Sairam Commosales Pvt. ltd., Kolkata V. ITO, Ward 9(4), Kolkata, Kolkata

ITA 1840/KOL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6403 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 11-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice
• Section: 143(3); 142(1); 68; 263; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM & HONB LE SHRI S.S. VISWANETHRA RAVI, JM ] I.T.A NO. 1840/KOL/20 17 ASSESSMENT YEAR : 2009-1 0 SAIRAM COMMOSALES PVT. LTD. -VS- ITO, WARD-9(4 ), KOLKATA [PAN: AAMCS 6593 B] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI MIRAJ D SHAH, AR FOR THE REVENUE : SHRI SALLONG YADEN, ADDL. CIT DATE OF HEARING : 17.05.2018 DATE OF PRONOUNCEMENT : 18.05.2018 ORDER PER J.SUDHAKAR REDDY, AM THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)- 17, KOLKATA P ASSED U/S 143(3)/263/147/143(3) OF THE INCOME TAX ACT, 1961(THE ACT). 2. THE LD. COUNSEL FOR THE ASSESSEE POINTED THAT T HE NOTICE FOR SCRUTINY ASSESSMENT WAS ISSUED TO THE ASSESSEE BY THE AO ON 13.02.2014 FIXI NG THE CASE FOR HEARING ON 12.03.2014 AND THAT THE AR OF THE ASSESSEE REPLIED TO THE NOTICE ON 19.03.2014 AND THAT THE ASSESSMENT ORDER WAS PASSED ON 31.03.2014 AND H ENCE THE ASSESSEE DID NOT HAVE ADEQUATE OPPORTUNITY TO REPRESENT ITS CASE. FURTHER HE SUBMITTED THAT THE AO RELIED ON A REPORT BY THE INCOME TAX INSPECTOR, BUT A COPY OF T HE REPORT WAS NOT FURNISHED TO THE 2 ITA NO.1840/KOL/2017 SAIRAM COMMOSALES PVT. LTD. A.YR .2009-10 2 ASSESSEE AND HENCE THERE IS NO VIOLATION OF PRINCIP LES OF NATURAL JUSTICE. FURTHER THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT, THE ASSESS MENT ORDER IS PASSED U/S 144 OF THE ACT AND THE LD. CIT(A) HAD ALSO PASSED AN EX PARTE ORDER. HE SUBMITTED THAT THE ASSESSEE HAS NOT BEEN PROVIDED ADEQUATE OPPORTUNITY AND THAT THE AO WHILE PASSING THE ORDER U/S 143(3) PURSUANT TO AN ORDER U/S 263 OF TH E ACT BY THE CIT, HAS NOT FOLLOWED THE SPECIFIC DIRECTIONS GIVEN BY THE CIT-2, KOLKATA IN THE SAID ORDER PASSED U/S 263 OF THE INCOME TAX ACT, 1961 DATED 11.03.2014. HE SUBMI TTED THAT ON IDENTICAL FACTS THE KOLKATA A BENCH OF THE TRIBUNAL IN I.T.A NO. 110 4/KOL/2016 IN THE CASE OF SRIRAM TIE UP PVT. LTD VS ITO ORDER DATED 21.03.2018 AND IN THE CASE OF M/S SKIPPER PLASTIC LTD. IN I.T.A. NO. 282/KOL/2016 ORDER DATED 21.03.2 018 AND IN THE OTHER CASES, THE IMPUGNED ORDER WAS SET ASIDE TO THE FILE OF THE ASS ESSING OFFICER FOR FRESH ADJUDICATION. 3. THE LD. DR DID NOT OBJECT TO THE PRAYER THAT THI S ASSESSMENT MAY BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER BUT SUBMITTED THAT DI RECTIONS SHOULD BE GIVEN TO THE ASSESSEE TO ENSURE ATTENDANCE AND COOPERATION BY THE ASSESS EE BEFORE THE ASSESSING OFFICER. 4. AFTER HEARING RIVAL CONTENTIONS AND PERUSING THE PAPERS ON RECORD AS WELL AS THE CASE LAW CITED WE HOLD AS FOLLOWS. 5. THE ASSESSING OFFICER HAS NOT GIVEN ADEQUATE OPP ORTUNITY TO THE ASSESSEE AND HAS PASSED AN ORDER U/S 143(3) OF THE ACT WITHOUT ADEQU ATE ENQUIRY. THE DIRECTIONS GIVEN BY THE CIT IN THE SEC 263 ORDER HAVE NOT BEEN FOLLO WED BY THE AO. THE LD. CIT(A) HAS PASSED AN EX PARTE ORDER AND HAS NOT DEALT WITH THE ISSUE ON MERIT. IN THE CASE OF SRIRAM TIE UP PVT. LTD. SUPRA AT PARA 6 AND 7 HELD AS FOLLOWS: 3 ITA NO.1840/KOL/2017 SAIRAM COMMOSALES PVT. LTD. A.YR .2009-10 3 6. IN THE CASE OF M/S. SUKANYA MERCHANDISE PVT. LTD . VS ITO (ITA 291/KOL/2016 DATED 15.12.2017) CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE, A SIMILAR VIEW HAS BEEN TAKEN BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL AND THE SIMILAR ISSUE RELATING TO THE ADDITION MADE UNDER SECTION 68 ON ACCOUNT OF SHARE CAPITAL CONTRIBUTION BY TREATING THE SAME AS UNEXPLAINED CASH CREDITS IS RESTORED BACK B Y THE TRIBUNAL TO THE FILE OF THE A.O. IN ALMOST SIMILAR SITUATION AFTER RECORDING ITS OBS ERVATIONS / FINDINGS AS UNDER: WE NOTE THAT THE AO PURSUANT TO THE ORDER OF LD. CI T HAD TAKEN NOTE OF THE DIRECTIONS OF THE LD. CIT AND ISSUED NOTICE U/S. 14 2(1) DATED 16.08.2013 AND HAS ACKNOWLEDGED THAT THE ASSESSEE HAD FURNISHED THE CO PY OF FINAL ACCOUNT, I. T. ACKNOWLEDGEMENT, BANK STATEMENT FOR THE RELEVANT PE RIOD EVIDENCING THE RECEIPT OF SHARE APPLICATION MONEY FROM THE SHARE APPLICANT S. THEREAFTER, THE AO MAKES CERTAIN INFERENCES BASED ON THE LIST OF SHAREHOLDER S AND TAKING NOTE OF THE BANK STATEMENT FURNISHED BY THE ASSESSEE. WE NOTE THAT AFTER THE INITIAL NOTICE DATED 16.08.2013, THEREAFTER THE AO HAD ISSUED THE NOTICE ON 26.02.2014 WHICH HAS BEEN REPRODUCED AT PAGE 3 OF THE REASSESSMENT ORDER , WHEREIN AO REQUIRED THE DIRECTORS OF THE ASSESSEE COMPANY TO BE PRESENT BEF ORE HIM ON 06.03.2014. HOWEVER, ACCORDING TO THE LD. AR, THE ASSESSEE RECE IVED THE NOTICE ONLY ON 07.03.2014 AND THEREAFTER, THE ASSESSEE REQUESTED T HE AO TO PROVIDE ANOTHER OPPORTUNITY OF HEARING VIDE ITS LETTER DATED 20.03. 2014. THEREAFTER, THE AO FIXED THE DATE OF HEARING ON 12.03.2014 VIDE NOTICE DATED 10.03.2014. SO, ACCORDING TO THE ASSESSEE COMPANY SINCE THE DIRECTORS WERE NOT I N STATION TILL 23.03.2014, THE LD. AR HAD REQUESTED FOR ADJOURNMENT TILL THAT TIME . THOUGH THE AO HAS STATED THAT HE HAS ISSUED SUMMONS ON 24.03.2014 TO THE ASS ESSEE COMPANY TO PRODUCE THE DIRECTORS OF THE COMPANY BEFORE HIM ON 26.03.20 14, THE ASSESSEE COMPANY CONTENDED THAT IT HAS NOT RECEIVED THE SAID SUMMON AND, THEREFORE, COULD NOT MAKE THE PERSONAL APPEARANCE. THE AO HAS DRAWN ADV ERSE CONCLUSION BASICALLY BECAUSE OF NON-APPEARANCE OF THE DIRECTORS OF THE A SSESSEE COMPANY AND THAT OF THE SHAREHOLDER COMPANIES. WE NOTE THAT INITIALLY THE AO STARTED THE ENQUIRY ON 16.08.2013 WHICH WAS COMPLIED BY THE ASSESSEE BY SU BMITTING DOCUMENTS WHICH HAS BEEN ACKNOWLEDGED BY THE AO. THEREAFTER, THE ENQUIRY WAS STARTED ONLY AT THE FAG END OF FEBRUARY 2014 AND THE ASSESSEE COMPA NY HAD INFORMED THE AO THAT THEIR DIRECTORS WERE OUT OF STATION TILL 23.03.2014 . IN THE LIGHT OF THE AFORESAID FACTS, WE ARE OF THE OPINION THAT THE ASSESSEE DID NOT GET FAIR OPPORTUNITY TO PRESENT THE EVIDENCES BEFORE THE AO SO, THERE WAS A LACK OF OPPORTUNITY AS AFORESAID, THEREFORE, IT HAS TO GO BACK TO AO. 8. WE ALSO NOTE THAT LD. CIT WHILE SETTING ASIDE TH E ORDER OF THE AO WHICH WAS PASSED U/S. 147/143(3) OF THE ACT, THE LD. CIT GAVE CERTAIN GUIDELINES TO FOLLOW FOR CONDUCTING DEEP INVESTIGATION. WE ALSO NOTE TH AT SIMILARLY PLACED ASSESSEES HAD CHALLENGED THE EXERCISE OF REVISIONAL JURISDICT ION U/S. 263 OF THE ACT BEFORE THIS TRIBUNAL IN THOSE CASES ONE OF IT OF SUBHA LAK SHMI VANIJYA PVT. LTD. VS. CIT IN ITA NO. 1104/KOL/2014 DATED 30.07.2015, WHEREIN THE TRIBUNAL WAS PLEASED TO UPHOLD THE ORDER PASSED BY THE LD. CIT PASSED U/S. 263 OF THE ACT, WHICH WE LEARN 4 ITA NO.1840/KOL/2017 SAIRAM COMMOSALES PVT. LTD. A.YR .2009-10 4 TO HAVE BEEN CONFIRMED BY THE HONBLE JURISDICTIONA L HIGH COURT AND THE SLP PREFERRED AGAINST THE DECISION OF THE HONBLE JURIS DICTIONAL HIGH COURT HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT. THEREFORE, SIMILAR ORDER OF THE LD. CIT PASSED U/S. 263 OF THE ACT HAS BEEN UPHELD. WE NOT E THAT THE AO WHILE GIVING EFFECT TO THE CITS 263 ORDER HAS NOTED THAT THE AS SESSEE COMPANY HAS IN FACT FURNISHED THE DOCUMENTS SOUGHT BY HIM TO HIS NOTICE U/S. 142(1) OF THE ACT. HOWEVER, THE AO TOOK THE ADVERSE VIEW AGAINST THE A SSESSEE ON THE PLEA THAT THE DIRECTORS OF THE ASSESSEE COMPANY AND SHARE SUBSCRI BING COMPANIES HAD NOT APPEARED BEFORE HIM ON 26.03.2014 AND T AFTER TAKIN G NOTE THAT NONE APPEARED ON 26.03.2014 CONCLUDED ON THE SAME DAY 26.03.2014 TH AT ENTIRE AMOUNT OF SHARE APPLICATION MONEY RECEIVED ALONG WITH PREMIUM AMOUN TING TO RS.8,06,00,000/- WHICH HAS REMAINED UNEXPLAINED AND ADDED TO THE I NCOME OF THE ASSESSEE. WE ALSO NOTE THAT THE LD. CIT AFTER LOOKING INTO THE P ERNICIOUS PRACTICE OF CONVERTING BLACK MONEY INTO WHITE MONEY HAS GIVEN THE GUIDELIN ES TO AO AS TO HOW THE INVESTIGATION SHOULD BE CONDUCTED TO FIND OUT THE S OURCE OF SOURCE. SINCE SIMILAR ORDER OF THE LD. CIT PASSED U/S. 263 OF THE ACT HAS BEEN UPHELD BY THE TRIBUNAL AS WELL AS BY THE HONBLE CALCUTTA HIGH COURT AS WELL AS THE SLP HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT, SIMILAR ORD ER OF THE LD. CIT HAS TO BE GIVEN EFFECT TO AS DIRECTED BY THE LD. CIT. WE TAK E NOTE THAT THE LD. CIT WITH HIS EXPERIENCE AND WISDOM HAS GIVEN CERTAIN GUIDELINES IN THE BACKDROP OF BLACK MONEY MENACE SHOULD HAVE BEEN PROPERLY ENQUIRED INT O AS DIRECTED BY HIM. THE AO OUGHT TO HAVE FOLLOWED THE INVESTIGATING GUIDELI NES AND METHOD AS DIRECTED BY HIM TO UNEARTH THE FACTS TO DETERMINE WHETHER THE I DENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SHARE SUBSCRIBERS. WE NOTE THAT THE HONBLE SUPREME COURT IN THREE JUDGES BENCH IN THE CASE OF TIN BOX, (SUPRA), HAS HELD THAT SINCE THERE WAS LACK OF OPPORTUNITY TO THE ASSESSEE AT TH E ASSESSMENT STAGE ITSELF, THE ASSESSMENT NEEDS TO BE DONE AFRESH AND THEREBY REVE RSED THE HONBLE HIGH COURT, TRIBUNAL AND CIT(A)S ORDERS AND REMANDED THE MATT ER BACK TO AO FOR FRESH ASSESSMENT. SO, SINCE THERE WAS LACK OF OPPORTUNIT Y AS AFORESTATED IT HAS TO GO BACK TO AO. WE ALSO NOTE THAT THE HONBLE DELHI HI GH COURT IN THE CASE OF CIT VS. JANSAMPARK ADVERTISING & MARKETING PVT. LTD. I N ITA NO. 525/2014 DATED 11.03.2015 WHEREIN AFTER NOTICING INADEQUATE ENQUIR Y BY AUTHORITIES BELOW HAVE HELD AS UNDER: 41. WE ARE INCLINED TO AGREE WITH THE CIT(APPEALS) , AND CONSEQUENTLY WITH ITAT, TO THE EXTENT OF THEIR CONCLUSION THAT T HE ASSESSEE HEREIN HAD COME UP WITH SOME PROOF OF IDENTITY OF SOME OF THE ENTRIES IN QUESTION. BUT, FROM THIS INFERENCE, OR FORM THE FACT THAT THE TRANSACTIONS WERE THROUGH BANKING CHANNELS, IT DOES NOT NECESSARILY F OLLOWING THAT SATISFACTION AS TO THE CREDITWORTHINESS OF THE PART IES OR THE GENUINENESS OF THE TRANSACTIONS IN QUESTION WOULD ALSO HAVE BEE N ESTABLISHED. 42. THE AO HERE MAY HAVE FAILED TO DISCHARGE HIS OB LIGATION TO CONDUCT A PROPER INQUIRY TO TAKE THE MATTER TO LOGICAL CONCLU SION. BUT 5 ITA NO.1840/KOL/2017 SAIRAM COMMOSALES PVT. LTD. A.YR .2009-10 5 CIT(APPEALS), HAVING NOTICED WANT OF PROPER INQUIRY , COULD NOT HAVE CLOSED THE CHAPTER SIMPLY BY ALLOWING THE APPEAL AN D DELETING THE ADDITIONS MADE. IT WAS ALSO THE OBLIGATION OF THE F IRST APPELLATE AUTHORITY, AS INDEED OF ITAT, TO HAVE ENSURED THAT EFFECTIVE I NQUIRY WAS CARRIED OUT, PARTICULARLY IN THE FACT OF THE ALLEGATIONS OF THE REVENUE THAT THE ACCOUNT STATEMENTS REVEAL UNIFORM PATTERN OF CASH DEPOSITS OF EQUAL AMOUNTS IN THE RESPECTIVE ACCOUNTS PRECEDING THE TRANSACTIONS IN QUESTION. THIS NECESSITATED A DETAILED SCRUTINY OF THE MATERIAL SU BMITTED BY THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION148 ISSUED B Y THE AO, AS ALSO THE MATERIAL SUBMITTED AT THE STAGE OF APPEALS, IF DEEM ED PROPER BY WAY OF MAKING OR CAUSING TO BE MADE A 'FURTHER INQUIRY IN EXERCISE OF THE POWER UNDER SECTION 250(4). HIS APPROACH NOT HAVING BEEN ADOPTED, THE IMPUGNED ORDER OF ITAT, AND CONSEQUENTLY THAT OF CI T(APPEALS), CANNOT BE APPROVED OR UPHELD.' IN VIEW OF THE AFORESAID ORDER AND IN THE LIGHT OF THE HONBLE SUPREME COURTS DECISION IN TIN BOX COMPANY (SUPRA) AND TAKING INTO CONSIDERATION THE FACT THE ORDER OF THE LD. CIT PASSED U/S. 263 OF THE ACT IN SIMILAR CASES BEING UPHELD UP TO THE LEVEL OF APEX COURT, AND TAKING NOTE OF HONBLE DELHI HIGH COURTS ORDER IN JANSAMPARK ADVERTISING & MARKETING PVT. LTD. (SUPRA ), WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MATTER BACK TO THE FI LE OF AO FOR DE NOVO ASSESSMENT AND TO DECIDE THE MATTER IN ACCORDANCE TO LAW AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. WE, THEREFORE, CONSIDER IT FAIR AND PROPER AND IN THE INTEREST OF JUSTICE TO SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THE IS SUE IN DISPUTE AND RESTORE THE MATTER TO THE FILE OF THE A.O. TO DECIDE THE SAME AFRESH A FTER GIVING THE ASSESSEE PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD AND AFTER TAK ING INTO CONSIDERATION THE ENTIRE EVIDENCE ALREADY AVAILABLE ON RECORD AS WELL AS OTH ER DOCUMENTARY EVIDENCE WHICH THE ASSESSEE MAY CHOOSE TO FILE IN SUPPORT OF ITS CASE ON THE ISSUE. THE KOLKATA BENCH OF THE ITAT HAS PASSED SIMILAR OR DER IN MANY CASES ON THE SAME ISSUE. 5. CONSISTENT WITH THE VIEW TAKEN THEREIN WE SET AS IDE THIS ASSESSMENT TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION, WITH THE DIRECTION THAT AN ADEQUATE OPPORTUNITY SHOULD BE PROVIDED TO THE ASSESSEE AND THAT THE DIR ECTION GIVEN BY THE LD. CIT IN THE ORDER PASSED U/S 263 BE FOLLOWED. THE ASSESSEE IS D IRECTED TO APPEAR BEFORE THE 6 ITA NO.1840/KOL/2017 SAIRAM COMMOSALES PVT. LTD. A.YR .2009-10 6 ASSESSING OFFICER WITHIN 30 DAYS OF RECEIPT OF THIS ORDER TAKE NOTICE AND THEREAFTER COOPERATE IN COMPLETION OF THE ASSESSMENT. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 18.05.2018 SD/- SD/- [S.S.VISWANETHRA RAVI] [ J.SUDHAK AR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED : 18.05.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. SAIRAM COMMOSALES PVT. LTD. C/O, D.J.SHAH & CO., KALYAN BHAVAN, 2, ELGIN ROAD, KOLKATA-700020. 2. ITO, WARD-9(4), KOLKATA, AAYAKAR BHAWAN, P-7, CH OWRINGHEE SQUARE, KOLKATA- 700069. 3..C.I.T.(A)- , KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S