Ekdant India Ltd, Noida V. ITO, Ward-8(1), New Delhi

ITA 3469/DEL/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5052 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 22-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Unexplained cash credit; Bogus Share capital; Principle of natural justice; Additional evidence
• Section: 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI B BEN CH, NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER, AND SHRI SUCHITRA KAMBLE, JUDICIAL MEMBER, ITA NO.3469/DEL/2019 [ASSESSMENT YEAR: 2014-15] M/S EKDANT INDIA LTD. B-1,-46, NEW ASHOK NAGAR, NEW DELHI-110096 ITO, WARD-8(1), ROOM NO.143, C.R BUILDING, NEW DELHI PAN - AABCT8767F APPELLANT RESPONDENT APPELLANT BY SHRI DEEPAK KAPOOR RESPONDENT BY MS. NIDHI SRIVASTAVA CIT - DR DATE OF HEARING 19 /08 /2019 DATE OF PR ONOUNCEMENT 20 /08 /2019 ORDER PER SUCHITRA KAMBLE, JUDICIAL MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE LD. CIT(A)-34, NEW DELHI, DATED 12/03/2019 FOR ASSESSME NT YEAR 2014-15. 2. GROUNDS OF APPEAL ARE AS UNDER:- 1. BECAUSE ON FACTS AND IN LAW THE LD. CIT(A) OUGHT TO HAVE ADMITTED THE ADDITIONAL EVIDENCE IN THE FORM OF FLOW CHART SHOWING TRAIL OF FUNDS OUT OF BANK LOAN TO ASSOCIATE COMPANIES TO THE ACCOUNT OF APPELLANT AS SHARE APPL ICATION MONEY UNDER RULE 46A(L)(C) OR 46A(L)(D). 2. BECAUSE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE ASSESSING OFFICER THE EVIDENCE WHICH IS RELEVANT TO THE GROUNDS OF APPEAL RELATING TO UNEXPLAINED CASH CREDIT UNDER SECTION 68 ON ACCOUNT OF SHARE CAPITAL. 3. BECAUSE THE LD. C1T(A) HAS ERRED IN NOT ADMITTING THE ADDITIONAL EVIDENCE. THE FACTS OF THE CASE CLEARLY PROVE THAT THE ADDITIONAL EVIDENCE OUGHT TO BE ADMITTED IN THE INTEREST OF JUSTICE AND FAIR PLAY. THE LD. C1T (A) DID NOT TAKE INTO CONSIDERATION ALL FACTS BROUGHT TO HER KNOWLEDGE AND A GROSS INJUSTIC E HAS BEEN DONE TO THE APPELLANT. 4. BECAUSE THE ASSESSING OFFICER MADE THE ORDER DT. 2 8/12/2016 APPEAL AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELL ANT TO ADDUCE EVIDENCE RELEVANT TO THE GROUND OF APPEAL RELATING TO ADDITION UNDER SEC TION 68 ON ACCOUNT OF SHARE CAPITAL. 2 5. BECAUSE APPELLANT INFORMED THE NEW ADDRESSES OF TH REE SHAREHOLDERS AND NOTICE UNDER SECTION 133(6) WHERE SERVED ON THE ADDRESSES GIVEN AS IS EVIDENT FROM THE ORDER SHEET ENTRY ON 14-12-2016. THEREFORE, THE GRO UNDS TAKEN BY THE LD. AO/CIT(A) THAT THE CORRECT ADDRESS OF ALL ABOVE SHAREHOLDERS WAS NOT COMMUNICATED TO THE DEPARTMENT IS FACTUALLY WRONG AND UNJUSTIFIED. 6. BECAUSE THE APPELLANT VIDE WRITTEN SUBMISSIONS DT. 14/12/2016 AND DT.22/12/2016 REQUESTED THE LD. AO TO ISSUE SUMMON UNDER SECTION 131 TO THE SHAREHOLDERS. THE LD. AO DID NOT ALLOW THE REQUEST OF THE APPELLANT AND N O SUMMON UNDER SECTION 131 WERE ISSUED BY THE DEPARTMENT IN THE COMPLETE CONTRAVENT ION OF RATIO OF JUDGMENT. CIT VS DURGA PRASAD MORE, [1971] 82 1TR 540 (SC), PEE AAR SECURITIES LTD. VS DCIT (2018) TAXMAN.COIN 602 (DELHI). CIT VS NAVODAYA CASTLE PVT. LTD.. DELHI HIGH CONN. 2014, J2014] 51) IAXINAN.COM 110 (DELHI). 7. BECAUSE ON FACTS AND IN LAW AND ON GROUNDS TAKEN AN D BASIS ADOPTED THE ADDITION OF RS. 10,31.54,300/- ON ACCOUNT OF SHARE CAPITAL RAISE BY THE APPELLANT DURING THE YEAR IS UNJUSTIFIED AND ILLEGA L, THE LD. AO AS WELL AS LD. CIT(A) FAILED TO TAKE INTO CONSIDERATION THE FACTS AND SUPPORTING DOCUMENTS FILED BY THE APPELLANT AND ALSO THE OTHER MATERIAL AVAILABLE ON RECORD. DUE TO DEMONETIZATION IN THE MONTH OF NOVEMBER/DECEMBER. 2 016 THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING TH E BANK LOAN ACCOUNTS OF ASSOCIATE COMPANIES FROM WHICH THE SHARE CAPITAL WA S INTRODUCED BY TRANSFERRING THE FUNDS TO THE ACCOUNTS OF SHAREHOLD ERS. THE ANNEXURE- A4 OF THE APPEAL PAPER BOOK BEFORE CIT(A) CLEARLY ESTABLI SHED AND PROVED BEYOND DOUBT THE TRAIL OF FUNDS OUT OF BANK LOAN ACCOUNTS OF ASSOCIATE COMPANIES TO THE ACCOUNT OF APPELLANT AS SHARE APPLICATION MONEY . THE ADDITION OF RS. 10,31,54,300/- IS THEREFORE UNJUSTIFIED, ILLEGAL AN D UNWARRANTED. THE SAME DESERVES TO BE DELETED IN TOTO. 8. BECAUSE THE IMPUGNED ORDER IS PERVERSE AND CONTRAR Y TO THE PRINCIPLE OF NATURAL JUSTICE. THE LD. CIT(A) DID NOT TAKE INTO C ONSIDERATION THE FACT THAT IN THE LIGHT OF ADDITIONAL EVIDENCE THE SOURCE OF SOUR CE OF SHARE APPLICATION MONEY WAS DULY ESTABLISHED. THE LD. OT(A) DID NOT T AKE INTO CONSIDERATION THE SUBMISSIONS MADE IN THE APPEAL BY THE APPELLANT AND ALSO THE FACTS STATED IN APPLICATION UNDER RULE 46A AND ALSO REPLY TO THE REMAND REPORT DT. 28/02/2019. 9. BECAUSE THE CASE LAW RELIED UPON BY THE LD. CIT(A) ARE DISTINGUISHABLE ON FACTS AND THE LD. C1T(A) DID NOT TAKE INTO CONSIDER ATION THE FACTS STATED SUBMITTED BY THE APPELLANT. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SALE OF BIO-BRIQUETTES. THE ASSESSEE FILED INCOME TAX RETURN DECLARING TOTAL IN COME AT NIL AND BOOK PROFITS OF RS.6,95,412/- U/S 115J OF THE INCOME TAX ACT, 1961(HEREINAFTER THE ACT). THE ASSESSMENT WAS COMPLETED VIDE ORDER DATED 28/12/2016 AFTER MAKING ADDITIONS OF RS.10,31,54,300/- U/S 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL, RS.17,85,872/- ON ACCOUN T OF TRADE PAYABLES, 3 RS.6,09,000/- OF PREPAID RENT, RS.15,000/- ON ACCOU NT OF UNEXPLAINED EXPENSES AND RS.6,32,500/- ON ACCOUNT OF INCREASE I N SHARE CAPITAL. THUS, TOTAL ADDITION OF RS.10,61,96,672/- WAS MADE BY THE ASSESSING OFFICER. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE A PPEAL OF THE ASSESSEE. 5. THE LD. AR SUBMITTED THAT DURING THE RELEVANT PR EVIOUS YEAR, THE ASSESSEE RAISED THE SHARE CAPITAL FROM THREE SHAREH OLDERS. ON 05/12/2016, THE ASSESSEE PROVIDED NEW ADDRESS OF THE THREE SHAR EHOLDERS. THE ASSESSING OFFICER MENTIONED IN THE ORDERSHEET ENTRY DATED 14/12/2016 THAT NOTICES ISSUED U/S 133(6) HAVE BEEN SERVED TO THE PARTIES AND REPLY FROM THE PARTIES WERE PENDING. THE ASSESSEE REQUEST ED THE ASSESSING OFFICER TO ISSUE SUMMONS U/S 131 TO THE SHAREHOLDER S, BUT THE ASSESSING OFFICER DID NOT ISSUE SUMMONS AND ONLY ALLOW TWO DA YS TIME TO THE ASSESSEE TO MAKE COMPLIANCE OF SHOW CAUSE NOTICE IN CLEAR VI OLATION OF PRINCIPLES OF NATURAL JUSTICE. THE LD. AR SUBMITTED THAT THE DEMO NETIZATION OF CURRENCY AT RELEVANT TIME IN DECEMBER, 2016, THE ASSESSEE WA S PREVENTED BY SUFFICIENT CAUSE TO FILE THE DOCUMENTS PROVING SOUR CE OF SOURCE. THE ASSESSING OFFICER HAS NOT TAKEN COGNIZANCE OF ANY O F THE EVIDENCE OR NOT PROVIDED ANY OPPORTUNITY TO THE ASSESSEE TO FILE SU FFICIENT EVIDENCE TO SUPPORT THE ASSESSEES CASE. DURING FIRST APPEAL, B EFORE THE CIT(A), THE ASSESSEE FILED APPLICATION UNDER RULE 46A OF THE IN COME TAX RULES, 1962 4 (HEREINAFTER THE RULES) FOR ADMITTING ADDITIONAL EVIDENCE IN THE FORM OF ANNEXURE-A-4 BEING THE BANK LOANS ACCOUNTS OF ALPIN E REALTCH PVT. LTD. AND EKDANTINFRABUILD PVT. LTD. ALONG WITH THE CHART SHO WING TRAIL OF FUNDS OUT OF BANK LOAN TO EKDANT AND ALPINE TO THE ACCOUNT OF TH E ASSESSEE AS SHEAR APPLICATION MONEY. THE LD. AR SUBMITTED THAT WITH T HE HELP OF THE ADDITIONAL EVIDENCES THE ASSESSEE DULY PROVED SOURCE OF SOURCE RIGHT UP TO WITHDRAWAL OF MONEY OUT OF BANK LOANS I.E. LOAN FROM CORPORATI ON BANK AND PUNJAB & SIND BANK. THE CIT(A) DIRECTED THE ASSESSING OFFICE R TO FILE REMAND REPORT BUT THE ASSESSING OFFICER VIDE REMAND REPORT DATED 07/02/2019 DID NOT RAISE ANY OBJECTIONS TO THE CHART SHOWING SOURCE OF SOURCE AND BANK LOAN ACCOUNTS OF ALPINE AND EKDANT. THUS, THE ASSESSING OFFICER NEVER ANALYZED THE DOCUMENTARY EVIDENCE FILED TO THE APPLICATION U NDER RULE-46A AND THE CIT(A) SIMIPLICITER REJECTED THE ADMISSIONS. 6. THE LD. DR SUBMITTED THAT THE CIT(A) HAS RIGHTLY REJECTED THE APPLICATION UNDER RULE-46A AS THE ASSESSEE WAS GIVE N AMPLE OPPORTUNITY BEFORE THE ASSESSING OFFICER FOR GIVING DETAILS AT THE TIME OF ASSESSMENT PROCEEDINGS. THE LD. DR RELIED UP ON THE ORDER OF T HE CIT(A) AND THE ASSESSING OFFICER. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT T HE ASSESSING OFFICER HAS NOT ISSUED SUMMONS U/S 131 TO THE SHAREHOLDERS, WHICH A MOUNTS TO NON- 5 VERIFICATION OF THE AUTHENTICITY OF THE TRANSACTION S DESPITE HAVING THE PROPER ADDRESS. THE ASSESSING OFFICER, WITHOUT VERIFYING T HE FACTUAL ASPECT HAS ARRIVED AT THE CONCLUSION BY MAKING ADDITION WITHOU T ANY SUPPORTING DOCUMENTS. THE CIT(A) DESPITE CALLING FOR REMAND RE PORT HAS SIMPLICITER REJECTED THE EVIDENCE PRODUCED BY THE ASSESSEE AND HAS NOT LOOKED IN TO THE MERIT OF THE DOCUMENTS. THUS, THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAS TOTALLY IGNORED THE EVIDENCE PRODUCED DURING TH E COURSE OF APPELLATE PROCEEDINGS BY THE ASSESSEE. THEREFORE, IT WILL BE APPROPRIATE TO REMAND BACK THIS ISSUE TO THE FILE OF THE ASSESSING OFFICE R BY TAKING COGNIZANCE OF EVIDENCES PRODUCED BEFORE THE FIRST APPELLATE AUTHO RITY BY THE ASSESSEE. NEEDLESS TO SAY THE ASSESSEE BE GIVEN OPPORTUNITY O F HEARING BY FOLLOWING THE PRINCIPLE OF NATURAL JUSTICE. THE APPEAL OF THE ASSESSEE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20/08/2019. SD/- SD/- /- SD/- [R.K. PANDA] [SUCHITRA KAMBLE] ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI; DATED: 20/08/2019. F{X~{T? F{X~{T? F{X~{T? F{X~{T? FA FA FA FA P.S P.SP.S P.S