Khazana Consultants Pvt. Ltd., Ahmedabad V. ITO, Ward-2(1)(2), Ahmedabad

ITA 829/AHD/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 6028 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 03-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V.K. SINGH
• Keywords: Unexplained cash credit; Recovery proceedings
• Section: 68; 144; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH (Conducted Through Virtual Court) Before: Ms. Annapurna Gupta, Accountant Member And Shri TR Senthil Kumar, Judicial Member Khazana Consultants Pvt. Ltd. 301, Sheel Complex, Nr. Mithakhali roads, Navrangpura, Ahmedabad PAN No: AACCK1058R (Appellant) Vs The ITO, Ward-2(1)(2), Ahmedabad (Respondent) Appellant by : None Respondent by : Shri V.K. Singh, Sr. D.R. Date of hearing : 07-03-2022 Date of pronouncement : 25-03-2022 आदेश/ORDER PER : ANNAPURNA GUPTA, ACCOUNTANT MEMBER:- The present appeal has been filed by the Assessee against the order passed by the Commissioner of Income Tax (Appeals)-XXI, Ahmedabad, (in short referred to as CIT(A)), dated 25-02-2013, u/s. 250(6) of the Income Tax Act, 1961(hereinafter referred to as the “Act”) pertaining to Assessment Year (A.Y) 2005-06. 2. None appeared on behalf of the assessee nor any application seeking adjournment filed before us. Further we have noted from the order sheet entry that the hearing in the appeal, filed on 04.04.2018 by the assessee, has repeatedly remained unattended on behalf of the assessee on 11.12.2019,24.02.2020, 22.01.2021, 19.04.2021, 27.07.2021 10.11.2021 and finally 10.02.2022, when the case was fixed for ITA No. 829/Ahd/2018 Assessment Year 2005-06 I.T.A No. 829/Ahd/2018 A.Y. 2005-06 Page No Khazana Consultants Pvt. Ltd. . vs. ITO 2 hearing today and notice directed to be issued by RPAD. We have further noted that several notices issued to the asessee at the address mentioned in Form NO. 36 have returned with the remark refused/returned, including the notice for hearing on 10.11.2021 and the notice for the hearing today on 07.03.2022. We have further noticed that even the assessment proceedings have remained unattended by the assessee, the assessment order having been passed u/s. 144 of the Act i.e. ex- parte.We have also noted that even before the Ld. CIT(A) the assessee ,after submitting additional details, did not participate further in the proceedings and all letters addressed to the assessee came back with the remark “refused”. Para 3.3 of the ld. CIT(A)’s order bring out the above facts as under: 3.3 During the appellate stage, the appellant filed additional details vide its letter dated 14.07.2011 which were forwarded to the AO. The AO had submitted his remand report vide his letter dated 28.06.2012. The remand report was forwarded to the appellant for its counter comments vide this office letter dated 18.10.2012, by Hegel. AD. The same letter came bad-; with a remark "refused". Subsequently, a notice dated 31. 12. 2012 was sent to the appellant by Regd. AD, but the same also returned back with a note "not known". Under the stated circumstances, 1 proceed to adjudicate the grounds of appeal on the basis of merits of the case and the remand report submitted by the AO. 3. It appears that the assessee harbors a misconceived belief that as an aggrieved person his duty ends with filing of the appeal and it is for the adjudicating authorities to ensure his compliance and participation in the appellate proceedings. Albeit,the assessee it appears is not interested in participating in the appellate proceedings. Therefore considering the unresponsive attitude of the assessee before all the authorities below us and also before us, with the assessee refusing to even take the notices of hearing, we are of the view that no further opportunity is to be granted to the assessee for hearing. Accordingly the appeal was proceeded to be heard with and adjudicated on the basis of material before us. I.T.A No. 829/Ahd/2018 A.Y. 2005-06 Page No Khazana Consultants Pvt. Ltd. . vs. ITO 3 4. The solitary issue, it transpires from the orders of the authorities below, relates to addition made on account of unsecured loans remaining unexplained, as per the provisions of Section 68 of the Act. The assessment order reveals that the Assessing Officer (A.O.) had noted that the assessee had claimed to have received unsecured loans amounting to Rs. 16,76,59,700/- during the impugned year and on being asked the prove the genuineness of the same,the A.O. noted that the assessee was unable to prove the genuineness with respect of unsecured loan amounting to Rs. 4,77,69,700/- pertaining to the following : Sr. No. (Name of the parties Amount (Rs.) (a) Dev Agencies (P) Ltd. 1,01,69,700 (b) DSFS Consultanmcy Services (?) Ltd. 78,00,000 (c) Karnavati Alfa International Ltd. 18,00,000 (d) ShriSaihaba Finsec (P)Ltd. : 2,80,00,000 Total 4,77,69,700 5. Before the Ld. CIT(A) the asessee filed additional details with regard to the above unsecured loans, which were forwarded to the A.O. by the Ld. CIT(A) for his comments. On receipt of the remand report of the A.O., the same was forwarded to the assessee who thereafter did not respond, with the letters being returned with the remark refused/not known. Ld. CIT(A) thereafter proceeded to adjudicate the issue on the basis of material before him and deleted addition of unsecured pertaining to following: Dev Agencies (P) Ltd. Rs. 1,01,69,700/- Shri Saibaba finsec (P) Ltd. Rs.2,80,00,000/-. 5.1 on finding that the assessee had proved the genuineness of the same which was independently confirmed by the A.O. also and nothing adverse found. I.T.A No. 829/Ahd/2018 A.Y. 2005-06 Page No Khazana Consultants Pvt. Ltd. . vs. ITO 4 5.1. The addition in relation to the remaining unsecured loans, pertaining to the following, were however confirmed (1) DSFS Consultancy Services Pvt. Ltd. Rs. 78,00,000/- and (2) karnavati Alfa International Ltd. Rs.18,00,000/-. 6. It is against the above additions confirmed that the assessee has filed appeal before us raising the following grounds: 1. The Ld CIT (Appeals ) - XXI has erred in law by passing ex-parte order and on the facts in partly confirming the additions made by the AO amounting to Rs.96 lacs u/s 68, ignoring the facts and material available on record, submitted by the appellant as additional documents which were sufficient to prove the genuineness of of unsecured loans, existence of the lenders, ought to have considered the submission of the appellant and delete the additions made by the LD AO. It be so held now. 2. The Order passed by the LD CIT(A) - XXI is ex-parte without giving proper opportunity to the appellant of being heard. The appellant has submitted all the necessary details on 14th July 2011 on the basis of which the remand report was called for. Even the notices referred by the Ld AO in his remand report i.e. 18.10.2012, 31.12.2012 were not served on to the appellant and as such no compliance could be made. However, all the required details were already on the record which were not considered by the Ld AO in the remand report nor the Ld CIT (A) - XXI has taken cognizance of the same in the appellate proceedings and passed the Order ex-parte. 3. The appellant not being in knowledge of any notices nor even the fact of passing the Order by the Ld CIT(A)-XXI had come to know about the Order recently during the recovery proceedings by the Ld ITO, 2(1)(2), have asked for copy of the Order vide letter dated 3.2.2018 and received the copy of Order on 6.03.2018 vide ITO's letter dated 20.2.2018, immediately have proceeded for filing this appeal before the Hon'ble Tribunal. 4. The appellant reserves its right to add, amend. After, edit, delete or modify any of the grounds of appeal at the time or before the hearing of this appeal. 7. We have gone through the findings of Ld. CIT(A) with respect to the aforestated unsecured loans at para 3.4 (a) and 3.4 (d) as under: 3.4 (a) DSFS Consultancy Services (P.) Ltd. With respect to this lender the A.O. had reported that the appellant has filed details like confirmation copy of acknowledgment of filing return, audit reports and bank accounts. I.T.A No. 829/Ahd/2018 A.Y. 2005-06 Page No Khazana Consultants Pvt. Ltd. . vs. ITO 5 However, in response to notice u/s. 133(6) issued by the A.O., the same has returned unserved. Subsequently the Notice server, deputed by the A>O. could not trace the said party at the address indicated by the appellant on the loan confirmation. In view of the finding of the A.O. that notice u/s. 133(6) remained unserved. I am of the view that the existence of the loan is in doubt. In other words, the appellant has not proved the existence of the lender beyond doubt especially in view of the fact that none have appeared in the appellate proceedings. I am of the view that the A.O. has correctly added the sum of Rs. 78 lacs u/s. 68 of the Income Tax Act. 3.4 (b) Karnavati Alfa International Ltd. – Rs. 18,00,000/- With respect to this lender, the AO, in his remand report, has pointed GUI that attempts were made to cross-verily unsecured loans with, the records of the lender as the same party is assessed in his charge. However, the loan amount could not be verified from the record of the lender. The AO also has reported that the amount of unsecured loans outstanding as on 31.3.2005 in the lender's book was Us.14 lacs and on the other hand Rs. 18 lacs was the unsecured loans: which was disallowed u/s. 6B of the I.T. Act by the AO. In view of the basic mismatch of the loan figures from the appellant vis-a-vis the lender's book and also the fact that none has appeared from the appellant side before me despite of number of attempts made from this office, 1 am of the view that prima facie loan given by Karnavati Alfa International Ltd. amounting to Rs. 18 lacs as unexplained cash credit u/s. 68 of the I.T. Act. The addition therefore made by the A.O. to this extent is confirmed. 8. On going through the above, we have noted that with respect to M/s DSFS Consultancy Services Pvt. Ltd., though document like confirmation, copy of acknowledgement of filing return, tax audit reports and bank account were filed by the assessee, however enquiry conducted by the A.O., by issuing notice u/s. 133(6) of the Act to the loan depositor remained unserved. Nor could notice server trace the party at the address indicated by the assessee. We have gone through the assessment order and we have noted that the A.O. has mentioned therein that the I.T.A No. 829/Ahd/2018 A.Y. 2005-06 Page No Khazana Consultants Pvt. Ltd. . vs. ITO 6 noncompliance by the aforesaid party to summons issued to it was confronted to the assessee and who did not respond to the same. 9. In view of the aforesaid fact, we see no infirmity in the order of the Ld.CIT(A) holding that since the party giving the unsecured loan was not found to be in existence at the address given by the assessee itself and no explanation for the same was given by the assessee., the unsecured loan of Rs.78,00,000/- remained unexplained. The order of the Ld.CIT(A) confirming the addition of the same is upheld. 10. As for the unsecured loan received from M/s Karnavati Alfa International Ltd. , we find that the Ld. CIT(A) has noted that the A.O. of M/s Karnavati Alfa International Ltd. was the same as that of the assessee and had noted from the records that against unsecured loan of Rs. 18,00,000/- received by the assessee, M/s Karnavati Alfa International Ltd. had reflected loans of 14,00,000/- given to the assessee. In view of this fact confirmed by the A.O. himself from his assessment records, we are of the view that to the extent of Rs. 14,00,000/- the unsecured loans stand confirmed by the inquiry conducted by the A.O. himself independently. The remaining Rs. 4,00,000/- remaining unexplained, addition of the same confirmed by the Ld. CIT(A) is upheld. 11. In view of the above addition u/s 68 of the Act of Rs.78,00,000/- and Rs.4,00,000/- of unexplained unsecured loans from M/s DSFS Consultancy Services Pvt. Ltd. and M/s Karnavati Alfa International Ltd respectively is upheld, while of Rs.14,00,000/- from M/s Karnavati Alfa International Ltd is deleted. 12. As for the grounds raised challenging the passing of ex parte order by Ld.CIT(A), in the absence of any representation of the assessee before us and a consequence the absence of any pleadings with respect to the said grounds, the grounds are dismissed. I.T.A No. 829/Ahd/2018 A.Y. 2005-06 Page No Khazana Consultants Pvt. Ltd. . vs. ITO 7 13. In effect, appeal of the Assessee is partly allowed in above terms. Order pronounced in the open court on 25 -03-2022 Sd/- Sd/- (TR SENTHIL KUMAR) (ANNAPURNA GUPTA) JUDICIAL MEMBER True Copy ACCOUNTANT MEMBER Ahmedabad : Dated 25/03/2022 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद