Panagarh Cold Storage Pvt. Ltd., Burdwan V. ACIT, Circle - 2, Durgapur, Durgapur

ITA 2034/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54509 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2011
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 02-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 11-11-2010
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Keywords: Bogus Share capital; Depreciation; Opportunity of being heard
• Section: 43B; 68; 144

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [ () , , . .. . ! ! ! !. .. . , , , , '# ] ]] ] [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE S RI C. D. RAO, AM] % % % % /ITA NO.2034/KOL/20 1 11 1 0 '( )*/ ASSESSMENT YEAR : 2005-06 (,- / APPELLANT ) - ' - ( /0,- /RESPONDENT) PANAGARH COLD STORAGE PVT.LTD.. -VERSUS- A.C.I.T., CIRCLE-2,DURGAPUR PANAGRAH (PAN: AADCP 3246 P) % % % % /ITA NO.2152/KOL/20 10 '( )*/ ASSESSMENT YEAR : 2005-06 (,- / APPELLANT ) - ' - ( /0,- /RESPONDENT) .A.C.I.T., CIRCLE-2, DURGAPUR PANAGARH COLD STORAGE PVT.LTD.. PANAGRAH (PAN: AADCP 3246 P) ,- 1 2 '/ FOR THE APPELLANT: SHRI SHUVO CHAKRABORTY /0,- 1 2 '/ FOR THE RESPONDENT: SHRI NIRAJ KUMAR '3 / ORDER ( (( ( . .. . ! ! ! !. .. . ) )) ), , , , '# PER SHRI C.D.RAO, AM THE ABOVE TWO APPEALS ONE FILED BY ASSESSEE AND TH E OTHER FILED BY THE REVENUE ARE AGAINST ORDER DATED 23.09.2010 OF CIT( A)-DURGAPUR PERTAINING TO ASSESSMENT YEAR 2005-06 2. ITA NO.2034/KOL/2010(BY THE ASSESSEE) : THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL :- 1. FOR THAT THERE IS NO BASIS OF LD.CIT(A)S FINDI NG REGARDING APPLICABILITY OF 44AF IN APPELLANTS CASE SINCE THE APPELLANT IS ENG AGED IN COLD STORAGE BUSINESS AND THERE IS NO IOTA OF CONNECTION WITH RE TAIL TRADE. MOREOVER THE AMOUNT TREATED BOTH BY AO AS WELL AS CIT(A) AS PEAK TURNOVER FROM RETAIL BUSINESS IS ACTUALLY LOAN ADVANCED TO FARMERS UNDER AGRICULTURAL MARKETING PRODUCED LOAN SCHEME. HENCE SUCH APPELLATE ORDER LA CKS CREDENTIALS AND IS LIABLE TO BE QUASHED. 2 2. FOR THAT IMPUGNED CONFIRMATION OF RS.70 LACS ON SHA RE ACCOUNT DUE TO LACK OF CREDITWORTHINESS OF SHARE HOLDERS HAVE NO MATERI ALS SUBSTANCE SINCE THE CONFIRMATIONS, NAME ADDRES OF SAID SHARE HOLDERS WE RE SUBMITTED AT APPELLATE STAGE ALONG WITH ROC RETURN COPY. THE INA BILITY OF APPELLANT TO PRODUCE THE PAN OR IT FILE OF THE SHARE HOLDERS DUE TO THEY BEING MOSTLY POOR FARMERS HAVING NO TAXABLE INCOME OR BANK ACCOU NT. HENCE ALLEGATION OF ABSENCE OF CREDITWORTHINESS IS BASELESS, PERVERS E AND SUCH ADDITION IS LIABLE TO BE DELETED. 3. FOR THAT CONFIRMATION OF ADDITION ON SECURED LOAN W AS NOT JUSTIFIED SINCE ALL RELEVANT DOCUMENTS IN THE FORM OF PAPER BOOK WAS PR ODUCED BEFORE APPELLANT AUTHORITY AT THE TIME OF HEARING. 4. FOR THAT ALLOWANCE OF DEPRECIATION ADDITION SUBJECT TO VERIFICATION BY A.O. IS CONFOUNDING AND UNSATISFACTORY SINCE ALL RELEVAN T BILLS AND OTHER ALLIED DOCUMENTS WERE PRODUCED BEFORE CIT(A) IN THE FORM O F PAPER BOOK. WHERE BY SUCH SEGREGATION COULD HAVE DONE. 5. FOR THAT ALLOWANCE OF SUNDRY CREDITORS ADDITION SU BJECT TO VERIFICATION BY AO IS NOT SATISFACTORY SINCE THE CIT(A) HAD SUCH SC OPE IN REMAND PROCEEDINGS WHICH HE DID NOT. THEREFORE ANY ORDER F OR SUBSEQUENT VERIFICATION IS BAD IN LAW AND SUFFER FORM PROCEDUR AL INFIRMITIES. 6. FOR THAT ALLOWANCE OF CLOSING STOCK SUBJECT TO VERI FICATION BY AO IS UNSATISFACTORY SINCE SUCH VERIFICATION COULD HAVE B EEN DONE IN REMAND HEARING. BUT LD.APPELLATE AUTHORITY AND A.O. AS WEL L DITHERED THEIR RESPONSIBILITY TO DO SO. 7. FOR THE APPELLANT CRAVES LEAVE TO ADDUCE FURTHER GR OUND OR GROUNDS AT THE TIME OF HEARING. ITA NO.2152/KOL/2010(BY THE REVENUE) : 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE HONBLE CIT(A) DURGAPUR WAS NOT JUSTIFIED IN DELETING RS.30 LAKH O UT OF THE ADDITION OF RS.1 CRORE U/S 68 OF THE I.T.ACT, 1961 MADE BY THE ASSES SING OFFICER ON ACCOUNT OF SHARE CAPITAL AND SHARE PREMIUM RECEIVED BY THE ASS ESSEE FOR WHICH NO DETAILS WERE SUBMITTED AT THE ASSESSMENT STAGE. 3. THE BRIEF FACTS OF THIS CASE ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF MAINTAINING A COLD STORAGE. THE CASE WAS TAKEN FOR SCRUTINY AND ASSESSEE HAS BEEN GIVEN SEVERAL OPPORTUNITIES TO SUBMIT THE DETAILS C ALLED FOR BY AO. BUT NO COMPLIANCE WAS MADE TO AO AS A RESULT AO COMPLETED ASSESSMENT U/S 144 BY MAKING THE FOLLOWING ADDITIONS :- THE FIRST ADDITION OF RS.2,00,000/- WAS MADE UNDER INCOME FROM RETAIL TRADE OR BUSINESS NOT DISCLOSED. THE SECOND ADDITION OF RS.1 00 LAC WAS MADE ON UNEXPLAINED SHARE CAPITAL ACCOUNT COMPRISING OF RS.10 LAC OF SH ARE CAPITAL AND RS.90 LAC ON 3 ACCOUNT OF SHARE PREMIUM ACCOUNT. AO ADD BACK THE A MOUNT SINCE SUCH AMOUNT REMAINED UNVERIFIABLE. THIRD ADDITION OF RS.604437/ - WAS MADE AS UNDISCLOSED CASH CREDIT WHICH WAS SHOWN AS SECURED LOAN SHOWING AS C LOSING BALANCE. THE FOURTH ADDITION OF RS.401666/- WAS MADE AS UNALLOWABLE DEP RECIATION SINCE THE ABSENCE OF RESPECTIVE DATES OF INSTALLATION/DATES ON WHICH THE SAME WERE PUT TO USE. ACCORDINGLY 50% OF TOTAL DEPRECIATION CLAIM WAS DISALLOWED. THE FIFTH ADDITION OF RS.2300134/- ON ACCOUNT OF CURRENT LIABILITY OUTSTANDING U/S 43B SI NCE SUCH LIABILITY WAS NOT ASCERTAINABLE FROM RECORDS. THE SIXTH ADDITION OF R S.294274/- WAS ADDED AS SUPPRESSED CLOSING STOCK ON ACCOUNT OF PURCHASES OF AMMONIA GAS. 3.1. ON APPEAL LD. CIT(A) AFTER TAKING INTO CONSIDE RATION OF THE SUBMISSIONS MADE BY ASSESSEE AND THE REMAND REPORT SUBMITTED BY AO D ATED 31 ST OCTOBER, 2008 HAS DELETED THE ADDITION OF RS.30,00,000/- ON ACCOUNT OF SHARE APPLICATION MONEY AND CONFIRMED THE BALANCE OF RS.70,00,000/- ALONG WITH THE OTHER ADDITIONS MADE BY AO. 3.2. AGGRIEVED BY THIS NOW ASSESSEE AND THE REVENUE IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING, THE LD. COUNSEL APPEARIN G ON BEHALF OF ASSESSEE HAS SUBMITTED THAT LD.CIT(A) HAS CONFIRMED THE ADDITION OF SHARE CAPITAL WITHOUT APPRECIATING THE FACT THAT ON COMPANIES MATTER VERI FICATION AND ESTABLISHMENT OF IDENTITY OF SHAREHOLDERS IS SUFFICIENT WHICH WAS NO T DONE NEITHER IN ASSESSMENT STAGE NOR IN REMAND STAGE IN SPITE OF PRODUCTION OF CONFI RMATIONS OF SHAREHOLDERS AT APPELLATE STAGE. A.O. NEVER BOTHERED TO ENQUIRE ABO UT THE IDENTITY OF SHAREHOLDERS AND MADE ADDITION ARBITRARILY. THEREFORE HE REQUESTED T O SET ASIDE THE ISSUE TO THE FILE OF AO TO DO THE DENOVO ASSESSMENT. 5. ON THE OTHER HAND, THE LD. DR APPEARING ON BEHAL F OF THE REVENUE SUBMITTED THAT SINCE THE REVENUE IS ALSO IN APPEAL IN RESPECT OF THE DELETION OF RS.30,00,000/- ON ACCOUNT OF SHARE CAPITAL, HAS NOT OBJECTED FOR SETT ING ASIDE THE ISSUE TO THE FILE OF AO FOR FRESH ADJUDICATION. 4 6. AFTER HEARING THE RIVAL SUBMISSIONS AND AFTER TA KING INTO CONSIDERATION THE SUBMISSIONS OF THE LD. COUNSEL FOR ASSESSEE AND ON CAREFUL PERUSAL OF THE GROUNDS TAKEN BY ASSESSEE AS WELL AS THE IMPUGNED ORDERS KE EPING IN VIEW OF THE FACT THAT THE ORIGINAL ASSESSMENT PASSED BY AO U/S 144 (BEST TO J UDGEMENT ASSESSMENT) AND ASSESSEE NOW IS IN A POSITION TO SUBSTANTIATE THE C LAIM OF ASSESSEE WE CONSIDERATE IT FIT TO SET ASIDE BOTH THE APPEALS I.E. REVENUES AS WEL L AS ASSESSEES TO THE FILE OF AO FOR FRESH ADJUDICATION TO FRAME DENOVO ASSESSMENT AFTER TAKING INTO CONSIDERATION THE DOCUMENTS FILED BY ASSESSEE AND AFTER GIVING A REAS ONABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE. 7. IN THE RESULT THE APPEALS OF THE ASSESSEE AND TH E REVENUE ARE ALLOWED IN PART FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29.08.2011. SD/- SD/- [ , ] [ . !., '# ] [ MAHAVIR SINGH ] [ C. D. RAO ] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (!# !# !# !#) )) ) DATE: 29.08.2011. R.G.(.P.S.) '3 1 /4 5'4)6- COPY OF THE ORDER FORWARDED TO: 1. PANAGARH COLD STORAGE PVT. LTD., BARADA BHAVAN, PAN AGARH BAZAR, G.T.ROAD, PANAGARH. 2 THE I.T.O., WARD-ACUT-2, DURGAPUR. 3. THE CIT, 4. THE CIT(A)- DURGAPUR. 5. DR, KOLKATA BENCHES, KOLKATA 04 // TRUE COPY, '3':/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES