M/s JLD Cement Pvt. Ltd., Kolkata V. ITO, Wd.5(2), Kolkata, Kolkata

ITA 50/KOL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6404 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 10-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K TIWARI
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Opportunity of being heard; Principle of natural justice; Reassessment proceedings
• Section: 131; 68; 263

Judgement Text

1 ITA NO.50/KOL/2017 M/S. JLD CEMENT (P) LTD., AY- 2008-09 , D , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA () .., . ' # $% % , '() [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 50/KOL/2017 ASSESSMENT YEAR: 2008-09 M/S. JLD CEMENT PVT. LTD. (PAN: AADCS9409F) VS. INCOME-TAX OFFICER, WD-5(2), KOLKATA APPELLANT RESPONDENT DATE OF HEARING 08.03.2018 DATE OF PRONOUNCEMENT 18.05.2018 FOR THE APPELLANT SHRI MIRAJ D. SHAH, AR FOR THE RESPONDENT SHRI A. K. TIWARI, CIT ORDER PER SHRI A.T.VARKEY, JM THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF LD. CIT(A)-6, KOLKATA DATED 19.10.2016 FOR AY 2008-09. 2. THE IMPUGNED ORDER OF LD. CIT(A) IS AN EX PARTE ORDER. THE LD. CIT (A) IN ORDER TO DECIDE THE APPEAL EX PARTE HAS GIVEN THE REASON FOR DOING SO AT PARA 1 AND 2 OF HIS ORDER WHICH IS REPRODUCED AS UNDER: 1. NOTICE FOR HEARING WAS ISSUED BY THIS OFFIC E BY SPEED POST ON 28.12.2015 FIXING HEARING ON 28.01.2016. ON 28.01.2016, A LETTER WAS FILED REQUESTING FOR ADJOURNMENT AND THE HEARING WAS ADJOURNED TO 19.02.2016. NONE APPEARED ON 19.02.2017. ONE MORE HEARING NOTICE WAS ISSUED ON 22.09.2016 GRANTING A HEARING ON 13.10.2016. HOWEVER, THE APPELLANT DID NOT ATTEND ON THAT DATE. HENCE, IT IS CLEAR T HAT THE APPELLANT HAS NOTHING FURTHER TO SAY IN THE MATTER. 2. IT HAS BEEN HELD BY THE HONBLE SUPREME COURT I N THE CASE OF CIT VS. B. N. BHATTACHARJEE 118 ITR 461 THAT PREFERRING APPEAL DOES NOT MEAN ME RELY FILING OF THE APPEAL BUT EFFECTIVELY PURSUING IT. THIS PRINCIPLE HAS ALSO BEEN FOLLOWED IN CIT VS. MULTIPLAN INDIA (P) LTD. 38 ITD 320 (DEL) AND ESTATE OF LATE TUKOJIRAO HOLKAR VS. C WT 223 480 (MP). LAW ASSISTS THOSE WHO ARE VIGILANT AND NOT THOSE WHO SLEEP OVER THEIR RIG HTS. THE APPELLANT HAS FILED THE APPEAL BUT HAS NOT TAKEN CARE TO AVAIL OF THE OPPORTUNITY OF B EING HEARD. HENCE, I HAVE NO OPTION BUT TO DECIDE THE APPEAL EX PARTE. IN VIEW OF THE ABSENCE OF THE APPELLANT ON THE DATE OF HEARING, THE APPEAL IS BEING DECIDED ON THE BASIS OF THE GROUNDS OF APPEAL, STATEMENT OF FACTS AND THE ASSESSMENT ORDER. 2 ITA NO.50/KOL/2017 M/S. JLD CEMENT (P) LTD., AY- 2008-09 3. FROM A READING OF THE ABOVE REASONING, IT IS EVI DENT THAT LD. CIT (A) FIXED THE HEARING OF THE APPEAL ONLY ON THREE DATES I.E. ON 2 8.01.2016, 19.02.2016 AND ON 13.10.2016 AND SINCE NONE REPRESENTED ON BEHALF OF ASSESSEE, H AS PASSED THE EX PARTE ORDER. AS PER THE LD. AR, THE ASSESSEE DID NOT RECEIVE ANY NOTICE OF HEARING FIXED ON 13.10.2016, THEREFORE ACCORDING TO LD. AR, THE IMPUGNED ORDER IS FRAGILE FOR VIOLATION OF NATURAL JUSTICE. THE LD. CIT (A) FOUND FAULT WITH THE ASSESSEE NOT APPEARING BEFORE HIM ON 13.10.2016 CAME TO THE CONCLUSION THAT ASSESSEE IS NOT INTERESTED IN PURSU ING THE APPEAL IS NOT CORRECT, WHEN THE FACTS AS RECORDED BY LD. CIT(A) THAT ASSESSEE HAD F ILED AN ADJOURNMENT APPLICATION BEFORE HIM ON 28.01.2016, SO THE LD. CIT(A) OUGHT TO HAVE GIVEN OPPORTUNITY TO ASSESSEE TO REPRESENT AND PRESENT ITS CASE DURING APPELLATE PRO CEEDINGS. SO, WE NOTE THAT ASSESSEE DID NOT GET PROPER OPPORTUNITY BEFORE THE FIRST APPELLA TE AUTHORITY DURING THE APPELLATE PROCEEDINGS. 4. COMING TO THE AOS ORDER, WE NOTE THAT THE AO WA S GIVING EFFECT TO THE ORDER OF LD. CIT PASSED U/S. 263 OF THE ACT ON 26.03.2013 WHEREI N THE LD. CIT HAS GIVEN THE FOLLOWING GUIDELINES AS TO HOW TO INVESTIGATE. XXXIV) EXAMINE THE GENUINENESS AND SOURCE OF SHARE CAPITAL, NOT ON A TEST CHECK BASIS, BUT IN RESPECT OF EACH AND EVERY SHAREHOLDER BY CONDUCTING INDEPENDENT ENQUIRY NOT THROUGH THE ASSESSEE. THE BANK ACCOUNT FOR THE ENTIRE PERIOD S HOULD BE EXAMINED IN THE COURSE OF VERIFICATION TO FIND OUT THE MONEY TRAIL OF THE SHA RE CAPITAL. XXXV) FURTHER THE AO SHOULD EXAMINE THE DIRECTORS A S WELL AS EXAMINE THE CIRCUMSTANCES WHICH NECESSITATED THE CHANGE IN DIRECTORSHIP IF AP PLICABLE. HE SHOULD EXAMINE THEM ON OATH TO VERIFY THEIR CREDENTIALS AS DIRECTOR AND REACH A LOGICAL CONCLUSION REGARDING THE CONTROLLING INTEREST. XXXVI) THE AO IS DIRECTED EXAMINE THE SOURCE OF REA LIZATION FROM THE LIQUIDATION OF ASSETS SHOWN IN THE BALANCE SHEET AFTER THE CHANGE OF DIRE CTORS, IF ANY AFTER CONDUCTING THE INQUIRIES & VERIFICATION AS DIRECTED ABOVE, THE AO SHOULD PAS S A SPEAKING ORDER, PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. HOWEVER, WE NOTE THAT AOS INVESTIGATION AS PER HIS OWN WORDS AS STATED AT PARA 4 IS AS UNDER: 4. IT WAS NOTICED FROM THE BALANCE SHEET OF THE A SSESSEE THAT ASSESSEE HAS RECEIVED A SHARE APPLICATION MONEY OF RS.141,99,47,500/- DURIN G THE YEAR IN QUESTION. TO VERIFY THE GENUINENESS OF THE SAID TRANSACTIONS AND TO VERIFY THE IDENTITY AND CREDITWORTHINESS OF THE SHAREHOLDERS OF THE ASSESSEE COMPANY, NOTICE U/S. 1 31 OF I. T. ACT WAS ISSUED TO DIRECTORS OF THE ASSESSEE COMPANY ALONG WITH THE DIRECTORS OF TH E SHAREHOLDER COMPANIES ON TEST CHECK BASIS. THEY WERE ASKED TO APPEAR PERSONALLY BEFORE THE UNDERSIGNED AND TO PRODUCE/FURNISH DETAILS/DOCUMENTS IN SUPPORT OF THE JUSTIFICATION FOR THE INVESTMENT MADE BY THEM IN THE ASSESSEE COMPANY AND OTHER DETAILS A S ASKED FOR. BUT NONE OF THEM APPEARED BEFORE THE UNDERSIGNED. AFTER THAT A LETT ER WAS ISSUED TO THE ASSESSEE ON 20.03.2014 INFORMING THE SAID FACTS AND WAS ALSO AS KED TO SHOW CAUSE AS TO WHY SHARE 3 ITA NO.50/KOL/2017 M/S. JLD CEMENT (P) LTD., AY- 2008-09 APPLICATION MONEY RECEIVED BY IT SHOULD NOT BE TRE ATED AS BOGUS AND WHY THE SAME SHOULD NOT BE TREATED AS ITS UNACCOUNTED MONEY INTRODUCED IN ITS BOOKS OF ACCOUNTS AS SHARE APPLICATION MONEY. ASSESSEE WAS ALSO ASKED VIDE TH IS LETTER AS TO WHY THE SAID SHARE APPLICATION MONEY SHOULD NOT BE TREATED AS UNACCOUN TED CASH CREDIT IN ITS BOOKS AS PER THE PROVISIONS OF SECTION 68 OF I. T. ACT. BUT, ASSESS EE FAILED TO PUT FORWARD ANY EXPLANATION TILL THE DATE OF PASSING OF THIS ORDER. 6. SO, WE NOTE THAT INVESTIGATION AS PER THE GUIDEL INES OF THE LD. CIT HAS NOT BEEN ADHERED TO BY THE AO THAT IS ONE ASPECT WHICH HAS B EEN POINTED OUT BY THE LD AR ASSAILING THE DECISION OF AO. 7. HOWEVER THE MAIN GRIEVANCE OF THE ASSESSEE IS TH AT NO PROPER OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO DISCHARGE THE ONUS CASTED UPON I T AS REQUIRED IN SEC. 68 MATTERS. ACCORDING TO ASSESSEE, NO STATUTORY NOTICES WERE SE RVED UPON IT. WE NOTE THAT OTHER THAN A NOTICE DATED 01.05.2013, THE AO HAS NOT GIVEN ANY D ETAILS OF THE STATUTORY NOTICES, WHEN IT WAS ISSUED ETC., DATE ON WHICH IT WAS FIXED FOR HEA RING ETC. ARE NOT DISCERNABLE FROM THE INVESTIGATION CONDUCTED BY AO (SUPRA). SO, WE FIND FORCE IN THE SUBMISSION OF THE LD. AR THAT NO PROPER OPPORTUNITY WAS GIVEN TO ASSESSEE BY AO DURING THE REASSESSMENT PROCEEDINGS AND SO WE ARE, THEREFORE, OF THE OPINIO N THAT ASSESSEE DID NOT GET PROPER OPPORTUNITY BEFORE THE AO DURING REASSESSMENT PROCE EDINGS. THE HONBLE (THREE JUDGE BENCH) OF THE HONBLE SUPREME COURT IN TIN BOX COMP ANY VS. CIT (2001) 249 ITR 216 (SC) HAS HELD AS UNDER: IT IS UNNECESSARY TO GO INTO GREAT DETAIL IN THESE MATTERS FOR THERE IS A STATEMENT IN THE ORDER OF THE TRIBUNAL, THE FACT-FINDING AUTHORITY, THAT R EADS THUS : WE WILL STRAIGHTAWAY AGREE WITH THE ASSESSEES SUB MISSION THAT THE INCOME-TAX OFFICER HAD NOT GIVEN TO THE ASSESSEE PROPER OPPORTUNITY OF BEI NG HEARD. THAT THE ASSESSEE COULD HAVE PLACED EVIDENCE BEFORE THE FIRST APPELLATE AUTHORITY OR BEFORE THE TRIBUNAL IS REALLY OF NO CONSEQUENCE FOR IT IS THE ASSESSMENT ORDER THAT COUNTS. THAT ORDER MUST BE MADE AFTER THE ASSESSEE HAS BEEN GIVEN A RE ASONABLE OPPORTUNITY OF SETTING OUT HIS CASE. WE, THEREFORE, DO NOT AGREE WITH THE TRIBUNAL AND THE HIGH COURT THAT IT WAS NOT NECESSARY TO SET ASIDE THE ORDER OF ASSESSMENT AND REMAND THE MATTER TO THE ASSESSING AUTHORITY FOR FRESH ASSESSMENT AFTER GIVING TO THE ASSESSEE A PROPER OPPORTUNITY OF BEING HEARD. TWO QUESTIONS WERE PLACED BEFORE THE HIGH COURT, OF WHICH THE SECOND QUESTION IS NOT PRESSED. THE FIRST QUESTION READS THUS : 1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN NOT SETTING ASIDE THE ASSESSMENT ORDER IN SPITE OF A FINDING ARRIVED AT BY IT THAT THE INCOME- TAX OFFICER HAD NOT GIVEN A PROPER OPPORTUNITY OF H EARING TO THE ASSESSEE ? 4 ITA NO.50/KOL/2017 M/S. JLD CEMENT (P) LTD., AY- 2008-09 IN OUR OPINION, THERE CAN ONLY BE ONE ANSWER TO THI S QUESTION WHICH IS INHERENT IN THE QUESTION ITSELF : IN THE NEGATIVE AND IN FAVOUR OF THE ASSESSEE. THE APPEALS ARE ALLOWED. THE ORDER UNDER CHALLENGE IS SET ASIDE. THE ASSESSMENT ORDER, THAT OF THE COMMISSIONER (APPEALS) AND OF THE TRIBUNAL A RE ALSO SET ASIDE. THE MATTER SHALL NOW BE REMANDED TO THE ASSESSING AUTHORITY FOR FRESH CO NSIDERATION, AS AFORESTATED. 8. IN SIMILAR CASE THIS TRIBUNAL IN ITA NO.393/KOL/ 2016 IN M/S. STAR GRIHA (P) LTD. VS. ITO FOR AY 2008-09 DATED 15.12.2017 HAS OBSERVED AS UNDER:- WE ALSO NOTE THAT THE LD. CIT AFTER LOOKING INT O THE PERNICIOUS PRACTICE OF CONVERTING BLACK MONEY INTO WHITE MONEY HAS GIVEN THE GUIDELIN ES TO AO AS TO HOW THE INVESTIGATION SHOULD BE CONDUCTED TO FIND OUT THE SOURCE. SINCE SIMILAR ORDER OF THE LD. CIT PASSED U/S. 263 OF THE ACT HAS BEEN UPHELD BY THE TRIBUNAL AS WELL AS BY THE HONBLE CALCUTTA HIGH COURT AS WELL AS THE SLP HAS BEEN DISMISSED BY THE HONBLE S UPREME COURT, SIMILAR ORDER OF THE LD. CIT HAS TO BE GIVEN EFFECT TO AS DIRECTED BY THE LD . CIT. WE TAKE NOTE THAT THE LD. CIT WITH HIS EXPERIENCE AND WISDOM HAS GIVEN CERTAIN GUIDELINES IN THE BACKDROP OF BLACK MONEY MENACE SHOULD HAVE BEEN PROPERLY ENQUIRED INTO AS DIRECTED BY HIM. THE AO OUGHT TO HAVE FOLLOWED THE INVESTIGATING GUIDELINES AND METHOD AS DIRECTED BY HIM TO UNEARTH THE FACTS TO DETERMINE WHETHER THE IDENTITY, GENUINENESS AND CREDITWORTHIN ESS OF THE SHARE SUBSCRIBERS. WE NOTE THAT THE HONBLE SUPREME COURT (THREE JUDGES BENCH) IN THE CASE OF TIN BOX, (SUPRA), HAS HELD THAT SINCE THERE WAS LACK OF OPPORTUNITY TO THE ASSESSEE AT THE ASSESSMENT STAGE ITSELF, THE ASSESSMENT NEEDS TO BE DONE AFRESH AND THEREBY REVE RSED THE HONBLE HIGH COURT, TRIBUNAL AND CIT(A)S ORDERS AND REMANDED THE MATTER BACK T O AO FOR FRESH ASSESSMENT. SO, SINCE THERE WAS LACK OF OPPORTUNITY AS AFORESTATED IT HAS TO GO BACK TO AO. 9. WE ALSO NOTE THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JANSAMPARK ADVERTISING & MARKETING PVT. LTD. IN ITA NO. 525/20 14 DATED 11.03.2015 WHEREIN AFTER NOTICING INADEQUATE ENQUIRY BY AUTHORITIES BELOW HA VE HELD AS UNDER: 41. WE ARE INCLINED TO AGREE WITH THE CIT(APPEALS) , AND CONSEQUENTLY WITH ITAT, TO THE EXTENT OF THEIR CONCLUSION THAT THE ASSESSEE HEREIN HAD COME UP WITH SOME PROOF OF IDENTITY OF SOME OF THE ENTRIES IN QUESTION. BUT, FROM THIS INF ERENCE, OR FORM THE FACT THAT THE TRANSACTIONS WERE THROUGH BANKING CHANNELS, IT DOES NOT NECESSAR ILY FOLLOWING THAT SATISFACTION AS TO THE CREDITWORTHINESS OF THE PARTIES OR THE GENUINENESS OF THE TRANSACTIONS IN QUESTION WOULD ALSO HAVE BEEN ESTABLISHED. 42. THE AO HERE MAY HAVE FAILED TO DISCHARGE HIS OB LIGATION TO CONDUCT A PROPER INQUIRY TO TAKE THE MATTER TO LOGICAL CONCLUSION. BUT CIT(APPE ALS), HAVING NOTICED WANT OF PROPER INQUIRY, COULD NOT HAVE CLOSED THE CHAPTER SIMPLY B Y ALLOWING THE APPEAL AND DELETING THE ADDITIONS MADE. IT WAS ALSO THE OBLIGATION OF THE F IRST APPELLATE AUTHORITY, AS INDEED OF ITAT, TO HAVE ENSURED THAT EFFECTIVE INQUIRY WAS CARRIED OUT, PARTICULARLY IN THE FACT OF THE ALLEGATIONS OF THE REVENUE THAT THE ACCOUNT STATEME NTS REVEAL UNIFORM PATTERN OF CASH DEPOSITS OF EQUAL AMOUNTS IN THE RESPECTIVE ACCOUNTS PRECEDI NG THE TRANSACTIONS IN QUESTION. THIS NECESSITATED A DETAILED SCRUTINY OF THE MATERIAL SU BMITTED BY THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION148 ISSUED BY THE AO, AS ALSO T HE MATERIAL SUBMITTED AT THE STAGE OF APPEALS, IF DEEMED PROPER BY WAY OF MAKING OR CAUSI NG TO BE MADE A 'FURTHER INQUIRY IN EXERCISE OF THE POWER UNDER SECTION 250(4). HIS APP ROACH NOT HAVING BEEN ADOPTED, THE IMPUGNED ORDER OF ITAT, AND CONSEQUENTLY THAT OF CI T(APPEALS), CANNOT BE APPROVED OR UPHELD.' 5 ITA NO.50/KOL/2017 M/S. JLD CEMENT (P) LTD., AY- 2008-09 10. IN VIEW OF THE AFORESAID ORDER AND IN THE LIGHT OF THE HONBLE SUPREME COURTS DECISION IN TIN BOX COMPANY (SUPRA) AND TAKING INTO CONSIDERATION THE FACT THE ORDER OF THE LD. CIT PASSED U/S. 263 OF THE ACT IN SIMILAR CASES BEING UPHELD UP TO THE LEVEL OF APEX COURT, AND TAKING NOTE OF HONBLE DELHI HIGH COURT S ORDER IN JANSAMPARK ADVERTISING & MARKETING PVT. LTD. (SUPRA), WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF AO FOR DE NOVO ASSESSMENT AND T O DECIDE THE MATTER IN ACCORDANCE TO LAW AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. 11. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES . ORDER IS PRONOUNCED IN THE OPEN COURT ON 18TH MAY, 2018. SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18TH MAY, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT M/S. JLD CEMENT PVT. LTD., 10, PRINCEP STREET, KOLKATA-72. 2 RESPONDENT ITO, WARD-5(2), KOLKATA. 3 . THE CIT(A), KOLKATA 4. 5. CIT , DR, ITAT, KOLKATA. / TRUE COPY, BY ORDER, SENIOR PVT. SECY .