M/s. Smart Options Services, Ahmedabad V. ITO, Ward-6(1)(3), Ahmedabad

ITA 2106/AHD/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0508 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 11-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Set aside
• Section: 68; 143(3); 250; 22

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, HONBLE VICE-PRESIDENT AND SHRI RAJPAL YADAV, HONBLE JUDICIAL MEMBER ITA NO. 2106/AHD/2018 ASSESSMENT YEAR : 2015-16 M/S. SMART OPTIONS SERVICE, SF-1, KESHARKUNJ COMPLEX, OPP. AMC SOUTH ZONAL OFFICE, KRISHANBAG CHAR RASTA, MANINAGAR, AHMEDABAD PAN : ACHFS 5154 J V/S . INCOME-TAX OFFICER, WARD-6(1)(3), AHMEDABAD ITA NO. 2107/AHD/2018 ASSESSMENT YEAR : 2015-16 M/S. SMART OPTIONS, SF-1, KESHARKUNJ COMPLEX, OPP. AMC SOUTH ZONAL OFFICE, KRISHANBAG CHAR RASTA, MANINAGAR, AHMEDABAD PAN : ABYFS 0835 L V/S . INCOME-TAX OFFICER, WARD-6(1)(3), AHMEDABAD / (APPELLANT) .. / (RESPONDENT) ASSESSEE BY : SHRI SN DIVATIA, AR REVENUE BY : SHRI LALIT P JAIN, SR DR / DATE OF HEARING : 02/11/2018 /DATE OF PRONOUNCEMENT : 30/11/2018 / O R D E R PER BENCH : THE PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANC E OF THE ASSESSEE AGAINST THE SEPARATE ORDERS OF THE LD. CIT(A)-6, AHMEDABAD, BOTH DATED 19.07.2018, PASSED IN THE CASE OF RESPECTIVE ASSESSEE FOR ASSES SMENT YEAR 2015-16. 2. THE REGISTRY HAS POINTED OUT THAT BOTH THE APPEA LS ARE TIME BARRED BY 22 DAYS. IN ORDER TO EXPLAIN THE DELAY, THE ASSESSEE HAS FILED AN APPLICATION AS WELL ITA NOS. 2106 & 2107 /AHD/2018 SMART OPTIONS SERVICE & SMART OPTIONS AY : 2015- 16 - 2 - AS AFFIDAVIT OF MS. HETAL T. PRAJAPATI, PARTNER OF SMART OPTIONS/SMART OPTIONS SERVICES. IN THE APPLICATION, IT HAS BEEN PLEADED THAT SHRI A.G. PRAJAPATI WAS TAX CONSULTANT OF THE ASSESSEE-FIRM AND HIS DAUGHTER-IN -LAW MS. KENISHA PRAJAPATI WAS HOSPITALIZED ON ACCOUNT OF DENGUE FEVER. HENCE, HE WAS NOT ATTENDING HIS PROFESSIONAL WORK CONSISTENTLY DURING THAT PERIOD. THE APPEALS WERE REQUIRED TO BE FILED ON OR BEFORE 19.09.2018 AND MS. KENISHA PR AJAPATI REMAINED HOSPITALIZED FROM 19.09.2018 TO 26.09.2018. ACCORDING TO THE AS SESSEE, DUE TO ABOVE REASONS, THE APPEALS COULD NOT BE FILED WELL IN TIME AND THE Y BECAME TIME BARRED. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSE SSEE OUGHT TO HAVE MADE ARRANGEMENTS A LITTLE EARLIER IN TIME FOR FILING T HESE APPEALS BEFORE THE TRIBUNAL AND SHOULD NOT HAVE WAITED UP TO LAST DATE. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE RECORD CAREFULLY. AFTER LOOKING TO THE REASONS STATED IN THE APPLICATION, WE ARE SATISFIED THAT THE ASSESSEE HAVE BEEN PREVENTED BY SUFFICIENT REASONS FOR NOT SUBMITTING THEIR APPEALS WELL IN TIME. THE DELAY IS NOT VERY SUBSTANTIVE, IT IS ONLY 22 DAYS. THERE IS NO DELIBERATE ATTEMPT AT THE END OF THE AS SESSEES FOR MAKING THEIR APPEALS TIME BARRED. THE DELAY HAS HAPPENED ON ACC OUNT OF ILLNESS OF THE DAUGHTER-IN-LAW OF THE TAX CONSULTANT WHO REMAINED HOSPITALIZED. CONSIDERING THE ABOVE FACTS, WE CONDONE THE DELAY IN FILING THE APPEALS BEFORE THE TRIBUNAL AND PROCEED TO DISPOSE OF THEM ON MERITS. 4. BEFORE ADVERTING TO THE SPECIFIC GRIEVANCE OF TH E ASSESSEE, WE DEEM IT APPROPRIATE TO TAKE NOTE OF THE BRIEF FACTS. BOTH THE FIRMS AT THE RELEVANT TIME WERE ENGAGED IN FINANCING ACTIVITIES. THEY HAVE FI LED THE RETURN OF INCOME ON 30 TH OCTOBER 2015 DECLARING NIL INCOME. ASSESSMENTS HA VE BEEN FRAMED UNDER SECTION 143(3) OF THE INCOME-TAX ACT ON 19.12.2017. THE LEARNED ASSESSING OFFICER HAS DETERMINED TAXABLE INCOME OF M/S. SMART OPTION SERVICES AT RS. ITA NOS. 2106 & 2107 /AHD/2018 SMART OPTIONS SERVICE & SMART OPTIONS AY : 2015- 16 - 3 - 40,43,92,460/- AND IN THE CASE OF M/S. SMART OPTION S AT RS.14,90,74,330/-. THE COMPUTATION MADE BY THE ASSESSING OFFICER IN BOTH T HE CASES READS AS UNDER:- A. M/S. SMART OPTION SERVICES RETURNED INCOME RS. NIL ADD : UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT AS PER PARA 5.1 RS.24,50,52,200/- ADD : DISALLOWANCE OUT OF INTEREST EXPS. AS PER PAR A 5.2 RS.1,88,28,646/- ADD : DISALLOWANCE OUT OF COMMISSION EXPS. AS PER PARA 5.3 RS.49,21,055/- ADD : INTEREST INCOME NOT OFFERED TO TAX AS PER PAR A 5.4 RS.40,43,92,457/- ASSESSED INCOME: ROUNDED OFF: RS.40,43,92,457/- RS.40,43,92,460/- B. M/S. SMART OPTION RETURNED INCOME RS. NIL ADD : UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT AS PER PARA 5.1 RS.4,67,40,000/- ADD : DISALLOWANCE OUT OF INTEREST EXPS. AS PER PAR A 5.2 RS.58,72,575/- ADD : DISALLOWANCE OUT OF COMMISSION EXPS. AS PER PARA 5.3 RS.24,25,800/- ADD : INTEREST INCOME NOT OFFERED TO TAX AS PER PAR A 5.4 RS.7,03,14,082/- ADD: LOSS FROM SHARE TRADING TREATED AS FROM UNEXPLAINED SOURCE AS PER PARA 5.5 RS.2,37,21,875/- ASSESSED INCOME: ROUNDED OFF: RS.14,90,74,332/- RS.14,90,74,330/- 5. DISSATISFIED WITH THESE ADDITIONS, ASSESSEE CARR IED THE MATTER IN APPEAL BEFORE THE LEARNED FIRST APPELLATE AUTHORITY. THE APPEALS OF THE ASSESSEE(S) HAVE BEEN DISMISSED BY THE LD. CIT(A) FOR WANT OF PROSEC UTION. 6. BEFORE US, THE ASSESSEES HAVE PLEADED THAT LEARN ED CIT(A) FAILED TO GIVE PROPER OPPORTUNITIES OF HEARING TO THE ASSESSEES AN D DISMISSED THEIR APPEALS FOR WANT OF PROSECUTION. ON MERITS, THEY HAVE CHALLENG ED THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER AND CONFIRMED BY THE CIT( A). ASSESSEES MOVED AN APPLICATION FOR EARLY HEARING OF THESE APPEALS. ITA NOS. 2106 & 2107 /AHD/2018 SMART OPTIONS SERVICE & SMART OPTIONS AY : 2015- 16 - 4 - 7. WITH THE ASSISTANCE OF THE LEARNED REPRESENTATIV ES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. AFTER LOOKING TO THE ORDER O F THE CIT(A), WE DEEM IT APPROPRIATE THAT THESE APPEALS BE TAKEN UP FOR EARL Y HEARING BECAUSE LEARNED FIRST APPELLATE AUTHORITY HAS NOT ADJUDICATED THE I SSUES ON MERITS; RATHER DISMISSED THE APPEALS OF THE ASSESSEE(S) FOR WANT O F PROSECUTION. WITH THE CONCURRENCE OF BOTH THE PARTIES, WE HAVE TAKEN UP T HE APPEALS FOR HEARING. IT IS PERTINENT TO OBSERVE THAT SUB-SECTION (6) OF SECTIO N 250 PROVIDES A MECHANISM FOR DISPOSAL OF APPEAL BY THE LEARNED CIT(A). THIS CLA USE READS AS UNDER:- 250 (6) THE ORDER OF THE COMMISSIONER (APPEALS) DISPOSI NG OF THE APPEAL SHALL BE IN WRITING AND SHALL STATE THE POINTS FOR DETERMINATIO N, THE DECISION THEREON AND THE REASON FOR THE DECISION. 8. A PERUSAL OF THIS CLAUSE WOULD INDICATE THAT LEA RNED FIRST APPELLATE AUTHORITY IS REQUIRED TO STATE THE POINTS OF DISPUT E AND THEREAFTER RECORD REASONS IN SUPPORT OF HER CONCLUSIONS ON THOSE POINTS. NO DOUBT, THE LEARNED FIRST APPELLATE AUTHORITY HAS FIXED THE APPEALS FOR HEARI NG ON FOUR OCCASIONS STARTING FROM 8 TH FEBRUARY 2018 UPTO 5 TH JULY 2018. THE HEARING REMAINED TO BE UNATTENDED BY THE ASSESSEES. ACCORDING TO LEARNED C OUNSEL FOR THE ASSESSEE, AN APPLICATION FOR ADJOURNMENT WAS MOVED ON 23.03.2018 , BUT THEREAFTER NO NOTICE WAS RECEIVED BY THE ASSESSEES AND THEIR APPEALS WER E DISMISSED FOR WANT OF PROSECUTION. ON DUE CONSIDERATION OF ABOVE FACTS A ND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LEARNED FIRST APPELLATE AUTHORITY FAILED TO ADHERE TO THE PROCEDURES CONTEMPLATED IN SUB-SECTION (6) OF SECTI ON 250 OF THE INCOME-TAX ACT. THE CIT(A) OUGHT TO HAVE CALLED FOR ASSESSMENT RECO RDS AND PERUSED THE CONFIRMATION ETC. FILED BY THE ASSESSEE AND OUGHT T O HAVE ADJUDICATED THE ISSUES ON MERITS. TO SOME EXTENT, THERE CAN BE AN ALLEGATI ON OF NEGLIGENCE QUA THE ASSESSEE, BECAUSE INSPITE OF FOUR NOTICES, THEY TUR NED UP ONLY ONCE WITH AN APPLICATION FOR ADJOURNMENT; BUT IT IS TO BE KEPT I N MIND THAT THE PUNISHMENT IN ITA NOS. 2106 & 2107 /AHD/2018 SMART OPTIONS SERVICE & SMART OPTIONS AY : 2015- 16 - 5 - THE SHAPE OF TAX LIABILITY ON AN INCOME DETERMINED AT MORE THAN RS.40 LACS AGAINST NIL INCOME IS DISPROPORTIONATE TO THE ALLEGED NEGLI GENCE. 9. SIMILARLY, IN THE CASE OF M/S. SMART OPTIONS, TH E INCOME HAS BEEN DETERMINED AT RS.14,90,74,330/- AS AGAINST NIL INCO ME. THERE IS A SUBSTANTIAL TAX LIABILITY UPON THE ASSESSEE. CONSIDERING THESE COR ROBORATIVE FACTORS ALONG WITH AFORESAID FACTS AND CIRCUMSTANCES, WE DEEM IT PROPE R TO SET ASIDE THE ORDERS OF THE LEARNED CIT(A) IN BOTH THE APPEALS AND RESTORE ALL THESE ISSUES TO THE FILE OF THE LEARNED CIT(A) FOR RE-ADJUDICATION. THE ASSESS EES ARE DIRECTED TO CO-OPERATE WITH LEARNED CIT(A) AND NOT TO SEEK UNNECESSARY ADJ USTMENTS. 10. IN VIEW OF THE ABOVE DISCUSSIONS, BOTH THE APPE ALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 30 TH NOVEMBER, 2018 AT AHMEDABAD. SD/- SD/- (PRAMOD KUMAR) VICE PRESIDENT (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD, DATED 30/11/2018 *BT. / COPY OF THE ORDER FORWARDED TO : 1. $ / THE APPELLANT 2. %&$ / THE RESPONDENT. 3. ( / CONCERNED CIT 4. ( ( ) / THE CIT(A) 5. + %.. , , / DR, ITAT, AHMEDABAD 6. 1 / GUARD FILE. / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) ! ', / ITAT, AHMEDABAD