Bangbhumi Distributors (P) Ltd., Kolkata V. I.T.O.,Ward-5(3), Kolkata

ITA 998/KOL/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 8440 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 02-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUBASH AGARWAL ADV SMT
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice; Set aside
• Section: 142(1); 250; 131; 68; 263; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA B BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI ABY T. VARKEY, JUDICIAL MEMBER) I.T.A. NO. 998/KOL/2019 ASSESSMENT YEAR: 2012-13 BANGBHUMI DISTRIBUTORS (P) LTD.............................................................APPELLANT [PAN: AAECB 6236 A] VS. ITO, WARD-5(3), KOLKATA...............................................................................................RESPONDENT APPEARANCES BY: SH. SUBASH AGARWAL, ADV.,APPEARED ON BEHALF OF THE ASSESSEE. SMT. RANU BISWAS, ADDL. CIT, APPEARED ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : MARCH 10 TH , 2021 DATE OF PRONOUNCING THE ORDER : MARCH 24 TH , 2021 ORDER PER J. SUDHAKAR REDDY, AM : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-23, KOLKATA [HEREINAFTER THE CIT(A)], PASSED U/S. 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DATED 13.02.2017 FOR THE ASSESSMENT YEAR 2012-13. 2. THE ASSESSEE IS A COMPANY AND IS IN THE BUSINESS OF INVESTMENT AND TRADING OF SHARES & SECURITIES. IT FILED ITS RETURN OF INCOME FOR THE AY 2012-13 ON 26.09.2012. THE AO PASSED AN ORDER U/S 144 OF THE ACT ON THE GROUND THAT THE ASSESSEE FAILED TO COMPLY WITH THE NOTICES ISSUED U/S 131 OF THE ACT TO THE DIRECTORS FOR THEIR PERSONAL APPEARANCE. THE AO ALSO RECORDS THAT THE ASSESSEE FAILED TO PRODUCE DETAILS, DOCUMENTS, INFORMATION ETC. DURING THE COURSE OF SCRUTINY PROCEEDINGS. AT PAGE-1 OF THE ASSESSMENT ORDER THE AO RECORDS ALL THE NOTICES ISSUED TO THE ASSESSEE RETURNED UNSERVED AND THE NOTICES AND LETTERS WERE SERVED UPON THE ASSESSEE BY AFFIXATION. HENCE HE PASSED AN EX- PARTE ORDER. ON APPEAL THE LD. FIRST APPELLATE AUTHORITY ALSO PASSED AN EX-PARTE ORDER FOR THE REASON THAT THE LETTERS, NOTICES WERE RETURNED UNSERVED WITH THE REMARKS INADEQUATE ADDRESS 2 I.T.A. NO. 998/KOL/2019 ASSESSMENT YEAR: 2012-13 BANGBHUMI DISTRIBUTORS (P) LTD. AND THAT NOTICES COULD NOT BE SERVED ON THE ASSESSEE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT PRINCIPLES OF NATURAL JUSTICE WERE VIOLATED IN THIS CASE AS, NO NOTICES OF HEARING WERE SERVED ON THE ASSESSEE. HE SUBMITS THAT THE ASSESSEE COMPANY HAS CHANGED ITS ADDRESS AND THIS WAS INTIMATED TO THE AUTHORITIES BUT THE NOTICES WERE SENT TO THE OLD ADDRESS OF THE ASSESSEE. IT WAS PLEADED THAT ONE OPPORTUNITY BE GIVEN TO THE ASSESSEE TO SUBSTANTIATE ITS CASE AND THAT THE ASSESSEE UNDERTAKES TO FULLY COOPERATE WITH THE ASSESSING AUTHORITIES DURING THE SET ASIDE ASSESSMENT PROCEEDINGS. ON QUERY FROM THE BENCH, HE SUBMITTED THAT THE E-MAIL ADDRESS OF THE ASSESSEE COMPANIES TO BE [e-mail] AND THAT IN FACELESS ASSESSMENT ALL NOTICES ARE SERVED TO THE E-MAIL ADDRESS OF THE ASSESSEE AND THAT IN THE DATABASE OF THE DEPARTMENT THE E-MAIL ADDRESS MENTIONED IS CORRECT. 4. THE LD. D/R THOUGH NOT LEAVING HER GROUND SUBMITTED THAT SHE HAS NO OBJECTION TO THE MATTER BEING SET ASIDE TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW AS THERE WAS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 5. AFTER HEARING RIVAL CONTENTIONS, IN VIEW OF THE ABOVE DISCUSSION WE DEEM IT FIT AND PROPER TO SET ASIDE THE MATTER TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW AS THERE IS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AS WE HAVE BEEN DOING IN SIMILAR, SUCH CASES. 5.1. THIS BENCH OF THE ITAT IN THE CASE OF SRIRAM TIE UP PVT. LTD. IN I.T.A. NO. 1104/KOL/2016 FOR THE AY 2009-10 ORDER DATED 21.03.2018 AT PARA 6 AND 7 HELD AS FOLLOWS: 6. IN THE CASE OF M/S. SUKANYA MERCHANDISE PVT. LTD. VS ITO (ITA 291/KOL/2016 DATED 15.12.2017] CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE, A SIMILAR VIEW HAS BEEN TAKEN BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL AND THE SIMILAR ISSUE RELATING TO THE ADDITION MADE UNDER SECTION 68 ON ACCOUNT OF SHARE CAPITAL CONTRIBUTION BY TREATING THE SAME AS UNEXPLAINED CASH CREDITS IS RESTORED BACK BY THE TRIBUNAL TO THE FILE OF THE A.O. IN ALMOST SIMILAR SITUATION AFTER RECORDING ITS OBSERVATIONS / FINDINGS AS UNDER: WE NOTE THAT THE AO PURSUANT TO THE ORDER OF LD. CIT HAD TAKEN NOTE OF THE DIRECTIONS OF THE LD. CIT AND ISSUED NOTICE U/S. 142(1) DATED 16.08.2013 AND HAS ACKNOWLEDGED THAT THE ASSESSEE HAD FURNISHED THE COPY OF FINAL ACCOUNT I.T. ACKNOWLEDGEMENT, BANK STATEMENT FOR THE RELEVANT PERIOD EVIDENCING THE RECEIPT OF SHARE APPLICATION MONEY FROM THE SHARE APPLICANTS. THEREAFTER, THE AO MAKES CERTAIN INFERENCES BASED ON THE LIST OF SHAREHOLDERS AND TAKING NOTE OF THE BANK STATEMENT FURNISHED BY THE ASSESSEE. WE NOTE THAT AFTER THE INITIAL NOTICE DATED 16.08.2013, THEREAFTER THE AO HAD ISSUED THE NOTICE ON 26.02.2014 WHICH HAS BEEN REPRODUCED AT PAGE 3 OF THE REASSESSMENT ORDER, 3 I.T.A. NO. 998/KOL/2019 ASSESSMENT YEAR: 2012-13 BANGBHUMI DISTRIBUTORS (P) LTD. WHEREIN AO REQUIRED THE DIRECTORS OF THE ASSESSEE COMPANY TO BE PRESENT BEFORE HIM ON 06.03.2014. HOWEVER, ACCORDING TO THE LD. AR, THE ASSESSEE RECEIVED THE NOTICE ONLY ON 07.03.2014 AND THEREAFTER, THE ASSESSEE REQUESTED THE AO TO PROVIDE ANOTHER OPPORTUNITY OF HEARING VIDE ITS LETTER DATED 20.03.2014. THEREAFTER, THE AO FIXED THE DATE OF HEARING ON 12.03.2014 VIDE NOTICE DATED 10.03.2014. SO, ACCORDING TO THE ASSESSEE COMPANY SINCE THE DIRECTORS WERE NOT IN STATION TILL 23.03.2014, THE LD. AR HAD REQUESTED FOR ADJOURNMENT TILL THAT TIME. THOUGH THE AO HAS STATED THAT HE HAS ISSUED SUMMONS ON 24.03.2014 TO THE ASSESSEE COMPANY TO PRODUCE THE DIRECTORS OF THE COMPANY BEFORE HIM ON 26.03.2014, THE ASSESSEE COMPANY CONTENDED THAT IT HAS NOT RECEIVED THE SAID SUMMON AND, THEREFORE, COULD NOT MAKE THE PERSONAL APPEARANCE. THE AO HAS DRAWN ADVERSE CONCLUSION BASICALLY BECAUSE OF NON-APPEARANCE OF THE DIRECTORS OF THE ASSESSEE COMPANY AND THAT OF THE SHAREHOLDER COMPANIES. WE NOTE THAT INITIALLY THE AO STARTED THE ENQUIRY ON 16.08.2013 WHICH WAS COMPLIED BY THE ASSESSEE BY SUBMITTING DOCUMENTS WHICH HAS BEEN ACKNOWLEDGED BY THE AO. THEREAFTER, THE ENQUIRY WAS STARTED ONLY AT THE FAG END OF FEBRUARY 2014 AND THE ASSESSEE COMPANY HAD INFORMED THE AO THAT THEIR DIRECTORS WERE OUT OF STATION TILL 23.03.2014. IN THE LIGHT OF THE AFORESAID FACTS, WE ARE OF THE OPINION THAT THE ASSESSEE DID NOT GET FAIR OPPORTUNITY TO PRESENT THE EVIDENCES BEFORE THE AO SO, THERE WAS A LACK OF OPPORTUNITY AS AFORESAID, THEREFORE, IT HAS TO GO BACK TO AO. 8. WE ALSO NOTE THAT LD. CIT WHILE SETTING ASIDE THE ORDER OF THE AO WHICH WAS PASSED U/S. 147/143(3) OF THE ACT, THE LD. CIT GAVE CERTAIN GUIDELINES TO FOLLOW FOR CONDUCTING DEEP INVESTIGATION. WE ALSO NOTE THAT SIMILARLY PLACED ASSESSEES HAD CHALLENGED THE EXERCISE OF REVISIONAL JURISDICTION U/S. 263 OF THE ACT BEFORE THIS TRIBUNAL IN THOSE CASES ONE OF IT OF SUBHA LAKSHMI VANIJYA PVT. LTD. VS. CIT IN ITA NO. 1104/KOL/2014 DATED 30.07.2015, WHEREIN THE TRIBUNAL WAS PLEASED TO UPHOLD THE ORDER PASSED BY THE LD. CIT PASSED U/S. 263 OF THE ACT, WHICH WE LEARN TO HAVE BEEN CONFIRMED BY THE HON'BLE JURISDICTIONAL HIGH COURT AND THE SLP PREFERRED AGAINST THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT HAS BEEN DISMISSED BY THE HON'BLE SUPREME COURT. THEREFORE, SIMILAR ORDER OF THE LD. CIT PASSED U/S. 263 OF THE ACT HAS BEEN UPHELD. WE NOTE THAT THE AO WHILE GIVING EFFECT TO THE CIT'S 263 ORDER HAS NOTED THAT THE ASSESSEE COMPANY HAS IN FACT FURNISHED THE DOCUMENTS SOUGHT BY HIM TO HIS NOTICE U/S. 142(1) OF THE ACT HOWEVER, THE AO TOOK THE ADVERSE VIEW AGAINST THE ASSESSEE ON THE PLEA THAT THE DIRECTORS OF THE ASSESSEE COMPANY AND SHARE SUBSCRIBING COMPANIES HAD NOT APPEARED BEFORE HIM ON 26.03.2014 AND T AFTER TAKING NOTE THAT NONE APPEARED ON 26.03.2014 CONCLUDED ON THE SAME DAY 26.03.2014 THAT ENTIRE AMOUNT OF SHARE APPLICATION MONEY RECEIVED ALONG WITH PREMIUM AMOUNTING TO RS.8,06,00,000/- WHICH HAS REMAINED UNEXPLAINED AND ADDED TO THE INCOME OF THE ASSESSEE. WE ALSO NOTE THAT THE LD. CIT AFTER LOOKING INTO THE PERNICIOUS PRACTICE OF CONVERTING BLACK MONEY INTO WHITE MONEY HAS GIVEN THE GUIDELINES TO AO AS TO HOW THE INVESTIGATION SHOULD BE CONDUCTED TO FIND OUT THE SOURCE OF SOURCE. SINCE SIMILAR ORDER OF THE LD. CIT PASSED U/S. 263 OF THE ACT HAS BEEN UPHELD BY THE TRIBUNAL AS WELL AS BY THE HON'BLE CALCUTTA HIGH COURT AS WELL AS THE SLP HAS BEEN DISMISSED BY THE HON'BLE SUPREME COURT, SIMILAR ORDER OF THE LD. CIT HAS TO BE GIVEN EFFECT TO AS DIRECTED BY THE LD. CIT. WE TAKE NOTE THAT THE LD. CIT WITH HIS EXPERIENCE AND WISDOM HAS GIVEN CERTAIN GUIDELINES IN THE BACKDROP OF BLACK MONEY MENACE SHOULD HAVE BEEN PROPERLY ENQUIRED INTO AS DIRECTED BY HIM. THE AO OUGHT TO HAVE FOLLOWED THE INVESTIGATING GUIDELINES AND METHOD AS DIRECTED BY HIM TO UNEARTH THE FACTS TO DETERMINE WHETHER THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SHARE SUBSCRIBERS. WE NOTE THAT THE HON'BLE SUPREME COURT IN THREE JUDGES BENCH IN THE CASE OF TIN BOX, (SUPRA), HAS HELD THAT SINCE THERE WAS LACK OF OPPORTUNITY TO THE ASSESSEE AT THE ASSESSMENT STAGE ITSELF, THE ASSESSMENT NEEDS TO BE DONE AFRESH AND THEREBY REVERSED THE HON'BLE HIGH COURT, TRIBUNAL AND CIT(A)'S ORDERS AND REMANDED THE MATTER BACK TO AO FOR FRESH ASSESSMENT. SO, SINCE THERE WAS LACK OF OPPORTUNITY AS AFORESTATED IT HAS TO GO BACK TO AO. WE ALSO NOTE THAT THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. JANSAMPARK ADVERTISING & MARKETING PVT. LTD. IN ITA NO. 525/2014 DATED 11.03.2015 WHEREIN AFTER NOTICING INADEQUATE ENQUIRY BY AUTHORITIES BELOW HAVE HELD AS UNDER: 4 I.T.A. NO. 998/KOL/2019 ASSESSMENT YEAR: 2012-13 BANGBHUMI DISTRIBUTORS (P) LTD. '41. WE ARE INCLINED TO AGREE WITH THE CIT(APPEALS), AND CONSEQUENTLY WITH ITAT, TO THE EXTENT OF THEIR CONCLUSION THAT THE ASSESSEE HEREIN HAD COME UP WITH SOME PROOF OF IDENTITY OF SOME OF THE ENTRIES IN QUESTION. BUT, FROM THIS INFERENCE, OR FORM THE FACT THAT THE TRANSACTIONS WERE THROUGH BANKING CHANNELS, IT DOES NOT NECESSARILY FOLLOWING THAT SATISFACTION AS TO THE CREDITWORTHINESS OF THE PARTIES OR THE GENUINENESS OF THE TRANSACTIONS IN QUESTION WOULD ALSO HAVE BEEN ESTABLISHED. 42. THE AO HERE MAY HAVE FAILED TO DISCHARGE HIS OBLIGATION TO CONDUCT A PROPER INQUIRY TO TAKE THE MATTER TO LOGICAL CONCLUSION. BUT CIT(APPEALS), HAVING NOTICED WANT OF PROPER INQUIRY, COULD NOT HAVE CLOSED THE CHAPTER SIMPLY BY ALLOWING THE APPEAL AND DELETING THE ADDITIONS MADE. IT WAS ALSO THE OBLIGATION OF THE FIRST APPELLATE AUTHORITY, AS INDEED OF ITAT, TO HAVE ENSURED THAT EFFECTIVE INQUIRY WAS CARRIED OUT, PARTICULARLY IN THE FACT OF THE ALLEGATIONS OF THE REVENUE THAT THE ACCOUNT STATEMENTS REVEAL UNIFORM PATTERN OF CASH DEPOSITS OF EQUAL AMOUNTS IN THE RESPECTIVE ACCOUNTS PRECEDING THE TRANSACTIONS IN QUESTION. THIS NECESSITATED A DETAILED SCRUTINY OF THE MATERIAL SUBMITTED BY THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTIONL48 ISSUED BY THE AO, AS ALSO THE MATERIAL SUBMITTED AT THE STAGE OF APPEALS, IF DEEMED PROPER BY WAY OF MAKING OR CAUSING TO BE MADE A FURTHER INQUIRY' IN EXERCISE OF THE POWER UNDER SECTION 250(4). HIS APPROACH NOT HAVING BEEN ADOPTED, THE IMPUGNED ORDER OF IT AT, AND CONSEQUENTLY THAT OF CIT(APPEALS), CANNOT BE APPROVED OR UPHELD.' IN VIEW OF THE AFORESAID ORDER AND IN THE LIGHT OF THE HON'BLE SUPREME COURT'S DECISION IN TIN BOX COMPANY (SUPRA) AND TAKING INTO CONSIDERATION THE FACT THE ORDER OF THE LD. CIT PASSED U/S. 263 OF THE ACT IN SIMILAR CASES BEING UPHELD UP TO THE LEVEL OF APEX COURT, AND TAKING NOTE OF HON'BLE DELHI HIGH COURT'S ORDER IN JANSAMPARK ADVERTISING & MARKETING PVT. LTD. (SUPRA), WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF AO FOR DE NOVO ASSESSMENT AND TO DECIDE THE MATTER IN ACCORDANCE TO LAW AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. WE, THEREFORE, CONSIDER IT FAIR AND PROPER AND IN THE INTEREST OF JUSTICE TO SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE IN DISPUTE AND RESTORE THE MATTER TO THE FILE OF THE A.O. TO DECIDE THE SAME AFRESH AFTER GIVING THE ASSESSEE PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD AND AFTER TAKING INTO CONSIDERATION THE ENTIRE EVIDENCE ALREADY AVAILABLE ON RECORD AS WELL AS OTHER DOCUMENTARY EVIDENCE WHICH THE ASSESSEE MAY CHOOSE TO FILE IN SUPPORT OF ITS CASE ON THE ISSUE. 6. KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO THE ORDERS OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN SIMILAR MATTERS, WE SET ASIDE THIS ASSESSMENT TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW, AFTER GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. KOLKATA, THE 24 TH MARCH, 2021. SD/- SD/- [ABY T. VARKEY] [J. SUDHAKAR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24.03.2021 BIDHAN (P.S.) 5 I.T.A. NO. 998/KOL/2019 ASSESSMENT YEAR: 2012-13 BANGBHUMI DISTRIBUTORS (P) LTD. COPY OF THE ORDER FORWARDED TO: 1. BANGBHUMI DISTRIBUTORS (P) LTD., C/O SUBASH AGARWAL & ASSOCIATES, ADVOCATES SIDDHA GIBSON, 1, GIBSON LANE, SUITE 213, 2 ND FLOOR, KOLKATA-700 069. 2. ITO, WARD-5(3), KOLKATA. 3. CIT(A)-23, KOLKATA. (SENT THROUGH MAIL) 4. CIT- 5. CIT(DR), KOLKATA BENCHES, KOLKATA. (SENT THROUGH MAIL) TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES