Bindal Agencies Private Limited, Chennai V. ITO, Corporate Ward -1(2), Chennai

ITA 382/CHNY/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5205 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 01-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS S VIJAYA PRABHA
• Assessee Lawyers: T BANUSEKAR; B JAISHEILA
• Keywords: Search and seizure; Opportunity of being heard; Principle of natural justice; Accommodation entries
• Section: 143(3); 234B; 68; 132

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO. 3 82 / CHNY /201 8 / ASSESSMENT YEAR :20 1 4 - 1 5 M/S. BINDAL AGENCIES PVT. LTD., NO. 12/2, VENKATACHALAM LANE, 1 ST FLOOR, RATTAN BAZAAR, CHENNAI 600 0 03 . [PAN: A ACCB3892N ] VS. THE INCOME TAX OFFICER , CO RPORATE WARD 1(2), CHENNAI . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI T. BANUSEKAR , C.A. & MS. B. JAISHEILA, C.A. / RESPONDENT BY : MRS. S. VIJAYAPRABHA , J CIT / DATE OF HEARING : 1 0 . 0 5 .201 8 / DATE OF PRONOUNCEMENT : 07 . 0 6 .201 8 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMI SSIONER OF INCOME TAX (APPEALS) 3, CHENNAI DATED 30 . 11 .201 7 RELEVANT TO THE ASSESSMENT YEAR 20 1 4 - 1 5. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. FOR THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE TO THE EXTENT PREJUDICIAL TO THE INTERESTS OF THE APPELLANT AND IS OPPOSED TO THE PRINCIPLES OF EQUITY, NATURAL JUSTICE AND FAIR PLAY. I.T.A. NO. 3 82 / CHNY /18 2 2. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE ORDER OF THE ASSESSING OFFICER IS WITHOUT JURISDICTION. 3. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ADDITION OF R S.1 0,00,000/ - AS BOGUS TRANSACTIONS. 4. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE APPELLANT HAD NOT RECEIVED ANY LOAN FROM M/S. SHIPRA FABRICS PVT. LTD IN THE PREVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR. 5. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE DISALLOWANCE OF INTEREST PAYMENT OF RS.1,45,421/ - . 6. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE APPELLANT HAS DEDUCTED TAX AT SOURCE ON THE INTEREST PAID. 7. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT ALL THE LOAN TRANSACTIONS WERE CARRIED OUT THROU GH BANKING CHANNEL. 8. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE PROVISIONS OF SECTION 68 ARE NOT INVOCABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 9. FOR THAT THE APPELLANT OBJECTS TO THE LEVY OF INTEREST UN DER SECTIONS 234B AND 234C. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN ADMITTING A TOTAL INCOME OF .24,84,440/ - . THE RETURN FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY AND AGAINST STATUARY NOTICES ISSUED, THE ASSESSEE FURNISH ED THE PARTICULARS CALLED FOR. ON VERIFICATION OF THE DETAILS FILED BY THE ASSESSEE AS WELL AS CONSIDERING THE SUBMISSIONS, THE ASSESSMENT WAS COMPLETED UNDER I.T.A. NO. 3 82 / CHNY /18 3 SECTION 143(3) OF THE ACT BY DETERMINING TOTAL INCOME ASSESSED AT .36,72,384/ - AFTER MAKING VARI OUS DISALLOWANCES. 2.1 WITH REGARD TO THE DISALLOWANCE OF BOGUS TRANSACTION, AMOUNTING TO R S .10 LAKHS, THE ASSESSING OFFICER OBSERVED THAT THERE WAS A SEARCH AND SEIZURE ACTION U NDER SECTION 132 IN THE CASE OF MR. VIPUL VI D HUR BHATT AND HIS RELATED ENTIT IES AND DURING THE SAID ACTION, MR. BHATT HAD ACCEPTED THAT HE HA S INDULGED IN PROVIDING A CCOMMODATION ENTRIES FOR WHICH AS MANY AS 347 ENTITIES HAVE BEEN FLOATED AND EARNED COMMISSION FOR PROVIDING ACCOMMODATION ENTRIES TO THE BENEFICIARIES. ON RECEIPT OF THIS INFORMATION , THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN AS TO WHY SAID BOGUS TRANSACTION SHOULD NOT BE CONSIDERED FOR ADDITION. AFTER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE, THE ASSESSING OFFICER MADE AN ADDITION OF .10 LAKHS AS SHAM TRANSACTION . 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS WELL AS FACTS OF THE CASE, THE LD. CIT(A) CONFIRMED THE ADDITION. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TR IBUNAL. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITION OF .10 LAKHS IS NOT A BOGUS TRANSACTION, BUT A LOAN TRANSACTION AND THE LOAN FROM M/S. SHIPRA FABRICS PVT. LTD. WAS ALSO SHOWN IN THE OPENING BALANCE AND NOT CURRENT I.T.A. NO. 3 82 / CHNY /18 4 YEAR TRANSACTION. THUS, THE LD. COUNSEL FOR THE ASSESSEE PRAYED FOR DELETING THE ADDITION. 5. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSING OFFICER MADE THE ADDITION OF .10 LAKHS AS BOGUS TRANSACTION BASED ON THE INFORMATION IN RESPECT OF THE ADMISSION TOWARDS PROVIDING ACCOMMODATION ENTRIES TO THE BENEFICIARIES BY SHRI BHATT. THERE ARE THREE ENTITIES VIZ., M/S. BK DYING, M/S. SANTOSHIMA TRADE LINKS LTD . & M/S. SHIPRA FABRICS P. LT D. STATED TO HAVE MADE ACCOMMODATION ENTRIES. ON VERIFICATION OF THE LEDGER ACCOUNT COPIES TAKEN BY THE DDIT UNIT 7(4), MUMBAI , THE ASSESSING OFFICER OBSERVED THAT THE AMOUNT SAID TO HAVE BEEN RECEIVED FROM M/S. BK DYING & M/S. SANTOSHIMA TRADE LINKS LTD. ARE THE OPENING BALANCE AND ACCORDINGLY, THE SAID AMOUNTS OF ACCOMMODATION ENTRIES WILL BE ASSESSED IN THE RESPECTIVE ASSESSMENT YEARS IN WHICH THE AMOUNT WAS STATED TO HAVE BEEN RECEIVED BY THE COMPANY. HOWEVER, S INCE THE ASSESSEE COULD NOT FILE ANY CONFI RMATION FROM THE PARTY CONCERNED IN RESPECT OF THE TRANSACTION OF .10 LAKHS WITH M/S. SHIPRA FABRICS P. LTD., THE ASSESSING OFFICER ADDED THE SAME AS INCOME OF THE ASSESSEE. BY FILING CONFIRMATION OF ACCOUNTS OF M/S. SHIPRA FABRICS P. LTD., THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LOAN FROM I.T.A. NO. 3 82 / CHNY /18 5 M/S. SHIPRA FABRIC S P. LTD. WAS TAKEN DURING THE PREVIOUS YEAR AND INTEREST WAS PAID REGULARLY AND TDS WAS DEDUCTED BESIDES HAVING RETURNED THE FULL AMOUNT THROUGH BANK ON 01.07.2017 OF .13,60,615/ - IN FULL AND FINAL SETTLEMENT AND PRAYED FOR DELETING THE ADDITION. SINCE T HE ABOVE SAID MATERIAL WAS NOT AVAILABLE BEFORE THE ASSESSING OFFICER, WE DIRECT THE ASSESSING OFFICER TO VERIFY AS TO WHETHER THE SAID AMOUNT WAS ALREADY ADDED IN THE PREVIOUS YEAR AND DECIDE THE ISSUE AFRESH AFTER ALLOWING AN OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. 6.1 WITH REGARD TO THE ADDITION TOWARDS INTEREST ON THE LOANS AT .1,45,421/ - , AT PARA 5.2, THE ASSESSING OFFICER HELD THAT THE AMOUNT OF ACCOMMODATION ENTRIES IN RESPECT M/S. BK DYING & M/S. SANTOSHIMA TRADE LINKS LTD. WILL BE ASSESSED IN THE RESPECTIVE ASSESSMENT YEARS IN WHICH THE AMOUNT IS SAID TO HAVE BEEN RECEIVED BY THE COMPANY, THE INTEREST PAID IN LIEU OF THE LOAN AMOUNT CANNOT BE DISALLOWED IN THE ASSESSMENT YEAR UNDER CONSIDERATION. SINCE THE ASSESSEE FILED CONFIRMATION FROM M/ S. SHIPRA FABRICS P. LTD. STATED TO HAVE BEEN RECEIVED THE LOAN IN THE PREVIOUS YEAR AND WE DIRECTED THE ASSESSING OFFICER TO VERIFY THE SAME, THE ENTIRE INTEREST PAYMENT CANNOT BE DISALLOWED UNTIL AND UNLESS THE ENTIRE TRANSACTIONS ARE HELD TO BE BOGUS . A CCORDINGLY, THE ADDITION TOWARDS INTEREST ON LOANS IS ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NO. 3 82 / CHNY /18 6 6.3 LEVY OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT ARE CONSEQUENTIAL IN NATURE. SINCE WE HAVE REMITTED THE ISSUES BACK TO THE FILE OF THE ASSESSING OFFICER, WE ARE NOT INCLINED TO ADJUDICATE THE ISSUE AT THIS JUNCTURE. 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 07 TH JUNE , 201 8 AT CHENNAI. SD/ - SD/ - ( A. MOHAN ALANKAMONY ) ACCOUNTANT MEM BER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 07 . 0 6 .201 8 VM/ - / COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) / CIT(A), 4. / CIT, 5. / DR & 6. / G F.