Eastern Copper Manufacturing Co. Pvt. Ltd., Kolkata V. DCIT, Circle-9, Kolkata, Kolkata

ITA 2043/KOL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2054 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 24-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 68

Judgement Text

1 ITA NO. 2043/KOL/2016 EASTERN COPER MANUFACTURING CO., AY 2011-12 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 2043/KOL/2016 ASSESSMENT YEAR: 2011-12 EASTERN COPPER MANUFACTURING CO. (PAN: AAACE7015Q) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-9, KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 19.09.2018 DATE OF PRONOUNCEMENT 16.11.2018 FOR THE APPELLANT SHRI SUBASH AGARWAL, ADVOCATE FOR THE RESPONDENT SHRI KAPIL MONDAL, JCIT, SR. DR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE ASSESSEE IS AGAINST TH E ORDER OF THE LD. CIT(A)-16, KOLKATA DATED 30.08.2016 FOR AY 2011-12. 2. GROUND NO.2 OF ASSESSEES APPEAL IS AGAINST THE ORDER OF LD. CIT(A) IN CONFIRMING THE ADDITION MADE BY THE AO OF RS.1,70,00,000/- BY INVO KING SEC. 68 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON ACCO UNT OF RECEIPT OF SHARE APPLICATION MONEY. 3. BRIEFLY STATED FACTS ARE THAT DURING THE COURSE OF ASSESSMENT, THE AO OBSERVED THAT THE ASSESSEE RAISED SHARE APPLICATION MONEY TO THE TUNE OF RS.1.7 CR. AGAINST WHICH SHARES WERE ALLOTTED IN THE NEXT YEAR CONSISTING OF 34000 SHARE S OF FACE VALUE OF RS. 10/- EACH ISSUED AT A PREMIUM OF RS. 490/- PER SHARE. THE ASSESSEE WAS A SKED TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE PERSONS THROUGH WHOM MONEY WERE TAKEN, BUT, ACCORDING TO AO, SINCE NO COMPLIANCE WAS MADE BY THE ASSESSEE COMPAN Y, THE AO MADE AN ADDITION OF RS.1,70,00,000/-. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ACTION OF AO. AGGRIEVED, ASSESSEE PR EFERRED THIS APPEAL BEFORE US. 2 ITA NO. 2043/KOL/2016 EASTERN COPER MANUFACTURING CO., AY 2011-12 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. AT THE OUTSET, THE LD. AR BROUGHT TO OUR NOT ICE THAT NO PROPER OPPORTUNITY WAS GIVEN TO THE ASSESSEE BY THE AO WHEN HE FRAMED THE ASSESS MENT. ACCORDING TO LD. AR, NEITHER PROPER OPPORTUNITY WAS GIVEN TO THE ASSESSEE BY THE AO TO DISCHARGE THE ONUS CASTED UPON IT TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINE NESS OF TRANSACTION OF SHARES INTRODUCED IN THE ASSESSEE COMPANY NOR THE AO PROVIDED THE REM AND REPORT WHICH WAS SOUGHT FOR BY THE LD. CIT(A). IT WAS BROUGHT TO OUR NOTICE BY THE LD. AR THAT THE NOTICES HAVE BEEN SERVED ON FEW SHARE SUBSCRIBERS. WE NOTE THAT THE ENTIRE ADDITION HAS BEEN MADE ON THE BASIS THAT THE DIRECTORS OF THE ASSESSEE COMPANY DI D NOT APPEAR FOR THAT IT WAS BROUGHT TO OUR NOTICE THAT THE ASSESSEE GOT ONLY ONE WEEKS NOTICE PERIOD WHICH WAS INSUFFICIENT BECAUSE DIRECTORS WERE OUT OF TOWN, SO COULD NOT ATTEND THE HEARING BEFORE AO. IN THE LIGHT OF THE ABOVE, WE FIND THAT NO PROPER OPPORTUNITY WAS GIVEN TO ASSESSEE BY AO DURING THE ASSESSMENT PROCEEDINGS. THEREFORE, WE ARE INCLINED TO SET ASIDE THE ORDER OF LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF AO BY APPLYING TH E RATIO OF THE DECISION OF HONBLE (THREE JUDGE BENCH) OF THE HONBLE SUPREME COURT IN TIN BO X COMPANY VS. CIT (2001) 249 ITR 216 (SC) WHEREIN IT HAS BEEN HELD AS UNDER: IT IS UNNECESSARY TO GO INTO GREAT DETAIL IN THESE MATTERS FOR THERE IS A STATEMENT IN THE ORDER OF T HE TRIBUNAL, THE FACT-FINDING AUTHORITY, THAT READS TH US : WE WILL STRAIGHTAWAY AGREE WITH THE ASSESSEES SUB MISSION THAT THE INCOME-TAX OFFICER HAD NOT GIVEN TO THE ASSESSEE PROPER OPPORTUNITY OF BEI NG HEARD. THAT THE ASSESSEE COULD HAVE PLACED EVIDENCE BEFORE THE FIRST APPELLATE AUTHORITY OR BEFORE THE TRIBUNAL IS REALLY OF NO CONSEQUENCE FOR IT IS THE ASSESSMENT ORDER THAT COUNTS. THAT ORDER MUST BE MADE AFTER THE ASSESSEE HAS BEEN GIVEN A RE ASONABLE OPPORTUNITY OF SETTING OUT HIS CASE. WE, THEREFORE, DO NOT AGREE WITH THE TRIBUNAL AND THE HIGH COURT THAT IT WAS NOT NECESSARY TO SET ASIDE THE ORDER OF ASSESSMENT AND REMAND THE MATTER TO THE ASSESSING AUTHORITY FOR FRESH ASSESSMENT AFTER GIVING TO THE ASSESSEE A PROPER OPPORTUNITY OF BEING HEARD. TWO QUESTIONS WERE PLACED BEFORE THE HIGH COURT, OF WHICH THE SECOND QUESTION IS NOT PRESSED. THE FIRST QUESTION READS THUS : 1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN NOT SETTING ASIDE THE ASSESSMENT ORDER IN SPITE OF A FINDING ARRIVED AT BY IT THAT THE INCOME- TAX OFFICER HAD NOT GIVEN A PROPER OPPORTUNITY OF H EARING TO THE ASSESSEE ? IN OUR OPINION, THERE CAN ONLY BE ONE ANSWER TO THI S QUESTION WHICH IS INHERENT IN THE QUESTION ITSELF : IN THE NEGATIVE AND IN FAVOUR OF THE ASSESSEE. 3 ITA NO. 2043/KOL/2016 EASTERN COPER MANUFACTURING CO., AY 2011-12 THE APPEALS ARE ALLOWED. THE ORDER UNDER CHALLENGE IS SET ASIDE. THE ASSESSMENT ORDER, THAT OF THE COMMISSIONER (APPEALS) AND OF THE TRIBUNAL A RE ALSO SET ASIDE. THE MATTER SHALL NOW BE REMANDED TO THE ASSESSING AUTHORITY FOR FRESH CO NSIDERATION, AS AFORESTATED. 5. WE ALSO NOTE THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JANSAMPARK ADVERTISING & MARKETING PVT. LTD. IN ITA NO. 525/20 14 DATED 11.03.2015 WHEREIN AFTER NOTICING INADEQUATE ENQUIRY BY AUTHORITIES BELOW HA VE HELD AS UNDER: 41. WE ARE INCLINED TO AGREE WITH THE CIT(APPEALS) , AND CONSEQUENTLY WITH ITAT, TO THE EXTENT OF THEIR CONCLUSION THAT THE ASSESSEE HEREIN HAD COME UP WITH SOME PROOF OF IDENTITY OF SOME OF THE ENTRIES IN QUESTION. BUT, FROM THIS INF ERENCE, OR FORM THE FACT THAT THE TRANSACTIONS WERE THROUGH BANKING CHANNELS, IT DOES NOT NECESSAR ILY FOLLOWING THAT SATISFACTION AS TO THE CREDITWORTHINESS OF THE PARTIES OR THE GENUINENESS OF THE TRANSACTIONS IN QUESTION WOULD ALSO HAVE BEEN ESTABLISHED. 42. THE AO HERE MAY HAVE FAILED TO DISCHARGE HIS OB LIGATION TO CONDUCT A PROPER INQUIRY TO TAKE THE MATTER TO LOGICAL CONCLUSION. BUT CIT(APPE ALS), HAVING NOTICED WANT OF PROPER INQUIRY, COULD NOT HAVE CLOSED THE CHAPTER SIMPLY B Y ALLOWING THE APPEAL AND DELETING THE ADDITIONS MADE. IT WAS ALSO THE OBLIGATION OF THE F IRST APPELLATE AUTHORITY, AS INDEED OF ITAT, TO HAVE ENSURED THAT EFFECTIVE INQUIRY WAS CARRIED OUT, PARTICULARLY IN THE FACT OF THE ALLEGATIONS OF THE REVENUE THAT THE ACCOUNT STATEME NTS REVEAL UNIFORM PATTERN OF CASH DEPOSITS OF EQUAL AMOUNTS IN THE RESPECTIVE ACCOUNTS PRECEDI NG 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 BY THE AO, AS ALSO T HE MATERIAL SUBMITTED AT THE STAGE OF APPEALS, IF DEEMED PROPER BY WAY OF MAKING OR CAUSI NG TO BE MADE A 'FURTHER INQUIRY IN EXERCISE OF THE POWER UNDER SECTION 250(4). HIS APP ROACH NOT HAVING BEEN ADOPTED, THE IMPUGNED ORDER OF ITAT, AND CONSEQUENTLY THAT OF CI T(APPEALS), CANNOT BE APPROVED OR UPHELD.' 6. IN THE LIGHT OF THE HONBLE SUPREME COURTS DECI SION IN TIN BOX COMPANY (SUPRA), AND TAKING NOTE OF HONBLE DELHI HIGH COURTS ORDER IN JANSAMPARK ADVERTISING & MARKETING PVT. LTD. (SUPRA), AND SINCE THE LD DR CO ULD NOT CONTRADICT THE FACT THAT ASSESSEE DID NOT GET PROPER OPPORTUNITY BEFORE THE AO DURING ASSESSMENT PROCEEDINGS, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MATTER B ACK TO THE FILE OF AO FOR DE NOVO ASSESSMENT AND TO DECIDE THE MATTER IN ACCORDANCE T O LAW AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 16/11/201 8 SD/- SD/- (DR. A. L. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16TH NOVEMBER, 2018 JD.(SR.P.S.) 4 ITA NO. 2043/KOL/2016 EASTERN COPER MANUFACTURING CO., AY 2011-12 COPY OF THE ORDER FORWARDED TO: 1 APPELLANT EASTERN COPPER MANUFACTURING CO. PVT. L TD., 42/1, STRAND ROAD, 2 ND FLOOR, KOLKATA-700 007. 2 RESPONDENT DCIT, CIRCLE-9, KOLKATA. 3 4 5 CIT(A)-16, KOLKATA. (SENT THROUGH E-MAIL) CIT , KOLKATA DR, KOLKATA BENCHES, KOLK ATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR