SACHIN COTSPIN LTD, MUMBAI V. CIT (A)-9, MUMBAI

ITA 5049/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1894 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-10-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 15-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K C KANOJIA
• Keywords: Unexplained investment; Principle of natural justice
• Section: 133(6); 69; 148; 132

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY , JM AND SHRI MANOJ KUMAR AGGARWAL , AM ./ I.T.A. NO. 5049/MUM/2015 ( / ASSESSMENT YEAR : 2005 - 06 ) SACHIN COTSPIN LTD. (NOW ISS INTERNATIONAL LTD.) 604, SHAH & NAHAR INDUSTRIAL ESTATE DR. E.MOSES ROAD WORLI, NAKA MUMBAI - 400 018 / VS. INCOME TAX OFFICER WARD - 4 (3) ( 4 ) AAYAK AR BHAVAN, M.K.ROAD MUMBAI ./ ./ PAN/GIR NO. AA DCS1025P ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENT BY : SHRI K.C.KANOJIA , DR / DATE OF HEARING : 2 6 /10 /2016 / DATE OF PRONOUNCEMENT : 23 /1 1 /2016 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR A SSESSMENT Y EAR [AY] 20 05 - 06 ASSAILS THE ORDER OF THE COMMISSIONE R OF INCOME TAX (APPEALS) - 9 [CIT(A)], MUMBAI DATED 31/07/2015 ON MERITS AS WELL AS ON VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 2 ITA NO. 5049 /MUM / 2015 M/S SACHIN COTSPIN LTD. ASSESSMENT YEAR 2005 - 06 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE BEING PROVIDED WITH SEVERAL OPPORTUNITIES AND RPAD NOTICES. THEREFORE, I T SEEMS THAT THE ASSESS EE IS NOT SERIOUS IN PURSUING IT S APPEAL. THEREFORE, WE PROCEED TO DECIDE THE APPEAL ON MERITS ON THE BASIS OF THE MATERIALS AVAILABLE ON RECORD AND AFTER HEARING THE ARGUMENTS OF THE REVENUE. 3 . FACTS QU A THE DISPUTE ARE THAT THE ASSESSEE S CASE FOR IMPUGNED AY WAS RE - OPENED BY ASSESSING OFFICER [AO] BY ISSUE OF NOTICE U/S 148 DATED 17/06/2011 UPON RECEIPT OF CERTAIN INFORMATION FROM INVESTIGATION WING OF THE INCOME TAX DEPARTMENT PURSUANT TO SEARCH & SEIZURE OPERATIONS U/S 132 ON A GROUP ENGAGED IN FRAUDULENT BILLING ACTIVITIES AND BOGUS ENTRY PROVIDERS IN THE GUISE OF SPECULATION PROFIT / LOSS. IT WAS REVEALED THAT THE ASSESSEES NAME FIGURED IN THE LIST OF BENEFICIARIES OF BOGUS ENTRIES AND ASSESSEE WAS FOUND TO HAVE ENTERED INTO SHARE PURCHASE TRANSACTIONS FOR RS.44.02 LACS IN THE SHARES OF TWO ENTITIES NAMELY M/S MANOJ IMPEX LTD. & M/S WEB BUSINESS.COM THROUGH BROKER M/S ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. NOTICES U/S 133(6) ISSUED TO THESE THREE PARTIES TO CONFIRM THE TRANSACTIONS WERE RETURNED UN - SERVED. THE ASSESSEE DENIED HAVING ENTERED INTO SUCH TRANSACTIONS. THE ASSESSEE WAS ASKED TO EXPLAIN THE TRANSACTIONS IN DETAILS AND SUBMIT SUPPORTING DOCUMENTS/INFORMATION ETC. BUT FAILED TO DO SO EVEN UP - TO DATE OF FINAL HEARING ON 11/01/2013 WHICH LED AO TO FINAL IZE THE ASSESSMENT ON THE BA S IS OF MATERIAL AVAILABLE ON RECORD. FINALLY, R ELYING UPON DATA PROVIDED BY INVESTIGATION WING AND STATEMENTS OF DIRECTORS OF ALLEGED BOGUS ENTRY PROVIDERS AND UPON PERUSAL OF FINANCIA L STATEMENT OF ASSESSEE, AO C ONCLUDED THAT IMPUGNED I N VESTMENTS UNEARTHED IN THE NAME OF ASSESSEE REM AINED UNEXPLAINED INVESTMENT WHICH ATTRACTS ADDITIONS U/S 69 . ADDING THE SAME, THE INCOME OF THE ASSESSEE WAS DETERMINED A T RS.44 , 07 , 182/ - VIDE ORDER DATED 01/03/2013 . AGGRI E VED, THE ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) BUT WAS UNSUCCESSFUL VIDE ORDER DATED 31/07/2015. AG AINST THE SAME, THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. DR HAS PLACED RELIANCE UPON STAND OF LOWER AUTHORITIES AND JUSTIFIED AD DITION U/S 69. 4. WE HAVE HEARD THE CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FIRST OF ALL, IT IS SEEN THAT ASSESSEE HAS BEEN FOUND TO HAVE MADE UNEXPLAINED INVESTMENTS IN SHARES OF 3 ITA NO. 5049 /MUM / 2015 M/S SACHIN COTSPIN LTD. ASSESSMENT YEAR 2005 - 06 CERTAIN COMPANIES O N THE BASIS OF MATERIAL/DOCUMENTS SEI ZED FROM THE PREMISES OF THE ALLEGED BOGU S ENTRY PROVIDERS BUT THE SAME WERE NOT REFLECTED I N THE ASSESSEES BOOKS OF THE ACCOUNTS. THE ASSESSEE HAS DENIED HAVING ENTERED INTO SUCH TRANSACTIONS. THE SEIZED MATERIAL HAS BEEN USED AGAINST THE ASSESSEE AND FO RM THE BASIS OF IMPUGNED ADDITIONS. I T IS NOT CLEARLY DISCERNIBLE FROM THE ASSESSMENT ORDER TH AT WHETHER THE ADVERSE MATERIAL WAS SUPPLIED / CONFRONTED TO THE ASSESSEE OR NOT AND WHICH IS ONE OF THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE. SECONDLY, THE A SSESSEES FINANCIAL STATEMENT DO NOT SHOW ANY SUCH INVESTMENTS AND ASSESSEE HAS DENIED HAVING ENTERED INTO SUCH TRANS ACTIONS . THE ADDITIONS ARE MADE SOLELY ON THE BASIS OF ENTRIES IN BOOKS OF THIRD PARTIES WITHOUT CORROBORATING THE SAME FROM INDEPENDENT SO URCES. PER CONTRA, NOTICES U / S 133(6) ISSUED BY AO TO CONFIRM THE TRANSACT IONS WERE RETURNED BACK UN - SERVED WHICH WAS CONFRONTED TO ASSESSEE AND ASSESSEE WAS DIRECTED TO SUPPLY REQUISITE INFORMATION / DOCUMENTS IN SUPPORT OF HIS CONTENTIONS BUT THE ASSESSE E FAILED TO DO SO . THE REFORE, O N ONE HAND ASSESSEE WAS NOT ABLE TO DISPROVE THE TRANSACTIONS CONCLUSIVELY AND ON THE OTHER HAND AO HAS SUSTAINED ADDITIONS MEREL Y ON THE BASIS OF INFORMATION OBTAINED FROM THIRD PARTIES WITHOUT CONFRONTING THE SAME TO THE AS SESSEE AND WITHOUT CORROBORATING THE SAME FROM INDEPENDENT SOURCES . THE REFORE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DEEM IT FIT TO RESTORE THE MATTER BACK TO THE FILE OF AO TO CONFRONT THE ADVERSE MATERIAL TO ASSESSEE AND PROVIDE HIM AN OPPORTUNI TY TO DISPROVE THE TRANSACTIONS. THE ASSESSEE, ON THE OTHER HAND, IS DIRECTED TO SUBSTANTIATE HIS STAND IN THIS REGARD FORTHWITH FAI L ING WHICH AO SHALL BE AT LIBERTY TO ADJUDICATE THE MATTER ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 5. THEREFORE, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23RD NOVEMBER , 201 6 S D / - SD/ - ( SAKTIJIT DEY ) ( MANOJ KUMAR AGGARWAL ) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : .1 1 .201 6 LAXMIKANT DEKA, SR. PS 4 ITA NO. 5049 /MUM / 2015 M/S SACHIN COTSPIN LTD. ASSESSMENT YEAR 2005 - 06 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASST . REGISTRAR) , / ITAT, MUMBAI SR. NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATION SHEETS ARE ATTAC HED 16.11.16 SR.PS/PS 2 DRAFT DICTATED ON 16.11.16 SR.PS/PS 3 DRAFT PLACED BEFORE AUTHOR SR.PS/PS 4 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 5 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 6 APPROVED DRAFT COMES TO THE SR. PS/PS 2 2 .11.16 SR.PS/PS 7 ORDER PRONOUNCEMENT ON 23.11.16 SR.PS/PS 8 FILE SENT TO THE BENCH CLERK 23.11.16 SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE AR 11 DATE OF DISPATCH OF ORDER