Mahadedha Urban Cooperative Bank Ltd, Ghaziabad V. DCIT, Circle-1, Ghaziabad

ITA 4213/DEL/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3218 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 27-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Share purchase agreement; Principle of natural justice
• Section: 143(3); 133(6); 201; 143(2); 37; 68

Judgement Text

ITA NO.- 4213/DEL/2017. M/S MAHAMEDHA URBAN CO-OPERATIVE BANK LTD. PAGE 1 OF 16 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: E: NEW DELHI) BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA NO: 4213/DEL/2017 (ASSESSMENT YEAR: 2012-13) MAHAMEDHA URBAN CO - OPERATIVE BANK LTD., GHAZIABAD. VS DCIT, ] CIRCLE-1, GHAZIABAD. PAN NO: AAAAM4437E APPELLANT RESPONDENT ASSESSEE BY : NONE REVENUE BY : MS. RAKHI VIMAL, SR. DR ORDER PER ANADEE NATH MISSHRA, AM (A) THIS APPEAL BY ASSESSEE IS FILED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), GHAZIABAD [LD. CIT(A) FOR S HORT], DATED 31.03.2017, FOR ASSESSMENT YEAR (A.Y., FOR SHORT) 2012-13, ON TH E FOLLOWING GROUNDS: 1. THE LD' CIT (A), GHAZIABAD HAS ERRED BY NOT GIV ING THE PROPER OPPORTUNITY TO PLEAD THE CASE BEFORE IT AND BY PASSING EX-PARTE ORDER, THE ORDER IS NOT TENABLE AS IT IS NOT BASED ON NATURAL GROUND REALITIES AND JUSTICE. 2. THE LD' CIT (A), GHAZIABAD HAS ALSO ERRED BY NO T ADJOURNING THE HEARING OF THE CASE DESPITE REQUESTING TWICE I.E. ON 28 / 03/2017 & 30/03/2017 ON THE GENUINE GROUND THAT THE COUNSEL WAS OUT OF STATION FOR SOME URGENT WORK AND WAS TO RETURN BACK IN THE FIRST WEEK OF THE FOLLOWING M ONTH OF HEARING, WHICH IS AGAINST ITA NO.- 4213/DEL/2017. M/S MAHAMEDHA URBAN CO-OPERATIVE BANK LTD. PAGE 2 OF 16 THE PRINCIPLE OF DUE NATURAL JUSTICE. 3. THAT THE LD' CIT (A), GHAZIABAD AND THE LD' DY. COMMISSIONER OF INCOME TAX, CIRCLE - 1, GHAZIABAD HAVE ERRED IN LAW AND ON FACTS IN MAKING THE ADDITION OF RS. 1,15,00,000/- U/S 68 OF INCOME TAX ACT, 1961 IN SHARE CAPITAL ONLY BY MAKING A REFERENCE OF RBI INSPECTION REPORT, DESPITE AND I GNORING THE FACTS THAT THE ASSESSEE HAD SUBMITTED ALL THE EVIDENCE TO PROVE TH EIR CREDIT WORTHINESS. AFTER PROVIDING ALL THE RELATED DOCUMENTS THE LD' ASSESSI NG OFFICER NEITHER RAISED ANY QUERY FOR THE SAME NOR OBJECTED ON ANY SUBMITTED DO CUMENTS. IT IS ALSO WORTHWHILE TO MENTION HERE THAT THE RBI INSPECTOR H AD NO ROLE TO JUSTIFY THE CREDIT WORTHINESS OF THE SHAREHOLDER. THEY HAVE ONLY TO GI VE THE REPORT ON FINANCIAL DISCIPLINE OF THE BANK ACCORDING TO RULES AND REGUL ATIONS OF THE RBI. 4. THAT THE LEARNED DY. COMMISSIONER OF INCOME TAX, CIRCLE - 1, GHAZIABAD HAS ERRED IN LAW AND ON FACTS IN MAKING THE ADDITION OF RS. 29,50,000/- U/S 68 OF INCOME TAX ACT, 1961 IN SHARE CAPITAL MADE BY THREE COMPANIES DESPITE AND IGNORING THE FACTS THAT THE ASSESSEE HAD SUBMITTED ALL THE EVIDENCE TO PROVE THEIR CREDIT WORTHINESS. AFTER PROVIDING ALL THE RELATED DOCUMENTS THE LD' ASSESSING OFFICER DIDN'T RAISE ANY QUERY FOR THE SAME. 5. THAT THE LEARNED DY. COMMISSIONER OF INCOME TAX, CIRCLE -1, GHAZIABAD HAS ERRED IN LAW AND ON FACTS IN MAKING THE ADDITION OF RS. 2,17,95,629/- FOR DISALLOWING THE EXPENDITURE U/S 37 BY MAKING A REFE RENCE OF RBI INSPECTION REPORT, DESPITE AND IGNORING THE FACTS THAT THE ASS ESSEE HAS MAINTAINED ITS BOOKS OF ACCOUNT PROPERLY AND GET THEM AUDITED. EVEN THE LD' ASSESSING OFFICER DIDN'T REJECT THE BOOKS OF ACCOUNT. IT IS ALSO WORTHWHILE TO MENTION HERE THAT THE LD' ASSESSING OFFICER MISUNDERSTOOD THE REMARKS OF RBI INSPECTOR FOR NON DECLARING THE LOANS OF RS. 9.61 CRS AS NPA AND NOT MAKING THE PROVISIONS OF RS. 5.69 CRS. ON T HE SAME AND TREATING IT AS DIVERSION OF THE FUND. EVEN THE LD' ASSESSING OFFIC ER IGNORED THEIR COMMENTS ABOUT DECLARING MORE PROFIT BY SUCH PROVISION OF RS. 5.69 CRS. THE LD' ASSESSING OFFICER ALSO IGNORED THE FACT THA T IF THE ASSESSEE DECLARED THE LOANS OF RS. 9.61 CRS AS NPA THAN A TOTAL INTEREST OF RS. 1.25 CRS WAS ALSO TO BE REVERSED IN ADDITION TO MAKING THE PROVISION OF RS. 5.69 CRS AND DUE TO WHICH THE DECLARED PROFIT WOULD BE REDUCED BY RS. 1.25 CRS. THE LD' ASSESSING OFFICER HAS ALSO ERRED BY TAKING THE ABOVE BASES FOR DISALLOWING THE EXPENDITURE WITHOUT POINTING OUT ANY DEFICIENCI ES IN THE BOOKS OF ACCOUNT. 6. ANY ADDITIONAL GROUND, IF ANY, MAY BE SUBMITTED WIT H YOUR KIND PERMISSION. IT IS, THEREFORE, PRAYED THAT THE ABOVE ADDITIONS M AY KINDLY BE DELETED AND THE APPEAL OF THE APPELLANT ASSESSEE MAY BE ALLOWED ON MERITS OF THE CASE. ITA NO.- 4213/DEL/2017. M/S MAHAMEDHA URBAN CO-OPERATIVE BANK LTD. PAGE 3 OF 16 (B) WHEN THIS APPEAL CAME UP FOR HEARING BEFORE US ON 02.12.2019, THERE WAS NOBODY PRESENT FROM ASSESSEES SIDE. IT WAS FOUND FROM PE RUSAL OF RECORDS THAT A LETTER DATED 21.11.2019 OF MRS & CO., CHARTERED ACCOUNTANTS WAS FILED FOR SEEKING ADJOURNMENT OF HEARING FIXED ON 02.12.2019 ON THE GROUND THAT COUNCIL OF THE CASE UNDERSIGNED IS OUT OF TOWN FOR SOME PERSONAL REASONS. . THE AFORESAID LETTER DATED 22.11.2019 IS REPRODU CED BELOW FOR EASE OF READY REFERENCE: ITA NO.- 4213/DEL/2017. M/S MAHAMEDHA URBAN CO-OPERATIVE BANK LTD. PAGE 4 OF 16 (B.1) WE HAVE FURTHER FOUND FROM PERUSAL OF RECORD THAT T HERE IS NO AUTHORIZATION FROM ASSESSEES SIDE IN FAVOUR OF CA RAM KUMAR DHIMAN OR IN FAVOUR OF MRS & CO, CHARTERED ACCOUNTANTS TO APPEAR IN INCOME TAX APPELLATE TRIBU NAL (ITAT, FOR SHORT) IN CONNECTION WITH THE PRESENT APPEAL. IN THE ABSENCE OF ANY AUT HORIZATION FROM THE ASSESSEES SIDE, THE LETTER SEEKING ADJOURNMENT LACKS LEGITIMACY. MOREOV ER, AS NOBODY WAS PRESENT AT THE TIME OF HEARING BEFORE US FROM ASSESSEES SIDE, WE HAD N O ASSISTANCE AT THE TIME OF HEARING, IN FULLY UNDERSTANDING AND IN OBTAINING CLARITY REGARD ING REASON STATED FOR SEEKING ADJOURNMENT, VAGUELY WORDED AS SOME PERSONAL REASON . IN CUMULATIVE CONSIDERATION OF THESE FACTS AND CIRCUMSTANCES, WE PROCEED TO DECIDE THIS APPEAL IN ACCORDANCE WITH RULE 24 OF INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963. (C) VIDE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE I.T. ACT, INCOME OF THE ASSESSEE WAS ASSESSED AT RS. 5,53,11,095/- AS AGAIN ST RETURNED INCOME OF RS. 1,90,65,466/-. THE RELEVANT PORTION OF THE ASSESSM ENT ORDER IS REPRODUCED AS UNDER: 3. THE ASSESSEE, MAHAMEDHA URBAN CO-OPERATIVE BANK LTD. IS A CO-OPERATIVE BANK WHICH HAS BEEN REGISTERED UNDER THE CO-OPERATIVE SO CIETIES ACT, 1965 AND POSSESS LICENSE FOR FUNCTIONING AS BANK FROM RBI AND DOING THE FOLLOWING ACTIVITIES. ACCEPTING THE DEPOSITS FROM THE MEMBERS/PUBLIC, GRANTING THE SECURED AND UNSECURED LOANS INCLUDING BILLS/CHEQUES DISCOUNTING, INVESTING THE FUNDS ACCORDING TO THE NORMS OF THE RBI AND CO-OPERATIVE SOCIETY ACT, 1-885, THE REGIST ERED OFFICE OF THE BANK IS SITUATED AT NAI BASTI, GHAZIABAD AND THE BANK IS OPERATING: FRO M SIX BRANCHES : S.NO. BRANCHES ADDRESS DATE OF OPENING 1. GHAZIABAD BRANCH MAIN BRNACH, 36, NAI BASTI, GHAZIABAD 01.03.2001 2. NOIDA BRANCH J - 89, SECTOR - 41, NOIDA 29.08.2003 3. RAJ NAGAR BRANCH (EX - COUNTER) EC. RAJ NAGAR, GHAZIABAD 25.09.2007 4. SURQJPUR BRANDHTFTX - COUNTERJ SURAJPUR, GREATER NOIDA 1 5.05.2008 5. HAPUR BRANCH OPP, BUS STAND, HAPUR 08.04.2009 6,. DADRI (EX - COUNTER) - OPP, BHAGWATI NURSING HOME, RAILWAY ROAD, DADRI, U.P 13.12.2009 ITA NO.- 4213/DEL/2017. M/S MAHAMEDHA URBAN CO-OPERATIVE BANK LTD. PAGE 5 OF 16 THE ASSESSEE VIDE ORDERSHEET ENTRY DATED 06.01.2016 HAS BEEN ASKED TO PRODUCE AUDIT REPORT OF RBI FOR F.Y. 2011-12. THE DATE FOR COMPLI ANCE WAS FIXED FOR 07.01.2015. ON THE GIVEN DATE NEITHER ANYBODY APPEARED NOR ANY WRI TTEN REPLY, REGARDING AUDIT REPORT, WAS RECEIVED IN THIS OFFICE. HOWEVER, ON 08.01,2015 , THE AR PRODUCED A LETTER FROM RBI WHICH WAS ADDRESSED TO THE ASSESSEE BANK. THE AR CI TED THE PRIOR APPROVAL CONDITION OF RBI IN SHARING THE REPORT BEFORE ANY AUTHORITY OR C OURT. IN ORDER TO GET THE AUDIT REPORT, A NOTICE U/S 133(6) WAS ISSUED TO THE DY. G ENERAL MANAGER, RESERVE BANK OF INDIA, LUCKNOW, ON 23,01,2015. 4. THE RBI REPORT TITLED STATUTORY INSPECTION OF M AHAMEDHA URBAN CO- OPERATIVE BANK LIMITED, GHAZIABAD U/S 35 OF BANKING REGULATION ACT, 1935RVTFITH REFERENCE TO FINANCIAL POSITION AS ON MARCH 31, 201 2. LOANS RECEIVED ON 23,02,2015'. BASED ON THE FINDINGS OF THE RBI REPORT, ESPECIALLY REGARDING INTRODUCTION OF PAID UP SHARE CAPITAL WHERE SOURCE OF THE CONTRIBUTION WAS NOT ASCERTAINABLE AND REGARDING DIVERSION OF FUNDS THROUGH BAD LOANS WHICH TURNED I NTO NON-PERFORMING ASSETS, SHOW CAUSE NOTICE U/S 142(4) WAS ISSUED ON 05.03.2015 WH ICH IS BEING REPRODUCED BELOW:- QUERIES:- THE STATUTORY NOTICE U/S 143(2) WAS ISSUED ON 13/ 08/2013 WHICH WAS PROPERLY SERVED UPON YOU, YOUR ARE, REQUIRED TO FURNISH THE REPLIES OF FOLLOWING QUERIES ON OR BEFORE 12/03/2015 AT 11:30 AM. 1. YOUR ATTENTION IS DRAWN TO THE PARA NO. 21. OF THE CONFIDENTIAL RBI REPORT OF STATUTORY INSPECTION OF MAHAMEDHA URBAN CO-OPERATIV E BANK LIMITED, GHAZIABAD, THE RELEVANT PORTION OF THE PARAGRAPH IS BEING REPRODUCED BELOW:- PAID-UP SHARE CAPITAL 2.1THE PAID-UP SHARE CAPITAL (AT BOOK VALUE) OF TH E BANK STOOD AT RS. 535.65 LAKH AS ON THE DATE OF PRESENT INSPECTION, POSITION AN INCREAS E OF RS. 126.76 LACK (31.00%) FROM RS. 408.89 LAKH SINCE THE DATE OF LAST INSPECTION, I.E. MARCH 31, 2011. THE BANK HAD RAISED RS. 303.43 LAKH OF FRESH SHARE MONEY DURING THE YEAR UNDER REVIEW. DURING THE YER 34 MEMBERS CONTRIBUTED MORE THAN RS. 1.00 LAKH EACH. THE MAJOR INDIVIDUAL CONTRIBUTORS DURING THE YEAR INCLUDED SUNITA BHATI, WIFE OF RAJ SINGH BHATI, CHAIRMAN OF THE BANK (RS. 45.00 LAKH) ; ANITA BHATI, DIRECTOR ( RS. 35.00 LAKH); RAJ SINGH BHATI, CHAIRMAN (RS. 30.00 LAKH); UDAIVEER SINGH, DIRECTOR (RS. 15.00 LAKH) ETC. THE SOURCE OF THE CONTRIBUTION WAS NOT ASCERTAINABLE. THE BANK W AS CHARGING 10% SHARE MONEY FROM THE BORROWER AS AGAINST THE NORM OF 2.5% & 5% FROM THE SECURED AND UNSECURED BORROWERS RESPECTIVELY. THE BANK HAD NOT PREPARED THE SHARE CERTIFICATES OF THE MEMBERS ICE FEBRUARY 11,2007, FURTHER, 47 SHARE CER TIFICATES ISSUED DURING JANUARY 2, 2002 AND APRIL 5, 2002 HAD NOT BEEN HANDED OVER / D ISPATCHED TO THE MEMBERS. SHARE CERTIFICATE BEARING NUMBER FROM 5301 TO 7200 ISSUED BETWEEN JULY 4, 2005 AND FEBRUARY, 11 2007 PREPARED WITH SIGNATURE OF ONLY O NE DIRECTOR (SIGNATURE OF THE SECRETARY AND CHAIRMAN NOT APPENDED) ARE ALSO YET T O BE DELIVERED TO THE RESPECTIVE MEMBERS. THE BOARD IN ITS MEETING DATED NOVEMBER, 29, 2011 PASSED RESOLUTION FOR ENHANCING THE AUTHORIZED CAPITAL OF THE BANK TO RS. 15.00 CRORE FROM RS. 5,00 CRORE AS ITA NO.- 4213/DEL/2017. M/S MAHAMEDHA URBAN CO-OPERATIVE BANK LTD. PAGE 6 OF 16 HITHERTO. THE FEE FOR THE NOMINAL MEMBERSHIP WAS A LSO INCREASED FROM RS. 2.00 TO RS. 100.00 IN THE SAME MEETING. THE CECISIONS OF THE B OARD WERE REGISTERED WITH REGISTRAR ON NOVEMBER 1, 2011. FOLLOWING INVESTMENTS IN THE FORM OF SHARE CAPITAL HAVE BEEN CITED WHERE THE SOURCE OF THE CONTRIBUTION WAS NOT ASCERTAINABLE. THESE ARE 1. SUNITA BHATI - (RS. 45,00,000/-) 2. ANITA BHATI - (RS. 35,00,000/-) 3. RAJ SINGH BHATI - (RS. 30,00,000/-) 4. UDAI VEER SINGH - (RS. 15,00,000/-) TO FURTHER CLOUD THE GENUINENESS OF THESE TRANSACTI ONS, THE REPORT MENTIONS FOLLOWING OTHER FACTS:- I. THE BANK WAS CHARGING 10% SHARE MONEY FROM THE BORR OWERS AS AGAINST THE NORM OF 2.5% AND 5% FROM THE SECURED AND UNSECURED BORRO WERS RESPECTIVELY. II. THE BANK HAS NOT PREPARED THE SHARE CERTIFICATE OF THE MEMBERS SINCE FEB- 11-2007 AND FURTHER 47 SHARE CERTIFICATE ISSUED DUR ING JAN 2, 2002 AND APRIL 05, 2002 HAD NOT BEEN HANDED OVER /DISPATCHED TO THE MEMBERS. SIMILARLY, SHARE CERTIFICATES BEARDING NUMBER 5301 TO 7300 WERE PREPAID WITH SIGNATURE OF ONLY ONE DIRECTOR AND ARE ALSO YE T TO BE DEVELOPED TO THE RESPECTIVE MEMBER. FROM THE ABOVE FACTS, IT IS CLEAR THAT THE TRANSACT IONS OF RECEIPT OF SHARE MONEY BETWEEN 01.04.2011 AND 31.03.2012 ARE NOT GENUINE. IN THIS RESPECT, YOU ARE REQUESTED TO SHOW-CAUSE WHY THIS AMOUNT OF SHARE MO NEY RECEIVED FROM ABOVE MENTIONED FOUR ALLEGED INVESTERS COULD NOT BE ADD ED BACK IN OUR INCOME OF THE YEAR U/S 68 OF THE I.T. ACT, 1961 FOR WANT OF GENUINENES S OF TRANSACTION AND CREDITWORTHINESS. 2. YOUR ATTENTION IS DRAWN TO THE PARA 5.6 OF THE ABOV E MENTIONED REPOT OF THE RESERVE BANK OF INDIA WHICH CLEARLY STATES THAT THE TOTAL AMOUNT OR DIVERSIONS IN LOAN ACCOUNT WAS FOUND TO THE RS. 9,61.04 LACS A ND OVER AND ABOVE THIS AMOUNT ADDITIONAL PROVISIONS OF RS. 569.51 LAC HAS BEEN SUGGESTED AS PROVISION FOR BDDR. IT MEANS RS. 1530.55 LACS OF T HE FUNDS OF THE BANK HAS BEEN DIVERTED. THIS FINDING OF THE RBI REPORT ALON G ;WITH OTHER SERIOUS DIVERSION / BOOK FUDGING INSTANCES ;WHICH HAVE ALSO BEEN NOTED BY THE RBI INVESTIGATING TEAM CLEARLY ESTABLISHES, ON THE BASI S OF FACTUAL AUDIT / INVESTIGATION OF THE WORKING OF THE BANK, THAT THE ABOVE MENTIONED AMOUNT OF RS. 1530.55 LACS HAS BEEN DIVERTED WHICH IF INTERPR ETED WITH RESPECT TO THE PROVISION OF THE INCOME-TAX ACT, 1961, RENDERS THE COST OF OBTAINING THESE FUNDS OF RS. 1530.55 LACS AS NOR BUSINESS EXPENDI TURE AND HENCE SHOULD BE DISALLOWED U/S 37 OF THE INCOME TAX ACT, 1961. THE BANK HAS DEPOSITS OF RS. 138,06,37,294,7/- DUR ING THE YEAR AND DIRECT THE INDIRECT EXPENSES ON THESE DEPOSITS IN RS. 19,60,08 ,132/-. IF WE TAKE THIS PROPORTION, THE COST OF DIVERTED FUND OF RS. 15,30, 55,000/- COMES TO RS. 2,17,95,628,5/-. YOU ARE REQUESTED TO SHOW-CAUSE W HY THIS PROPORTIONATE COST OF FUND SHOULD NOT BE DISALLOWED FOR BEING AN EXPENSES NOT RELATED TO BUSINESS. ITA NO.- 4213/DEL/2017. M/S MAHAMEDHA URBAN CO-OPERATIVE BANK LTD. PAGE 7 OF 16 ITA NO.- 4213/DEL/2017. M/S MAHAMEDHA URBAN CO-OPERATIVE BANK LTD. PAGE 8 OF 16 ITA NO.- 4213/DEL/2017. M/S MAHAMEDHA URBAN CO-OPERATIVE BANK LTD. PAGE 9 OF 16 ITA NO.- 4213/DEL/2017. M/S MAHAMEDHA URBAN CO-OPERATIVE BANK LTD. PAGE 10 OF 16 ITA NO.- 4213/DEL/2017. M/S MAHAMEDHA URBAN CO-OPERATIVE BANK LTD. PAGE 11 OF 16 (C.1) THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). V IDE IMPUGNED APPELLATE ORDER DATED 31.03.2017, THE LD. CIT(A) DISMISSED THE ASSE SSEES APPEAL. THE RELEVANT PORTION OF THE ORDER OF THE LD. CIT(A) IS REPRODUCED AS UNDER: 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER (HEREINAFTER 'AO') THE APPELLANT HAS FILED THIS APPEAL TAKING THE FOLLOWIN G GROUNDS OF APPEAL:- 3.1 GROUNDS OF APPEAL: 1. THAT THE LEARNED DY. COMMISSIONER OF INCOME TAX, CIRCLE - I, GHAZIABAD HAS ERRED IN LAW AND ON FACTS IN MAKING T HE ADDITION OF RS. 1,15,00,000/- U/S 68 OF INCOME TEX. ACT, 1061 FOR AD DITION IN SHARE CAPITAL ONLY BY MAKING THE REFERENCE OF RBI INSPECT ION REPORT, DESPITE AND IGNORING THE FACTS THAT THE ASSESSEE SUBMITTED ALL THE EVIDENCE TO PROVE THEIR CREDIT WORTHINESS. AFTER PROVIDING THE ALL THE RELATED DOCUMENTS THE LD ASSESSING OFFICER DIDNT RAISE AN Y QUERRY FOR THE SAME. IT IS ALSO WORTHWHILE TO MENTION HERE THAT THE RBI INSPECTOR HAD ANY ROLE TO JUSTIFY THE CREDIT WORTHINESS OF THE SHAREHOLDER . THE HAVE TO GIVE THE REPORT ON FINANCIAL DISCIPLINE OF THE BANK ACCORDIN G TO RULES AND REGULATION OF THE RBI. 2. THAT THE LEARNED DY. COMMISSIONER OF INCOME TAX, CIRCLE - I, GHAZJABAD HAS ERRED IN LAW AND ON FACTS IN MAKING T HE ADDITION OF RS. 29,50,000/- U/S 68 OF INCOME TAX ACT, 1961 FOR ADDIT ION IN SHARE CAPITAL MADE BY THREE COMPANIES DESPITE AND IGNORING THE FA CTS THAT THE ASSESSEE SUBMITTED ALL THE EVIDENCE TO PROVE THEIR CREDIT WORTHINESS. ITA NO.- 4213/DEL/2017. M/S MAHAMEDHA URBAN CO-OPERATIVE BANK LTD. PAGE 12 OF 16 AFTER PROVIDING THE ALL THE RELATED DOCUMENTS THE L D ASSESSING OFFICER DIDNT RAISE ANY QUARRY FOR THE SAME. 3. THAT THE LEARNED DY. COMMISSIONER OF INCOME TAX, CIRCLE - I, GHAZAABAD BAS ERRED IN LAW AND ON FACTS IN MAKING T HE ADDITION OF RS. 2,17,95,629/- FOR DISALLOWING THE EXPENDITURE U/S 37 BY MAKING THE REFERENCE OF RBI INSPECTION REPORT, DESPITE: AND IG NORING THE FACTS THAT THE ASSESSEE MAINTAINED ITS BOOKS OF ACCOUNT PROPER LY AND GET AUDITED EVEN THE LD. ASSESSING OFFICER DIDNT REJECTED THE BOOKS OF ACCOUNT. IT IS ALSO WORTHWHILE TO MENTION HERE THAT THE LD. ASSESSING OFFICER MISUNDERSTAND THE REMARKS OF RBI INSPECTOR FOR NON DECLARING THE LOANS OF RS. 9.61 CRS AS NPA AND NON MAKING THE PROVISION OF RS. 5.69 CRS. ON THE SAME AS DIVERSION OF THE FUND. EVEN THE LD. AS SESSING OFFICER IGNORE THEIR COMMENTS ABOUT DECLARING MORE PROFIT BY SUCH PROVISIONS OF RS. 5.69. CRS. THE LD ASSESSING OFFICER HAS ERRED BY TAKING TOE A BOVE BASE FOR DISALLOWING THE EXPENDITURE WITHOUT MAKING ANY DEFI CIENCIES TO THE BOOKS OF ACCOUNT. 4. ANY ADDITIONAL GROUND MAY BE SUBMITTED WITH YOUR KIND PERMISSION IF ANY. 5. THAT KINDLY STAY THE DEMAND DURING THE PENDEN CY OF THE APPEAL. IT IS 'THEREFORE., PRAYED, THAT THE ABOVE ADDITION MAY KINDLY BE DELETED AND THE APPEAL OF THE & APPELLANT ASSESSEE MAY BE A LLOWED. 4. APPELLANT HAD EARLIER VIDE LETTER DT. 17.02.2015 REQUESTED FOR EARLY FIXATION OF THE CASE. HOWEVER, THIS APPEAL WAS FIXED FOR HEARIN G ON NUMBER OF TIMES, THE DETAILS OF WHICH ARE GIVEN BELOW, BUT NO COMPLIANCE WAS MADE T O ANY OF THE NOTICES ISSUED. ALL THESE NOTICES WERE SENT TO THE APPELLANT THROUGH SP EED POST ON THE ADDRESS GIVEN IN THE APPEAL PETITION I.E. FORM NO. 35: SI. NO. DATE OF NOTICE DATE FIXED FOR HEARING REMARK 1 . 06.04.2016 25.04.2016 NONE ATTENDED 2. 27.04.2016 05.05.2016 AN APPLICATION FILED FOR ADJOURNMENT ON THE GROUND THAT COUNSEL IS OUT OF STATION AND THE CASE FIXED FOR HEARING ON 18.05.2016 . 3. 18.05.2016 AN APPLICATION FILED FOR ADJOURNMENT FOR TIME TO FILE WRITTEN SUBMISSION AND THE CASE FIXED FOR HEARING ON 09.06.2016 4 17.03.2017 28.03.2017 AN APPLICATION FILED FOR ADJOURNMENT COUNSEL OUT OF STATION ADJOURNED TO 30.03.2017 5 30.03.2017 NOT ATTENDED ITA NO.- 4213/DEL/2017. M/S MAHAMEDHA URBAN CO-OPERATIVE BANK LTD. PAGE 13 OF 16 5. FROM THE ABOVE IT IS CLEAR THAT DESPITE SEVERAL OP PORTUNITIES NONE APPEARED ON BEHALF OF THE APPELLANT FOR HEARING ONLY APPLICA TIONS FOR ADJOURNMENT HAVE BEEN FILED BEFORE THE UNDERSIGNED. HENCE THE APPEAL FIL ED BY THE APPELLANT IS LIABLE TO BE DISMISSED FOR NON-PROSECUTION. IN MAY ABOVE VIEW, I FIND SUPPORT FROM THE FOLLOWING DECISION:- (I) IN THE CASE OF CIT VS. B.N. BHATTACHARGEE & ANOTHER 118 ITR 461 (RELEVANT PAGES 477 & 478) WHEREIN THEIR LORDSHIPS HAVE HELD THAT 'THE APPEAL DOES NOT MEAN MERELY FILING OF APPEAL B UT EFFECTIVELY PURSUING IT' (II) IN THE CASE OF ESTATE OF LATE TUKOJL RAO HOLKER VS. CWT 223 IR 480 (MP) WHILE DISMISSING THE REFERENCE MADE AT THE INSTANCE OF ASSESSEE IN DEFAULT MADE FOLLOWING OBSERVATIONS IN THEIR ORD ER. 'IF THE PARTLY AT WHOSE INSTANCE THE REFERENCE IS MADE FAILS TO APPEAR AT T HE HEARING, OR FAILS IN TAKING STEPS FOR PREPARATION OF THE PAPER BOOKS SO AS TO ENABLE HEARING OF THE REFERENCE, THIS COURT IS NOT BOUND TO ANSWER TH E REFERENCE. (III) IN THE CASE OF CIT VS. MULTPLAN INDIA PVT. LTD. 38ITD 320 (DEL). THE APPEAL FILED BY THE REVENUE BEFORE THE TRIBUNA L WHICH WAS FIXED FOR HEARING BUT ON THE DATE OF HEARING NOBODY REPRE SENTED NEITHER THE REVENUE APPLICANT, NOR ANY COMMUNICATION FOR ADJOUR NMENT WAS RECEIVED. THERE WAS NO COMMUNICATION OR INFORMATION AS TO WHY REVENUE CHOOSE TO REMAIN ABSENT ON THAT DATE. THE HON'BLE TRIBUNAL LA ID DOWN THE PRINCIPLE THAT ON THE BASIS OF INHERENT POWER THE APPEAL FILE D BY THE APPELLANT CAN BE TREATED AS UN-ADMITTED . 6. THEREFORE, KEEPING IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE APPELLANT IS LIABLE TO BE DISMISSED FOR NON-PROSECUTION. NO STAT EMENT OF FACTS HAS BEEN SUBMITTED BY APPELLANT ALONGWITH FORM 35. THUS ALL FACTS GIVEN IN THE ASSESSMENT ORDER ARE TREATED AS TRUE AND CORRECT FA CTS IN THE CASE OF DISPUTE. 7. ON MERITS, PERUSAL OF FACTS REVEAL THAT APPELLANT I S A COOPERATIVE BAR AND AO AFTER OBTAINING STATUTORY INSPECTION OF APPELLANT F ROM RBI EXAMINEE THE SHARE CAPITAL INTRODUCED IN THE APPELLANT BANK AMOUNTING TO RS. 1,15,00,000/- AND AFTER DETAILED ENQUIRY AND HAVING CONFRONTED APPELL ANT MADE AN ADDITION AS APPELLANT FAILED TO DISCHARGE REQUISITE ONUS U/S 68 OF THE IT ACT. SIMILARLY AN ADDITION OF RS. 2,95,00,000/- WAS MADE ON ACCOUNT TO FAILURE TO SUBSTANTIATE GENUINENESS, IDENTITY AND CREDITWORTHINESS OF EIGHT INVESTORS OF SHARE CAPITAL. APPELLANT FAILED TO DISCHARGE THE PRIMARY ONUS U/S 68. AN ADDITION OF RS. 2,1795,629/- WAS MADE BY AO AFTER CONSIDERING THE STATUTORY REP ORT OF RBI. IN VIEW OF ABOVE FACTS SINCE APPELLANT FAILED TO SU BSTANTIATE MAINTAINABILITY OF APPELLANT'S CLAIM REGARDING ADDITION TO SHARE CAPIT AL AND INCURRENCE OF BUSINESS, EXPENSES U/S 37 AT ASSESSMENT STAGE AS WELL AS DURING APPELLATE ST AGE. THUS, THE ADDITIONS MADE BY AO ARE UPHELD AND ACCORDINGLY APPELLANTS GROUNDS OF APPEAL ARE DISMISSED. ITA NO.- 4213/DEL/2017. M/S MAHAMEDHA URBAN CO-OPERATIVE BANK LTD. PAGE 14 OF 16 (D) THIS PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE AFORESAID IMPUGNED APPELLATE ORDER DATED 31.03.2017 OF THE LD . CIT(A). AT THE TIME OF HEARING, REVENUE WAS REPRESENTED BY MS. RAKHI VIMAL, THE LEA RNED SENIOR DEPARTMENTAL REPRESENTATIVE (IN SHORT LD. SR. DR). HOWEVER, AS MENTIONED EARLIER, NONE WAS PRESENT FROM THE ASSESSEES SIDE. IN THE ABSENCE OF ANY RE PRESENTATION FROM ASSESSEES SIDE, AT THE TIME OF HEARING BEFORE US, WE HEARD THE LD. SR. DR. THE LD. SR. DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND THE AFORESAID IM PUGNED ORDER DATED 31.03.2017 OF THE LD. CIT(A). AFTER PERUSAL OF THE ORDER OF THE A O AND THE AFORESAID IMPUGNED ORDER DATED 31.03.2017 OF THE LD. CIT(A), WE FIND THAT TH E LD. CIT(A) HAS PASSED SPEAKING ORDER ON MERITS. RELEVANT PORTION OF THE IMPUGNED A PPELLATE ORDER OF THE LD. CIT(A) HAS ALREADY BEEN REPRODUCED IN FOREGOING PARAGRAPH (C.1) OF THIS ORDER. WE FIND THAT THE LD. CIT(A) HAS GIVEN DETAILED REASONS FOR HIS DECIS ION ON MERITS IN THE AFORESAID IMPUGNED APPELLATE ORDER DATED 31.03.2017 OF LD. CI T(A). DURING APPELLATE PROCEEDINGS IN INCOME TAX APPELLATE TRIBUNAL (ITAT , FOR SHORT) NO MATERIAL HAS BEEN BROUGHT FOR OUR CONSIDERATION TO PERSUADE US TO TAK E A VIEW DIFFERENT FROM THE VIEW TAKEN BY THE LD. CIT(A) IN THE IMPUGNED ORDER ON ME RIT. AFTER HEARING THE LD. SR. DR AND AFTER PERUSAL OF MATERIALS ON RECORD, AND FURTH ER, IN VIEW OF THE FOREGOING DISCUSSION, WE DECLINE TO INTERFERE WITH THE AFORES AID IMPUGNED APPELLATE ORDER DATED 31.03.2017 OF LD. CIT(A); AND DISMISS THIS APPEAL. (E) BEFORE WE PART; WE EXPLICITLY CLARIFY THAT THE ASS ESSEE WILL BE AT LIBERTY TO APPROACH ITAT FOR RESTORATION OF THE APPEAL IN ACCO RDANCE WITH PROVISO TO RULE 24 OF INCOME TAX (APPELLATE TRIBUNAL), RULES, 1963. IF T HE ASSESSEE DOES APPROACH ITAT FOR ITA NO.- 4213/DEL/2017. M/S MAHAMEDHA URBAN CO-OPERATIVE BANK LTD. PAGE 15 OF 16 RESTORATION OF THE APPEAL IN ITAT, THE MATTER WILL BE CONSIDERED IN ACCORDANCE WITH LAW HAVING REGARD TO THE FACTS AND CIRCUMSTANCES. (F) IN THE RESULT, APPEAL FILED BY ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 4/12/2019. SD/- SD/- (H.S. SIDHU) (ANADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 04/12/2019 POOJA/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA NO.- 4213/DEL/2017. M/S MAHAMEDHA URBAN CO-OPERATIVE BANK LTD. PAGE 16 OF 16 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER