Deputy Commissioner of Income TAx Circle-1(1)(2), Bangalore V. M/s Bengaluru Leisure Pvt Ltd , Bangalore

ITA 752/BANG/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9472 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 03-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: MANJEET SINGH
• Keywords: Unexplained cash credit; Principle of natural justice; Additional evidence; Set aside
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI A.K GARODIA, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.752 & 753/BANG/2017 ASSESSMENT YEAR : 2012-13 THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-1(1)(2), BENGALURU. VS. M/S BENGALURU LEISURE PVT. LTD., NO.116, D BLOCK-45/5, NEELADRI MAHAL, NANDIDURGA ROAD, BENSON TOWN POST, BENGALURU-560 046. PAN AAECB 0355Q APPELLANT RESPONDENT ASSESSEE BY : SHRI MANJEET SINGH, ADDL. CIT REVENUE BY : SHRI MUKESHKUMAR JAIN, C.A DATE OF HEARING : 03-08-2020 DATE OF PRONOUNCEMENT : 21-08-2020 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEALS HAVE BEEN FILED BY REVENUE AGAINST ORDER DATED 23/12/2016 PASSED BY LD. CIT (A)-1, BANGALORE FOR ASSESSMENT YEARS 2012-13 AND 2013-14 ON FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED CIT( APPEALS), IN SO F AR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, IS OPPOSED TO LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSE SSING OFFICER U/S 68 OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF UNEXPL AINED CASH PAGE 2 OF 8 ITA NOS.752 & 753/BANG/2017 CREDITS AND NOT APPRECIATING THAT THE ASSESSEE HAD FAILED TO PROVE THE CREDITWORTHINESS OF THE LOAN CREDITORS DURING T HE ASSESSMENT PROCEEDINGS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF CASE, T HE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSIN G OFFICER U/S 68 OF THE INCOME TAX ACT, 19961 ON ACCOUNT OF UNEXPLAI NED CASH CREDITS BY ACCEPTING ONLY LEDGER ACCOUNT AS EVIDENCE FOR LO AN AND NOT APPRECIATING THAT THE ASSESSEE HAD FAILED TO PROVE THE CREDITWORTHINESS OF THE CREDITOR OF THE CREDITORS D URING THE ASSESSMENT PROCEEDINGS. 4. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URG ED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF T HE LD. CIT(A) BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTO RED. 5. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEA RING OF APPEAL. 2. AT THE OUTSET, LD.SR.DR SUBMITTED THAT ASSESSEE FILED VARIOUS DOCUMENTS BEFORE LD.CIT(A) WHICH WAS NOT SE NT TO LD.AO FOR REMAND. HE ALSO SUBMITTED THAT LD.CIT(A) DID NOT CARRY OUT INDEPENDENT VERIFICATION OF SUCH DETAILS/DOCUMENTS, IF ANY, THAT HAS BEEN FILED BY A SSESSEE. LD.SR.DR SUBMITTED THAT, IMPUGNED ORDERS PASSED BY LD.CIT(A) ARE CRYPTIC AND WITHOUT ANY REASON. HE S UBMITTED THAT LD.CIT(A) REPRODUCED WHAT HAS BEEN OBSERVED AN D RECORDED BY LD.AO AND SUBMISSIONS BY ASSESSEE FOR D ELETING THE ADDITION. 3. HE THEREFORE SUBMITTED FOR THE APPEALS TO BE SET -ASIDE TO LD.CIT(A) FOR DUE VERIFICATION OF THE DOCUMENTS FILED BY ASSESSEE. 4. ON THE CONTRARY, LD.AR, WHILE OPPOSING SUBMISSIO N BY LD.SR.DR, SUBMITTED THAT, ALL DETAILS FILED BY ASSE SSEE HAVE BEEN VERIFIED BY LD.CIT(A). HE OPPOSED GROUND RAISE D BY REVENUE, WHEREIN, VIOLATION OF RULE 46A HAVE BEEN A LLEGED. PAGE 3 OF 8 ITA NOS.752 & 753/BANG/2017 HE ALSO SUBMITTED THAT ALL DETAILS WERE FILED BEFOR E LD. AO AND THEREFORE THERE IS NO VIOLATION OF RULE 46A. HO WEVER ON PERUSAL OF ASSESSMENT ORDER WE NOTE THAT LD. AO REC ORDED THAT ASSESSEE DID NOT FILE ANY DETAILS TO DISCHARGE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS WI TH RESPECT TO SECTION 68. 5. IN SUPPORT, LD.AR PLACED RELIANCE ON FOLLOWING D ECISIONS: DECISION OF HONBLE ALLAHABAD HIGH COURT IN CASE OF CIT VS SUBASH CHANDER AGGARWAL REPORTED IN 172 ITR 166 DECISION OF HONBLE GUJARAT HIGH COURT IN CASE OF CIT VS.VOLIMOHEMAD AHMEDBHAI, REPORTED IN 134 ITR 214 DECISION OF HONBLE ALLAHABAD HIGH COURT IN CASE OF SMT.MOHINDER KAUR VS.CENTRAL GOVERNMENTI REPORTED I N 104 ITR 20 6. WE HAVE PERUSED ALL DECISIONS RELIED BY LD.AR. 6.1. WE NOTE THAT, IN DECISION BY HONBLE ALLAHABAD HIGH COURT, IN CASE OF CIT VS SUBASH CHANDER AGGARWAL(SUPRA) , ISSUE WAS IN RELATION TO NON-GRANTING OF CROSS-EXAM INATION. IN OUR VIEW THIS DECISION DOES NOT SUPPORT THE ARGU MENTS OF ASSESSEE AS THEY ARE FACTUALLY NOT SIMILAR. 6.2. IN CIT VS.VOLIMOHEMAD AHMEDBHAI(SUPRA), HONBLE COURT CONSIDERED ISSUE, WHETHER, THE AAC ADMITTED ADDITIONAL EVIDENCE WITHOUT GIVING OPPORTUNITY TO A O. HONBLE COURT OBSERVED AND HELD AS UNDER: IT IS CLEAR FROM THE ABOVE-QUOTED PROVISION THAT T HE AAC SHOULD NOT HAVE TAKEN INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE ITO HAD BEEN ALLOWED A REASONABLE OPPORT UNITY TO EXAMINE THE EVIDENCE OR TO CROSS-EXAMINE THE WITNESS WHOSE EVIDENCE WAS TAKEN ON RECORD OR TO PRODUCE ANY EVIDENCE IN REBUT TAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE. IT IS, THEREFORE , OBVIOUS THAT THE AAC COULD NOT HAVE RELIED ON THE ADDITIONAL EVIDENC E WITHOUT GIVING PAGE 4 OF 8 ITA NOS.752 & 753/BANG/2017 SUCH OPPORTUNITY TO THE ITO. THE MERE FACT THAT NOT ICE OF HEARING OF THE APPEAL WAS GIVEN TO THE ITO WOULD NOT MEET THE REQU IREMENTS OF THE ABOVE RULE. EVEN IF NO SUCH RULE WAS IN EXISTENCE, ENDS OF JUSTICE AND FAIR PLAY DEMAND THAT WHEN AN ASSESSEE PRODUCES ADD ITIONAL EVIDENCE IN HIS APPEAL AN OPPORTUNITY IS GIVEN TO THE ITO TO TEST THE EVIDENCE OR TO COUNTER THE EFFECT OF THE EVIDENCE BY PRODUCING EVIDENCE IN REBUTTAL OR OTHERWISE. THE REASON IS SELF-EVIDENT. IT STANDS TO REASON TO PRESUME THAT THE ITO TOOK HIS DECISION NOT TO REMAIN PRESEN T BECAUSE HE CONSIDERED IT UNNECESSARY TO DO SO IN THE CONTEXT O F THE EXISTING RECORD. HE COULD NOT HAVE ANTICIPATED OR REASONABLY FORESEE N THAT THE RECORD WAS GOING TO BE AUGMENTED BY ADDUCING FRESH EVIDENC E. BESIDES, HE HAD A RIGHT TO OBJECT TO THE PRODUCTION OF ADDITION AL EVIDENCE. SINCE SOMETHING ADVERSE TO THE ITO WAS SOUGHT TO BE DONE IN THE COURSE OF THE APPEAL BY WAY OF AUGMENTING THE RECORD, THE ITO OUGHT TO HAVE BEEN HEARD AND GIVEN AN OPPORTUNITY TO MEET WITH TH E ADDITIONAL MATERIAL BY WAY OF CROSS-EXAMINATION, COUNTER EVIDE NCE AND URGING SUBMISSIONS IN THE CONTEXT OF THE AUGMENTED RECORD. OF COURSE, IF THE APPEAL WAS GOING TO BE DECIDED ON THE BASIS OF THE EXISTING RECORD OF WHICH HE HAD NOTICE, NO SUCH QUESTION COULD ARISE A ND NO GRIEVANCE COULD BE MADE AS THE ITO HAD FAILED TO EXERCISE HIS OPTION TO REMAIN PRESENT. HE HAD NO NOTICE OF THE APPLICATION FOR AD DITIONAL EVIDENCE AS NO NOTICE WAS ISSUED. WHEN A PRAYER FOR ADDITIONAL EVIDENCE WAS MADE, IT WAS AN INDEPENDENT AND SUBSTANTIVE APPLICA TION SEEKING A NEW RIGHT. NOTICE OF SUCH APPLICATION WAS NECESSARY TO THE ITO AND HE OUGHT TO HAVE BEEN AFFORDED BOTH AN OPPORTUNITY TO OPPOSE IT AND TO TEST THE ADDITIONAL EVIDENCE OR COUNTER THE EFFECT THERE OF OR PRODUCE EVIDENCE IN REBUTTAL. NO SUCH ORDER GRANTING THE REQUEST COU LD HAVE BEEN PASSED BEHIND THE BACK OF THE ITO IN VIOLATION OF THE PRIN CIPLES OF NATURAL JUSTICE. AT THE COST OF REPETITION, IT BE STATED TH AT NOTICE OF APPEAL CANNOT BE EQUATED WITH NOTICE OF A FUTURE APPLICATION TO L EAD ADDITIONAL EVIDENCE WHICH NO ONE COULD HAVE ANTICIPATED OR REA SONABLY FORESEEN. ORDINARILY, THE APPEAL WOULD BE DECIDED ON THE EVID ENCE RECORDED IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE ITO, THER EFORE, MAY NOT, IN A GIVEN CASE, THINK IT NECESSARY TO REMAIN PRESENT AT THE HEARING OF THE APPEAL. HE, HOWEVER, CANNOT BE EXPECTED TO ANTICIPA TE THAT ADDITIONAL EVIDENCE MIGHT BE PRODUCED BY THE ASSESSEE IN HIS A PPEAL. IT IS FOR THIS REASON THAT IT IS NECESSARY TO GIVE HIM AN OPPORTUN ITY TO MEET THE ADDITIONAL EVIDENCE. THE TRIBUNAL HAS, THEREFORE, F ALLEN INTO AN ERROR IN REJECTING THE PLEA OF THE REVENUE THAT THE AAC OUGH T TO HAVE GIVEN AN OPPORTUNITY TO THE ITO TO EXAMINE THE ADDITIONAL EV IDENCE OR TO CROSS- EXAMINE THE WITNESSES WHOSE EVIDENCE WAS TAKEN ON R ECORD OR TO REBUT THE ADDITIONAL EVIDENCE. WE, THEREFORE, ANSWER THE QUESTION REFER RED TO US IN THE NEGATIVE AND AGAINST THE ASSESSEE. 6.3. IN SMT.MOHINDER KAUR VS.CENTRAL GOVERNMENT(SUPRA), HONBLE ALLAHABAD HIGH COURT HELD AS UNDER: NO PART OF RULE 46A WHITTLES DOWN OR IMPAIRS THE PO WER TO MAKE FURTHER INQUIRY CONFERRED UPON THE AAC BY SECTION 2 50. PAGE 5 OF 8 ITA NOS.752 & 753/BANG/2017 IN OUR VIEW, THESE DECISIONS RELIED BY LD.AR DOES N OT COME TO RESCUE ASSESSEE, RATHER IT SUPPORTS CONTENTION OF R EVENUE. 7. WE ALSO NOTE THAT LD.CIT(A), DID NOT REFER TO AN Y DOCUMENTS FILED BY ASSESSEE IN IMPUGNED ORDER, WHEN LD.AO CATEGORICALLY MENTIONS IN ASSESSMENT ORDER THAT ASS ESSEE DID NOT FILE ANY EVIDENCE TO ESTABLISH GENUINENESS OF TRANSACTIONS. WE NOTE THAT LD.CIT(A) MERELY RELIED ON SUBMISSIONS ADVANCED BY ASSESSEE WITHOUT CARRYING INDEPENDENT ENQUIRIES/VERIFICATION IN RESPECT OF UN EXPLAINED CREDITS AND SUNDRY CREDITORS FOR ASSESSMENT YEAR 20 12-13 AND UNEXPLAINED CREDITS FOR ASSESSMENT YEAR 2013-14 APPEARING IN THE BOOKS OF ACCOUNT OF ASSESSEE. WE R EFER TO THE FOLLOWING PARAGRAPHS IN IMPUGNED ORDERS: 4.5 THIS WAS THE SITUATION IN 2012-13, THE A0 DID NOT BELIEVE THE EVIDENCE GIVEN AND MADE ADDITION. THE APPELLANT SUBMITTED VARIOUS DETAILS ONCE AGAIN WHICH ACCORDING TO HIM H E HAD BEEN SUBMITTED TO THE AO ALSO GIVING THE ENTIRE COPIES I NCLUDING THE, DETAILS OF SHARE APPLICATION MONEY. THE SAME WAS SE NT TO THE AG FOR REMAND REPORT. HOWEVER, NO REMAND REPORT HAS BEEN R ECEIVED TILL DATE. 4.6 IT IS SEEN THAT DETAILS REGARDING LEDGER ACCOUN T AND SHARE APPLICATION MONEY HAVE BEEN FILED BEFORE THE AO, BU T THE AG IGNORED THE SAME AND MADE AN ADDITION OF RS.3,16,92,240 ON ACCOUNT OF UNSECURED LOANS. THE TRANSACTIONS ARE MOSTLY BY CHE QUE. THE AG HAS NO BASIS FOR MAKING ADDITION WHEN CONCERNED DET AILS AND EVIDENCES WERE AVAILABLE. 5. ACCORDING TO THE APPELLANT THERE WAS NO DISCUSSI ON ON ADDITION OF RS.1,00,66,066/- DURING THE ASSESSMENT PROCEEDINGS ON ACCOUNT OF SUNDRY CREDITORS. THE APPELLANT WAS NOT ASKED TO EXPLAIN REGARDING THE SAME. WHILE THE APPELLANT PROVIDED ALL THE CONCERNED DETAILS DURING THE ASSES SMENT PROCEEDING, AG HAS MERELY RECORDED THAT THE ASSESSE E HAS FAILED TO PRODUCE THE DETAILS AND HENCE THE ADDITION HAS BEEN MADE. AS THE ADDITION IS WITHOUT ANY BASIS, THE SAME IS HEREBY D ELETED. 8. OBSERVATIONS IN IMPUGNED ORDER FOR ASSESSMENT YE AR 2013-14 ARE AS UNDER: PAGE 6 OF 8 ITA NOS.752 & 753/BANG/2017 4.6 ACCORDING TO THE APPELLANT ALL THE FACTS HAS B EEN ADEQUATELY DISCLOSED, AND THE INCOME IS ALSO OFFERED, THERE CA NNOT BE ANYTHING OF THE ASSESSEE WHICH IS UNDISCLOSED. SUCH CONSIDER ATION OF LOANS AS UNDISCLOSED IS CONTRARY TO THE FACTS AND PROVISIONS OF THE LAW. THE LEARNED ASSESSING OFFICER HAS NOT APPLIED HIS MIND AND HAS PASSED THE ORDER. THE LEARNED ASSESSING OFFICER HAS NOT GI VEN ANY FINDING NOR CONDUCTED ANY INQUIRY AND HAS PASSED THE ORDER WITHOUT ANY MATERIAL ON RECORD. SUCH PASSING OF ASSESSMENT IS A RBITRARY. PROVISIONS TO SECTION 68 HAS NOT BEEN GIVEN DUE CON SIDERATION AND LEARNED ASSESSING OFFICER HAS ACTED ARBITRARILY WHI LE PASSING THE ORDER. 4.7 THE APPELLANT HAS FILED WRITTEN SUBMISSION AND SUBMITTED VARIOUS DETAILS WHICH HAD BEEN SUBMITTED BEFORE THE AO IN THE ASSESSMENT PROCEEDING. COPIES OF CONFIRMATION ACCOU NTS, LEDGER ACCOUNTS WERE FILED DURING THE ASSESSMENT PROCEEDIN GS. INSPITE OF VARIOUS EVIDENCES FURNISHED, THE AO HAS RECORDED TH AT THE DETAILS WERE FILED ON 25/02/2016. THE ASSESSMENT ORDER IS P ASSED STATING THAT THERE IS NOTHING TO RECORD TO ESTABLIS H THE CREDIT WORTHINESS OF THESE CREDITORS. HOWEVER, NO OPPORTUN ITY APPEARS TO HAVE BEEN PROVIDED TO ESTABLISH THE SAME, IN CASE T HE AO WANTED TO QUESTION IF DETAILS HAVE BEEN FILED AND THE AO S HOULD HAVE PROVIDED MORE OPPORTUNITY. AS THE ASSESSMENT IS MAD E ON THE BASIS OF DETAILS PROVIDED THERE IS NO REASON TO MAK E AN ADDITION U/S 68 WITHOUT FURTHER HEARING OR OPPORTUNITY. AS A LL THE DETAILS AND CONFIRMATION WERE PROVIDED BY THE APPELLANT, TH ERE IS NO BASIS FOR THE ADDITION, THE ADDITION IS HERE BY DELETED. 9. FROM ABOVE OBSERVATIONS IN IMPUGNED ORDER, IT IS CLEAR THAT LD.CIT(A) EITHER REMANDED EVIDENCE FAILED BY A SSESSEE TO LD.AO NOR CARRY OUT ANY INDEPENDENT VERIFICATIO N. BASED ON WHAT WAS STATED BY ASSESSEE, HE DELETED THE ADDI TION. WE THEREFORE AGREE WITH ARGUMENT ADVANCED BY LD.SR.DR . 10. IN THE LIGHT OF ABOVE, WE SET ASIDE THESE ISSUE S BACK TO LD.CIT (A) FOR FRESH ADJUDICATION AFTER COMPLYING WITH REQUIREMENTS UNDER RULE 46A. ASSESSEE IS ALSO DIREC TED TO FILE ALL NECESSARY EVIDENCES AND EXPLANATIONS IN SU PPORT OF ITS CLAIM. LD.CIT (A) IS DIRECTED TO PASS A DETAILE D ORDER BY PAGE 7 OF 8 ITA NOS.752 & 753/BANG/2017 GRANTING PROPER OPPORTUNITY TO ASSESSEE OF BEING HE ARD IN ACCORDANCE WITH LAW. ACCORDINGLY, GROUNDS RAISED BY REVENUE IN BOTH THES E APPEALS STANDS ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT, APPEALS FILED BY REVENUE STANDS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST AUG, 2020. SD/- SD/- (A.K GARODIA) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 21ST AUG, 2020. /VMS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL. BANGALORE. PAGE 8 OF 8 ITA NOS.752 & 753/BANG/2017 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -08-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -08-2020 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -08-2020 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -08-2020 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -08-2020 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -08-2020 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -08-2020 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS