Kothari Rajendra Bansilal, Ahmednagar V. Income-tax Officer,

ITA 2186/PUN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0490 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 20-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Opportunity of being heard; Principle of natural justice; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . . , BEFORE SHRI R.K. PANDA, AM . / ITA NO.2186/PN/2016 / ASSESSMENT YEAR : 2007-08 KOTHARI RAJENDRA BANSILAL, PROP. OF R.K.ENGINEERS, L-219, MIDC, NAGAR, AHMEDNAGAR 414001 PAN : AFAPK1833Q . / APPELLANT V/S ITO, WARD-1, AHMEDNAGAR . / RESPONDENT / APPELLANT BY : SHRI PRAMOD SHINGTE / RESPONDENT BY : SHRI HITENDRA NINAWE / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 08-05-2016 OF THE CIT(A)-II, PUNE RELATING TO ASSE SSMENT YEAR 2007-08 2. THERE WAS A DELAY OF 2 DAYS IN FILING OF THIS APPEAL BY TH E ASSESSEE FOR WHICH THE ASSESSEE HAS FILED A PETITION SEEKIN G CONDONATION OF DELAY. AFTER HEARING BOTH THE SIDES THE DE LAY IN FILING OF THIS APPEAL BY THE ASSESSEE IS CONDONED. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A N INDIVIDUAL ENGAGED IN THE BUSINESS OF MACHINING OF CI AND MS COMPONENTS AND JOB WORKS. HE FILED HIS RETURN OF INCOME O N 29-10-2007 DECLARING TOTAL INCOME OF RS.9,35,732/-. DURING THE / DATE OF HEARING :07.11.2016 / DATE OF PRONOUNCEMENT: 11.11.2016 2 ITA NO.2186/PN/2016 COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NO TED THAT ASSESSEE HAD TAKEN LOAN OF RS.18,52,000/- FROM 96 PARTIES AND IN EACH CASE THE LOAN WAS BELOW RS.20,000/-. ON BEING ASKED BY THE ASSESSING OFFICER TO SUBSTANTIATE THE SAID LOAN, THE ASSESS EE FILED CONFIRMATION LETTERS FROM ALL THE PERSONS ALONG WITH RELEVAN T DETAILS, SUCH AS AMOUNT OF LOAN, DATE OF DEPOSIT, SOURCE THE REOF ETC. ON VERIFICATION OF THE SAME, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS NOT FILED CONFIRMATION LETTERS IN 8 CASES AND THE CREDIT AMOUNT OF LOAN CLAIMED TO BE TAKEN FROM THE ABOVE 8 PAR TIES WORKED OUT TO BE RS.1,12,000/-. HE FURTHER NOTED THAT 4 2 CREDITORS WHOSE CONFIRMATIONS WERE FILED HAPPEN TO BE ASSE SSEES EMPLOYEES AND THE CREDIT OF SUCH LOAN TAKEN FROM SUCH PE RSONS WORKED OUT TO RS.6,85,000/-. FURTHER, IN RESPECT OF THE A BOVE 42 PERSONS IT WAS SEEN THAT IN 18 CASES THE ASSESSEE HAS NOT FILED THE IDENTITY PROOF. NOT EVEN A SINGLE CREDITOR FROM AMONG THE PERSONS WORKING IN THE ASSESSEES UNIT TRIED TO SUBSTANTIATE HIS/H ER CREDIT WORTHINESS BY FILING ANY BANK STATEMENT TO SUPPORT THE FA CT ABOUT AVAILABILITY OF EXPLAINABLE SOURCES FOR THE CREDIT. IN SOME CA SES PROOF OF IDENTITY, SUCH AS PAN, ELECTION CARD ETC. WAS FILED BU T THE CREDITORS HAD NOT FILED THE COPIES OF INCOME-TAX RETURN. THE ASSESSING OFFICER FURTHER NOTED THAT IN THE IMMEDIATELY PRE CEDING YEAR ALSO THE ASSESSEE HAD TAKEN LOAN AGGREGATING TO RS.18,19,000/- IN CASH FROM NUMBER OF PERSONS, AND IN EACH CASE, THE SAID LOAN WAS BELOW RS.20,000/-. ACCORDING TO THE ASS ESSING OFFICER, IT IS UNBELIEVABLE THAT A PERSON WHOSE ANNUAL INCOME WAS IN THE RANGE OF RS.9 TO 10 LAKHS PER ANNUM HAD TO BORR OW VIRTUALLY EACH YEAR LOANS OF SMALL AMOUNTS FROM HIS EMPLOYEES, MOST O F WHOM WERE CLAIMED TO BE MACHINE OPERATORS. IN VIEW OF TH E ABOVE, SUCH AS ABSENCE OF PROOF OF IDENTITY, ABSENCE OF SPECIFIC SOU RCE OF 3 ITA NO.2186/PN/2016 INCOME ETC. THE ASSESSING OFFICER DISALLOWED THE AMOUNT OF RS.7,97,000/-(I.E. 1,12,000 + 6,85,000) AS UNEXPLAINED CASH CRED IT U/S.68 OF THE I.T. ACT. 4. IN APPEAL THE LD.CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE SINCE NONE APPEARED BEFORE HIM TO SUBSTANTIATE THE GENUINENESS OF THE LOAN TRANSACTIONS, IDENTIFY AND CAPACITY OF THE CREDITORS. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD.CIT ERRED IN DISMISSING THE APPEAL FOR THE REASON OF NON- ATTENDANCE WITHOUT REALIZING THE FACT THAT ASSESSEE HA S NOT RECEIVED THE NOTICES OF THE HEARING, THE ORDER MAY KINDLY BE RESTORED TO THE FILE OF CIT(A) FOR RE-CONSIDERATION OF APPEAL ON MERIT. WITHOUT PREJUDICE TO ABOVE GROUND FOLLOWING GROUNDS ARE TAKEN ON MERIT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW THE LD.CIT ERRED IN INITIATING THE PROCEEDINGS U/S.147 OF THE INCOME TAX ACT, 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW THE LOWER AUTHORITIES HAVE ERRED IN MAKING THE ADDITION OF RS.7,97,000/- BY TREATING THE UNSECURED LOANS AS UNEXPLAINED CASH CR EDIT U/S.68 BY DISREGARDING APPELLANTS CONTENTION IN THIS REGARD. THE APPELLANT CRAVES FOR TO LEAVE, ADD, ALTER, MODIF Y, DELETE ABOVE GROUND OF APPEAL BEFORE OR AT THE TIME HEARING, IN THE INTEREST OF NATURAL JUSTICE. 6. THE LD. COUNSEL FOR THE ASSESSEE MADE A STATEMENT AT THE BAR THAT ALTHOUGH ACCORDING TO THE ORDER OF THE CIT(A) N OTICES WERE ISSUED FOR HEARING ON THREE OCCASIONS, I.E. 28-08-2015, 22-0 9-2015 AND 19-10-2015, HOWEVER, NOT A SINGLE NOTICE HAS BEEN RE CEIVED BY THE ASSESSEE. HE SUBMITTED THAT IN VIEW OF THE NON RECE IPT OF ANY NOTICE FROM THE OFFICE OF THE CIT(A) THERE WAS NON-ATTENDANCE BEFORE 4 ITA NO.2186/PN/2016 THE CIT(A) FROM THE SIDE OF THE ASSESSEE. HE SUBMITTED T HAT GIVEN AN OPPORTUNITY THE ASSESSEE IS IN A POSITION TO SUBSTANT IATE HIS CASE. HE ACCORDINGLY REQUESTED THAT THE MATTER MAY B E SET ASIDE TO THE FILE OF THE CIT(A) WITH A DIRECTION TO GIVE ONE MORE OPP ORTUNITY TO THE ASSESSEE TO SUBSTANTIATE HIS CASE. 7. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND WHILE SUPPORTING THE ORDER OF CIT(A) SUBMITTED THAT HE HAS NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE CIT(A ) SINCE NOTICES OF HEARING HAVE NOT BEEN RECEIVED BY THE ASSESS EE AS STATED BY THE LD. COUNSEL FOR THE ASSESSEE. 8. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. I FIND THE ASSESSING OFFICER IN THE INSTANT CASE HAS MADE AN ADDITION OF RS.7,97,000/- U/S.68 O F THE I.T. ACT IN VIEW OF FAILURE ON THE PART OF THE ASSESSEE TO SUBSTANTIAT E WITH EVIDENCE TO THE SATISFACTION OF THE ASSESSING OFFICER RE GARDING THE IDENTIFY AND CREDIT WORTHINESS OF THE LOAN CREDITORS A ND THE GENUINENESS OF THE TRANSACTIONS. I FIND THE LD.CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER SINCE THERE WAS NON-COMPLIA NCE ON THE PART OF THE ASSESSEE DESPITE ISSUE OF NOTICES FIXING T HE DATES OF HEARING ON 28-08-2015, 22-09-2015 AND 19-10-2015. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE A SSESSEE HAS NOT RECEIVED A SINGLE NOTICE OF HEARING FROM THE OFFICE O F THE CIT(A) AND THEREFORE THE MATTER SHOULD BE SET ASIDE TO THE FILE OF THE CIT(A) WITH A DIRECTION TO GIVE ONE OPPORTUNITY TO SUBSTA NTIATE HIS CASE. SINCE THE LD. COUNSEL FOR THE ASSESSEE MADE A S TATEMENT AT THE BAR THAT NO NOTICE OF HEARING HAS BEEN RECEIVED BY THE ASSESSEE FROM THE OFFICE OF THE CIT(A) FIXING THE DATES OF HEARING, THE REFORE, 5 ITA NO.2186/PN/2016 UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN TH E INTEREST OF JUSTICE, I DEEM IT PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE CIT(A) WITH A DIRECTION TO GIVE ONE MORE OPPORTUNITY T O THE ASSESSEE TO SUBSTANTIATE HIS CASE. THE CIT(A) SHALL DECIDE THE ISSUE AS PER FACT AND LAW AND AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. I HOLD AND DIRECT ACCORDINGLY. GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATI STICAL PURPOSES. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11-11-2016. SD/- ( R.K. PANDA ) ACCOUNTANT MEMBER PUNE ; DATED : 11 TH NOVEMBER, 2016. '# $# / COPY OF THE ORDER FORWARDED TO : / BY ORDER , // $ % / TRUE COPY // // TRUE COPY // &' % * / SR. PRIVATE SECRETARY *, / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT (A) - 2 PUNE 4. THE PR.CIT-2, PUNE 5. $ %%* , * , SMC BENCH / DR, ITAT, SMC BENCH PUNE; 6. 2 / GUARD FILE.