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Income Tax Appellate Tribunal, DELHI BENCH : SMC : NEW DELHI
Before: SHRI R.K. PANDA
BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER Assessment Year: 2010-11 Diwakar Marketing P. Ltd., Vs. ACIT, c/o Kapil Goel, Advocate, Central Circle-30, F-26/124, Sector-7, New Delhi. Rohini, Delhi. PAN: AABCD0904E (Appellant) (Respondent) Assessee by : Shri Kapil Goel, Advocate Revenue by : Shri D.S. Rawat, Sr.DR Date of Hearing : 08.10.2018 Date of Pronouncement : 20.11.2018 ORDER
PER R.K. PANDA, AM:
This appeal by the assessee is directed against the order dated 7th June, 2018 of the CIT(A)-30, New Delhi, relating to Assessment Year 2010-11.
The facts of the case, in brief, are that the assessee is an NBFC and filed its return of income on 22.09.2010 declaring total income of Rs.4,787/-. Subsequently, the Assessing Officer reopened the assessment u/s 147 of the Act by recording reasons which has been reproduced by the Assessing Officer at para 2 of the assessment order. In response to notice u/s 148 of the IT Act, the assessee filed its return of income on 26th April, 2017 declaring an income of Rs.4,790/- which was declared in the original return. The assessee further submitted that there is no live link of disclosed income to escapement of income. The Assessing Officer provided a copy of reasons recorded before the issue of notice u/s 148 and copy of approval of the PCIT and asked the assessee to submit its objections within seven days of the receipt of the letter. However, no objection was filed before the Assessing Officer before the stipulated time, but, was filed thereafter on 11th September, 2017 which was disposed of by the Assessing Officer, vide letter dated 3rd October, 2017. The Assessing Officer issued notice u/s 143(2) and 142(1) along with specific questionnaire asking the assessee to explain as to why the accommodation entries amounting to Rs.10 lakhs should not be considered as unexplained credit u/s 68 of the IT Act. The assessee filed its reply stating that an amount of Rs.10 lakhs was received on 29th March, 2010 from M/s Highlight Impex Pvt. Ltd., towards payment received against sale of shares of M/s Richfield Tracon Pvt. Ltd. in the normal course of business activity. The Assessing Officer issued notice u/s 133(6) to M/s Richfield Tracon Pvt. Ltd., which was returned unserved. The Assessing Officer, thereafter, issued commission u/s 131(1)(d) of the Act to the ADIT, Investigation, Kolkata, to carry out necessary verification of the genuineness of the above mentioned companies and the business activities undertaken by them. After considering the report of the ADIT, Investigation, Kolkata and the submissions of the assessee, the Assessing Officer made addition of Rs.10 lakhs to the total income of the assessee on the ground that the assessee as well as M/s Richfield Tracon Pvt. Ltd. and M/s Highlight Impex Pvt. Ltd. are shell/paper companies and are 2 doing no real business. All the transactions are undertaken in a controlled manner to give accommodation entries to the beneficiaries.
Since none appeared before the CIT(A), the ld.CIT(A), in the ex parte order passed by him on 7th June, 2018, upheld the addition made by the Assessing Officer.
Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:-
“1. That on the facts and in the circumstances of the case and in law, ld CIT-A erred in sustaining the order passed by Ld AO u/s 147/143(3)without appreciating that assumption of jurisdiction u/s 148 was by Ld Assessing Officer was in violation of jurisdictional conditions stipulated under the Act; 1.1. That on the facts and in the circumstances of the case and in law, Id CIT- A erred in sustaining the order passed by Ld Assessing Officer u/s 147/143(3) without appreciating that “rubber stamp” reasons in present case are based on unconfronted “appraisal report” of investigation wing and are without independent application of mind; 1.2. That on the facts and in the circumstances of the case and in law, Id CIT-A erred in sustaining the order passed by Ld Assessing Officer u/s 147/143(3) without appreciating that reasons are inchoate and dictated by investigation wing as Ld AO has no where strained his nerve to find out the nature of transaction (here sale of shares) which were completely overlooked and aborted in reasons recorded, without which, charge of income escaping assessment remained amorphous; Notably purchase/sale of shares was duly recorded in books of accounts and no suppression of income was made on this count. 1.3. That on the facts and in the circumstances of the case and in law, ld CIT-A erred in sustaining the order passed by Ld AO u/s 147/143(3) without appreciating that sine qua non cross examination has been kept at bay which is sufficient to quash the orders passed by Ld AO and Ld CIT-A; 2. That on the facts and in the circumstances of the case and in law, ld CIT-A erred in sustaining the order passed by Ld AO u/s 147/143(3) without appreciating that on basis of surfeit and inundated evidences on records burden lying on assessee has been fully discharged and met, so addition made by Ld AO (Rs 10,00,000) and confirmed by CIT-A in impugned order deserves to be deleted. 2.1. That on the facts and in the circumstances of the case and in law, Id CIT-A 3 erred in sustaining the order passed by Ld AO u/s 147/143(3) without appreciating that assessee sold shares of M/s Richfield Trackon Pvt Ltd which were acquired during financial year 2006-07 and has been duly reflected in audited balance sheet as on 31/3/2007, 31/3/2008, 31/03/2009 and said shares are sold in subject period for Rs 10 lacs to M/s Highlight Impex Pvt Ltd duly recorded in books of account and best evidence in assessee’s possession to establish its case was duly filed to Ld AO/Ld CIT-A. Notably, assessment for AY 2007-08 was done u/s 143(3).
2.2. That order passed by Ld AO and further order passed by Id C1T A are bad in law in so far as addition amounting to Rs 10,00,000 on a/c of sale of shares is concerned which is arbitrarily made subject matter of addition u/s 68 without any incriminating material on records and merely on basis of “if and buts” and mere suspicion. 2.3. That order passed by Ld AO and further order passed by Id C1T A are bad in law in so far as addition amounting to Rs 10,00,000 on a/c of sale of shares is concerned, without disposing assessee’s seminal contention that section 68 per se is not attracted to mere sale of shares (share sale proceeds) 2.4. That on the facts and in the circumstances of the case and in law, Id CIT-A erred in sustaining the order passed by Ld AO u/s 147/143(3) without appreciating that there is no basis of any of the addition of Rs 10,00,000 as whole addition is based merely on assumption , conjectures and surmises and suspicion only without any iota of evidence to support the bald allegation 2.5. That on the facts and in the circumstances of the case and in law, Id CIT-A erred in sustaining the order passed by Ld AO u/s 147/143(3) without appreciating that all the additions made are without bringing legally admissible document; 2.6. That on the facts and in the circumstances of the case and in law, Id CIT-A erred in sustaining the order passed by Ld AO u/s 147/143(3) without appreciating that none of evidence filed by assessee is overruled in accordance with law; 3. That on the facts and in the circumstances of the case and in law, Id CIT-A erred in not restoring the returned income declared by assessee in its return of income.
That on the facts and in the circumstances of the case and in law, Id CIT-A erred in not deleting the addition made by Ld AO which was also unlawful and made in violation of principles of natural justice. That the appellant craves leave to add add/alter any/all grounds of appeal before or at the time of hearing of the appeal.”
4. I have heard the rival arguments made by both the sides and perused the order of the authorities below. It is an admitted fact that despite giving repeated opportunities, none appeared before the CIT(A) for which he was constrained to pass the ex parte order wherein he has sustained not only the addition made by the Assessing Officer, but, has enhanced the same to Rs.10,24,790/-. Even the paper book alleged to have been filed by the assessee before the CIT(A) was also not available on record as per para 5 of the order of the CIT(A). Since there was no compliance by the assessee and the paper book was not filed, the ld.CIT(A) has decided the issue on the basis of the material available on record and on the basis of judicial principles. Therefore, considering the totality of the facts of the case and in the interest of justice, I deem it proper to restore the issue to the file of the CIT(A) with a direction to grant one final opportunity to the assessee to substantiate its case and decide the issue as per fact and law. The assessee is also hereby directed to appear before the CIT(A) without seeking any adjournment under any pretext, failing which the ld.CIT(A) is at liberty to pass appropriate order as per law. We hold and direct accordingly.
In the result, the appeal filed by the assessee is allowed for statistical purpose. The decision was pronounced in the open court on 20.11.2018.