Dharmandan Infrastructure Pvt. Ltd.,, Ahmedabad v. The Dy. Commissioner of Income Tax, Circle-1(1)(2),, Ahmedabad

ITA 2636/AHD/2016 | 2012-2013
Pronouncement Date: 18-11-2019 | Result: Allowed

Appeal Details

RSA Number 263620514 RSA 2016
Assessee PAN AADCD6866B
Bench Ahmedabad
Appeal Number ITA 2636/AHD/2016
Duration Of Justice 3 year(s) 1 month(s) 5 day(s)
Appellant Dharmandan Infrastructure Pvt. Ltd.,, Ahmedabad
Respondent The Dy. Commissioner of Income Tax, Circle-1(1)(2),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2019
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 18-11-2019
Last Hearing Date 22-01-2019
First Hearing Date 22-01-2019
Assessment Year 2012-2013
Appeal Filed On 13-10-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI MAHAVIR PRASAD JUDICIAL MEMBER & SHRI WASEEM AHMED ACCOUNTANT MEMBER) ITA. NO: 2636/AHD/2016 (ASSESSMENT YEAR: 2012-13) DHARMANADAN INFRASTRUCTURE PVT. LTD. 2 GOLDEN HOMES B/H. GURUDWARA S.G. ROAD THALTEJ AHMEDABAD- 380054 V/S THE DY. COMMISSIONER OF INCOME TAX CIRCLE-1(1)(2) AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AADCD 6866B APPELLANT BY: SHRI DHIREN SHAH AND NUPUR SHAH C. A. RESPONDENT BY : SHRI UMA PRASAD SR. D.R. ( )/ ORDER DATE OF HEARING : 10 -10-201 9 DATE OF PRONOUNCEMENT : 18-11-2019 PER MAHAVIR PRASAD JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A)-1 AHMEDABAD DATED 22.08.2016 PERTAINING TO A.Y. 2012-13 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 2636 /AHD/2016 . A.Y. 2012-13 2 1. DISALLOWANCE ON ACCOUNT OF FICTITIOUS LOSS UNDER THE HEAD OF BUSINESS AND PROFESSION - RS. 2.53.61.230/-. I. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS. 2 53 61 230/- AS MADE BY THE LD. A.O ON ACCOUNT OF ALLEGED FICTITIOUS LOSS UNDER THE HEAD OF BUSINESS AND PROFESSION WITHOUT P ROPERLY APPRECIATING THE ENTIRE FACTS OF THE CASE. 2. THE LD. CIT(A) AND THE LD. A.O ERRED IN LAW AN D ON FACTS IN FAILING TO PROPERLY CONSIDER THE SUBMISSIONS FILED BY APPELLANT COMPANY BEFORE THEM. 3. THE LD. CIT (A) AS WELL THE LD. A.O FAILED TO GR ANT THE OPPORTUNITY OF CROSS EXAMINATION OF MR. DEEPAK CHIMANLAL SHAH WHOSE STAT EMENT RECORDED BEHIND THE BACK OF THE APPELLANT HAS BEEN RELIED UPON IN R ESPECT OF THE DISALLOWANCE IN THE CASE OF APPELLANT. THEY OUGHT TO HAVE GRANTED T HE OPPORTUNITY OF CROSS EXAMINATION OF MR. DIPAKKUMAR CHINUBHAI SHAH IN VIE W OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE KOLKATA [2015] 62 T AXMANN.COM 3 (SC) AS WELL AS VARIOUS OTHER JUDICIAL PRONOUNCEMENTS RELIED UPON B Y THE APPELLANT. 2. FACTS OF THE CASE ARE THAT THE APPELLANT IS THE PRI VATE LIMITED COMPANY UNDER THE INCOME TAX ACT 1961. DURING THE FINANCIAL YEAR 201 1-12 THE APPELLANT WAS ENGAGED IN THE BUSINESS OF TRADING IN CLOTHES AND D EALING THE LANDS FOR THE CONSTRUCTION ACTIVITY. THE APPELLANT HAS OFFERED TH E INCOME UNDER HEAD OF BUSINESS AND PROFESSION. 3. THE APPELLANT HAS FILED THE RETURN OF INCOME ON 18. 10.2012 WHEREIN THE APPELLANT HAS OFFERED RS. 1 76 18 860/- UNDER THE H EADS OF BUSINESS AND PROFESSION. THE APPELLANT HAS SHOWN THE SALE RS. 7 83 06 950/- WHICH CONSISTING OF SALE OF LAND OF RS. 4 93 71 950/- AND SALE OF CLOTHS OF RS. 2 89 35 000/-. FROM THE BUSINESS OF TRADING IN CLOT HS AND INCURRED THE LOSSOF RS. 2 53 61 230/-. 4. THE FINDING OF THE ASSESSING OFFICER IN THIS REGARD IS AS UNDER: ITA NO. 2636 /AHD/2016 . A.Y. 2012-13 3 4.1 AS PER THE AIR INFORMATION IT IS SEEN THAT THE ASS ESSEE HAS SOLD A PROPERTY OF RS. 6 98 54 400/- ACCORDINGLY A NOTICE U/S. 133(6) OF THE ACT WAS ISSUED TO THE SUB- REGISTRAR-3 RATANPUR RAJKOT. ON EXAMINATION OF CO PY OF SALE DEED SO-RECEIVED FROM SUB-REGISTRAR-3 RATANPUR RAJKOT IT IS FOUND THAT THE ASSESSEE HAS IS A CONFIRMING PARTY IN RESPECT OF TRANSACTION ENTERED INTO BETWEEN PURCHASER GSPC GAS COMPANY LTD. AND THE SELLER SHRI VAGHERBHAI JIV ABHAI. IT IS ALSO NOTICED THAT THE ASSESSEE HAD ENTERED INTO A BANAKHAT WITH SHRI VAGHERBHAI JIVABHAI ON 04/10/2011 FOR PURCHASE OF LAND FOR A CONSIDERATION OF RS. 2 55 87 000/-. SUBSEQUENTLY THE SAID PROPERTY WAS SOLD BY SHRI VA GHERBHAI JIVABHAI TO GSPC GAS COMPANY LTD. IN CONFORMITY WITH THE ASSESSEE VI DE REGISTRATION DEED NO. RKT-3/55/2012 DATED 03/01/2012 FOR A SALE CONSIDERA TION OF RS. 6 98 58 950/-. HENCE VERIFICATION OF THIS FACT CLEARLY REVEALS TH AT THE ASSESSEE HAS EARNED RS. 4 42 71 950/- AS SHORT TERM CAPITAL GAIN ON SUCH TR ANSACTION. THE ASSESSEE VIDE POINT NO. 2 OF LETTER DATED 05/02/2015 WAS THEREFO RE REQUESTED TO EXPLAIN THE DETAILS OF INCOME OFFERED FOR TAXATION IN THE RETUR N OF INCOME FILED FOR A.Y. 2012- 13 OR ELSE EXPLAIN AS TO WHY THE SAME SHOULD NOT BE TAXED ACCORDINGLY. THE ASSESSEE FURNISHED ITS REPLY VIDE LETTER DATED 12/0 2/2015 FOR THE SAKE OF REFERENCE THE SAME IS REPRODUCED AS UNDER: 'WE ARE CONFIRMING PARTY IN THE SAID TRANSACTIONS. T HIS TRANSACTION IS OUR BUSINESS TRANSACTIONS AND THE SAID PURCHASE AND SAL ES DETAILS ARE MENTIONED IN SALES AND PURCHASE ACCOUNT AND DUTY AU DITED BY CHARTERED ACCOUNTANT AS BUSINESS TRANSACTIONS. INITIALLY WE HAVE MADE AN AGREEMENT TO SALE TO PURC HASE THE SAID PROPERTY BY RS. 2 55 87 000 AND MADE PAYMENT OF RS. 517015 000 TO SELLER. BEFORE MAKING A FULL PAYMENT AND EXECUTING FINAL SALES DEED WE HAVE SOLD THE SAID PROPERTY FOR RS. 6 98 58 950. WE ARE CONFIRMING PARTY IN THE SAID SALES DEED. WE HAVE RECEIVED RS. 4 93 7 1 950. SO WE HAVE DEBITED RS. 51 00 000 AS PURCHASE ACCOUNT AND CREDI TED RS. 4 93 71 950 AS SALES IN THE BOOKS OF ACCOUNT. SO THE PROFIT OF THE ID TRANSACTION RS.4 42 71 750 (4 93 71 750-51 00 000) IS AS INCOME FROM BUSINESS PROFESSION. THE DETAILS OF PURCHASE HAS BEEN GIVEN IN ANNEXURE- E OF OUR SUBMISSION DATED 24-1-2014 AND DETAILS OF SALES AND DEED HAS B EEN GIVEN IN ANNEXURE-A OF OUR SUBMISSION DATED 27-01-2015. THE COPY OF REGISTERED DEED SHOWING THIS TRANSACTION IS GIVEN IN ANNEXURE- F OF OUR SUBMISSION DATED 24-12-2014 ITA NO. 2636 /AHD/2016 . A.Y. 2012-13 4 5. IN ORDER TO VERIFYING THE CONTENTS OF THE ASSESSEE LD. A.O. SUMMONED ONE SHRI DEEPAK CHIMANLAL SHAH AND IN ACCORDANCE WITH HIS ST ATEMENT WHO WAS PROPRIETOR OF M/S. NUTAN ENTERPRISE FROM WHOM ASSES SEE PURPORTEDLY MADE THE PURCHASE OF GOODS SUCH AS CLOTHS ETC. AND STATE MENT OF SHRI DEEPAK CHIMANLAL SHAH WAS RECORDED IN THE ABSENCE OF THE A SSESSEE WHEREIN SHRI DEEPAK CHIMANLAL SHAH. 6. IN REPLY TO QUESTION NO. 4 CATEGORICALLY DEPOSE THA T HE HAD ONLY ISSUED SALE/PURCHASE BILL AND NO GOODS WERE PHYSICALLY DEL IVERED TO THE ASSESSEE. AND ON THE BASIS OF THE STATEMENT OF SHRI DEEPAK CHIMA NLAL SHAH ADDITIONS WERE MADE FOR FICTITIOUS LOSS TO THE TUNE OF RS. 2 53 61 230/-. 7. ON THE OTHER HAND CONTENTION OF THE ASSESSEE WAS T HAT STATEMENT OF SHRI DEEPAK CHIMANLAL SHAH WAS RECORDED IN ITS ABSENCE A ND NO OPPORTUNITY OF CROSS EXAMINATION WAS GIVEN TO THE ASSESSEE. AND IN APPEAL LD. CIT(A) CONFIRMED THE ACTION OF LD. ASSESSING OFFICER. 8. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER AND HEARD BOTH THE PARTIES. AS STATEMENT OF SHRI DEEPAK CHIMANLAL SHAH WAS RECORDED IN THE ABSENCE OF ASSESSEE AND NO OPPORTUNITY WAS GRANTED BY THE ASSESSING OFFICER AND THIS PLEA WAS ALSO TAKEN BEFORE THE LD. CIT(A) BUT TO NO AVAIL. 9. IN SUPPORT OF ITS CONTENTION LD. A.R. CITED A JUDG MENT OF HONBLE SUPREME COURT IN THE MATTER OF C. VASANTLAL & CO. VS. CIT 4 5 ITR 206 WHEREIN IT IS HELD THAT STATEMENT U/S. 131 DOES NOT HAVE ANY EVIDENTIA L VALUE IF OPPORTUNITY OF CROSS EXAMINATION TO THE OTHER PARTIES NOT GIVEN. ITA NO. 2636 /AHD/2016 . A.Y. 2012-13 5 10. IN ANOTHER CASE OF HONBLE SUPREME COURT IN THE MAT TER OF ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE KOLK ATA [2015] 62 TAXMANN.COM 3 (SC) WHEREIN IT HAS BEEN HELD: '6. ACCORDING TO US NOT ALLOWING THE ASSESSEE TO CR OSS-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW W HICH MAKES THE; ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEM ENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN' WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE THE ADJUDIC ATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY TH E ASSESSEE. HOWEVER NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TR IBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION OF THE SAID DEALERS COULD NOT HAV E BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT T HEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS N OT FOR THE TRIBUNAL TO HAVE GUESSWORK AS TO FOR WHAT PURPOSES THE APPELLANT WAN TED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FR OM THEM. 7. AS MENTIONED ABOVE THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DIS CREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS-EXAMINATION. THAT APART THE ADJUDICATING AUTHORITY SIMPLY RELIED UPO N THE PRICE-LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS WERE IN FACT SOLD TO THE SAID D EALERS/WITNESS PRICE WHICH IS MENTIONED IN THE PRICE-LIST ITSELF COULD BE THE SUB JECT MATTER OF CROSS- EXAMINATION. THEREFORE IT WAS NOT TOR THE ADJUDICA TING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUBJECT MATTER OF THE CROSS -EXAMINATION AND MAKE THE REMARKS AS MENTIONED ABOVE. WE MAY ALSO POINT OUT T HAT ON AN EARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APP EAL NO. 2216 OF 2000 ORDER DATED 17.03.2005 WAS PASSED REMITTING THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING IT S REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS'. ITA NO. 2636 /AHD/2016 . A.Y. 2012-13 6 11. IN THE CASE OF HEIRS AND LRS OF LATE LAXMANBHAI S. PATGEL VS. CIT 327 ITR 290 (2008) (GUJ.) WHEREIN IT IS HELD: INCOMECASH CREDIT OPPORTUNITY OF BEING HEARDDUR ING SEARCH OF ONE R KEY OF BANK LOCKER ALONG WITH TWO PACKETS CONTAINING SI X PROMISSORY NOTES WERE RECOVERED- OUT OF THOSE SIX PROMISSORY NOTES; ONE W AS IN THE SUM OF RS. 8 78 358 EXECUTED BY ONE K IN THE CAPACITY OF PARTNER OF FIR M DCIIN HIS STATEMENT RECORDED DURING SEARCH R STATED THAT THE KEY: OF L OCKER AND THE TWO ENVELOPES WERE HANDED OVER TO HIM BY THE ASSESSEEK ALSO ADMI TTED IN HIS STATEMENT RECORDED ON THE SAME DAY AT 2.00 AM MIDNIGHT THAT H E HAD EXECUTED THE PRONOTE AND SIGNED IT ON BEHALF OF DCI AFTER OBTAINING A SU M OF RS. 8 78 358LATER K FILED AN AFFIDAVIT THAT HIS STATEMENT WAS RECORDED AT LATE HOURS IN THE NIGHT UNDER COERCION AND PRESSURESUBSEQUENTLY K ALONG WITH TW O OTHER PARTNERS OF DCI MADE A VOLUNTARY DISCLOSURE OF A SUM OF RS. 11 LACS INCLUDING THE AMOUNT OF RS. 8 78 358 AND SAME WAS ASSESSED IN THE HANDS OF THE THREE PARTNERS-RELYING ON THE STATEMENT OF R AND THE RETRACTED STATEMENT OF K AO MADE ADDITION OF RS. 8 78 358 UNDER.S.68 IN THE HANDS OF ASSESSEE ALSO A ND THE SAME WAS CONFIRMED BY CIT(A) AND TRIBUNAL-NOT JUSTIFIEDAPPARENTLY THER E WAS A VIOLATION 0F PRINCIPLES OF NATURAL JUSTICE AS THE STATEMENT OF O NE OF THE IMPORTANT WITNESSES NAMELY R ON WHICH HEAVY RELIANCE WAS PLACED BY THE AO IS NEITHER REFERRED TO IN THE ASSESSMENT ORDER NOR COPY THEREOF WAS GIVEN TO THE ASSESSEE NOR THE ASSESSEE WAS GIVEN AN OPPORTUNITY OF CROSS-EXAMININ G THE SAID RAUTHORITIES COULD RIOT BE ABSOLVED FROM DOING SO ON THE GROUND THAT THE FACTS STATED BY R WERE ADMITTED BY THE ASSESSEEK HAD NOT ONLY RETRAC TED HIS EARLIER STATEMENT BUT ALSO MADE A VOLUNTARY DISCLOSURE ALONG WITH TW O OTHER PARTNERS OF DCI IN THE SUM OF RS. 11 LACS WHICH INCLUDED THE AMOUNT OF PRO NOTE OF RS. 8 78 358LEGAL EFFECT OF THE STATEMENT RECORDED BEHIND THE BACK OF THE ASSESSEE AND WITHOUT FURNISHING THE COPY THEREOF TO THE ASSESSEE OR WITH OUT GIVING AN OPPORTUNITY OF CROSS-EXAMINATION IS THAT IF THE ADDITION IS MADE THE SAME IS REQUIRED TO BE ITA NO. 2636 /AHD/2016 . A.Y. 2012-13 7 DELETED ON THE GROUND OF VIOLATION OF THE PRINCIPLE S OF NATURAL JUSTICEORDERS OF ALL THE THREE AUTHORITIES SET ASIDE AND ADDITION DE LETED' 12. SINCE NO OPPORTUNITY OF CROSS EXAMINATION WAS GIVEN TO THE ASSESSEE THUS IN THE INTEREST OF JUSTICE WE SET ASIDE THIS MATTER T O THE FILE OF THE ASSESSING OFFICER TO DECIDE THIS MATTER AFRESH AFTER AN OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE. 13. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 18 - 11- 2019 SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 18 /11/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHME DABAD