M/s N.P. Jewellery House Pvt. Ltd., Kolkata V. DCIT, Cir-9(2), Kolkata, Kolkata

ITA 1985/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1508 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 07-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DAVID Z CHOWNGTHU CIT REVEN
• Keywords: Opportunity of being heard; Deemed dividend
• Section: 40A(3); 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A, KOLKATA [BEFORE SHRI P.M. JAGTAP, AM & SHRI S.S. VISWANETHRA RAVI, JM] I.T.A. NO. 1985/KOL/2016 ASSESSMENT YEAR: 2012-13 M/S. N.P. JEWELLERY HOUSE PVT. LTD. ..................................APPELLANT OM TOWER, 1 ST FLOOR, P-16, KALAKAR STREET KOLKATA - 700007 [PAN : AABCN8157B] D.C.I.T, CIR 9(2)...................................RESPONDENT KOLKATA APPEARANCES BY: SHRI ANIL KOCHAR, ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE. SHRI DAVID Z. CHOWNGTHU, ADDL. CIT APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JULY 24, 2017 DATE OF PRONOUNCING THE ORDER : JULY 31, 2017 ORDER PER P.M. JAGTAP, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) 2, KOLKATA DATED 29.09.2016 WHEREBY HE CONFIRMED THE VARIOUS ADDITIONS/DISALLOWANCES MADE BY THE AO TO THE TOTAL INCOME OF THE ASSESSEE. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL WHO IS ENGAGED IN THE BUSINESS OF MANUFACTURING, WHOLE SELLING AND RETAILING OF GOLD ORNAMENTS, JEWELLERY AND BULLION. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY THE ASSESSEE ON 29.09.2012 DECLARING A TOTAL INCOME OF RS. 96,79,500/-. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 17.12.2015, THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED BY THE AO AT RS. 1,73,08,650/- AFTER MAKING THE FOLLOWING ADDITIONS/DISALLOWANCES. 2 I.T.A. NO. 1985/KOL/2016 ASSESSMENT YEAR: 2012 -13 N.P. JEWELLERS HOUSE P LTD INTEREST 7,39,726/- UNDISCLOSED INCOME 9,85,550/- ACCOUNTING CHARGES U/S 40(A)(IA) 2,20,340/- U/S 14A R.W.R. 8D 74,927/- DONATION 64,152/- REPAIR & MAINTENANCE 3,61,200/- PENALTIES & CHARGES ON DUTIES & TAXES 20,851/- BUSINESS PROMOTION 3,14,415/- SALESMAN INCENTIVE 26,66,814/- DEEMED DIVIDEND 6,00,246/- OFFICE EXPENSES 3,19,015/- SHOP EXPENSES 1,42,338/- COMMISSION U/S 40A(3) 10,24,089/- MOTOR CAR EXPENSES 95,493/- RS. 76,29,156 3. AGAINST THE ORDER PASSED BY THE AO UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) DISPUTING ALL THE ADDITIONS/DISALLOWANCES MADE BY THE AO TO ITS TOTAL INCOME EXCEPT THE DISALLOWANCE MADE UNDER SECTION 14A R.W.R. 8D. THE LEARNED CIT(A) HOWEVER DID NOT FIND MERIT IN THE CASE OF THE ASSESSEE AND CONFIRMED ALMOST ALL THE ADDITIONS/DISALLOWANCES MADE BY THE AO TO THE TOTAL INCOME OF THE ASSESSEE THEREBY DISMISSING THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. IN ITS APPEAL, THE ASSESSEE HAS RAISED AS MANY AS 15 GROUNDS OUT OF WHICH GROUND NO 4 TO 15 RELATE TO THE VARIOUS ADDITIONS AND DISALLOWANCES MADE BY THE AO WHICH HAVE BEEN CONFIRMED BY THE LD. CIT(A) WHILE IN GROUND NO 1 TO 3, THE ASSESSEE HAS RAISED PRELIMINARY ISSUES CHALLENGING THE IMPUGNED ORDER OF THE LEARNED CIT(A) ON THE GROUND THAT THE SAME HAS BEEN PASSED WITHOUT TAKING INTO CONSIDERATION VARIOUS CONDITIONS RAISED BY THE ASSESSEE BEFORE HIM AS WELL AS WITHOUT APPRECIATING THE DETAILS AND DOCUMENTS PLACED ON 3 I.T.A. NO. 1985/KOL/2016 ASSESSMENT YEAR: 2012 -13 N.P. JEWELLERS HOUSE P LTD RECORD. THE ASSESSEE HAS ALSO ALLEGED THAT THE LEARNED CIT(A) HAS PASSED A VERY CRYPTIC ORDER SUMMARILY REJECTING THE SUBMISSIONS AND EVIDENCES WITHOUT ASSIGNING ANY BASIS AND THE REASONS. THE SAID GROUNDS NO 1 TO 3 READ AS UNDER: 1. FOR THAT THE LD. CIT(A) BEFORE WHOM THE APPELLANT HAD SUBMITTED A WRITE UP WITH ALL RELEVANT EVIDENCES AND IN VIEW OF THE FACT THAT SOME FRESH EVIDENCES WERE SUBMITTED AND PRAYER WAS MADE FOR ACCEPTANCE OF THE SAME, THE LD. CIT(A) FAILED TO APPRECIATE THE CONTENTIONS RAISED BY THE APPELLANT AND PASSED ORDER IN A VERY CRYPTIC MANNER AND WHICH IS DEVOID OF REASONING. 2. FOR THAT THE LD. CIT(A) BEFORE WHOM THE APPELLANT HAD ATTENDED AND FILED DETAILED SUBMISSIONS AND EVIDENCES, SUMMARILY REJECTED THE SAME WITHOUT ASSIGNING ANY BASIS AND THE REASONS IN RESPECT OF ALL THE GROUNDS TAKEN BY THE APPELLANT. 3. FOR THAT THE LD. CIT(A) FAILED TO APPLY HIS MIND TO THE FACTS OF THE CASE, THE BASIS GIVEN BY THE A.O. FOR MAKING VARIOUS ADDITIONS/DISALLOWANCES AND CONTENTIONS IN WRITTEN SUBMISSIONS MADE BY THE APPELLANT AND THE EVIDENCES ADDUCED. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THE PRELIMINARY ISSUES RAISED IN GROUND NO 1 TO 3 AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD INCLUDING THE ORDERS OF THE ASSESSING OFFICER AND THE LD. CIT(A). AS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE, ALL THE ADDITIONS/DISALLOWANCES IN QUESTION WERE MADE BY THE AO IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSEE TO OFFER ITS EXPLANATION IN THE MATTER AND THIS POSITION WHICH IS CLEARLY EVIDENT FROM THE ASSESSMENT ORDER PASSED BY THE AO UNDER SECTION 143(3) HAS NOT BEEN DISPUTED EVEN BY THE LEARNED DR. AS FURTHER SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE ASSESSEE THUS GOT THE OPPORTUNITY TO TAKE ITS STAND ON THE ISSUES RELATING TO THE SAID ADDITIONS/DISALLOWANCES FOR THE FIRST TIME ONLY BEFORE THE LD. CIT(A) 4 I.T.A. NO. 1985/KOL/2016 ASSESSMENT YEAR: 2012 -13 N.P. JEWELLERS HOUSE P LTD AND ALTHOUGH THE ASSESSEE MADE FULL SUBMISSIONS TO SUPPORT AND SUBSTANTIATE ITS CASE ON THE SAID ISSUES AND ALSO FILED THE RELEVANT DETAILS AND DOCUMENTS, THE LD. CIT(A) HAS SIMPLY CONFIRMED THE ADDITIONS/DISALLOWANCES MADE BY THE AO MAINLY FOR THE SAME REASONS AS GIVEN BY THE AO WITHOUT CONSIDERING AND APPRECIATING THE CASE MADE OUT BY THE ASSESSEE. FOR INSTANCE, HE HAS POINTED OUT THAT THE DISALLOWANCE OF RS. 7,39,726/- MADE BY THE AO ON ACCOUNT OF INTEREST WAS CHALLENGED BY THE ASSESSEE BY POINTING OUT THAT IT HAD SUFFICIENT OWN FUNDS OF RS. 7,32,74,715/- IN THE FORM OF SHARE CAPITAL AND RESERVES TO MAKE THE INVESTMENT OF RS. 80,00,000/- IN FIXED ASSET AND THE ENTIRE INTEREST BEARING BORROWED FUNDS WERE UTILISED ONLY FOR THE PURPOSE OF ITS BUSINESS. THE LD. CIT(A) HOWEVER HAS NOT DISCUSSED OR DEALT WITH THIS SUBMISSION MADE BY THE ASSESSEE AND SIMPLY CONFIRMED THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF INTEREST BY STATING THAT ALL THE RELEVANT ISSUES HAD ALREADY BEEN CONSIDERED BY THE AO IN DETAIL. SIMILARLY, THE DISALLOWANCE OF RS. 6,00,246/- MADE BY THE AO ON ACCOUNT OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) WAS CHALLENGED BY THE ASSESSEE BEFORE THE LD. CIT(A) BY POINTING OUT THAT THE AMOUNT IN QUESTION HAVING BEEN GIVEN BY THE ASSESSEE COMPANY TO ITS DIRECTOR, THE DISALLOWANCE, IF ANY, UNDER SECTION 2(22)(E) CAN BE MADE ONLY IN THE HANDS OF THE DIRECTOR AND NOT IN THE HANDS OF THE ASSESSEE COMPANY. ALTHOUGH THE LD. CIT(A) DISCUSSED THIS ASPECT OF THE MATTER POINT OUT BY THE ASSESSEE IN HIS IMPUGNED ORDER AND ALSO DIRECTED THE AO TO REOPEN THE CASE OF THE DIRECTOR, HE STILL DISMISSED THE RELEVANT GROUND RAISED BY THE ASSESSEE ON THIS ISSUE WITHOUT GIVING ANY RELIEF TO THE ASSESSEE. THESE TWO INSTANCES POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE AS WELL AS OTHER INSTANCES 5 I.T.A. NO. 1985/KOL/2016 ASSESSMENT YEAR: 2012 -13 N.P. JEWELLERS HOUSE P LTD TOUCHED UPON BY HIM CLEARLY SHOW THAT THE IMPUGNED ORDER HAS BEEN PASSED BY THE LD. CIT(A) IN A VERY CRYPTIC MANNER WITHOUT CONSIDERING THE DETAILED SUBMISSIONS MADE BY THE ASSESSEE AND HE HAS REJECTED THE CONTENTIONS RAISED BY THE ASSESSEE ON VARIOUS ISSUES RELATING TO ADDITIONS/DISALLOWANCES SUMMARILY WITHOUT ASSIGNING ANY REASON AND WITHOUT APPRECIATING THE RELEVANT DETAILS AND DOCUMENTS PLACED ON RECORD. EVEN THE LEARNED DR HAS NOT BEEN ABLE TO REBUT OR CONTROVERT THIS POSITION WHICH IS CLEARLY EVIDENT FROM THE IMPUGNED ORDER OF THE LD. CIT(A). WE, THEREFORE, CONSIDER IT FAIR AND PROPER AND IN THE INTEREST OF JUSTICE TO SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND REMIT THE MATTER BACK TO HIM FOR DISPOSING OF THE APPEAL OF THE ASSESSEE AFRESH BY PASSING A WELL REASONED AND WELL DISCUSSED ORDER ON THE DETAILED SUBMISSIONS MADE BY THE ASSESSEE IN THE LIGHT OF FACTS AND FIGURES PLACED ON RECORD. NEEDLESS TO SAY THAT THE LD. CIT(A) SHALL GIVE A PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JULY, 2017. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31/07/2017 BISWAJIT, SR. PS 6 I.T.A. NO. 1985/KOL/2016 ASSESSMENT YEAR: 2012 -13 N.P. JEWELLERS HOUSE P LTD COPY OF ORDER FORWARDED TO: 1. M/S. N.P. JEWELLERY HOUSE PVT. LTD., OM TOWER, 1 ST FLOOR, P-16, KALAKAR STREET, KOLKATA 700007. 2. DCIT, CIR 9(2), KOLKATA 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, SR. P.S. / H.O.O. ITAT, KOLKATA