Bhumika Enterprises Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 5621/DEL/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69674 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-12-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 06-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: RAKESH JAIN; SAHEVE DEORA
• Keywords: Opportunity of being heard; Additional evidence; Reasonable cause; Assessment record
• Section: 12

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A: NEW DELHI BEFORE SHRI S. V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 5621/DEL/2012 ASSESSMENT YEAR: 2008 - 09 BHUMIKA ENTERPRISES PVT. LTD., S - 9, OKHLA INDUSTRIAL AREA, PHASE - II, 1 ST FLOOR, NEW DELHI PAN AAACE2853Q VS. DCIT CIRCLE - 2(1) NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SAHEVE DEORA, CA & RAKESH JAIN, CA RESPONDENT BY: MS Y. KAKKAR, DR O R D E R PER A. T. VARKEY , JUDICIAL MEMBER THE APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A), V , NEW DELHI DATED 24.08.2012 FOR THE ASSESSMENT YEAR 2008 - 09 . 2. THE ASSESSEE HAS ASSAILED THE DECISION OF THE LD CIT(A) ON THE FOLLOWING GROUNDS: 1.1 THAT WITHIN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LAW ON THE POINT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - V, NEW DELHI (LEARNED CLT (A)) HAS ERRED IN DISMISSING THE APPEAL OF THE APPELLANT WITHOUT PROVIDING ADEQUATE OPPO RTUNITY OF BEING HEARD IN THE MATTER AND THEREFORE THE IMPUGNED ORDER IS BAD IN LAW AND DESERVES TO BE SET ASIDE. 1.2 THAT WITHIN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LAW ON THE POINT THE LEARNED CIT (A) HAS ERRED IN REFUSING THE APPLICATION OF THE APPELLANT FOR ADJOURNMENT, COMPLETELY OVERLOOKING THE REASON THAT THE ARGUING COUNSEL WAS PREOCCUPIED AND AT THE S AME TIME PAGE NO. 2 ITA NO. 5621/DEL/2012 OVERLOOKING THE FACT THAT THE APPELLANT'S AUTHORISED REPRESENTATIVE HAD ALREADY FILED DETAILED SUBMISSIONS DURING THE COURSE OF APPEAL PROCEEDINGS, AND THEREAFTER, THE LEARNED CIT (A) NEITHER CALLED FOR FURTHER DETAILS OF THE CASE FROM THE APPELLA NT NOR CALLED FOR THE ASSESSMENT RECORDS FROM THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX (LEARNED DCIT), AND ACCORDINGLY. DID MAKE NO ATTEMPT TO UNDERSTAND THAT THE GOOD AND SUFFICIENT NEXUS EXISTED BETWEEN THE BORROWINGS AND UTILIZATION THEREOF FOR ACQ UISITION OF SHARES, AND THEREFORE, CONSEQUENTIALLY INTEREST PAID ON SUCH BORROWINGS WAS DEDUCTIBLE AGAINST PROFIT EARNED ON SALE OF SUBJECT SHARES, AND THEREFORE, THE IMPUGNED ORDER IS ERRONEOUS AND IS BAD IN LAW AND DESERVES TO BE SET ASIDE. 1.3 THAT W ITHIN THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW ON THE POINT THE LEARNED CIT (A) HAS ERRED IN DISALLOWING DEDUCTION OF EXPENDITURE OF INTEREST OR RS. 42.84.932.00 FOR THE REASON THAT THERE IS NO NEXUS BETWEEN THE BORROWINGS OF THE APPELLANT AS UTILIZ ED FOR ACQUISITION OF SHARES AS THE LOAN AGREEMENT EXECUTED BETWEEN THE APPELLANT AND THE LENDER (KANIKA INVESTMENT LIMITED) , WHILE THE SAID LOAN AGREEMENT CLEARLY INDICATES THAT BORROWED FUNDS WERE UTILIZED FOR ACQUISITION OF SHARES , AND THAT THE SAID LO A N AGREEMENT HAS BEEN IGNORED BY THE LEARNED CIT(A) WITHOUT ASSIGNING AN) REASON THEREFORE, AND THEREFORE , THE IMPUGNED ORDER IS ERRONEOUS AND IS BAD IN LA W AND DESERVES TO BE SET ASIDE. 2 T HAT WITHIN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LAW O N THE POINT THE LEARNED CIT (A) HAS ERRED IN DISALLOWING INTEREST OF RS. 42.84.932.00 NOTWITHSTANDING THE FACT THAT THE APPELLANT HAD FILED ALL BANK STATEMENTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEREIN THE BORROWED FUNDS WERE CREDITED AND FURTHER PAYMENT WERE ALSO MADE FOR PURCHASE OF OTHER ASSETS. I.E., LAND AND BUILDING AND PLANT AND MACHINERY , WHICH CLEARLY EXPLAINED THE NEXUS BETWEEN ALL BORROWED FUNDS AND THEIR UTILIZATION , AND THEREFORE , THE IMPUGNED ORDER IS ERRONEOUS AND IS BAD IN LAW AND DESERVES TO BE SET ASIDE. 3 . THAT WITHIN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LAW ON THE POINT THE RELIANCE PLACED BY THE LEARNED CIT (A) ON HIS FINDING AS CONTAINED IN THE IMPUGNED ORDE R THAT AGREEMENT DATED 19.10.20()7 EXECUTED BETWEEN THE APPELLANT AND SELLER OF SHARES (SASF) WHEREBY THE AMOUNT OF RS. 1 CRORE WAS PAID ON 10.09.2007 BEFORE THE DATE OF THE AGREEMENT AND THAT THIS ADVANCE AMOUNT HAS NOT BEEN MENTIONED IN THE SAID AGREEMEN T. IS NOT APPROPRIATE AS THE APPELLANT WAS NOT PROVIDED WITH AN OPPORTUNITY ON THIS ACCOUNT FOR WHICH THE APPELLANT COULD HAVE ARRANGED THE NECESSARY EVIDENCE. 4. T HAT WITHIN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LAW 011 THE POINT THE APPELLANT WISHES TO PLACE AND RELY ON ADDITIONAL DOCUMENTS TO ARGUE ITS CASE WHICH IS MORE SPECIFICALLY DIRECTED TO PAGE NO. 3 ITA NO. 5621/DEL/2012 MEET THE FINDING OF THE LEARNED ('IT (A) IN PARA 3 ABOVE. AND THE APPELLANT WILL BE FILING A SEPARATE APPLICATION FOR THIS PURPOSE. 5. THAT THE GROUNDS OF APPEAL SUBMITTED HEREINABOVE BE READ WITHOUT PREJUDICE TO ONE ANOTHER IN CASES AND CIRCUMSTANCES WHEREVER THE CONTEXT SO REQUIRES . 6. THAT THE APPELLANT COMPANY RESERVES ITS RIGHT TO ADVANCE SUCH OTHER GROUNDS BEFORE OR AT THE HEARING, WHICH IT MAY CONSIDER FIT AND APPROPRIATE FOR WHICH IT CRAVES LEAVE TO AMEND, ALTER OR OTHERWISE MODIFY THE GROUNDS) APPEARING HEREINBEFORE. 2 . THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD CIT(A) HAS MADE A FINDING THAT THERE IS NO EVIDENCE TO LINK THE PAYMENT OF RS. 5 CRORE FOR PURCHASE OF SHARES OR OTHER ASSETS AND THAT THE ASSESSEE HAS ALSO PURCHASE D OTHER ASSETS FROM SASF. IT IS ALSO PLEA DED THAT ADEQUATE OPPORTUNITY OF BEING HEARD IN THE MATTER WAS NOT GRANTED TO THEM. THE ASSESSEE IS AGGRIEVED BY T HE ORDER OF LD CIT(A) FOR NOT SUMMONING DETAILS OF THE CASE EITHER FROM THEM NOR FROM THE LD DCIT, AND THEREFORE ACCORDING TO LD AR THE LD CIT(A) DID NOT MAKE ANY ATTEMPT TO KNOW OR UNDERSTAND THAT GOOD AND SUFFICIENT NEXUS EXISTED BETWEEN THE BORROWINGS A ND UTILIZATION THEREOF , FOR ACQUISITION OF SHARES, AND THEREFORE, CONSEQUENTIALLY INTEREST PAID ON SUCH BORROWINGS WAS DEDUCTIBLE AGAINST PROFIT EARNED ON SALE OF SUBJECT SHARES . 3. ACCORDING TO THE LD AR THE LD CIT(A) HAS DISALLOWED DEDUCTION OF EXPENDITURE OF INTEREST OF RS. 42,84,932/ - PAID BY THE ASSESSEE ON BORROWING UTILIZED FOR PURCHASE OF SHARES, AGAINST WHICH PROFIT EARNED BY THE ASSESSEE ON SALE OF SHARES, BY STATING THAT ASSESSEE HAD NOT FILED TH E CONFIRMATION FROM THE STRESSED ASSETS STABILIZATION FUND (SASF) (TO WHOM THE PAYMENT HAD BEEN MADE BY IT) FOR ASSIGNMENT OF A CORPORATE LOAN OF RS. 5 CRORE BY SASF IN FAVOUR OF THE ASSESSEE. THE ASSESSEE CLAIMED THAT SINCE THERE WAS NO DIRECTION AT ANY S TAGE OF ASSESSMENT PROCEEDINGS NOR DURING APPELLATE PROCEEDINGS , TO PRODUCE SUCH EVIDENCE, THE ASSESSEE WAS PREVENTED BY A REASONABLE CAUSE FROM PRODUCING THE SAID DOCUMENT. NOW ACCORDING TO THE ASSESSEE THEY HAVE ON THERE OWN APPROACHED AND OBTAINED COPY OF CONFIRMATION OF PAYMENT MADE FROM SASF. THE COPY OF THE SAID CERTIFICATE DATED 27 TH OCTOBER 2012 WHICH WAS ISSUED BY THE SASF CONFIRMING THE FACT THAT PAYMENT OF RS. 5 CRORES WAS FOR ASSIGNING THE CORPORATE LOAN BY SASF TO THE ASSESSEE, WAS ALSO ATTACHE D ALONG WITH PAGE NO. 4 ITA NO. 5621/DEL/2012 APPLICATION MOVED FOR FILING ADDITIONAL EVIDENCE UNDER RULE 29 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES 1963. 4 . ACCORDING TO THE LD AR THE LD CIT(A) ERRED IN RECORDING A FINDING THAT THE AN AMOUNT OF RS. 1 CRORE WAS FOUND TO HAVE BEEN P AID ON 10.09.2007, WHEREAS, THE AGREEMENT BETWEEN THE ASSESSEE AND SELLER OF SHARES (SASF) WAS EXECUTED ON 19.10.2007 I.E. RS. 1 CRORES WAS PAID BEFORE THE DATE OF THE EXECUTION OF THE AGREEMENT AND THAT SINCE THIS ADVANCE AMOUNT HAS NOT BEEN MENTIONED IN THE SAID AGREEMENT IS NOT CORRECT SINCE THE ASSESSEE WAS NOT PROVIDED WITH AN OPPORTUNITY TO EXPLAIN ABOUT THIS OR ELSE THE ASSESSEE COULD HAVE PRODUCED EVIDENCE TO SUBSTANTIATE THE IR CLAIM. 5 . THE LD AR SUB MITTED THAT THE SUMMARIZED DETAILS SETTING OUT NEXUS BETWEEN BORROWINGS OF THE ASSESSEE AND UTILIZATION OF THE FUNDS BY THE ASSESSEE FOR ACQUIRING THE DEBT FROM SASF, COULD NOT BE PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER OR BEFORE THE LD CIT(A ) DURING THE APPELLATE PROCEEDINGS BECAUSE , THE AUTHORITIES BELOW DID NOT SEEK THE COPY OF SUCH DOCUMENTS FROM THE ASSESSEE AND ALSO THERE WAS NO OCCASION FOR THE ASSESSEE TO PROVIDE SUCH INFORMATION TO ANY OF THE AFORESAID AUTHORITIES. 6 . FROM THE AFORESAID SUBMISSION OF THE LD AR, WE UNDERSTAND THAT THE MAIN GRIEVANCE OF ASSESSEE IS THAT THE COMPANY DID NOT GET A FAIR AND REASONABLE OPPORTUNITY BEFORE THE ASSESSING OFFICER AND THE LD CIT(A) TO EXPLAIN AND PRODUCE DOCUMENTS TO SUPPORT THEIR CASE AND IT IS THEIR CLAIM THAT GIVEN A CHANCE THEY COULD HAVE GIVEN PLAUSIBLE EXPLANATION S TO CLARIFY ANY DOUBT WHICH THE AUTHORITIES HAD IN THEIR MIND. THEREFORE, THEIR PRAYER IS THAT THEY SHOULD BE GRANTED AN OPPORTUNITY TO THEM TO CLARIFY THE DOUBTS I N THE MINDS OF THE AUTHORITIES BELOW. 7 . LD SR. DR DOES NOT HAVE ANY OBJECTION TO SEND THE MATTER BACK TO THE FILE OF ASSESSING OFFICER FOR FURTHER INVESTIGATION AND RE - ADJUDICATION. 8 . IN THE LIGHT OF THE ABOVE WE FEEL THAT FOR THE ENDS OF THE JUSTICE T HE ASSESSEE SHOULD BE GIVEN A CHAN C E TO PRODUCE ALL DOCUMENTS WHICH THEY RELY UPON AFRESH PAGE NO. 5 ITA NO. 5621/DEL/2012 BEFORE THE LD ASSESSING OFFICER AND CLEAR THE DOUBTS IF ANY IN THE MIND OF THE LD ASSESSING OFFICER. 9 . IN THE SAID CIRCUMSTANCE, WE SET ASIDE THE ORDER OF THE LD ASSESSING OFFICER AND DIRECT THE ASSESSING OFFICER TO RE - ADJUDICATE AND PASS A FRESH ASSESSMENT ORDER AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. NEEDLESS TO SAY THE DOCUMENTS P RODUCE D BEFORE US AND ANY OTHER DOCUMENTS WHICH THE ASSESSEE RELIES UPON OR IF DIRECTED BY THE LD ASSESSING OFFICER, AS THE CASE MAY BE THE SAME ALSO MAY BE TAKEN INTO CONSIDERATION BY THE ASSESSING OFFICER BEFORE PASSING THE FRESH ASSESSMENT ORDER . 1 0 . I N VIEW OF THE ABOVE THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 2 0 . 12 .2013. - S D / - - S D / - ( S. V. MEHROTRA ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 2 0 / 12 /2013 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI