Unicon Merchants Pvt. Limited, Rourkela V. JCIT,Central Circle, Sambalpur

ITSSA 25/CTK/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9531 (ITAT-CUTTACK)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 02-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 07-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Document seized; Principle of natural justice; Tax effect; Documents seized
• Section: 201; 13; 153; 153C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM ( ) / IT(SS)A NO. 25 /CTK/2019 ( / ASSESSMENT YEAR : 20 1 4 - 201 5 ) UNICON MERC HANTS PVT. LTD., P - 25, CIVIL TOWNSHIP, ROURKELA - 4, ODISHA VS. JCIT, CENTRAL CIRCLE, SAMBALPUR ./ PAN NO. : A AACU 6553 H AND ( ) / IT(SS)A NO. 27 /CTK/2019 ( / ASSESSMENT YEAR :201 4 - 201 5 ) JCIT, CENTRAL CIR CLE, SAMBALPUR VS. UNICON MERCHANTS PVT. LTD., P - 25, CIVIL TOWNSHIP, ROURKELA - 4, ODISHA ./ PAN NO. : A AACU 6553 H ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI FIRO ZE B. ANDHYARUJINA, SR. AD V. WITH SHRI S.S.JANGID, N.S.JANGID, L.MISHRA(AOR), SWADESH NARAYAN RATH, S.R.DAS H , ARS /REVENUE BY : SHRI S .M.KESHKAMAT , CIT - DR / DATE OF HEARING : 2 7 / 11 /2019 / DATE OF PRONOUNCEMENT : 02 / 01 /20 20 / O R D E R PER L.P.SAHU , A M : TH ESE TWO APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A) - 2 , BHUBANESWAR , DATED 19.02.2019 FOR THE ASSESSMENT YEAR 201 4 - 201 5. IT (SS) A NO. 25&27 /CTK/201 9 2 2. FIRST, WE SHALL TAKE UP APPEAL OF THE ASSESSEE IN IT(SS)A NO.25/CT K/2019, WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. BECAUSE, THE IMPUGNED ORDER IS IN VIOLATION TO NATURAL JUSTICE SINCE; IT RELIED UPON THE REMAND REPORT DATED 24/05/2018 AND NO OPPORTUNITY OF HEARING OR CLARIFICATION OF DO UBTS WAS GRANTED DURING REMAND PROCEEDINGS. EARLIER, THE ORIGINAL ASSESSMENT ORDER DATED 31/12/2016 WAS ALSO PASSED WITHIN 4 DAYS OF ISSUING NOTICE WITHOUT GIVING ANY OPPORTUNITY OF HEARING. 2. AS PER INCOME TAX RETURN FILED BY PETITIONER, THE INCO ME (LOSS) FOR THE YEAR WAS NEGATIVE AS (RS.18.849 LAKHS). ENTIRE ADDITION OF INCOME UNDER ASSESSMENT ORDER DATED 31/12/2016 U/S 153 WAS DELETED BY LD. CIT APPEALS - 2 AND THE ADDITION OF RS.L4.634LAKHS, AS PER PREVIOUS ASSESSMENT ORDER DATED 25/11/2016, WA S CONFIRMED. HOWEVER, LD. CIT APPEALS FAILED TO RECTIFY APPARENT MISTAKE IN TAKING RETURNED INCOME (LOSS) BY AO. IN ABSENCE, OF OPPORTUNITY BEFORE AO, THE SAME COULD NOT BE RECTIFIED. 3. THE ASSESSEE HAS ALSO FILED ADDITIONAL GROUNDS OF APPEAL VIDE LETTER DATED 12.11.2019, WHICH READS AS UNDER : - ADDITIONAL G R OUNDS . 1. WITHOUT PREJUDICE AND IN THE ALTERNATIVE, THE LOSS OF RS. 18.85 LAKHS BE ALLOWED TO BE SET OFF AGAINST RS. 14.63 LAKHS AND THE BALANCE BE ALLOWED TO BE CARRIED FORWARD. 4 . BRIEF FACTS OF T HE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF SHARE. A SEARCH AND SEIZURE OPERATION AS CARRIED OUT ON 24 TH /25 TH SEPTEMBER, 2014 IN THE RESIDENTIAL, FACTORY AND OFFICE PREMISES OF SHIVOM MINERALS LTD. AND GROUP CASES, ROURKELA. DURI NG THE SEARCH & SEIZURE OPERATIONS, BOOKS OF ACCOUNT AND OTHER RELEVANT DOCUMENTS/MATERIALS WERE FOUND AND SEIZED. ON THE BASIS OF SEIZED DOCUMENTS/MATERIALS AND/OR BOOKS OF ACCOUNT, THE AO COMPLETED IT (SS) A NO. 25&27 /CTK/201 9 3 ASSESSMENT U/S.153C R.W.S.144 OF THE ACT MAKING ADDITION OF RS.76,70,000/ - U/S.68 OF THE ACT. 5. FEELING AGGRIEVED THE ASSESSEE APPEALED BEFORE THE CIT(A) AND THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND FINDINGS OF THE AO, DIRECTED THE AO TO DELETE THE ADDITION AND ALLOWED THE APPEAL OF THE ASSESSEE. 6. NOW, AGGRIEVED WITH THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL AGAINST THE DELETION OF ADDITION AND THE ASSESSEE IS IN APPEAL WITH A PRAYER THAT THE LOSS OF RS.18.85 LAKHS BE ALLOWED TO BE SET OFF AGAINST RS.14.63 LAKHS AND THE BALANCE BE ALLOWED TO BE CARRIED FORWARD. 7. BEFORE US, LD. AR SUBMITTED THAT AS PER INCOME TAX RETURN FILED BY ASSESSEE THE INCOME (LOSS) FOR THE YEAR WAS NEGATIVE AS RS.18.849 LAKHS. ENTIRE ADDITION OF INCOME UNDER ASSESSMENT ORDER DATED 31/12/2016 U/S 153C OF THE ACT WAS DELETED BY CIT(A) AND THE ADDITION OF RS.L4.634LAKHS, AS PER PREVIOUS ASSESSMENT ORDER DATED 25/11/2016, WAS CONFIRMED. HOWEVER, CIT(A) FAILED TO RECTIFY APPARENT MISTAKE IN TAKING RETURNED INCOME (LOSS) BY AO. IN ABSENCE, OF OPPORTUNITY BEFORE AO, THE SAME COULD NOT BE RECTIFIED. FURTHER, THE LD. AR IN THE FORM OF ADDITIONAL GROUND, HAS SUBMITTED THAT THE LOSS OF RS.18.85 LAKHS BE ALLOWED TO BE SET OFF AGAINST RS.14.63 LAKHS. 8. ON THE OTHER HAND, LD. DR BEFORE US SUBMITTED THAT THE CIT(A) ERRED I N DELETING THE ADDITION OF RS.76,70,000/ - ON ACCOUNT OF IT (SS) A NO. 25&27 /CTK/201 9 4 UNSECURED LOAN IGNORING THE REMAND REPORT OF THE ASSESSING OFFICER REGARDING THE GENUINENESS OF LOAN TRANSACTIONS AND CREDITWORTHINESS OF TWO LOAN CREDITORS NAMELY BAJRANG ENGINEERS PVT. LTD. AND SHIV OM MINERALS LTD. IT WAS ALSO CONTENDED BY LD. DR THAT THE CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF UNSECURED LOAN IGNORING THE FINANCIAL CONDITION OF THE LOAN CREDITORS, NAMELY BAJRANG ENGINEERS PVT. LTD. AND SHIVOM MINERALS LTD. WHO WERE SUFFE RING FROM FINANCIAL CRISIS AND COULD NOT PAY THE ADMITTED TAX AND COULD FILE RETURN OF INCOME FOR A.Y. 2014 - 15 ONLY AFTER COMPLETION OF ASSESSMENT U/S. 153C. MOREOVER, THE LOAN CREDITORS, BAJRANG ENGINEERS PVT. LTD. HAS GENERATED HUGE LOSS DURING THE ASSES SMENT YEAR UNDER CONSIDERATION. IN THE SAID CONTEXT, THE LOAN CREDITORS CANNOT ADVANCE SUCH HUGE AMOUNT OF INTEREST FREE LOAN TO THE ASSESSEE FROM ITS OWN RESOURCES. IN SUPPORT OF HIS CONTENTIONS, LD. DR RELIED ON THE DECISION OF THE HON'BLE DELHI HIGH COU RT IN CASE OF PCIT VS. BIKRAM SINGH [2017] 85 TAXMANN.COM 104 (DELHI) AND SUBMITTED THAT THE ADDITION MADE BY THE AO DESERVES TO BE UPHELD. 9. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSING THE ENTIRE M ATERIAL AVAILABLE ON RECORD, PRIMA FACIE , ON PERUSAL OF THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE, WE FIND THAT SUCH GROUND HAS BEEN RAISED FOR THE FIRST TIME BY THE ASSESSEE BEFORE THE TRIBUNAL WITHOUT RAISING THE SAME BEFORE THE CIT(A). FURTHER ON IT (SS) A NO. 25&27 /CTK/201 9 5 PER USAL OF THE GROUNDS OF APPEAL FILED BY THE ASSESSEE BEFORE THE CIT(A), WE FIND THAT NO SUCH GROUND RAISED BY THE ASSESSEE HAS BEEN INCORPORATED BY THE CIT(A). IN OUR OPINION, THIS GROUND IS REQUIRED TO BE RAISED BEFORE THE CIT(A) . HENCE, WE RESTORE THIS AP PEAL TO THE FILE OF CIT(A) ONLY TO THE EXTENT OF GROUND RAISED BY THE ASSESSEE BEFORE US IN THE NATURE OF ADDITIONAL GROUND AND DIRECT THE CIT(A) TO DECIDE THE ABOVE ISSUE AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE UPON PROVIDING A REASONABLE OPPORT UNITY OF BEING HEARD TO THE ASSESSEE . THE ASSESSEE IS ALSO DIRECTED TO COOPERATE WITH THE CIT(A) FOR EARLY DISPOSAL OF THE CASE AND TO SUBSTANTIATE ITS CLAIM BEFORE CIT(A) WITH PROPER EVIDENCE. ACCORDINGLY, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. THUS, APPEAL OF THE ASSESSEE IN IT(SS)A NO.25/CTK/2019 IS ALLOWED FOR STATISTICAL PURPOSES. 10 . NOW, WE SHALL TAKE UP THE APPEAL OF THE REVENUE IN IT(SS)A NO.27/CTK/2019. 11 . AT THE OUTSET, LD. AR OF THE ASSESSEE SUBMITTED THAT THE APPEAL OF THE REVENUE IS BELOW THE TAX LIMIT AS PRESCRIBED BY THE CBDT CIRCULAR NO.17/2019 DATED 8 TH AUGUST, 2019, THEREFORE, THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE. 12 . ON THE OTHER HAND, LD. DR ALSO FAIRLY CONCEDED THAT NO DOUBT THE TAX EFFECT I NVOLVED IN THE APPEAL IS LESS THAN RS.50 LAKHS, THUS, BOUND BY THE DEPARTMENTAL INSTRUCTION . IT (SS) A NO. 25&27 /CTK/201 9 6 13 . AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSING THE ENTIRE MATERIAL ON RECORD, WE FIND THAT THE TAX EFFECT IN THE APPEAL OF THE REVENUE IS B ELOW RS.50 LAKHS, WHICH IS NOT MAINTAINABLE AS PER THE CBDT CIRCULAR NO.17/2019, DATED 8 TH AUGUST, 2019. THEREFORE, WE DISMISS THE APPEAL OF THE REVENUE ACCORDINGLY. HOWEVER, IT IS MADE CLEAR THAT THE DEPARTMENT IS AT LIBERTY TO FILE MISCELLANEOUS APPLICAT ION, IF THE TAX EFFECT IS FOUND TO BE MORE THAN THE PRESCRIBED LIMIT OF RS.50,00,000/ - AS PER THE AMENDMENT CARRIED OUT BY THE CBDT IN CIRCULAR NO.17/2019, DATED 8 TH AUGUST, 2019, OR ANY OF THE CONDITIONS ETC. AS AVAILABLE IN THE AMENDED PARA 10 OF CIRCULA R NO.3/2018, DATED 20 TH AUGUST, 2018. THUS, APPEAL OF THE REVENUE IS DISMISSED. 14 . IN THE RESULT, APPEAL OF THE ASSESSEE IN IT(SS)A NO.25/CTK/2019 IS ALLOWED FOR STATISTICAL PURPOSES AND APPEAL OF REVENUE IN IT(SS)A NO.27/CTK/2019 IS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 02 / 01 / 20 20 . S D/ - ( C.M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 02 / 01 /20 20 PRAKASH KUMAR MISHRA, SR.P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT - UNICON MERCHA NTS PVT. LTD., P - 25, CIVIL TOWNSHIP, ROURKELA - 4, ODISHA 2. / THE RESPONDENT - JCIT, CENTRAL CIRCLE, SAMBALPUR IT (SS) A NO. 25&27 /CTK/201 9 7 / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//