Jhalak Fabrics Ltd., Delhi V. ITO, New Delhi

ITA 3838/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3511 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-07-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 09-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANEESH BAHUGUNA
• Assessee Lawyers: P ROYCHAUDHURI
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : D NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AN D SHRI RAJPAL YADAV, JUDICIAL MEMEBR I.T.A NO. 3838/DEL/09 ASSTT. YEAR 2006-07 JHALAK FABRICS LTD. 661, FIRST FLOOR, GANDHI MARKET, CHANDNI CHOWK DELHI. VS. ITO WARD 4 (2), C.R. BUILDIGN, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI P. ROY CHAUDHURI, ADVOCATE RESPONDENT BY: SHRI MANEESH BAHUGUNA, SR. DR ORDER PER RAJPAL YADAV, JM: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LD. CIT(A) DATED 10 TH JULY, 2009 PASSED FOR ASSTT. YEAR 2006-07. THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET CONTEND ED THAT AO DID NOT GRANT SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSE SSEE DURING THE ASSTT. PROCEEDING. THE ASSESSEE SOUGHT TO PRODUCE ADDITION AL EVIDENCE BEFORE ITA NO. 3838/DEL/2009 ASST T. YEAR 2006-07 2 THE LD. CIT(A) THAT PRAYER WAS ALSO NOT ENTERTAINED BY THE LD. FIRST APPELLATE AUTHORITY. HE FURTHER CONTENDED THAT NO D OUBT ASSESSEE HAD RAISED FRESH SHARE APPLICATION MONEY DURING THE YEA R AND THE ISSUE WAS INVESTIGATED BY THE AO. THE TAX CONSULTANT OF THE A SSESSEE SOUGHT ADJOURNMENT TO PRODUCE THE RELEVANT EVIDENCE BUT IN STEAD OF GRANTING SUFFICIENT TIME LD. AO GRANTED ADJOURNMENT FOR A VE RY SHORT PERIOD AND THEN CONCLUDED THAT SUFFICIENT OPPORTUNITY WAS GRAN TED TO ASSESSEE, IT FAILED TO PRODUCE THE RELEVANT EVIDENCE. THE AO IN THIS WAY MADE THE ADDITION OF RS. 1,43,39,400/-. SIMILARLY HE MADE AN ADDITION OF RS. 5,90,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT RE CEIVED BY THE ASSESSEE IN THE SHAPE OF UNSECURED LOAN. HE PRAYED THAT ISSUES BE SET ASIDE TO THE FILE OF AO FOR REINVESTIGATION AND REA DJUDICATION AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSE E. 2. LD. DR ON THE OTHER HAD OPPOSED THE PRAYER OF AS SESSEE. HE TOOK US THROUGH THE OBSERVATION OF LD. CIT(A) RECORDED O N PAGE 4 AND CONTENDED THAT SUFFICIENT TIME WAS GRANTED TO THE A SSESSEE. IT FAILED TO EVEN SUBMIT THE CONFIRMATION FROM THE ALLEGED SHARE APPLICATION. HE FURTHER CONTENDED THAT ASSESSEE BEFORE THE LD. CIT( A) TOOK A PLEA THAT TAX CONSULTANT WENT TO THE AO WITH THE RELEVANT EV IDENCE BUT SOMEHOW LD. AO COULD NOT COMMENCE THE HEARING OF THE CASE O F ASSESSEE ON THAT DAY AND THE TAX CONSULTANT LEFT THE PAPER WITH THE STAFF OF THE AO. THIS ITA NO. 3838/DEL/2009 ASST T. YEAR 2006-07 3 PLEA HAS BEEN REJECTED BY THE LD. CIT(A) BECAUSE IS SUE FAILED TO SUBSTANTIATE THIS PLEA. THE AFFIDAVIT FILED BY THE TAX CONSULTANT TO THIS EFFECT HAS BEEN BELIED BY THE LD. CIT(A). 3. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. THE ASSESSEE IS A COMPANY ENG AGED IN THE FABRIC BUSINESS. IT HAS FAILED ITS RETURN OF INCOME ON 24. 11.2006 DECLARING AN INCOME OF RS. 94,680/-. THE CASE WAS SELECTED FOR S CRUTINY ASSESSMENT AND A NOTICE U/S 143(2) WAS ISSUED ON 10.10.2007 WH ICH WAS DULY SERVED UPON THE ASSESSEE. IN RESPONSE TO THE NOTICE SHRI PRAMOD SHARMA, CHARTERED ACCOUNTANT APPEARED BEFORE THE AO . IT EMERGES OUT FROM THE ASSTT. ORDER THAT ASSESSEE HAS RAISED FRES H SHARE APPLICATION MONEY OF RS. 1,43,39,400/-. IT ALSO AVAILED UNSECUR ED LOAN OF RS. 5,90,000/-. THE AO DIRECTED THE ASSESSEE TO FULFILL THE CONDITIONS ENUMERATED IN SECTION 68 FOR EXPLAINING THE SHARE A PPLICATION MONEY AS WELL AS UNSECURED LOAN. THE TAX CONSULTANT OF THE A SSESSEE FILED THE DETAILS BUT FAILED TO SUBMIT THE NECESSARY DETAILS IN RESPECT OF THESE TWO ISSUES AND HE CONTINUED TO SEEK ADJOURNMENT FOR THE ONE OR THE OTHER REASON. ON DUE CONSIDERATION OF THE RECORD WE FIND THAT FIRST ORDER SHEET ENTRY IN THE ASTT.. ORDER IS DATED 22.11.2007 WHEN AO HAS OBSERVED THAT NOTICE U/S 143(2) DATED 10.10.2007 HAS BEEN SERVED UPON THE ASSESSEE. HE AGAIN ISSUED THE NOTICE AFTER EIGHT MONTHS ON 10 TH JULY, 2008 WHEN ITA NO. 3838/DEL/2009 ASST T. YEAR 2006-07 4 NOTICES U/S 143(2) 143(1) WERE SERVED UPON THE ASSE SSEE. THE INVESTIGATION ON THE ISSUES COMMENCED FROM 3 RD SEPTEMBER, 2008. THE AO HAS PASSED THE ASSTT. ORDER ON 10.12.2008. IT AP PEARS THAT AO WANTS THE ASSESSEE TO COMPLY HIS DIRECTIONS FOR SUBMITTIN G THE REQUIRED DETAILS WITHIN A PERIOD OF TWO AND A HALF MONTHS. IN OUR OP INION, THE AO OUGHT TO HAVE TAKEN UP THE ISSUE RIGHT FROM THE DATE WHEN 14 3(2) NOTICES WAS SERVED UPON THE ASSESSEE. HAD THAT STEP BEEN TAKEN THEN THERE WOULD BE A SUFFICIENT TIME OF MORE THAN A YEAR WOULD BE A VAILABLE WITH THE AO TO INVESTIGATE THESE ISSUES. IT IS NOT ALWAYS NECES SARY THAT ALL DETAILS ARE READILY AVAILABLE TO AN ASSESSEE. IT WOULD REQUIRE SOMETIME TO COLLECT THE INFORMATION AND SUBMIT THEM. IF THIS PAUCITY OF TIM E IS PITTED WITH THE ULTIMATE TAX LIABILITY FOR JUDGING THE FAIR PLAY AN D EQUITY THEN SCALE WOULD TILT IN FAVOUR OF THE ASSESSEE TO SAY THAT SUFFICIE NT TIME WAS NOT GRANTED TO IT AND IT HAS BEEN BURDENED WITH TAX LIABILITY WITH OUT AFFORDING PROPER OPPORTUNITY TO DEFEND. THE QUASI JUDICIAL AUTHORITI ES ARE NOT BEING RESPECTED ON ACCOUNT OF THEIR POWER TO LEGALIZE THE INJUSTICE ON TECHNICAL GROUND BUT BECAUSE THEY ARE CAPABLE OF REMOVING INJ USTICE AND IS EXPECTED TO DO SO. TAKING INTO CONSIDERATION THE FA CTS AND CIRCUMSTANCES AND THE FINDINGS OF THE REVENUE AUTHO RITIES BELOW WE ALLOW THE APPEAL OF ASSESSEE AND SET ASIDE THE ORDE R OF LD. CIT(A). WE RESTORE ALL THESE ISSUES TO THE FILE OF AO FOR READ JUDICATION. IT IS NEEDLESS ITA NO. 3838/DEL/2009 ASST T. YEAR 2006-07 5 TO SAY THAT OBSERVATIONS MADE BY US WILL NOT IMPAIR OR INJURE THE CASE OF AO OR WILL CAUSE ANY PREJUDICE TO THE DEFENCE / EXP LANATION OF THE ASSESSEE. LD. AO SHALL GRANT DUE OPPORTUNITY OF HEA RING TO THE ASSESSEE. ORDER PRONOUNCED IN THE OPEN COURT ON 23.7.2010. SD/- [G.E. VEERABHADRAPPA] [RAJPAL YADAV] VICE PRESIDENT JUDICIAL MEMBER DATED: 23.7.2010 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT