M/S GOPESH IMPEX PVT. LTD, Mumbai V. ITO-12(2)(3), Mumbai

ITA 347/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5380 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 25-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VINOD KUMAR
• Keywords: Unexplained cash credit; Bogus Share capital; Principle of natural justice; Tangible material; Reason to believe; Set aside
• Section: 143(3); 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI SAKTIJIT DEY ( JUDICIAL MEMBER ) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 347/MUM/2019 ASSESSMENT YEAR: 2010 - 11 M/S GOPESH IMPEX PVT. LTD., 303, KANCHAN GANGA APTS, DATTANI PARK, KANDIVALI (EAST), MUMBAI - 400099. VS. ITO - 12(2)(3), MUMBAI - 400020. PAN NO. AAACG9004B APPELLANT RESPONDENT ASSESSEE BY : NONE REVENUE BY : MR. V. VINOD KUMAR, DR DATE OF HEARING :05/10/2020 DATE OF PRONOUNCEMENT : 07/10/2020 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2010 - 11. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 20, MUMBAI [IN SHORT CIT(A)] AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) R.W.S. 147 THE INCOME TAX ACT 1961, (THE ACT). THOUGH THE CASE WAS FIXED FOR HEARING ON 17.02.2020 AND 05.10.2020, NEITHER THE ASSESSEE NOR ITS AUTHORIZED REPR ESENTATIVE PARTICIPATED IN THE HEARING BEFORE THE TRIBUNAL. AS THERE IS NON - COMPLIANCE BY THE ASSESSEE, WE ARE PROCEEDING TO DISPOSE OFF THIS APPEAL AFTER EXAMINING THE MATERIALS AVAILABLE ON RECORD AND HEARING THE LD. DEPARTMENTAL REPRESENTATIVE (DR). M/S GOPESH IMPEX PVT. LTD. ITA NO. 347/MUM/2019 2 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER : 1.1 ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE CIT(A) ERRED I N PASSING ORDER WITHOUT PROVIDING OF REASONABLE OPPORTUNITY OF HEARING AND NOT FOLLOWING THE PRINCIPLE OF NATURAL JUST ICE, HENCE, THE ORDER PASSED IS INVALID AND VOID AB - INI TIO. 1.2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CI T ( A) ERRED IN PASSING ORDER DATED 31.12.2018 WITHOUT PROVIDING OF REASONABLE OPPORTUNITY OF HEARING AND NOT CONSIDERING THE ADJOURNMENT REQUEST MADE BEFO RE CIT(A) BY EMAIL DATED 28.12.2018 IN RESPONSE TO CI T(A)'S EMAIL DATED 28 DEC 2018 FOR SHORT ADJOURNMENT. 2.1 ON THE FACTS AND CI RCUMSTANCES OF THE CASE AND IN L AW, THE APPELLANT OBJECT THE RE OPENING OF THE ASSESSMENT UNDER S ECTIO N 147 OF INCOME T AX ACT, 1961 (THE ACT ) 2.2. THE NOTICE ISSUED U/S 148 THE ACT IS INVALID AND VOID AB INITIO AS THE REASON RECORDED AMOUNTS TO REASON TO SUSPECT AND DO NOT AMOUNT TO REASON TO BELIEVE AND T HE SAID REASON DO NOT CONSTITUTE BELIEF. 2.3. ON THE FACTS AND CI RCUMSTANCES OF THE CASE AND IN L AW THE RE - OPENING OF THE ASSESSMENT IS INVALID AND VOID AB INITIO, AS APPELLANT HAD TRULY AND FULLY DISCLOSED ALL FACTS FOR SHARE APPLICATION MONEY, DURING THE ORIGINAL ASSESSMENT AND NO FRESH MATERI AL WAS FOUND AGAINST THE APPELLANT, TO ARRIVE AT A CONCLUSION THAT INCOME HAD ESCAPED ASSESSMENT AND THE RE - OPENING WAS BASED ON A THIRD PARTY INFORMATION . 3.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN NOT DELETING THE ADDITION OF RS. 3, 00 , 00 , 000 / - IN RESPECT OF SHARE APPLICATION MONEY RECEIVED, WHICH WAS TREATING THE SAME AS CASH CREDIT UNDER SECTION 68 OF THE ACT WITHOUT CONSIDERING T HE FACTS THAT THE APPELLANT AND THE INVESTORS HAD PROVIDED A L L THE DETAILS AND EXPLANATION FOR PROVING THE IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF THE SHARE APPLICANTS. 3.2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN NOT DELETING THE ADDITION OF SHARE APPLICATION MONEY WHICH WAS MADE MERE ON THE M/S GOPESH IMPEX PVT. LTD. ITA NO. 347/MUM/2019 3 ASSUMPTION AND SURMISE, BASED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION DEPARTMENT WITH OUT CONSIDERING THE FACTS THAT T HERE WAS NO EVIDENCE OR MATERIAL OR DIRECT STATEMENT AGAINST THE APPELLANT 3.3 ON THE FACTS AND CI RCUMSTANCES OF THE CASE AND IN L AW, THE CIT(A) ERRED IN NOT DE LETING THE ADDITION ON THE BASIS OF THE INFORMATION RECEIVED FROM THE INVESTIGATING DEP ARTMENT WITHOUT CONSIDERING THE FACTS OF THE APPELLANT CASE WITHOUT PROVIDING T HE ALLEGED TANGIBLE MATERIAL TO THE APPELLANT . 3.4 ON T HE FACTS AND CI RCUMSTANCES OF THE CASE AND IN L AW, THE CIT(A) ERRED IN NOT DELETING THE ADDITION OF SHARE APPLICATION MONEY BASED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION DEPARTMENT, WITHOUT AFFORDING T HE SAID ALLEGED STATEMENT/S RECORDED AGAINST THE APPELLANT, SO THAT THERE WAS NO OPPORTUNITY FOR APPELLANT TO CROSS EXAMINE, IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. 3.5. ON T HE FACTS AND CI RCUMSTANCES OF THE CASE AND IN L AW, THE CIT(A) ERRED IN NOT DELETING THE ADDITION OF SHARE APPLICATION MONEY WITHOUT CONSIDERING THE FACTS THAT ENTIRE AMOUNT WAS REPAID , IN ABSENCE OF ALLOTMENT OF SHARES . 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2010 - 11 ON 15.10.2010 DECLARING LO SS AT RS.36,048/ - . ON THE BASIS OF INFORMATION FROM THE DIRECTOR GENERAL OF INCOME TAX (INV.) KOLKATA THAT THE ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY FROM TH RE E SHELL COMPANIES I.E. AADITA CONSTRUCTIONS PVT. LTD. (RS.1,00,00,000/ - ), AKSHAJ MULTITRADE PVT. LTD. (RS.1,00,00,000/ - ) AND ADHIK MULTITRADE PVT. LTD. (RS.1,00,00,000/ - ), THE ASSESSING OFFICER (AO) MADE INQUIRIES/VERIFICATIONS. AS A RESULT OF SUCH INQUIRI ES/VERIFICATIONS, THE AO ARRIVED AT A FINDING THAT THE ASSESSEE RECEIVED RS.3,00,00,000/ - IN THE GUISE OF SHARE APPLICATION MONEY FROM THE ABOVE THREE SHELL COMPANIES AND THEREFORE, BROUGHT IT TO TAX AS UNEXPLAINED TAX CREDIT U/S 68 OF THE ACT. M/S GOPESH IMPEX PVT. LTD. ITA NO. 347/MUM/2019 4 4. AGGRIEV ED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). WE FIND THAT THE LD. CIT(A) VIDE ORDER DATED 31.12.2018 CONFIRMED THE ADDITION OF RS.3,00,00,000/ - MADE BY THE AO AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT BY DECIDING THE AP PEAL EX - PARTE ON THE FOLLOWING REASONS : IN THE COURSE OF THE AP PELLATE PROCEEDINGS, HEARINGS WERE FIXED ON 26.11.2018, 18 .12.2018 AND AGAIN ON 2 8.12.2018. ALSO, A LETTER DATED 12.11.2018 WAS ISSUED REQUESTING THE APPELLANT TO FURNISH CERTAIN DOCUMENTS. IN RESPECT OF HEARING ON 26.11.2018, THE APPELLANT SOUG H T ADJOURNMENT. FOR HEARINGS ON NEXT TWO DAYS, THE APPELLANT DID NOT RESPOND TO THE HEARING NOTICES IN ANY MANNER. NOR DID THE APPELLANT FURNISH THE DOCUMENTS CALLED FOR . I , THEREFORE, PRESUME THAT THE APPELLANT IS NOT SER I OUS IN PROSECUTING THE APPEAL. THEREFORE, THE APPEAL IS DISPOSED OFF BASED ON MATERIAL AVAILABLE ON RECORD. 5 . BEFORE US, THE LD. DR SUBMITS THAT AS THERE WAS REPEATED NON - COMPLIANCE BY THE ASSESSEE, THE LD. CIT(A) HAS RIGHTLY AFFIR MED THE ORDER OF THE AO. 6 . WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIALS ON RECORD. IN THE INSTANT CASE, AS MENTIONED EARLIER THE ASSESSEE FILED A REPLY IN RESPECT OF THE HEARING FIXED ON 26.11.2018, ASKING FOR AN ADJOURNMENT. AS PER THE LD. CIT(A) THE ASSESSEE DID NOT RESPOND TO THE NOTICES FIXED FOR HEARING ON 18.12.2018 AND 28.12.2018 . AS MENTIONED IN THE GROUNDS OF APPEAL, IT IS THE CONTENTION OF THE ASSESSEE THAT THE LD. CIT(A) DID NOT CONSIDER THE REQUEST MADE BY E - MAIL DATED 28.12.2018 BY THE ASSESSEE SEEKING A S HORT ADJOURNMENT. IN VIEW OF THE SUCH FACTUAL SCENARIO, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE MAY BE GIVEN AN OPPORTUNITY TO PRESENT ITS CASE BEFORE THE LD. CIT(A). ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIM TO DECIDE THE ISSUE AFRESH AFTER GIVING REASONABLE OPPORTUNITY OF M/S GOPESH IMPEX PVT. LTD. ITA NO. 347/MUM/2019 5 BEING HEARD TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSEE TO APPEAR BEFORE THE LD. CIT(A) ON THE DATE FIXED FOR HEARING. 7 . IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED THROUGH NOTICE BOARD UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963. SD/ - SD/ - ( SAKTIJIT DEY ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 07/10/2020 RAHUL SHARMA SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI