Madhya Pradesh Jaypee Minerals Ltd., New Delhi V. ITO, Ward- 16(1), New Delhi

ITA 6284/DEL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5767 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 10-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: V K GARG
• Keywords: Opportunity of being heard; Additional evidence; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER ITA NO.-6284/DEL/2017 ( ASSESSMENT YEAR: 2013-14) M/S MADHYA PRADESH JAYPEE MINERALS LTD. 63, BASANT LOK, JA HOUSE, VASANT VIHAR, NEW DELHI. AAECM6805G VS ITO WARD 16(1) NEW DELHI. ASSESSEE BY SH. V.K. GARG, ADV. REVENUE BY MS. ASHIMA NEB, SR. DR ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASSA ILING THE CORRECTNESS OF THE ORDER DT. 22.8.2017 OF CIT(A)-37, NEW D ELHI PERTAINING TO 2013-14 AY ON VARIOUS GROUNDS ON MERITS. HOWEVER, THE PARTIES WERE HEARD ONLY QUA THE ISSUES RAISED IN GROUND NO. 3 WHICH READS AS UNDER: 3. THAT ON FACTS AND IN LAW, LD. CIT(A) HAS ERRED IN NOT ADMITTING THE ADDITIONAL GROUND OF APPEAL AND ADDITIONAL EVIDENCE. AS SUCH AND OTHERWISE TOO THE LD. CIT(A) AND THE LD. AO HAVE ERRED ON FACTS AND IN LA W IN ASSESSING INTEREST INCOME ON FDRS OF RS. 9,04,348/- AT ITS GROSS AMOUNT WITHO UT NETTING OFF THE SAME AGAINST SUBSTANTIALLY HIGHER INTEREST PAID WHICH HAS DIRECT NEXUS WITH THE SAID INTEREST EARNED DURING PRE-OPERATIVE PERIOD RELATED TO THE S OLE PROJECT BEING IMPLEMENTED. 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY AS PER THE ASSESSMENT ORDER WAS INCORPORATED FOR THE DEV ELOPMENT AND MINING OF COAL FROM AMIELIA COAL BLOCK IN DISTT. SRINGHOLI (MP). THE SOLE ISSUE FOR CONSIDERATION IN THE PRESENT APPEAL IS THE T AXABILITY OF THE RECEIPT OF INTEREST INCOME FROM FDRS. THE ASSESSEE BEFOR E THE AO PLACED RELIANCE UPON THE DECISIONS THE APEX COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LTD. VS. CIT (1997) 2 27 ITR 172 (S.C) AND CIT VS. BOKARO STEEL LTD. (1999) (S.C) AND ALSO T HE DECISION OF THE DELHI HIGH COURT IN THE CASE OF INDIAN OIL PA NIPAT POWER CONSORTIUM LTD. VS. ITO 315 ITR 255 (DEL). THE AO HELD THESE TO BE NOT APPLICABLE AS THE FACTS OF THE ASSESSEES CASE WERE CONS IDERED TO THE ENTIRELY DISTINGUISHABLE. THE AO WAS OF THE VIEW THAT THE GENERAL STATEMENT THAT THESE FUNDS WERE TEMPORARILY PLACED IN F DRS AND WERE INEXTRICABLY CONNECTED WITH THE SETTING UP OF THE MINING P ROJECT COULD DATE OF HEARING 2 6 .04.2018 DATE OF PRONOUNCEMENT 27.06. 2018 ITA NO. 6284/DEL/2017 PAGE 2 OF 4 NOT BE ACCEPTED AS THE ASSESSEE WAS FOUND TO HAVE OFFE RED NO EXPLANATION SETTING OUT THE SPECIFIED PURPOSE FOR WHICH THE SE FUNDS WERE STATED TO BE DEPLOYED. HE HELD THAT THE MERE CONTENTION OF THE ASSESSEE THAT THESE FUNDS WERE CONNECTED WITH THE MININ G PROJECT BY ITSELF DID NOT ADDRESS THE ISSUE. HE WAS OF THE VIEW THAT THE CHARACTER OF THE RECEIPT IS DETERMINED BY THE PURPOSE FOR WHICH IT H AS BEEN USED AND IN THE FACTS, THERE WAS NO SPECIFIC STATED PURPOSE FOR WHICH THE MONEY HAS BEEN DEPOSITED IN FDRS. CONSEQUENTLY, IT WAS HELD THAT DECISION OF THE DELHI HIGH COURT IN THE CASE OF INDIAN OIL PA NIPAT POWER CONSORTIUM LIMITED WAS NOT APPLICABLE TO ASSESSEE AT ALL. 3. THE ISSUE WAS CARRIED IN APPEAL BEFORE THE CIT(A) SEEK ING PERMISSION TO FILE ADDITIONAL EVIDENCE STATED TO BE LOANS SAN CTIONED BY ICICI TO SUPPOR THE CLAIM THAT THE ENTIRE FUNDS RAISED B Y THE COMPANY BY WAY OF SHARE CAPITAL AND TERM LOAN WERE MEANT ONLY FO R THE PROJECT AND THAT THERE WERE NO SURPLUS FUNDS. CONSIDERING THE FA CT THAT THE SUFFICIENT OPPORTUNITY WAS PROVIDED IN THE COURSE OF THE AS SESSMENT PROCEEDINGS BY THE AO, THE FRESH EVIDENCE WAS NOT ADMITT ED. SIMILARLY, THE PRAYER FOR ADMISSION OF ADDITIONAL GROUND WAS ALSO REJ ECTED BY THE CIT(A) LEADING TO THE FILING OF THE PRESENT APPEAL. 4. THE LD. AR REITERATED THE SUBMISSIONS BEFORE THE CIT (APPEALS) WHICH HAVE BEEN EXTRACTED IN THE ORDER AT PAGE 3 & 4. THE LD. SR.DR, ON THE OTHER HAND, RELYING UPON THE IMPUGNED ORDER SUP PORTED THE SAME ON THE REASONING ADOPTED BY THE AO AND THE CIT (A) NAMELY ON THE GROUND THAT THERE WAS ADEQUATE OPPORTUNITY AT THE AS SESSMENT STAGE, HENCE FRESH EVIDENCES COULD NOT BE ACCEPTED. APART FROM THAT IT WAS ALSO HER SUBMISSION THAT THE EVIDENCE FILED IS NOT SUFFICIENT AND COMPLETE. 5. I HAVE HEARD THE SUBMISSIONS AND FIND ON GOING THROUGH THE RECORD THAT ADMISSION OF ADDITIONAL EVIDENCE WAS OBJECTED TO BY THE AO ON THE FOLLOWING GROUNDS: THE ISSUE RAISED BY THE ASSESSEE COMPANY IS CONSID ERED BUT NOT ACCEPTABLE AS DURING THE ASSESSMENT PROCEEDINGS, AMPLE OPPORTUNIT IES WERE PROVIDED TO THE ASSESSEE COMPANY TO PROVE THE NEXUS BETWEEN THE FUN DS UTILIZED FOR MAKING FDRS WITH BORROWED FUNDS BUT NO SUCH DETAILS WERE F ILED BY THE ASSESSEE . FURTHER AS STATED IN PRECEDING PARA THAT THE ASSESS EE HAS RAISED RS. 39,79,59,180/- AS PAID UP SHARE CAPITAL DURING THE YEAR, WHICH IN NO MEANS SPECIALLY MEANT FOR THE PROJECT BUT THE SURPLUS FUN DS OF THE ASSESSEE. IT IS ALSO IMPORTANT TO NOTE THAT AS PER THE LOAN SANCTIONED L ETTER ISSUED BY THE ICICI BANK LIMITED MENTIONED AT PAGE 3 OF THE PAPER BOOK THAT THE PURPOSE OF THE ITA NO. 6284/DEL/2017 PAGE 3 OF 4 FACILITY PROVIDES ONLY FOR UTILIZED FOR THE PURPOSE OF FINANCING THE PROJECT INCLUDING REIMBURSEMENT OF PRE-OPERATIVE EXPENSES O N THE PROJECT. FURTHER IT WAS MENTIONED AT PAGE 12 OF THE PB THAT THE ASSESSE E COMPANY SHALL OPEN WITH THE ACCOUNT BANK A TRUST AND RETENTION ACCOUNT TO T HE SATISFACTION OF ICICI BANK LIMITED FOR SERVICING OF THE FACILITY FOR WHICH FUN DS WERE BORROWED AND ALSO MENTIONED THE UTILIZATION OF FUNDS IN THE MANNER PR ESCRIBED IN THE CLAUSE, WHICH CLEARLY REFLECTS THAT THE AMOUNT RECEIVED FROM ICIC I BANK LIMITED AS TERM LOAN CANNOT BE UTILIZED FOR THE PURPOSE OF INVESTMENT IN FDRS AND WILL BE DISBURSED ONLY WHEN THE ASSESSEE COMPANY SUBMITTED THE DETAIL S OF EXPENSES TO BE PAID FOR THE PROJECT EXPENSES. ACCORDINGLY, PLEA OF THE ASS ESSEE COMPANY THAT THE BORROWED FUNDS UTILIZED FOR MAKING FDRS ARE FAR AWA Y FROM THE REALITY AND LIABLE TO BE REJECTED. FURTHER NO EXPLANATIONS HAV E BEEN FILED BY THE ASSESSEE COMPANY REGARDING THE PAID-UP CAPITAL RAISED DURING THE YEAR AND ITS UTILIZATION, WHICH REFLECTS THAT THE ASSESSEE HAD FAILED TO PROV E THE NEXUS BETWEEN THE BORROWED FUNDS AND FUNDS UTILIZED FOR MAKING FDRS A ND THE INTEREST INCOME ON FDRS WERE RIGHTLY ADDED BY THE AO DURING THE ASSESS MENT PROCEEDINGS. ( EMPHASIS PROVIDED) 6. IT IS SEEN ON A PERUSAL OF THE ABOVE THAT ADMITTEDLY THE RELIANCE PLACED BY THE ASSESSEE BEFORE THE AO ON SUBMISSIONS ON THE BASIS OF FACTS AVAILABLE ON RECORD DID NOT RESULT WITH A FAVOURABLE V IEW. CONSEQUENTLY, THE ASSESSEE APPROACHED THE APPELLATE FO RUM WITH PERMISSION TO RAISE FRESH EVIDENCES. IT IS NOT THE CASE O F THE REVENUE AS HAS BEEN CONSIDERED ABOVE THAT THE EVIDENCE IS NOT RELE VANT OR CRUCIAL FOR DETERMINING THE ISSUE. THE FACT THAT IT IS NOT SUFFICIENT AND INCOMPLETE IS THE CASE MADE OUT BY THE CIT(A) AS WELL AS T HE SR.DR. IN SUCH AN EVENTUALITY, I DO NOT SEE ANY REASON WHY THE C IT(A) DID NOT DIRECT THE ASSESSEE TO CALL FOR SUPPORTING DOCUMENTS AND MAKE GOOD THE INSUFFICIENCY AND/OR INCOMPLETENESS IN THE EVIDENCES NOTED. THE APPELLATE FORUM PROVIDED UNDER THE ACT IS NOT PERCEIVED TO BE AN EM PTY RITUAL WHEREIN THE CLAIMS/PLEAS OF THE TAXPAYERS ARE TO BE MECHANICALLY OBSTRUCTED. THE FORUM EXISTS FOR RENDERING JUSTICE CONS IDERING THE CORRECT EVIDENCES AND IT IS THE DUTY AND RESPONSIBILITY OF THE CIT(A) TO ENSURE THAT IN THE EVENTUALITY, THE EVIDENCES RELIED UPON ARE NOTICED TO BE INSUFFICIENT OR INCOMPLETE, THEN HE OUGHT TO EXERCISE TH E POWERS VESTED IN THE SAID AUTHORITY BY SUB-RULE (4) OF RULE 46A TO CALL FOR THE EVIDENCE. I FIND, ON GOING THROUGH THE MATERIAL AVAILABLE ON RECORD THAT THE ADDITIONAL EVIDENCES SOUGHT TO BE RELIED UPON AS NOT ED ARE DEFINITELY RELEVANT AND CRUCIAL FOR DETERMINING THE ISSUE. ACCORDINGLY , IN THE INTERESTS OF SUBSTANTIAL JUSTICE, IT IS DIRECTED TO BE TAKEN ON RECORD. QUA THE SUFFICIENCY OF THE SAME WHICH IS CONSIDERED TO BE D OUBTED BY THE TAX AUTHORITY, I AM OF THE VIEW THAT IN CASE THE EVID ENCES FILED ARE FOUND TO BE INSUFFICIENT AND/OR INCOMPLETE THERE IS NO IMPED IMENT FOR THE CONCERNED AUTHORITY TO DIRECT THE ASSESSEE TO FURT HER SUBSTANTIATE ITS CLAIM. ITA NO. 6284/DEL/2017 PAGE 4 OF 4 7. THE LD. SR. DR THOUGH PLACED RELIANCE ON THE ORDERS SPECIFICALLY REQUESTED THAT IN CASE IT IS TO BE REMANDED, THEN A REM AND BE MADE TO THE AO AND NOT THE CIT(APPEALS) ON THE GROUND THAT THE EVIDENCES WILL NEED TO BE CONSIDERED FIRST BY THE AO. THE SAID REQUEST IS ACCEPTED. THE IMPUGNED ORDER, ACCORDINGLY, IS SET ASIDE BACK TO TH E FILE OF THE AO WITH A DIRECTION TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW ADMITTING FRESH EVIDENCES AND DIRECTING THE ASSESSEE IF NEE D BE TO FILE FURTHER SUPPORTING EVIDENCES. 8. THE ISSUE SOUGHT TO BE RAISED BY THE ASSESSEE AS ADDITIONAL GROUND BEFORE THE CIT(A), ACCORDINGLY, IS ALSO SET ASIDE PERMITTING T HE ASSESSEE TO RAISE APPROPRIATE CLAIMS IN ACCORDANCE WITH LAW. IN TER MS OF THE ABOVE, THE IMPUGNED ORDER IS SET ASIDE BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO PASS A SPEAKING ORDER IN ACCOR DANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 9. WHILE SO DIRECTING IT IS HOPED THAT THE OPPORTUNITY SO P ROVIDED IS UTILIZED BY THE ASSESSEE FULLY AND FAIRLY BY MAKING PROPER COMPLIANCES. IT IS MADE CLEAR THAT IN THE EVENTUALITY OF ABUSE OF THE SAME THE AO WOULD BE AT LIBERTY TO PASS AN ORDER ON THE BASIS OF MAT ERIAL AVAILABLE ON RECORD. SAID ORDER WAS PRONOUNCED IN THE OPEN COU RT AT THE TIME OF HEARING ITSELF. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JUNE 2018. SD/- (DIVA SINGH) JUDICIAL MEMBER DATED: 27.06. 2018 *KAVITA ARORA/POONAM(CHD) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI