M/S ARK IMPORTS PVT. LTD.,LUDHIANA vs. ACIT, LUDHIANA

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ITA 237/CHANDI/2017Status: DisposedITAT Chandigarh24 February 2025AY 2013-14Bench: SHRI RAJPAL YADAV (Vice President), SHRI KRINWANT SAHAY (Accountant Member)1 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal noted that the assessee and its counsels failed to appear despite multiple opportunities and notices. The Tribunal found that both the Assessing Officer and the CIT(A) considered all necessary documents and submissions and passed speaking orders. Therefore, the Tribunal held that there was no need to interfere with the findings of the CIT(A).

What were the facts?

The assessee, M/s ARK Imports Pvt. Ltd., is a licensed member dealing in raw wool. A search and seizure operation was conducted on 23.05.2013. The assessing officer made an addition based on alleged siphoning of cash and sham transactions on the NSEL platform.

What were the issues?

Whether the addition made by the Assessing Officer and upheld by the CIT(A) is justified in absence of incriminating material and proper opportunity to the assessee, and whether liability can be termed as income.

Which sections of the Income-tax Act were involved?

Section 153A,Section 132

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Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘A’, CHANDIGARH

Before: SHRI RAJPAL YADAV & SHRI KRINWANT SAHAY

Hearing: 06.02.2025Pronounced: 24.02.2025

"नधा"रती क" ओर से/Assessee by : None राज"व क" ओर से/ Revenue by : Shri Rohit Sharma, CIT DR (Virtual) सुनवाई क" तार"ख/Date of Hearing : 06.02.2025 उदघोषणा क" तार"ख/Date of Pronouncement : 24.02.2025 आदेश/Order Per Krinwant Sahay, AM : Appeal in this case has been filed by the assessee against the order dated 29.12.2016 of ld. Commissioner of Income Tax (Appeals)-5, Ludhiana [hereinafter referred to as ‘CIT(A)’], for the Assessment Year 2013-14.

2.

The Assessee has raised following Grounds of appeal:

237-Chd-2017 ARK Imports Pvt Ltd, Ludhiana 2 1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law in upholding the assessment framed u/s 153A of the Act in the absence of any incriminating material having been found during the course of search which is a condition precedent and as such the order passed is illegal, arbitrary and unjustified.

2. That the Ld Commissioner of Income Tax (Appeals) has erred in holding that the assessee has been given adequate opportunity of being heard and was non- cooperative in supplying the information for completion of the assessment which is contrary to the facts on record and as such framing of assessment flouting the Principals of natural Justice is illegal, arbitrary and unjustified.

3. That the Ld. Commissioner of Income Tax (Appeals) has further erred in upholding the rejection of books of account without pin-pointing any mistake in the maintenance of the same which is illegal, arbitrary and unjustified. 4. Without prejudice to the above, the Ld. Commissioner of Income Tax (Appeals) has erred in law as well on facts in upholding the addition of Rs. 182,34,04,000/- for alleged siphoning off of cash from the accounts of 17 allegedly tainted parties in utter disregard of the explanations rendered which is illegal, arbitrary and unjustified. 5. That the entire addition is based on the statements of third parties i.e employees of M/s NSEL without giving any opportunity of cross examination by the assessee and as such making the addition flouting the Principals of Natural Justice is illegal, arbitrary and unjustified. 6. That the addition is based on the statement recorded of only one Sh. Gaurav Pathak which has been taken to be sacrosanct and made the base for all the allegedly 237-Chd-2017 ARK Imports Pvt Ltd, Ludhiana 3 tainted parties without recording the statements of the other concerned parties and as such the addition upheld is illegal, arbitrary and unjustified. 7. That the Ld. Commissioner of Income Tax (Appeals) has further erred in upholding that there was a discrepancy in the stocks of NSEL and the entire purchases/sales were sham transactions which is contrary to the facts on record and as such upholding of the addition on wrong facts is illegal, arbitrary and unjustified. 8. That the Ld. Commissioner of Income Tax (Appeals) has further erred in upholding the addition of Rs. 334,90,43,762/- being the allegedly proportionate amount out of Rs.719.37 crores considered to be unaccounted income payable by the assessee to M/s NSEL only on the basis of suit filed by NSEL in utter disregard of the explanations filed which is arbitrary and unjustified.

9. That the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that during the course of assessment proceedings, the details were suo-moto called for by the assessing officer from M/s NSEL and liability amount differs from the one appearing in the recovery suit showing the mala-fide which fact has not been mentioned in the assessment order and as such the addition upheld is illegal, arbitrary and unjustified.

10.

Without prejudice to ground 7 and 8, in any case, liability cannot be termed to be income o f the Assessee which defies all logics of accounting principles and as such the addition upheld isillegal, arbitrary and unjustified. 11. That the order of the Ld. Commissioner of Income Tax (Appeals) is erroneous, arbitrary, opposed to law and facts o f the case and is, thus, untenable.

237-Chd-2017 ARK Imports Pvt Ltd, Ludhiana

3.

It emerges out from the record that is on Board since 29th March 2017. From the Note Sheet entry, it is seen that Shri Tej Mohan Singh, Shri Jasleen Khera and others have appeared from time to time and thereafter all the Counsels have withdrawn their power of attorney and pleaded no instructions. On 26.9.2024, Shri Tej Mohan Singh, Advocate and Shri Sanjay Sood, CA have also withdrew their power of attorney. It is pertinent to note that as and when a counsel withdrew his power of attorney, it is a duty cast upon him to serve a notice through registered post upon the Assessee informing that he is withdrawing his power of attorney so that Assessee can make alternative arrangement thereafter. The Tribunal is not required to serve a fresh notice. But in the interest of justice and for abundant caution, Tribunal issued fresh notice for hearing to the Assessee for 20.11.2024. But none appeared on behalf of the Assessee. It is 50th occasion that this group has been listed for hearing. The notice was issued through the A.O. and the A.O. has informed that notice has been sent on the last e.mail available with the Department. It is further observed that DCIT, Central Circle, Ludhiana vide his letter dated 7.1.2025 informed the Tribunal that officials from the 237-Chd-2017 ARK Imports Pvt Ltd, Ludhiana 5 Range visited the premises of the Assessee which was found locked.

4.

During proceedings before us, the ld. DR informed the Bench that he has been intimated by the Assessing Officer that the Assessee is absconding. We have been apprised that there are large number of cases pending against the head of the group with different investigating agencies. Looking to all these cumulative setting of circumstances would suggest that the Assessee is not very much interested in persecuting this appeal. Even otherwise, it is trite (‘S. Velu Palandar Vs. DCIT’, 83 ITR 686 (Mad.)] and incumbent on the authority to decide an appeal on merit in accordance with the principles of natural justice.

5.

Now coming on merits, brief facts of the case are that the Assessee belongs to Genex Group of cases, Ludhiana where search and seizure operation u/s 132 of the Income Tax Act, 1961 (in short 'the Act') was conducted on 23.05.2013. Further, the facts, as enumerated in the assessment order are as under: a) The assessee is a company and is the licenced member to deal in raw wool. It is reportedly maintaining books of account.

237-Chd-2017 ARK Imports Pvt Ltd, Ludhiana 6 b). NSEL was a platform provided to enable the buyers and Sellers to transact on spot against the actual delivery of the goods through the licensed members appointed by the NSEL. In this case, M/s ARK was appointed as Licensed member to deal in raw wool. For this purpose, a settlement account of the Licenced member is maintained by NSEL with a designated Bank in which the amount of net proceeds (net of purchases/sales through the Licensed member) are credited to the settlement account. c). In the case of Assessee M/s ARK Imports Pvt. Ltd, the Settlement account no. 00990680013160 was opened with HDFC Bank, Feroze Gandhi larket, Ludhiana. d) As per the aforesaid settlement account, the amount of Rs.32,05,19,069/- is due to the assessee i.e. M/s ARK Imports (P) Ltd. f). As per NSEL, amount of Rs. 719.37/- cr. (Rs. Seven hundred nineteen crores and thirty seven lacs only) is shown as recoverable from M/s ARK Imports (P) Ltd as per recovery suit filed in suit No. 173 of 2014 before the Hon'ble Mumbai High Court. g). The settlement Account would have been a representative figure of the actual amount due from/to the NSEL member License holder(i.e. in this case M/s ARK Imports (P) LTD) only if real/actual 237-Chd-2017 ARK Imports Pvt Ltd, Ludhiana 7 purchases/sales had taken place at the NSEL platform. However the facts of the case would bear out that sham transactions of purchases/sales were also taking place on the NSEL platform without actual delivery of the goods. i. In quantity otherwise reported. ii. In quality otherwise reported iii. These observation are supported from the facts outlined in the body of the Assessment Order.

6.

We have gone through the assessment order passed by the Assessing Officer and the appellate order passed by the ld. CIT(A). We find that the Assessing Officer has passed a speaking order based on various incriminating documents found and seized from various business and residential premise of the group. Against the order of the Assessing Officer, the Assessee filed an appeal before the ld. CIT(A) on different grounds. The ld. CIT(A), in our view, has passed a speaking order on merit on each and every issue / ground raised by the Assessee in the appeal. The Assessee dissatisfied with the order of the ld. CIT(A) has filed this appeal before the Tribunal but despite giving fifty opportunities to the Assessee, the Assessee has not complied with and further that all the Counsels and C.A. who had filed their Power of Attorney have 237-Chd-2017 ARK Imports Pvt Ltd, Ludhiana 8 also withdrawn in the absence of any instruction from the Assessee.

7.

The ld. DR relied on the order of the CIT(A) and prayed that the appeal of the Assessee deserves to be dismissed.

8.

In our view, both the Assessing Officer and the ld. CIT(A) have passed the assessment order and the appellate order keeping in view the aspect of natural justice. They have considered all the necessary documents, statements and submissions filed by the Assessee. Since the order passed by the ld. CIT(A) is a speaking order on each issue, therefore, in our considered opinion, there is no need to interfere in the findings given by the ld. CIT(A). Thus, the findings given by the ld. CIT(A) on different issues in the Appeal Order are hereby sustained / confirmed. Accordingly, appeal filed by the Assessee on different grounds are hereby dismissed

9.

In the result, appeal of the assessee is dismissed.

Order pronounced on 24 02.2025. ( RAJPAL YADAV ) Accountant Member “आर.के.”

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