BANSAL OIL MILLS LTD., Jaipur V. ACIT, Jaipur

ITA 813/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5504 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 29-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA
• Assessee Lawyers: R C SHAH
• Keywords: Gift; Search and seizure; Opportunity of being heard; Principle of natural justice; Reason to believe
• Section: 143(3); 147; 68; 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 813/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2003-04 M/S BANSAL OIL MILLS LTD., G-834 A ROAD NO. 14, VKI AREA, JAIPUR. CUKE VS. A.C.I.T., CIRCLE-4, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AAACB 9830 C VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI R.C. SHAH (ADV) JKTLO DH VKSJ LS @ REVENUE BY : SHRI O.P. BHATEJA (ADDL.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 16/02/2016 MN?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 19/02/2016 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 06/09/2013 PASSED BY THE LEARNED CIT(A)-II, JAIPUR FOR A.Y. 2003-04. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1 THAT THE LD CIT(A) HAS WRONGLY SUSTAINED THE ADDITION OF RS. 300000/ MADE BY THE ASSESSING AUTHORITY TO THE TOTAL RETURNED INCOME OF THE ITA 813/JP/2013_ M/S BANSAL OIL MILLS LTD. VS ACIT 2 APPELLANT COMPANY ALLEGING THAT THE CREDITWORTHINESS AND GENUINENESS OF THE LENDER COMPANY COULD NOT BE PROVED AND ESTABLISHED. THE LD CIT(A) HAS FAILED TO APPRECIATE THAT THE APPELLANT HAS TAKEN THE LOAN THROUGH ACCOUNT PAYEE CHEQUE, RETURNED AMOUNT BY ACCOUNT PAYEE CHEQUE, BOTH WERE ROUTED THROUGH REGULAR BANKING CHANNEL, INTEREST WAS PAID AND TDS WAS DEDUCTED AND DEPOSITED BY APPELLANT AND CLAIMED BY LENDER IN ITS IT RETURN, CONFIRMATION WAS FILED. THE LENDER IS A BODY CORPORATE, TRANSACTION WA S DULY ENTERED IN BOOKS. PAN OF LENDER WAS GIVEN AND REQUEST OF APPELLANT TO SUMMON THE PERSON WHO MADE INCRIMINATORY STATEMENT WAS NOT GRANTED. 2. THAT THE LD CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSING OFFICER WAS JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 147 AND SECTION 68 OF THE IT ACT, 1961. 3. THAT THE ASSESSING OFFICER HAS WRONGLY AND UNLAWFULLY BASED HIS ADDITION BY RELYING ON THE STATEMENT RECORDED BY THE DEPARTMENT OF ONE SRI KRIPA SHANKAR SHARMA IN THE CASE OF M/S B.C. PUROHI T AND COMPANY WHEREIN THE SEARCH AND SEIZURE WAS CONDUCTED ON 12/4/2005 IN SPITE OF THE FACT THAT TH E APPELLANT COMPANY WAS NOT AT ALL CONNECTED OR RELATED DIRECTLY OR INDIRECTLY TO THESE PERSONS AND THE DEPONENT HAS NO WHERE TAKEN NAME OF THE APPELLANT. 4. THAT THE LD CIT(A) IS NOT CORRECT IN NOT CONSIDER ING AND ACCEPTING THE DETAILED SUBMISSIONS AND VARIOUS JUDICIAL DECISIONS FILED BY THE APPELLANT COMPANY. 2. THE ASSESSEE COMPANY IS ENGAGED IN MANUFACTURING OF EDIBLE OIL, OIL CAKES AND MILL STONE. THE ASSESSEE FILED ITS RET URN ON 28/11/2003 ITA 813/JP/2013_ M/S BANSAL OIL MILLS LTD. VS ACIT 3 SHOWING INCOME OF RS. 15,79,210/-. THE RETURN WAS PRO CESSED U/S 143(1)(A) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THEREAFTER AFTER RECORDING THE REASONS U/S 147 OF THE ACT, THE ASSESSING OFFICER ISSUED NOTICE U/S 148 OF THE ACT AND SCRUTINIZED TH E CASE. THE ASSESSEE CHALLENGED THE REOPENING U/S 147 AND ADDITION MADE U/S 68 OF THE ACT. IN THIS CASE, THE RETURN WAS PROCESSED U/S 143(1)(A) OF THE ACT AND NOTICE U/S 148 OF THE ACT WAS ISSUED ON 30/3/2010, W HICH IS MORE THAN 4 YEARS FROM THE RELEVANT ASSESSMENT YEAR. THE MAIN REASON FOR REOPENING WAS THAT THERE WAS A SEARCH AND SEIZURE CON DUCTED BY THE DEPARTMENT IN THE CASE OF B.C. PUROHIT AND COMPANY GROUP ON 12/4/2005. DURING THE COURSE OF SEARCH, THERE WAS AL LEGATION THAT SOME PARTIES HAVE TAKEN ENTRIES FROM THIS COMPANY. THE AS SESSEE ALSO HAS HELD TO BE INVOLVED IN GETTING THE ENTRIES FROM THI S GROUP BUT IT IS ARGUED THAT THE ASSESSEE HAS TAKEN THIS LOAN FROM M /S K.G. PETROCHEM (P) LTD. THROUGH ACCOUNT PAYEE CHEQUE, WHICH HAS BEE N REPAID TO HIM. THE ASSESSEE HAD FURNISHED ALL THE DETAILS BEFORE TH E ASSESSING OFFICER, THEREFORE, PROCEEDING U/S 148 IS DESERVED TO BE QUA SHED. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE LD /CIT(A) AND ARGUED THAT IN THIS CASE NO SCRUTINY U/S 143(3) HAS BEEN MADE B Y THE DEPARTMENT AND DEPARTMENT WAS HAVING INFORMATION AGAINST THE AS SESSEE THAT THE ITA 813/JP/2013_ M/S BANSAL OIL MILLS LTD. VS ACIT 4 ASSESSEE WAS INVOLVED IN TAKING ENTRY THROUGH M/S B. C. PUROHIT AND COMPANY. THEREFORE, REOPENING U/S 148 OF THE ACT IS VALID. 3. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN TH IS CASE, NO SCRUTINY HAS BEEN MADE BY THE REVENUE. THE CASE HAS BEEN REOP ENED U/S 148 ON THE BASIS OF SEARCH CONDUCTED IN THE CASE OF M/S B.C. PUROHIT AND COMPANY GROUP ON 12/4/2005. M/S BANSAL OIL MILLS LT D. (ASSESSEE) ALSO FOUND BENEFICIARY AND HAD RECEIVED ACCOMMODATION EN TRY OF RS. 3 LACS FROM M/S K.G. PETROCHEM (P) LTD. THEREFORE, THE ASSE SSING OFFICER HAD REASON TO BELIEVE TO REOPEN THE CASE U/S 147 OF THE ACT. ACCORDINGLY THE ACTION OF THE ASSESSING OFFICER ON REOPENING IS CON FIRMED. 4. ALL THE OTHER GROUNDS OF THE APPEAL ARE AGAINST CONFIRMING THE ADDITION OF RS. 3 LACS U/S 68 OF THE ACT. THE LD ASS ESSING OFFICER OBSERVED THAT THE ASSESSEE HAD TAKEN LOAN FROM M/S K.G. PETROCHEM (P) LTD. ON 4/1/2013. DURING THE COURSE OF SEARCH, STAT EMENT OF SHRI KRIPA SHANKAR SHARMA AND RELATIVES OF MR. B.C. PUROHIT WER E RECORDED WHEREIN THE CONFESSED THAT COMPANIES APPEARING IN TH E RECORD, DOCUMENTS WERE BOGUS HAVING NO BUSINESS ACTIVITY AND WERE ONLY BEING USED TO PROVIDE ENTRY IN THE GUISE OF GIFTS, LOANS OR LONG TERM CAPITAL ITA 813/JP/2013_ M/S BANSAL OIL MILLS LTD. VS ACIT 5 GAIN ON TRANSACTIONS IN SHARES AND WHATEVER DEPOSITS WERE MADE IN THE BANK ACCOUNT OF THESE COMPANIES WERE IN FACT SUMS R ECEIVED FROM THE BENEFICIARIES WHO WANTED TO HAVE AN ACCOMMODATION EN TRY. THE LD ASSESSING OFFICER REPRODUCED THE STATEMENT RECORDED U/S 132(4) OF THE ACT ON PAGE 4 TO 10 OF THE ASSESSMENT ORDER AND ON THE BASIS OF THIS STATEMENT, THE LD ASSESSING OFFICER GAVE THE REASON ABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE APPEARED AND FILED REPLY ON 30/11/2010, WHICH HAS ALSO BEEN REPRODUCED ON PAGE 10 AND 11 OF THE ASSESSMENT ORDER. AFTER CONSIDERING THE ASSESSEES REPLY, IT WAS HELD BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD FAILED TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. COPY OF THE BANK ACCOUNT OF K.K. PETRO CHEMICAL WAS NOT PROVIDED TILL DATE. K.K. PETRO CHEMICAL WAS ALSO NOT PRODUCED FOR VERIFICATION BEFO RE THE ASSESSING OFFICER. THEREFORE, HE HELD THAT THIS IS AN ACCOMMOD ATION ENTRY OF RS. 3 LACS. ACCORDINGLY HE MADE ADDITION OF RS. 3 LACS U/ S 68 OF THE ACT. 5. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASSE SSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A), WHO HAD CONFIRMED THE ADDITION BY OBSERVING AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS MADE. THE AR COULD NOT CONTROVERT THE ITA 813/JP/2013_ M/S BANSAL OIL MILLS LTD. VS ACIT 6 FINDINGS OF THE A.O.. THE SUBMISSION FILED BY THE AR FOR THE APPELLANT IS NOT TENABLE BECAUSE THE A.O. CLEAR LY MENTIONED IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS FAILED TO PRODUCE THE BASIC ISSUE RELATING TO THE CREDITWORTHINESS AND GENUINENESS OF THE COMPANY. COP Y OF BANK ACCOUNT OF K.K. PETRO CHEMICAL WAS NOT PROVI DE TILL DATE. K.K. PETRO CHEMICAL WAS NOT PRODUCED FOR VERIFICATION TILL DATE. ALL THESE DISCREPANCIES AND STATEMENTS OF ENTRIES PROVIDES WERE THE BASIS FOR TO HELD THAT THE AMOUNT GIVEN BY /S K.K. PETRO CHEMICAL WAS NOT A LOAN BUT AN ACCOMMODATION ENTRY. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, THE CAS E LAWS CITED BY THE AR FOR THE APPELLANT IS NOT RELEVANT. HENCE, THE ADDITION MADE BY THE A.O. IS SUSTAINED. THE APPELLANT FAILS ON THIS GROUND. 6. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD A R FOR THE ASSESSEE HAS REITERATED THE ARGUMENTS MADE BEFORE T HE LD CIT(A) AND FURTHER ARGUED THAT THE ASSESSEE IS NOT CONNECTED D IRECTLY OR INDIRECTLY TO M/S B.C. PUROHIT AND COMPANY AND SHRI KRIPA SHAN KAR SHARMA IN ANY WAY. THE COMPANY OR ANY PERSON OF THE ASSESSEE COMPAN Y DOES NOT KNOW THE GROUP OR ANY INDIVIDUAL RELATED TO THE GROU P. FURTHER SHRI KRIPA SHANKAR SHARMA HAS NO WHERE STATED IN HIS STAT EMENT RECORDED BY THE DEPARTMENT THAT A LOAN OF RS. 3 LACS HAD BEE N GIVEN TO THE ITA 813/JP/2013_ M/S BANSAL OIL MILLS LTD. VS ACIT 7 ASSESSEE COMPANY AND SUCH LOAN WAS BOGUS OR ACCOMMOD ATION ENTRY. HE FURTHER ARGUED THAT THE ASSESSEE HAD DEDUCTED TDS ON INTEREST PAYMENT AND PAID TO THE GOVERNMENT. THE LOAN AMOUNT ALREADY REPAID TO THE LOANEE. THE COPY OF STATEMENT RECORDED DURIN G THE COURSE OF SEARCH OF SHRI KRIPA SHANKAR SHARMA HAD NOT BEEN PR OVIDED TO THE ASSESSEE. THE ASSESSEE VIDE LETTER DATED 30/11/2010 HAD REQUESTED TO THE ASSESSING OFFICER TO PROVIDE THE COPY OF STATEM ENT RECORDED BY THE DEPARTMENT AND COPY OF THE SEIZED MATERIAL CONNECTE D WITH IN THE CASE OF B.C. PUROHIT & COMPANY GROUP. THE ASSESSEE ALSO R EQUESTED FOR ARRANGING CROSS EXAMINATION OF THE PARTY TO BRING O N RECORD THE CORRECT FACT WITH RELATION TO LOAN TAKEN BY THE ASSESSEE. HE FURTHER RELIED UPON A RECENT DECISION OF HON'BLE SUPREME COURT IN THE C ASE OF ANDAMAN TIMBER VS. CIT, CIVIL APPEAL NO. 4228 OF 2006 ORDER D ATED 2 ND SEPTEMBER, 2015 WHEREIN THE HON'BLE SUPREME COURT HA S HELD THAT NOT ALLOWING THE ASSESSEE TO CROSS EXAMINE THE WITNESS BY ASSESSING AUTHORITY THOUGH THE STATEMENT OF THOSE WITNESSES WER E MADE THE BASIS OF THE IMPUGNED ORDER, IS SERIOUS FLAW WHICH MAKES T HE ORDER NULLIFY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. THEREFORE, ITA 813/JP/2013_ M/S BANSAL OIL MILLS LTD. VS ACIT 8 IMPUGNED ORDER PASSED BY THE TRIBUNAL IS SET ASIDE. ACCORDINGLY, THE AR PRAYED TO SET ASIDE THE ORDER OF THE LD CIT(A). 7. AT THE OUTSET, THE LD. DR VEHEMENTLY SUPPORTED T HE ORDER OF THE LOWER AUTHORITIES AND ARGUED THAT THE HONBLE BENCH IN THE CASE OF DCIT VS. SONI HOSPITALS PVT. LTD. IN ITA NO. 588/JP/2011 ORDER DATED 11/8/2015 FOR A.Y. 2005-06 HAS HELD THAT SHRI KRIPA SHANKAR SHARMA HAD PROVIDED ACCOMMODATION ENTRY TO THE VARIOUS PER SONS/ENTITIES AFTER OBTAINING CASH FROM THE ENTRY TAKERS, WHO IS ALSO D IRECTOR OF M/S KK PETRO, CHEMICAL PVT. LTD., THEREFORE, ORDER OF THE LD CIT(A) MAY PLEASE BE CONFIRMED. 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS UNDISPUTED FACT THAT THE LD ASSESSING OFFICER AS WELL AS LD CIT(A) HAD NOT PROVIDED CROSS EXAMINATION OF THE PARTY WHOSE STATEMENT HAD BEEN US ED AGAINST THE ASSESSEE AS AN EVIDENCE, WHICH WAS ASKED TO BE CROSS EXAMINED BY THE ASSESSEE VIDE LETTER DATED 30/11/2010. BY RESPECTFU LLY FOLLOWING THE ORDER OF THE HON'BLE SUPREME COURT IN THE CASE OF A NDAMAN TIMBER VS. CIT, THIS ISSUE IS SET ASIDE TO THE ASSESSING OFFICE R AND THE LD ASSESSING OFFICER IS DIRECTED TO PROVIDE COPY OF STATEMENT AN D REQUIRED COPY OF ITA 813/JP/2013_ M/S BANSAL OIL MILLS LTD. VS ACIT 9 SEIZED MATERIAL FOR EXPLAINING THE CASH CREDITOR BY THE ASSESSEE. ACCORDINGLY, THIS ISSUE IS SET ASIDE TO THE ASSESSI NG OFFICER FOR DENOVO. 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED F OR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 19/02/2016. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 19 TH FEBRUARY, 2016 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S BANSAL OIL MILLS LTD., JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE A.C.I.T., CIRCLE-4, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 813/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR