THE DCIT, 1(1), Bhopal V. M/S. CENTURY MOULDINGS PVT. LTD., Bhopal

ITA 353/IND/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5312 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-12-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 22-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Keywords: Depreciation; Opportunity of being heard; Deemed to accrue or arise in india; Bogus loan
• Section: 133(6); 147; 131; 68; 11

Judgement Text

ITA NO. 249/IND/2015 & 353/IND/2015 M/S CENTURY MOULDINGS 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., ..!', #$ # !% BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER I.T.A. NO.353/IND/2015 ASSESSMENT YEAR: 2005-06 DCIT 1(1) BHOPAL :: APPELLANT VS M/S CENTURY MOULDINGS PVT. LTD. BHOPAL ./ PAN: AABCC-6126F :: RESPONDENT I.T.A. NO.249/IND/2015 ASSESSMENT YEAR: 2005-06 M/S CENTURY MOULDINGS PVT. LTD. BHOPAL :: APPELLANT VS DCIT 1(1) BHOPAL :: RESPONDENT REVENUE BY SHRI MOHD. JAVED ASSESSEE BY SHRI ASHISH GOYAL ! ' #$ DATE OF HEARING 19.12.2016 %&'( #$ DATE OF PRONOUNCEMENT 23.12.2016 ITA NO. 249/IND/2015 & 353/IND/2015 M/S CENTURY MOULDINGS 2 * O R D E R PER SHRI D.T. GARASIA, JM THE REVENUE AND THE ASSESSEE ARE IN APPEAL AGAINST THE ORDER OF THE LEARNED CIT(A), BHOPAL DATED 7.12.201 4. 2. FOLLOWING GROUNDS OF APPEAL HAVE BEEN TAKEN BY THE REVENUE :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(APPEAL) HAS ERRED IN : 1. NOT DIRECTING THE ASSESSING OFFICER TO REOPEN THE CASES OF THE ASSESSEE FOR VERIFICATION OF GENUINENESS OF OPENING BALANCE OF UNSECURED LOANS AMOUNTING TO RS.92,04,424/- AS THE CASE OF THE ASSESSEE IS OUT OF THE PURVIEW OF TIME LIMITATION F OR REOPENING OF THE CASE AS PER SECTION 147 OF THE IT ACT. 2. DELETING THE ADDITION OF RS.39,89,303/- OUT OF RS.52,39,303/- (1,44,43,727 (-) 92,04,424) ON ITA NO. 249/IND/2015 & 353/IND/2015 M/S CENTURY MOULDINGS 3 ACCOUNT OF UNEXPLAINED LOAN FROM FICTITIOUS ENTITIE S CREATED BY THE DIRECTORS WHEN ANY INCOME FROM THE PROPRIETARY CONCERNS ARE NOT REFLECTED BY THEM IN THEIR INCOME TAX RETURN WHICH REPRESENTS ASSESSEE COMPANYS OWN DISCLOSED FUND WHICH ARE CHANNELISED IN THE FORM OF LOAN. 3. DELETING THE ADDITION OF RS.15,00,000/- OUT OFRS. 16,06,450/- ON ACCOUNT OF UNEPXLAINED LOAN FROM DELA RAM TALREJA AND FAMILY MEMBERS WHEN CREDITWORTHINESS OF THE CREDITORS REMAINED UNPROVED EVEN AFTER ISSUANCE OF SUMMONS WHICH WAS DULY SERVED AND WHICH REMAINS UNATTENDED NOR ANY INFORMATION WERE FILED. 3. FOLLOWING GROUNDS OF APPEAL HAVE BEEN TAKEN BY THE ASSESSEE :- 1. THAT O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, A FAIR, PROPER AND MEANINGFUL OPPORTUNITY ITA NO. 249/IND/2015 & 353/IND/2015 M/S CENTURY MOULDINGS 4 HAS NOT BEEN AFFORDED TO THE APPELLANT TO PUT UP DEFENCE ON THE ISSUES DISPUTED IN THE APPEAL. 2. THE HON'BLE CIT APPEALS ACT OF SUSTAINING ADDITIONS OF UNSECURED LOANS OF RS.13.56 LACS PERTAINING TO FOLLOWING PERSONS IS ABSOLUTELY ARBITRARY, CONTRARY TO FACTS ON HIS RECORD AND THEREFORE UNLAWFUL : M/S SHUBH TRACTORS (PROPRIETORSHIP.MR.MURLI GIRDHANI RS.2,00,000 M/S ALKA TRADERS (PROPRIETORSHIP MR. MOOLCHAND VIDHANI) RS.5,00,000 M/S RENU ENTERPRISES (PROPRIETORSHIP.MRS. RENU GIRDHANI) RS.5,50,000 MRS. SHAKUNTALA TALREJA RS.1,06,450 RS.13,56,450 ABOVE ADDITIONS DESERVE TO BE DELETED. 3. THAT THE LD. CIT APPEAL HAS OVERLOOKED TO CONSID ER THE PAPERS AND EVIDENCES FURNISHED BEFORE HIM DURING THE COURSE OF ASSESSMENT AND AS SUCH ENTIRE ORDER HAS BECOME ARBITRARY AND BASELESS. ITA NO. 249/IND/2015 & 353/IND/2015 M/S CENTURY MOULDINGS 5 4. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN MANUFACTURING AND SALE OF PLASTIC MOULDING CHAIRS AND AUXILIARY ITEMS. THE ASSESSEE HAS TAKEN SHARE APPLICATION MONEY OF RS.67,44,600/-, UNSECURED LOAN OF RS.75,98,177/- AND SECURED LOAN OF RS. 1,93,92,329/- TOTALING TO RS. 3,37,35,116/- AGAINST THE MEAGER TURNOVER OF RS.1,08,48,130/- AND NET LOSS OF RS.43,71,818/- WAS UNUSUAL. THEREFORE, THE ASSESSING OFFICER ISSUED NO TICE U/S 133(6) OF THE ACT AND SUMMONS U/S 131 OF THE ACT TO SUNDRY CREDITORS/PARTIES WHO SUPPLIED MATERIALS TO THE ASSESSEE AND CREDITORS PROVIDING LOANS TO THE ASSESSEE. THE SUMMONS ISSUED TO CERTAIN CREDITORS WERE RETURNED UNSERVED AND LIKEWISE NOTICE U/S 133(6) OF THE ACT I SSUED TO DIFFERENT SUNDRY CREDITORS REMAINED UNSERVED IN M OST OF THE CASES AND IN SOME CASES, THOUGH NOTICES WERE SERVE D, THEY DID NOT TURN UP. THE ASSESSEE HAS TAKEN LOAN OF ITA NO. 249/IND/2015 & 353/IND/2015 M/S CENTURY MOULDINGS 6 RS.25,95,000/- FROM M/S SHUBH TRADERS BESIDES RS.34,36,275/-, RS.45,57,960/-, RS.38,54,488/- FROM M/S ALKA TRADERS AND M/S RENU ENTERPRISES & M/S CENTURY PLANT. THE ASSESSEE SUBMITTED THAT THE DIRECTORS OF TH E ASSCOMPANY ARE THE PROPRIETORS OF THE ABOVE CONCERNS INCLUDING M/S SHUBH TRACTORS AND THEY HAVE TAKEN SECURED LOAN FROM JHARNESHWAR SAHKARI BANK MARYADIT BY SHOWING THE ABOVE-MENTIONED CONCERNS AS THEIR PROPRIE TARY CONCERNS. THE STATEMENT OF SHRI MURLI GIRDHANI, ONE O F THE DIRECTORS OF THE COMPANY, WAS RECORDED AND HE STATED TH AT HE HAS NOT SHOWN ANY INCOME FROM M/S SHUBH TRACTORS. THEREFORE, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ABOVE LOANS HAVE BEEN RECEIVED FROM THE DIRECTORS THR OUGH FICTITIOUS PROPRIETARY CONCERNS. THEREFORE, THE ASSE SSING OFFICER TREATED RS.1,44,43,723/- AS BOGUS LOANS AND THE ASSESEES OWN UNDISCLOSED FUNDS WHICH ARE CHANNELISED ITA NO. 249/IND/2015 & 353/IND/2015 M/S CENTURY MOULDINGS 7 THROUGH PROPRIETARY CONCERNS. THEREFORE, IT WAS ADDED BY THE ASSESSING OFFICER U/S 68 OF THE ACT. 5. THE MATTER WAS CARRIED IN APPEAL BY THE ASSESSEE AND THEN LEARNED CIT(A) DELETED THE ADDITION OF RS.92,04 ,424/- AND RS.52,39,299/- AND CONFIRMED THE REST OF THE ADDIT IONS BY OBSERVING AS UNDER :- IN VIEW OF THE DISCUSSION MADE ABOVE, IT IS FOUND THAT THE A.O. ASSESSED OPENING BALANCE OF THE ABOVE CREDITORS OF RS.92,04,424/- AS DEEMED INCOME WHICH IS NOT JUSTIFIED AND OUT OF THE LOANS OF RS.52,39,299/ - OBTAINED FROM THE ABOVE CREDITORS IN THE YEAR UNDER CONSIDERATION, RS.12,50,000/- AND RS.1,06,450/- IS CONFIRMED FOR THE REASONS NARRATED IN SUB-PARA (V) AND (VI) OF PARA 2 OF THE ORDER. 6. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED AS UNDER :- ITA NO. 249/IND/2015 & 353/IND/2015 M/S CENTURY MOULDINGS 8 A. TURNOVER OF RS.1,08,48,130/- G.P. RATE BEING 14. 37% AND NET LOSS OF RS.43,71,818/- ARE THE FINANCIAL PO SITION OF THE ASSESSEE COMPANY FOR THE A.Y. 2005-06 WHEN AUDI TED U/S 44AB OF THE ACT. THE TOTAL LOAN AND SHARE APPLI CATION MONEY TOTALLED UP TO RS. 3,37,35,116/- AGAINST WHIC H THE TURNOVER WAS MEAGRE AMOUNT OF RS.1,08,48,130/- AND THAT TOO WITH NET LOSS OFRS.43,71,818/-, THIS ACCORDING TO LD. A.O. WAS UNUSUAL. THE DEPLOYMENT OF THE LOAN AND APPLICATION MONEY CA N BE SEEN IN THE ASSET SIDE OF THE BALANCE SHEET WHICH I NCLUDE FIXED ASSET : 212.40 LAKH CLOSING STOCK: 11.71 LAKH ACCU.LOSSES : 122.10 LAKH ALSO THE TOTAL TURNOVER IS RS.137.30 LAKH AND NOT 1 08.48 AS CONTENDED BY THE LD. A.O. THE PERSONS WHO GAVE LOAN WERE NOT OUTSIDERS BUT WERE THE SHAREHOLDERS/STAKEHOLDER S OF THE CONCERN. ITA NO. 249/IND/2015 & 353/IND/2015 M/S CENTURY MOULDINGS 9 THE NET LOSS IN THE BUSINESS DESPITE OF GROSS PROFI T OF RS.15.58 LAKH IS DUE TO FOLLOWING FACTORS :- BANK INTEREST : RS.24.50 LAKH OTHER INTEREST : RS.7.40 LAKH DEPRECIATION : RS.18.20 LAKH THUS LD. A.O. HAS ARBITRARILY CONCLUDED THAT THE FU NDS OF THE APPELLANT ARE USED FOR THE PURPOSE OTHER THAN BUSIN ESS PURPOSE. B. NOTICES U/S 133(6) AND SUMMONS U/S 131 WERE SERV ED TO THE CREDITORS FOR PURCHASE AND PROVIDER OF LOAN, IN MOST OF THE CASES THE NOTICE REMAINED UNSERVED AND THOSE SE RVED DID NOT TURN UP. SR.NO. NAME REMARKS 1. SHRI MURLI GIRDHANI SUMMONS SERVED. NOT APPEARED 2. MOOLCHAND VIDHANI, PROPRIETORSHIP. ALKA TRADERS (A) SUMMONS NOT SERVED (B) HE SUFFERED HEART ATTACH (C) ADDRESS GIVEN TO LD. A.O. LD. A.O. ITA NO. 249/IND/2015 & 353/IND/2015 M/S CENTURY MOULDINGS 10 WAS REQUESTED TO DEPUTE INSPECTOR. W.S. TO LD. A.O. DATED (D) 14.11.07 P.B.3 (E) LD. ASSESSING OFFICER CHOSE NOT TO TAKE ACTION 3 DELA RAM TALREJA SUMMONS SERVED. NOT APEPARED DCIT VS. ROHNI BUILDERS 256 ITR 360 (GUJ.) NATHU RAM PREMCHAND 49 ITR 461 (ALL) ITO VS. MAYUR AGRAWAL 128 ITD 55 (AGREA) (TM) MAKIN G REFERENCE TO CIVIL PROCEDURE CODE, ORDER VI RULE 10 . C. LD. CIT(A) ALLEGED THAT CASH WAS DEPOSITED IN THE ACCOUNT OF THE CONCERN WHO SUBSEQUENTLY ISSUED CHEQUE IN FA VOUR OF THE APPELLANT COMPANY. (A) THIS FACT IS IMPROPER. NO SUCH CASH WASA EVER D EPOSITED ON GIVEN DATES. (B) LD. CIT(A) MISGUIDED HIMSELF AS THE BANK ACCOUNT ITSELF WAS OWNED BY THE APPELLANT. 7. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT TH E ASSESSEE HAS TAKEN THE LOAN FROM THE BANK AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICE U/S 136 AND ITA NO. 249/IND/2015 & 353/IND/2015 M/S CENTURY MOULDINGS 11 SUMMONS U/S 131 OF THE ACT WERE SERVED ON THE CREDI TORS. IN MOST OF THE CASES SUMMONS WERE SERVED AND IF IT IS SERVED THEY DID NOT TURN UP. THE SUMMONS WERE SERVE D ON MR. MURLI GIRDHANI BUT HE DID NOT APPEAR, ON MOOLCHAND VIDHANI SUMMONS WERE NOT SERVED AND ON SHRI DELA RAM TALREJA, SUMMONS WERE SERVED BUT NOT APPEARED. THEREFOR E, WITHOUT EXAMINING THESE PERSONS AND WITHOUT CALLING FO R THE REMAND REPORT FROM THE ASSESSING OFFICER, THE LE ARNED CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITIONS. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SI DES. WE FIND THAT THE ASSESSMENT WAS GETTING TIME BARRED AND THE ASSESSING OFFICER HAS MADE THE ASSESSMENT ORDER WITHOUT GIVING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE FIND THAT THE LEARNED CIT(A) HAS NOT EXAMI NED THE DIRECTORS OF THE COMPANY WHO HAD TAKEN LOAN FROM COOPERATIVE BANKS AND IN TURN THEY HAVE INVESTED THE LO AN AMOUNT FOR THE BUSINESS PURPOSES OF THE ASSESSEE ITA NO. 249/IND/2015 & 353/IND/2015 M/S CENTURY MOULDINGS 12 COMPANY. THEREFORE, IN OUR OPINION, IT REQUIRES VERIF ICATION AT THE LEVEL OF THE ASSESSING OFFICER. WE, THEREFOR E, IN THE INTEREST OF JUSTICE AND FAIR PLAY, SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AND TO FRAMED THE ASSESSMENT AS PER LAW, AFTER PROVIDING THE ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. 8. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE AND THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 23 DECEMBER, 2016. SD/- SD/- ( ..!') (..) #$ (O.P.MEENA) (D.T.GARASIA) ACCOUNTANT MEMBER J UDICIAL MEMBER )'* / DATED : 23 DECEM BER, 2016. DN/ ITA NO. 249/IND/2015 & 353/IND/2015 M/S CENTURY MOULDINGS 13