Blazing Trail Technologies India Pvt. Ltd., New Delhi V. ITO, Ward- 5(1), New Delhi

ITA 3820/DEL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8620 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 22-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: KARANJOT SINGH KHURANA
• Keywords: Unexplained cash credit; Principle of natural justice; Additional evidence; Valuation report; Set aside
• Section: 142(1); 143(1); 68; 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC, NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER ITA NO. 3820/DEL/2018 ASSESSMENT YEAR: 2014-15 BLAZING TRAIL TECHNOLOGIES VS. ITO, WARD 5(1) INDIA PVT. LTD. ROOM NO. 379, 53-DG-III, VIKAS PURI, C.R. BLDG., NEW DELHI 18 I.P. ESTATE, (PAN: AAFCB3876K) NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. KARANJOT SINGH KHURANA, ADV. REVENUE BY : SH. SL ANURAGI, SR. DR. ORDER THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDE R DATED 05.1.2018 OF THE LD. CIT(A)-2, NEW DELHI PER TAINING TO ASSESSMENT YEAR 2014-15 ON THE FOLLOWING GROUNDS :- BEING AGGRIEVED BY THE ORDER OF THE AO AND THE LD. CIT(A), THE APPELLANT CRAVES LEAVE TO PREFER APPEAL ON THE GROUNDS, WITHOUT PREJUDICE TO ONE ANOTHER, AS FOLLOWS:- 2 A. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW AND IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, THE ORDER OF THE LD. CIT(A) IS PERVERSE IN LAW AND ON FACTS ON THE FOLLOWING GROUNDS: A.1 THE LD. CIT(A) ERRED IN DISMISSING THE APPELLANTS REQUEST FOR ADMISSION OF ADDITIONAL EVIDENCE. A.2 THE LD. CIT(A) ERRED IN NOT CONSIDERING THE APPELLANTS REPLY TO THE REMAND REPORT OF THE AO. B. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 6,88,115/- ON ACCOUNT OF DISALLOWANCE OF EXPENSES. C. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 22,00,000/- ON ACCOUNT OF SHARE CAPITAL AND SHARE PREMIUM. 3 THE APPELLANT CRAVES LEAVE TO ALTER, AMEND, ADD, MODIFY, DELETE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING BEFORE THIS HONBLE TRIBUNAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FI LED E- RETURN OF INCOME ON 30.11.2014 DECLARING LOSS OF R S. 7,42,003/-. THE RETURN OF THE ASSESSEE WAS PROCESS ED U/S. 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) . SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UN DER CASS AND NOTICE U/S. 143(2) OF THE ACT DATED 28.8.2 015 WAS ISSUED. AS PER INFORMATION AVAILABLE ON THE OFF ICIAL WEBSITE OF INDIA POST, THE NOTICE WAS DELIVERED AT THE REGISTERED ADDRESS OF THE ASSESSEE ON 03.9.2015. THEREAFTER, SEVERAL NOTICES, INCLUDING QUESTIONNAIR E U/S. 142(1) OF THE ACT WERE ISSUED FROM TIME TO TIME. H OWEVER, THERE WAS NO COMPLIANCE ON THE PART OF THE ASSESSEE . NONE ATTENDED THE PROCEEDINGS. NOR WERE ANY WRITTEN COMMUNICATIONS RECEIVED. FINALLY, A SHOW CAUSE NOTI CE U/S. 144 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 2.11.2 016 AND IN RESPONSE TO THE SAME A WRITTEN SUBMISSION WA S 4 RECEIVED FROM THE A.R. OF THE ASSESSEE, SEEKING MOR E TIME FOR FURNISHING DETAILS / DOCUMENTS AS CALLED FOR AN D ACCORDINGLY THE CASE WAS ADJOURNED TO 23.11.2016 AN D THEREAFTER TO 01.12.2016. THE AR FINALLY ATTENDED T HE PROCEEDINGS ON 20.12.2016 AND THEREAFTER ON 26.12.2 016. HOWEVER, BEYOND COPIES OF CERTAIN BILLS, NO DETAILS / DOCUMENTS WERE FURNISHED. AGAIN HE SOUGHT TIME TILL 28.12.2016, STATING THAT ALL THE DIRECTORS WERE ABR OAD AND THEREFORE, ONE FINAL OPPORTUNITY MAY BE GRANTED. ACCORDINGLY, THE CASE WAS FIXED FOR HEARING ON 28.1 2.2016, BUT THE AR DID NOT ATTEND THE PROCEEDINGS ON THE SA ID DATE. DESPITE THE AFORESAID SHOW CAUSE PUTTING THE ASSESS EE ON NOTICE THAT THE PROCEEDINGS SHALL BE COMPLETED EXPA RTE IN THE EVENT OF NON-COMPLIANCE, THE ASSESSEE HAS CHOSE N TO REMAIN SILENT. CONSIDERING SUCH CONTINUED NON- COMPLIANCE AND THE FACT THAT THE PROCEEDINGS ARE GE TTING BARRED BY LIMITATION ON 31.12.2016, THE AO HAS NO O PTION BUT TO COMPLETE THE PROCEEDINGS U/S. 144 OF THE ACT AND MADE THE ADDITION OF RS. 6,85,115/- ON ACCOUNT OF 5 EXPENSES AND FURTHER MADE THE ADDITION OF RS. 22,00 ,000/- ON ACCOUNT OF SHARE CAPITAL AND SHARE PREMIUM BY COMPLETING THE ASSESSMENT AT RS. 21,43,110/- U/S. 1 44 OF THE ACT VIDE ORDER DATED 29.12.2016. AGAINST THE SA ID ASSESSMENT ORDER, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 05.1.201 8 HAS DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED WI TH THE IMPUGNED ORDER, ASSESSEE IS IN APPEAL BEFORE THE TR IBUNAL. 3. DURING THE HEARING, LD. COUNSEL FOR THE ASSESSEE HAS STATED THAT LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE ASSESSEES REQUEST FOR ADMISSION OF ADDITIONAL EVI DENCES AND NOT CONSIDERED THE ASSESSEES REPLY TO THE RE MAND REPORT OF THE AO. HE FURTHER SUBMITTED THAT LD. CI T(A) HAS WRONGLY CONFIRMED THE ADDITION OF RS. 6,85,115/- ON ACCOUNT OF DISALLOWANCE OF EXPENSES. IN THIS REGARD , HE SUBMITTED THAT THE ASSESSEE HAD RECEIPTS OF RS. 8,3 3,334/- FROM INFORMATION TECHNOLOGY SERVICES RENDERED BY IT DURING THE CAPTIONED ASSESSMENT YEAR. AGAINST THIS, THE A SSESSEE HAD CLAIMED EXPENSES OF RS. 17,12,789/-. HE FURTHER 6 SUBMITTED THAT ASSESSEE PROVIDED THE VOUCHERS IN R ELATION TO THE MAJORITY OF THE EXPENSES, WHICH ARE AT PAGE NO. 29- 91 OF THE PB. HOWEVER, THE AO WITHOUT PERUSING THE VOUCHERS SUBMITTED MADE AN ADHOC ADDITION OF 40% OF SUCH EXPENSES AMOUNTING TO RS. 6,85,115/- ON THE GR OUND THAT THE ASSESSEE HAS NOT PRODUCED ITS BOOKS OF ACC OUNT ALONGWITH BILL/ VOUCHERS, AND ALSO BECAUSE THE NATU RE OF SUCH EXPENSES AND THEIR NEXUS WITH THE BUSINESS OF THE ASSESSEE WAS NOT ASCERTAINABLE AS PER THE AO. WITH REGARD TO ADDITION OF RS. 22,00,000/- IS CONCERNED, HE SUB MITTED THAT ASSESSEE HAD RECEIVED AN AMOUNT OF RS. 22,00, 000/- (RS. 2,00,000/- AS SHARE CAPITAL, AND RS. 20,00,000 /- AS SHARE PREMIUM). THE ASSESSEE JUSTIFIED THE HIGHER VALUATION OF SHARES BY SUBMITTING SHARE VALUATION REPORT AND ALSO PROVIDED THE IDENTITY OF THE INVESTOR, WHI CH ARE AT PAGE4 NO. 7-14 OF THE PAPER BOOK. HOWEVER, THE AO TREATED THE ENTIRE AMOUNT RECEIVED AS SHARE CAPITAL AND SHARE PREMIUM AS UNEXPLAINED CREDIT UNDER SECTION 6 8 OF THE ACT HOLDING THAT THE ASSESSEE HAS FAILED TO DIS CHARGE ITS 7 ONUS OF PROVING THE SOURCE AND CAPACITY OF SHARE AP PLICANTS AS WELL AS GENUINENESS OF THE TRANSACTIONS. HE FURT HER SUBMITTED THAT LD. CIT(A) HAS CONFIRMED BOTH THE AD DITIONS WITHOUT ADMITTING THE ADDITION EVIDENCES UNDER RULE 46A AND FAILED TO SPECIFY ANY OF THE CIRCUMSTANCES UNDE R CLAUSES (A) TO (D) OF RULE 46A(1). IN VIEW OF ABOVE , HE REQUESTED TO SET ASIDE THE ORDERS OF THE AUTHORITIE S BELOW AND ALLOW THE APPEAL OF THE ASSESSEE. 4. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT HE HAS PASSED A WELL REA SONED ORDER, WHICH DOES NOT NEED ANY INTERFERENCE. 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS ESPECIALLY THE IMPUGNED ORDER. AS REGARDS GROUND NO . (A) RELATING TO ADMISSION OF ADDITIONAL EVIDENCE IS CON CERNED, IT IS NOTED THAT ASSESSEE HAS SUBMITTED SOME DOCUMENTA RY EVIDENCES IN THE FORM OF SHARE APPLICATION CERTIFIC ATE, BANK STATEMENT AND KYC OF SHARE HOLDER FROM WHICH PREMI UM WAS RECEIVED, BILLS AND VOUCHERS RELATED TO EXPENSE S. THE ASSESSEE HAS NOT SPECIFIED THE REASONS AS TO WHY TH ESE 8 EVIDENCES COULD NOT BE FURNISHED BY IT BEFORE THE A O. HOWEVER, THE EARLIER LD. CIT(A) DIRECTED THE AO TO EXAMINE THE EVIDENCES AND SUBMIT HIS COMMENTS AND ACCORDINGLY, THE AO HAS SUBMITTED ITS REPORT VIDE LETTER DATED 28.7.2017 HAS SUBMITTED THAT THE ASSESSEE HAS FAILED TO SPECIFY ANY OF THE CIRCUMSTANCES MENTIONE D IN RULE 46A OF THE I.T. RULES FROM CLAUSES (A) TO (D). FURTHER THE ASSESSEE HAS NOT GIVEN JUSTIFICATION BEFORE THE LD. CIT(A) AS TO WHY IT FAILED TO SUBMIT THE EVIDENCES BEFORE THE AO WHICH HE INTENDS TO SUBMIT BEFORE THE LD. CI T(A), THEREFORE, IN THE ABSENCE OF ANY SUCH JUSTIFICATION , LD. CIT(A) HAS RIGHTLY DISMISSED THE REQUEST OF THE AS SESSEE FOR ADMITTING THE ADDITIONAL EVIDENCES, WHICH DOES NOT NEED ANY INTERFERENCE ON MY PART, HENCE, I UPHOLD T HE ACTION OF THE LD. CIT(A) ON THE ISSUE OF DISPUTE AN D REJECT THE GROUND (A) RAISED BY THE ASSESSEE. 5.1 AS REGARDS GROUND (B) RELATING TO CONFIRMING TH E ADDITION OF RS. 6,85,115/- ON ACCOUNT OF DISALLOWA NCE OF EXPENSES IS CONCERNED, I FIND THAT DETAILS AND VOUC HERS 9 HAVE NOT BEEN LINKED TO VERIFY THE GENUINENESS AND QUANTUM AND THE BILLS AND VOUCHERS ARE A FEW ONLY. HENCE, THE LD. CIT(A) HAS RIGHTLY HELD THAT EXPENSE S AS MADE BY THE AP APPEARS TO BE REASONABLE AND APPROPR IATE AND THEREFORE, THE ADDITION OF RS. 6,85,115/- WAS C ORRECTLY CONFIRMED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON MY PART, HENCE, I UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE OF DISPUTE AND REJECT THE G ROUND (B) RAISED BY THE ASSESSEE. 5.2 AS REGARDS GROUND (C) RELATING TO CONFIRMING TH E ADDITION OF RS. 22,00,000/- ON ACCOUNT OF SHARE CAP ITAL AND SHARE PREMIUM IS CONCERNED, I FIND THAT AO OBSERVED THAT DURING THE YEAR UNDER APPEAL THE ASSESSEE HAS RECEI VED A SUM OF RS. 22,00,000/- OUT OF WHICH SHARE CAPITAL W AS RS. 2,00,000/- AND SHARE PREMIUM WAS RS. 20,00,000/- F OR WHICH THE ASSESSEE COMPLETELY FAILED TO DISCHARGE I TS ONUS CAST UPON IT UNDER THE PROVISIONS OF SECTION 68 OF THE ACT I.E. IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. THE AO HAS STATED THAT DESPITE REPEA TED 10 OPPORTUNITY, THE ASSESSEE DID NOT PROVIDE EVEN THE PRIMARY DETAILS IN RESPECT OF THE IDENTITY AND CAPACITY OF THE LENDERS. AS PER THE AO, ONLY THE NAMES OF THE SHARE HOLDERS WERE FURNISHED BY THE ASSESSEE AND THEREFO RE, THE AO ADDED THE WHOLE AMOUNT OF RS. 22,00,000/- U/S. 6 8 OF THE ACT AS UNEXPLAINED READ WITH THE PROVISIONS OF SECTION 115BBE OF THE ACT. HOWEVER, IN THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS ALSO FILED ADDITIONAL EVIDENCES IN THE FORM OF SHARE VALUATION REPORT D ATED 20.3.2014 ALONGWITH CONFIRMATION FROM THE SHARE HOL DER NAMELY MR. SUBHASH CHANDER RANDEVA BUT WITH NO CONFIRMATION FROM THE CREDITORS, HENCE, THE ADDITIO NAL EVIDENCES HAVE NOT BEEN ADMITTED, AS AFORESAID. HEN CE, THE LD. CIT(A) HAS RIGHTLY HELD THAT IN THE ABSENCE OF ANY EXPLANATION TO THE NATURE AND SOURCE OF THE CREDITS AND GENUINENESS OF TRANSACTION, HE CONFIRMED THE ADDITI ON OF RS. 22,00,000/-, WHICH DOES NOT NEED ANY INTERFERE NCE ON MY PART, HENCE, I UPHOLD THE ACTION OF THE LD. CIT( A) ON 11 THE ISSUE OF DISPUTE AND REJECT THE GROUND (D) RAIS ED BY THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 10-04-2019. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE: 10/04/2019 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT(A) 5. DR, ITAT BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES