PUNCTUAL MERCHANTS PRIVATE LIMITED ,KOLKATA vs. ITO, WARD - 7(2), KOLKATA , KOLKATA

O R D E R

PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:

“I. For that the Ld. CIT(A) erred in deciding the appeal ex-parte without allowing the appellant any proper opportunity of being heard. 2. For that the appellant craves leave to produce additional evidences in terms of Rule 46A of the Income Tax Rules 1962.

Punctual Merchants Pvt. Ltd., AY 2012-13 2 3. For that the order passed by the Ld. CIT(A) is bad in law since the Ld. CIT(A) has not decided the issues ground wise in respect of the grounds raised by the appellant in the Memo of Appeal.

4. For that the Ld. CIT(A) is bad in law since the order passed is not any speaking order nor the Ld. CIT(A) has looked into the assessment records and relevant materials to conclude that the order of the Ld. AO cannot be interfered with.

5. For that on the facts and in the circumstances of the case the order passed by the Ld. CIT(A) is not maintainable.

6. For that the order of the Ld. AO be modified and the assessee be given relief prayed for.

7. For that the assessee craves leave to add, alter or amend any ground before or at the time of hearing.”

Punctual Merchants Pvt. Ltd., AY 2012-13 3 4.1. From the perusal of the above report of the Inspector, Ld. Sr. DR pointed out that on the given address of the assessee only a small shop named “Anjali Tailors” was found. Ld. Inspector enquired about the whereabouts of the assessee who was informed by the employees working there (Anjali Tailors) that they never knew such entity on that address. He thus, made the service of the notice for hearing by affixture on 20.10.2022. Ld. Sr. DR pointed out that even before Ld. CIT(A), in the first appeal, no one attended in response to notices issued and, therefore, the appeal was decided on the basis of material available on record. Relevant observations made by the Ld. CIT(A) in this respect are extracted below:

Punctual Merchants Pvt. Ltd., AY 2012-13 4 “This appeal is directed against order u/s. 143(3)/144 dated 24.03.2015, passed by ITO, Ward-7(2). Appeal has been filed on 05.05.2015. Notices dated 27.12.2017 & 15.02.2018 were issued. E-mail also generated through ITBA online systems and in registered PAN based E-MAIL ID. However, no one attended in response to these notices. Hence, appeal is decided on the basis of material available on record. ……. …… 3. As can be seen from the nature of additions/disallowances in the grounds of appeal, the issues involved are factual in nature and require verification before arriving at the final conclusion. As the assessee has not attended to the appeal proceedings, necessary evidences in support of the assessee’s contentions have not been verified. Under the circumstances I am left with no option but to confirm the additions/disallowances made by the assessing officer.” 4.2. It was also pointed out from the order of assessment that it has been passed u/s. 144 of the Act wherein also no compliance was made by the assessee in respect of notices issued u/s. 142(1) of the Act as well as summons issued u/s. 131 to the directors of the assessee. The relevant extract from the order of Ld. AO are reproduced as under: “The assessee company filed its original return of income for the assessment year 2012-13 on 21.11.2012 declaring total income of Rs. O/-. The return was duly processed u/s 143(1) of the Income Tax Act'61 at the returned income dated Case Selected for scrutiny: Subsequently, the case was selected for Scrutiny under CASS through the computer generated selection of scrutiny in the AST module. The Notice u/s 143(3) of the Income Tax Act '61 was issued to the assessee. The case was re-fixed for hearing by communicating to assessee with the notices u/s 142(1) of the Act on 04.02.2015. In this respect successive opportunities of being heard were given to the assessee company by issuing notices u/s 142(1) of Act. Further re-fixation notices were also issued to the assessee company vide this office letters, records of such notices issued are kept in the: records. Summons u/s.13l were issued to the Directors on 10.02.2015 & 20.02.2015 and show cause notice on 25.02.2015. The copies of services of such notices are kept in the records. Even though en ugh opportunity of being heard was provided to the assessee company and to explain his case and substantiate his return of income filed but there was non- compliance on the part of the assessee company. Non-Compliance on the part of the assessee: There was non-compliance on the part of the assessee in response to both the statutory notices. Several reminder letters were issued to the assessee company through post for making compliance in the scrutiny case but all the notices and letters returned un-served mentioning “No such address”. Best Judgenent assessment reasons: Even though enough opportunity of being heard was provided to the assessee to explain return of Income filed and several reminders were issued, evidences

Punctual Merchants Pvt. Ltd., AY 2012-13 5 of service of such notices are kept in the records, but none appeared to explain the details of accounts as flied in the return of Income. The assessee was given a final opportunity of being heard and it was specially written in the said letter that in case of non-compliance to that letter, it will be presumed that the assessee has nothing to offer and the assessment proceeding would be completed u/s. 144 of the Income Tax Act.” 4.3. From the above factual observation on the conduct and behavioral pattern of the assessee, it is leading us to understand that assessee is not serious about taking up the matters at the appropriate forums and has been casual in pursuing it. Such conduct of the assessee of non –compliance as well as non-appearance on the appeals filed by it reflects that assessee is abusing the process of law time and again. From the perusal of the assessment order, it is noted that Ld. AO had asked to make personal production of the directors of the assessee and the shareholders or directors of the subscribing companies for recording their statement and to ascertain reason for the amount of investment at such huge premium when the assessee generated almost no revenue and does not have a value in the market. Ld. AO noted in his order that assessee could not produce the directors personally even though opportunity of being heard was given. Ld. AO found from the accounts that assessee had raised fresh share capital by issuing shares, details of which are tabulated as under: Rate As on As on 31.03.2013 31.03.2012 Share Capital Issued Face value Rs.10 2,00,000 1,00,000 Share premium raised Rs. 49,900,000 0 Share application 0 0 money raised Total Increase 5,01,00,000 1,00,000 4.4. In this respect, Ld. AO noted that the burden of proof was on the assessee to substantiate the said cash credit found in its books. Ld. AO noted that assessee did not furnish any details and documents nor fulfilled the conditions relating to identity, creditworthiness and Punctual Merchants Pvt. Ltd., AY 2012-13 6 genuineness of the transaction. Since the assessee failed to discharge its onus in respect of introduction of share capital despite several opportunities given to it, Ld. AO held that the purported fresh capital along with premium aggregating to Rs. 5 Cr. was nothing but assessee’s own money and thus, treated it as unexplained cash credit which was added to the total income of the assessee. Ld. AO also made a disallowance of Rs.8900/- u/s. 14A of the Act read with Rule 8D(2)(iii) and completed the assessment. Ld. CIT(A) sustained the additions made by the Ld. AO, in the light of non-appearance of the assessee and failure on the part of the assessee to file necessary evidence in support of the grounds raised by it.

Order pronounced in the Court on 22nd November, 2022.