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Income Tax Appellate Tribunal, “C” BENCH : KOLKATA
Before: Hon’ble Shri A T Varkey, JM, & Shri M.Balaganesh, AM]
These appeals by the Revenue and the Cross Objections by the assessee arise out of the common order of the Learned Commissioner of Income Tax(Appeals)-8, Kolkata [in
2 to 850/Kol/2016 C.O. Nos. 29 to 31/Kol/2016 M/s Dhenu Holding & Suppliers P Ltd. A.Yrs. 2005-06to2007-08 short the ld CIT(A)] in Appeal Nos. 1018,1019&1020/2014-15 dated 23.02.2016 against the separate orders passed by the ITO, Ward-1(3), Kolkata, ITO, Ward-11(2), Kolkata [ in short the ld AO] under section 143(3)/ 147/ 144 of the Income Tax Act, 1961 (in short “the Act”) as the case may be, dated 05.06.2013, 28.03.2013 respectively for the Assessment Years 2005-06 , 2006-07 and 2007-08 respectively. As identical issues are involved in all these appeals they are taken up together and disposed off by this common order for the sake of convenience.
The first common issue to be decided in these appeals is as to whether the ld. CIT(A) was justified in deleting the addition made towards unexplained cash deposit made in the bank account of the assessee company in the hands of the assessee company and directing the ld. AO to add only commission @0.25%on the total transactions, in the facts and circumstances of the case. The facts of Asst Year 2005-06 are taken up for adjudication and decision rendered thereon would apply with equal force for Asst Years 2006-07 and 2007-08 also except with variance in figures.
Brief facts of this issue are that the assessee is a private limited company. The assessment was completed u/s 147 of the Act by the ld. AO for the Asst Year 2005-06. The assessee vide letter dated 24.09.2012 requested the ld. AO to treat the original return as return filed in response to notice u/s 148 of the Act. The ld. AO issued several letters to the assessee requesting to furnish the evidence of having filed the return of income originally. There was no compliance on the part of the assessee in this regard. The ld. AO observed that the ld. AR of the assessee appeared once and furnished audited accounts with minimum details. The assessee thereafter did not co-operate in the assessment proceedings by making appearance and furnishing the requisite details and therefore the ld. AO was forced to complete the assessment u/s 144 of the Act. The 2
3 to 850/Kol/2016 C.O. Nos. 29 to 31/Kol/2016 M/s Dhenu Holding & Suppliers P Ltd. A.Yrs. 2005-06to2007-08 ld. AO asked the assessee for explaining the source of huge deposits made in the bank account with Royal Bank of Scotland among other details. Since no details were furnished, the ld. AO proceeded to treat the entire cash deposits made in the bank account as unexplained and accordingly proceeded to add a sum of Rs. 4,39,18,960/- to the total income for the assessment year 2005-06. Similar additions were made other assessment years also. The ld. CIT(A) observed that the assessee is only engaged in providing accommodation entries and hence the credits found in the bank account cannot be treated as income of the assessee and moreover, the directors of the assessee company are persons of no means and illiterates and that the possibility of the company’s bank account being misused for routing illegal transactions cannot be ruled out. Accordingly, he held that the assessee company should be treated only as accommodation entry provider or pass through agent and only the commission attributable on the total deposits made in the bank account of the assessee (i.e. both cash and cheque deposits) should be brought to tax. The ld. CIT(A) placed reliance on various appellate orders and assessment orders passed by the Income Tax Department and determined the commission @ 0.25% of total cash and cheque deposits for the assessment year 2005-06 and directed the ld. AO to tax a sum of Rs. 3 lacs for the assessment year 2005-06. Similar direction was given for assessment year 2006-07 to be taxed at Rs. 3,75,000/- and for assessment year 2007-08 at Rs. 6 lacs as against additions made by the ld. AO in the sums of Rs. 5,50,45,360/- and Rs. 8,19,99,100/- towards cash deposits in the bank account for assessment years 2006-07 and 2007-08 respectively. Aggrieved the revenue is in appeal before us on deletion of addition made towards cash deposits. The assessee also is in cross objection before us with a prayer to reduce the rate of commission from 0.25% to 0.10%.
None appeared on behalf of the assessee. We find no effective representation by furnishing proper details were made even before the ld. AO thereby warranting the ld. 3
4 to 850/Kol/2016 C.O. Nos. 29 to 31/Kol/2016 M/s Dhenu Holding & Suppliers P Ltd. A.Yrs. 2005-06to2007-08 AO to frame the assessment u/s 144 read with 147 of the Act. We have heard the ld. DR. We find from the facts of the instant case, we deem it fit and appropriate, to remand the appeals to the file of ld. AO for de novo adjudication with a direction to the assessee to co-operate with the ld. AO for presenting the true facts. In view of these directions given in the revenue’s appeal, the adjudication of commission percentage whether at 0.25% or 0.10%, becomes premature at this stage. Hence the cross objection preferred by the assessee is also remanded back to the file of ld. AO. Since de novo adjudication of this entire issue is directed to the file of the ld. AO, the assessee is given full liberty to adduce fresh evidences, if any, in support of its contentions. Accordingly, grounds raised by the revenue in this regard and grounds raised by the assessee in cross objection in this regard are allowed for statistical purposes.
The next common issue raised by the assessee in the cross objection is with regard to action of the ld. CIT(A) in upholding the addition made towards unexplained liabilities in the form of share application money, sundry creditors for all the three assessment years.
We have heard the ld. DR. We have already stated that the assessee had not co- operated at all before the ld. AO by filing necessary details in this regard. The ld. CIT(A) also upheld this addition for want of evidences from the assessee. It is not the caes of the revenue that these creditors, share application moneys were not received by cheques by the assessee company. Hence these transactions might even be credited in the bank account i.e. Royal Bank of Scotland which is directed hereinabove to be verified by the ld. AO afresh. Hence, we deem it fit and appropriate, in the interest of justice and fair play, to remand this issue also to the file of ld. AO for de novo adjudication in accordance with law. The assessee is given full liberty to furnish fresh 4
5 to 850/Kol/2016 C.O. Nos. 29 to 31/Kol/2016 M/s Dhenu Holding & Suppliers P Ltd. A.Yrs. 2005-06to2007-08 evidences, if any, in support of its contentions. Accordingly, grounds raised by the assessee in its cross objection in this regard are allowed for statistical purposes.
In the result, the appeals of the revenue as well as the cross objections of the assessee are allowed for statistical purposes.
Order pronounced in the Court on 30.11.2018