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Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad
Before: Shri R.K. Panda, Vice- & Shri Laliet Kumar
Date of hearing: 18/12/2023 Date of pronouncement: 20/12/2023 ORDER Per Laliet Kumar, J.M This appeal filed by the assessee is directed against the order dated 17.12.2018 of the learned CIT (A)-, relating to A.Y.2010-11.
The assessee has raised the following grounds:
“1. The order of the learned Commissioner of Income Tax (Appeals) is against the law, weight of evidence and probabilities of the case. 2. The learned CIT(A) ought to have considered the objections raised by the appellant before the AO in terms of Apex Courts direction in the case of GKN Drive Shafts (India) Ltd. v. Income Tax Officer, GKN Drive Shafts(India) Ltd. v. ITO [2003] 259 ITR 19. There is also no whisper in Page 1 of 10 the assessment order about disposal of objection. The directions/observation of the Apex Court should have been followed under Article 141 of the Constitution.
3. The learned CIT(A) ought to have appreciated and accepted the principle that, when there are divergent views expressed by the Courts on an issue, the view which is favourable to the assessee should be accepted on interpretation of the direction of Apex Court.
The learned CIT(A) ought to have appreciated the facts of the case that, the reasons recorded by the assessing officer that a sum of Rs.47.85 crores has escaped assessment in the hands of the company is based on no tangible and verified material but on some unverified reports of other agencies which cannot be a basis for reopening. Therefore, the proceedings are liable to be quashed.
The learned CIT(A) ought to have appreciated facts of the case that, the reasons recorded by the learned AO for reopening the assessment are contrary to facts recorded in the assessment order. There is no consistency between the two. The only inference that there is no application of mind. This makes both reopening and assessment order 9fhe AO 0s bad in, law.
6. The learned CIT(A)' as final inference is grossly contrary to her findings the body of the assessment order in as much as while coming to a finding that the transaction is sham for benefit of a third party and appellant only provided a platform and never utilised the proceeds, should not have proceeded ahead to make addition under 68 as the assessee was never the beneficiary of the GDR as per A0's observation. This makes the addition legally not sustainable and liable to be deleted.
The learned CIT(A) should have appreciated the facts that, the reopening and also the assessment order of the AO is based on suspicion and surmise and replete with irrelevant evidences and therefore not sustainable as per settled judicial precedents.
The learned CIT(A) without appreciating the facts on the detailed submissions made by the appellant and has held that the issue pertains to penny stock issue when the Company has not sold any shares. The company has issued GDR at Luxembourg and hence the question of penny stock does not arise.
The learned CIT(A) without appreciating the facts that the reopening should have done within the stipulated time u/s. 149(1)(a). However, the AO has reopened the assessment u/s. 149(1)(b) which is bad in law, not sustainable and any other consequential orders is nullity. 10.The appellant craves leave to add to, amend or modify the above grounds of appeal either before or at the time of hearing of the appeal, if it is considered necessary.”
The learned AR drew our attention to the order passed by the learned CIT (A) more particularly at para 7 of the order which is to the following effect:
“7. I have carefully considered the facts of the case, assessment order and submissions of the appellant. The appellant has not produced anything new to substantiate his submissions against the addition made by the Assessing Officer. Further as per the latest order of ITAT, Chennai dt.06.12.2018 in the case of M/s Pankaj Agarwal & Sons (HUF) Vs. ITO, Non-Corporate Ward -10(3), Chenna & 7 other similar cases, the present issue (penny stock issue) was held in favour of Revenue. Hence, the submissions of the appellant not accepted. Therefore, the additions made by the Assessing Officer confirmed.”
4. It was submitted by the learned AR that the present case is not of penny stock which has been wrongly mentioned by the learned CIT (A) in the impugned order. It was submitted that the assessee company has received the GDR proceeds from Luxembourg after due approval from the Indian authorities. However, it is the case that there is a misuse of the GDR proceeds by the assessee i.e. it was utilized for the purposes for which it was sanctioned nor by the Indian authorities. It was submitted that the order passed by the learned CIT (A) is non-speaking order and perfunctory order as the legal ground with respect to the reasons for which reopening have not been supplied to the assessee and even the assessee has not been provided an opportunity to file its objections and neither the objections were disposed of by a speaking order in the light of the decision of the Hon'ble Supreme Court in the case of GKN Drive Shafts(India) Ltd. v. ITO [2003] 259 ITR 19. It was submitted that the assessee had filed detailed elaborate submission which were reproduced by the learned CIT(A) in the order in Para 5 &6 of the impugned order, however, there is no whisper/adjudication on the submissions made by the assessee. It was submitted by the learned AR that the assessee is entitled to relief as claimed in the appeal.
5. Per contra, the learned DR submitted that the order passed by the learned CIT (A) is cryptic and non-speaking and the learned AR has right in submitting that the objections raised by the assessee has not been adjudicated by the learned CIT (A) while passing the appellate order. He also relied on the decision of the hon Supreme Court in the case of Home Finders Housing Ltd (94 taxman.com 84) dated 8.5.2018 and also on the decision of the Securities and Exchange Board of India order dated 21.09.2011 whereby the SEBI has decided that there was a misuse of the GDR proceeds. The learned DR, however, submitted that the proceedings against the assessee are pending for adjudication before the Enforcement Directorate Courts after receiving the report from the SEBI.
We have heard the rival arguments made by both the sides and perused the available material on record. In the present case the learned CIT (A) had undoubtedly reproduced and mentioned the submission of the assessee in para 5.2 of his order. The findings of the learned CIT (A) is given in para 6 to 7 of the order which is to the following effect: