ITO 8(2)-4, MUMBAI V. OPERA INFRA PROJECTS P. LTD, MUMBAI

ITA 8014/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8786 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 22-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJARSHI DWIVEDI
• Keywords: Unexplained cash credit; Business income; Opportunity of being heard
• Section: 142(1); 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER & SHRI P.M.JAGTAP, ACCOUNTANT MEMBER. I.T.A. NO.8014/MUM/2010 ASSESSMENT YEAR : 2007-08. THE INCOME-TAX OFFICER, M/S OPERA INFRA PROJECTS PVT. LTD., 8(2)(4, MUMBAI. VS. 602, VARDHMAN APT., 60 HANUMAN RD., VILE PARLE (E), MUMBAI-400 057. AACCP 1304P. APPELLANT. RESPONDENT. APPELLANT BY : SHRI RAJARSHI DWIVEDI. RESPONDENT BY : NONE. DATE OF HEARING : 22-08-2012 DATE OF PRONOUNCEMENT : 26 -9-2012. O R D E R PER P.M. JAGTAP, A.M. : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LEARNED CIT(APPEALS)-17, MUMBAI DATED 11ST AUGUST, 2010 WHE REBY HE DELETED THE ADDITIONS OF RS.52,77,026/- AND RS.12,32,448/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S 68 AND BY WAY OF ESTIM ATION OF PROFIT OF THE ASSESSEE AT HIGHER RATE RESPECTIVELY. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND ROAD CONTRACTORS . THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 14-11-2 007. IN THE SAID RETURN, INCOME 2 ITA NO.8014/MUM/2010 FROM BUSINESS WAS SHOWN BY THE ASSESSEE AT RS.20,23 ,403/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND THE NOTICE U /S 143(2) ALONG WITH NOTICE U/S 142(1) WAS ISSUED BY THE AO TO THE ASSESSEE ON 25-0 9-2008 FIXING THE HEARING ON 08-10-2008. THE SAID NOTICE AS WELL AS SUBSEQUENT N OTICES ISSUED BY THE AO ON 19- 12-2008, 23-06-2009, 16-07-2009, 03-08,2009 AND 27- 08-2009, HOWEVER, REMAINED UNCOMPLIED WITH BY THE ASSESSEE. A FINAL N OTICE DATED 16-11-2009, THEREFORE, WAS ISSUED BY THE AO U/S 142(1) FIXING T HE HEARING ON 30-11-2009. THE SAID NOTICE INDICATED CLEARLY THAT THE LAST AND FIN AL OPPORTUNITY WAS BEING GIVEN TO THE ASSESSEE AND FAILING TO AVAIL THE SAME WILL RES ULT IN THE BEST JUDGMENT ASSESSMENT U/S 144 ON THE BASIS OF MATERIAL AVAILAB LE ON RECORD. THERE WAS, HOWEVER, NO RESPONSE FROM THE ASSESSEE COMPANY TO T HE SAID NOTICE. SINCE THE ASSESSMENT WAS GETTING TIME BARRED, THE AO PROCEEDE D TO COMPLETE THE ASSESSMENT TO THE BEST OF HIS JUDGMENT U/S 144 ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. IN THE ASSESSMENT SO COMPLETED VIDE AN ORDER DATED 30- 11-2009, HE TREATED THE SHARE CAPITAL OF RS.12,05,000/- AND OTHER LOANS OF RS.40, 72,026/- REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE COMPANY AS UNEXPLAINED CASH C REDITS U/S 68 FOR THE FAILURE OF THE ASSESSEE TO ESTABLISH THE IDENTITY AND CAPACITY OF THE CONCERNED CREDITORS/SHAREHOLDERS AND GENUINENESS OF THE RELEV ANT TRANSACTIONS. THE AMOUNT OF RS.52,77,026 ACCORDINGLY WAS ADDED BY HIM TO THE TO TAL INCOME OF THE ASSESSEE U/S 68. SIMILARLY, FOR THE FAILURE OF THE ASSESSEE TO S UPPORT AND SUBSTANTIATE THE FIGURE OF PROFIT OF RS.20,23,403/- SHOWN FROM THE BUSINESS BY PRODUCING THE RELEVANT BILLS/VOUCHERS ETC., THE AO ESTIMATED THE BUSINESS INCOME AT RS.32,55,852/- BEING 10% OF SALES OF RS.3,25,58,517/- TAKING THE BUSINES S OF THE ASSESSEE AS THAT OF RESTAURANT. ACCORDINGLY, THE ADDITION OF RS.12,32,4 88/- (I.E. RS.32,55,852 - RS.20,23,403) WAS MADE BY HIM TO THE TOTAL INCOME O F THE ASSESSEE ON THIS ISSUE. 3 ITA NO.8014/MUM/2010 3. AGAINST THE ORDER PASSED BY THE AO U/S 143(3), A N APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS). IT WA S SUBMITTED ON BEHALF OF THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS) THAT SHARE CAPITAL OF RS.12,05,000/- AS WELL AS LOANS OF RS.40,72,026/- WERE RECEIVED BY TH E ASSESSEE COMPANY IN THE EARLIER YEARS AND NOT IN THE YEAR UNDER CONSIDERATI ON. BASED OF THIS SUBMISSION OF THE ASSESSEE, THE LEARNED CIT(APPEALS) DELETED THE ADDITION MADE BY THE AO U/S 68 HOLDING THAT THE SAID CREDITS NOT BEING PERTAINED T O THE YEAR UNDER CONSIDERATION, COULD NOT BE ADDED U/S 68 IN THAT YEAR. HE ALSO DEL ETED THE ADDITION OF RS.12,32,448/- MADE BY THE AO BY ESTIMATING THE BUS INESS INCOME OF THE ASSESSEE AT 10% OF THE TOTAL SALES ON THE GROUND THAT THE BU SINESS OF THE ASSESSEE WAS THAT OF BUILDERS AND CONTRACTORS AND NOT OF RESTAURANT AS T AKEN BY THE AO AND THAT THE ESTIMATION OF INCOME AS MADE BY THE AO WAS WITHOUT POINTING OUT ANY DEFECTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE WHICH WERE DUL Y AUDITED. AGGRIEVED BY THIS RELIEF ALLOWED BY THE LEARNED CIT(APPEALS) TO THE A SSESSEE, THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FO LLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.52,77, 026/- MADE U/S 68 OF THE ACT, WITHOUT APPRECIATING FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.32,55,8 52/- (I.E. 10% OF TOTAL SALES OF RS.3,25,58,517/-) MADE FOR WANT OF D ETAILS LIKE VOUCHER. 4. AT THE TIME OF HEARING BEFORE US, NONE HAS APPEA RED ON BEHALF OF THE ASSESSEE DESPITE THE FACT THAT THE NOTICE OF THE HEARING SE NT TO THE ASSESSEE BY RPAD HAS BEEN DULY SERVED, A PROOF OF WHICH IS PLACED ON REC ORD. THIS APPEAL OF THE REVENUE IS, THEREFORE, BEING DISPOSED OF EXPARTE QUA THE RE SPONDENT ASSESSEE AFTER HEARING ARGUMENTS OF THE LEARNED DR AND PERUSING THE RELEV ANT MATERIAL ON RECORD. 4 ITA NO.8014/MUM/2010 5. AS REGARDS THE ISSUE INVOLVED IN GROUND NO.1 REL ATING TO ADDITION U/S 68, IT IS WELL SETTLED THAT ONLY THE CASH CREDITS PERTAINING TO THE RELEVANT YEAR CAN BE ADDED U/S 68 IF THEY REMAIN UNEXPLAINED AND TO THAT EXTEN T WE FIND NO INFIRMITY IN THE DECISION OF THE LEARNED CIT(APPEALS) ON THIS ISSUE IN PRINCIPLE. HOWEVER, KEEPING IN VIEW THAT THERE WAS NO EFFECTIVE COMPLIANCE ON THE PART OF THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WE ARE OF THE VIEW THAT THE LEARNED CIT(APPEALS) OUGHT TO HAVE GIVEN AN OPPORTUNITY TO THE AO TO VERIFY THE STAND OF THE ASSESSEE THAT THE RELEVANT CASH CREDITS REPRESE NTING SHARE CAPITAL AND LOANS WERE RECEIVED IN THE EARLIER YEARS. WE, THEREFORE, RESTO RE THIS ISSUE TO THE FILE OF THE AO FOR THE LIMITED PURPOSE OF VERIFYING THIS STAND OF THE ASSESSEE FROM THE RELEVANT RECORD AND DECIDE THE ISSUE RELATING TO ADDITION U/ S 68 ACCORDINGLY KEEPING IN VIEW THE SETTLED LEGAL POSITION. GROUND NO. 1 OF THE REV ENUES APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 6. AS REGARDS THE ISSUE RAISED IN GROUND NO.2 RELAT ING TO ESTIMATION OF THE INCOME OF THE ASSESSEE FROM BUSINESS, IT IS NO DOUB T TRUE THAT THE AO MADE A MISTAKE IN TAKING THE BUSINESS OF THE ASSESSEE AS T HAT OF A RESTAURANT INSTEAD OF BUILDERS AND CONTRACTORS. HOWEVER, THE LEARNED CIT( APPEALS), IN OUR OPINION, IS NOT JUSTIFIED TO SAY THAT THE ESTIMATION OF BUSINESS IN COME OF THE ASSESSEE AS MADE BY THE AO WAS NOT SUSTAINABLE WITHOUT VERIFYING AND PO INTING OUT ANY DEFECTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE LEARNED CIT(A PPEALS) APPEARS TO HAVE OVERLOOKED THE FACT THAT THERE WAS NO COMPLIANCE FR OM THE ASSESSEE TO THE NOTICES ISSUED BY THE AO DURING THE COURSE OF ASSESSMENT PR OCEEDINGS AND SINCE THE BOOKS OF ACCOUNT STATED TO BE MAINTAINED BY THE ASSESSEE AND DULY AUDITED BY THE AUDITORS WERE NOT PRODUCED FOR THE VERIFICATION OF THE AO, T HE LATTER HAD MADE THE ESTIMATION OF BUSINESS INCOME WHICH, IN OUR OPINION , COULD NOT BE SET ASIDE FOR WANT OF VERIFICATION OR FOR WANT OF ANY DEFECTS POI NTED OUT BY THE AO IN THE BOOKS 5 ITA NO.8014/MUM/2010 OF ACCOUNT. IN OUR OPINION, THE LEARNED CIT(APPEALS ) IN THE FACTS AND CIRCUMSTANCES OF THE CASE SHOULD HAVE DIRECTED THE ASSESSEE TO PR ODUCE THE BOOKS OF ACCOUNT BEFORE THE AO IN ORDER TO GIVE AN OPPORTUNITY TO TH E AO TO VERIFY THE SAME. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF THE LEAR NED CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT AND OTHER SUPPORTING DOCUMENTS FOR THE VERIFICATION OF THE AO. THE AO IS DIRECTED TO DECIDE THIS ISSUE AFRESH AFTER GIVING THE ASSESSEE PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD. GRO UND NO. 2 OF HE REVENUES APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATIS TICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 26 TH DAY OF SEPT. , 2012. SD/- SD/- (I.P. BANSAL) (P.M. JAGTAP) JUDICIAL MEMBER ACCO UNTANT MEMBER MUMBAI, DATED: 26 TH SEPT., 2012. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, C-BENCH. (TRUE COPY) BY ORD ER ASSTT. REGI STRAR, ITAT, MUMBAI BENCHES, MUMB AI. WAKODE