M/S ARK IMPORTS PVT. LTD.,LUDHIANA vs. ACIT, CC-1, LUDHIANA

आयकर अपीलȣय अͬधकरण, चÖडीगढ़ Ûयायपीठ, चÖडीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCH, ‘A’, CHANDIGARH

BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT &
SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER

आयकर अपील सं./ ITA No. 1431/CHD/2018
Ǔनधा[रण वष[ / Assessment Year : 2013-14

ARK Imports Pvt. Ltd.,
# 228-A, Industrial Area-A,
Cheema Chowk
Ludhiana 141001

बनाम
Vs.

The DCIT,
Central Circle-1,
Ludhiana
èथायी लेखा सं./PAN NO: AAJCA5899B
अपीलाथȸ/Appellant
Ĥ×यथȸ/Respondent

Ǔनधा[ǐरती कȧ ओर से/Assessee by : None
राजèव कȧ ओर से/ Revenue by : Shri Rohit Sharma, CIT DR

(Virtual)

सुनवाई कȧ तारȣख/Date of Hearing

:
06.02.2025
उदघोषणा कȧ तारȣख/Date of Pronouncement
:
24.02.2025

आदेश/Order

Per Krinwant Sahay, AM :

Appeal in this case has been filed by the Revenue against the order dated 24.09.2018 of ld. Commissioner of Income Tax
(Appeals)-5, Ludhiana [hereinafter referred to as ‘CIT(A)’], for the Assessment Year 2013-14. 2. Grounds of appeal are as under:
1. Addition of Rs. 182,34,04,000/- on account of cash withdrawal from bank by suppliers of appellant:-

1431-Chd-2018
ARK Imports Pvt Ltd, Ludhiana

That the above-mentioned addition has been made on the ground of cash withdrawal from the bank accounts of 17 tainted parties without verifying their books of accounts just on the basis that in all these 17 accounts introduction for opening of current account is given by Sh. Kailash Aggarwal one of the director of the Appellant
Further to state that all these 17 firms are income tax assesses within the local juri iction «of Distt.
Ludhiana. The Assessing Authority could have summoned them and make them produce their records along with recording their statements. The Authorities have power to summon/call information u/s 133 but they could not exercise it and shift the burden on the Appellant to produce the books of accounts of supplier.
Further to state that out of these 17 concerns mentioned in the Assessment order by the AO that introduction in these accounts were made by Sh
Kailash
Aggarwal,
2
concerns accounts were opened prior to incorporation of appellant Company and introduction in 4 accounts were not made by Sh. Kailash Aggarwal one of director of the Company.
2. Shortfall of the stock in the Godowns of NSEL
In the assessment order the AO has stated that there is a shortfall in the stocks at the Godowns of NSEL, in this respect it is stated that all the godowns were in the custody of NSEL as evident from the statement of Sh. Babber Hussain and Sh.
Juggal Kishore that they are employees of NSEL and got salaries from NSEL. Since the godowns of NSEL were managed and controlled by the NSEL and how

1431-Chd-2018
ARK Imports Pvt Ltd, Ludhiana the assesse shall be responsible for any shortfall in the stocks of NSEL. Since the Stocks were of NSEL then how these stock shall be treated as stocks of the assessee.
3. Addition of Rs. 334,90,43,762/- on account of recovery suit filed by NSEL:-
That the Assessing Authority made proportionate addition of Rs. 334,90,43,762/- in the A.Y.2013-4
on account of recovery suit filed by M/s Modern
India
Ltd
&
Others against
M/s
Financial
Technologies India Pvt Ltd & Others. It is pertinent to mention here that the Appellant were not the original party to suit. Later, 23/04/2014 the Appellant was added as third party.
The AO also noted that the report submitted by M/s
Sharp & Tannan Associates submitted to the Board of Directors of NSEL, recoveries have been worked out from various members of NSEL, in the case of Assessee, the recoverable amount from the assessee as on 31.08.2013
was shown as Rs,719.37 crores since the assessee failed to file confirmation of account from NSEL as on date.
Therefore, the AO added Rs. 719.37 Crores on account of unaccounted/undisclosed income in the hands of the assessee making proportional addition in the A.Y. 2012-13, 2013-14, 2014-15 in the ratio of sales of the assessee. Thus for the Asstt. Year
2013-14
the proportional addition comes to Rs.334,90,43,762/-. How A.O. can treat turnover as income of the assessee rather than profit from transactions.
4. The Bombay High Court confirms claims of only Rs. 650 crores which was earlier Rs. 5600
crores in NSEL Case.

1431-Chd-2018
ARK Imports Pvt Ltd, Ludhiana

It is pertinent to mention here that as per an article dated Aug 22, 2018 in the Hindu Business Line
Newspaper, The Bombay High Court appointed committee headed by Justice VC Dada to look into scam of National Stock Exchange has confirmed claims of only Rs. 650 crores from 4697 entities which was initially Rs. 5600 crores.
As now the total claims have been reduced from Rs.
5600 crores to Rs. 650 crores, from 4697 entities, it is thereby stated that now the total claim against
ARK Imports Pvt. Ltd. Which was earlier 719 Crores now definitely be reduced by 80-90%.
5. Quantum Addition Pending in ITAT under ITA No. 237/Chandi/2017
Further it is stated that the Assessee has filed an appeal against the quantum of the order of Ld.
Commissioner of Income Tax Appeals (Ludhiana) with the Income
Tax
Appellate
Tribunal,
Chandigarh. So, it is prayed that till the final disposal of the quantum appeal by the Income Tax
Appellate Tribunal, the penalty proceedings u/s 271AAB should be hold up since the figure of penalty is very high and it solely depends upon the final decision of Honable ITAT .

1431-Chd-2018
ARK Imports Pvt Ltd, Ludhiana the assessee filed its return of income in Form No, 1TR-5
through e-filing on 29.04.2014 declaring income of Rs.
2,99,27,300/-. Assessment was completed u/s 143(3)/l 53(A) of the I.T. Act 1961 vide order dated 31.03.2016 at a total income of Rs. 520,23,75,062/-.
6. During the course of assessment proceedings, it was found that at the time of Search Proceedings the assessee had admitted the undisclosed income amounting to Rs.
1,70,00,000/- u/s 132(4) of the I.T. Act.1961. Penalty proceedings u/s 271AAB of the I.T. Act, 1961 were initiated on 31.03.2016 on undisclosed income of Rs. 1,70,00,000/-.
7. During the proceedings before us, while none appeared from the Assessee’s side (despite 50 opportunities given). The ld. DR filed written submissions, which are as under: -

Submissions of CIT DR
8. Apart from the above facts filed in the form of written submissions, the ld. CIT DR also relied on the exhaustive and speaking order of the Assessing Officer. As already discussed above, no one appeared from the Assessee’s side, therefore,

1431-Chd-2018
ARK Imports Pvt Ltd, Ludhiana there was no rebuttal on the part of the Assessee on any fact
/ issues brought on record by the ld. DR.
9. Against this penalty order, the Assessee filed an appeal before the ld. CIT(A) and during the proceedings before the ld.
CIT(A), the ld. Counsel filed detailed submissions and we find that the ld. CIT(A) has dealt with each and every issue raised by the Assessee in his appeal order. Finally, the ld. CIT(A) has given his findings as under:-
“The AR has not disputed that the fact that Section 271AAB is applicable in the present case. The only argument of the AR is that the addition has been challenged before the Hon'ble ITAT. However, as already mentioned the addition made by the AO falls within the definition of 'undisclosed income' and any variation in the addition made by the AO as a result of appeal/revision by the Hon'ble ITAT or Court/ any higher authority will be given effect to by the AO and appropriate order enhancing or reducing or cancelling the penalty will be passed in accordance with provision of Section 275(1A). However, as of now, on the basis of the facts and the circumstances of the case, the penalty imposed by the AO in this case u/s 271AAB @
30%
on the undisclosed income of Rs.
517,24,47,762/-, is found sustainable and hence confirmed.”

1431-Chd-2018
ARK Imports Pvt Ltd, Ludhiana

Against this order, the Assessee filed an appeal before this Tribunal.
10. From the records it is gathered that in fact, it is a bunch of 16 appeals directed at the instance of Assessee except three appeals namely ITA Nos. 952, 956 and 960/Chd/2018 by the Revenue. It emerges out from the record that ITA No.
237/Chd/2017 and other cases of this group are 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 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

1431-Chd-2018
ARK Imports Pvt Ltd, Ludhiana 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 Range visited the premises of the Assessee which was found locked.
11. 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.
12. We have gone through the penalty order passed by the Assessing Officer and appellate order passed by the ld. CIT(A).
We find that the A.O. has passed this penalty order in a 1431-Chd-2018
ARK Imports Pvt Ltd, Ludhiana detailed manner and brought each and every fact on record.
Even before the ld. CIT(A), the Assessee did not dispute the fact that section 271AAB was applicable in the present case.
The only argument that the Counsel of the Assessee put before the ld. CIT(A) was that quantum addition had been challenged before the ITAT. We find that despite giving 50 opportunities to the Assessee, there is no compliance by the Assessee either in the appeal challenging the addition in the assessment order in the appeal challenging the penalty order passed by the ld.
CIT(A).
13. After going through the appellate order passed by the ld.
CIT(A), we are of this considered view that the ld. CIT(A) has passed a speaking order on merit on different issues of penalty levied on the Assessee. As the Assessee has not complied with any of the notices (50 opportunities given) issued by the Tribunal and even all the Counsels and C.A.’s who had filed their Power of Attorney had also withdrawn it in the absence of any instruction from the Assessee. We are left with no other option but to pass an ex-parte order.
14. Even on merit, we find that both the Assessing Officer and the. CIT(A) has passed the penalty order and appellate

1431-Chd-2018
ARK Imports Pvt Ltd, Ludhiana order in this case in detail keeping in view the aspect of natural justice. They have considered all the necessary documents, statements and submissions filed by the Assessee since order passed by the ld. CIT(A) is a speaking order on each issue, therefore, in our considered view there is no need to interfere in the findings given by the ld. CIT(A). Thus, findings given by the ld. CIT(A) on different issues in his
Appeal Order are hereby sustained. Accordingly, appeal filed by the Assessee in this case on different grounds stands dismissed.
15. In the result, Assessee’s appeal is dismissed.

Order pronounced on 24 02.2025. ( RAJPAL YADAV )
Accountant Member
“आर.के.”
आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the order forwarded to :
1. अपीलाथȸ/ The Appellant
2. Ĥ×यथȸ/ The Respondent
3. आयकर आयुÈत/ CIT
4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय आͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH
5. गाड[ फाईल/ Guard File
आदेशानुसार/ By order,

सहायक पंजीकार/