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ITA 6363/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8436 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 16-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Income from undisclosed sources; Opportunity of being heard; Principle of natural justice; Accommodation entries; Assessment record; Set aside
• Section: 69C; 234B; 201; 147; 68

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH FRIDAY E : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 6363/DEL/2017 (ASSESSMENT YEAR: 2006 - 07 ) MONARCH TAPES LTD, B - 9/24, DLF PHASE - I, GURGAON, HARYANA PAN: AAECM2986N VS. ITO, WARD - 5(4), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI GAUTAM JAIN, ADV SHRI LILIT MOHAN, CA REVENUE BY: SHRI SURENDER PAL, SR. DR DATE OF HEARING 18/10 / 201 9 DATE OF PRONOUNCEMENT 1 3 / 01 / 2020 O R D E R PER PRASHANT MAHARISHI, A. M. 1. ASSESSEE HAS PREFERRED AN APPLICATION FOR EARLY HEARING IN ITA NUMBER 6363/DEL/2017 FILED AGAINST THE ORDER OF THE LD CIT(A) - 37, NEW DELHI DATED 19.09.2017 FOR THE ASSESSMENT YEAR 2006 - 07. 2. ASSESSEE SUBMITTED THAT THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS ) HAS DISMISSED THE APPEAL EX PARTE ON THE GROUND THAT NOTICES REMAINED UN - COMPLIED WITH DURING THE APPELLATE PROCEEDINGS. 3. HE SUBMIT TED THAT THERE WAS NO DELIBERATE NON - COMPLIANCE ON THE PART OF THE APPELLANT COMPANY. HE STATED THAT THERE WAS A COMPLIANCE MADE BY THE COUNSEL OF THE APPELLANT BY FILING AN APPLICATION FROM THE 1 ST DATE OF HEARING NAMELY ON 25/ 0 5/2015 TO 0 3/ 0 5/2016 . TO DEMONSTRATE THESE FACTS HE SUBMITTED A CHRONOLOGY OF EVENT . HE FURTHER SUBMITTED THAT SUBSEQUENTLY, THE MATTER WAS TRANSFERRED TO THE OFFICE OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 37, NEW DELHI. FURTHER , ON 19/ 0 9/2017 ONE OF THE DIRECTORS HAD SUFFERED AN UNTIMELY DEMISE WHO WAS THE ONLY PERSON AWARE OF THE ISSUES INVOLVED IN THE APPEAL . THEREFORE, IT WAS PRAYED BEFORE THE LEARNED CIT (A) THAT SOME MORE TIME MAY BE GRANTED TO ASSESSEE TO OBTAIN RELEVANT RECORDS. PAGE | 2 HOWEVER , THE LEARNED CIT (A) DID NOT ACCEP T THE AFORESAID PRAYER AND PASSED THE ORDER ON THE SAME DATE. HE ALSO REFERRED TO ADJOURNMENT APPLICATION DATED 19/ 0 9/2017. HE FURTHER SUBMITTED THAT THERE WERE CERTAIN CHANGE IN THE MANAGEMENT OF THE COMPANY PRIOR TO THE ORDER OF THE ASSESSMENT PASSED O N 24/03/2014 AND THE NEW MANAGEMENT WAS NOT AT ALL AWARE ABOUT THE APPELLATE PROCEEDINGS AS IT DID NOT HAVE ANY ACCESS TO THE RECORDS OF THE PROCEEDINGS UNTIL 2018. HE FURTHER STATED THAT IN FACT THE COMPLETE RECORDS ARE STILL NOT AVAILABLE WITH THE PRESE NT MANAGEMENT , AND INSPECTION OF THE ASSESSMENT RECORDS HAS ALSO NOT BEEN ALLOWED TILL DATE , BY THE LEARNED ASSESSING OFFICER , ON ACCOUNT OF NON - PAYMENT OF DEMAND. HE FURTHER REFERRED TO THE CHANGE OF SHAREHOLDERS IN THE COMPANY. HE THEREFORE SUBMITTED TH AT THERE WERE GENUINE AND BONA FIDE REASONS FOR ALLEGED NON - COMPLIANCE BEFORE THE LEARNED CIT (A) . IN VIEW OF THIS HE SUBMITTED THAT EITHER ASSESSEE SHOULD BE GRANTED AN EARLY HEARING IN THIS APPEAL OR MATTER MAY BE RESTORED BACK TO THE FILE OF THE LEARNED CIT (A) . 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY OBJECTED TO EARLY HEARING PETITION FILED BY THE ASSESSEE AND SUBMITTED THAT WHEN THE ASSESSEE HAS NOT APPEARED BEFORE THE LEARNED CIT (A) , THERE IS NO REASON THAT ASSESSEE SHOULD BE GRANTED EARLY HEARING IN THIS MATTER BEFORE THE COORDINATE BENCHES. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS IN THE PRESENT CASE THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS ) - 37, NEW DELHI DATED 19/ 0 9/2017 FOR ASSESSMENT YEAR 2006 - 07. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN FRAMING THE IMPUG NED REASSESSMENT U/S 143(3)/L 47 AND THAT TOO WITHOUT ASSUMING JURISDICTION AS PER LAW AND WITHOUT COMPLYING WITH THE MANDATORY CONDITIONS U/S 147 TO 151 AS ENVISAGED UNDER THE INCOME TAX ACT, 1961. 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. AO IN FRAMING THE IM PUGNED REASSESSMENT U/ 143(3 )/1 47 IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. C IT(A) H; ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKING < AGGREGATE ADDITION OF RS. 1,85,00,000/ - ON ACCOUNT OF SHARE PAGE | 3 CAPITAL BY TREATING AS ALLEGED INCOME FROM UNDISCLOSED SOURCES AND THAT TOO BY RECORDING INCORRECT FACTS AND FINDI NGS AND WITHOUT OBSERVING THE PRINCIPLES OF NATURAL JUSTICE. 4. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) CONFIRMING THE ACTION OF LD. AO IN MAKING AN AGGREGATE ADDITION RS. 1,85,00,000/ - ON ACCOUNT OF SHARE CAPITAL IS BAD IN LA W AND AGAINST THE FA CTS AND CIRCUMSTANCES OF THE CASE. 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADD I T ION OF RS.3,70,000/ - ON ACCOUNT OF ALLEGED COMM ISSION PAID U/S 69C OF THE ACT. 6. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS OF RS. 1,20,00,000/ - ON ACCOUNT OF SHARE CAPITAL RECEIVED FROM M/S KRIPA FINVEST (P) LTD. U/S 68 AND THAT TOO BY RECORDING INCORRECT FACTS AND FINDINGS AND WITHOUT OBSERVING THE PRINCIPLES OF NATURAL JUSTICE. 7. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS. 1,20,00,000/ - OR ACCOUNT OF SHARE CAPITAL RECEIVED FROM M/S KRIPA FINVEST (P) LTD. U/S 68, IS BAD IR LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN PASSING THE IMPUGNED ORDER AND THAT TOO WITHOU T PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD. 9. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN CHARGING INTERES T U/S 234B OF THE INCOME TAX ACT, 1961. 6. ON CAREFUL CONSIDERATION IT IS FOUND THAT THE LEARNED ASSESSING OFFICER HAS PASSED AN ORDER U/S 143 (3) READ WITH SECTION 147 OF THE INCOME TAX ACT ON 24/3/2014 WHEREIN THE INCOME OF THE ASSESSEE IS ASSESSED AT RS. 30887550/ WHEREIN THE ADDITION FOR BO GUS ACCOMMODATION ENTRIES IS MADE OF RS. 1,85 ,00,000 / - EXPENDITURE INCURRED ON BOGUS ACCOMMODATION ENTRY OF RS. 370,000 / - AND SHARE CAPITAL OF RS. 12,000,000 / - HAS BEEN ADDED IN THE HANDS OF THE ASSESSEE AGAINST THE RETURNED INCOME OF ONLY RS. 17548/ - . 7. UNDOUBTEDLY THE ASSESSEE HAS BEEN GIVEN THE NUMBER OF OPPORTUNITIES TO APPEAR BEFORE THE LEARNED CIT (A). HOWEVER, NONE APPEARED BEFORE HIM AND THEREFORE THE LEARNED CIT (A) PASSED AN EX PARTE ORDER . IT IS NOT THAT THE LEARNED CIT (A) PASSED ORDER FOR NON - PROSECUTION BY ASSESSEE, BUT, THE ORDER WAS PASSED ON THE MERITS OF THE MATTER. THE ORDER WAS ALSO PASSED IN ABSENCE OF THE ASSESSEE. FURTHER , IT IS NOT THE CASE THAT ASSESSEE HAS NOT SOUGHT TIME BEFORE THE LEARNED CIT (A) , IT IS ALSO NOT THE CASE THAT THE REQUEST PAGE | 4 BEFORE THE LEARNED CIT (A) TO OBTAIN THE COPIES OF THE FORM NO. 35 ETC IS DEVOID OF ANY MERIT. AS FACT EXPLAINED BEFORE US, IT IS APPARENT THAT THE ASSESSEE WAS NOT HAVING ANY INFORMATION. THUS, THE NEW MANAGEMENT WAS NOT IN A POSITION TO DEFEND I TS CASE BEFORE THE LD CIT(A) IN ABSENCE OF ANY INFORMATION. IN ANY WAY, IF THE ORDER IS PASSED IN ABSENCE OF THE ASSESSEE OR LITIGANT WHO HAS PREFERRED AN APPEAL BEFORE A JUDICIAL OFFICER, IF SUFFICIENT CAUSE WAS SHOWN FOR REASON OF HIS NONAPPEARANCE BEFOR E HIM, IN ACCORDANCE WITH THE PRINCIPLES OF THE NATURAL JUSTICE , MORE PRECISELY WHEN THE MATTER HAS BEEN DECIDED BY THE JUDICIAL OFFICER ON THE MERITS OF THE ISSUE, THE MATTER NEEDS TO BE REHEARD. IF IT IS NOT DONE SO, THERE IS NO PURPOSE OF FILING AN APP EAL. IT WOULD MERELY BE REITERATION OF FACTS MENTIONED BY THE LOWER AUTHORITIES. THIS IS PRECISELY ORDER PASSED BY LD CIT(A). FURTHERMORE , IN THE PRESENT CASE THE ASSESSEE HAS ALREADY MADE INSPECTION REQUEST TO THE ASSESSING OFFICER WHICH HAS NOT BEEN GRA NTED AT ALL. ON THE BASIS OF THE INFORMATION GIVEN BEFORE US , IT IS APPARENT THAT THERE IS A CHANGE IN THE SHAREHOLDERS AS WELL AS CHANGE IN THE MANAGEMENT. IN FACT, NO HARM WOULD BE CAUSED TO THE REVENUE IF THE MATTER IS DECIDED ON THE MERITS OF THE ISS UE AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE OF HEARING AND PLACING ANY EVIDENCES BEFORE CIT(A) AS ASSESSEE MAY LIKE. UNDOUBTEDLY IT WOULD BE THE PREROGATIVE OF THE COMMISSIONER OF INCOME TAX(APPEALS) TO ADMIT THOSE EVIDENCE IN ACCORDANCE WITH THE PROVI SIONS OF THE INCOME TAX RULES, 1962 , BUT FOR RENDERING PROPER JUSTICE IT IS IMPORTANT THAT ASSESSEE MUST BE HEARD BEFORE PASSING AN ORDER , IF THERE IS AN APPEAL FILED BY THE ASSESSEE. 8. UNDOUBTEDLY, ASSESSEE HAS ALSO BEEN GRANTED MANY OPPORTUNITIES OF HEARIN G. MOST OF THE TIMES IT REMAINED UN - COMPLIED WITH . THEREFORE, WE SET ASIDE THE APPEAL OF THE ASSESSEE TO THE FILE OF THE LEARNED CIT(A) WITH A DIRECTION TO ASSESSEE TO APPEAR BEFORE HIM AND SUBMIT NECESSARY EVIDENCES WITHIN 3 MONTHS FROM THE DATE OF THIS ORDER. THE LEARNED CIT(A) WILL HEAR THE ASSESSEE ON MERITS OF THE ISSUE AND DECIDE THE APPEAL AFRESH. FOR THE NON - COMPLIANCE MADE BY THE ASSESSEE BEFORE THE LEARNED CIT (A) ASSESSEE IS DIRECTED TO DEPOSIT RS. 25,000 / - IN THE PRIME MINISTERS NATIONAL RELIEF FUND WITHIN 30 DAYS FROM THE DATE OF THIS ORDER AND THEN APPEAR BEFORE THE PAGE | 5 LEARNED CIT (A) WITHIN 3 MONTHS FROM THE DATE OF THIS ORDER SUBMITTING THE RELEVANT DETAILS. 9. ACCORDINGLY APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 3 / 01 / 2020 . - SD/ - - SD/ - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 3 / 01 / 2020 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI