DCIT, Moradabad V. M/s Rohilkhand Chemicals & Protien (P) Ltd., Moradabad

ITA 4580/DEL/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6359 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 13-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 195; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SH. R.K PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.4580/DEL/2015 ASSESSMENT YEAR: 2009-10 DCIT CIRCLE II, MORADABAD VS M/S. ROHILKHAND CHEMICALS & PROTEIN (P) LTD. RAMPUR ROAD, MORADABAD (APPELLANT) (RESPONDENT) APPELLANT BY SMT. RASHMITA JHA, SR. DR RESPONDENT BY NONE DATE OF HEARING: 20/03/2019 DATE OF PRONOUNCEMENT: 07/05/2019 ORDER PER R.K. PANDA, AM: 1. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGA INST THE ORDER DATED 15.04.2015 OF THE CIT(A), MORADABAD RELATING TO A. Y. 2009- 10. 2. DESPITE SERVICE OF NOTICE NONE APPEARED ON BEHAL F OF THE ASSESSEE AT THE TIME OF HEARING. IT WAS FURTHER SEE N FROM THE ORDER PAGE | 2 SHEET ENTRIES THAT DURING THE PREVIOUS HEARINGS ALS O NOBODY WAS APPEARING BEFORE THE TRIBUNAL. WE, THEREFORE, DEEM IT PROPER TO DECIDE THE APPEAL ON THE BASIS OF MATERIAL AVAILABL E ON RECORD AND AFTER HEARING THE LD. DR. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY AND FILED ITS RETURN OF INCOME ON 30.03.201 0 DECLARING INCOME OF NIL. THE CASE OF THE ASSESSEE WAS REOP ENED U/S 147 BY ISSUING NOTICE U/S 148. THE REASONS FOR REOPENING WAS THAT THE ASSESSEE HAS CREDITED AN AMOUNT OF RS.49,80,000/- I N ITS BOOKS AS SHARE PREMIUM DURING THE FINANCIAL YEAR 2008-09. THE ASSESSEE HAS RECEIVED SHARE PREMIUM OF RS.2490/-PER SHARE OF FACE VALUE OF RS.10/-AND THERE IS NOTHING ON RECORD TO JUSTIFY AND SATISFACTORILY EXPLAIN THE NATURE OF ITS CREDIT. I N RESPONSE TO NOTICE U/S148 IT WAS SUBMITTED THAT THE ORIGINAL RE TURN FILED MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/ S 148. 3.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS DES PITE OPPORTUNITIES GRANTED ON VARIOUS OCCASIONS THERE WA S NO PROPER COMPLIANCE. SINCE THE ASSESSEE FAILED TO DISCHARGE THE ONUS CAST ON IT BY FURNISHING THE REQUISITE DETAILS AS CALLED FOR, THE ASSESSING OFFICER MADE ADDITION OF RS.49,80,000/- A S UNEXPLAINED MONEY CREDITED IN THE BOOKS OF ACCOUNTS . THE ASSESSING OFFICER FURTHER MADE ADDITION OF RS.17,78 ,000/- BEING THE CASH DEPOSIT MADE BY THE ASSESSEE IN THE BANK A CCOUNT FOR WHICH NO DOCUMENTARY EVIDENCE WAS FURNISHED. THUS, THE PAGE | 3 ASSESSING OFFICER DETERMINED THE TOTAL INCOME OF TH E ASSESSEE AT RS.67,58,000/-. 4. BEFORE CIT(A) THE ASSESSEE APART FROM CHALLENGIN G THE ADDITION ON MERIT CHALLENGED THE VALIDITY OF THE RE ASSESSMENT PROCEEDINGS ON THE GROUND THAT THE ASSESSING OFFICE R HAS PROCEEDED TO COMPLETE THE ASSESSMENT WITHOUT DISPOS ING OF THE OBJECTION OF THE ASSESSEE COMPANY. 5. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD. CIT (A) HELD THAT NOTICE U/S. 148 OF THE IT ACT IS INVALID SINCE THE ASSESSING OFFICER HAS NOT DISPOSED OF THE OBJECTION S RAISED BY THE ASSESSEE. THE RELEVANT OBSERVATIONS OF THE CIT(A) AT PAGE 5 AND 6 OF HIS ORDER READ AS UNDER :- I HAVE CAREFULLY CONSIDERED THE ISSUE, GROUNDS OF APPEAL AND DETAILED WRITTEN SUBMISSIONS MADE BY THE AR FOR THE APPELLAN T. COPY OF REASONS FOR REOPENING OF THE CASE AS FILED BY THE APPELLANT IND ICATE THAT THE AO TOOK ACTION U/S 148 ON THE BASIS OF A RETURN FILED ON 10.11.2008 BY THE APPELLANT WITH THE REGISTRAR OF COMPANIES UNDER THE COMPANIES ACT, 195 6 ON 10.11.2008. IN THIS, THE DATE OF ALLOTMENT OF SHARE WAS MENTIONED AS 20. 03.2008. THE CLAIM OF THE APPELLANT IS THAT THE INFORMATION PERTAINED TO THE FINANCIAL YEAR 2007-08.. THE FACT WAS ALSO BROUGHT BY THE APPELLANT BEFORE THE AO DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS VIDE ITS REPLY DATED 4.3.2015. IT IS SE EN THAT THE AO HAS REFERRED TO THIS LETTER BUT HAS NOT DISPOSED OF THE OBJECTION R AISED BY THE APPELLANT. THE AR IN SUPPORT OF THE SUBMISSIONS PLACED RELIANCE ON THE J UDICIAL PRONOUNCEMENT, VIZ. SUPREME COURTS DECISION IN THE CASE OF GKN DRIVESH AFTS (INDIA) LTD. V. INCOME- TAX OFFICER [2002] 125TAXMAN 963 (SC),. TORRENT POW ER SEC LTD. V. ASSISTANT COMMISSIONER OF INCOME-TAX [2014] 45 TAXMAN.COM 443 (GUJRAT)AND BOMBAY HIGH COURT IN THE CASE OF PRANSUKHLAL BROS. V. INCO ME-TAX OFFICER-16(3)(1) [2015] 54 TAXMAN.COM 327 (BOMBAY). THE FACTS THAT E MERGE FROM THE REPLY/ PAGE | 4 EXPLANATION AND COPY OF RETURN FILED WITH THE REGIS TRAR OF COMPANIES MAKE IT CLEAR THAT THE APPELLANT HAD NOT ISSUED SHARES DURING THE FINANCIAL YEAR 2008-09 RELEVANT TO THE AY UNDER APPEAL. THERE REMAINS NO C ASE TO ISSUE NOTICE U/S 148 TO VERIFY THE FACTS WHICH WERE NOT LONGER IN EXISTENCE IN THE YEAR UNDER APPEAL. IT IS ALSO SEEN THAT THE ASSESSING OFFICER HAS ONLY REFER RED TO THE LETTER OF DI (I & CL), BUT HAS NET MADE ANY INDEPENDENT ENQUIRY TO VERIFY THE CORRECTNESS OF INFORMATION. THE CASE LAWS QUOTED BY THE AR FOR THE APPELLANT MAKE IT CLEAR THAT THE AO WAS DUTY BOUND TO FIRST DISPOSE OF THE OBJEC TION RAISED BY THE APPELLANT AND THIS HAS NOT BEEN DONE BY THE AO. IN THE TOTALI TY OF THE CIRCUMSTANCES AND FACTS OF THE CASE, THE ISSUANCE 'OF NOTICE U/S 148 IS NOT MAINTAINABLE. AS SUCH THE NOTICE ISSUED U/S 148 OF THE ACT, IS CANCELLED. THE ASSESSMENT AS MADE BY THE AO STANDS ANNULLED. NOW COMING TO THE MERITS OF THE CASE, IT IS NOTICED THAT THE AO MADE TWO DISALLOWANCES AS PER HIS FINDINGS MENTIONED IN PARA 3(I) AND 3(II) OF THE ASSESSMENT ORDER, AMOUNTING TO RS. 49,80,000/ AND R S. 17,78,000/RESPECTIVELY. THE FIRST ADDITION OF RS. 49,80,000/WAS MADE BY THE AO ON ACCOUNT OF ISSUANCE OF SHARES DURING THE YEAR UNDER APPEAL WHICH AS PER RE TURN FILED WITH THE REGISTRAR OF COMPANIES FALLS IN THE FINANCIAL YEAR 2007-08 RE LEVANT TO THE AY 08-09. AS SUCH THIS ADDITION IS NOT SUSTAINABLE. THE 2 ND ADDITION MADE BY THE AO IS OF RS. 17,78,000/. THIS ADDITION HAS BEEN MADE BY THE AO O N THE POINT THAT THE ASSESSEE FAILED TO EXPLAIN TRANSACTIONS WITH DOCUMENTARY EVI DENCE. PERUSAL OF PARA 3 OF THE ARS REPLY/ EXPLANATION MAKE IT CLEAR THAT ALL ENTR IES WERE DULY MENTIONED IN THE RESPECTIVE BANK ACCOUNT. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY MATERIAL EVIDENCE TO JUSTIFY HIS OBSERVATIONS AND S HOW THAT ENTRIES IN THE BANK ACCOUNT WERE NOT GENUINE. AS SUCH THE ADDITION IS N OT SUSTAINABLE. THE APPEAL IS ALLOWED. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE REV ENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL :- 1. THE LD. PR. COMMISSIONER OF INCOME TAX (APPEAL), MORADABAD HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CANCEL LING THE NOTICE U/S 148 AND PAGE | 5 ANNULLING THE ASSESSMENT IGNORING THE FACT THAT THE ASSESSING OFFICER HAD ISSUED NOTICE U/S 148 AFTER RECORDING VALID REASONS ON THE BASIS OF INFORMATION RECEIVED FROM R.O.C. 2. THE LD.PR. COMMISSIONER OF INCOME TAX (APPEAL), MOR ADABAD HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 49.80,000/- MADE ON ACCOUNT OF SHARE PREMIUM RECEIVED BY ASSESS EE COMPANY ON SALE OF 2000 SHARES @ PREMIUM OF RS. 2,490/- PER SHARE WITH OUT APPRECIATING THE FACTS BROUGHT ON RECORDS BY THE ASSESSING OFFICER. 3. THE LD.PR. COMMISSIONER OF INCOME TAX (APPEAL). MOR ADABAD HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN ACCEPTING TH E ADDITIONAL EVIDENCE BY THE ASSEESSEE COMPANY REGARDING RETURN OF ALLOTMENT FIL ED WITH ROC. KANPUR AND ALLOWING RELIEF OF RS. 49.80,000/- ON ACCOUNT OF SH ARE PREMIUM WITHOUT AFFORDING AN OPPORTUNITY TO THE AO WHICH IS IN CONTRAVENTION OF RULE 46-A OF IT. RULES, 1962. 4. THE LD.PR.COMMISSIONER OF INCOME TAX(APPEAL). MORAD ABAD HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETI NG THE ADDITIONS OF RS. I 1,78.000/- & RS. 6.00,000/- MADE ON ACCOUNT OF CASH DEPOSIT & CASH TRANSACTION RESPECTIVELY BY OBSERVING THAT ALL ENTR IES WERE DULY MENTIONED IN RESPECTIVE ACCOUNTS.. 5. THE LD.PR.COMMISSIONER OF INCOME TAX (APPEAL). MORA DABAD HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN AC CEPTING THE ADDITIONAL EVIDENCE BY THE ASSEESSEE COMPANY AND AL LOWING RELIEF OF RS. 17.78,000/- ON ACCOUNT OF CASH DEPOSIT & CASH TRANS ACTION WITHOUT AFFORDING AN OPPORTUNITY TO THE AO WHICH IS IN CONT RAVENTION OF RULE 46- A OF IT. RULES. 1962. 7. WE HAVE HEARD THE ARGUMENTS MADE BY LD. DR AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THE ASSE SSEE DID NOT PRODUCE THE DETAILS AS CALLED FOR BY THE ASSESSING OFFICER. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE H AS RAISED AN OBJECTION AFTER OBTAINING REASONS FOR REOPENING OF THE ASSESSMENT. WE FIND THE LD. CIT(A) QUASHED THE REASSESSMENT PRO CEEDINGS AND DELETED THE ADDITION ON MERIT ALSO ON THE BASIS OF CERTAIN EVIDENCES FILED BY THE ASSESSEE BEFORE HIM WITHOUT CALLING FOR ANY REMAND REPORT FROM THE ASSESSING OFFICER OR GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER WHICH IS IN CO NTRAVENTION TO PROVISIONS OF RULE 46 A OF THE IT RULES. UNDER THES E PAGE | 6 CIRCUMSTANCES WE DEEM IT PROPER TO RESTORE THE ISSU E TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE TH E ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSING OFFICER SHALL VERIFY AS TO WHETHER THE ASSESSEE HAD RECEIVED ANY SHARE CAPITAL AND SHARE PREMIUM FOR THE IMPUGNED ASSESSMENT YEAR BY OBTAINI NG NECESSARY INFORMATION FROM THE ROC. HE SHALL VERIF Y AS TO WHETHER THE ASSESSEE HAS FILED ANY OBJECTION CHALLE NGING THE REASONS. NEEDLESS TO SAY THE ASSESSING OFFICER SHA LL DECIDE THE ISSUE AS PER FACT AND LAW AFTER GIVING DUE OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. HE SHALL ALSO KEEP IN MIND THE LATEST DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F DCIT VS. NRA IRON & STEEL (P) LTD. AND THE DECISION OF HONB LE DELHI HIGH COURT IN THE CASE OF NDR PROMOTERS PRIVATE LIMITED REPORTED IN 410 ITR 379. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 07.05.2019. SD/- SD/- (SUCHITRA KAMBLE) (R.K PANDA) JUDICIAL MEMBER ACCOUNTANT MEM BER *NEHA* DATE:- 07.05.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTR AR ITAT NEW DELHI PAGE | 7 DATE OF DICTATION 01.05.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 02.05.2019 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 07.05.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 07.05.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER