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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
Captioned appeal by the assessee is against order dated 7th February 2019, passed by the learned Commissioner of Income Tax (Appeals)–24, Mumbai, pertaining to the assessment year 2012–13.
When the appeal was called for hearing, no one was present on behalf of the assessee to represent the case. Accordingly, we proceed to dispose off the appeal ex–parte qua the assessee after hearing the 2 Meena Securities Pvt. Ltd.
learned Departmental Representative and on the basis of material on record.
The core issue arising in the present appeal is relating to the addition of ` 50 lakh made under section 69A of the Income-tax Act, 1961 (for short "the Act"). Of course, there are other legal issues raised by the assessee pertaining to the validity of re–opening of assessment under section 147 of the Act as well as rejection of additional evidence by the learned Commissioner (Appeals).
Brief facts are, the assessee company is stated to be engaged in the business of financial services. For the assessment year under consideration, the assessee filed its return of income on 24th September 2012, declaring loss of ` 77,563 under the normal provisions and book profit of ` 44,454 under section 115JB of the Act. The return of income filed by the assessee was initially processed under section 143(1) of the Act. Subsequently, a search and seizure operation under section 132 of the Act was carried out in case of Vipul Vidur Bhat, and other related entities on 5th February 21016. In the course of such search and seizure operation, a statement was recorded under section 132(4) of the Act from Vipul Vidur Bhat, wherein, he accepted that he provides accommodation entries through various bogus entities/companies floated by him. From the information gathered during the search and seizure operation, it was found that 3 Meena Securities Pvt. Ltd.
the assessee had availed loan of ` 50 lakh from P. Saji Textiles Ltd., one of the entities belonging to Vipul Vidur Bhat. On the basis of such information, the Assessing Officer re–opened the assessment under section 147 of the Act. In the course of assessment proceedings, the Assessing Officer called upon the assessee to prove the genuineness of the loan transaction with P. Saji Textiles Ltd. Further, to independently verify the genuineness of the said transaction, the Assessing Officer issued a notice under section 133(6) of the Act to Shri P. Saji Textiles Ltd. As observed by the Assessing Officer, in response to the notice, the party concerned furnished loan confirmation, copies of income tax return and bank statement to support the loan transaction. The Assessing Officer, however, relying upon the statement of Vipul Vidur Bhat and other materials found during the search and seizure operation ultimately concluded that the alleged loan transaction between the assessee and P. Saji Textiles Ltd. is non–genuine. Further, he observed, assessee’s claim that it is a onetime loan taken from the party and was also re–paid cannot be accepted in view of the information available on record. Accordingly, he treated the amount of ` 50 lakh as unexplained money under section 69A of the Act and added back to the income of the assessee. Being aggrieved with the aforesaid addition, the assessee filed appeal before the first appellate authority.
4 Meena Securities Pvt. Ltd.
The learned Commissioner (Appeals), however, agreed with the decision of the Assessing Officer. He observed, in spite of sufficient opportunity given to the assessee, it failed to produce the lender before the Assessing Officer for verification. He observed, except submitting loan confirmation, bank statement, etc., the assessee has not submitted any other details to prove the genuineness of the loan transaction. Further, learned Commissioner (Appeals) refused to admit the additional evidences sought to be produced by the assessee during the appellate proceeding on the reasoning that the assessee ought to have submitted them in course of assessment proceedings. Thus, ultimately, learned Commissioner (Appeals) upheld the addition made by the Assessing Officer.
The learned Departmental Representative strongly relied upon the observations of learned Commissioner (Appeals).
We have considered rival submissions and perused material on record. It is relevant to observe, on the basis of certain information gathered in the course of search and seizure operation conducted in the case of a third party i.e. Vipul Vidur Bhat, it was found that one of the entities belonging to the said group viz. P. Saji Textiles Pvt. Ltd., had provided loan of ` 50 lakh to the assessee. Relying upon the statement recorded from Vipul Vidur Bhat, it was concluded by the Assessing Officer that the loan obtained by the assessee is nothing but 5 Meena Securities Pvt. Ltd.
accommodation entry, hence, non–genuine. However, it is a fact on record that in response to the notice issued under section 133(6) of the Act by the Assessing Officer, the lender has furnished loan confirmation, copies of income tax return, bank statement, etc. Of course, it is a fact that the assessee was unable to produce the lender before the Assessing Officer. It is also observed, before learned Commissioner (Appeals) the assessee had furnished some more documentary evidences by way of additional evidence and through a separate application has sought admission of such evidences. The evidence sought to be produced are as under:– i) Confirmation Accounts and ITR–V copy and bank statement of Sampada Chemicals Ltd. & Victory Sales Pvt. Ltd. in support of source of lender P. Saji Textiles Ltd.; ii) An affidavit of the Director Vishrut Tripathi dated 05.11.2018; iii) Share application letter and resolution and bank statement of PSTL in support of the fact, the said PSTL subscribed to the share capital of your appellant and continues to be the shareholder of your appellant; iv) ROC document of PSTL being ADT–1, AOC–4XBRL, CS certificate, registration on charge, list of shareholders, form 32, DIR–12 (public domain, downloaded form ROC); v) Financial statement of PSTL as at 31.03.2017 with copy of annual report and other reports (in public domain, downloaded from ROC).
However, learned Commissioner (Appeals) has refused to admit them as additional evidence simply on the reasoning that they were 6 Meena Securities Pvt. Ltd.
not produced before the Assessing Officer. In our view, if the assessee furnishes some additional evidences, it should not be rejected mechanically without examining whether they have a crucial bearing in deciding the issue. Therefore, learned Commissioner (Appeals) should have directed the Assessing Officer to examine the fresh evidences submitted by the assessee and furnish a report to him. By debarring the assessee from furnishing the additional evidences deprives it of a fair opportunity of being heard. Therefore, without expressing any opinion either on the authenticity of the additional evidence furnished by the assessee or even the merits of the addition made, we are of the considered opinion that the issue requires de novo adjudication by the Assessing Officer after considering all the evidences filed by the assessee including the fresh evidences filed before learned Commissioner (Appeals).
As regards the validity of re–opening of assessment under section 147 of the Act, admittedly, such re–opening is on the basis of fresh tangible material available before the Assessing Officer to form a belief that income chargeable to tax has escaped assessment. That being the case, we do not find any infirmity in the action of the Assessing Officer in exercising power under section 147 of the Act. Therefore, assessee’s ground on re–opening of assessment deserves
7 Meena Securities Pvt. Ltd. to be dismissed. Whereas, all other grounds are allowed for statistical purposes.
In the result, assessee’s appeal is partly allowed for statistical purposes. Order pronounced in the open Court on 25.09.2019