M/s. Glorious Suppliers Pvt. Ltd., , Kolkata V. ITO, Ward - 6(2), Kolkata , Kolkata

ITA 2228/KOL/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2444 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 23-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RADHEY SHYAM
• Assessee Lawyers: M D SHAH
• Keywords: Search and seizure; Principle of natural justice; Accommodation entries; Reassessment proceedings; Set aside
• Section: 131; 68; 148; 142(1)

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) . . , . . ! , ' #$ ) [BEFORE SHRI P.M. JAGTAP, VICE PRESIDENT (KZ) & SHR I A. T. VARKEY, JM] I.T.A. NO. 2228/KOL/2017 ASSESSMENT YEAR: 2006-07 M/S. GLORIOUS SUPPLIERS PVT. LTD. PAN: AACCG 2938 E VS. ITO, WARD 6(2) KOLKATA APPELLANT RESPONDENT DATE OF HEARING 10.07.2019 DATE OF PRONOUNCEMENT 04.09.2019 FOR THE APPELLANT SHRI M.D. SHAH, AR FOR THE RESPONDENT SHRI RADHEY SHYAM, CIT, DR ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) 17, KOLKATA DATED 17.04.2017 FOR AY 2006-07. 2. THE MAIN GRIEVANCE WHICH IS SPECIFIED IN GROUND NO. 1 OF THE APPEAL IS THAT THE IMPUGNED ORDER IS VITIATED FOR VIOLATION OF PRINCIP LES OF NATURAL JUSTICE. IT WAS BROUGHT TO OUR NOTICE BY THE LD. AR FOR THE ASSESSEE THAT EVEN AT THE ASSESSMENTS STAGE, THE ASSESSEE DID NOT GET PROPER OPPORTUNITY BEFORE THE LD CIT(A) AS WELL AS THE AO MISDIRECTED HIMSELF TO MAKE ADDITIONS WHICH HAS NO SANCTION UNDER LAW. FOR BUTT RESSING THIS ARGUMENTS THE LD. AR DREW OUR ATTENTION TO PAGE 1 AND 2 OF THE ASSESSMENT ORD ER WHEREIN THE AO NOTES THAT A SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON 10.10.2009 IN BA DALIA GROUP OF CASES AND THAT NUMBER OF BANK ACCOUNTS WERE FOUND DURING THE COURSE OF SE ARCH & SEIZURE OPERATION AT THE PREMISES OF MR. M.M. DAGA AT 3, RABINDRA SARANI, 1 ST FLOOR, KOLKATA 700 001 INCLUDING BANK ACCOUNT OF M/S. GLORIOUS SUPPLIERS PRIVATE LIMITED (ASSESSEE) BEARING ACCOUNT NO. 1076118 WITH ABN AMRO BANK, KOLKATA. ACCORDING TO A O, ON VERIFICATION OF BANK ACCOUNTS IT WAS OBSERVED THAT SOME CREDIT ENTRIES W ERE MADE BY THE VARIOUS BENEFICIARIES. THEREAFTER, IN RESPONSE TO QUERY PERTAINING TO BANK ACCOUNTS, IT HAS BEEN SUBMITTED U/S 131 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) ON 21.12.2009 BY SHRI 2 ITA NO.2228/KOL/2017 M/S. GLORIOUS SUPPLIERS PVT. LTD. AY 2006-07 M.M. DAGA THAT I AM NOT ABLE TO EXPLAIN THOUGH I AGREE THAT THE BANK ACCOUNTS WERE USED AND MAINTAINED BY ME. I USED TO TAKE CASH FROM VARI OUS BENEFICIARIES, DEPOSIT THEM IN THESE ACCOUNTS AND ISSUE CHEQUE IN NAME OF CONCERNS AFTER DEDUCTING MY COMMISSION. 3. TAKING NOTE OF THE AFORESAID STATEMENT, THE AO I SSUED NOTICE U/S 148 TO REOPEN THE ASSESSMENT OF ASSESSEE FOR AY 2006-07ON 24.07.2012 AND THEREAFTER, IN THE REASSESSMENT PROCEEDINGS OBSERVED THAT HE HAD ISSUED SUMMONS U/S 131 TO THE DIRECTORS OF THE ASSESSEE- COMPANY HOWEVER IT WAS NOT RESPONDED TO SINCE THE S HOW CAUSE NOTICE AND SUMMONS HAVE BEEN RETURNED BACK BY THE POSTAL AUTHORITY WITH THE REMARK NO SUCH COMPANY. HOWEVER, THE AO ACKNOWLEDGES THAT THE ASSESSEE-COMPANY HAS F URNISHED COPY OF THE FINAL ACCOUNT, IT RETURN ACKNOWLEDGED AND COPY OF BANK STATEMENT. THE AO NOTED THAT ASSESSEE-COMPANY ISSUED 3,11,900 SHARES TO DIFFERENT COMPANIES AND R ECEIVED RS. 3,11,90,000/- @ RS. 10/- PER SHARE AND @ 9/- PER SHARE AS PREMIUM. THE AO ACKNOW LEDGES THAT THE ASSESSEE HAS FILED THE LIST OF SHAREHOLDERS AND ALSO FURNISHED THE COPY OF FINAL ACCOUNT, IT RETURN ACKNOWLEDGEMENT, BANK STATEMENT FOR THE RELEVANT PE RIOD EVIDENCING THE RECEIPT ON SHARE APPLICATION MONEY FROM THE SHARE APPLICANT. THE AO NOTED THAT SHARE CAPITAL SO RECEIVED HAS BEEN INVESTED IN SHARES OF OTHER PRIVATE LIMITED CO MPANY. IT WAS NOTED BY THE AO THAT THE ASSESSEE-COMPANY IS IN 2 ND YEAR IN OPERATION AND IT DEALS IN INVESTMENT AND T RADING IN SHARES & SECURITIES ETC. FROM RECORD THE AO NOTED THAT THE AUTHORIZED SHARE CAPITAL OF THE SAID COMPANY WAS RS. 48,00,000/- AND DURING THE YEAR UND ER CONSIDERATION, SUBSCRIBED AND ISSUED CAPITAL WAS RS. 47,69,000/- AND SHARE PREMIU M ACCOUNT WAS RS. 4,20,21,000/-. VALUE OF FIXED ASSETS WERE FOUND OF RS. NIL/- CLOSING BAN K BALANCE OF RS. 1,103/- AND INVESTMENT VALUE WAS FOUND TO THE TUNE OF RS. 4,69,50,000/-. S INCE THE SUMMONS AND SHOW CAUSE NOTICE WERE RETURNED BACK UNSERVED, THE AO DREW ADVERSE IN FERENCE AGAINST THE ASSESSEE-COMPANY IN RESPECT TO THE GENUINENESS OF THE SHARE TRANSACT IONS AND MADE AN ADDITION OF RS. 3,11,90,000/- U/S 68 OF THE ACT. IT WAS ALSO BROUG HT TO OUR NOTICE THAT THE AO HAD MADE ADDITION OF RS. 1,46,203/- @ 0.30 PAISA PER HUNDRED RUPEES ON AN AMOUNT OF RS. 4,87,34,260/- AS COMMISSION INCOME WHICH THE ASSESS EE RECEIVED AND WAS ADDED SEPARATELY. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE T HE LD. CIT(A) WHICH WAS CONFIRMED. THEREFORE THE ASSESSEE IS BEFORE US. 4. ASSAILING THE IMPUGNED ORDER, THE LD. AR CONTEND ED THAT THE AO HAS MADE THE ADDITION OF RS. 3,11,90,000/- ON THE GROUND THAT SU MMONS U/S 131 ISSUED TO THE DIRECTORS OF 3 ITA NO.2228/KOL/2017 M/S. GLORIOUS SUPPLIERS PVT. LTD. AY 2006-07 THE ASSESSEE-COMPANY WAS RETURNED BACK UNSERVED WHE REAS IT WAS POINTED OUT BY THE LD. AR THAT THE NOTICES ISSUED BY THE AO U/S 143(2), 148 A ND 142(1) AND NOTICES OF LD. CIT(A) WERE DULY SERVED UPON THE REGISTERED OFFICE OF THE ASSESSEE-COMPANY BY THE VERY SAME POSTAL AUTHORITIES WHO HAVE RETURNED BACK THE SUMMO NS WITH AN ENDORSEMENT NO SUCH COMPANY. ACCORDING TO THE LD. AR WHEN ALL THE AFOR ESAID STATUTORY NOTICES COULD BE DULY SERVED UPON THE ASSESSEE, IT WAS SURPRISING THAT ON LY THE SUMMONS U/S 131COULD NOT BE SERVED UPON THE ASSESSEE-COMPANY. BE THAT AS IT MAY , WE NOTE THAT THE AO HAD ACKNOWLEDGED THAT THE ASSESSEE HAD COMPLIED BEFORE THE AO BY FILING DOCUMENTS LIKE COPY OF THE FINAL ACCOUNT, IT RETURN ACKNOWLEDGEMENT, CO PY OF BANK STATEMENT ETC. DURING THE ASSESSMENT PROCEEDINGS. THE LD. AR STATED THAT SIMP LY BECAUSE THE DIRECTORS COULD NOT APPEAR CANNOT BE A GROUND TO DRAW ADVERSE INFERENCE AGAINST ASSESSEE IN THE LIGHT OF THE CREDENCE FURNISHED BY THE ASSESSEE TO SUBSTANTIATE THE IDENTITY, CREDITWORTHINESS & GENUINENESS OF THE TRANSACTION. MOREOVER, GIVEN A C HANCE, THE LD. AR UNDERTAKES TO PRODUCE THE DIRECTORS OF THE ASSESSEE-COMPANY AS WELL AS TH AT OF THE SHARE SUBSCRIBING COMPANIES IN RESPECT OF SHARES SUBSCRIBED / PREMIUM PAID IN THIS ASSESSMENT YEAR IF ANY. WHEN WE ASKED THE LD. AR ABOUT THE STATEMENT GIVEN BY MR. M.M. DA GA, HE CONTENDED THAT THE BADALIA GROUP OF ASSESSEE COMPANY MAY HAVE BEEN USED AS A P ASS THROUGH ENTRY GIVING ACCOMMODATION ENTRIES TO THE BENEFICIARIES. ACCORDI NG TO LD. AR, THE AO HAS TO MAKE UP HIS MIND AS TO WHETHER THE ASSESSEE COMPANY WAS ONLY A PASS THROUGH ENTRY / ACCOMMODATION ENTRY PROVIDER TO BENEFICIARIES WHO WOULD DEPOSIT M ONEY IN THE ASSESSEES ACCOUNTS WHICH WOULD BE PASSED ON TO OTHER COMPANIES THROUGH BANKI NG CHANNELS AS DESCRIBED BY SHRI M.M. DAGE AND IN THAT CASE, THE ASSESSEES ROLE AS AN ACCOMMODATION ENTRY PROVIDER WOULD BE CLEAR & THEN ASSESSEE-COMPANY WOULD BE ENTITLED TO ONLY COMMISSION INCOME; AND THE MONEY DEPOSITED IN THE ACCOUNT OF THE ASSESSEE CANN OT BE BROUGHT U/S 68 OF THE ACT. HOWEVER THE LD. DR CONTESTED THE CLAIM OF THE ASSES SEE AND POINTED OUT THAT THE AO HAS CLEARLY STATED THAT THE ASSESSEE-COMPANY ISSUED SHA RES AT PREMIUM & NOW IT CANNOT BE TURN AROUND AND SAY THAT IT WAS ONLY AN ACCOMMODATION EN TRY PROVIDER AND THEREFORE, THE ADDITION MADE U/S 68 SHOULD NOT BE DISTURBED. 5. AFTER HAVING HEARD BOTH THE PARTIES WE NOTE THAT AO HAS DRAWN ADVERSE INFERENCE AGAINST THE ASSESSEE SINCE THE SUMMONS ISSUED U/S 1 31 RETURNED BACK UNSERVED. HOWEVER IT WAS BROUGHT TO OUR NOTICE THAT PURSUANT TO STATUTOR Y NOTICES U/S 142(1) & 143(2), THE 4 ITA NO.2228/KOL/2017 M/S. GLORIOUS SUPPLIERS PVT. LTD. AY 2006-07 ASSESSEE HAS RESPONDED AND FILED ALL DOCUMENTS TO S UBSTANTIATE THE CREDIT ENTRIES IN THE ASSESSEES BANK ACCOUNT. SO ONLY ON THE BASIS OF NO TICE/SUMMONS HAVING BEEN RETURNED ON THE VERY SAME ADDRESS OF THE ASSESSEE CANNOT BE A G ROUND TO DRAW ADVERSE INFERENCE AGAINST THE ASSESSEE. 6. SINCE THE AO HAS ACKNOWLEDGED THE PRODUCTION OF DOCUMENTS BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS AND THE AO HAS MADE THE ADDI TION ONLY THE GROUND THAT SUMMONS U/S 131 COULD NOT BE SERVED UPON THE ASSESSEE, WE A RE INCLINED TO SET ASIDE THE ORDER OF CIT(A) AND REMAND THE MATTER BACK TO THE AO FOR FRE SH ADJUDICATION IN THE LIGHT OF THE UNDERTAKING OF THE LD. AR THAT ASSESSEE WOULD PRODU CE THEIR DIRECTORS. WE MAKE IT CLEAR THAT WE HAVE NOT MADE ANY FINDING ON MERITS AND THE AO T O FRAME ASSESSMENT DE-NOVO AFTER HEARING THE ASSESSEE AND NOT TO BE INFLUENCED BY AN Y OF OUR OBSERVATION AND IN ACCORDANCE TO LAW. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSE. ORDER IS PRONOUNCED IN THE OPEN COURT ON 04.09. 2019 SD/- SD/- (P.M. JAGTAP) (ABY. T. VARKEY) VICE-PRESIDENT JUDICIAL MEMBER DATED : 4TH SEPTEMBER, 2019 BISWAJIT (SR. P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT M/S. GLORIOUS SUPPLIERS PVT. LTD., 9 , LAL BAZAR STREET, BLOCK A, 3 RD FLOOR, ROOM NO. 7, KOLKATA 700 001. 2 RESPONDENT ITO, WARD 6(2), KOLKATA. 3. THE CIT(A) -, KOLKATA. (THROUGH E-MAIL) 4. 5. CIT KOLKATA DR, ITAT, KOLKATA. (THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR/H.O.O. ITAT, KOLKATA