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Income Tax Appellate Tribunal, DELHI BENCH ‘B’ : NEW DELHI
Before: SHRI A.T. VARKEY & SHRI PRASHANT MAHARISHI
O R D E R PER A.T. VARKEY, JUDICIAL MEMBER :
This appeal, at the instance of the assessee, is directed against the order of the Commissioner of Income-tax (Appeals)-V, New Delhi dated 18.04.2012 for the assessment year 2002-03.
The assessee filed return declaring NIL income on 31.10.2002 and the same was processed u/s 143(1) of the Income-tax Act, 1961 (hereinafter ‘the Act’). The AO received an information from DIT (Inv), New Delhi that the assessee company had received accommodation entries amounting to Rs.5,01,000/- from Saar Enterprises Pvt. Ltd. on 21.3.2002.
The AO recorded the reasons and notice u/s 148 was issued to the assessee on 16.3.2009. In response to notice u/s 148, it was submitted on behalf of the assessee that the return of income filed on 31.10.2002 be treated the return filed in response to notice u/s 148. Accordingly, notice dated 04.12.2009 u/s 143(2) was issued. After going through the submissions made by the assessee, the AO held as under:-
“ The assessee company filed confirmation from M/s Saar Enterprises Pvt. Ltd. but did not produce any person for personal deposition whereas it was given several opportunities to do so. Details of bank account of Saar Enterprises Pvt. Ltd. have been received. From the verification of details it is observed that the company has given the amount of Rs.5,00,000/- by DD for which it paid a cheque of Rs.5,01,000/- to the bank. The assessee company and the company giving share application money are having bank accounts in Delhi. From this it is evident that the assessee company has purchased the accommodation entry of Rs.5,00,000- as the amount has been received by DD, which is as good as cash, as the assessee company did not have faith in the company giving the accommodation entry in the guise of share application money for which no shares have been allotted. M/s Saar Enterprises Pvt. Ltd. is not a genuine investor. From the verification of copy of Balance Sheet filed by the assessee company it is observed that M/s Saar Enterprises Pvt. Ltd. has subscribe share capital of Rs.1,86,000/- and has no reserves and surplus during the year under consideration and earlier year. The company has no credibility for genuine investments as it does not have its funds for investment. This shows that this company is being used as conduit for giving accommodation entries. Hence, a sum of Rs.5,01,000/- is added to income of the assessee company as unexplained cash credits of the assessee company for the year under consideration. The Director of M/s Saar Enterprises Pvt. Ltd. has admitted before the Investigation Wing of Income Tax Department that accommodation entries are given on receipt of commission. There is normal trend to give such entries @2% commission. The assessee company has paid commission of Rs.10,000/- for getting the accommodation over and above the amount of DD and commission thereon. Thus, an addition of Rs.10,000/- is made to income of the assessee company for the year under consideration as expenses incurred for illegal activities of taking accommodation entries during the year under consideration.”
Accordingly, the AO made the addition Rs.5,01,000/- on account of investment from undisclosed sources and Rs.10,000/- on account of expenses from undisclosed sources.
Aggrieved, the assessee filed an appeal before the first appellate authority and the ld. CIT (A) dismissed the appeal of the assessee by holding as under :-
“3. I have considered the grounds of appeal taken by the appellant and also considered the non cooperation on the part of the appellant. It appeals that the assessee is not interested in having his appeal decided. The appeal filed by the appellant is liable to be dismissed for non-prosecution and also on merits as the appellant has not filed any written submissions alongwith documentary evidences regarding his claim. I find support from the decision in the case of CIT vs. B.N. Bhattacharjee (1977), reported in 118 ITR 461 (SC) [relevant pages 477 and 478] wherein their Lordships have held that :- “The appeal does not mean merely filing of the appeal but actively pursuing it.” The Delhi Tribunal in CIT v/s Multiplan India (P) Ltd as reported in 38. ITD 320 (Delhi) when faced with a similar situation of non prosecution of appeal dismissed the appeal of the revenue. In the given circumstance, the appeal filed by the assessee is dismissed for non-prosecution and also non-availability of any submissions along with evidences in support of grounds taken by him.”
The assessee, being aggrieved, is in appeal before us.
At the outset of the hearing, the ld. AR pressed in respect to grounds no.1 and 2, which are against the impugned action of the Ld CIT(A) in dismissing the appeal of the assessee without giving proper opportunity of being heard and for doing so, he relied on the decision of the Delhi Tribunal in the case of Multiplan India (P) Ltd. on account of non- prosecution of appeal which, according to Ld AR, is beyond the powers of Ld. CIT (A). It was submitted by the ld. AR that by not giving proper opportunity of being heard, the ex-parte order of the ld. CIT (A) is against the interest of justice and equity. He, therefore, prayed that the matter be set aside to the file of the Ld. CIT (A) to be decided after providing opportunity to the assessee of being heard.
On the other hand, the ld. DR relied on the orders of the authorities below and pointed out that the Ld. CIT (A) has given several opportunities to the assessee to present its case before him, however, for reasons best known, it did not cooperate with the Ld. CIT(A), so he opposed the request of the assessee to remand the matter back to Ld. CIT(A).
We have heard both the sides and perused the record. We find that the impugned order is an ex-parte order and the ld. CIT (A) has dismissed the appeal for non-prosecution. The impugned order of the Ld. CIT(A) is the appellate order from reassessment order U/s 147 / 143(3) of the Act and is in respect to addition under Section 68 of the Act for an amount of Rs.5,01,000/- and Rs.10,000/- on account of commission to accommodation entry provider. It is noticed from a perusal of the impugned order that the Ld. CIT (A) had given 5 opportunities to the assessee, however, none turned up and the last two notices returned back un-served and in the said circumstances, we find that the Ld. CIT (A) passed the ex-parte order against the assessee. However, before us, the Ld. AR took an undertaking that the assessee will definitely cooperate with the appellate proceedings before the Ld. CIT (A) incase an opportunity is granted to it. In such a scenario, we deem it fit to set aside the impugned order and remand the matter back to the file of the Ld. CIT (A) to decide on merits the grounds raised
before him and the Ld CIT(A) is directed to adjudicate the appeal on merits in accordance to law after giving proper opportunity to the assessee. Needless to say, the assessee will extend all cooperation before the Ld. CIT(A) and provide its correct address to the CIT (A) and shall not take any adjournment without just cause.
8. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in open court on this 21st day of October, 2015.