ACIT, Cuttack V. Shiva Shakti Agri Consultancy Ltd, Cuttack

ITA 376/CTK/2012

• Counselvise Citation: 37622114 RSA 2012
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 26-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 06-06-2012
• Court: TRIBUNAL
• Department Lawyers: AMBIKA PRASAD MOHANTYAR
• Assessee Lawyers: N K NEB
• Keywords: Unexplained cash credit; Share purchase agreement; Opportunity of being heard; Principle of natural justice

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 376/CTK/2012 / ASSESSMENT YEAR 2007 - 08 ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(2), CUTTACK. - - - VERSUS - SHIVA SHAKTI AGRI CONSULTANCY LTD., C - 1232, SECTOR 6, CDA, CUTT ACK PAN: AAJCS 6789 G ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI AMBIKA PRASAD MOHANTY,AR / FOR THE RESPONDENT: / SHRI N.K.NEB, DR / DATE OF HEARING: 26.09.2012 / DATE OF PRONOUNCEMENT: 30.10.2012 / ORDER . . . , SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER . THE APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER DT.28.3.2012 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) FOR THE ASSESSMENT YEAR 2007 - 08 IN THE CASE OF THE ASSESSEE. 2. THE REVENUE HAS RAISED THE FOLLOWING ISSUES IN THE GROUNDS OF APPEAL. 0 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN DELETING THE ADDITION O F 5,00,000 MADE BY THE AC U/S.68 ( SHARE APPLICATION MONEY) WHEN CREDIT ENTRIES APPEARING IN THE BOOKS OF ACCOUNT HAVE NOT BEEN SATISFACTORILY EXPLAINED BY THE ASSESSEE PARTICULARLY WHEN THE ASSESSEE FAILED TO PROVE CREDITWORTHINESS OF THE SHARE APPLICANT S. THE LD.CIT(A) HAS OVERLOOKED TO CONSIDER THE RECENT DECISION OF HONBLE DELHI HIGH COURT REPORTED IN TAX INDIA ONLINE - TIOL - 148 - HC - DEL - IT DATED 15.02.2012 IN THE CASE OF CIT V RS. NOVA PROMOTORS AND FINLEASE PVT LTD. I.T.A.NO. 376/CTK/2012 2 02. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF 16,00,000 MADE U/S.68 ON ACCOUNT OF UNEXPLAINED UNSEC URED LOANS ON THE GROUND THAT AO HAD N OT CALLED FOR ANY CLARIFICATION/ EXPLANATION! IN THE NOTICE ISSUED U/S.14 2 TO THE ASSESSSEE WHERE AS AO HAD CATEGORICALLY ASKED THE ASSESSEE TO FURNISH THE NAME & ADDRESSES OF THE LOAN CREDITORS WITH THEIR CONFIRMATION TO PROVE GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF SUCH CREDITORS THROUGH ORDER SHEET ENTRY DATED 21.12.2009 03. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) IS NOT JUSTIFIED IN DELETING THE DISALLOWANCE OF 51,466 U/S.36(1)(VA) READ WITH SECTION 2(24)(X) MADE IN THE ASSESSMENT ORDER FOR BELATED REMITTANCE OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND & ESI. IT APPEARS THAT THE CIT(A) IS IN ERROR IN CONSIDERING THE DISALLOWANCE U/S.43B OF THE I.T.ACT . 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED BY THE ASSESSEE AND THEIR LEGAL IMPLICATIONS. 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL AND ANALYZING THE SAME IN THE LIGHT OF THE SUBMISSIONS OF BOTH THE PARTIES, THE UND ISPUTED FACTS RELATING TO THE ISSUES ARE THAT THE DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE SHOWN TO HAVE RECEIVED SHARE APPLICATION MONEY OF 5,00,000. THE ASSESSING OFFICER OBSERVED IN HIS ORDER THAT THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF SHARE APPLICATION MONEY ALONG WITH FULL NAMES AND COMPLETE ADDRESS OF THE SHARE HOLDERS HAVING VOTING RIGHT OF 10% OR MORE. THE ASSESSEE FURNISHED THE LEDGER COY OF SHARE APPLICATION MONEY AND ADDRESSES OF SHARE HOLDERS. HOWEVER, THE ASSESSEE COULD NOT PRODUCE OTHER DETAILS IN ORDER TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS FOR VERIFICATION. THE ASSESSING OFFICER FURTHER REQUI RED THE ASSESSEE TO PRODUCE THE EVIDENCE OF I.T.A.NO. 376/CTK/2012 3 SOURCE OF INVESTMENT OF SHARE CAPITAL OF SHAREHOLDERS/DIRECTORS WITH THE COPY OF BANK ACCOUNT DETAILS AT LEAST ONE YEAR BEFORE AVAILING THE MONEY FROM THE BANK ACCOUNT BUT THE ASSESSEE FAILED TO DO SO. IN ABSENCE OF SHARE CERTIFICATES OR EVEN THE BANK PASS BOOKS THROUGH WHICH SUCH SHARE TRANSACTION TAKEN PLACE, THE ASSESSING OFFICER HELD THE ENTIRE AMOUNT OF 5,00,000 CLAIMED AS SHARE APPLICATION MONEY U/S.68 OF THE I.T.ACT. 4.1. IN RESPECT OF UNSECURED LOAN OF 16,00,00, ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH THE NAMES AND COMPLETE POSTAL ADDRESSES OF THE LOAN CREDITORS ALONG WITH PAN AND OTHER I.T.PARTICULARS SUCH AS THE DETAILS OF RETURN OF INCOME ETC. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER OBSERVED THAT NEITHER DURING THE COURSE OF HEARING NOR BEFORE THE COMPLETION OF ASSESSMENT THE ASSESSEE COULD PRODUCE ANY EVIDENCE IN RESPECT OF UNSECURED LOAN CREDITORS. THEREFORE, HE TREATED THE SAID AMOUNT OF 16,00,000 AS UNEXPLAINED CASH CREDIT AND A DDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 4.2. IN RESPECT OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND & ESI, FROM THE TAX AUDIT REPORT (SCHEDULE VI), THE ASSESSING OFFICER NOTICED THAT EMPLOYEE CONTRIBUTION TO THE PROVIDENT FUND & E.S.I AMOUNTING TO 32,220 AND 19,246 ARE PAYABLE AS ON 31.3.2007 AND WHICH WERE SHOWN UNDER THE HEAD CURRENT LIABILITIES AND PROVISIONS IN THE BALANCE SHEET. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN SUPPORT OF THOSE PAYMENTS, THE DUE DATE, INCLUDING THE GRACE PERIOD OF FIVE DAYS GRANTED UNDER THOSE ACTS. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE IN THIS REGARD AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED THE ASSESSEE FILED APPE AL BEFORE THE LEARNED CIT(A), WHO AFTER HEARING THE ASSESSEE AND CONSIDERING THE MATERIAL MADE AVAILABLE TO I.T.A.NO. 376/CTK/2012 4 HIM, DELETED THE AFORESAID ADDITIONS. HENCE, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LEARNED DR VEHEMENTLY CONTENDED BEFORE US THAT THE ASSESSEE HAS FAILED TO ESTABLISH ITS CLAIM IN RESPECT OF THE SHARE APPLICATION MONEY, UNSECURED LOAN AND THE PAYMENT OF EMPLOYEES CONTRIBUTION TO PF AND ESI AS DISCUSSED IN DETAIL IN THE ASSESSMENT ORDER. WHEREAS THE LEARNED CIT(A) BASED ON MATERIAL EVIDENCE PRODUCED BY THE ASSESSEE BEFORE HIM HAS ALLOWED THE ABOVE CLAIM OF THE ASSESSEE WITHOUT EITHER CALLING FOR A REMAND REPORT FROM THE ASSESSING OFFICER OR GIVING ANY OPPORTUNITY TO THE ASSESSING O FFICER TO HAVE HIS SAY IN THIS REGARD, WHICH IS IN VIOLATION OF RULE 46A OF THE I.T.RULES,1962. THE LEARNED AR OF THE ASSESSEE, ON THE OTHER HAND, SUPPORTED THE IMPUGNED ORDERS OF THE LEARNED CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GONE THR OUGH THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSING OFFICER HAS DISALLOWED THE ABOVE CLAIMS OF THE ASSESSEE THE ASSESSEE HAVING NOT ESTABLISHED SUCH CLAIM BY PRODUCING NECESSARY EVIDENCE AS DETAILED IN THE ASSESSMENT ORDER. BUT T HE LEARNED CIT(A) BASED ON EVIDENCES PRODUCED AND CASE LAWS RELIED ON HAS DELETED THE ABOVE DISALLOWANCES/ADDITION. WE FIND THAT THE LEARNED CIT(A) NEITHER HAS CALLED FOR ANY REMAND REPORT FROM THE ASSESSING OFFICER NOR GIVEN ANY OPPORTUNITY OF BEING HEARD TO THE ASSESSING OFFICER, WHICH IS IN VIOLATION OF RULE 46A OF THE I.T.RULES, AS RIGHTLY POINTED OUT BY THE LEARNED CIT(A). IN SUCH VIEW OF THE MATTER, WE FIND IT FIT TO SET ASIDE THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND RESTORED THE ISSUES TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERATION AFRESH IN THE LIGHT OF EVIDENCE PRODUCED BY THE ASSESSEE AND CASE LAWS RELIED ON BY IT AND PASS NECESSARY CONSEQUENTIAL ORDER IN ACCORDANCE WITH LAW, STRICTLY FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE. I.T.A.NO. 376/CTK/2012 5 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. S D/ - S D/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( ) DATE: 30.10.2012 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(2), CUTTACK. 2 / THE RESPONDENT: SHIVA SHAKTI AGRI CONSULTANCY LTD., C - 1232, SECTOR 6, CDA, CUTTACK 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 03.10.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 03.10.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.10.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER .. ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY.