KOCHAR FINANCE & INVESTMENT (P) LTD., NEW DELHI V. ITO, WARD- 14(4), NEW DELHI

ITA 5090/DEL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4694 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 24-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 143(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.5090/DEL/2018 ASSESSMENT YEAR: 2014-15 KOCHAR FINANCE & INVESTMENT (P) LTD., 9, LSC, MASJID MOTH, NEW DELHI. PAN: AAACK5353R VS. ITO, WARD-14(4), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MAYANK PATWARI, CA REVENUE BY : SHRI S.L. ANURAGI, SR. DR DATE OF HEARING : 08.05.2019 DATE OF PRONOUNCEMENT : .05.2019 ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 3 RD MAY, 2018 PASSED BY THE CIT(A)-5, DELHI, RELATING TO ASSESSME NT YEAR 2014-15. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PRIVATE LIMITED COMPANY AND FILED ITS RETURN OF INCOME ON 29 TH SEPTEMBER, 2014 DECLARING NIL INCOME. THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAS MADE INVESTMENT OF RS.2,30,00,000/- I N M/S PIONEER DEALTRADE P. LTD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER ASKED THE ASSESSEE TO FURNISH CERTAIN DETAILS AND ISSUED SUMM ONS U/S 131 OF THE IT ACT FOR PRODUCTION OF THE DIRECTORS FOR RECORDING HIS STATE MENT. FURTHER, THE DIRECTORS WERE ITA NO.5090/DEL/2018 2 ALSO SPECIFICALLY ASKED TO PRODUCE CERTIFIED COPY O F ALL AGREEMENTS SIGNED WITH PERSONS/ENTITIES TO WHOM LOANS AND ADVANCES HAVE BE EN GIVEN AND WITH WHOM INVESTMENT HAVE BEEN MADE SINCE DATE. THE DIRECTOR S DID NOT APPEAR DESPITE REPEATED OPPORTUNITIES GRANTED. IN VIEW OF THE ABOVE AND OB SERVING THAT THE ASSESSEE COMPANY AND ITS DIRECTORS WERE NOT FOUND EXISTING AT THE AD DRESS PROVIDED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AND THE FINANCIAL S OF THE COMPANY AND THE ITR FOR THE LAST TEN YEARS DO NOT SHOW ANY BUSINESS ACTIVIT Y CARRIED ON BY THE ASSESSEE, THE ASSESSING OFFICER HELD THAT THE ASSESSEE COMPANY IS A PAPER/BOGUS/DUMMY COMPANY AND IS BEING USED AS A CONDUIT TO PROVIDE ENTRIES T O VARIOUS ENTITIES. HE, THEREFORE, DETERMINED THE INCOME AT RS.4,60,000/- BY ESTIMATIN G THE COMMISSION @ 2% OF THE TRANSACTION OF RS.2,30,00,000/- MADE DURING THE YEA R. IN APPEAL, THE LD.CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER. 3. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS:- 1 .THAT LD CIT(A) ERRED IN LAW AS WELL AS IN FACT BY UPHOLDING THE ADDITION OF RS 4,60,000/- BEING 2% OF THE AMOUNT OF RS.2,30,00, 000/- INVESTED IN THE SHARES OF M/S PIONEER DEAL TRADE PVT LTD BY HOLDING THE AP PELLANT AS PAPER COMPANY. 2. THAT LD CIT(A) FAILED TO CONSIDER THE LEGAL POSITI ON THAT SUCH INVESTMENT OF RS.2,30,00,000/- IN SHARES OF M/S PIO NEER DEAL TRADE PVT LTD. WAS FOUND TO BE GENUINE AS THE ASSESSMENT IN THAT CASE WAS MADE U/S 143(3) FOR WHICH THE COPY WAS ALREADY ENCLOSED WITH PAPER BOOK. HENC E, THE ACTION OF LD CIT(A) UPHOLDING THE ADDITION OF RS.4,60,000/- IS AGAINST THE PRINCIPAL OF CONSISTENCY. 3. THAT LD CIT(A) WHILE UPHOLDING THE ADDITION OF RS 4,60,000/- FAILED TO APPRECIATE THE LEGAL POSITION THAT IT WAS MADE IN V IOLATION TO PRINCIPLE OF NATURAL JUSTICE. 4. LD CIT(A) FAILED TO APPRECIATE THAT THE ADDITION O F RS 4,60,000/-WAS ITA NO.5090/DEL/2018 3 MADE MERELY ON PRESUMPTION BY DETERMINING THE NOTIO NAL COMMISSION, WHICH WAS NOT PERMISSIBLE IN THE EYE OF LAW. 5. THE APPELLANT RESERVE THE RIGHT TO ADD, ALTER, MOD IFY OR DELETE ANY OF THE GROUNDS. 4. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES AND PERUSED THE RELEVANT MATERIAL ON RECORD. I FIND THE ASSESSING O FFICER, IN THE INSTANT CASE, MADE ADDITION OF RS.4,60,000/- BEING 2% COMMISSION ON TH E INVESTMENT OF RS.2,30,00,000/- MADE BY THE ASSESSEE COMPANY IN M/S PIONEER DEALTRA DE P. LTD. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT ASSESSMENT OF M/S PIONEER DEALTRADE P. LTD. WAS COMPLETED U/S 143(3) VIDE ORDER DATED 20 TH DECEMBER, 2016 AND THE INVESTMENT MADE BY THE ASSESSEE COMPANY IN M/S PIONEER DEALTRA DE P. LTD. WAS NOT DOUBTED. THEREFORE, IT IS HIS SUBMISSION THAT NO DISALLOWANC E IS CALLED FOR. HOWEVER, IT IS AN ADMITTED FACT THAT THE DIRECTORS OF THE ASSESSEE CO MPANY HAVE NEVER APPEARED BEFORE THE ASSESSING OFFICER DESPITE SUMMONS ISSUED AND NE ITHER THE ASSESSEE COMPANY NOR ITS DIRECTORS WERE FOUND EXISTING AT THE ADDRESS PR OVIDED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. TO A POINTED QUE RY RAISED BY THE BENCH AS TO WHETHER THE ASSESSEE IS IN A POSITION TO PRODUCE TH E DIRECTORS BEFORE THE ASSESSING OFFICER FOR HIS EXAMINATION, THE LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT GIVEN AN OPPORTUNITY, HE WILL PRODUCE THE DIRECTORS BEFORE T HE ASSESSING OFFICER FOR HIS EXAMINATION. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE, I DEEM IT PROPER TO RESTORE THE ISSUE TO T HE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO GIVE AN OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE DIRECTORS AND ITA NO.5090/DEL/2018 4 SUBSTANTIATE ITS CASE. THE ASSESSING OFFICER IS DI RECTED TO DECIDE THE ISSUE AS PER FACT AND LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. I HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE AR E ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, THE APPEAL FILED BY THE ASS ESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 1 6.05.2019. SD/- (R.K. PANDA) ACCOUNTANT MEMBER DATED: 16 TH MAY, 2019 DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI