M/s Shree Gurukripa Ores (P) Ltd., Howrah V. ITO, WD-1(1), KOLKATA, Kolkata

ITA 342/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1852 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 02-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARJEE
• Section: 133(6); 131; 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH KOLKATA BEFORE SHRI N.V. VASUDEVAN, JM &DR. A.L.SAINI, AM ./ITA NO.342/KOL/2016 ( / ASSESSMENT YEAR: 2006-07) M/S SHREE GURUKRIPA ORES (P) LTD. 42, DOBSON ROAD, 5 TH FLOOR, HOWRAH 711 101. VS. ITO, WARD-1(1), KOLKATA AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069. ./ ./PAN/GIR NO. : AAJCS 4982 K (APPELLANT) .. (RESPONDENT) APPELLANT BY :SHRI SUBASH AGARWAL, ADVOCATE RESPONDENT BY :SHRI ARINDAM BHATTACHARJEE, ADDL. CIT / DATE OF HEARING : 23/11/2017 /DATE OF PRONOUNCEMENT : 25/01/2018 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 2006-07, IS DIRECTED AGAINST AN ORDER PASSED BY THE COMMISSIONER OF INCOME TAX(APPEALS)-I, KOLKATA IN APPEAL NO.878/CIT(A)-1/W-1(1)/2014-15 DATED 28.12.2015, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER U/S.144 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), DATED 29.12.2008. 2.THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.80,09,601/- AS UNEXPLAINED INCOME U/S 68. 2. FOR THAT THE LD. CIT(A) ERRED IN IGNORING THE FAVOURABLE REMAND REPORT SUBMITTED BY THE AO TO HIM, WHEREIN THE AO HAD GIVEN A FAVOURABLE FINDING IN RESPECT OF THE MAJORITY OF LOAN CREDITORS. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ALL OR ANY OF THE GROUNDS OF APPEAL M/S SHREE GURUKRIPA ORES (P) LTD. ITA NO.342/KOL/2016 ASSESSMENT YEAR: 2006-07 PAGE | 2 3. THE BRIEF FACTS APROPOS THIS ISSUE ARE THAT ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE A.Y. 2006-07 ON 29.03.2007 DECLARING A TOTAL LOSS OF RS.23,108/-. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS DULY PROCESSED U/S 143(1) OF THE ACT. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY U/S 143(2) OF THE ACT AND THE AO HAS COMPLETED THE ASSESSMENT BY MAKING ADDITION OF RS.80,09,601/- ON ACCOUNT OF UNSECURED LOAN. DURING THE ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO FILE THE DETAILS OF UNSECURED LOAN CREDITORS WITH ITS LOAN CONFIRMATION ACCOUNTS. HOWEVER, THE ASSESSEE HAS FAILED TO FILE ALL DETAILS OF UNSECURED LOAN CREDITORS. BESIDES, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE DID NOT COOPERATE WITH THE ASSESSING OFFICER AND DID NOT FILE THE DETAILS OF EVIDENCES BEFORE THE AO, THEREFORE, THE AO HAS PASSED THE ORDER U/S 144 OF THE I.T. ACT, 1961 AND MADE THE ADDITION AT RS.80,09,601/-. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CIT(A) ASKED FOR REMAND REPORT FROM THE AO AND ACCORDINGLY, THE AO SUBMITTED REMAND REPORT. THE LD. CIT(A) OBSERVED THAT THE AO IN THE REMAND REPORT DATED 16.07.2014 HAS STATED THAT TWO LETTERS RELATING TO SACHIN MALLICK AND SWETA AGARWAL RETURNED BACK BY THE POSTAL DEPARTMENT WITH COMMENTS UNCLAIMED AND IN THE CASE OF SHRI OM PRAKASH AGARWAL IT HAD BEEN NOTED THAT FROM HIS BANK STATEMENT THE AMOUNT OF RS.6,69,601/- WAS DEBITED FROM HIS BANK ACCOUNT ON 25.04.2006. THEREFORE, IN SPITE OF AOS REQUESTS TO PRODUCE THE LOAN CREDITORS FOR VERIFICATION, THEIR IDENTITY AND CREDITWORTHINESS REMAINED UNVERIFIED AND EVEN IN REMAND PROCEEDINGS, THE VERIFICATION COULD NOT BE DONE IN RESPECT OF THREE CASH CREDITORS AND OTHER CASH-CREDITORS. DURING ASSESSMENT PROCEEDINGS ALSO, THE ASSESSEE DID NOT COMPLY AND FAILED TO PROVE THE CREDITWORTHINESS OF THE CASH CREDITORS. THE ASSESSEE ALSO NOT FILED ANY COPIES OF BANK STATEMENTS OF ANY CASH CREDITORS. THEREFORE, THE LD. CIT(A) CONFIRMED THE ADDITION U/S 68 AT RS.80.09.601/-. M/S SHREE GURUKRIPA ORES (P) LTD. ITA NO.342/KOL/2016 ASSESSMENT YEAR: 2006-07 PAGE | 3 5. NOT BEING SATISFIED WITH THE ORDER OF LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US.THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT THE LD. CIT(A) HAS NOT CONSIDERED THE RELEVANT PARA OF THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER ON DATED 16.07.2014, WHICH IS GIVEN BELOW: AS DIRECTED, I HAVE GONE THROUGH THE DETAILS OF THE CASE AND SUBMISSION FILED BY THE A/R OF THE ASSESSEE. THE ONLY ISSUE INVOLVED IN THIS CASE IS VERIFICATION OF GENUINENESS OF UNSECURED LOANS TO THE TUNE OF RS.80,09,601/-. IN COURSE OF REMAND REPORT PROCEEDINGS, A LETTER WAS ISSUED TO THE ASSESSEE COMPANY SEEKING DETAILS OF UNSECURED LOANS DETAILS. IN RESPONSE, SHRI B.C. SURANA APPEARED AND SUBMITTED A LIST OF 16 PERSONS WITH THEIR ADDRESSES AND CORRESPONDING AMOUNT OF LOANS. FOR VERIFICATION, LETTERS WERE ISSUED TO ALL CREDITORS. OUT OF TOTAL 16 CREDITORS, CONFIRMATION LETTERS FROM 13 PERSONS WERE RECEIVED THROUGH POSTAL SERVICE. TWO LETTERS (ADDRESSED TO CREDITORS 1.SACHIN MALLICK AND 2.SWETA AGARWAL) RETURNED BACK BY THE POSTAL DEPARTMENT WITH COMMENT UNCLAIMED. COMPLIANCE FROM ONE CREDITOR, I.E. SHRI OM PRAKASH AGARWAL WAS RECEIVED THROUGH OFFICES RECEIVING SECTION. THEREFORE, THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS ABUNDANTLY CLEAR FROM THE REMAND REPORT THAT ASSESSEE SUBMITTED A LIST OF 16 PERSONS WITH THEIR ADDRESSES AND CORRESPONDING AMOUNTS OF LOANS FOR VERIFICATION AND LETTERS WERE ISSUED BY ASSESSING OFFICER TO ALL CREDITORS. OUT OF 16 CREDITORS, CONFIRMATION LETTERS FROM 13 PERSONS WERE RECEIVED THROUGH POSTAL SERVICES. TWO LETTERS ADDRESSED TO SACHIN MALLICK AND SWETA AGARWAL RETURNED BACK BY POSTAL DEPARTMENT WITH REMARK AS UNCLAIMED. IN THE REMAND REPORT, AO ALSO NOTED THAT COMPLIANCE FROM ONE CREDITOR I.E. SHRI OM PRAKASH AGARWAL WAS RECEIVED THROUGH OFFICERS RECEIVING SECTION. THEREFORE, IN THE REMAND REPORT, THE ASSESSEE HAS SUBMITTED THE 16 LOAN CREDITORS WITH THEIR ADDRESSES AND CORRESPONDING AMOUNTS OF LOANS AND THE AO SENT LETTERS FOR VERIFICATION AND OUT OF TOTAL 16 CREDITORS, CONFIRMATION LETTERS FROM 13 PERSONS WERE RECEIVED THROUGH POSTAL SERVICE. THE AO DID NOT FIND ANY MISTAKE IN THE CONFIRMATIONSORECEIVEDFROM 13 PERSONS. THEREFORE, THE COUNSEL SUBMITTED THAT DURING THE COURSE OF REMAND PROCEEDINGS, IT WAS ESTABLISHED THAT NOTICES SENT THROUGH POSTAL SERVICES WAS SERVED ON THE LOAN CREDITORS PROVING THEIR IDENTITIES, THE TRANSACTIONS HAVE TAKEN PLACE THROUGH BANKING CHANNELS AND ALL BUT TWO CREDITORS (WHOSE M/S SHREE GURUKRIPA ORES (P) LTD. ITA NO.342/KOL/2016 ASSESSMENT YEAR: 2006-07 PAGE | 4 ADDRESS WAS NOT AVAILABLE WITH THE ASSESSEE), THE LOAN CREDITORS WERE INCOME TAX ASSESSES AS THEY HAVE PROVIDED THEIR PAN NUMBERS. THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED ON THE JUDGMENT OF HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF CIT VS. M/S DATAWARE PRIVATE LIMITED IN GA NO.2856 OF 2011 WHEREIN IT WAS HELD THAT THE ASSESSING OFFICER OF THE ASSESSEE CANNOT TAKE THE BURDEN OF ASSESSING THE PROFIT AND LOSS ACCOUNT OF THE CREDITOR WHEN ADMITTEDLY THE CREDITOR HIMSELF IS AN INCOME TAX ASSESSEE. AFTER GETTING THE PAN NUMBER AND GETTING THE INFORMATION THAT THE CREDITOR IS ASSESSED UNDER THE ACT, THE AO SHOULD ENQUIRE FROM THE AO OF THE CREDITOR AS TO THE GENUINENESS OF THE TRANSACTION AND WHETHER SUCH TRANSACTION HAS BEEN ACCEPTED BY THE AO OF THE CREDITOR BUT INSTEAD OF ADOPTING SUCH COURSE, THE AO HIMSELF COULD NOT ENTER INTO THE RETURN OF THE CREDITOR AND BRAND THE SAME AS UNWORTHY OF CREDENCE. SO LONG IT IS NOT ESTABLISHED THAT THE RETURN SUBMITTED BY THE CREDITOR HAS BEEN REJECTED BY ITS AO, THE AO OF THE ASSESSEE IS BOUND TO ACCEPT THE SAME AS GENUINE WHEN THE IDENTITY OF THE CREDITOR AND THE GENUINENESS OF TRANSACTION THROUGH ACCOUNT PAYEE CHEQUE HAS BEEN ESTABLISHED. 6. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 7. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT LD. CIT(A) DID NOT CONSIDER THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER IN RIGHT PERSPECTIVE. WE NOTE THAT ASSESSEE HAD SUBMITTED A LIST OF 16 CREDITORS, WITH THEIR ADDRESSES AND CORRESPONDING AMOUNT OF LOANS. THE ASSESSING OFFICER SENT LETTERS FOR VERIFICATION TO ALL CREDITORS. WE NOTE THAT OUT OF TOTAL 16 CREDITORS, CONFIRMATION LETTERS WERE RECEIVED BY THE ASSESSING OFFICER FROM 13 PERSONS. THE ASSESSING OFFICER DID NOT FIND ANY IRREGULARITY, SO FAR CONFIRMATION LETTERS OF 13 CREDITORS ARE CONCERNED. THE AO DID NOT BRING ANY M/S SHREE GURUKRIPA ORES (P) LTD. ITA NO.342/KOL/2016 ASSESSMENT YEAR: 2006-07 PAGE | 5 EVIDENCE ON RECORD TO SHOW THAT THESE 13 CREDITORS ARE BOGUS. THE ADDRESS OF TWO CREDITORS WAS NOT AVAILABLE WITH THE ASSESSEE. WE NOTE THAT SUBSTANTIAL CREDITORS, THAT IS, OUT OF 16 CREDITORS, THE 13 CREDITORS CONFIRMED THE TRANSACTIONS. IT IS ALSO POSSIBLE, BECAUSE OF HUMAN TENDENCY, THAT WHEN THE TRANSACTION IS OVER, SOME OF THE CREDITORS MAY NOT COOPERATE WITH THE ASSESSEE IN SENDING THE CONFIRMATION LETTERS TO THE ASSESSING OFFICER.IT IS FOR THE REVENUE AUTHORITIES TO EXERCISE THE POWERS U/S 133(6) TO ENFORCE THE RELEVANT CREDITOR TO SUBMIT CONFIRMATION. MOREOVER, THE ASSESSING OFFICER HAS POWER UNDER SECTION 131 OF THE ACT, TO ENFORCE THE ATTENDANCE OF ANY PERSON. WE NOTE THAT DURING THE COURSE OF REMAND PROCEEDINGS, IT WAS ESTABLISHED THAT NOTICES SENT THROUGH POSTAL SERVICES, WERE SERVED ON THE LOAN CREDITORS PROVING THEIR IDENTITIES, THE LOAN CREDITORS CONFIRMED THE TRANSACTIONS BY FURNISHING CONFIRMATION LETTERS, THE TRANSACTIONS HAVE TAKEN PLACE THROUGH BANKING CHANNELS AND ALL BUT TWO CREDITORS(WHOSE ADDRESS WAS NOT AVAILABLE WITH THE ASSESSEE), THE LOAN CREDITORS WERE INCOME TAX ASSESSES AS THEY HAVE PROVIDED THEIR PAN NUMBERS. HENCE, WE ARE OF THE VIEW THAT IDENTITY, CREDITWORTHINESS, AND GENUINENESS OF THE TRANSACTIONS HAVE BEEN PROVED BY THE ASSESSEE. THEREFORE, CONSIDERING THE FACTUAL POSITION EXPLAINED ABOVE, WE ARE OF THE VIEW THAT ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD.CIT(A) NEEDS TO BE DELETED. ACCORDINGLY, WE DELETE THE ADDITION. 8.IN THE RESULT, THE APPEAL OF THE ASSESSEE, IS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 25/01/2018. SD/- (N.V. VASUDEVAN) SD/- (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; DATED 25/01/2018 ( RS, SPS) M/S SHREE GURUKRIPA ORES (P) LTD. ITA NO.342/KOL/2016 ASSESSMENT YEAR: 2006-07 PAGE | 6 / COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/D.D.O, I.T.A.T, KOLKATA BENCHES, KOLKATA . 1. / THE APPELLANT M/S SHREE GURUKRIPA ORES (P) LTD. 2. / THE RESPONDENT- ITO, WARD-1(1), KOLKATA 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, KOLKATA 6. / GUARD FILE.