Riddhika Creations Pvt. Ltd., , Kolkata V. ITO, Ward - 4(1), Kolkata, Kolkata

ITA 2188/KOL/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2440 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 13-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHUR Y
• Assessee Lawyers: M D SHAH
• Keywords: Opportunity of being heard; Set aside
• Section: 131; 68; 144; 264

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) . . , . . ! , ' #$ ) [BEFORE SHRI P.M. JAGTAP, VICE PRESIDENT & SHRI A. T. VARKEY, JM] I.T.A. NOS. 2188/KOL/2017 ASSESSMENT YEARS: 2012-13 RIDDHIKA CREATIONS PVT. LTD. C/O D.J. SHAH & CO., KALYAN BHAVAN, 2 ELGIN ROAD, KOLKATA- 700069 VS. INCOME-TAX OFFICER WARD-4(1), KOLKATA (PAN: AADCN8754C) APPELLANT RESPONDENT FOR THE APPELLANT SHRI M.D. SHAH, AR FOR THE RESPONDENT SHRI ROBIN CHOUDHURY, ADDL. CIT , SR. DR DATE OF HEARING 09.07.2019 DATE OF PRONOUNCEMENT 04.09.2019 ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-2, KOLKATA DATED 13.05.2016 FOR ASSESSMENT YEAR 2012-1 3. 2. AT THE OUTSET WE NOTE THAT THERE IS A DELAY OF 4 44 DAYS. THE REASON FOR THE DELAY IS AS GIVEN BELOW: THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FO R THE ASSESSMENT YEAR 2012- 13 ON 22/12/2012. THIS RETURN OF INCOME WAS SUBJECTED TO ASSESSMENT U/S. 144 OF THE INCOME TAX ACT, 1961 DATED 12/03/2015, WHEREIN AN ADDITION OF RS. 167.5 LACS WAS MADE ON ACCOUNT OF SHARE CAPITAL AND PREMIUM RAISED BY THE ASSESSEE COMPANY. AGAINST THIS ORDER THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (APPEAL S)-2 ON 28/04/2015. AFTER FILING THE APPEAL, THE ASSESSEE CONSULTED OTH ER SENIOR TAX EXPERTS, WHO EXPLAINED THAT AS THE ASSESSMENT ORDER WAS PASSED U/S.144 OF THE INCOME TAX ACT, 1961 AND THE CASE REQUIRED FRESH ENQUIRY AND EXAMINATION AS WELL AS ADMISSION OF FRESH DOCUMENTS, THE ASSESSEE WAS ADVISED BY SENIOR TAX EXPERTS THAT HE SHOULD WITHDRAW THE APPEAL FILED BEFORE THE CIT (APPEALS) AND FILE A REVISION PETITI ON U/S.264 OF THE INCOME TAX ACT, 1961; THE REASON BEING THAT THE CIT (APPEALS) DID NOT HAV E THE POWER TO SET ASIDE AND SUCH POWERS CAN ONLY BE EXERCISED U/S.264 OF THE INCOME TAX ACT, 1961. BASED ON THE ABOVE ADVICE, THE ASSESSEE FILED A PET ITION U/S.264 OF THE INCOME TAX ACT, 1961 BEFORE THE PRINCIPAL COMMISSIONER OF INCOME TA X, KOLKATA, ON 31/03/2016. THE ASSESSEE MOVED APPLICATIONS BEFORE THE LEARNED CIT (APPEALS) ON 04/05/2016 AND 09/05/2016 PRAYING FOR WITHDRAWAL OF APPEAL. THE LE ARNED CIT (APPEALS) PASSED AN 2 ITA NO. 2188/KOL/2017 RIDDHIKA CREATIONS PVT. LTD., AY: 2012-13 ORDER DATED 13/05/2016 WHEREIN HE REFUSED THE WITHD RAWAL OF APPEAL BUT HE DISMISSED THE APPEAL ON MERITS AND UPHELD THE ADDITION. SUBSEQUEN TLY, THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX PASSED AN ORDER DATED 27 /03/2017 WHEREIN HE DID NOT CONSIDER THE MERIT OF THE CASE BUT DISMISSED THE RE VISION PETITION FOR THE REASON THAT THE CIT (APPEALS) HAS DISMISSED THE CASE AND HENCE THE REVISION PETITION WAS LIABLE TO BE DISMISSED. THE ASSESSEE SUBMITS THAT IT WAS UNDER THE BONA-FID E BELIEF THAT THE REVISION PETITION WOULD REMAIN MAINTAINABLE AND THEREFORE, WAS PERUSI NG THE REVISION PETITION U/S.264 OF THE INCOME TAX ACT, 1961. AS STATED ABOVE THAT THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX DISMISSED THE REVISION PETITION IN VIEW OF THE ORDER OF THE CIT (APPEALS). THEREFORE, THE ASSESSEE HAS BEEN ADVISED TO FILE ON E APPEAL BEFORE THE LEARNED ITAT WITH A PRAYER TO CONDONE THE DELAY IN FILING OF APPEAL A GAINST THE ORDER PASSED BY THE LEARNED CIT (APPEALS). THE ASSESSEE SUBMITS THAT THE DELAYED FILING OF THE APPEAL WAS NOT DUE TO ANY MALA-FIDE REASONS BUT DUE TO THE BONA-FIDE BELIEF THAT THE RE VISION PETITION WAS STILL MAINTAINABLE AND THE SAME WILL BE HEARD ON MERITS. DUE TO THESE REASONS, THE ASSESSEE DID NOT FILE AN APPEAL BEFORE THE LEARNED ITAT AGAINST THE ORDER PA SSED BY THE LEARNED CIT (APPEALS) WITHIN THE PRESCRIBED TIME LIMIT. THE APPELLANT SUB MITS THAT THE DELAY IN FILING OF THE APPEAL THEREFORE BE CONDONED. 3. FOR THE AFORESAID REASONS, THE ASSESSEE PRAYS FO R CONDONATION OF DELAY. WE NOTE THAT IN ASSESSEES CASE ORIGINAL ASSESSMENT WAS COMPLETE D UNDER SECTION 144 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) I.E. BEST JUDGMEN T ASSESSMENT BY THE AO AND THEREFORE WHEN THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CI T(A) IT WAS ADVISED TO IT THAT INSTEAD OF PURSUING AN APPEAL BEFORE CIT(A), IT SHOULD FILE SE CTION 264 PETITION BEFORE THE PRINCIPAL CIT-2 WHICH WAS DONE BY THE ASSESSEE COMPANY. IN TH E LIGHT OF FILING OF SECTION 264 PETITION BEFORE THE PRINCIPAL CIT, THE ASSESSEE PRA YED TO CIT(A) FOR WITHDRAWAL OF THE APPEAL BEFORE HIM. HOWEVER, THE CIT(A) DISMISSED TH E APPEAL ON MERITS. THEREAFTER, PRINCIPAL CIT DISMISSED THE 264 PETITION OF THE ASS ESSEE CITING THE REASON THAT SINCE THE CIT(A) HAS DECIDED ON MERITS HE HAS NO OTHER ALTERN ATIVE BUT TO DISMISS IT. WE NOTE THAT THE ASSESSEE HAD BEEN TAKING NECESSARY LEGAL STEPS TO G ET REDRESSAL AGAINST THE BEST JUDGMENT ASSESSMENT BY AO U/S 144 OF THE ACT. HOWEVER, THE L D. CIT(A) DID NOT APPRECIATE THE ACTION OF FILING PETITION U/S 264 OF THE ACT AND DI SMISSED THE APPEAL OF THE ASSESSEE. HOWEVER, THE ASSESSEE ON THE BONA FIDE BELIEF BASED ON ADVICE OF TAX EXPERTS PURSUED THE PETITION FILED U/S 264 OF THE ACT BEFORE THE LD. PR . CIT WHO ALSO DISMISSED THE PETITION, SO THE DELAY HAPPENED. WE NOTE THAT THE DELAY IS NOT I NTENTIONAL AND WERE FOR BONA FIDE REASONS BASED ON EXPERT ADVICE, SO, THEREFORE, WE CONDONE T HE DELAY. COMING TO THE MERITS OF THE 3 ITA NO. 2188/KOL/2017 RIDDHIKA CREATIONS PVT. LTD., AY: 2012-13 CASE WE NOTE THAT THE ASSESSEE AGGRIEVED BY THE ACT ION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS. 167.52 LACS MADE UNDER SECTION 68 O F THE ACT. 4. AT THE OUTSET ITSELF, THE LD. COUNSEL FOR THE AS SESSEE DREW OUR ATTENTION TO THE FACT THAT THE ASSESSEE WAS INCORPORATED ON 27.01.2012 AND IT HAD ISSUED SHARES TO DIFFERENT ENTITIES ALONG WITH PREMIUM. DURING THE SCRUTINY ASSESSMENT, THE AO TAKING NOTE THAT THE SUMMONS SENT UNDER SECTION 131 OF THE ACT TO THE DIRECTORS OF INVESTORS COMPANIES WAS NOT COMPLIED WITH, HE DREW ADVERSE INFERENCE AGAINST THE ASSESSE E AND HAS MADE AN ADDITION OF RS. 1,67,50,000/-. WE NOTE THAT THE ASSESSMENT ORDER IT SELF IS CRIPTIC ORDER (THREE PAGES) PASSED UNDER SECTION 144 OF THE ACT. WE NOTE THAT NEITHER THE AO HAS SPELLED OUT THE DATE OF ISSUE OF 131 SUMMONS NOR EVEN THE DATES OF ISSUE OF STATU TORY NOTICES HAVE BEEN MENTIONED IN THE ASSESSMENT ORDER. ACCORDING TO THE LD. COUNSEL THE SUMMONS TO PRODUCE DIRECTORS WERE RECEIVED AT THE FAG END OF FEBRUARY, 2015 AND IT SO HAPPENED THAT THE DIRECTORS OF THE INVESTOR COMPANIES AS WELL AS THE ASSESSEE COMPANY WERE OUT OF STATION, THEREFORE, THE DIRECTORS COULD NOT BE PRESENT BEFORE THE AO. ACCOR DING TO THE LD. COUNSEL ONLY ONE NOTICE WAS RECEIVED AND THEREAFTER, THE AO PROCEEDED TO DR AW ADVERSE INFERENCE AGAINST THE ASSESSEE WHICH GOES ON TO SHOW THAT NO PROPER OPPOR TUNITY THE ASSESSEE GOT AT THE ASSESSMENT STAGE. BY RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TIN BOX COMPANY VS. CIT (2001) 249 ITR 216 (SC) THE LD. AR CONTENDED THAT THE ISSUE NEEDS TO BE REMANDED BACK TO AO FOR FRESH/ DE NOVO ASSESSMENT FOR LACK OF OPPORTUNITY BEFORE AO. WE NOTE THAT IN THE CASE OF TIN BOX (SUP RA) THE HONBLE SUPREME COURT HELD AS UNDER: IT IS UNNECESSARY TO GO INTO GREAT DETAIL IN THESE MATTERS FOR THERE IS A STATEMENT IN THE ORDER OF THE TRIBUNAL, THE FACT-FINDING AUTHORITY, THAT READS THUS: WE WILL STRAIGHTAWAY AGREE WITH THE ASSESSEES SUB MISSION THAT THE INCOME-TAX OFFICER HAD NOT GIVEN TO THE ASSESSEE PROPER OPPORTUNITY OF BEING 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 REASONABLE OPPORTUNITY OF SETTING OUT HIS CASE. WE, THEREFORE, DO NOT AGREE W ITH 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. 4 ITA NO. 2188/KOL/2017 RIDDHIKA CREATIONS PVT. LTD., AY: 2012-13 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 OPPORTUNI TY OF HEARING 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 T HE ASSESSEE. THE APPEALS ARE ALLOWED. THE ORDER UNDER CHALLENGE IS SET ASIDE. THE ASSESSMENT ORDER, THAT OF THE COMMISSIONER (APPEALS) AND OF THE TRIBU NAL ARE ALSO SET ASIDE. THE MATTER SHALL NOW BE REMANDED TO THE ASSESSING AUTHORITY FO R FRESH CONSIDERATION, AS AFORESTATED. 5. RESPECTFULLY, TAKING NOTE OF THE AFORESAID DECIS ION OF HONBLE SUPREME COURT AND THE FACT THAT THE ASSESSEE DID NOT RECEIVE PROPER OPPOR TUNITY BEFORE THE AO AT THE ASSESSMENT STAGE, WE ARE INCLINED TO SET ASIDE THE ORDER OF TH E CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF AO FOR DE NOVO ADJUDICATION. THE ASSESSEE IS DIRECTED TO PRODUCE THE DIRECTORS AS UNDERTAKEN BEFORE US. THE AO IS DIRECTED TO PASS TH E DE NOVO ASSESSMENT AFTER HEARING THE ASSESSEE IN ACCORDANCE WITH LAW. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 4TH SEPTEMBER, 2019. SD/- SD/- (P.M. JAGTAP) (A. T. VARKEY) VICE PRESIDENT JUDICIAL MEMBER DATED: 4TH SEPTEMBER, 2019 BIDHAN (P.S.) 5 ITA NO. 2188/KOL/2017 RIDDHIKA CREATIONS PVT. LTD., AY: 2012-13 COPY OF THE ORDER FORWARDED TO: 1 APPELLANT RIDDHIKA CREATIONS PVT. LTD., C/O D.J. SHAH & CO., KALYAN BHAVAN, 2 ELGIN ROAD, KOLKATA- 700069. 2 RESPONDENT ITO, WARD-4(1), KOLKATA. 3 CIT(A)-2, KOLKATA (SENT THROUGH E-MAIL) 4 CIT 5 DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E -MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR