RESPLENDA EXPRESSIONS PVT LTD., CHENNAI v. ITO CORPORATE WARD 5(4), CHENNAI

IN THE INCOME-TAX APPELLATE TRIBUNAL D BENCH CHENNAI . BEFORE SHRI DUVVURU RL REDDY JUDICIAL MEMBER & SHRI S. JAYARAMAN ACCOUNTANT MEMBER ./ I.T.A.NOS.1363 & 1364/CHNY/2019 / ASSESSMENT YEARS : 2010-11 & 2011-12 RESPLENDA EXPRESSIONS PVT. LTD. NO. 138 LUZ CHURCH ROAD MYLAPORE CHENNAI 600 004. [PAN: AADCR6466M] VS. THE INCOME TAX OFFICER CORPORATE WARD 5(4) CHENNAI. ( /APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI T. BANUSEKAR C.A. / RESPONDENT BY : SHRI N. SRINIVASA RAO CIT / DATE OF HEARING : 24.10.2019 /DATE OF PRONOUNCEMENT : 04.11.2019 / O R D E R PER DUVVURU RL REDDY JUDICIAL MEMBER: BOTH THE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-3 CHENNAI DATED 07.03.2019 RELEVANT TO THE ASSESSMENT YEARS 2010-11 & 2011-12. SINCE COMMON ISSUES HAVE BEEN RAISED IN THESE APPEALS HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF BREVITY. THE COMMON GROUNDS RAISED IN BOTH THE APPEALS OF THE ASSESSEE ARE REPRODUCED AS UNDER: 1. FOR THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO LAW FACTS AND CIRCUMSTANCES OF THE CASE TO THE EXTENT I.T.A. NOS.1363 & 1364/CHNY/19 2 PREJUDICIAL TO THE INTEREST OF THE ASSESSEE AND AT ANY RATE IS OPPOSED TO THE PRINCIPLES OF EQUITY NATURAL JUSTICE AND FAIR PLAY. 2. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE ORDER OF THE ASSESSING OFFICER IS WITHOUT JURISDICTION. 3. FOR THAT THE REASSESSMENT WAS BAD IN LAW. 4. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE ASSESSING OFFICER COULD NOT HAVE HAD ANY REASON TO BELIEVE THAT INCOME OF THE APPELLANT HAD ESCAPED ASSESSMENT. 5. FOR THAT THERE WAS NO FAILURE ON THE PART OF THE APPELLANT TO DISCLOSE FULLY AND TRULY MATERIAL FACTS RELEVANT TO THE CASE. 6. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE ASSESSING OFFICER OUGHT NOT TO HAVE RE-OPENED THE ASSESSMENT MERELY BASED ON A PURPORTED STATEMENT RECORDED FROM A THIRD PARTY I.E. SHRI. RAJENDAR JAM. 7. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ADDITION OF RS.37 81 5291- AS BOGUS PURCHASES. 8. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE PURCHASES MADE BY THE APPELLANT WERE GENUINE AND WERE PROPERLY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. 9. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE ASSESSING OFFICER COULD NOT HAVE RESORTED TO ANY ADDITION BASED ON THE PURPORTED STATEMENT RECORDED FROM THE SAID THIRD PARTY COLLECTED BEHIND THE BACK OF THE APPELLANT. 10. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE ASSESSING OFFICER HAD NOT GIVEN THE APPELLANT AN OPPORTUNITY TO CROSS EXAMINE SHRI. RAJENDAR JAM. 11. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE STATEMENT RECORDED WAS RETRACTED BY SHRI. RAJENDAR JAM WITH CORROBORATIVE EVIDENCES. 12. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION BASED ON MERE CONJECTURES AND SURMISES. 13. FOR THAT WITHOUT PREJUDICE TO THE ABOVE THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE ASSESSING OFFICER HAVING I.T.A. NOS.1363 & 1364/CHNY/19 3 CONCLUDED THAT THE PURCHASES WERE BOGUS OUGHT TO HAVE EXCLUDED THE SAID AMOUNT FROM THE VALUE OF CLOSING STOCK AND SALES CORRESPONDINGLY. 14. FOR THAT THE APPELLANT OBJECTS TO THE LEVY OF INTEREST ULS.234B AND 234C. 2. BRIEF FACTS RELATING TO THE COMMON GROUND RAISED BY THE ASSESSEE RELATES TO REASSESSMENT MADE UNDER SECTION 147 OF THE INCOME TAX ACT 1961 [ACT IN SHORT]. SINCE THE ASSESSEE HAS RAISED COMMON GROUND FOR BOTH THE ASSESSMENT YEARS WE SHALL TAKE THE FACTS RELATING TO THE ASSESSMENT YEAR 2010-11 FOR DISCUSSION AND ADJUDICATION. 2.1 THE CASE OF THE ASSESSEE WAS REOPENED UNDER SECTION 147 AND NOTICE UNDER SECTION 148 OF THE ACT ISSUED TO THE ASSESSEE. IN RESPONSE TO THE NOTICE THE ASSESSEE VIDE LETTER DATED 13.12.2016 HAS REQUESTED TO TREAT THE ORIGINAL RETURN FILED ON 15.10.2010 AS RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSEE HAS REQUESTED FOR THE REASONS FOR REOPENING AND THE SAME WAS FURNISHED. AFTER CONSIDERING THE OBJECTIONS OF THE ASSESSEE AND ELABORATELY DISCUSSING THE REASONS FOR REOPENING THE ASSESSING OFFICER HAS HELD THAT THE REOPENING OF ASSESSMENT WAS AS PER LAW. 2.2 AGAINST THE REOPENING OF ASSESSMENT THE ASSESSEE HAS NOT RAISED ANY SPECIFIC GROUND BEFORE THE LD. CIT(A) AND THEREBY THE ASSESSEE HAS ACCEPTED THE REOPENING OF ASSESSMENT WHICH WAS DONE AS PER LAW. ON I.T.A. NOS.1363 & 1364/CHNY/19 4 PERUSAL OF THE APPELLATE ORDER WE FIND THAT THE ASSESSEE HAS RAISED ONLY COMMON GROUND RELATING TO ADDITION MADE ON ACCOUNT OF BOGUS PURCHASE. THUS BEFORE THE TRIBUNAL THE ASSESSEE CANNOT RAISE THE GROUND WHICH WAS NOT RAISED BEFORE THE LD. CIT(A). ACCORDINGLY THE GROUND RAISED BY THE ASSESSEE STANDS DISMISSED. 3. THE NEXT GROUND RAISED IN THE APPEALS OF THE ASSESSEE IS RELATING TO ADDITION MADE ON ACCOUNT OF BOGUS PURCHASE. IT WAS THE SUBMISSION OF THE LD. COUNSEL THAT THE PURCHASES MADE BY THE ASSESSEE WERE GENUINE AND WERE PROPERLY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. IT WAS FURTHER SUBMISSION THAT THE ASSESSING OFFICER COULD NOT HAVE RESORTED TO ANY ADDITION BASED ON THE PURPORTED STATEMENT RECORDED FROM THE SAID THIRTY PARTY COLLECTED BEHIND THE BACK OF THE ASSESSEE. IT WAS FURTHER SUBMISSION THAT THE ASSESSEE WAS NOT GIVEN ANY OPPORTUNITY TO CROSS EXAMINE THE PERSON WHOSE STATEMENT WAS TAKEN INTO ACCOUNT FOR MAKING ADDITION AND PRAYED FOR DELETING THE ADDITION. 4. ON THE OTHER HAND THE LD. DR STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 5. WE HAVE HEARD BOTH THE SIDES PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. SIMILAR ISSUE WAS SUBJECT MATTER IN APPEAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS I.T.A. NOS.1363 & 1364/CHNY/19 5 2008-09 TO 2009-10 AND VIDE ORDER IN I.T.A. NOS. 2935 TO 2937/CHNY/2017 DATED 01.08.2019 THE COORDINATE BENCHES OF THE TRIBUNAL HAS OBSERVED AND HELD AS UNDER: 6. WE HEARD DR. S. PANDIAN THE LD. DEPARTMENTAL REPRESENTATIVE ALSO. ACCORDING TO THE LD. D.R. THERE WERE BOGUS PURCHASES. IT CAME TO THE NOTICE OF THE ASSESSING OFFICER FROM THE REPORT RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT AT MUMBAI. ACCORDING TO THE LD. D.R. ONE SHRI RAJENDRA JAIN WHO WAS NAME LENDER WAS EXAMINED. THE SAID SHRI RAJENDRA JAIN IDENTIFIED THE ASSESSEE-COMPANY ALONG WITH THE AMOUNT OF BOGUS PURCHASES AS THE BENEFICIARY OF ACCOMMODATION ENTRY PROVIDED TO THEM. THEREFORE ACCORDING TO THE LD. D.R. THE ASSESSING OFFICER HAS RIGHTLY REOPENED THE ASSESSMENT ON THE BASIS OF THE REPORT OF THE INVESTIGATION WING OF THE DEPARTMENT AT MUMBAI. ON A QUERY FROM THE BENCH WHETHER THE COPIES OF INVESTIGATION REPORT OF THE DEPARTMENT AT MUMBAI WERE FURNISHED TO THE ASSESSEE? THE LD. D.R. SUBMITTED THAT THERE WAS NO REFERENCE ABOUT FURNISHING THE COPIES OF INVESTIGATION REPORT TO THE ASSESSEE IN THE IMPUGNED ORDER OF THE ASSESSING OFFICER AS WELL AS THE CIT(APPEALS). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER REOPENED THE ASSESSMENT AFTER ISSUING NOTICE UNDER SECTION 148 OF THE ACT ON THE BASIS OF THE REPORT / INFORMATION SAID TO BE RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT AT MUMBAI. THIS REPORT IS THE BASE FOR MAKING ADDITION. HOWEVER THE SAID REPORT WAS NOT FURNISHED TO THE ASSESSEE. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE ASSESSING OFFICER PLACED HER RELIANCE ON THE INVESTIGATION REPORT SAID TO BE RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT AT MUMBAI COPY OF THE SAME SHOULD BE FURNISHED TO THE ASSESSEE SO THAT THE ASSESSEE MAY RESPOND TO THE REPORT BY FILING NECESSARY REPLY. SINCE SUCH AN ACTION WAS NOT TAKEN BY THE ASSESSING OFFICER THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THERE IS A CLEAR VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE IN ALL THE THREE APPEALS OF THE ASSESSEE AND THE ENTIRE ISSUE RAISED BY THE ASSESSEE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER AFTER FURNISHING COPIES OF THE INVESTIGATION REPORT SAID TO BE RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT AT MUMBAI AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 8. IN THE RESULT ALL THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NOS.1363 & 1364/CHNY/19 6 6. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE OF EARLIER ASSESSMENT YEARS FOR THE ASSESSMENT YEARS UNDER CONSIDERATION ALSO WE DIRECT THE ASSESSING OFFICER TO RE-EXAMINE THE MATTER AFTER FURNISHING COPIES OF THE INVESTIGATION REPORT SAID TO BE RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT AT MUMBAI AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT BOTH THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 04 TH NOVEMBER 2019 AT CHENNAI. SD/- SD/- (S JAYARAMAN) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI DATED THE 04.11.2019 VM/- /COPY TO: 1. / APPELLANT 2. / RESPONDENT 3. ( ) /CIT(A) 4. /CIT 5. /DR & 6. /GF.