Canyon Financial Services Ltd., New Delhi V. ITO, New Delhi

ITA 461/DEL/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7362 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 27-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Keywords: Unexplained cash credit; Search and seizure; Opportunity of being heard; Set aside
• Section: 68; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.461/DEL./2017 (ASSESSMENT YEAR : 2012-13) M/S. CANYON FINANCIAL SERVICES LTD., VS. ITO, WARD 5 (3), CHAMBER 1, A 257, SARITA VIHAR, NEW DELHI. NEW DELHI 110 076. (PAN : AAACC3744J) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : MS. ASHIMA NEB, SENIOR DR DATE OF HEARING : 18.07.2019 DATE OF ORDER : 26.07.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. CANYON FINANCIAL SERVICES LTD. (HE REINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESEN T APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 30.11.2016 PASSE D BY THE COMMISSIONER OF INCOME - TAX (APPEALS)-2, NEW DELH I QUA THE ASSESSMENT YEAR 2012-13 ON THE GROUNDS INTER ALIA T HAT :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, LD. ITO ERRED IN LAW AND FACTS OF THIS CASE ON INIT IATING AND CONCLUDING THE PROCEEDINGS U/S 153C / 143(3) OF THE INCOME TAX ACT, 1961, ON THE BASIS OF DOCUMENTS ALREADY ON RECORD AND BELONG TO THE DALMIA EQUITIES ITA NO.461/DEL./2017 2 PRIVATE LIMITED FOUND DURING THE SEARCH AND SEIZURE OPERATION CARRIED OUT AT THE PREMISES OF SH. PARAG DALMIA, 113-114, MOHTA BUILDING, 4-BHIKAJI CAMA PLACE, NEW DELHI, AS A PART SEARCH OPERATION ON M/S DALMIA GROUP ON ZS' JANUARY, 2012 BY THE INVESTIGATION WING, UNIT-VI(L), NEW DELHI. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) ERRED IN LAW AND FACTS OF THIS CASE I N MAKING THE ADDITION OF RS.1,98,00,000/- INTO THE INCOME OF THE APPELLANT FOR THE AY 2012-13 AS UNEXPLAINED CREDIT U/S 68 OF THE INCOME TAX ACT, 19 61 INSTEAD OF TREATING THE SAME AS SHARE CAPITAL AND S HARE PREMIUM. 3. THAT THE LD CIT(A) ERRED IN LAW AND FACTS OF THI S BY NOT CONSIDERING THE DETAILS AND DOCUMENTS PRODUC ED / SUBMITTED UNDER PROTEST, IN SUPPORT OF THE IDENTI TY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE CAPITAL/SHARE PREMIUM RECEIVED BY THE APPELLANT DUR ING THE AY 2012-13. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) ERRED IN LAW AND FACTS OF THIS CASE I N MAKING THE ADDITION OF RS.9,20,00,000/- INTO THE INCOME OF THE APPELLANT FOR THE AY 2012-13 AS UNEXPLAINED CREDIT U/S 68 OF THE INCOME TAX ACT, 19 61 INSTEAD OF TREATING THE SAME AS UN-SECURED LOAN RECEIVED BY THE APPELLANT. 5. THAT LD CIT(A) FAILED TO APPRECIATE THE EVIDENCES FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEREIN THE GENUINENESS AND CREDITWORTHINESS OF LOAN TRANSACTION HAS BEEN DULY EXPLAINED AND HENCE SAME CANNOT BE TAXED AS INCOME OF THE APPELLANT. 6. THAT THE ORDER U/S 153C / 143(3) OF THE INCOME TAX ACT, 1961 DATED 31ST MARCH, 2015 PASSED BY THE LD ITO IS BAD IN LAW AND VOID AB-INITIO. ITA NO.461/DEL./2017 3 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE ISSUES AT HAND ARE : ON THE BASIS OF SEARCH AND SEI ZURE OPERATION CARRIED OUT AT THE PREMISES OF DALMIA GROUP OF CASE S ON 28.01.2012 BY THE INVESTIGATION WING, UNIT-VI (1), NEW DELHI, CERTAIN DOCUMENTS VIZ. A-3/DB-8 WERE FOUND AND SEIZED BELON GING TO THE ASSESSEE. ON THE BASIS OF SEIZED MATERIAL, SATISFA CTION NOTE WAS RECORDED AND NOTICE UNDER SECTION 143 (2) OF THE IN COME-TAX ACT, 1961 (FOR SHORT THE ACT) WAS ISSUED. ASSESSING O FFICER (AO) NOTICED THAT THE ASSESSEE HAS RECEIVED FRESH SHARE CAPITAL OF RS.7,92,000/- AND FRESH SHARE PREMIUM OF RS.1,90,08 ,000 TOTALING TO RS.1,98,00,000/- FROM M/S. RATIFF ACCESSORIES PV T. LTD. (FORMERLY M/S. ANUBHAV FOOTWEAR PVT. LTD.). ASSESS EE COMPANY ALSO CLAIMED TO HAVE RECEIVED UNSECURED LOAN OF RS. 9,20,00,000/- FROM M/S. NET AGROFOODS PVT. LTD.. ON FAILURE OF T HE ASSESSEE TO FURNISH EVIDENCE SO AS TO PROVE CREDITWORTHINESS AN D GENUINENESS OF THE TRANSACTION, AO MADE ADDITION OF RS1,98,00,0 00/- ON ACCOUNT OF SHARE APPLICATION/PREMIUM AND RS.9,20,00 ,000/- ON ACCOUNT OF UNSECURED LOAN U/S 68 OF THE ACT. 3. ASSESSEE CARRIED THE MATTER BY WAY OF APPEAL BEFOR E THE LD. CIT (A) WHO HAS DISMISSED THE APPEAL EX-PARTE THOUGH ON MER IT. FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIB UNAL BY WAY OF FILING THE PRESENT APPEAL. ITA NO.461/DEL./2017 4 4. ASSESSEE HAS NOT PREFERRED TO PUT IN APPEARANCE DESPITE ISSUANCE OF THE NOTICE AND CONSEQUENTLY, WE PROCEEDED TO DEC IDE THE PRESENT APPEAL WITH THE ASSISTANCE OF THE LD. SENIOR DR AS WELL AS ON THE BASIS OF DOCUMENTS AVAILABLE ON THE FILE. 5. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E FOR THE REVENUE TO THE APPEAL WHO HAS RELIED UPON THE ORDER PASSED BY THE AO, GONE THROUGH THE DOCUMENTS RELIED UPON AND ORDERS P ASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. PERUSAL OF THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) APPARENTLY GOES TO SHOW THAT ON THE FIRST DAY OF HE ARING I.E. 09.09.2016, ASSESSEE MOVED REQUEST FOR ADJOURNMENT AND CONSEQUENTLY, THE CASE WAS ADJOURNED TO 05.10.2016 ON WHICH DATE NONE APPEARED AND THEN LD. CIT (A) RECORDED IN PARA 3.0 TO HAVE ISSUED THE NOTICE ON 06.10.2016 AND 27.10.2016 BUT HAS NOT BROUGHT ON RECORD THE FACT, IF SUCH NOTICE WAS EVER SERVED UPON THE ASSESSEE COMPANY. ENTIRE EXERCISE HAS BEEN COMPLET ED WITHIN A PERIOD OF ONE AND HALF MONTH WHICH SHOWS THAT THE A PPEAL HAS BEEN DECIDED IN HASTE WITHOUT GETTING THE SERVICE EFFECT ED. THERE IS NOT AN IOTA OF EVIDENCE ON FILE IF 05.10.2016, THE DATE OF HEARING REQUESTED BY THE ASSESSEE WAS EVER BROUGHT TO THE N OTICE OF ASSESSEE COMPANY OR NOTICE REPORTED TO HAVE ISSUED THEREAFTER WAS ITA NO.461/DEL./2017 5 SERVED UPON THE ASSESSEE COMPANY. MOREOVER, IF AT ALL APPEAL WAS TO BE DECIDED EX PARTE, CIT (A) WAS REQUIRED TO DEC IDE ON MERIT AS HE HAS NO POWER TO DISMISS THE APPEAL FOR NON-PROSE CUTION. SO, IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT TAKING A HOLISTIC VIEW AND TO DECIDE THE CONTROVERSY AT HAND ONCE FOR ALL, THE ISSUE IS REQUIRED TO BE SET ASIDE TO THE LD. CIT (A ) WHO SHALL DECIDE THE APPEAL AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. CONSEQUENTLY, APPEAL FILED BY THE AS SESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 26 TH DAY OF JULY, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 26 TH DAY OF JULY, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-2, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.