Inpac Delta India Pvt Ltd, CHENNAI V. ACIT, CHENNAI

ITA 2153/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81141 (ITAT-CHENNAI)
• Duration Of Justice: 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 18-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DURGESH SUMROTT
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Share purchase agreement; Additional evidence
• Section: 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , !' #$ , % '&# '' BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ' ./ ITA NO.2153/MDS/2014 % ( )( / ASSESSMENT YEAR : 2007-08 M/S INPAC DELTA INDIA PVT. LTD. (NOW KNOWN AS STORA ENSO INPAC DELTA INDIA PVT. LTD.), C-6, SIPCOT INDUSTRIAL PARK, IRRUGATTUKOTTAI, SRIPERUMBUDUR, KANCHEEPURAM DISTRICT. PAN : AABCI 4159 G V. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II(3), CHENNAI - 600 034. ($+/ APPELLANT) (-.$+/ RESPONDENT) $+ / ' / APPELLANT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE -.$+ / ' / RESPONDENT BY : SHRI DURGESH SUMROTT, CIT ' 0 / 12 / DATE OF HEARING : 28 TH AUGUST, 2014 34) / 12 / DATE OF PRONOUNCEMENT : 4 TH SEPTEMBER, 2014 / O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE ASSESSEE-COMPAN Y AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III, CHENNAI, DATED 26.06.2014, FOR THE ASSESSMENT YEAR 2007-08. 2 I.T.A. NO. 2153/MDS/14 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUF ACTURING STICKERS, LABELS, POLY BAGS AND USER GUIDE FOR NOKI A AND MOTOROLA CELLPHONES. THE ASSESSEE-COMPANY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 31.10.2007 DECLARING NIL INCOME. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) WAS ISSUED TO THE ASSESSEE ON 24.09.2008. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER MADE AN ADDITION OF ` 88,00,000/- ON ACCOUNT OF INGENUINE LOAN. AGGRIEVED BY THE ASSESSMENT ORDER DATED 29.12.200 9, THE ASSESSEE PREFERRED AN APPEAL BEFORE CIT(APPEALS). BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE SUBMITTED CONFIRM ATION LETTERS FROM THE CREDITORS ALONG WITH THEIR AUDITED ACCOUNT S FOR THE PERIOD ENDING ON 31.03.2007 AND ON 31.03.2008, AND ALSO CO PIES OF THE BANK STATEMENTS AND SHARE CERTIFICATES TO SHOW ALLO TMENT OF SHARES TO THE CREDITORS. THE ASSESSEE ALSO PRODUCED DIREC TOR OF THE LENDING COMPANY. THE CIT(APPEALS) REMITTED ALL THE DOCUMENTS TO THE ASSESSING OFFICER FOR HIS REPORT. THE ASSESSIN G OFFICER, AFTER EXAMINING THE DOCUMENTS, OBJECTED TO THE ADMISSION OF THE DOCUMENTS AS ADDITIONAL EVIDENCE UNDER RULE 46A OF INCOME-TAX RULES, 1962. THE CIT(APPEALS) ACCEPTED THE OBJECTI ONS RAISED BY THE ASSESSING OFFICER AND DISMISSED THE APPEAL OF T HE ASSESSEE VIDE IMPUGNED ORDER. 3 I.T.A. NO. 2153/MDS/14 NOW, THE ASSESSEE HAS COME IN SECOND APPEAL ASSAI LING THE FINDINGS OF THE CIT(APPEALS). 3. SHRI R. VIJAYARAGHAVAN, ADVOCATE, APPEARING ON B EHALF OF THE ASSESSEE, SUBMITTED THAT ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY FROM M/S KEMPOO EXPORTS PVT. LTD. , WHICH WAS SHOWN AS UNSECURED LOAN IN THE ASSESSMENT YEAR UNDE R CONSIDERATION. SUFFICIENT OPPORTUNITY WAS NOT GRAN TED BY THE ASSESSING OFFICER TO PRODUCE CONFIRMATION LETTER FR OM THE DIRECTOR OF M/S KEMPOO EXPORTS PVT. LTD. SINCE, THE DIRECTOR O F THE LENDING COMPANY WAS NOT AVAILABLE DURING THAT PERIOD, THE A SSESSEE COULD NOT GET CONFIRMATION LETTER TO SUPPORT ITS CONTENTI ONS. HOWEVER, THE ASSESSEE HAD FURNISHED COPY OF THE BALANCE SHEET OF M/S KEMPOO EXPORTS PVT. LTD. FOR THE YEAR ENDING ON 31.03.2008 ALONG WITH ITS WRITTEN SUBMISSION ON 25.02.2014. THE ASSESSEE FUR NISHED ALL THE DOCUMENTS THAT WERE AVAILABLE AT THAT TIME. THE AS SESSEE HAD PRAYED FOR SOME MORE TIME TO PRODUCE THE DIRECTOR O F THE COMPANY, BUT, THE A.O. REFUSED TO GRANT FURTHER OPPORTUNITY. THE ASSESSEE PRODUCED THE DIRECTOR OF THE LENDING COMPANY BEFORE THE CIT(APPEALS) ON 25.02.2014. HIS STATEMENT UNDER SE CTION 131 OF THE ACT WAS RECORDED, WHEREIN HE HAS STATED THAT AN AMOUNT OF ` 88,00,000/- WAS GIVEN TO M/S INPAC DELTA INDIA PVT. LTD. DURING THE 4 I.T.A. NO. 2153/MDS/14 FINANCIAL YEAR ENDING ON 31.03.2007. THE LD. COUNS EL FOR THE ASSESSEE FURTHER CONTENDED THAT THE ADDITIONAL EVID ENCE PRODUCED BY THE ASSESSEE BEFORE THE CIT(APPEALS) HAS BEEN RE JECTED FOR FLIMSY REASONS. THE LD. COUNSEL PRAYED FOR ACCEPTI NG THE DOCUMENTS ON RECORD AND ALLOW THE APPEAL AFTER EXAMINING THE SAME. 4. ON THE OTHER HAND, SHRI DURGESH SUMROTT, CIT, RE PRESENTING THE DEPARTMENT, VEHEMENTLY SUPPORTED THE DECISION O F THE AUTHORITIES BELOW. THE LD. D.R. CONTENDED THAT SUF FICIENT OPPORTUNITY WAS GRANTED BY THE ASSESSING OFFICER, BUT THE ASSES SEE FAILED TO PRODUCE ANY DOCUMENT ON RECORD. THE ADDITIONAL EVI DENCE PRODUCED BY THE ASSESSEE BEFORE THE CIT(APPEALS) IS NOT IN CONFORMITY WITH THE PROVISIONS OF RULE 46A OF THE I NCOME-TAX RULES, 1962. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH SIDES AND HAVE EXAMINED THE ORDERS OF AUTHORITIES BELOW. IT IS AN ADMITTED FACT THAT THE ASSESSEE WAS NOT ABLE TO PRODUCE DOCUMENTS BEFORE ASSESSING AUTHORIT Y TO SUPPORT ITS CONTENTIONS. THE ASSESSING AUTHORITY MADE ADDITION OF ` 88,00,000/- IN THE INCOME RETURNED BY THE ASSESSEE, AS UNPROVED CREDITORS. THE CONTENTION OF LD. COUNSEL FOR THE ASSESSEE IS THAT AT THAT TIME, THE DIRECTOR OF THE LENDING COMPANY WAS NOT AVAILABLE, THEREFORE, 5 I.T.A. NO. 2153/MDS/14 CONFIRMATION LETTER COULD NOT BE PRODUCED BEFORE TH E A.O. THE ASSESSEE HAD PRODUCED AUDITED FINANCIAL RECORDS FOR THE FINANCIAL YEAR ENDING ON 31.03.2007 AND ON 31.03.2008 ALONG W ITH THE BANK STATEMENTS AND SHARE CERTIFICATES ALLOTTED TO M/S K EMPOO EXPORTS PVT. LTD. THE ASSESSEE HAS ALSO PLACED ON RECORD RE TURN OF ALLOTMENT IN FORM 2 FILED BEFORE THE CONCERNED REGI STRAR OF COMPANIES. IT IS STATED THAT AGAINST UNSECURED LOA N OF ` 88,00,000/- , THE ASSESSEE HAS ALLOTTED SHARES TO THE LENDING C OMPANY. A PERUSAL OF LIST OF ALLOTTEES PLACED AT PAGE 9 OF TH E PAPER-BOOK FILED BEFORE US SHOWS THAT 1510000 SHARES HAVE BEEN ALLOT TED TO M/S KEMPOO EXPORTS PVT. LTD. ON 06.09.2007. 6. THE ASSESSEE HAS BEEN ABLE TO EXPLAIN THE REASON FOR NON- FURNISHING OF DOCUMENTS AT THE TIME OF ASSESSMENT P ROCEEDINGS. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS RAI SED DOUBTS OVER TWO ISSUES, VIZ. (I) MONIES RECEIVED AS LOAN FROM A BROAD; AND (II) THE AMOUNTS RECEIVED AS LOAN FROM M/S KEMPOO EXPORTS PV T. LTD. THE ASSESSEE WAS ABLE TO FURNISH COPY OF FIRC CERTIFICA TES IN RESPECT OF LOANS RECEIVED FROM ABROAD. HOWEVER, IN RESPECT OF LOAN OF M/S KEMPOO EXPORTS PVT. LTD., THE ASSESSEE WAS NOT ABLE TO FURNISH CONFIRMATION LETTER. 6 I.T.A. NO. 2153/MDS/14 WE ARE OF CONSIDERED VIEW THAT THE ASSESSEE WAS Q UITE AMENABLE TO REINFORCE ITS CLAIM, BUT WAS PREVENTED BY FACTORS BEYOND ITS CONTROL. THE ASSESSEE PRODUCED DOCUMENT S AS SOON AS THEY WERE MADE AVAILABLE TO IT BY THE LENDER. THE ASSESSEE ALSO MADE EFFORT TO PRODUCE THE DIRECTOR OF THE LENDING COMPANY, WHO HAS SUPPORTED THE CASE OF ASSESSEE. IN OUR CONSIDE RED OPINION, THE FILE NEEDS REVISIT TO THE A.O. THE ASSESSING OFFIC ER SHALL TAKE INTO CONSIDERATION ALL THE RELEVANT DOCUMENTS PRODUCED B Y THE ASSESSEE TO SUPPORT ITS CONTENTIONS AND AFTER CONSIDERING TH E SAME, SHALL PASS A FRESH ORDER ON THE ISSUE, IN ACCORDANCE WITH LAW. 7. IN RESULT, THE IMPUGNED ORDER IS SET ASIDE AND A PPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THURSDAY, THE 4 TH OF SEPTEMBER, 2014 AT CHENNAI. SD/- SD/- ( ... ) ( !' #$ ) (DR. O.K. NARAYANAN) (VIKAS AWASTHY) /VICE-PRESIDENT % '&# /JUDICIAL MEMBER /CHENNAI, G& /DATED, THE 4 TH SEPTEMBER, 2014. KRI. 7 I.T.A. NO. 2153/MDS/14 &H / -%1I! J!)1 /COPY TO: 1. $+ /APPELLANT 2. -.$+ /RESPONDENT 3. 0 K1 () /CIT(A)-III, CHENNAI-34 4. 0 K1 /CIT, CHENNAI-III, CHENNAI-34 5. !LM -%1% /DR 6. M( N /GF.