K.R.M. Enterprises (P) Ltd., Delhi V. ITO, New Delhi

ITA 95/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4122 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 04-05-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 07-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEVENDRA SINGH
• Assessee Lawyers: SM MATHUR
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence; Set aside
• Section: 143(3); 142(1); 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH D DELHI ] BEFORE SHRI C. L. SETHI, JM AND SHRI K. D. RANJAN, AM I. T. APPEAL NO. 95 (DEL) OF 2010. ASSESSMENT YEAR : 2006-07. M/S. K. R. M. ENTERPRISES (P) LTD., THE INCOME-TAX OFFICER, SHOP NO. 1011, IIIRD FLOOR, VS. W A R D : 5 (1), 1767 68, BHAGIRATH PALACE, N E W D E L H I. D E L H I 6. PAN / GIR NO. AAC FJ 4662 R. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI S. M. MATHUR, C. A.; DEPARTMENT BY : SHRI DEVENDRA SINGH, SR. D.R. ; O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 200 6-07 ARISES OUT OF THE ORDER OF THE LD. CIT (APPEALS)-VIII, NEW DELHI. 2. THE GROUNDS OF APPEAL, RAISED BY THE ASSESSEE, A RE REPRODUCED AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE FOLLOWING ACTIONS OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ARE ARBITRARY, ERRONEOUS AND ILLEGAL AND MUST BE QUEST : 1. IN THE CIT (APPEALS) CONFIRMING PART ADDIT ION OF RS.12,80,000/- CONTRARY TO LAW AND FACTS; 2 I. T. APPEAL NO. 95 (DEL) OF 2010. 2. IN THE CIT (APPEALS) NOT TELESCOPING THE AD DITION AGAINST THE LAW AND FACTS AND ONE ANOTHER; 3. THAT THE APPELLATE ORDER DATED 16/11/2009 A S PASSED BY THE LD. CIT (APPEALS) AND AUTHORITY BELOW IS WRONG, ILLEGAL, AR BITRARY AND AGAINST THE NATURAL JUSTICE TO THE EXTENT OF CONFIRMING LOANS O F RS.12,80,000/-; 4. THAT THE LD. CIT (APPEALS) AND AUTHORITY BE LOW HAS PASSED THE ORDER IN HASTE AND WITHOUT CONSIDERING ALL FACTS AND INFORMA TIONS AS SUBMITTED DURING THE COURSE OF PROCEEDINGS; 5. THAT THE TAX CALCULATION IS WRONG; 6. THAT THE INTEREST CHARGED IS WRONG. 3. THE ONLY ISSUE FOR CONSIDERATION RELATES TO CONF IRMING THE PART ADDITION OF RS.12,80,000/- ON ACCOUNT OF LOAN RECEIVED BY THE ASSESSEE. THE F ACTS OF THE CASE STATED IN BRIEF ARE THAT THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SE CTION 143(3) OF THE ACT, WHICH WAS LATER ON SELECTED FOR SCRUTINY. THE AO ISSUED QUESTIONNAIRE IN RESPONSE THERETO PART DETAILS WERE FILED. THE AO ISSUED SHOWCAUSE NOTICE CLARIFYING THAT IF T HE REMAINING DETAILS AS PER QUESTIONNAIRE WERE NOT FILED BY 12/02/2008 THE ASSESSMENT WILL BE DECIDED EX-PARTE. THE ASSESSEE VIDE LETTER DATED 12/12/2008 STATED THAT SHRI RAM KISHAN AGGARW AL, DIRECTOR OF THE COMPANY, WHO WAS CONVERSANT WITH THE FACTS OF THE CASE, WAS SUFFERIN G FROM TYPHOID AND WAS HELD UP AT BANGALORE. A REQUEST WAS MADE FOR ADJOURNMENT OF THE CASE. HO WEVER, THE AO PROCEEDED TO COMPLETE THE ASSESSMENT UNDER SECTION 144 OF THE ACT. 4. THE ASSESSING OFFICER WHILE COMPLETING ASSESSMEN T NOTED THAT FRESH UNSECURED LOANS WERE OBTAINED BY THE ASSESSEE FROM SHRI PIYUSH AGGARWAL [RS.6,40,000/-] AND PRAGYA AGGARWAL [RS.6,40,000/-]. SINCE THE ASSESSEE DID NOT FURNIS H ANY EXPLANATION ABOUT THE GENUINENESS OF LOAN ALONG WITH CREDITWORTHINESS OF THE LENDERS, THE AO ADDED THE AMOUNT OF RS.12,80,000/-. 5. BEFORE THE LD. CIT (APPEALS) THE ASSESSEE FILED ADDITIONAL EVIDENCE WITH A REQUEST TO ADMIT THE SAME. THE LD. CIT (APPEALS) OBTAINED THE COMMENTS OF THE AO. THE ASSESSING OFFICER IN HIS REMAND REPORT STATED THAT THE ASSESSEE DID N OT COMPLY WITH THE TERMS OF NOTICE ISSUED UNDER SECTION 142(1) OF THE ACT AND AVOIDED THE ASSESSMEN T PROCEEDINGS AND ALSO FILING OF INFORMATION TO SCUTTLE INVESTIGATIONS DURING THE ASSESSMENT PRO CEEDINGS. THEREFORE, ADDITIONAL EVIDENCE FILED 3 I. T. APPEAL NO. 95 (DEL) OF 2010. SHOULD NOT BE ADMITTED. THE ASSESSEE ALSO COMMENTE D ON THE REMAND REPORT THAT THE ASSESSEE WAS PREVENTED FROM SUBMITTING THE NECESSARY DOCUMEN TS BECAUSE OF THE ILLNESS OF THE DIRECTOR, WHO WAS CONVERSANT WITH THE INFORMATION. THEREFORE , THERE WAS NO WILLFUL NEGLECT ON THE PART OF THE ASSESSEE. THE LD. CIT (APPEALS), HOWEVER, WAS OF THE VIEW THAT THERE WAS A WILLFUL AND DELIBERATE NON-COMPLIANCE ON THE PART OF THE ASSESS EE. THEREFORE, HE DECLINED TO ACCEPT THE REQUEST OF THE ASSESSEE FOR ADMISSION OF THE ADDITI ONAL EVIDENCE. THE LD. CIT (APPEALS) THEREAFTER PROCEEDED TO DECIDE THE ISSUE ON MERITS. THE LD. CIT (APPEALS) REFERRED TO LETTER DATED 15/09/2008 WHEREIN THE ASSESSEE HAD STATED THAT NO FRESH LOAN / SHARE APPLICATION MONEY WAS RECEIVED BY IT DURING THE YEAR UNDER CONSIDERATION. FROM THIS REPLY OF THE ASSESSEE, THE LD. CIT (APPEALS) WAS OF THE VIEW THAT EITHER THE ASSESSEE COMPANY DID NOT TAKE ASSESSMENT PROCEEDINGS SERIOUSLY AND FAIL TO DISCHARGE LEGAL OBLIGATION CA ST UPON IT UNDER SECTION 68 OF THE ACT I.E. FILING NECESSARY PROOF SO AS TO PROVE THE GENUINENESS OF T HE TRANSACTION, IDENTITY OF THE PARTIES AND THEIR CREDITWORTHINESS OR IT HAD DELIBERATELY AVOIDED FIL ING NECESSARY PARTICULARS BEFORE THE AO. IN BOTH THE CASES THE ULTIMATE OUT-COME WAS THAT THE A O WAS PREVENTED FROM EXECUTING / PERFORMING HIS DUTIES AS AN INVESTIGATOR. THEREFORE, THERE WA S NO MERIT IN THE ASSESSEES ARGUMENTS THAT IT WAS PREVENTED FROM FILING THE NECESSARY EVIDENCE WI TH REGARD TO GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITORS ETC. BECAUSE OF INDIFFERENT HEALTH OF ONE OF THE DIRECTORS. THE LD. CIT (APPEALS), THEREFORE, UPHELD THE ADDITI ON OF RS.12,80,000/-. 6. BEFORE US THE LD. AR OF THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAD RECEIVED LOAN FROM SHRI PIYUSH AGGARWAL AND PRAGYA AGGARWAL THROUGH BA NKING CHANNELS. THE CONFIRMATION FOR THE SAME WAS FILED BEFORE THE LD. CIT (APPEALS). IT HA S BEEN ADMITTED THAT THE CONFIRMATIONS WERE NOT FILED BEFORE THE AO AS SHRI RAM KISHAN AGGARWAL , THE DIRECTOR WHO WAS CONVERSANT WITH THE INFORMATION FELL SICK AT BANGALORE. AS REGARDS THE INFORMATION GIVEN IN LETTER THAT NO LOAN / SHARE APPLICATION MONEY WAS RECEIVED, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT WAS AN INADVERTENT MISTAKE ON THE PART OF THE REPRESENTATI VE OF THE ASSESSEE. THE FACT REMAINS THAT THE ASSESSEE HAD RECEIVED FRESH LOAN FROM TWO PERSONS. THEREFORE, THE LD. CIT (APPEALS) SHOULD HAVE ADMITTED THE ADDITIONAL EVIDENCE AND DECIDED THE IS SUE ACCORDINGLY. THE LD. AR OF THE ASSESSEE RELIED ON THE DECISION OF THE ITAT, H-BENCH IN THE CASE OF H.L.S. ASIA LTD. VS. DCIT 121 TTJ 4 I. T. APPEAL NO. 95 (DEL) OF 2010. (DEL.) 340 FOR THE PROPOSITION THAT THE ADDITIONAL EVIDENCE SHOULD HAVE BEEN ADMITTED BY THE LD. CIT (APPEALS). ON THE OTHER HAND, THE LD. SR. DR S UPPORTED THE ORDER OF THE LD. CIT (APPEALS). 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE FACTS STATED ABOVE, IT IS CLEAR THAT THE ASSESS EE HAD NOT GIVEN INFORMATION BEFORE THE AO WITH REGARD TO THE FRESH CASH CREDITS INTRODUCED IN THE BOOKS OF ACCOUNTS. THE ASSESSEE HAD FILED ADDITIONAL EVIDENCE BEFORE THE LD. CIT (APPEALS), W HICH WAS NOT ADMITTED. THE LD. CIT (APPEALS) WHILE REJECTING THE APPLICATION FOR ADMIS SION OF ADDITIONAL EVIDENCE HAS IGNORED THE CONTENTION OF THE ASSESSEE THAT SHRI R. K. AGGARWAL , THE DIRECTOR OF THE COMPANY, WHO WAS CONVERSANT WITH THE INFORMATION, FELL SICK AT BANGA LORE. IN OUR CONSIDERED OPINION, THE LD. CIT (APPEALS) SHOULD HAVE ADMITTED THE ADDITIONAL EVIDE NCE AND DECIDED THE ISSUE, AFTER KEEPING IN VIEW THE INFORMATION FILED BY THE ASSESSEE, DURING THE COURSE OF APPELLATE PROCEEDINGS. SINCE THE ASSESSEE HAD NOT FILED INFORMATION BEFORE THE AO AN D THE LD. CIT (APPEALS) HAD NOT ADMITTED THE ADDITIONAL EVIDENCE, IN OUR CONSIDERED VIEW, THE MA TTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THE CASE AFRESH. THE LD. COUNSEL FOR THE ASSESSEE BEFORE US UNDERTOOK THE RESPONSIBILITY OF CO-OPERATING WITH T HE ASSESSING OFFICER. WE, THEREFORE, SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTIONS TO COMPLETE ASSESSMENT AFTER PROPER VERIFICATION AND AFFORDING THE ASSESSEE A RE ASONABLE OPPORTUNITY OF BEING HEARD. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED, FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 04 TH MAY, 2010. SD/- SD/- [ C. L. SETHI ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 04 TH MAY, 2010. *MEHTA * 5 I. T. APPEAL NO. 95 (DEL) OF 2010. COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT. 6 I. T. APPEAL NO. 95 (DEL) OF 2010. 7 I. T. APPEAL NO. 95 (DEL) OF 2010.