Principal Commissioner Of Income Tax-1, Kolkata v. M/S. Aba Earthline Communications Ltd

ITAT/111/2021 IA NO: GA/1/2021, GA/2/2021IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE PRINCIPAL COMMISSIONER OF INCOME TAX-1, KOLKATAVERSUSM/S. ABA EARTHLINE COMMUNICATIONS LTD. BEFORE : THE HON’BLE JUSTICE T.S. SIVAGNANAM And THE HON’BLE JUSTICE HIRANMAY BHATTACHARYYA Date : 1[st] August, 2022. Appearance:-Ms. Smita Das De, Adv.… For AppellantMr. S.M. Surana, Adv.Mr. B. Sengupta, Adv.… For Respondent GA/1/2021 The Court : We have heard Ms. Smita Das De, learned standingcounsel appearing for the appellant/revenue and Mr. S.M. Surana, learnedcounsel appearing for the respondent/assessee. There is a delay of 844 days in filing the present appeal. We aresatisfied with the reasons assigned in the affidavit filed in support of the condone delay application. Accordingly, the delay in filing the appeal iscondoned. The application for condonation of delay is allowed.ITAT/111/2021 This appeal filed by the revenue under Section 260A of the Income TaxAct, 1961 (the Act, for brevity) is directed against the order dated 9[th]November, 2018, passed by the Income Tax Appellate Tribunal “D” Bench,Kolkata (Tribunal) in I.T.A No. 1141/Kol/2017 for the assessment year2012-13. The revenue has raised the following substantial questions of law forconsideration. i)Whether the Income Tax Appellate Tribunal erred in law in deleting theaddition of Rs. 40,24,70,000/- made by the Assessing Officer underSection 68 of Income Tax Act, 1961 and confirmed by theCommissioner of Income Tax(Appeal) as the assessee failed toestablish the creditworthiness, identity and genuineness of transactionfor which credit in the books of accounts ? ii)Whether the order of Income Tax Appellate Tribunal is sustainable inas much as it has decided the appeal on the basis of decision reportedin ITR 308 (SC) but overlooking the recent judgement of Rajmandir’scase of jurisdictional High Court confirmed by Supreme Court as suchthe order of Income Tax Appellate tribunal is wrong and liable to be setaside ? We have heard Ms. Smita Das De, learned standing counsel appearingfor the appellant/revenue and Mr. S.M. Surana, learned counsel appearingfor the respondent/assessee. The revenue is aggrieved by the order passed by the Tribunal by whichthe appeal filed by the assessee was allowed. Before we examine thecorrectness of the order, first we are required to note the conduct of theassessee. The return of income filed by the assessee was sent for scrutinyand notices were issued to the assessee under Sections 143(2) and 142(1) ofthe Act. It appears that the assessee was represented by the authorisedrepresentative and produced the Books of account, audited accounts andother relevant details and documents. Thereafter, the Assessing Officerconducted an enquiry and he has recorded in his order dated 20[th] March,2015 that though repeated reminder letters were sent to the assesseerequesting to the principal officer of the assessee company to appear withthe complete set of books of accounts and relevant documents, none hadappeared before the Assessing Officer. Further, the Assessing Officer notedthat the Directors of the ‘share subscribing companies’ have not appeared tosubstantiate their personal identity, the existence, identity, creditworthinessand sources of funds of the subscriber companies to make payment of shareapplication money to the assessee company and the genuineness of theshares subscription transactions claimed by the assessee company were alsonot established. Therefore, having left with no option, the Assessing Officercompleted its assessment. Aggrieved by the same, the assessee preferred appeal before theCommissioner of Income Tax (Appeals), Kolkata [CIT(A)]. Though the appealwas instituted and the notice issued, it was fixed only on 28[th] February,2017. On the said date, there was no appearance on behalf of the assessee.The CIT(A) has noted that notice under Section 250 was issued on 26[th]October, 2016 by which the date of hearing was fixed on 8[th] November,2016. On the said date none appeared on behalf of the appellant nor anywritten request was made seeking adjournment. Therefore, the CIT(A) issuedfresh notice fixing the hearing date on 15[th] December, 2016 and 3[rd]February, 2017, but there was no compliance. Therefore, the CIT(A) had noother option and by order dated 28[th] February, 2017 dismissed the appeal. Aggrieved by the same, the assessee went on appeal before theTribunal raising various grounds. The learned Advocate for the respondentassessee points out that in paragraph 5 of the order passed by the Tribunalthe facts have been noted and the Tribunal following its earlier decision hasallowed the appeal and there is no error. From paragraph 5 of the impugnedorder we note that Tribunal has stated that the facts of the case are not indispute. It is not clear on what basis the Tribunal came to such aconclusion. The Tribunal has not recorded that the revenue has conceded tothe documents details produced by the assessee for the first time before theTribunal. According to the Tribunal, those documents were available in theassessment file. Be that as it may, the assessee was bound to co-operate in theassessment proceedings. In spite of several notices the assessee did not evencare to reply to the said notices nor respond to the notices. Therefore, we arerequired to examine the correctness of the order passed by the Tribunal onmerits. It will be rewarding a person who does not require such anindulgence. Therefore, we are of the considered view that the Tribunal fell inerror by stating that the facts are not in dispute. Then the enquiry could notbe completed by the Assessing Officer on account of supine interference onthe part of the assessee in not co-operating with the assessmentproceedings. Therefore, we are of the clear view that the matter has to beremanded back to the Assessing Officer for fresh consideration. In the result, the appeal is allowed. The order passed by the Tribunal is set aside. Consequently, the order passed by the Commissioner is also set asideand the matter is remanded to the Assessing Officer for fresh consideration.The Assessing Officer shall issue only one notice to the assessee fixing adate. In the said notice all the requirements to be complied with by theassessee should be clearly mentioned and also the persons who are requiredto be present before the Assessing Officer. No requests for adjournment shall be entertained. The assessee isgiven only last opportunity to co-operate in the assessment proceedingsbefore the Assessing Officer. If they fail to do so, the benefit of this order willnot enure to the assessee and the order of assessment dated 20[th] March, 2015 passed under Section 143(3) of the Act shall automatically standrevived without any further reference to this Court and the Assessing Officershall be entitled to initiate proceedings for recovery of the tax, interest andpenalty as computed. Consequently, the substantial questions of law are left open.The stay application being GA/2/2021 is closed. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) S.Pal/SN.