ITO 2(3)(2), MUMBAI vs. SHAH PRATAP INDUSTRIES P.LTD, MUMBAI

Shah Pratap Industries Pvt. Ltd. Assessment Year: 2011-12 1. "Whether on the facts and in the circumstances of the case in law, the Ld. ClT(A) erred in deleting the addition of Rs.3,72,52,750/- on account of transactions with accommodation entry provider. 2. "Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in accepting the contention of the assessee that sums received from M/s. JIK Industries Ltd. represents loan ignoring the facts that it was a transaction with accommodation entry operator and who was a non filer and repeatedly failed to comply to various notices issued by the AO." 3. "Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) passed the order deleting the addition without making necessary enquiries which was required in this case." 4. "Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing the appeal of the assessee in respect of relief of interest under section 234B." 5. "For these and other grounds that may be urged at the time of hearing the decision of may be set aside and that of the AO restored."

Facts in brief are that the assessee being resident corporate assessee was assessed for impugned AY u/s143(3) on 26/03/2013 wherein it was saddled with certain additions of Rs.372.52 Lacs on account of transactions with bogus bill providers. Pursuant to search operations on 04/02/2011 in the case of M/s JIK Industries Ltd., certain documents and computer back up was found and seized and the case of the assessee was covered u/s 153C of the act vide issuance of notice on 30/04/2012. However, the same remained un-responded to by the assessee and no return of income was filed in the specified time. Upon perusal of details gathered in the case of M/s JIK Industries Ltd., from the bank accounts, it was noted that the assessee undertook certain transactions with concerns floated by Shri Dalip Jayantlal Shah, an alleged accommodation / bill provider. Shri Dalip Jayantlal Shah in his statement, admitted to have indulged in the activities of providing bogus bills / accommodation bills. The details of transactions carried out by the assessee with the bogus bill issuing concerns has been tabulated in para-4 & 5, Table B & C of the quantum assessment order. The Shah Pratap Industries Pvt. Ltd. Assessment Year: 2011-12 aggregate credit of Rs.372.52 Lacs was being reflected in assessee’s bank account held with IDBI for the year under consideration. Since the assessee failed to adduce any details, the aforesaid amount was added to the income of the assessee.

Before learned first appellate authority, it was pleaded that Ld. AO made addition on account of bogus purchases whereas no such purchases were made by the assessee during the year under consideration. The attention was drawn to the fact that the bank account, the credit of which was added to the income of the assessee, was fully disclosed in the Balance Sheet. The Ld. CIT(A), at para 7.4.1, observed that it was not clear from the assessment order that whether the addition was on account of bogus purchases or on account of unexplained credit in the bank account. In the said background, Ld. CIT(A) proceeded to examine the addition made by Ld. AO on both counts. It was observed that the assessee had not made any claim of purchases during the year and therefore, the additions could not have been on account of bogus purchases. The assessee submitted that credit in the bank account represented loans received by the assessee from its parent company i.e. JIK Industries Limited and to support of the same, the ledger extracts in the books of the assessee and in the books of JIK Industries Ltd were produced. It was submitted that there was no link whatsoever between transactions of Shri Dalip J.Shah and the bank account of the assessee. It was also submitted that loan received by the assessee from the parent company was duly reflected in the Balance Sheet under the head Other Current Liabilities. Against those submissions, Ld. AO’s comments were sought. However, in the absence of any response, the addition of Shah Pratap Industries Pvt. Ltd. Assessment Year: 2011-12 Rs.372.52 Lacs was deleted. Aggrieved, the revenue is in further appeal before us.

The Ld. DR has submitted that the assessee miserably failed to respond during assessment proceedings and it was incumbent on the part of Ld. first appellate authority to conclude the investigation to a logical conclusion. On the other hand, Ld. AR submitted that there was no transaction, whatsoever, between the assessee and Shri Dalip J.Shah as alleged by Ld. AO and therefore, the additions could not be sustained.

Upon careful consideration, the undisputed position that emerges is the fact that the assessee has remained negligent in filing the return of income in response to notice u/s 153C and failed to adduce the requisite details as called for by Ld. AO during assessment proceedings. The onus was on assessee to refute the allegations levelled by Ld. AO. Having failed to do so, certain submissions were made by the assessee before learned first appellate authority assailing the additions made by Ld. AO. Although, comments were called on assessee’s submissions, however, no response was received against the same. Nothing on record throw any light as to why the response was not received and as to what had transpired before Ld. AO when his comments were called upkn by learned CIT(A). Therefore, the facts do not inspire us to upheld the action of Ld. CIT(A). By setting aside the same, we remit the matter back to the file of Ld. AO for re-consideration of the matter de-novo with a direction to the assessee to defend the allegations levelled against him while making the additions. Needless to add that reasonable opportunity of being heard shall be provided to the assessee.