UNIWORTH SECURITIES LTD, KOLKATTA V. ITO WD 9(3)(2), MUMBAI

ITA 2370/MUM/2011

• Counselvise Citation: 237019914 RSA 2011
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Appeal Filed On: 24-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANTAM BOSE
• Assessee Lawyers: R C JAIN AJAY DAGA
• Keywords: Unexplained cash credit; Opportunity of being heard
• Section: 142(1); 14A; 68; 144; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI R.K.PANDA (A .M) ITA NO.2369/MUM/2011(A.Y. 2006-07) ITA NO.2370/MUM/2011(A.Y.2006-07) UNIWORTH SECURITIES LTD., 11, POLLOCK STREET, 3 RD FLOOR, KOLKATA 700 001. PAN: AAACU3418R (APPELLANT) VS. THE ITO, WARD 9(3)(2), AAYKAR BHAVAN, MK ROAD, MUMBAI 20. (RESPONDENT) APPELLANT BY : S/SHRI R.C.JAIN/AJAY DAGA RESPONDENT BY : SHRI SANTAM BOSE. DATE OF HEARING : 16/01/2012 DATE OF PRONOUNCEMENT : 2 0/01/2012 ORDER PER N.V.VASUDEVAN, J.M: ITA NO.2369/M/11 IS AN APPEAL BY THE ASSESSEE AGAI NST THE ORDER DATED 20/7/2010 OF CIT(A) 20, MUMBAI RELATING TO ASSESSMENT YEAR 2006- 07. ITA NO.2370/M/11 IS ALSO AN APPEAL BY THE ASSE SSEE AGAINST THE ORDER DATED 21/1/2011 OF CIT(A) 20, MUMBAI RELATING TO AS SESSMENT YEAR 2006-07. ITA NO.2369/M/11 ARISES OUT OF THE ORDER OF ASSESSM ENT PASSED BY THE AO UNDER SECTION 144 OF THE INCOME TAX ACT,1961(THE AC T) FOR AY 06-07. ITA NO.2370/M/11 ARISES OUT OF AN ORDER PASSED BY THE A O UNDER SECTION 154 OF THE ACT RECTIFYING CERTAIN DEFECTS IN THE ORDER OF ASSESSMENT PASSED UNDER SECTION 144 OF THE ACT FOR AY 06-07. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN ITA NO.2369/M/11 READS AS FOLLOWS: ITA NO.2369/MUM/2011(A.Y. 2006-07) ITA NO.2370/MUM/2011(A.Y.2006-07) 2 1. THE LD. CIT(A) ERRED IN DISPOSING OF THE APP EAL EX-PARTE. 2. THE LD. CIT(A) ERRED IN CONFIRMING THE EX-PARTE ASSESSMENT MADE U/S.144 OF THE INCOME TAX ACT, 1961. 3. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION IN RESPECT OF SUNDRY CREDITORS READ WITH THE ORDER U/S. 154 DT. 25/02/20 10 AT RS. 22,73,553/-. 3.I IN SO DOING HE DID NOT CONSIDER THE DETAILS O F SUNDRY CREDITORS ON RECORD AS FURNISHED TO THE ITO AND REFERRED TO IN G ROUND NO.3 OF GROUNDS OF APPEAL BEFORE HIM. 3. WE WILL TAKE UP FOR CONSIDERATION GROUND NO.1 AN D & 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF HIRING VEHI CLES, OFFICE, EQUIPMENTS ETC. THE ASSESSEE FILED A RETURN OF INCOME ON 29/1 1/2006 DECLARING TOTAL INCOME AS NIL. THE RETURN OF INCOME WAS TAKEN UP F OR SCRUTINY. THE FOLLOWING NOTICES WERE SENT TO THE ASSESSEE AS PER THE AO. ITA NO.2369/MUM/2011(A.Y. 2006-07) ITA NO.2370/MUM/2011(A.Y.2006-07) 3 AS CAN BE SEEN FROM THE AFORESAID CHART ON 25/7/200 8 THE ASSESSEE HAD FILED CERTAINS DETAILS ASKED FOR BY THE AO IN HIS NOTICE UNDER SECTION 142(1) OF THE ACT DATED 30/6/2008. FOR THE PURPOSE OF THE PRESEN T APPEAL WE ARE CONCERNED WITH THE FOLLOWING DETAILS CALLED FOR IN THE NOTICE DATED 30/6/2008 UNDER SECTION 142(1) OF THE ACT: DETAILS OF CREDITORS EXCEEDING RS. 1 LAC IN ALPHAB ETICAL ORDER, IN THE FOLLOWING FORMAT: BALANCE AS ON S.NO. NAME & ADDRESS NATURE OF TRANSACTIONS DATE OF PAYMENT DETAILS OF CURRENT LIABILITIES. DETAILS OF TDS PAID. S.NO. AMOUNT CREDITED DATE OF DEDUCTION DUE DATE TDS PAID DATE OF PAYMENT DELAY IN PAYMENT 4. IN COMPLIANCE WITH THE AFORESAID NOTICE, THE AS SESSEE FILED ON 25/7/2008 THE FOLLOWING DETAILS: ITA NO.2369/MUM/2011(A.Y. 2006-07) ITA NO.2370/MUM/2011(A.Y.2006-07) 4 5. AS CAN BE SEEN FROM THE CHART OF NOTICES SENT BY THE AO, A FINAL SHOW CAUSE NOTICE DATED 10/11/2008 WAS ISSUED TO THE ASS ESSE, WHEREIN IT WAS POINTED OUT THAT THERE WAS NO COMPLIANCE ON BEHALF OF THE ASSESSEE TO ANY OF THE NOTICES ISSUED BY THE AO AND, THEREFORE, THE AS SESSMENT WILL HAVE TO BE COMPLETED UNDER SECTION 144 OF THE ACT. DESPITE TH IS NOTICE THE ASSESSEE ACCORDING TO THE AO DID NOT PRODUCE DETAILED EXPLAN ATION, EVIDENCE ETC. AND THEREFORE, THE AO PROCEEDED TO FRAME AN ASSESSMENT UNDER SECTION 144 OF ACT. THE AO FOUND THAT IN THE BALANCE SHEET THE CR EDITORS AS ON 31/3/2005 WERE RS. 14,97,714/- AND CREDITORS AS ON 31/3/2006 WAS RS. 27,71,267/-. ITA NO.2369/MUM/2011(A.Y. 2006-07) ITA NO.2370/MUM/2011(A.Y.2006-07) 5 THE AO ADDED THE DIFFERENCE BETWEEN THE OPENING BAL ANCE AND CLOSING BALANCE AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT AND MADE AN ADDITION OF RS.12,73,553/-. THE AO ALSO MADE A DIS ALLOWANCE UNDER SECTION 14A OF THE ACT AND ULTIMATELY COMPUTED THE TOTAL IN COME OF THE ASSESSEE AS FOLLOWS: 6. THE ORDER OF ASSESSMENT UNDER SECTION 144 OF TH E ACT WAS PASSED BY THE AO ON 26/11/2008. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE APPEAL WAS FIXED FOR HEARING ON 3/3/2010 AND WA S ADJOURNED TO 20/4/2010 AT ASSESSEES REQUEST. ON 20/4/2010 IT W AS AGAIN ADJOURNED TO 4/6/2010 AT ASSESSEES REQUEST. ON /6/2010 NONE AP PEARED ON BEHALF OF THE ASSESSEE, THEREFORE, THE CIT(A) PROCEEDED TO DE CIDE THE APPEAL EX-PARTE. THE CIT(A) FOUND NO GROUND TO INTERFERE IN THE ORD ER OF THE AND DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESSEE HAS RAISED GROUND NO.1 & 2 BEFORE THE TRIBUNAL. 7. IN THE MEANTIME THE AO INITIATED PROCEEDINGS UND ER SECTION 154 OF THE ACT. HE FOUND THAT IN THE BALANCE SHEET SUNDRY CRE DITORS AS ON 31/3/2006 WAS RS. 37,71,267/- AND NOT RS. 27,71,267/- AS MENT IONED IN THE ORDER UNDER SECTION 144 OF THE ACT. CONSEQUENTLY THE ADD ITION THAT OUGHT TO HAVE ITA NO.2369/MUM/2011(A.Y. 2006-07) ITA NO.2370/MUM/2011(A.Y.2006-07) 6 BEEN MADE UNDER SECTION 68 OF THE ACT SHOULD HAVE B EEN RS. 22,73,553/-. THIS MISTAKE WAS RECTIFIED IN THE PROCEEDINGS UNDER SECTION 154 OF THE ACT BY AN ORDER DATED 25/2/2010 RESULTING THE TOTAL INCOME BEING DETERMINED AT RS.23,15,662/-. ON APPEAL BY THE ASSESSEE THE CIT( A) DISMISSED THE APPEAL OF THE ASSESSEE HOLDING THAT THERE WAS AN APPARENT MISTAKE AND THAT THE MERITS OF THE ADDITION MADE UNDER SECTION 68 OF THE ACT CANNOT BE AGITATED IN THE APPEAL ORDER UNDER SECTION 154 OF THE ACT AND T HAT THE SAME CAN BE DONE ONLY IN AN APPEAL AGAINST THE ORDER UNDER SECTION 1 44 OF THE ACT. AGGRIEVED BY THIS ORDER OF THE CIT(A) THE ASSESSEE HAS FILED ITA NO.2370/M/2011. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS. AS FAR AS ITA NO.2369/M/11 IS CONCERNED WE FIND THAT THE ASSESSEE HAD GIVEN THE D ETAILS THAT WERE CALLED FOR BY THE AO IN THE NOTICE UNDER SECTION 142 (1) OF TH E ACT. THESE DETAILS HAVE ALREADY BEEN SET OUT IN THE EARLIER PART OF THIS OR DER. WE HAVE ALSO SEEN THE NOTICES ISSUED BY THE AO IN THE COURSE OF ASSESSMEN T PROCEEDINGS AND THE NON-COMPLIANCE OF THE ASSESSEE TO SUCH NOTICES. TH E LD. COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THAT MR. JHUNJHUNWAL SRIKRISHNAN JWALPRASAD, DIRECTOR OF THE COMPANY WAS INCHARGE OF THE COMPANYS DAY TO DAY AFFAIRS AT MUMBAI. THE OTHER DIRECTORS WERE RE SIDING AT CALCUTTA. MR. JHUNJHUNWAL SRIKRISHNAN JWALPRASAD WAS DIAGNOSED AS SUFFERING FROM CANCER AND, THEREFORE, COULD NOT ATTEND THE PROCEED INGS BEFORE THE AO. THAT IS THE REASON WHY THE FINAL SHOW CAUSE NOTICE DATED 10/11/2008 WAS SENT BY THE AO TO THE KOLKATTA ADDRESS OF THE OTHER DIRECTO RS. IT WAS FURTHER BROUGHT TO OUR NOTICE THAT MR. JHUNJHUNWAL SRIKRISHNAN JWAL PRASAD ULTIMATELY DIED ON 19/4/2010 AND THAT WAS THE TIME WHEN THE PROCEED INGS BEFORE CIT(A) HAD COME UP FOR HEARING. LD. COUNSEL FOR THE ASSES SEE THUS SUBMITTED THAT BECAUSE OF THE AFORESAID CIRCUMSTANCES THE ORDER OF THE CIT(A) SHOULD BE SET ASIDE AND THE AO SHOULD BE DIRECTED TO MAKE AN ASSE SSMENT AFRESH. ITA NO.2369/MUM/2011(A.Y. 2006-07) ITA NO.2370/MUM/2011(A.Y.2006-07) 7 9. WE ARE OF THE VIEW THAT THE FACTS AND CIRCUMSTA NCES BROUGHT TO OUR NOTICE PREVENTED THE ASSESSEE FROM COMPLYING WITH THE VARI OUS REQUIREMENTS AT THE TIME OF ASSESSMENT. IN THE INTEREST OF JUSTICE WE FEEL THAT THE ORDERS OF THE CIT(A) HAVE TO BE SET ASIDE AND THE ISSUE RAISED BY THE ASSESSEE BEFORE CIT(A) HAVE TO BE RESTORED TO THE AO FOR FRESH CONSIDERATI ON. WE DIRECT ACCORDINGLY. WE ALSO DIRECT THE ASSESSEE TO MAKE PROPER COMPLIAN CE BEFORE THE AO TO ENABLE THE AO TO DECIDE THE ISSUE AFRESH. THE AO W ILL OFFER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. FOR STATISTICAL PURP OSES BOTH THESE APPEALS ARE TREATED AS ALLOWED. 10. IN THE RESULT, BOTH THE APPEALS BY THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 20 TH DAY OF JAN. 2012. SD/- SD/- (R.K.PANDA ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED. 20 TH JAN.2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RF BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.2369/MUM/2011(A.Y. 2006-07) ITA NO.2370/MUM/2011(A.Y.2006-07) 8 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 16/1/2012 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 17/1/2012 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPR OVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER