CENTROID CAPITAL PVT. LTD, MUMBAI V. INCOME TAX OFFICER 9(2) (2) , MUMBAI

ITA 2182/MUM/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 9567 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 29-11-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Unexplained cash credit; Unexplained investment; Revision of order; Opportunity of being heard; Principle of natural justice; Set aside
• Section: 69; 234B; 250; 264

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) ITA No. 2182/MUM/2021 Assessment Year: 2013-14 Centroid Capital Private Limited, 8, Ajanta, Veera Desai Road, Andheri (West), Mumbai-400058. Vs. ITO-9(2)(2), Room No. 601A, 6 th floor, Aayakar Bhavan, M.K. Road, Mumbai-400020. PAN No. AADCC 4546 R Appellant Respondent Assessee by : Mr. Jitendra Singh, AR Revenue by : Mr. Ajeya Kumar Ojha, DR Date of Hearing : 30/06/2022 Date of pronouncement : 07/07/2022 ORDER PER OM PRAKASH KANT, AM This appeal has been preferred by the assessee against the order dated 26.06.2019 passed by the Ld. Commissioner of Income- tax (Appeals)-16, Mumbai [in short ‘the Ld. CIT(A)’], for assessment year 2013-14, raising following grounds: 1. The Ld. Commissioner of Income Tax (Appeals) [hereinafter referred to as the "Ld. CIT(A)"] erred in passing the order dated 24.06.2019 up Tax Officer A.O.'] in making various additions and disallowances without appreciating the facts and circumstances of the case. Thus, the order dated 24.06.2019 passed b the same may be quashed. 2. Appellate Order passed without providing the Appellant an appropriate opportunity of being heard is bad in law i. ii. Centroid Capital Private Limited The Ld. Commissioner of Income Tax (Appeals) - [hereinafter referred to as the "Ld. CIT(A)"] erred in passing the order dated 24.06.2019 upholding the action of the Ld. Income Tax Officer - 9(2)(2), Mumbai [hereinafter referred to as 'Ld. A.O.'] in making various additions and disallowances without appreciating the facts and circumstances of the case. Thus, the order dated 24.06.2019 passed by Ld. CIT(A) is bad in law and the same may be quashed. Appellate Order passed without providing the Appellant an appropriate opportunity of being heard is bad in law The Ld. CIT(A) erred in passing the impugned order dated 24.06.2019 under section 250 of the Act without providing the Appellant an appropriate opportunity of being heard. Thus, the impugned appellate order is passed in gross violation of principles of natural justice and the same may be quashed and set aside. The Ld. CIT(A) failed to appreciate that during the period when the notices were issued the Appellant's Director were not available in India. The notices were issued in physical form whereas the Applicant had requested to issue the notices on email id provided in Form No. 35. Thus, the various notices issued by Ld. CIT(A) were not received by the Directors of the Appellant. Hence, the same were remained to be compiled with. The Appellant, therefore, prays that the impugned order dated 24.06.2019 may be set aside and an opportunity of being heard may be provided to the Appellant to explain its case. Centroid Capital Private Limited ITA No. 2182/M/2021 2 - 16, Mumbai [hereinafter referred to as the "Ld. CIT(A)"] erred in passing the holding the action of the Ld. Income 9(2)(2), Mumbai [hereinafter referred to as 'Ld. A.O.'] in making various additions and disallowances without appreciating the facts and circumstances of the case. Thus, the y Ld. CIT(A) is bad in law and Appellate Order passed without providing the Appellant an appropriate opportunity of being heard is bad in law The Ld. CIT(A) erred in passing the impugned order the Act without providing the Appellant an appropriate opportunity of being heard. Thus, the impugned appellate order is passed in gross violation of principles of natural justice and the same may be quashed and set aside. ate that during the period when the notices were issued the Appellant's Director were not available in India. The notices were issued in physical form whereas the Applicant had requested to issue the notices on email id provided in arious notices issued by Ld. CIT(A) were not received by the Directors of the Appellant. Hence, the same were remained to be compiled with. The Appellant, therefore, prays that the impugned order dated 24.06.2019 may be set aside and g heard may be provided to the 3. Addition by treating the term deposit with the Shamrao Vithal Co-operative Bank as unexplained investment under section 69 of the Act unjustified i. ii. 4. The appellant denies any liability to pay interest under section 234A, 234B and 234C of the Act. Hence, 2. At the outset, the Ld. counsel of the assessee submitted that the appeal has been filed on 30.11.2021, but Centroid Capital Private Limited Addition by treating the term deposit with the Shamrao Vithal operative Bank as unexplained investment under section 69 of the Act unjustified - Rs.10,00,000/- The Ld. CIT(A) erred in upholding the action of Ld. A.O. in treating the term deposit of Rs.10,00,000/ the Shamrao Vithal Co-operative Bank Ltd as Unexplained Cash Credit under section 69 of the Act without appreciating the fact and circumstances of the case in proper perspective. Hence, the addition of Rs.10,00,000/- under section 69 of the Act is unjustified and the same may be deleted. The Ld. CIT(A) failed to appreciate that the term deposit with the Shamrao Vithal Co-operative Bank Ltd represents initial contribution made by the Directors of the Appellant on the formation of the Appellant company. Thus, the term deposit was made out of funds available with the Directors of the Appellant company. The Appellant, therefore, prays that provisions of section 69 of the Act are not applicable in its case. Hence, addition of Rs.10,00,000/- under section 69 of the Act is against the provisions of law and the same may be deleted. The appellant denies any liability to pay interest under section 234A, 234B and 234C of the Act. Hence, the same are leviable. At the outset, the Ld. counsel of the assessee submitted that the al has been filed on 30.11.2021, but it is within limitation Centroid Capital Private Limited ITA No. 2182/M/2021 3 Addition by treating the term deposit with the Shamrao Vithal operative Bank as unexplained investment under section 69 ding the action of Ld. A.O. in treating the term deposit of Rs.10,00,000/- kept with operative Bank Ltd as Unexplained Cash Credit under section 69 of the Act without appreciating the fact and circumstances of the ective. Hence, the addition of under section 69 of the Act is unjustified The Ld. CIT(A) failed to appreciate that the term deposit operative Bank Ltd de by the Directors of the Appellant on the formation of the Appellant company. Thus, the term deposit was made out of funds available with the Directors of the Appellant company. The Appellant, therefore, prays that provisions of section not applicable in its case. Hence, under section 69 of the Act is against the provisions of law and the same may be The appellant denies any liability to pay interest under section the same are leviable. At the outset, the Ld. counsel of the assessee submitted that the it is within limitation. In view of fact that order of the Ld. CIT(A) though was passed on 24.06.2019 it was receive counsel of the assessee submitted that the Director of the assessee company is a non-resident Indian and residing since August 2001. The Ld. counsel has filed a copy of affidavit by the said Director Shri Subodh Ketkar. In the said affidavit, it is submitted that he being outside India could not be received and it came to the knowledge in September 2021. The Ld. counsel submitted that on receipt of the said order of the Ld. CIT(A), the assessee has duly filed the appeal on 30.11.2021. The Ld. counsel submitted that it is a sufficient cause for filing the appeal with a delay. 3. The Ld. DR could not controvert the facts stated by the Ld. counsel of the assessee. Centroid Capital Private Limited view of fact that order of the Ld. CIT(A) though was passed on 24.06.2019 it was received by the assessee on 03.09.2021. The Ld. counsel of the assessee submitted that the Director of the assessee resident Indian and residing in New Jersey, USA since August 2001. The Ld. counsel has filed a copy of affidavit by tor Shri Subodh Ketkar. In the said affidavit, it is submitted that he being outside India, the order of the Ld. CIT(A) could not be received and it came to the knowledge in September 2021. The Ld. counsel submitted that on receipt of the id order of the Ld. CIT(A), the assessee has duly filed the appeal on 30.11.2021. The Ld. counsel submitted that it is a sufficient cause for filing the appeal with a delay. The Ld. DR could not controvert the facts stated by the Ld. essee. Centroid Capital Private Limited ITA No. 2182/M/2021 4 view of fact that order of the Ld. CIT(A) though was passed on d by the assessee on 03.09.2021. The Ld. counsel of the assessee submitted that the Director of the assessee- New Jersey, USA since August 2001. The Ld. counsel has filed a copy of affidavit by tor Shri Subodh Ketkar. In the said affidavit, it is the order of the Ld. CIT(A) could not be received and it came to the knowledge of the assessee in September 2021. The Ld. counsel submitted that on receipt of the id order of the Ld. CIT(A), the assessee has duly filed the appeal on 30.11.2021. The Ld. counsel submitted that it is a sufficient cause for The Ld. DR could not controvert the facts stated by the Ld. 4. In our opinion, appeal on time by the assessee residing outside India and there was no active business carried out by the company. It is seen from the affidavit of assessee-company that there was no proper communication to the assessee about outcome of the proceedin CIT. There is delay in communication of the by the person looking a view of the above facts, we condone same is admitted for adjudication. 5. On perusal of the order of the Ld. CIT(A), we find that order has been passed ex-parte the notices issued by the Ld. CIT(A). In our opinion, the Ld. CIT(A) is required to decide the issue on merit even representation on behalf of the assessee. Centroid Capital Private Limited In our opinion, there exists a sufficient cause for not filing appeal on time by the assessee, being the Director of the company residing outside India and there was no active business carried out It is seen from the affidavit of the Director of the company that there was no proper communication to the assessee about outcome of the proceedings u/s 264 before the Ld. . There is delay in communication of the order of looking after income-tax affairs of assessee in India. f the above facts, we condone the delay in filing appeal and same is admitted for adjudication. On perusal of the order of the Ld. CIT(A), we find that order parte qua the assessee due to non the notices issued by the Ld. CIT(A). In our opinion, the Ld. CIT(A) is required to decide the issue on merit even when representation on behalf of the assessee. Centroid Capital Private Limited ITA No. 2182/M/2021 5 sufficient cause for not filing being the Director of the company residing outside India and there was no active business carried out the Director of the company that there was no proper communication to the gs u/s 264 before the Ld. order of the Ld. CIT(A) tax affairs of assessee in India. In the delay in filing appeal and On perusal of the order of the Ld. CIT(A), we find that order ee due to non-compliance of the notices issued by the Ld. CIT(A). In our opinion, the Ld. CIT(A) is when there is no 6. Before us, the assessee has justified the reason of non compliance and the Ld. counsel of the assessee has given undertaking to comply before the Ld. CIT(A). In view of the above and in interest of substantial justice the Ld. CIT(A) for deciding afresh in accordance with law providing adequate opportunity of being heard as well as to the Assessing Officer assessee are accordingly allowed for statistical purposes. 7. In the result, the appeal of the assessee is allowed for s purposes. Order pronounced in the Court on Sd/- (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Dated: 07/07/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- Centroid Capital Private Limited Before us, the assessee has justified the reason of non compliance and the Ld. counsel of the assessee has given undertaking to comply before the Ld. CIT(A). In view of the above interest of substantial justice, we restore the matter back for deciding afresh in accordance with law providing adequate opportunity of being heard, both to the assessee as well as to the Assessing Officer. The grounds assessee are accordingly allowed for statistical purposes. In the result, the appeal of the assessee is allowed for s ounced in the Court on 07/07/2022. Sd/- SANDEEP SINGH KARHAIL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT Copy of the Order forwarded to : Centroid Capital Private Limited ITA No. 2182/M/2021 6 Before us, the assessee has justified the reason of non- compliance and the Ld. counsel of the assessee has given undertaking to comply before the Ld. CIT(A). In view of the above the matter back to for deciding afresh in accordance with law after both to the assessee s raised by the assessee are accordingly allowed for statistical purposes. In the result, the appeal of the assessee is allowed for statistical OM PRAKASH KANT) MEMBER 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// Centroid Capital Private Limited BY ORDER, (Sr. Private Secretary ITAT, Mumbai Centroid Capital Private Limited ITA No. 2182/M/2021 7 Sr. Private Secretary) ITAT, Mumbai