The ACIT, 1(1), V. M/s Sanvariya Foods Ltd.,

ITA 332/IND/2004

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2417 (ITAT-INDORE)
• Duration Of Justice: 5 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-12-2009
• Assessment Year: 2000-2001
• Appeal Filed On: 07-05-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K K SINGH
• Assessee Lawyers: ANIL KHAA
• Keywords: Bogus Share capital; Additional evidence
• Section: 68; 144

Judgement Text

PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : N.A. I.T.A.NO. 332/IND/2004 A.Y. : 2000-01 ACIT M/S.SANWARIA FOODS LIMITED, 1(1), VS 36-37, INDUSTRIAL AREA, BHOPAL KHEDA ITARSI APPELLANT RESPONDENT APPELLANT BY : SHRI K.K.SINGH, CIT DR RESPONDENT BY : SHRI ANIL KHABYA, C.A. DATE OF HEARING : 23/12/2009 O R D E R PER V.K. GUPTA, A.M. THIS APPEAL FILED BY THE REVENUE ARISES OUT OF ORDER OF THE LD. CIT(A)-I, BHOPAL, DATED 27.2.2004, FOR THE ASSESSME NT YEAR 2000-01. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. IN THIS APPEAL, THE REVENUE HAS RAISED ADDITIONAL G ROUND, WHICH READS AS UNDER :- ADMITTING ADDITIONAL EVIDENCE SPECIALLY WHEN NO CIRCUMSTANCES EXISTED AS MENTIONED IN RULE 46A(1) O F THE PAGE 2 OF 6 INCOME-TAX RULES, 1962, AND THEREBY VIOLATED RULE 4 6-A(2) IN ADMITTING ADDITIONAL EVIDENCE WITHOUT RECORDING THE REASONS IN WRITING. 4. THE LD. DEPARTMENTAL REPRESENTATIVE, AFTER READIN G THE CONTENTS OF THIS ADDITIONAL GROUND CONTENDED THAT A S PER RULE 46-A(2) OF THE INCOME TAX RULES, 1962, THE LD. CIT(A) SHOULD H AVE RECORDED THE REASONS IN WRITING FOR ADMITTING ADDITIONAL EVIDENC ES FILED BY THE ASSESSEE BEFORE HIM. HENCE, THE ORDER OF THE LD. CIT(A) WAS LIABLE TO BE REVERSED MERELY FOR THIS REASON. ON A QUERY FROM THE BENCH, HOWEVER, HE ADMITTED THAT REMAND REPORT HAD BEEN CALLED FROM THE A.O., B UT HE AGAIN REITERATED THAT IT WAS THE SECOND CONDITION I.E. AFTER ADMISSI ON OF ADDITIONAL EVIDENCES, HE WAS LIABLE TO AFFORD AN OPPORTUNITY T O THE A.O. TO ENABLE HIM TO GIVE HIS OBSERVATIONS ON SUCH ADDITIONAL EVI DENCES. 5. THE LEARNED COUNSEL, ON THE OTHER HAND, CONTENDED T HAT ORIGINAL ASSESSMENT WAS FRAMED U/S 144 WITHOUT AFFORDING A S UFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE AND WHATEVER DETAILS WER E SUBMITTED THAT TOO WERE NOT GIVEN PROPER COGNIZANCE BY THE ASSESSING O FFICER. HE FURTHER CONTENDED THAT THE LD. CIT(A) HAD GIVEN ELABORATE F INDINGS IN PARA 7.18, 19 & 7.20 OF HIS ORDER, WHEREIN THE REASONS FOR AD MITTING SUCH ADDITIONAL EVIDENCES WERE ADEQUATELY REFLECTED. HENCE, THE GRO UND RAISED WAS LIABLE TO BE DISMISSED. PAGE 3 OF 6 6. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 7. IT IS NOTED THAT ASSESSMENT HAS BEEN COMPLETED BY T HE ASSESSING OFFICER BY INVOKING THE PROVISIONS U/S 144. THE LD. CIT(A) HAS GIVEN ELABORATE FINDINGS IN RESPECT OF THE MANNER IN WHIC H ASSESSMENT WAS COMPLETED. THE SAID FINDINGS ARE REPRODUCED AS UNDE R :- 7.18 PERUSAL OF THE RECORD OF THE ASSESSMENT PROCE EDINGS REVEALS THAT FIRST SERIOUS ATTEMPT TO GET THE INFOR MATION ON VARIOUS ISSUES WAS MADE BY THE ASSESSING OFFICER BY NOTICE DATED 4.9.2002 WHICH WAS COMPLIED BY THE APPELLANT ON 30.9.02. NEXT NOTICE WAS ISSUED ON 17.2.03 REQUIRIN G THE ATTENDANCE OF THE AUTHORISED REPRESENTATIVE ON 6.3. 03 WHICH WAS COMPLIED BY HIM AS PER THE NOTE SHEET. THE SAID NOTICE DATED 21.3.2003 DOES NOT HAVE ANY CORRESPONDING ENT RY IN THE ORDER SHEET. IN FACT IT APPEARS THAT NOTICE WAS INITIALLY ISSUED IN THE NAMES OF SANWARIA PRODUCTS LTD WHIC H WAS LATER ON CORRECTED AS SANWARIA FOODS LTD. THE NOT ICE WAS FOR HOSHANGABAD ADDRESS AND COMPLIANCE WAS REQUIRED BY 24.3.2003 WHICH ITSELF SUGGESTED THAT PROPER TIME W AS NOT ALLOWED. IN THE REPORT ALSO A.O. HAS NOT MENTIONED ANY DETAILS ABOUT THE SERVICE OF NOTICE DATED 21.3.2003 . 7.19 AS SUCH I FIND MERIT IN THE APPELLANTS CONTENTION THAT NOTICE DATED 21.3.03 WHICH REQUIRED CERTAIN INFORMATION FROM THE APPELLANT BY 24.3.03 WAS NOT SERVED UPON HIM. MOREOVER, THE NOTICE WAS SENT TO PAGE 4 OF 6 HOSHANGABAD AND IT WAS UNLIKELY THAT THE SAME COULD HAVE BEEN SERVED AND COMPLIED BY THE APPELLANT IN THE TIME ALLOWED BY THE ASSESSING OFFICER. THE A.O. DID NOT RECORD THE FACT OF NON-COMPLIANCE IN THE NO TE SHEET SO I AGREE THAT IT WAS PREMATURE ON THE PART OF THE A.O. FOR FRAME ASSESSMENT U/S 144. HOWEVER, SIN CE THE APPELLANT IS AGITATING VARIOUS DISALLOWANCES, I T WILL BE APPROPRIATE TO ADJUDICATE THEM ON MERIT AFT ER CONSIDERING THE APPELLANTS SUBMISSIONS. ( FOR READ Y REFERENCE COPY OF THE NOTICE DATED 21.3.2001 IS ENCLOSED AS ANENX-I TO THIS APPELLATE ORDER.) 7.20 SINCE THE ASSESSMENT IS NOT BEING ANNULLED FOR THE TECHNICAL MISTAKE AND OPPORTUNITY IS BEING GIVEN TO THE APPELLANT AT THE APPELLATE STAGE, THE GROUND IS ADJUDICATED AGAINST THE APPELLANT. 8. FROM THE BARE PERUSAL OF THE ABOVE FINDINGS, IT IS APPARENT THAT THERE EXIST SUFFICIENT REASONS FOR ADMISSION OF ADD ITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE THE LD. CIT(A). WE ARE FURTHER OF THE VIEW THAT THOUGH THE LD. CIT(A) HAS NOT GIVEN REASONS IN A SP ECIFIC MANNER FOR ADMISSION OF ADDITIONAL EVIDENCES, FILED BY THE ASS ESSEE BEFORE HIM. HOWEVER, HIS FINDINGS REPRODUCED ABOVE ITSELF CONST ITUTE REASONS AND JUSTIFY HIS ACTION. ACCORDINGLY, THE ADDITIONAL GRO UND FILED BY THE REVENUE IS DISMISSED. PAGE 5 OF 6 9. IN THE OTHER GROUNDS, THE VARIOUS ADDITIONS DELETED BY THE CIT(A) HAVE BEEN CHALLENGED ON MERITS. HOWEVER, THE LD. CIT DR PREFERRED TO ARGUE GROUND NO.5, FIRSTLY, WHEREIN TH E ADDITION OF RS. 1 CRORE MADE BY THE ASSESSING OFFICER U/S 68 ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL HAD BEEN DELETED BY THE CIT(A). THE LD. CIT JDR NARRATED THE FACTS BY DRAWING OUR ATTENTION TO RELEVANT PARAGRAP HS OF THE ASSESSMENT ORDER WHEREIN THE A.O. HAD POINTED OUT VARIOUS DISC REPANCIES AND CONTENDED THAT THE LD. CIT(A)S DECISION WAS NOT BA SED ON PROPER APPRECIATION OF FACTS AS THERE WERE CROSS ENTRIES I N THE BANK ACCOUNT FROM WHERE THE MONEY HAD BEEN GIVEN AND THERE WERE ALSO SOME DISCREPANCIES IN THE CONFIRMATION FILED BY THE ASSESSEE. HE FURTH ER CONTENDED THAT EVEN IN RESPECT OF OTHER GROUNDS, SIMILAR WAS THE POSITI ON. 10. THE LEARNED COUNSEL, ON THE OTHER HAND, DREW OUR AT TENTION TO PAGE NOS. 1, 2 & 3 OF THE PAPER BOOK AND CONTENDED THAT SHARES OF THE ASSESSEE COMPANY WERE HELD BY THE FIRM THROUGH ITS PARTNERS. HE FURTHER CONTENDED THAT THE FUNDS CAME FROM SANWARIA AGRO TO M/S. N.S. CORPORATION AND WITHIN THE SAME FUNDS WERE UTILIZED FOR ACQUIRING SHARES OF THE ASSESSEE COMPANY. AT THIS STAGE, HIS ATTENTI ON WAS DRAWN TO THE CONFIRMATION GIVEN BY THE PERSON WHO WAS A PARTNER OF THE FIRM M/S. N.S. CORPORATION, WHEREIN IT HAS BEEN STATED THAT HE HAD SUBSCRIBED TO THE SHARE CAPITAL OF THE ASSESSEE COMPANY. HOWEVER, AS PER COPY OF ACCOUNT PAGE 6 OF 6 OF THE SAID FIRM, THE AMOUNT HAD BEEN SHOWN AS INVE STED BY THE FIRM IN THE ASSESSEE COMPANYS CAPITAL. HENCE, BOTH THESE FACTS STOOD CONTRADICTORY TO EACH OTHER. THE LEARNED COUNSEL COULD NOT GIVE A NY EFFECTIVE REPLY. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE MA TTER REQUIRES RE- CONSIDERATION, HENCE, WE RESTORE THIS ISSUE TO THE FILE OF A.O. FOR ADJUDICATION THEREOF AS PER LAW AFTER GIVING A DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. SINCE THIS IS THE MAJOR GROUND AND THE ASSESSMENT HAD BEEN FRAMED U/S 144 AND, THEREFORE, TO MEET THE END S OF JUSTICE, WE RESTORE ALL OTHER ISSUES ALSO TO THE FILE OF A.O. FOR ADJUD ICATION THEREOF AFRESH AS PER LAW. THUS, ALL THE ISSUES RAISED IN THIS APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 23 RD DECEMBER, 2009. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23 RD DECEMBER, 2009. CPU* 2912