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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
This appeal preferred by the assessee is against the order of the Ld. CIT(A)-9, Kolkata dated 03.03.2017 for AY 2012-13 on the following grounds:
“1. For that the ex parte order dated 3 March 2017 passed by the Commissioner of Income Tax (Appeals) (in short CIT(A)) is illegal, arbitrary, erroneous and against the principles of natural justice and fair play.
2. For that the CIT(A) erred in dismissing the appeal ex-parte even though an adjournment application was filed before him and the same was in respect of only the second hearing fixed before him. The CIT(A) should have informed the appellant even if he wanted to refuse the adjournment and should have given another chance to the appellant.
3. For that further and in any event and without prejudice to the above, the CIT(A) should not have dismissed the appeal without deciding the issue on merits. The CIT(A) should have decided the issue on merits based on the statement of facts and grounds of appeal filed before him and erred in dismissing the appeal in limini and without giving any reason.
Promanada Reality Private Ltd., AY 2012-13 4. For that the order of the CIT(A) dismissing the appeal ex-parte and without any decision on merits, is erroneous, illegal and liable to be cancelled and recalled.”
At the outset, the Ld. AR brought to our notice that no proper opportunity was given to the assessee by the new AO who framed the assessment ignoring the enquiry made by ITO, Ward-9. Having heard rival submissions on this point we note from perusal of page 1 of the assessment order that the AO has acknowledged that the enquiries u/s. 133(6) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) made by the AO has been replied by the respective parties. In this case, it was brought to our notice that the AO who had passed the order was ITO, Wd-1(1), Kolkata whereas it was brought to our notice that ITO, Wd-9(1), Kolkata had made enquiries prior to the ITO, Wd-1(1), Kolkata the results of the said enquiry has not been taken into by the ITO, Ward-1(1), Kolkata before framing the assessment. It was brought to our notice from page 2 of the paper book that ITO, Wd-9(1), Kolkata had issued notices to the assessee and the same were replied to in detail. It was brought to our notice by the Ld. AR that the assessee is a running company and before issuing the shares the break-up value of the shares was computed at Rs.250/-. According to Ld. AR, neither proper opportunity was given to the assessee by the ITO, Wd-1(1), Kolkata to discharge the onus casted upon it to prove the identity, creditworthiness and genuineness of transaction of shares introduced in the assessee company nor the results of the enquiry concluded by ITO, Ward-9(1), Kolkata, was taken note of while framing the assessment. Therefore, he pleads that the matter may be remanded back to the AO for de novo assessment. On the other hand, taking into consideration these facts the Ld. CIT, DR has no objection to the matter being remitted back to the AO but he wants the Ld. AR to undertake to cooperate before the AO in the de novo assessment. The Ld. AR undertakes before us that the assessee will cooperate fully with the AO. We note that the assessee had replied to the notice issued by the earlier AO i.e. ITO, Wd-9(1), Kolkata. However, the case was transferred to jurisdiction to ITO, Wd-1(1), Kolkata who drew adverse inference against the assessee only on the ground that the assessee company failed to produce the directors of the share subscriber company and therefore has concluded that the share application money received by the assessee is bogus. We find that since the assessee had complied with the Promanada Reality Private Ltd., AY 2012-13 questionnaire that has been raised by the ITO, Wd-9(1), Kolkata in the interest of justice and fair play the ITO, Wd-1(1), Kolkata ought to have discussed the papers/documents filed by the assessee before ITO, Wd-9(1), Kolkata without doing so, we are of the opinion that no proper opportunity has been granted to the assessee by the ITO, Wd-1(1), Kolkata. In the light of the above, we find that no proper opportunity was given to assessee by AO during the reassessment proceedings and so we are, therefore, of the opinion that assessee did not get proper opportunity before the AO during assessment proceedings. The Hon’ble (three judge bench) of the Hon’ble Supreme Court in Tin Box Company Vs. CIT (2001) 249 ITR 216 (SC) has held as under: “It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus : “We will straightaway agree with the assessee’s submission that the Income-tax Officer had not given to the assessee proper opportunity of being heard.” That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of setting out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessment and remand the matter to the assessing authority for fresh assessment after giving to the assessee a proper opportunity of being heard. Two questions were placed before the High Court, of which the second question is not pressed. The first question reads thus : “1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of a finding arrived at by it that the Income- tax Officer had not given a proper opportunity of hearing to the assessee ?” In our opinion, there can only be one answer to this question which is inherent in the question itself : in the negative and in favour of the assessee. The appeals are allowed. The order under challenge is set aside. The assessment order, that of the Commissioner (Appeals) and of the Tribunal are also set aside. The matter shall now be remanded to the assessing authority for fresh consideration, as aforestated.”
In similar case this Tribunal in in M/s. Star Griha (P) Ltd. Vs. ITO for AY 2008-09 dated 15.12.2017 has observed as under:-
……We also note that the Ld. CIT after looking into the pernicious practice of converting black money into white money has given the guidelines to AO as to how the investigation Promanada Reality Private Ltd., AY 2012-13 should be conducted to find out the source. Since similar order of the Ld. CIT passed u/s. 263 of the Act has been upheld by the Tribunal as well as by the Hon’ble Calcutta High Court as well as the SLP has been dismissed by the Hon’ble Supreme Court, similar order of the Ld. CIT has to be given effect to as directed by the Ld. CIT. We take note that the Ld. CIT with his experience and wisdom has given certain guidelines in the backdrop of black money menace should have been properly enquired into as directed by him. The AO ought to have followed the investigating guidelines and method as directed by him to unearth the facts to determine whether the identity, genuineness and creditworthiness of the share subscribers. We note that the Hon’ble Supreme Court (three judges bench) in the case of Tin Box, (supra), has held that since there was lack of opportunity to the assessee at the assessment stage itself, the assessment needs to be done afresh and thereby reversed the Hon’ble High Court, Tribunal and CIT(A)’s orders and remanded the matter back to AO for fresh assessment. So, since there was lack of opportunity as aforestated it has to go back to AO…….
We also note that the Hon’ble Delhi High Court in the case of CIT Vs. Jansampark Advertising & Marketing Pvt. Ltd. in dated 11.03.2015 wherein after noticing inadequate enquiry by authorities below have held as under:
“41. We are inclined to agree with the CIT(Appeals), and consequently with ITAT, to the extent of their conclusion that the assessee herein had come up with some proof of identity of some of the entries in question. But, from this inference, or form the fact that the transactions were through banking channels, it does not necessarily following that satisfaction as to the creditworthiness of the parties or the genuineness of the transactions in question would also have been established.
The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT(Appeals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, particularly in the fact of the allegations of the Revenue that the account statements reveal uniform pattern of cash deposits of equal amounts in the respective accounts preceding the transactions in question. This necessitated a detailed scrutiny of the material submitted by the assessee in response to the notice under Section148 issued by the AO, as also the material submitted at the stage of appeals, if deemed proper by way of making or causing to be made a 'further inquiry’ in exercise of the power under Section 250(4). His approach not having been adopted, the impugned order of ITAT, and consequently that of CIT(Appeals), cannot be approved or upheld."
In view of the aforesaid order and in the light of the Hon’ble Supreme Court’s decision in Tin Box Company (supra) and taking into consideration the fact the order of the AO in similar cases being upheld up to the level of Apex Court, and taking note of Hon’ble Delhi High Court’s order in Jansampark Advertising & Marketing Pvt. Ltd. (supra), and the ld DR accepted that assessee did not get proper opportunity before the AO during Promanada Reality Private Ltd., AY 2012-13 assessment proceedings, we set aside the order of the Ld. CIT(A) and remand the matter back to the file of AO for de novo assessment and to decide the matter in accordance to law after giving opportunity of being heard to the assessee.
In the result, appeal of assessee is allowed for statistical purposes.