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Intec Corporation Vs. Principal Commissioner Of Income Tax -11, New Delhi
February, 06th 2019
              IN THE INCOME TAX APPELLATE TRIBUNAL

                   DELHI BENCH "E", NEW DELHI



             BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER

                               AND

        SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER



                        I.T.A. No. 180/DEL/2016
                             A.Y. : 2010-11
ITO, WARD 18(1),                 VS.   NET HEALTCARE SERVCIES (P)
NEW DELHI                              LTD.
                                       572, 2ND FLOOR, GANDHI
                                       CLOTH MARKET,
                                       CHANDNI CHOWK,
                                       DELHI
                                       (PAN: AACCN6291P)
(ASSESSEE)                             (RESPONDENT)


         Revenue by              :   Ms. Rinku Singh, Sr. Dr.
          Assessee by            :   None


                                ORDER
PER H.S. SIDHU : JM


     The Revenue has filed this Appeal against the impugned Order

dated 30.10.2015 of the Ld. CIT(A)-42, New Delhi relevant to

assessment year 2010-11.


2.   The grounds raised in the appeal read as under:-


          i) Whether facts and circumstances of the case and in law
          the Ld. CIT(A) is justified in deleting addition of Rs. 20

                                 1
       lakhs and Rs. 2.81 crore by admitting additional evidence
       under rule 46A of Income Tax Rule, 1962 (the Rule) even
       when the assessee was not prevented by sufficient cause
       from producing books of accounts and evidence with
       regards to identity, genuineness and creditworthiness of
       investor of share application money?

       ii)      Whether in facts and circumstances of the case and
       in law Ld CIT(A) is justified in admitting additional
       evidence under Rule 46A of the Rule only on the basis of
       self serving and unproven claims by the assessee and
       ignoring ratio decidendi as laid down on the similar issue
       of non cooperation by the assessee during assessment
       proceedings by Hon'ble Delhi High Court in case of CIT v
       Gold Leaf Capital Corporation Ltd (2013) 353 ITR 163
       (Delhi) and Hon'ble Supreme Court in the case of Salil
       Dutta v T.M and M.C. Private Ltd 1993-002 SCC-185-SC?

iii)   Whether in facts and circumstances of the case and in
       law, the Ld CIT(A) is justified in deleting addition of Rs.
       2.81 crore on account of unexplained share application
       money without considering his own finding that the
       assessee did not carryout of any business activity and
       had no source of income i.e. the assessee had no worth
       as well as following findings as evident from remand
       report dated 09.09.2015:

       ·        no   evidence   of   creditworthiness   of   investors
       investing Rs. 2.95 crore as share application money was
       filed;



                                 2
·     even audit report of investing companies (total
investment of Rs. 95.66 lakhs) was not filed; and

·     Copies of bank A/c of investors indicated deposit of
cash or cheque immediately before investment in share
application money?

4.   Whether in facts and circumstances of the case and
     in law, the Ld CIT(A) is justified in deleting addition
     of Rs. 2.81 crore u/s 68 of the Act by wrongly
     quoting the AO that the assessee had filed copies of
     audit reports, Board's resolutions and affidavit
     affirmed   by   the   directors   of   the   15   investor
     companies during remand proceedings?

5.   Whether in facts and circumstances of the case and
     in law Ld. CIT (A) is justified in deleting addition of
     RS. 2.81 crore on account of unexplained share
     application money without making further enquiry
     as directed by Hon'ble Delhi High Court in case of
     CIT v Jansampark Advertising and Marketing P. Ltd
     (2015) 375 ITR 373 (Del) and without analyzing
     copies of bank account and document as provided
     by the AO alonwith remand report?






6.    Whether in facts and circumstances of the case and
     in law the Ld CIT(A) is justified in deleting addition
     of Rs. 2.81 crore on account of unexplained share
     application money by holding that creditworthiness
     was proved by mere production of details of Income
     Tax Return details or issues of cheques or by
     furnishing copy of bank account and ignoring ratio
                       3
                 decidendi laid down by Hon'ble Delhi High Court on
                 the issue in the cases of CIT v N.R. Portfolio Pvt.
                 Ltd (2014) 2 ITR-OL-68, CIT v Nipun Builders and
                 Developers P. Ltd (2013) 350 ITR 407, CIT v
                 Navodaya Castles Pvt. Ltd (2014) 367 ITR 306?

           7.    Whether in facts and circumstances of the case and
                 in law, the Ld CIT(A) is justified in deleting addition
                 of Income of Rs. 20 lakhs as estimated by the AO
                 u/s   144    by   taking      into    account     facts    and
                 circumstanced     of    the   case        and   due   to   non-
                 production   of   the    books       of    accounts   by    the
                 assessee?

           8.    That the order of the CIT(A) is erroneous and is
                 not tenable on facts and in law.

           9.    That the appellant craves leave to add, alter,
                 amend or forgo any ground(s) of appeal either
                 before or at the time of hearing of the appeal.

           10.   That the appellant craves leave to add, alter,
                 amend or forgo any ground(s) of appeal either
                 before or at the time of hearing of the appeal.

3.   The brief facts of the case are that the assessee filed the

return of income on 01.04.2011 at Rs. NIL and it was processed u/s

143(1) of the Income Tax Act, 1961 (hereinafter referred as "Act")

and later picked up for scrutiny by issue of notice u/s 143(2) of the

Act on   28.09.2011, which was claimed by the                AO to have been



                                    4
served upon assesssee in person. On various subsequent dates,

notices were issued but the assessee did not comply with. A

questionnaire dated 04.04.2012 was then issued for hearing on

24.04.2012, but was not complied with. In response to the notice

dated 20.12.2012 scheduling the hearing for 28.12.2012, the AR of

the assessee appeared and filed a letter on 24.12.2012, whereby

the new address of the assessee company and its new management

was filed. It was also informed that the old management had sold of

shares of the company to the new management. Subsequently, a

detailed questionnaire was issued along with a notice u/s 143(2) of

the Act on 26.12.2012, which was again not complied with. Under

the circumstances, the AO issued a final show cause notice on

27.02.2013, in which the assessee was informed that any further

non-compliance will lead to best judgement assessment. The AO

also had informed that in such a case, the share application money

of Rs. 2.95 crore would be deemed as income u/s 68      of the Act

and the business income of the assessee will be assessed at Rs. 20

lakh. This notice was received back on 04.03.2013 with the remark

"No such firm at such address". Thereafter, the notice was served

by affixture by the Inspector. However, no further compliance was

made. Under the circumstances, the         AO treated the share

application money of Rs. 2.95 crores received during the year as


                                 5
unexplained cash credit u/s 68 of the Act vide his order dated

11.3.2013 passed u/s. 144 of the Income Tax Act, 1961. Secondly,

in the absence of any books of account, the business income was

estimated at Rs. 20 lakh and accordingly the income of the assessee

was assessed at Rs. 3,15,00,000/-. Against the assessment order,

the assessee filed the appeal before the Ld. CIT(A) who vide his

impugned order dated 30.1.2015 has partly allowed the appeal of

the assessee.   Aggrieved with the order of the Ld. CIT(A)-42, New

Delhi the Revenue is in appeal before the Tribunal.


4.   Ld. CIT(DR) relied upon the Order of the AO and reiterated the

contentions raised in the grounds of appeal.


5.   In this case, Notice of hearing to the assessee was sent by the

Registered AD post, in spite of the same, assessee, nor its

authorized representative appeared to prosecute the matter in

dispute, nor filed any application for adjournment. Keeping in view

the facts and   circumstances of the present case and the issue

involved in the present Appeal, we are of the view that no useful

purpose would be served to issue notice again and again to the

assessee, therefore, we are    deciding the present appeal exparte

qua assessee, after hearing the Ld. DR and perusing the records.


6.


                                  6
add ld. counsel for not granting opportunity of cross exaqmination

by the AO and CIT(A) also add andoman nikobar decision and delete

the same.


We have heard the Ld. DR and perused the records, especially the

impugned order. With regard to ground no. 1 & 2 are concerned,

relating to admission of additional evidence under Rule 46A of the

Income Tax Rules, 1962 are concerned, we find that assessee was

asked to file evidence in support of appointments/representation of Mr.

Ashok Khandewal as counsel for the assessee. It is noted that assessee

filed before the Ld. CIT(A) a copy of the letter dated 21.12.2012, which

was received by the ITO W. 13(2) on 24.12.2013. In the said letter, the

said counsel has mentioned that the assessee company had sold its

shares to the persons mentioned in the share purchase agreement (new

management) and informed the current address of the company and of its

Directors. Thus, the fact that Mr. Ashok Khandewal was the assessee's

authorised representative stands duly proved. In view of the above, as

the said counsel failed to represent before the AO in response to various

notices, which were provided to him by the assessee shows that the

assessee was prevented by sufficient cause from producing the evidence,

which was called upon to be produced before the AO. We further find that

the AO has objected to admit the additional evidence on the ground that

adequate opportunities were given to the assessee during the assessment

proceedings and, hence, the assessee cannot take plea that he was


                                    7
prevented by sufficient cause for filing the necessary evidence. However,

it is evident that the AO has not examined the plea of the assessee that

the non-compliance of the assessee was due to professional negligence on

the part of its counsel as alleged by its Director in the affidavit affirmed,

which was enclosed along with additional evidence. Keeping in view the

above, as the said counsel failed to provide the correct new address of the

company subsequent upon its acquisition by the new management as a

result of share purchase agreement, a copy of which was placed before

the AO, evidently, the assessee could not have complied with the notices

issued at the old address. This is more so relevant as at no stage the new

management would have come to know about the issuance of notice u/s

143(2) of the Act fixing the hearing, which was dispatched at the old

address as per record. It is evident that the first notice at the given

address was dispatched on 20.12.2012, which was handed over to the

counsel of the appellant company, who was looking after the assessee's

case in earlier years assuming that he was well versed with the matters.

The said counsel thereafter did not appear before the AO, nor informed

the assessee about developments in assessment proceedings. Therefore,

the Directors of the company were prevented by sufficient cause from

producing the evidence. Under the circumstances, Ld. CIT(A) has rightly

held that it is a fit case to admit additional evidence under Rule 46A(l)(b)

& (c) of the I.T. Rules, 1962.    It is noted that AO has challenged such

admission in the circumstances mentioned in clause(d), however, the

assessee has not made the request under clause(d). Therefore, the

                                      8
objections of the   AO in this regard are misplaced and are over-ruled.

Accordingly, the additional evidences were rightly admitted by the Ld.

CIT(A), which does not need any interference on our part, therefore,

we uphold the action of the Ld. CIT(A) on the issues in dispute and

reject the grounds raised by the Revenue.


6.1   With regard to ground no. 3, 4, 5 & 6 relating to deletion of

addition of Rs.2.81 crores on account of unexplained share

application money are concerned, we find that AO has examined the

additional evidences during the remand proceedings and, hence, verified

that the assessee had filed a copy of ITR, Audit Report, bank statement,

share application, Board's Resolution, Stamp Duty as per ROC record and

affidavit affirmed by the Directors of the 15 investor companies, who had

invested an aggregate amount of Rs. 2,95,25,000/- as share application

money in the assessee company. The AO issued notice u/s 133(6), in

which all the share applicants have confirmed having been given the

cheques to the appellant and have further submitted a copy of ITR,

Balance Sheet and the bank statement. The AO also deputed an Inspector

for field enquiry, who has verified the documents in support of identity,

genuineness and creditworthiness. The AO has also verified that the said

share applicants have duly recorded such investments in their balance

sheet also. Thus, the AO has confirmed that other than 3 persons,

namely, M/s Ravi Sales Corporation, Shyam Lai and M/s Hind Pharma, in

all other cases, there was no cash deposit in the bank account prior to







                                    9
issuing the cheque as share application with the assessee company. It is

also noted that in case of the above-referred 3 share applicants, namely,

M/s Ravi Sales Corporation, Shyam Lai and M/s Hind Pharma, there were

cash deposits just before issue of cheques to the appellant company. No

satisfactory explanation with regard source of such cash deposit was

given before the AO nor before me. The AO had issued summons to these

3 parties in the remand proceedings, who failed to comply before the AO.

The assessee could not produce these parties nor could furnish any

cogent reason for their non-appearance. Under the circumstances,

genuineness of cash credits in respect of these three parties remains

unexplained. In view of this, cash credits aggregating to Rs. 14 lakh

received from these 3 parties are held as unexplained cash credit u/s 68.

However, as in respect of other 12 parties, there is no adverse evidence

on record to suspect their identity, genuineness or creditworthiness, and

the AO has verified the authenticity of supporting documents filed by the

appellant in this regard, the balance share application money received

from such parties is held as explained. Accordingly, the assessee got part-

relief by the Ld. CIT(A), which does not need any interference on our

part, therefore, we uphold the action of the Ld. CIT(A) on the issue

in dispute and reject the grounds raised by the Revenue.


6.2   Apropos ground no. 7 is concerned,          relating to deletion of

addition of Rs. 20 lacs, we find that AO was compelled to make some

kind of estimation with regard addition to income in the absence of any


                                    10
compliance made by the assesse before the AO during the assessment

proceedings. As discussed above, we have upheld the action of the Ld.

CIT(A) for allowing the admission of additional evidences on the grounds

that the assessee was prevented by sufficient cause to produce evidences

called for by the   AO during the assessment proceeding on account of

professional negligence by its AR, Mr. Ashok Khandewal, CA, who was

handling the tax matters of appellant prior to its take-over by the new

management. It is also seen that the AO had, vide notice dated

08.03.2013, required the assessee to produce books of account. The

appellant has pleaded that even though the books of accounts were not

produced before the AO due to the above mentioned reason, yet the

audited financial accounts were enclosed with the return of income and

are available on the assessment record. It was submitted that the

assessee was carrying out no business during the current year and also in

the immediately preceding year and its return for the immediately

preceding year was accepted by the AO as such. Since the AO has not

brought out any evidence on record to suggest that the assessee was

carrying out any business activity during the year from whom, it had

earned income and has not raised any query on the audited financial

accounts filed by the appellant along with the return of income, the action

of the AO of estimating the income is held to be baseless and arbitrary

without support of any evidence gathered in this regard or based on any

material available on record. In the one-line order on this issue, the AO

has not discussed the basis for estimating the business income of Rs. 20

                                    11
lakh. Therefore, such addition was rightly deleted by the Ld. CIT(A),

which does not need any interference on our part, therefore, we

uphold the action of the Ld. CIT(A) on the issue in dispute and

reject the ground raised by the Revenue.

6.3   Ground no. 8, 9, & 10 are general in nature, hence, need not

be adjudicated.


7.    In the result, the Revenue's Appeal stands dismissed


      Order pronounced on 05/02/2019.



      Sd/-                                              Sd/-


[PRASHANT MAHARISHI]                             [H.S. SIDHU]
 ACCOUNTANT MEMBER                             JUDICIAL MEMBER

Date 05/02/2019
SRBHATNAGAR



Copy forwarded to: -

1.    Assessee -
2.    Respondent -
3.    CIT
4.    CIT (A)
5.    DR, ITAT             TRUE COPY
                                                        By Order,



                              Assistant Registrar, ITAT, Delhi Benches




                                 12

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