SHRI ALIULLAH AINULLAH SHAIKH, MUMBAI V. INCOME TAX OFFICER, WARD(26)(1)(1), MUMBAI

ITA 5354/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8304 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 16-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BRAJENDRA KUMAR
• Assessee Lawyers: ARATI AGARWAL
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence; Set aside
• Section: 68; 143(3); 142(1); 133(6); 143(2); 13; 20

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI AMARJIT SINGH (JM) I.T.A. NO. 5354/MUM/2019 (ASSESSMENT YEAR 2015-16 ) ALIULLAH ANIULLAH SHAIKH SHOP NO. 3, U.P. COMPOUND, LBS MARG KURLA WEST MUMBAI-400 070 PAN : AECPG7858Q VS . ITO WARD 26(1)(1) KAUTILYA BHAVAN BANDRA KURLA COMPLEX, BANDRA MUMBAI-400 051. (APPELLANT) (RESPONDENT) ASSESSEE BY MS. ARATI AGARWAL DEPARTMENT BY SHRI BRAJENDRA KUMAR DATE OF HEARING 04 . 08 . 20 2 1 DATE OF PRONOUNCEMENT 09.08.2021 O R D E R PER SHAMIM YAHYA (AM) :- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [IN SHORT LEAR NED CIT(A)] DATED 30.1.2018 FOR A.Y. 2015-16. 2. THE GROUNDS OF APPEAL READ AS UNDER : 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 52,23,936/- TO THE INCOME OF THE APPELLANT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF A ND IN LAW, THE LD. CIT(A) ERRED IN REJECTING THE ADDITIONAL EVIDENCES D ESPITE THE FACT THAT THE REASON FOR NOT FILING THE EVIDENCES BEFORE THE ASSES SING OFFICER WERE DULY EXPLAINED IN THE WRITTEN SUBMISSION FILED BEF ORE HIM. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE ADDITIONAL EVIDENCES SUBMITTED BEFO RE HIM WERE GERMANE TO THE ADDITIONS MADE BY THE LD. AO, AND O UGHT TO BE ADMITTED BY THE LD. CIT(A) ON ACCOUNT OF PRINCIPLES OF NATURA L JUSTICE ITSELF. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE OUTSTANDING BAL ANCES OF THE SUNDRY CREDITORS, WERE ACTUALLY AMOUNTS IN THE NATURE OF SECURITY ALIULLAH ANIULLAH SHAIKH 2 DEPOSITS, ADVANCES, ETC. WHICH WERE RECEIVABLE FROM THE CREDITORS, AND AS SUCH, NO ADDITION CAN BE MADE U/S. 68 OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT IN THIS CASE TH E ASSESSING OFFICER MADE ADDITION UNDER SECTION 68 OF THE I.T. ACT FOR THE F OLLOWING BALANCES : SUNDRY CREDITORS SHOWN BY ASSESSEE AS OUTSTANDING (I) ONGC LTD. SECURITY DEPOSIT 666,036/- (II) ROYAL STAR TRADING CO. 400,000/- (III) SYMCOM COMMUNICATION 41,57,900/- 52,23,936/- 4. BEFORE LEARNED CIT(A) ASSESSEE SOUGHT TO FILE AD DITIONAL EVIDENCE AND CLAIMED THAT THESE ARE ACTUALLY DEBIT BALANCES AND CANNOT BE ADDED UNDER SECTION 68 OF THE ACT. BUT LEARNED CIT(A) REFUSED T O ADMIT ADDITIONAL EVIDENCES AND CONFIRMED THE ASSESSING OFFICER ACTION. 5. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEF ORE US. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. WE MAY GA INFULLY REFER TO LEARNED CIT(A)S ORDER AS UNDER :- 7.1 THE PERUSAL OF THE GROUNDS OF APPEAL ENUMERATED IN THE FOREGOING PARAGRAPH 3 OF THIS ORDER, DEMONSTRATE THAT THE APPEL LANT HAS GRIEVANCE ON DELAYED ASSESSMENT PROCEEDINGS STATING THAT IT WAS IN ITIATED ON 29.07.2016 BUT TAKEN UP FOR HEARING ON 26.10.2017 AND THAT SUFFIC IENT TIME WAS NOT GRANTED FOR COMPLIANCE. THE REASONS FOR ADDITIONS A RE BASELESS. ADDITION MADE BASED ON FACTS REFLECTED BY ASSESSEE. THE APPE LLANT PRAYS TO KINDLY SET ASIDE THE ASSESSMENT AND REMAND BACK THE CASE WITH D IRECTION TO THE ASSESSING OFFICER TO VERIFY THE FACTS AND MAKE FRESH ASSESSMENT. AS THESE GROUNDS OF APPEAL ARE INTER-LACED WITH EACH OTHER, TH EY ARE TAKEN TOGETHER FOR ADJUDICATION AS FOLLOWS: 7.1.1 IT IS SEEN FROM THE FACTS AVAILABLE ON RECORD TH AT THE ASSESSEE IS A PROPRIETOR OF M/S. NATIONAL STEEL AND ENGAGED IN THE B USINESS OF METAL SCRAP AND FILED THE INSTANT APPEAL AGAINST ASSESSMENT ORDER U/ S. 143(3) OF THE IT ACT DATED 28.12.2017 WHEREIN THE AO HAS DISALLOWED O F RS. 52,23,936/- ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS UNDER THE PRO VISIONS OF SECTION 68 OF THE IT ACT. THE APPELLANT FILED THE APPEAL ON 16.0 1.2018 AND NOTICE FOR HEARING WAS ISSUED THROUGH ITBA PORTAL AND POSTAL AUTH ORITIES ON 02.01.2019. THE APPELLANT HAS NOT ATTENDED THE HEARING BUT FILED ITS SUBMISSION DATED 14.01.2019 AND LEDGER CONFIRMATION FROM TWO PARTIES NAMELY (1) M/S. SYNCCOM COMMUNICATIONS AND (2) M/S. ROYAL STAR TRADING COMPANY. THE APPELLANT HAS SUBMITTED COPY OF 'RELEAS E ORDER' DATED 28.08.2014 OF ONGC. HENCE, IN THE INTEREST OF NATURAL JUSTICE, THE APPELLANT WAS PROVIDED ANOTHER OPPORTUNITY OF HEARING BY ISSUIN G NOTICE DATED ALIULLAH ANIULLAH SHAIKH 3 16.01.2019 VIDE SPEED POST AND THE SAME WAS DULY SERV ED ON THE APPELLANT AND HEARING WAS FIXED ON 24.01.2019. HOWEVER, THE AP PELLANT DID NOT COMPLY WITH THE STATUTORY NOTICE AND NO DOCUMENTARY EVIDENCE WA S FURNISHED. THEREFORE, IT IS CONSTRUED THAT THE APPELLANT DOES NOT W ANT TO AVAIL THE OPPORTUNITY OF BEING HEARD AND PRODUCE REQUISITE EV IDENCES IN SUPPORT OF THE APPEAL FILED. THUS, THE APPEAL IS DECIDED ON THE MA TERIAL AVAILABLE ON RECORD. 7.1.2 THE FACTS OF THE CASE ARE THAT DURING THE YEAR TH E APPELLANT HAD SHOWN SIX SUNDRY CREDITORS. THE AO HAD ISSUED NOTICE U/S 13 3(6) OF THE IT ACT TO THEM. THE FOLLOWING CREDITORS HAD NOT COMPLIED WITH THE STATUTORY NOTICES ISSUED. 1. M/S. SYMCOM COMMUNICATION RS.41,57,900/- 2. M/S. ROYAL STAR TRADING CO. RS. 4,00,000/- 3. M/S. ONGC SD RS. 6.66.036/- TOTAL AMOUNT RS.52,23,936/- 7.1.3 THE SAME WAS CONFRONTED TO THE ASSESSEE AND ASKE D TO SUBMIT SUBSTANTIAL DOCUMENTS IN SUPPORT OF ITS CLAIM. THE A SSESSEE DID NOT PRODUCE ANY DOCUMENTS IN SUPPORT OF ITS CLAIM. AFTER CONSIDER ING THE SUBMISSION, THE AO DISALLOWED OF RS.52,23,936/- AS UNEXPLAINED CRED IT UNDER THE PROVISIONS OF SECTION 68 OF THE I.T ACT. 7.1.4 IN THE APPELLATE PROCEEDINGS VIDE AFORESAID WR ITTEN SUBMISSIONS, IT HAS OBJECTED TO THE DISALLOWANCE MADE BY THE AO AND REQU ESTED THAT THE SAID DISALLOWANCE SHOULD BE DELETED, THE MAIN CONTENTION OF THE APPELLANT IS THAT THE APPELLANT WAS NOT GIVEN SUFFICIENT OPPORTUNITY DURIN G THE ASSESSMENT PROCEEDINGS AND THERE WAS DEBIT BALANCE INSTEAD OF CR EDIT BALANCE IN CASE OF M/S. ROYAL STAR TRADING CO. AND M/S.SYMCOM COMMUNICA TION. THESE DEBIT BALANCES WERE IN RESPECT OF FINANCIAL TRANSACTIONS OVE R AND ABOVE PURCHASES AND PAYMENTS OF PURCHASES AND FILED ONLY CONFIRMATION LETTERS OF BOTH PARTIES WHICH ARE DATED 01.04.2015 AND 'RELEASE ORDER'. HOW EVER, NO OTHER DOCUMENTS ARE SUBMITTED BY THE APPELLANT SUCH AS INVO ICES, BANK STATEMENT ETC IN SUPPORT OF ITS CLAIM. 7.1.5 ON CAREFUL PERUSAL OF THE SUBMISSIONS OF THE AP PELLANT WITH REFERENCE TO THE ASSESSMENT ORDER, I FIND THAT THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND ACCORDINGLY NOTICES U/S. 143(2) WAS ISSUED ON 29.07.2016 AND DULY SERVED ON THE ASSESSEE. SUBSEQUENTLY, THE FILE WAS RECEIVED ON 13.10.2017 BY THE PRESENT AO, ON TRANSFER VIDE TRANSFE R MEMO DATED 05.10.2017. THE AO ISSUED NOTICE U/S. 142(1) ON 26.1 0.2017 ALONG WITH QUESTIONNAIRE AND DULY SERVED ON THE ASSESSEE. HOWE VER, NEITHER THE ASSESSEE NOR HIS AJR ATTENDED AND NO DETAILS OR WRITTE N EXPLANATION WAS SUBMITTED ON APPOINTED DATE. THE SUNDRY CREDITORS HAVE NOT RESPONDED TO NOTICE U/S. 133(6) ISSUED AND SERVED ON THEM DURING A SSESSMENT PROCEEDINGS. THE AO BROUGHT THESE FACTS TO THE NOTICE O F THE AR. GOING BY THE ABOVE FACTS I FIND THAT OPPORTUNITY WAS ACCORDED TO THE APPELLANT TO SUBMIT THE DOCUMENTARY EVIDENCES AND OFFER EXPLANATION REGARD ING THE NATURE OF TRANSACTIONS UNDERTAKEN BY THE APPELLANT WITH THE AFORE SAID PARTIES ON ACCOUNT OF WHICH SUCH BALANCES HAS ARISEN VIDE QUEST IONNAIRES ISSUED ALONG ALIULLAH ANIULLAH SHAIKH 4 WITH NOTICE U/S. 142(L) DATED 26.10.2017. THE APPELL ANT DID NOT FURNISH THE DETAILS CALLED FOR AND THAT IS WHY THE AO WAS COMPELL ED TO RESORT TO PROVISIONS OF SECTION 133(6). IT WAS ONLY AFTER NO R EPLY WAS RECEIVED FROM THE SUNDRY CREDITORS THAT AO ISSUED NOTICE U/S. 142(1) DA TED 20.12.2017. THE APPELLANT WAS ASKED TO EITHER FURNISH LEDGER CONFIRMA TION OF ABOVE THREE PARTIES WITH ALL INVOICES RAISED BY THEM OR TO SHOW C AUSE AS TO WHY CORRESPONDING SUNDRY CREDITORS BALANCES AMOUNTING TO R S.52,23,936/- SHOULD NOT BE ADDED TO TOTAL INCOME OF THE APPELLANT AS PER PROVISIONS OF INCOME TAX ACT, 1961. HENCE, I DO NOT FIND MERIT IN T HE SUBMISSION OF THE APPELLANT THAT SUFFICIENT TIME WAS NOT GRANTED TO THE APP ELLANT TO FURNISH DOCUMENTARY EVIDENCE AND TO SUBMIT THE REQUISITE EXPLA NATION. THEREFORE, THIS CONTENTION OF THE APPELLANT IS UNTENABLE AND IS R EJECTED. 7.1.6 COMING TO MERIT OF THE CASE, ON GOING THROUGH PAR AGRAPH NO.4.3 OF THE ASSESSMENT ORDER, I FIND THAT THE ASSESSING OFFICER HAS SPECIFICALLY POINTED OUT THAT THE APPELLANT HAS FAILED TO PROVE THE GENUINENES S OF THE OUTSTANDING BALANCES WITH DOCUMENTARY EVIDENCES. IT IS STATED, THERE IN THAT THE ASSESSEE HAS NOT FURNISHED ANY LEDGER COPY OF THE CONCERNED P ARTIES,' CONFIRMATION OF THE CONCERNED PARTIES, INVOICES RAISED BY THEM AND DE TAILS OF MATERIAL/SERVICES SUPPLIED BY THE ABOVE PARTIES. ASSE SSEE HAS ALSO NOT PROVIDED ANY DETAIL SHOWING ANY SUBSEQUENT PAYMENT MAD E TOWARDS THESE OUTSTANDING BALANCES. THUS, LEDGER CONFIRMATION FROM T WO PARTIES NAMELY (I) M/S. SYNCCOM COMMUNICATIONS, (II) M/S. ROYAL STAR TRA DING COMPANY AND (III) COPY OF 'RELEASE ORDER' DATED 28.08.2014 IN THE NAME OF ONGC, SUPRA ARE SUBMITTED IN THE COURSE OF APPELLATE PROCEEDINGS ARE ADDITIONAL EVIDENCES NOT PRODUCED BEFORE THE AO DURING THE ASSESSMENT PROCEEDI NGS. BEFORE ME, IN THE APPELLATE PROCEEDINGS, APPELLANT HAS NOT PRAYED F OR ADMISSION OF THE SAID ADDITIONAL EVIDENCES UNDER RULE 46A. THEREFORE, I AM UNABLE TO ADMIT AND ACCEPT THE ADDITIONAL EVIDENCES AND ADJUDICATE THE GR OUNDS OF APPEAL BASED ON THE ADDITIONAL EVIDENCES. IN THE GIVEN FACTS AND CIR CUMSTANCES, THE AFORESAID ADDITIONAL EVIDENCES ARE NOT ADMITTED AND R EJECTED. IT IS PERTINENT TO POINT OUT HERE THAT THE AFORESAID 'RELEASE ORDER' OF ONGC IS DATED 28.08.2014 AND THE CONFIRMATION OF ACCOUNTS BY M/S, RO YAL STAR TRADING COMPANY AND M/S. SYNNCOM COMMUNICATION ARC BOTH DAT ED 01.04.2015, WHICH MEANS THE APPELLANT WAS IN THE POSSESSION OF TH ESE DOCUMENTS EVEN DURING THE TIME OF ASSESSMENT PROCEEDINGS WERE IN PRO GRESS. YET, THE APPELLANT DID NOT SUBMIT THEM TO THE AO DURING THE ASSE SSMENT PROCEEDINGS STARTED ON 29.07.2016 AND CONCLUDED ON 28.12.2017. A PERIOD OF SEVEN DAYS IS SUFFICIENT FOR THE APPELLANT TO SUBMIT THE AFORESAID D OCUMENTS SINCE THE APPELLANT WAS ALREADY IN POSSESSION OF THE AFORESAID LEDGER CONFIRMATIONS. THERE IS, THEREFORE, NO JUSTIFICATION FOR ADMITTING THE A FORESAID ADDITIONAL EVIDENCES AT THIS STAGE. WITHOUT PREJUDICE TO THE ABOVE, THE ABOVE DOCUMENTS ALONE ARE NOT ADEQUATE TO ESTABLISH THE VERACITY OF TH E CLAIM OF THE APPELLANT THAT THE BALANCES ARE GENUINELY OUTSTANDING AS ON 31.03 .2015. ONLY CONFIRMATION LETTER IS NOT ENOUGH TO SUBSTANTIATE THE AP PELLANTS CLAIM. THE APPELLANT HAS NOT DISCHARGES THE ONUS CAST ON THE APPELL ANT TO PROVE HIS CLAIM WITH SUPPORTING DOCUMENTS. ALIULLAH ANIULLAH SHAIKH 5 6. FROM THE ABOVE WE NOTE THAT DESPITE NOTING THE A SSESSEES SUBMISSION THAT THESE ARE ACTUALLY DEBIT BALANCES LEARNED CIT( A) HAS NOT EXAMINED THE ISSUE AND HAS ALSO NOT CONSIDERED THE ADDITIONAL EV IDENCE. IN OUR CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ISSUE NEEDS TO BE REMITTED TO THE ASSESSING OFFICER. THE ASSESSING OF FICER SHALL CONSIDER THE ISSUE DENOVO. IF IN FACT THESE ARE DEBIT BALANCES T HERE IS NO LAW FOR THEIR BEING ADDED UNDER SECTION 68 OF THE ACT. HENCE, THIS ISSU E IS REMITTED TO THE ASSESSING OFFICER. NEEDLESS TO ADD THE ASSESSEE SHO ULD BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 9.8.2021. SD/- SD/- (AMARJIT SINGH) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTAN T MEMBER MUMBAI; DATED : 09/08/2021 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI