M/s. O.N.S. Creations Pvt Ltd, New Delhi V. CIT-V, New Delhi

ITA 4131/DEL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3889 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 19-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 19-10-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RA J TANDON
• Assessee Lawyers: RANO JAIN CAS; VENKETESH CHOURASIA
• Keywords: Opportunity of being heard
• Section: 263; 63; 144; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) SHRI I.P. BANSAL, JUDICIAL MEMBER AND BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.4131/DEL./2009 (ASSESSMENT YEAR : 2005-06) M/S. O.N.S. CREATIONS PVT. LTD., VS. ITO, WARD 13 (4), D-12/2, OKHLA INDL. AREA, NEW DELHI. PHASE II, NEW DELHI. (PAN : AAACO7606H) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN & SMT. RANO JAIN, CAS & SHRI VENKETESH CHOURASIA, CA REVENUE BY : SHRI RAJ TANDON, CIT DR O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER : THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE ORDE R OF CIT, DELHI-V, NEW DELHI DATED 18.05.2009 FOR THE ASSESSMENT YEAR 2005 -06. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE READ AS UNDER :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (CIT) UNDER SECTION 263 OF THE ACT IS BAD, BOTH IN THE EYE OF LAW AND ON FACTS . 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT HAS ERRED BOTH ON FACTS AND IN LAW, IN IGNORING THE CON TENTION OF THE APPELLANT THAT FOR INVOKING THE POWERS OF SECTION 2 63 BOTH THE CONDITIONS, I.E., THAT THE ASSESSMENT ORDER BEING E RRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE, NEED TO BE FULFILLED AND IN THE ABSENCE OF THE SAME IN THE PRESENT CASE, THE POWERS VESTED UNDER SECTION 263 CANNOT BE EXERCISED. ITA NO.4131/DEL./2009 2 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE O RDER PASSED UNDER SECTION 263 BAD AS THERE WAS NO SHOW CAUSE NO TICE ISSUED FOR INITIATING THE PROCEEDINGS FOR THE ASSESSMENT YEAR. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT HAS ERRED BOTH ON FACTS AND IN LAW, IN INITIATING THE P ROCEEDINGS FOR VERIFICATION AND AS SUCH THE ORDER PASSED WAS NEITH ER ERRONEOUS NOR PREJUDICE TO THE REVENUE. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT HAS ERRED BOTH ON FACTS AND IN LAW, IN IGNORING THE CON TENTION OF THE APPELLANT THAT THE PROCEEDING UNDER SECTION 263 CAN NOT BE USED FOR SUBSTITUTING OPINION OF THE AO BY THAT OF THE CIT. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT HAS ERRED BOTH ON FACTS AND IN LAW, IN DIRECTING THE A. O TO MAKE AN ADDITION OF RS.61,85,419/- & 40,00,000/- ON ACCOUNT OF FRESH LOANS RAISED AND SHARE CAPITAL AMOUNT RESPECTIVELY. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND AS PER THE AUDITORS REPORT, IT IS ENGAGED IN THE BUSINESS OF MANUFACTURER AND EXPORTE R OF GARMENTS. THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS FINALIZED U/S 144 OF THE INCOME-TAX ACT, 1961 VIDE ORDER DATED 28.12.2007. CIT PASSED ORDER U/S 263 BY DIRECTING THE ASSESSING OFFICER TO MAKE THE ADDITION OF RS.61,85,419/- ON A CCOUNT OF UNEXPLAINED LOAN AND RS.40,00,000/- ON ACCOUNT OF UNEXPLAINED SHARE CAPI TAL ON 18.5.2009. CIT HELD THAT THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF THESE LOAN AND SHARE CAPITAL. HE HAS ALSO HELD THAT ASSESSEE HAS FAILED TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE PERSONS FROM WHOM THESE LOANS AND SHARE CAPI TAL WERE RECEIVED. 3. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE AND AF TER HEARING, WE HOLD THAT THE CIT (A) HAS RIGHTLY INITIATED THE PROCEEDINGS U/S 2 63. THE AR OF ASSESSEE FAILED TO ITA NO.4131/DEL./2009 3 ESTABLISH THAT ASSESSING OFFICER HAD CONSIDERED THE ISSUE WHILE PASSING ORDER U/S 144 OF THE INCOME-TAX ACT. FURTHER, NO EXPLANATION WAS FURNISHED BEFORE THE CIT IN THIS REGARD. THERE WAS NO OCCASION WHERE ASSESSING OFFICER HAS APPLIED HIS MIND AND FORMED AN OPINION. IN OUR CONSIDERED VIEW, THE ACTION OF CIT U/S 263 OF INCOME-TAX ACT IS JUSTIFIED. HOWEVER, IN THE INTE REST OF JUSTICE AND EQUITY, WE HOLD THAT A MODIFICATION IS NECESSARY IN CITS DIRECTION . WE MODIFY THE DIRECTION TO THE EXTENT THAT ASSESSING OFFICER SHALL PROVIDE AN OPPO RTUNITY OF BEING HEARD BEFORE MAKING ANY ADDITION ON THESE ISSUES. THE ASSESSING OFFICER SHALL PROVIDE AN OPPORTUNITY OF BEING HEARD AND ALSO PERMIT ASSESSEE TO SUBMIT DETAILS REGARDING THE LOAN AND SHARE CAPITAL, IF ASSESSEE SO DESIRES. TH EREFORE, WE SUSTAIN THE ORDER U/S 263 WITH THE MODIFICATION NOTED ABOVE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 27 TH DAY OF MAY, 2011. SD/- SD/- (I.P. BANSAL) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 27 TH DAY OF MAY, 2011 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT, DELHI-V, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.