KETUL CHEM PRIVATE LIMITED, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), MUMBAI

ITA 6977/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4989 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2014-2015
• Appeal Filed On: 08-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AJAY R SINGH
• Keywords: Unexplained cash credit; Opportunity of being heard; Capital receipt
• Section: 246

Judgement Text

P A G E | 1 ITA NO.6977/MUM/2017 A.Y. 2014 - 15 M/S KETUL CHEM PRIVATE LTD. VS. DCIT,CC - 2(2) IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 6977/MUM/2017 (ASSESSMENT YEAR: 2014 - 15 ) M/S KETUL CHEM PRIVATE LTD. WESTERN EDGE - I, KANAKA SPACES, UNIT NO. 403, 4 TH FLOOR, ABOVE MERTO SHOPPING MALL, WESTERN EXPRESS HIGHWAY, BORIVALI (EAST) , MUMBAI - 400066 VS. DEPUTY COMMISSIONER OF INCOME TAX - CC - 2(2), 806, 8 TH FLOOR, PRATISHTHA BHAVAN, OLD CGO BLDG. M.K. ROAD, MUMBAI - 400020 PAN AAACK5766A ( APPELLANT ) ( RESPONDENT ) APPELLANT BY: SHRI AJAY R. SINGH , A.R RESPONDENT BY: SHRI MANOJ KUMAR SINGH, D.R DATE OF HEARING: 23 .01.2019 DATE OF PRONOUNCEMENT: 25 .01.2019 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 48, MUMBAI, DATED 31.10.2017, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC.143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT I.T. ACT), DATED 30.11.2016 FOR A.Y. 2014 - 15. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: P A G E | 2 ITA NO.6977/MUM/2017 A.Y. 2014 - 15 M/S KETUL CHEM PRIVATE LTD. VS. DCIT,CC - 2(2) GROUND NO.1: ADDITION OF RS. 10,49,975 / - AS UNEXPLAINED CASH CREDIT: (A) IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN CONFIR MING THE CAPITAL RECEIPT OF RS. 10,49,975 / - AS UNEXPLAINED CASH CREDIT U/S 68. (B) IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, THE RECEIPT OF RS. 10,49,975 / - SHOULD HAVE BEEN TREATED AS CAPITAL RECEIPT ON MERITS AND THEREFORE OUTSIDE THE SC OPE OF INCOME CHARGEABLE TO TAX. GROUND NO.2: DISALLOWANCE OF INTEREST UNDER MSME ACT, 2006: IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, THE ESTIMATED INTEREST OF RS. 1,00,000 SHOULD NOT HAVE BEEN HELD DISALLOWABLE WHEN THE CREDITORS AND /OR THEIR PAYMENTS ARE NO T COVERED UNDER MSME ACT, 2006. 2. BRIEFLY STATED, THE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME FOR A.Y. 2014 - 15 ON 29.11.2014, DECLARING TOTAL INC OME AT RS.1,42,15,710/ - . SUBSEQUENTLY , THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2) OF THE I.T. ACT. 3. AS THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS NEITHER EFFECTED COMPLIANCE TO THE NOTICES ISSUED BY THE A.O UNDER SEC.142(1) OF THE I.T. ACT, NOR PLACED ON RECORD THE REQUISITE DETAILS AS WERE SOUGHT BY HIM , THEREFORE THE A.O LEFT WITH NO OTHE R ALTERNATIVE COMPLETED THE ASSESSMENT ON THE BASIS OF INFORMATION AVAILABLE ON RECORD AFTER MAKING THE FOLLOWING ADDITIONS/DISALLOWANCES: PARTICULARS AMOUNT ADDITION ON ACCOUNT OF IMPUGNED CAPITAL RECEIPT TREATED AS UNEXPLAINED CASH CREDIT RS. 10 , 49 , 975 D ISALLOWANCE OF CORRESPONDING INTEREST UNDER THE THE MICRO AND MEDIUM ENTERPRISES DEVELOPMENT ACT 2006. RS. 1 , 00 , 000 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). HOWEVER, THE ASSESSEE IN THE COURSE OF THE APPELLATE PROCEEDINGS FAILED TO PUT UP AN APPEARANCE BEFORE THE CIT(A). THE CIT(A) HOLDING A CONVICTION THAT THE ASSESSEE WAS NOT INTERESTED IN PROSECUTING ITS APPEAL, THERE FORE, UPHELD THE ADDITIONS MADE BY THE A.O AND DISMISSED THE A PPEAL. P A G E | 3 ITA NO.6977/MUM/2017 A.Y. 2014 - 15 M/S KETUL CHEM PRIVATE LTD. VS. DCIT,CC - 2(2) 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE AT THE VERY OUTSET OF THE HEARING OF THE APPEAL SUBMITTED THAT THE CIT(A) H AD ERRED IN LAW BY DISMISSING THE APPEAL WITHOUT RE NDERING HIS DECISION O N EACH OF THE POINTS AS WERE RAISED BY THE ASSESSEE IN ITS APPEAL BEFORE HIM. IT WAS THE CONTENTION OF THE LD. A.R THAT AS PER SEC. 250(6) OF THE I.T. ACT, IT WAS OBLIGATORY ON THE PA RT OF THE CIT(A) TO DISPOSE OFF AN APPEAL AFTER RENDERING A DECISION ALONG WITH REASONS O N EACH OF THE POINTS WHICH HAD BEEN RAISED BY THE ASSESSEE BEFORE HIM. IN SUM AND SUBSTANCE, IT WAS AVERRED BY THE LD. A.R THAT THE CIT(A) IN THE PRESENT CASE HAD FAIL ED IN HIS STATUTORY OBLIGATION OF DISPOSING OF F THE APPEAL ON MERITS. THE LD. A.R IN SUPPORT OF HIS AFORESAID CONTENTION THAT THE CIT(A) IS NOT VESTED WITH THE POWER TO DISMISS AN APPEAL ON ACCOUNT OF NON - PROSECUTION BY THE ASSESSEE , AND REMAINS UNDER A ST ATUTORY OBLIGATION TO DISPOSE OFF THE SAME AFTER RENDERING HIS DECISION ON THE POINTS RAISED BY THE ASSESSEE BEFORE HIM, THEREIN RELIED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF COMMISSIONER OF INCOME TAX (CENTRAL), NAGPUR VS. PREMKUMAR ARJUNDAS LUTHRA (HUF) (2016) 240 TAXMAN 133 (BOM) . THE LD. A.R TAKING SUPPORT OF HIS AFORESAID CONTENTION AVERRED THAT THE MATTER IN ALL FAIRNESS MAY BE RESTORE D TO THE FILE OF THE CIT(A) WITH A DIRECTION TO RE - ADJUDICATE THE SAME ON MERITS. 6. P ER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. IT WAS SUBMITTED BY THE LD. D.R THAT AS THE ASSESSEE HAD ADOPTED A NON - COOPERATIVE APPROACH BOTH BEFORE THE A.O AND THE CIT(A), THEREFORE, ITS A PPEAL WAS RIGHTLY DISMISSED FOR NON PROSECUTION BY THE CIT(A). P A G E | 4 ITA NO.6977/MUM/2017 A.Y. 2014 - 15 M/S KETUL CHEM PRIVATE LTD. VS. DCIT,CC - 2(2) 7. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE IN THE COURSE OF THE APPELLATE PROCEEDINGS BEFORE THE CIT(A) HAD FAILED TO PUT UP AN APPEARANCE BEFORE HIM ON THE RESPECTIVE DATES ON WHICH THE APPEAL WAS FIXED FOR HEARING. ON A PERUSAL OF THE ORDER OF THE CIT(A) , IT STANDS REVEALED THAT THE HEARING OF THE APPEAL WAS INITIALLY FIXED FOR 11.08.2017 . H OWEVER, AS THE ASSESSEE FAILED TO PUT UP AN APPEARANCE ON 11.08.2017 , THEREFORE, THE MATTER WAS ADJOURNED FOR 16.10.2017, ON WHICH DATE TOO NO ONE ATTENDED THE APPELLAT E PROCEEDINGS ON BEHALF OF THE ASSESSEE. WE FIND THAT ON BOTH OF THE AFOREMENTIONED OCCASIONS THE NOTICE INTIMATING THE FIXATION OF THE APPEAL WAS DULY SERVED UPON THE ASSESSEE. T HE CIT(A) TAKING COGNIZANCE OF THE FACT THAT THE ASSESSEE HAD ALSO IN THE COU RSE OF THE ASSESSMENT PROCEEDINGS ADOPTED A NON - COOPERATIVE ATTITUDE, THEREFORE, OBSERVING THAT THE ASSESSEE WAS NOT INTERESTED IN PROSECUTING THE APPEAL, DISMISSED THE SAME. 8. WE HAVE PERUSED THE ORDER OF THE CIT(A) AND FIND THAT THE LATTER WHILE DISMIS SING THE APPEAL ON THE GROUND THAT THE ASSESSEE WAS NOT INTERESTED IN PROSECUTING THE SAME, HAD HOWEVER FAIL ED TO RENDER A DECISION ON THE ISSUE S WHICH WERE ASSAILED BY THE ASSESSEE IN ITS APPEAL BEFORE HIM. IN OUR CONSIDERED VIEW AS PER SEC.250(6) OF THE I.T. ACT IT IS OBLIGATORY ON THE PART OF A CIT(A) TO RENDER A DECISION IN RESPECT OF THE POINTS RAISED BY THE ASSESSEE BEFORE HIM ALONG WITH THE REASONS FOR ARRIVING AT SUCH CONCLUSION. IN SUM AND SUBSTANCE , ONCE AN ASSESSEE FILES AN APPEAL UNDER SEC. 246 A OF THE I.T. ACT, IT IS OBLIGATORY ON THE PART OF CIT(A) TO DISPOSE OFF THE SAME ON MERITS. ACCORDINGLY, IN OUR CONSIDERED VIEW THE LAW DOES NOT EMPOWER THE CIT(A) TO DISMISS THE APPEAL FOR NON - PROSECUTION. OUR AFORESAID VIEW IS FORTIFIED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE P A G E | 5 ITA NO.6977/MUM/2017 A.Y. 2014 - 15 M/S KETUL CHEM PRIVATE LTD. VS. DCIT,CC - 2(2) CASE OF COMMISSIONER OF INCOME TAX (CENTRAL), NAGPUR VS. PREMKUMAR ARJUNDAS LUTHRA (HUF) (2016) 240 TAXMAN 133 (BOM) . IN THE AFOREMENTIONED JUDGMENT THE HONBLE HIGH COURT AFTER DELIBERATING AT LENGTH ON THE ISSUE UNDER CONSIDERATION HAD CONCLUDED THAT THE CIT(A) CANNOT DISMISS AN APPEAL ON ACCOUNT OF NON - PROSECUTION OF THE SAME BY THE ASSESSEE . IT WAS OBSERVED BY THE HONBLE HIGH COURT AS UNDER : 8. FROM THE AFORESAID PROVISIONS, IT IS VERY CLEAR ONCE AN APPEAL IS PREFERRED BEFORE THE CIT(A), THEN IN DISPOSING OF THE APPEAL, HE IS OBLIGED TO MAKE SUCH FURTHER INQUIRY THAT HE THINKS FIT OR DIRECT THE ASSESSING OFFICER TO MAKE FURTHER INQUIRY AND REPORT THE RESU LT OF THE SAME TO HIM AS FOUND IN SECTION 250(4) OF THE ACT. FURTHER SECTION 250(6) OF THE ACT OBLIGES THE CIT(A) TO DISPOSE OF AN APPEAL IN WRITING AFTER STATING THE POINTS FOR DETERMINATION AND THEN RENDER A DECISION ON EACH OF THE POINTS WHICH ARISE FOR CONSIDERATION WITH REASONS IN SUPPORT. SECTION 251(1)(A) AND (B) OF THE ACT PROVIDE THAT WHILE DISPOSING OF APPEAL THE CIT(A) WOULD HAVE THE POWER TO CONFIRM, REDUCE, ENHANCE OR ANNUL AN ASSESSMENT AND/OR PENALTY. BESIDES EXPLANATION TO SUBSECTION (2) OF SECTION 251 OF THE ACT ALSO MAKES IT CLEAR THAT WHILE CONSIDERING THE APPEAL, THE CIT(A) WOULD BE ENTITLED TO CONSIDER AND DECIDE ANY ISSUE ARISING IN THE PROCEEDINGS BEFORE HIM IN APPEAL FILED FOR ITS CONSIDERATION, EVEN IF THE ISSUE IS NOT RAISED BY THE APPELLANT IN ITS APPEAL BEFORE THE CIT(A). THUS ONCE AN ASSESSEE FILES AN APPEAL UNDER SECTION 246A OF THE ACT, IT IS NOT OPEN TO HIM AS OF RIGHT TO WITHDRAW OR NOT PRESS THE APPEAL. IN FACT THE CIT(A) IS OBLIGED TO DISPOSE OF THE APPEAL ON MERITS. IN FACT WITH EFFECT FROM 1ST JUNE, 2001 THE POWER OF THE CIT(A) TO SET ASIDE THE ORDER OF THE ASSESSING OFFICER AND RESTORE IT TO THE ASSESSING OFFICER FOR PASSING A FRESH ORDER STANDS WITHDRAWN. THEREFORE, IT WOULD BE NOTICED THAT THE POWERS OF THE CIT(A) IS COT ERMINOUS WITH THAT OF THE ASSESSING OFFICER I.E. HE CAN DO ALL THAT ASSESSING OFFICER COULD DO. THEREFORE JUST AS IT IS NOT OPEN TO THE ASSESSING OFFICER TO NOT COMPLETE THE ASSESSMENT BY ALLOWING THE ASSESSEE TO WITHDRAW ITS RETURN OF INCOME, IT IS NOT OP EN TO THE ASSESSEE IN APPEAL TO WITHDRAW AND/OR THE CIT(A) TO DISMISS THE APPEAL ON ACCOUNT OF NON - PROSECUTION OF THE APPEAL BY THE ASSESSEE. THIS IS AMPLY CLEAR FROM THE SECTION 251(1)(A) AND (B) AND EXPLANATION TO SECTION 251(2) OF THE ACT WHICH REQUIRES THE CIT(A) TO APPLY HIS MIND TO ALL THE ISSUES WHICH ARISE FROM THE IMPUGNED ORDER BEFORE HIM WHETHER OR NOT THE SAME HAS BEEN RAISED BY THE APPELLANT BEFORE HIM. ACCORDINGLY, THE LAW DOES NOT EMPOWER THE CIT(A) TO DISMISS THE APPEAL FOR NON - PROSECUTION A S IS EVIDENT FROM THE PROVISIONS OF THE ACT. I N TERMS OF OUR AFORESAID OBSERVATIONS , WE ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE DISMISSAL OF THE APPEAL OF THE ASSESSEE BY THE CIT(A) FOR WANT OF PROSECUTION DE HORS RENDERING A DECISION ON THE POINTS THAT WERE ASSAILED BY THE ASSESSEE BEFORE HIM . W E THUS BEING OF P A G E | 6 ITA NO.6977/MUM/2017 A.Y. 2014 - 15 M/S KETUL CHEM PRIVATE LTD. VS. DCIT,CC - 2(2) THE CONSIDERED VIEW THAT THE MATTER REQUIRES TO BE REVISITED BY THE CIT(A) , SET ASIDE THE SAME TO HIS FILE FOR FRESH ADJUDICATION . THE CIT( A) SHALL IN THE COURSE OF THE SET ASIDE PROCEEDINGS RENDER HIS DECISION ON THE ISSUE S THAT HAD BEEN ASSAILED BY THE ASSESSEE BEFORE HIM ON THE BASIS OF A REASONED ORDER. NEEDLESS TO SAY, THE CIT(A) WHILE RE - ADJUDICATING THE APPEAL SHALL AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 9. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PR ONOUNCED IN THE OPEN COURT ON 25. 01.2019 SD/ - SD/ - (RAMIT KOCHAR) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 25. 01.2019 PS. ROHIT / 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 . //TRUE COPY// / BY ORDER, / (DY./ ASST T. REGISTRAR) , / ITAT, MUMBAI P A G E | 7 ITA NO.6977/MUM/2017 A.Y. 2014 - 15 M/S KETUL CHEM PRIVATE LTD. VS. DCIT,CC - 2(2)