Victor Tradelink Pvt. Ltd., Kolkata V. ITO, Ward - 9(2), Kolkata , Kolkata

ITA 2435/KOL/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6328 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 27-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Opportunity of being heard; Principle of natural justice; Reassessment proceedings
• Section: 142(1); 131; 68; 263; 2

Judgement Text

1 ITA NO.2435/KOL/2016 VICTOR TRADELINK P. LTD., AY- 2009-10 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOLK ATA () .., . ' # $% % , '() [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 2435/KOL/2016 ASSESSMENT YEAR: 2009-10 VICTOR TRADELINK PVT. LTD. (PAN: AACCV8005H) VS. INCOME-TAX OFFICER, WD-9(2), KOLKATA APPELLANT RESPONDENT DATE OF HEARING 15.03.2018 DATE OF PRONOUNCEMENT 09.05.2018 FOR THE APPELLANT SHRI MIRAJ D. SHAH, AR FOR THE RESPONDENT SHRI G. MALLIKARJUNA, CIT, DR ORDER PER SHRI A.T.VARKEY, JM THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF LD. CIT(A)-3, KOLKATA DATED 22.11.2016 FOR AY 2009-10. 2. THE IMPUGNED ORDER OF LD. CIT(A) IS AN EX PARTE ORDER. THE LD. CIT (A) IN ORDER TO DECIDE THE APPEAL EX PARTE HAS GIVEN THE REASON FOR DOING SO AT PARA 2 OF HIS ORDER WHICH IS REPRODUCED AS UNDER: 2. THE CASE WAS FIXED FOR HEARING ON 08.11.2016. THE CASE HAS GONE UNREPRESENTED AND NEITHER ANY FURTHER TIME WAS SOUGHT BY WAY OF AN AD JOURNMENT APPLICATION. THE APPELLANT DOES NOT APPEAR TO BE SERIOUS ABOUT PURSUING THIS A PPEAL. HENCE, I PROCEED TO DECIDE THE APPEAL ON THE BASIS OF MATERIAL ON RECORD. 3. FROM A READING OF THE ABOVE REASONING, IT IS EVI DENT THAT LD. CIT (A) FIXED THE HEARING OF THE APPEAL ONLY ON 08.11.2016 AND SINCE NONE REPRESENTED ON BEHALF OF ASSESSEE, HAS PASSED THE EX PARTE ORDER. AS PER THE LD. AR, THE ASSESSEE DID NOT RECEIVE ANY NOTICE OF HEARING FIXED ON 08.11.2016, SO THE IMPUGNED ORDER IS FRAGILE FOR VIOLATION OF NATURAL JUSTICE. WE NOTE THAT LD. CIT (A) HAS NOT GIVEN AN Y DETAILS OF THE NOTICE ISSUED BY HIS OFFICE AS TO WHEN IT WAS ISSUED AND FOR WHICH DATE IT WAS FIXED FOR HEARING ETC. OR WHETHER THE NOTICES GOT UNSERVED ETC. NO DETAILS ARE MENTI ONED BY LD. CIT (A). THE LD. CIT (A) FOUND FAULT WITH THE ASSESSEE NOT APPEARING BEFORE HIM ON 08.11.2016 AND HAVING NOT FILED ANY ADJOURNMENT APPLICATION CAME TO THE CONCLUSION THAT ASSESSEE IS NOT INTERESTED IN PURSUING THE APPEAL WHICH ACTION OF LD. CIT (A) CAN NOT BE COUNTENANCED. 2 ITA NO.2435/KOL/2016 VICTOR TRADELINK P. LTD., AY- 2009-10 4. COMING TO THE AOS ORDER, WE NOTE THAT THE AO WA S GIVING EFFECT TO THE ORDER OF LD. CIT PASSED U/S. 263 OF THE ACT WHEREIN THE LD. CIT HAS GIVEN THE FOLLOWING GUIDELINES AS TO HOW TO INVESTIGATE. XXXIV) EXAMINE THE GENUINENESS AND SOURCE OF SHARE CAPITAL, NOT ON A TEST CHECK BASIS, BUT IN RESPECT OF EACH AND EVERY SHAREHOLDER BY CONDUCTING INDEPENDENT ENQUIRY NOT THROUGH THE ASSESSEE. THE BANK ACCOUNT FOR THE ENTIRE PERIOD S HOULD BE EXAMINED IN THE COURSE OF VERIFICATION TO FIND OUT THE MONEY TRAIL OF THE SHA RE CAPITAL. XXXV) FURTHER THE AO SHOULD EXAMINE THE DIRECTORS A S WELL AS EXAMINE THE CIRCUMSTANCES WHICH NECESSITATED THE CHANGE IN DIRECTORSHIP IF AP PLICABLE. HE SHOULD EXAMINE THEM ON OATH TO VERIFY THEIR CREDENTIALS AS DIRECTOR AND REACH A LOGICAL CONCLUSION REGARDING THE CONTROLLING INTEREST. XXXVI) THE AO IS DIRECTED EXAMINE THE SOURCE OF REA LIZATION FROM THE LIQUIDATION OF ASSETS SHOWN IN THE BALANCE SHEET AFTER THE CHANGE OF DIRE CTORS, IF ANY AFTER CONDUCTING THE INQUIRIES & VERIFICATION AS DIRECTED ABOVE, THE AO SHOULD PAS S A SPEAKING ORDER, PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. HOWEVER, WE NOTE THAT AOS INVESTIGATION AS PER HIS OWN WORDS AS STATED AT PAGE 2 IS AS UNDER: IN COMPLIANCE TO THE DIRECTIONS OF THE LD. CIT, K OLKATA-III, NOTICE U/S. 142(1) OF THE ACT WAS ISSUED TO THE ASSESSEE COMPANY REQUIRING IT TO APPEAR BEFORE THE UNDERSIGNED, EITHER PERSONALLY OR THROUGH ITS AUTHORISED REPRESENTATIVE , AND FURNISH CERTAIN DETAILS. SUMMON U/S. 131 OF THE ACT WAS ALSO ISSUED TO THE DIRECTOR S OF THE COMPANY FOR THEIR PERSONAL ATTENDANCE. HOWEVER, NEITHER ANY ONE ON BEHALF OF THE ASSESSEE NOR THE DIRECTORS OF THE ASSESSEE COMPANY APPEARED BEFORE THE UNDERSIGNED TI LL DATE. SUMMONS U/S. 131 OF THE ACT WERE ALSO ISSUED TO DIRECTORS OF THE SUBSCRIBER COM PANIES, AS CLAIMED BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDING FOR THEIR PERSONAL ATTENDANCE ONCE AGAIN NONE O THE DIRECTORS OF THE SUBSCRIBER COMPANIES APPEARED BEFO RE THE UNDERSIGNED TILL DATE. SINCE THERE WAS NO COMPLIANCE ON THE PART OF THE DIRECTOR S OF THE ASSESSEE COMPANY OR THE DIRECTORS OF THE SUBSCRIBER COMPANIES, THERE IS NO OPTION BUT TO PASS THE ORDER EX PARTE. 6. SO, WE NOTE THAT INVESTIGATION AS PER THE GUIDEL INES OF THE LD. CIT HAS NOT BEEN ADHERED TO BY THE AO THAT IS ONE ASPECT WHICH HAS B EEN POINTED OUT BY THE LD AR ASSAILING THE DECISION OF AO. 7. HOWEVER THE MAIN GRIEVANCE OF THE ASSESSEE IS TH AT NO PROPER OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO DISCHARGE THE ONUS CASTED UPON I T AS REQUIRED IN SEC. 68 MATTERS. ACCORDING TO ASSESSEE, NO STATUTORY NOTICES WERE SE RVED UPON IT. WE NOTE THAT AO HAS NOT GIVEN ANY DETAILS OF THE STATUTORY NOTICES, WHEN IT WAS ISSUED ETC., DATE ON WHICH IT WAS FIXED ARE NOT DISCERNABLE FROM THE INVESTIGATION CONDUCTE D BY AO (SUPRA) SO, WE ARE OF THE OPINION THAT NO PROPER OPPORTUNITY WAS GIVEN TO ASS ESSEE BY AO DURING THE REASSESSMENT PROCEEDINGS. THE HONBLE (THREE JUDGE BENCH) OF THE HONBLE SUPREME COURT IN TIN BOX COMPANY VS. CIT (2001) 249 ITR 216 (SC) HAS HELD A S 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 R EADS THUS : 3 ITA NO.2435/KOL/2016 VICTOR TRADELINK P. LTD., AY- 2009-10 WE WILL STRAIGHTAWAY AGREE WITH THE ASSESSEES SUB MISSION THAT THE INCOME-TAX OFFICER HAD NOT GIVEN TO THE ASSESSEE PROPER OPPORTUNITY OF BEI NG 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 RE ASONABLE OPPORTUNITY OF SETTING OUT HIS CASE. WE, THEREFORE, DO NOT AGREE WITH 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. 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 OPPORTUNITY OF H EARING 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 THE ASSESSEE. THE APPEALS ARE ALLOWED. THE ORDER UNDER CHALLENGE IS SET ASIDE. THE ASSESSMENT ORDER, THAT OF THE COMMISSIONER (APPEALS) AND OF THE TRIBUNAL A RE ALSO SET ASIDE. THE MATTER SHALL NOW BE REMANDED TO THE ASSESSING AUTHORITY FOR FRESH CO NSIDERATION, AS AFORESTATED. 8. WE ALSO NOTE THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JANSAMPARK ADVERTISING & MARKETING PVT. LTD. IN ITA NO. 525/20 14 DATED 11.03.2015 WHEREIN AFTER NOTICING INADEQUATE ENQUIRY BY AUTHORITIES BELOW HA VE HELD AS UNDER: 41. WE ARE INCLINED TO AGREE WITH THE CIT(APPEALS) , AND CONSEQUENTLY WITH ITAT, TO THE EXTENT OF THEIR CONCLUSION THAT THE ASSESSEE HEREIN HAD COME UP WITH SOME PROOF OF IDENTITY OF SOME OF THE ENTRIES IN QUESTION. BUT, FROM THIS INF ERENCE, OR FORM THE FACT THAT THE TRANSACTIONS WERE THROUGH BANKING CHANNELS, IT DOES NOT NECESSAR ILY FOLLOWING THAT SATISFACTION AS TO THE CREDITWORTHINESS OF THE PARTIES OR THE GENUINENESS OF THE TRANSACTIONS IN QUESTION WOULD ALSO HAVE BEEN ESTABLISHED. 42. THE AO HERE MAY HAVE FAILED TO DISCHARGE HIS OB LIGATION TO CONDUCT A PROPER INQUIRY TO TAKE THE MATTER TO LOGICAL CONCLUSION. BUT CIT(APPE ALS), HAVING NOTICED WANT OF PROPER INQUIRY, COULD NOT HAVE CLOSED THE CHAPTER SIMPLY B Y ALLOWING THE APPEAL AND DELETING THE ADDITIONS MADE. IT WAS ALSO THE OBLIGATION OF THE F IRST APPELLATE AUTHORITY, AS INDEED OF ITAT, TO HAVE ENSURED THAT EFFECTIVE INQUIRY WAS CARRIED OUT, PARTICULARLY IN THE FACT OF THE ALLEGATIONS OF THE REVENUE THAT THE ACCOUNT STATEME NTS REVEAL UNIFORM PATTERN OF CASH DEPOSITS OF EQUAL AMOUNTS IN THE RESPECTIVE ACCOUNTS PRECEDI NG THE TRANSACTIONS IN QUESTION. THIS NECESSITATED A DETAILED SCRUTINY OF THE MATERIAL SU BMITTED BY THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION148 ISSUED BY THE AO, AS ALSO T HE MATERIAL SUBMITTED AT THE STAGE OF APPEALS, IF DEEMED PROPER BY WAY OF MAKING OR CAUSI NG TO BE MADE A 'FURTHER INQUIRY IN EXERCISE OF THE POWER UNDER SECTION 250(4). HIS APP ROACH NOT HAVING BEEN ADOPTED, THE IMPUGNED ORDER OF ITAT, AND CONSEQUENTLY THAT OF CI T(APPEALS), CANNOT BE APPROVED OR UPHELD.' 9. IN VIEW OF THE AFORESAID ORDER AND IN THE LIGHT OF THE HONBLE SUPREME COURTS DECISION IN TIN BOX COMPANY (SUPRA) AND TAKING INTO CONSIDERATION THE FACT THE ORDER OF THE LD. CIT PASSED U/S. 263 OF THE ACT IN SIMILAR CASES BEING UPHELD UP TO THE LEVEL OF APEX COURT, AND TAKING NOTE OF HONBLE DELHI HIGH COURT S ORDER IN JANSAMPARK ADVERTISING & 4 ITA NO.2435/KOL/2016 VICTOR TRADELINK P. LTD., AY- 2009-10 MARKETING PVT. LTD. (SUPRA), WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF AO FOR DE NOVO ASSESSMENT AND T O DECIDE THE MATTER IN ACCORDANCE TO LAW AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. 10. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES . ORDER IS PRONOUNCED IN THE OPEN COURT ON 9TH MAY, 2018. SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 9TH MAY, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT VICTOR TRADELINK PVT. LTD., C/O D. J. S HAH & CO., KALYAN BHAVAN, 2, ELGIN ROAD, KOLKATA-700 020. 2 RESPONDENT ITO, WARD-9(2), KOLKATA. 3 . THE CIT(A), KOLKATA 4. 5. CIT , DR, ITAT, KOLKATA. / TRUE COPY, BY ORDER, SENIOR PVT. SECY .