PRAMAASK CONGLOBE P.LTD, MUMBAI V. ITO 10(3)(3), MUMBAI

ITA 3772/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0214 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 01-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Keywords: Unexplained cash credit; Opportunity of being heard; Additional evidence; Corroborative evidences
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI N.K. PRADHAN , ACCOUNTANT MEMBER ITA NO. 3772 /MUM./2016 ( ASSESSMENT YEAR : 20 11 12 ) PRAMAASK CONGLOBE PVT. LTD. ROOM NO.16, B WING, GRACE PLAZA S.V. ROAD, JOGESHWARI (W) MUMBAI 400 102 PAN AAGCM2825A . APPELLANT V/S INCOME TAX OFFICER WARD 10(3)(3), MUMBAI . RESPONDENT ASSE SSEE BY : SHRI RAJESH S. SHAH REVENUE BY : SHRI POOJA SWAROOP DATE OF HEARING 12 . 02 .2018 DATE OF ORDER 21.02.2018 O R D E R PER SAKTIJIT DEY, J.M. THIS IS AN APPEAL BY THE ASSESSEE AGAINST ORDER DATED 1 ST MARCH 2016, PASSED BY THE LEARNED COMMISSIONER (APPEALS) 24, MUMBAI, FOR THE ASSESSMENT YEAR 2011 12. 2 . BRIEF FACTS ARE, THE ASSESSEE A COMPANY IS ENGAGED IN THE BUSINESS OF IMPORT AND EXPORT OF IRON ORE. FOR THE ASSESSMENT YEAR UNDER DISPUTE, ORIGINALLY ASSESSEE FILED ITS RETURN OF INCOME ON 30 TH SEPTEMBER 2011, DECLARING TOTAL INCOME OF ` 16,70,463. SUBSEQUENTLY, THE ASSESSEE FILED A REV ISED RETURN OF INCOME ON 23 RD MAY 2012. DURING 2 PRAMAASK CONGLOBE PVT. LTD. THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICING SUBSTANTIAL INCREASE IN AUTHORISED AS WELL AS ISSUED CAPITAL CALLED UPON THE ASSESSEE TO FURNISH NECESSARY DETAILS ALONG WITH THE SUPPORTING EVIDENCE. ON A PERUSAL OF THE DETAILS SUBMITTED, THE ASSESSING OFFICER FOUND THAT SHARES WERE ISSUED TO TWO DIRECTORS OF THE COMPANIES AND BOTH THE DIRECTORS HAVE BEEN ALLOTTED 4.95 LAKH SHARES EACH. IN THIS REGARD, IT WAS SUBMITTED BY THE ASSESSEE THAT UNSECURED L OAN OF ONE OF THE DIRECTORS VIZ. PRAVIN KUMAR, WAS TRANSFERRED TO SHARE INVESTMENT. THE ASSESSING OFFICER NOT BEING CONVINCED WITH THE EXPLANATION OF THE ASSESSEE CALLED UPON IT TO EXPLAIN THE SOURCE OF SHARE CAPITAL INTRODUCED AND TO ESTABLISH THE IDENTIT Y, GENUINENESS AND CREDITWORTHINESS OF THE PERSONS WHO PURPORTEDLY SUBSCRIBED TO SHARE CAPITAL. ALLEGING THAT THE ASSESSEE DID NOT FILE NECESSARY DETAILS THE ASSESSING OFFICER BEING OF THE OPINION THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE GENUINENESS O F SUBSCRIPTION TO THE SHARE CAPITAL AMOUNTING TO ` 99 LAKH TREATED IT AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT AND ADDED BACK TO THE INCOME OF THE ASSESSEE. FURTHER, THE ASSESSING OFFICER ON VERIFYING THE BALANCE SHEET OF THE COMPANY FOUND TH AT AN AMOUNT OF ` 132,74,156 HAS BEEN SHOWN AS A LIABILITY ON ACCOUNT OF CLIENT DISPUTE. ALLEGING THAT THE ASSESSEE FAILED TO FURNISH THE DETAILS CALLED FOR THE ASSESSING OFFICER ADDED BACK AN AMOUNT OF ` 82,74,156, AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. IN ADDITION TO THE ABOVE, THE ASSESSING OFFICER FOUND A CASH 3 PRAMAASK CONGLOBE PVT. LTD. DEPOSIT OF ` 44,51,000 MADE DURING THE YEAR. ALLEGING THAT THE ASSESSEE FAILED TO FURNISH ANY SUPPORTING EVIDENCE REGARDING THE SOURCE OF CASH DEPOSIT, THE ASSESSING OFFICER ADDED BACK THE AMOUNT OF ` 45,51,000, AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. BEING AGGRIEVED OF THE ADDITIONS MADE, ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED COMMISSIONER (APPEALS). 3 . THE LEARNED COMMISSIONER (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LEARNED COMMISSIONER (APPEALS) DELETED THE AMOUNT OF ` 27,81,000 OUT OF THE ADDITIONS MADE ON ACCOUNT OF SUBSCRIPTION TO SHARE CAPITAL AND CLIENT DEPOSITS WHILE SUSTA INING TEH ADDITION OF CASH DEPOSITS IN ITS ENTIRETY. BEING AGGRIEVED OF THE AFORESAID DECISION OF THE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE FILED THE PRESENT APPEAL. 4 . APART FROM THE GROUND S RAISED BY THE ASSESSEE ON THE MERITS OF THE ADDITIONS MADE THE ASSESSEE HAS RAISED THE FOLLOWING ADDITIONAL GROUNDS IN THE COURSE OF HEARING. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER (APPEALS) ERRED IN HOLDING THAT NUMBER OF ADDITIONAL EVIDENCES SUCH AS HDFC BANK ACCOUNT, ETC., WHICH WERE NOT PRODUCED BEFORE THE A.O. ARE NOT PRODUCED WITHOUT APPLICATION UNDER RULE 46A OF I.T. RULES 1962, THOUGH ON ADDITIONAL EVIDENCES WERE PRODUCED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER (APPEALS) ERRED IN NOT CONSIDERING THE EVIDENCES WHICH WERE BEFORE ASSESSING AND WHICH WERE FILED 4 PRAMAASK CONGLOBE PVT. LTD. DURING THE APPELLATE PROCEEDINGS AND HENCE, THE MATTER IS REQUIRED T O BE SET ASIDE TO THE OFFICE OF INCOME TAX OFFICER TO CONSIDER THE EVIDENCES. 5 . SINCE , THE ISSUE RAISED IN THE ADDITIONAL GROUNDS ARE ON APPRECIATION OF EVIDENCES FILED BY THE ASSESSEE AND GOES TO THE ROOT OF THE MATTER, WE ARE INCLINED TO ADMIT THE ADDITI ONAL GROUND S AND PROPOSE TO DECIDE THEM AT THE VERY OUTSET. 6 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT IN THE COURSE OF HEARING OF APPEAL, THE ASSESSEE HAD SUBMITTED BANK ACCOUNT COPIES TO PROVE THE SOURCE OF THE CONTRIBUTION MADE TO SHARE CAPIT AL, CLIENT DEPOSITS AND CASH DEPOSITS. HOWEVER, THE LEARNED COMMISSIONER (APPEALS) REFUSED TO LOOK INTO THE EVIDENCE ON THE REASONING THAT THEY WERE IN THE NATURE OF ADDITIONAL EVIDENCE, HENCE, HAVE TO BE FILED IN THE MANNER PRESCRIBED UNDER RULE 46A OF TH E I.T. RULES. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, THE EVIDENCES SUBMITTED BEFORE THE LEARNED COMMISSIONER (APPEALS) WERE NOT IN THE NATURE OF ADDITIONAL EVIDENCES BUT WERE PRODUCED BEFORE THE ASSESSING OFFICER. HE SUBMITTED, THE LEARNED COMMIS SIONER (APPEALS) WITHOUT PROPERLY APPRECIATING THE FACTS HAS REJECTED THE EVIDENCES. HE SUBMITTED, SINCE , THE EVIDENCES SUBMITTED BY THE ASSESSEE HAVE A CRUCIAL BEARING ON TH E VALIDITY OF THE ADDITIONS MADE BY THE ASSESSING OFFICER, THEY SHOULD BE CONSIDER ED. 5 PRAMAASK CONGLOBE PVT. LTD. 7 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, THOUGH, RELIED UPON THE OBSERVATIONS OF THE LEARNED COMMISSIONER (APPEALS), HOWEVER, SHE SUBMITTED THE MATTER CAN BE RESTORED TO THE FIRST APPELLATE AUTHORITY FOR DECIDING THE ISSUE AFRESH AFTER EXAMINING THE E VIDENCES SUBMITTED BY THE ASSESSEE. 8 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL AVAILABLE ON RECORD. UNDISPUTEDLY, THE IMPUGNED ADDITIONS HAVE BEEN MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE FAILED TO ESTABLISH THE SOURCE OF TH E INVESTMENTS / DEPOSITS WITH SUPPORTING EVIDENCES. IT IS EVIDENT, IN THE COURSE OF PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE PRODUCED CERTAIN EVIDENCES TO ESTABLISH THE SOURCE OF THE DEPOSITS. HOWEVER, THE LEARNED COMMISSIONER (APPEAL S) REJECTED THE EVIDENCES PRODUCED BY THE ASSESSEE ON THE REASONING THAT THEY WERE NOT PRODUCED FOLLOWING THE MANNER PRESCRIBED UNDER RULE 46A OF THE RULES. IT IS THE SPECIFIC PLEADING OF THE LEARNED AUTHORISED REPRESENTATIVE BEFORE US THAT THE EVIDENCE PR ODUCED BEFORE THE FIRST APPELLATE AUTHORITY ARE NOT IN THE NATURE OF ADDITIONAL EVIDENCE AS THEY WERE PRODUCED BEFORE THE ASSESSING OFFICER. WITHOUT ENTERING INTO THE CONTROVERSY AS TO WHETHER THE EVIDENCES SOUGHT TO BE PRODUCED BEFORE THE FIRST APPELLATE AUTHORITY ARE IN THE NATURE OF ADDITIONAL EVIDENCES OR NOT WE ARE OF THE VIEW THAT IF THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE DEPOSITS 6 PRAMAASK CONGLOBE PVT. LTD. PRODUCES CERTAIN EVIDENCES THEY ARE REQUIRED TO BE CONSIDERED ON THEIR OWN MERITS WITHOUT REJECTING THEM ON PURE LY TECHNICAL GROUNDS. IN VIEW OF THE AFORESAID, WE RESTORE THE ISSUES ARISING IN THE PRESENT APPEAL TO THE LEARNED COMMISSIONER (APPEALS) FOR DECIDING AFRESH AFTER CONSIDERING THE EVIDENCES SUBMITTED BY THE ASSESSEE. NEEDLESS TO MENTION, THE LEARNED COMMIS SIONER (APPEALS) MUST AFFORD REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE ISSUE. 9 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21.02.2018 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 21.02.2018 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (ASSTT. REGISTRAR/SR.P.S) ITAT, MUMBAI