M/s Jamuna Gems & Jewellers Pvt. Ltd., Kolkata V. D.C.I.T., Circle-9(1), Kolkata, Kolkata

ITA 252/KOL/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1701 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 03-05-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 10-02-2017
• Court: TRIBUNAL
• Department Lawyers: SALLONG YADEN JCIT LD
• Assessee Lawyers: S K TULIYAN LD
• Keywords: Principle of natural justice; Question of law
• Section: 143(3); 234B; 68

Judgement Text

1 ITA NO. 252/K/17 JAMUNA GEMS & JEWELLERS P.LTD IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIA L MEMBER I.T.A NO. 252/KOL/2017 ASSESSMENT YEAR: 2012-13 M/S. JAMUNA GEMS & VS. DEPUTY COMMISSIONER O F JEWELLERS PVT. LTD INCOME-TAX, CIR-9(1) PAN:AADCP9490M KOLKATA [ APPELLANT] [ RESPONDENT ] FOR THE APPELLANT : SHRI S.K TULIYAN, ADVOCATE, A DVOCATE, LD.AR FOR THE RESPONDENT : SHRI SALLONG YADEN, JCIT, LD .SR.DR DATE OF HEARING : 11-05-2017 DATE OF PRONOUNCEMENT : 31-05-2017 ORDER SHRI S.S.VISWANETHRA RAVI, JM: THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER D ATED 08-12-2016 OF CIT(A),3, KOLKATA FOR THE ASSESSMENT YEAR 2012-1 3. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED AS MANY A S NINE GROUNDS OF APPEAL. GROUND NOS. 1 TO 9:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE ASSESSMENT ORDER PASSED U/S. 143(3) OF THE ACT DATED 28/03/2015 BY THE LD. ASSES SING OFFICER (A. 0.) ASSESSING THE TOTAL INCOME AT RS.4,95,04,7101- IS ARBITRARY, ERRONEOUS , WITHOUT PROPER REASONS AND HENCE UNSUSTAINABLE IN LAW. 2. THAT THE LD. A.O. ACTED ARBITRARILY AND CAPRICIO USLY IN HAVING INVOKED PROVISIONS OF SEC. 68 OF THE ACT AND MAKING ADDITION OF RSA,50,00,0001- ON A CCOUNT OF RECEIPT OF SHARE APPLICATION MONEY FROM RANG VARDHAN FEBTRADE PVT. LTD. IN SPITE OF THE FACT THAT ALL THE EVIDENCES REQUIRED FOR ESTABLISHING THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION HAD BEEN FILED DURING THE IMPUGNED ASSESSMENT PROCEEDING. 3. THAT THE LD. A.O. FURTHER ERRED IN HAVING ALLEGE D BOGUS TRANSACTIONS WITH NON-EXISTENT ENTITIES SOLELY ON THE BASIS OF THE INSPECTOR'S REP ORT WITHOUT CONSIDERING THE FACTS THAT ALL THE CORPORATE ENTITIES WITH WHOM RANG VARDHAN FEBTRADE PVT. LTD. HAD TRANSACTIONS ARE REGISTERED WITH ROC, CONDUCTING BUSINESS FROM THEIR RESPECTIVE ADDRESSES REGISTERED WITH THE ROC AND LT. DEPARTMENT, ASSESSED TO INCOME-TAX AND TRANSACTIONS ARE THROUGH BANKING CHANNEL. 4. THAT THE LD. A.O. ERRED IN RELYING ON AN ALLEGED INSPECTOR'S REPORT FOR MAKING ADDITION U/S. 68 OF THE ACT OF AN AMOUNT OF RSA,50,00,0001- WITHOUT CONFRONTING THE ASSESSEE WITH THE ALLEGED REPORT OR PROVIDING THE ASSESSEE AN OPPORTUNITY TO REBUT THE ALLEGED INSPECTOR'S REPORT, THEREBY NOT FOLLOWING THE RULES OF NATURAL JUSTICE. 2 ITA NO. 252/K/17 JAMUNA GEMS & JEWELLERS P.LTD 5. THAT THE LD. A.O. ERRED IN HAVING ALLEGED ON SHE ER SUSPICION THAT THE MODUS OPERANDI IN THE INSTANT CASE WAS TO CREATE NECESSARY FUNDS BY BOGUS TRANSACTIONS TO BE UTILIZED BY THE ULTIMATE BENEFICIARY, I.E. THE APPELLANT-COMPANY, IN THE GAR B OF SHARE APPLICATION MONEY WITHOUT RECORDING ANY PLAUSIBLE DISSATISFACTION OVER THE EV IDENCES PRODUCED IN SUPPORT OF THE TRANSACTIONS AND BRINGING ON RECORD ANY CONTRARY EV IDENCE TO DISLODGE THE CLAIM OF THE APPELLANT. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, WHEN APPARENT IS NOT REAL ON THE FACE OF THE FACTS, EVIDENCE ON RECORD AND CIRCUMSTANCES OF THE CASE COULD NOT HAVE BEEN DENIED BY ANY CONCEIVABLE EVIDENCE, THE IMPUGNED ACTION OF TH E LD. A.O. ON HUMAN PROBABILITY CANNOT BE TERMED TO BE JUSTIFIED AND VALID IN THE EYE OF LAW AND HENCE THE ADDITION OF RSA,50,00,000/- MADE ON THAT SCORE IS LIABLE TO BE DELETED. 7. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. A.O. MISDIRECTED HIMSELF IN HAVING ADDED BACK THE ENTIRE AMOUNT OF RS. 4,50,00, 000I- RECEIVED AGAINST ALLOTMENT OF SHARES TO RANG VARDHAN FEBTRADE PVT. LTD. AS UNEXPLAINED C ASH CREDIT IN SPITE OF THE FACT THAT CONDITIONS PRECEDENT FOR INVOKING PROVISIONS OF SEC . 68 OF THE ACT ARE NOT FULFILLED IN THE INSTANT CASE. 8. THAT AS THE COMPUTATION OF ASSESSED TOTAL INCOME WAS ERRONEOUS ON THE FACTS OF THE CASE, THE INTERESTS CHARGED U/S. 234B & 234C SHOULD, ACCORDIN GLY, BE DIRECTED TO BE DELETED/MODIFIED. 9. THAT THE ORDER OF THE LD. A.O. SHOULD, ACCORDING LY, BE MODIFIED AND YOUR APPELLANT BE GIVEN SUCH RELIEF(S) AS PRAYED FOR. . 10. THAT THE APPELLANT CRAVES LEAVE TO AMEND, ALTER , MODIFY, SUBSTITUTE, ADD TO, ABRIDGE AND/ OR RESCIND ANY OR ALL OF THE ABOVE GROUNDS. 3. THEREAFTER, THE ASSESSEE FILED TO ADMIT THE FOLL OWING ADDITIONAL GROUND OF APPEAL:- '10. THE LD. CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS.4,,50,00, 0001- U/S 68 OF THE INCOME TAX ACT, 1961 MADE BY THE LD. AO BY RELYING ON AN A LLEGED REPORT OF THE DEPARTMENT'S INSPECTOR THAT NONE OF THE SHARE APPLICANT'S WERE F OUND AT THEIR ADDRESSES AND WITHOUT CONFRONTING THE APPELLANT WITH THE ALLEGED REPORT O R PROVIDING THE APPELLANT WITH AN OPPORTUNITY TO REBUT THE ALLEGED REPORT, THEREBY VIOLATING THE PRINCIPLES OF NATURAL JUSTICE. 11. THE LD. C1T(A) ERRED IN NOT ADJUDICATING THE AP PELLANT'S GROUND PRESSED BEFORE HIM REGARDING THE LD. AO'S FAILURE TO FOLLOW THE PRINC IPLE OF NATURAL JUSTICE IN NOT PROVIDING IT WITH A COPY OF THE ALLEGED REPORT OF THE DEPARTMENT'S INSP ECTOR, BASED ON WHICH THE LD. AO MADE THE IMPUGNED ADDITION OF RS. 4, 50,00,000/- U/S 68 OF T HE INCOME TAX ACT, 1961. 12. IN LIGHT OF THE FACT THAT THE LD. CIT(A) HAS I GNORED THE PRINCIPLE OF NATURAL JUSTICE, THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE JAR FRESH ADJUDI CATION. ' THE AFORESAID GROUNDS ARISE OUT OF THE IMPUGNED APP ELLATE ORDER PASSED BY THE LD. CIT(A)-3, KOLKATA ON 08/12/2016, UPHOLDING THE LD. AO'S ACTIO N OF MAKING ADDITION U/S 68 OF THE INCOME TAX ACT, 1961, RELYING ON AN ALLEGED REPORT OF A DE PARTMENT INSPECTOR AND USING IT AGAINST THE APPELLANT WITHOUT AFFORDING ANY OPPORTUNITY OF BEIN G HEARD TO IT THUS FAILING TO FOLLOW THE PRINCIPLE OF NATURAL JUSTICE AND THE FIRST GROUND O F APPEAL ALSO ARISES OUT OF THE ORDER PASSED BY THE LD. CIT(A)-3, KOLKATA ON 08/12/2016 AND THE WHO LE FACT LEADING TO THE AFORESAID GROUNDS BEING ON RECORD WHICH DOES NOT REQUIRE ANY INVESTIG ATION OF FACT, AND THE GROUND BEING THE QUESTION OF LAW ARISING OUT OF THE IMPUGNED APPELLA TE ORDERS MAY BE ADMITTED. 4. THE LD. COUNSEL FOR THE ASSESSEE PRAYED FOR ADMI SSION OF THESE ADDITIONAL GROUNDS AS ALL THE FACTS ARE ON RECORD A ND AS THIS IS A LEGAL ISSUE NOT REQUIRING ANY INVESTIGATION INTO FRESH FACTS. 5. THE LD.AR SUBMITS THAT THE AO MADE ADDITION U/S. 68 OF THE ACT BY RELYING ON THE REPORT OF THE INCOME-TAX INSPECTOR A ND THE REPORT WAS NOT 3 ITA NO. 252/K/17 JAMUNA GEMS & JEWELLERS P.LTD CONFRONTED TO THE ASSESSEE IN THE ASSESSMENT PROCEE DINGS. THE LD.AR SUBMITS TO DECIDE THE ADDITIONAL GROUND, WHICH DOES NOT REQUIRE ANY INVESTIGATION OF FACTS. HE RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF NTPC ( SUPRA). 6. THE LD.DR SUBMITTED THAT THE FACTS RELATING TO ADDITIONAL GROUNDS RAISED BY THE ASSESSEE WERE ON RECORD AND ARGUED TH AT THE ADDITIONAL GROUND BE TAKEN UP FIRST AS A PRIMARY ISSUE. 7. HAVING HEARD BOTH THE PARTIES AND PERUSING THE M ATERIAL AVAILABLE ON RECORD, WE FIND THAT THERE IS NO NEW MATERIAL/EV IDENCE, WHICH IS REQUIRED TO BE REFERRED IN DECIDING THE ADDITIONAL GROUND. IN FACT, THIS GROUND ARISES IN THIS APPELLATE ORDER ITSELF. IN VI EW OF THE SAME, WE ADMIT THE ADDITIONAL GROUND AND PROCEED TO HEAR THE APPE AL. 8. THE LD.AR SUBMITS THAT THE ASSESSEE IS A COMPANY AND ENGAGED IN THE BUSINESS OF MANUFACTURING OF GOLD ORNAMENTS. TH E AO MADE ADDITION OF RS.4,50,000/- BEING RECEIPT OF SHARE APPLICATION MONEY FROM M/S. RANG VARDHAN FABTRADE PVT. LTD. THE LD.AR SUBMITS THAT T HE ADDITION WAS MADE ON THE BASIS OF AN INCOME-TAX INSPECTORS REPORT AN D REFERRED TO PARA 9 OF THE ASSESSMENT ORDER AND ARGUED THAT THE SAID REPOR T WAS NOT CONFRONTED TO THE ASSESSEE AND AS SUCH, THERE WAS NO VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. THE LD.AR ALSO SUBMITS THAT THE ASSESSEE H AS RAISED A GROUND BEFORE THE CIT-A CHALLENGING THE ACTION OF THE AO I N NOT CONFRONTING WITH THE SAID REPORT TO THE ASSESSEE. THE CIT-A WITHOUT CONSIDERING THE SAME CONFIRMED THE ADDITION MADE BY THE AO. THE LD.AR AR GUED THAT THE SAID REPORT WAS NOT IN KNOWLEDGE OF THE ASSESSEE AND THE SAME HAS TO BE IGNORED AND CANNOT BE RELIED UPON BY THE AUTHORITIE S FOR THE PURPOSE OF ASSESSMENT UNLESS IT IS CONFRONTED TO THE ASSESSEE. THE LD. AR URGED TO RESTORE THE ISSUE TO THE FILE OF THE AO FOR FRESH A DJUDICATION OF THE SAME AND TO DIRECT THE AO TO SERVE THE COPY OF THE SAID REPORT ON THE ASSESSEE AND PROVIDE AN OPPORTUNITY TO MAKE THEIR SUBMISSION S IN SUCH REPORT. THE LD. DR DID NOT OBJECT TO THE PROPOSITION OF THE LD. AR. 4 ITA NO. 252/K/17 JAMUNA GEMS & JEWELLERS P.LTD 9. HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL AVA ILABLE ON RECORD. WE FIND THAT THE AO MADE THE ADDITION OF RS.4,50,00 ,000/- BY ALSO RELYING ON THE INCOME-TAX INSPECTORS REPORT, WHIC H IS EVIDENT FROM PARA 10 OF THE AOS ORDER. WE ALSO FIND THAT THE ASSESSE E RAISED A GROUND BEFORE THE CIT-A QUESTIONING THE ACTION OF THE AO I N NOT CONFRONTING THE SAID REPORT TO THE ASSESSEE. BUT, HOWEVER, THE CIT- A WITHOUT CONSIDERING THE SAME CONFIRMED THE IMPUGNED ADDITION MADE BY TH E AO, WHICH IS CLEARLY EVIDENT FROM 2 ND PAGE OF PAGE 23 OF THE CIT-AS ORDER. THE CIT-A WHILE NOTING THIS CONTENTION OF THE ASSESSEE DID NO T PROVIDE AN OPPORTUNITY TO THE ASSESSEE. IN VIEW OF THE ABOVE D ISCUSSION, IN THE INTEREST OF JUSTICE, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO THE FILE OF THE AO. ADDITION CANNOT BE BASED ON MATERIA L NOT CONFRONTED TO THE ASSESSEE. THE AO SHALL ENSURE THAT THE SAID REPORT WILL BE SERVED ON THE ASSESSEE AND THE ASSESSEE IS AT LIBERTY TO REBUT TH E SAME AND FILE REQUISITE EVIDENCES, IF ANY, AND TO SUBSTANTIATE ITS CLAIM. I N OTHER WORDS, THE ASSESSEE WOULD BE ENTITLED TO ALL LEGAL OPTIONS ON THIS ISSUE. THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSE. 10. IN VIEW OF THE DECISION ON PRELIMINARY ISSUE AS DISCUSSED, NO SEPARATE ADJUDICATION IS REQUIRED ON THE ORIGINAL G ROUNDS RAISED IN APPEAL MEMO. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 31 -05-2017 SD/- SD/- J. SUDHAKAR REDDY S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 31-05-2017 PP(SR.P.S.) 5 ITA NO. 252/K/17 JAMUNA GEMS & JEWELLERS P.LTD COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT M/S. JAMUNA GEMS & JEWELLERS PVT. LTD 67 BURTOLLA STREET, KOLKATA-700 007. 2 RESPONDENT THE DY. DCIT, CIR-9(1), AAYKAR BHAWAN, P-7 CHOWRINGHEE SQ. KOLKATA-700069. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR.PS/H.O.O ITAT KOLKATA