CHHATRACHHAYA NIRMAN (P) LTD.,INDORE vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 2 (1), INDORE

PDF · subscribers
ITA 508/IND/2018Status: DisposedITAT Indore23 January 2020AY 2012-1315 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the AO relied on material gathered behind the assessee's back without confronting the assessee or providing an opportunity for cross-examination. Therefore, the assessment order was set aside.

What were the facts?

The Assessing Officer (AO) added Rs. 15 lakhs as unexplained cash credit and Rs. 63,123/- as interest thereon to the assessee's income. The AO based this addition on the finding that the lender, M/s. Jayant Securities and Finance Ltd., was involved in providing bogus accommodation entries.

What were the issues?

Whether the addition made under Section 68 was justified without providing the assessee an opportunity to cross-examine the material gathered against them and principles of natural justice were followed.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI KUL BHARAT & SHRI MANISH BORAD

For Appellant: Shri Manish Vaid, A.R, Shri Priti Patwa, A.R
For Respondent: Shri Punit Kumar, Sr. D.R
Hearing: 21.01.2020Pronounced: 23.01.2020

Appellant by Shri Manish Vaid, A.R. & Shri Priti Patwa, A.R. Respondent by Shri Punit Kumar, Sr. D.R. Date of Hearing: 21.01.2020 Date of Pronouncement: 23.01.2020 आदेश / O R D E R PER KUL BHARAT, J.M: This appeal by the assessee is directed against order of the CIT(A)-1, Indore dated 20.3.2018 pertaining to the [ ] [M/s. Chhatrachhaya Nirman Pvt. Ltd., Indore] assessment year 2012-13. The assessee has raised following grounds of appeal:

1. That the Ld. CIT(A) erred in upholding the addition made by the A.O. of Rs.15,00,000/- u/s 68 as unexplained cash credit and interest thereon of Rs.63,123/-. That on the facts and in the circumstances of the case and in law, the said addition being wrong, uncalled for and unjustified, it is prayed that the addition u/s 68 of Rs.15,00,000/- and interest thereon of Rs.63,123/- may very kindly be deleted and the order of the Ld. CIT(A) may very kindly be quashed.

2.

That the Ld. CIT(A) erred in upholding the addition of Rs.15,00,000/- without taking into consideration the submissions and the evidences filed before him. That on the facts and in the circumstances of the case and in law, the upholding of said addition of Rs.15,00,000/- and the interest thereon of Rs.63,123/- is bad in law. 3. That the Ld. CIT(A) erred in not considering the fact that the A.O. had collected and used certain material behind the back of the assessee without supplying the same to the assessee and neither giving an opportunity of being heard nor providing an opportunity of cross examination to the assessee which is against the principles of natural justice. 4. That the appellant craves leave to add, to alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal

on or before final hearing, if necessity so arises.

2. The only effective ground is against sustaining addition of Rs.15 lakhs and interest thereof of Rs.63,123/- The facts in brief are that the assessee had filed his return through electronic media on 21.9.2012 declaring total income of Rs.48,96,104/-. The case was selected for [ ] [M/s. Chhatrachhaya Nirman Pvt. Ltd., Indore] scrutiny assessment and thereafter the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter called as ‘the Act’) was framed. Thereby, the A.O. made addition of Rs.15,63,123/- in the income disclosed by the assessee.

The basis of making such addition was that the A.O. observed that the assessee had taken unsecured loan of Rs.15 lakhs from M/s. Jayant Securities and Finance Ltd., Vadodara treating the same as explained in genuine transaction. The A.O. also made addition of Rs.63,123/- being the interest expenses on account of disallowance of interest expenses. Aggrieved against this, the assessee preferred appeal before Ld. CIT(A), who after considering the submissions and material placed before him dismissed the appeal. Now the assessee is in further appeal before this Tribunal.

3.

Ld. Counsel for the assessee submitted that the authorities below have grossly failed to appreciate the facts.

[ ] [M/s. Chhatrachhaya Nirman Pvt. Ltd., Indore] He further contended that adverse information, if any related to transaction was collected by the A.O. and assesee was not given opportunity to rebut the same. No opportunity of cross examination was granted. He further contended that before Ld. CIT(A), additional evidences were filed in support of the claim of the assessee. However, these evidences were not considered, therefore, he prayed that matter may be restored to the A.O. for a decision afresh.

4.

Ld. D.R. opposed these submissions and supported the orders of the authorities below. Ld. D.R. submitted that the A.O. has given a categorical finding that M/s. Jayant Securities and Finance Ltd. has been involved in giving bogus accommodation entries.

5.

We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. The Ld. CIT(A) has decided this issue by observing as under:

“4.1.2On examination of the fact, it was found that, this company was having merger/nil income and not doing any business activity but only engaged in giving accomodation entries.The appellant had shown total receipt of Rs.15,00,00/- in the garb of unsecured loan from this entity. Since, the transaction with this entity was [ ] [M/s. Chhatrachhaya Nirman Pvt. Ltd., Indore]

[ ] [M/s. Chhatrachhaya Nirman Pvt. Ltd., Indore] [ ] [M/s. Chhatrachhaya Nirman Pvt. Ltd., Indore] [ ] [M/s. Chhatrachhaya Nirman Pvt. Ltd., Indore] [ ] [M/s. Chhatrachhaya Nirman Pvt. Ltd., Indore] [ ] [M/s. Chhatrachhaya Nirman Pvt. Ltd., Indore] [ ] [M/s. Chhatrachhaya Nirman Pvt. Ltd., Indore] [ ] [M/s. Chhatrachhaya Nirman Pvt. Ltd., Indore] [ ] [M/s. Chhatrachhaya Nirman Pvt. Ltd., Indore] [ ] [M/s. Chhatrachhaya Nirman Pvt. Ltd., Indore]

6.

We find that the A.O. has based his finding purely on the basis of the findings of the other officers and the material gath4ered at the back of the assessee. In our considered view, the assessee should have been confronted with the material so gathered and the assessee was ought to have been given opportunity to cross examination.

Considering these facts, the impugned assessment order is set aside to the file of the A.O. to be decided afresh. The A.O. would verify the claim of the assessee, which he had filed in the form of additional evidences before Ld. CIT(A)

[ ] [M/s. Chhatrachhaya Nirman Pvt. Ltd., Indore] and would also make independent enquiries, if he so deem fit while framing the assessment afresh. The grounds raised in the appeal are allowed for statistical purposes.

7.

In the result, the appeal of the assessee is allowed for statistical purposes.

Order was pronounced in the open court on 23 .01.2020.

More judgments on Section 68

All 29,931 judgments and leading authorities on Section 68 →

Recent GST High Court judgments

Search GST case law →