QMAX SYNTHETICS PVT LTD, MUMBAI V. INCOME TAX, CIR 4(3)(1), MUMBAI

ITA 555/MUM/2023

AI Insights

The case involves Qmax Synthetics Pvt Ltd, which appealed against the order of the Commissioner of Income-tax (Appeals) at the National Faceless Appeal Centre, which had dismissed their appeal ex parte. The primary contention was regarding the additions made under sections 68 and 69C of the Income Tax Act, 1961, concerning loans received and interest paid on those loans, respectively. The assessee argued that they had provided sufficient evidence to substantiate the loans, including confirmations and bank statements, which were allegedly not considered by the CIT(A). The Tribunal noted the lack of consideration of these documents and remitted the matter back to the CIT(A) for a detailed examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 108448 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: D
• Next Hearing Date: 09-05-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 23-02-2023
• Other Referred Cases: ITA No.4378/Mum/2017
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 147; 68; 69C; 143(1)

Judgement Text

1 ITA 555/Mum/2023 Qmax Synthetics Pvt Ltd IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “D”, MUMBAI BEFORE AMIT SHUKLA (JUDICIAL MEMBER) AND MS. PADMAVATHY S. (ACCOUNTANT MEMBER) I.T.A. No.555 /Mum/2023 (Assessment year : 2011-12) Qmax Synthetics Pvt Ltd K8, Shree Arihant Compound, Kahler Pipeline, Bhiwandi-421 303 PAN : AAACQ0206D vs Asst. Commissioner of Income-tax, Circle 4(3)(1), Mumbai Aayakar Bhavan, Maharishi Karve Road, Mumbai APPELLANT RESPONDENT Assessee represented by Shri Ashok Bansal Department represented by Smt. Mahita Nair (Sr.Ar.CIT) Date of hearing 10-05-2023 Date of pronouncement 16 -05-2023 O R D E R PER : MS PADMAVATHY S. (AM) This appeal is against the order of the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC) [hereinafter ‘Ld.CIT(A)’] dated 27/12/2022 for the assessment year 2011-12. The assessee raised the following grounds of appeal:- “GROUNDS OF APPEAL 1. The Id.CIT(A) erred in dismissing the appeal without adjudicating on the grounds of appeal. 2 ITA 555/Mum/2023 Qmax Synthetics Pvt Ltd 2. The Id.CIT(A) erred in dismissing the appeal during the pendency of the period covered by the adjournment request submitted online. 3. The Id.CIT(A) erred in confirming the addition made u/s 68 of the Act of Rs. 20,00,000 in respect of loans received by the appellant. 3.i. In doing so, the Id.CIT(A) did not appreciate that the initial onus which lay on the appellant to prove genuineness of loans was duly discharged 86 the onus shifted to AO to bring on record some material to dislodge the evidence placed on record by the appellant which he miserably failed to do so3.ii. Further in doing so, the Id.CIT(A) erred in ignoring the fact that the facts of the case were exactly similar to that of the appellant's own . case for AY 2008-09 in which, the Hon. Mumbai ITAT had ruled in appellant's favour. 4. The Id.CIT(A) erred in confirming the addition made u/s 69C of the Act of Rs. 7,565 in respect of interest paid on loans received by the appellant. Y our appellant, therefore, submits that the order under appeal be quashed and in alternative the addition so made be deleted.” 2. The assessee is a company engaged in the business of trading in textiles on wholesale basis. The assessee filed the return of income declaring total income of Rs.82,29,700/-. The return was processed under section 143(1) of the Act. Subsequently, the assessment was reopened under section 147 based on information received from Investigation Wing. The reasons recorded while reopening the assessment are that as per the information provided by the DIT(Inv), Mumbai, the assessee has obtained bogus / accommodation entries of loan amounting to Rs.20 lakhs from certain companies, which are hawala funding floated by one Shri Pravinkumar Jain. The Assessing Officer called on the assessee to give justification for the loan transactions in the books of accounts. The assessee submitted the following details with regard to the loans obtained:- Sr.No. Name of the concern Amount (Rs.) Interest (Rs.) 1 Casper Enterprises P. Ltd (Ostwal Trading (I) P. Ltd.) 10,00,000 4,932 3 ITA 555/Mum/2023 Qmax Synthetics Pvt Ltd 2 Kush Hindustan Ent. Limited 10,00,000 2,633 Total: 20,00,000 7,565 3. The assessee also submitted confirmation, copy of ITR and bank statements pertaining to the above parties. However, the Assessing Officer held the amounts to be unexplained credits and made additions under section 68. The Assessing Officer made the addition for the reason that the assessee failed to produce the parties for verification and that the creditworthiness of the persons and the genuineness of the transactions were not established. The Assessing Officer also made an addition under section 69C for a sum of Rs.7,565/- towards interest claimed to have been paid by the assessee on the loan. Aggrieved, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal exparte by holding that “9. Held:-During the course of appeal proceedings, no reply has been filed by the appellant.! have perused the order of the Assessing Officer and considered the facts of the case. The appellant has not pursued the appeal despite being granted several opportunities as elaborated above. No details, documents or submission have been provided by the appellant substantiating its grounds of appeal. The mere facts mentioned in Form No. 35 cannot be considered in the absence of any supporting documentary evidence and submissions. The AO has passed a very reasoned and speaking order considering all the facts and the circumstances of the case and no interference with the order of the AO is called for. All the grounds of appeal are therefore dismissed.” 4. Before us, the Ld.AR submitted that the assessee had filed an adjournment letter on 12/12/2022 seeking time to appear before the CIT(A) till 27 th December, 2022 which the CIT(A) did not give and proceeded to dismiss the appeal exparte. 4 ITA 555/Mum/2023 Qmax Synthetics Pvt Ltd 5. On merits, the Ld.AR submitted that the assessee has filed all the relevant details including the confirmation, bank statements, I.T. return acknowledgement, etc. of both the parties and are available on record, which have not been considered. The Ld.AR further submitted that the co-ordinate bench of the Tribunal in assessee’s own case for A.Y. 2008-09 in ITA No.4378/Mum/2017 dated 27/04/2022 had considered similar issue of loans taken from the same parties and held the appeal in favour of the assessee. Accordingly, the Ld.AR prayed that the issue may be considered on merit and the addition be deleted. 6. The Ld.DR, on the other hand, vehemently supported the order of the lower authorities. The Ld.DR also submitted that the assessee did not appear in spite of issue of several notices by the CIT(A) and, therefore, the CIT(A) has rightly dismissed the appeal exparte. 7. We heard the parties and perused the materials on record. We notice that in para 4 of CIT(A)’s order, it is mentioned that the CIT(A) has issued notices on 12/07/2018, 21/09/2018, 22/01/2021, 11/01/2022 and 09/12/2022. It is further noticed that the assessee has not filed any reply to these notices for more than 4 years. We are, therefore, unable to agree with the Ld.ARs submission that the CIT(A) has not considered the adjournment letter filed to the last of the notices issued. On merits, we notice that the assessee has submitted various details as have been listed in the earlier part of this order, which have not been considered by the CIT(A). Therefore, in the interest of substantial justice, we remit the issue back to the CIT(A) to consider the documents submitted by the assessee in connection with the loans taken from the parties and decide the issue in accordance with law after giving a reasonable opportunity of being heard. 5 ITA 555/Mum/2023 Qmax Synthetics Pvt Ltd 8. Regarding the fact that the assessee has not responded to the notices of the appellate authority which has cost time and efforts to exchequer we order cost of Rs.5,000/- which shall be remitted to the Prime Minister’s Relief Fund and the assessee is directed to submit the copy of receipt before the CIT(A) during the remanded appellate proceedings. It is ordered accordingly. Order pronounced in the open court on 16/05/2023. Sd/- sd/- (AMIT SHUKLA) (PADMAVATHY S) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dt : 16 th April, 2023 Pavanan प्रतितिति अग्रेतििCopy of the Order forwarded to : 1. अिीिार्थी/The Appellant , 2. प्रतिवादी/ The Respondent. 3. आयकर आयुक्त CIT 4. तवभागीय प्रतितिति, आय.अिी.अति., मुबंई/DR, ITAT, Mumbai 6. गार्ड फाइि/Guard file. BY ORDER, //True Copy// Asstt. Registrar / Senior Private Secretary ITAT, Mumbai 6 ITA 555/Mum/2023 Qmax Synthetics Pvt Ltd