TRANSACT IONS AND FINALLY CONCLUDED THAT THESE PERSONS ARE NOT HAVING SUFFICIENT CREDITWORTH INESS AND THUS HE TREATED THE TRANSACTIONS AS NOT GENUINE. 3.1. ON APPEAL, THE LD. CIT(A) HAS CONFIRMED THE AC TION OF THE AO BY OBSERVING THAT THE ASSESSEE HAD FAILED TO DISCHARGE THE LEGAL OBL IGATION. THE COURTS HELD THAT IF THE ASSESSEE OFFERS AN EXPLANATION ABOUT THE CAS H CREDIT, THE AO CAN ASK THE ASSESSEE TO PROVE HIS EXPLANATION AND IF THE ASSESS EE FAILS TO TENDER EVIDENCE OR BURKES AN ENQUIRY, THEN THE ASSESSING OFFICER IS JU STIFIED IN REJECTING THE EXPLANATION AND HOLDING THAT THE INCOME IS FROM UND ISCLOSED SOURCE. THE AO IS NOT REQUIRED TO SPECIFY OR PROVE WHAT THAT SOURCE I S, WHICH FROM THE NATURE OF THE CASE MUST BE KNOWN ONLY TO THE ASSESSEE, AS HEL D IN SETH KALEKHAN MD HANIF VS CIT (1963) 50 ITR 1 (SC). IT IS NECESSARY FOR THE ASSESSEE TO PROVE PRIMA-FAC IE THE TRANSACTIONS GENUINE WITH IDENTITY OF THE CREDITOR, HIS CAPACITY AND THE TRANSACTION. ONLY AFTER THESE THREE THINGS PROVED PRIMA-FACIE ONLY THEN THE BURDE N SHIFTS ON THE DEPARTMENT. MERELY ESTABLISHING THE IDENTITY OF THE CREDITOR IS NOT ENOUGH [REF.SHANKAR INDUSTRIES VS CIT (1978) 114 ITR 689 (CAL), PRAKASH TEXTILE AGENCY VS CIT (1980) 121 ITR 890 (CAL)]. MERE FILING OF PARTICULA RS OF THE CASH-CREDITOR IS NOT ENOUGH. IN THE CASE OF CIT VS BAISHNAV CHARAN MAHAN TI (1995) 212 ITR 199 3 (ORI), IT WAS HELD THAT ONLY WHEN THREE CONDITIONS FULFILLED BY THE ASSESSEE THEN THE BURDEN SHIFTS TO THE DEPARTMENT. BUT IN THIS CASE, THE ASSESSEE FAILED TO PROVE THE IDENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSAC TIONS. THEREFORE, THE BURDEN NEVER SHIFTED TO THE DEPARTMENT . IT IS ALSO HELD T HAT MERE FILING THE INCOME TAX FILE NUMBERS OF THE CREDITORS IS NOT ENOUGH. THEIR IDENTITY AND CREDITWORTHINESS SHOULD BE PROVED AND THERE SHOULD BE GENUINE TRANSA CTIONS AS HELD IN CIT VS KORLEY TRADING CO. LTD. (1998) 232 ITR 820, 824 (CA L). EVEN THE RATIO LAID DOWN BY THE APEX COURT IN CIT V LOVELY EXPORTS (P) LTD. (2008) 216 ITR 195 (SC) HAS NOT BEEN FULFILLED BY THE ASSESSEE. 3.2. AGGRIEVED BY THIS NOW THE ASSESSEE IS IN APPEA L BEFORE US. 4. AT THE TIME OF HEARING THE LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE BY REFERRING TO THE INCOME ACKNOWLEDGEMENT, COMPUTATIO N OF INCOME AND BALANCE SHEET IN RESPECT OF THE SHARE APPLICANTS WHICH WERE PLACE D AT PAGES 25 TO 32 OF THE PAPER BOOK CONTENDED THAT THE ACTION OF THE REVENUE IS NO T JUSTIFIABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4.1. HE FURTHER RELIED ON VARIOUS JUDICIAL PRONOUNC EMENTS WHICH ARE AS UNDER :- A) CIT VS LOVELY EXPORTS (P) LTD. 216 CTR 195 (SC) B) ITO VS M/S. DIPAJYOTI RESOURCES (P) LTD. (ITAT, KOLKATA) C) M/S. OFFSHORE FINVEST LTD VS ITO (ITAT, KOLKATA) D) ITO VS ROSEBERRY MERCANTILE (P) LTD. (ITAT, KOLK ATA) E) ACIT VS VENKATESHWAR ISPAT P.LTD. 319 ITR 393 (C HH.) F) CIT VS PRAYAG HOSP8ITAL & RESEARCH (DELHI HIGH C OURT) G) CIT VS. DHAWAN JEWELLERS PVT. LTD. (DELHI HIGH C OURT) H) CIT VS DERBY OVERSEAS P. LTD. (DELHI HIGH COURT) 5. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE REVENUE AUTHORITIES. 6. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIALS AVAILABLE ON RECORD, IT IS OBSERVED THAT IN THE COU RSE OF THE APPEAL THE LD. AO HAS MADE ADDITIONS BASED ON THE MATERIAL AVAILABLE ON RECORD AND THE LD. CIT(A) HAS CONFIRMED THE SAME. EVEN THOUGH THE LD. COUNSEL HAS FILED COP IES OF PAN CARDS THE LD. CIT(A) HAS NOT ACCEPTED THE SAME BY OBSERVING THAT THE LD. AR DID NOT EXPLAIN AS TO WHY THE DOCUMENTS WERE NOT PRODUCED BEFORE THE AO. IT IS FU RTHER OBSERVED THAT ALL THE SHARE 4 APPLICANTS HAS ALREADY INVESTED RS.80,000/- EACH IN M/S.TEESTA TEA CO.(P) LTD. AS ON 31.3.2004. IF THIS FACT IS CORRECT THEN IN OUR CONS IDERED OPINION THE LD. AO CANNOT DOUBT THE GENUINENESS AND CREDITWORTHINESS OF THE S HARE APPLICANTS. IN OUR CONSIDERED OPINION THIS REQUIRES FRESH VERIFICATION. IN VIEW O F THIS WE ARE OF THE CONSIDERED VIEW THAT THE MATTER MAY BE RESTORED TO THE FILE OF THE AO WITH THE DIRECTION THAT THE ASSESSEE HAS TO PRODUCE EVIDENCE TO THE FACT THAT T HE ABOVE SHARE HOLDERS HAS REALLY INVESTED RS.80,000/- EACH IN M/S.TEESTA TEA CO.(P) LTD. IF THE ASSESSEE IS ABLE TO PROVE THIS FACT IN OUR CONSIDERED OPINION THE REVEN UE IS NOT JUSTIFIED TO DISBELIEVE THIS PRESENT TRANSACTION ALSO. THEREFORE, WE SET ASIDE T HIS ISSUE TO THE FILE OF AO TO RE- DECIDE THE SAME AS PER OUR DIRECTIONS AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER LAW. 6.1. IN THE RESULT THIS ISSUE IS ALLOWED FOR STATIS TICAL PURPOSES. 6.2. AS REGARDING THE OTHER ISSUE AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREFUL PERUSAL MATERIAL AVAILABLE ON RECORD, THE LEDGER AC COUNT OF ADM CHARGE ACCOUNT WHICH WAS PLACED AT PAGE 33 OF THE PAPER BOOK, THE ASSESSEE CONTENDED THAT THE AMOUNT OF RS.58,080/- HAS BEEN PAID BY CHEQUE. HOWE VER, NO EVIDENCE HAS BEEN PROVED IN RESPECT OF THE NATURE OF TRANSACTIONS. TH EREFORE, IN THE INTEREST OF JUSTICE, WE CONSIDER IT TO SET ASIDE THIS ISSUE ALSO TO THE FIL E OF THE AO WITH THE DIRECTION THAT THE ASSESSEE SHOULD PROVIDE SUFFICIENT EVIDENCE IN RESP ECT OF NATURE OF TRANSACTIONS THAT IS BILL RAISED BY THE TEA ASSOCIATION OF INDIA OR SOM E OTHER EVIDENCE TO THE SATISFACTION OF THE REVENUE. THEREFORE, WE SET ASIDE THIS ISSUE ALSO TO THE FILE OF AO TO RE-DECIDE THE SAME AS PER OUR DIRECTIONS AFTER GIVING A REASO NABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER LAW. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. 2 1 3 4& 25 6 ORDER PRONOUNCED IN THE COURT ON 29.03.2011. SD/- SD/- . .. . . .. . % % % % D.K.TYAGI, JUDICIAL MEMBER . .. . . .. .! !! !, ,, , # # # # , C.D.RAO, ACCOUNTANT MEMBER. ( (( (# # # #) )) ) DATE: 29.03.2011 5 ORDER PRONOUNCED IN THE COURT ON 29.03.2011 SD/- SD/- AM JM (CDR) (MS) RG/PS 1 / .%%7 87(9- COPY OF THE ORDER FORWARDED TO: 1. NORTH BENGAL CEREALS PVT. LTD., M.R.ROAD, KHAPARA, SILIGURI 2 A.C.I.T., CIRCLE-3, SILIGURI 3. THE CIT, 4. THE CIT(A)-SILIGURI. 5. DR, KOLKATA BENCHES, KOLKATA 7 .%/ TRUE COPY, 1&4/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES 6 .