Income Tax Appellate Tribunal - Delhi
Ebro India Pvt.Ltd. , Delhi vs Acit Circle-7(1), Delhi on 24 June, 2022
Author: G.S. Pannu
Bench: G.S. Pannu
IN THE INCOME TAX APPELLATE TRIBUNAL,
DELHI BENCH: 'B' NEW DELHI
BEFORE SHRI G.S. PANNU, HON'BLE PRESIDENT
AND
SHRI SAKTIJIT DEY, JUDICIAL MEMBER
S.A. No.158/Del/2022
[Arising out of ITA No.1291/Del/2022]
Assessment Year: 2018-19
M/s. Ebro India Pvt. Ltd., Vs. ACIT,
807, New Delhi House, Circle-7(1),
Barakhamba Road, Delhi
Connaught Place,
New Delhi
PAN :AAECT5502H
(Appellant) (Respondent)
Appellant by Sh. Rohit Jain, Advocate
Sh. Deepesh Jain, Advocate
Respondent by Sh. Mrinal Kumar Das, Sr. DR
Date of hearing 24.06.2022
Date of pronouncement 24.06.2022
ORDER
PER SAKTIJIT DEY, JM:
Captioned application has been filed by the assessee seeking stay on recovery of outstanding demand of Rs.155,35,09,214/-, including interest charged under section 234B and 234D of the Income-tax Act, 1961, pertaining to assessment year 2018-19.
2. Learned counsel for the assessee submitted, the impugned demand raised by the Assessing Officer is not enforceable as the 2 S.A. No.158/Del/2022 assessment order in pursuance to which the demand has been raised is unsustainable in law. Proceeding further, he submitted, while proposing the draft assessment order, the National Faceless Assessment Centre (NFAC) has not followed the mandatory procedure of section 144B of the Act. He submitted, the Assessing Officer did not issue any show-cause notice to the assessee and had not provided any personal hearing before passing the draft assessment order. Thus, he submitted, the assessment order is bad in law. In support of such contention, he relied upon the following decisions of the Hon'ble Delhi High Court:
1. Bharat Aluminium Company Ltd. Vs. Union of India [2022] 134 taxmann.com 187 (Del.)
2. Modicare Foundation Vs. NFAC [2021] 131 taxmann.com 35 (Del.)
3. Further, he submitted, while the draft assessment order was passed by NFAC under the provisions of section 144B of the Act, the final assessment order has been passed by the jurisdictional Assessing Officer. He submitted, as per the provision of section 144B of the Act, assessment is required to be conducted by NFAC, except under the circumstances provided under section 144B(8) of the Act. He submitted, since assessee's case is not falling under section 144B(8) of the Act, the jurisdictional Assessing Officer could not have passed the final assessment order. Further, he 3 S.A. No.158/Del/2022 submitted, while disposing of the objection of the assessee, the DRP has given specific direction to the Assessing Officer to deal with the ground raised by the assessee alleging breach of the provisions of section 144B of the Act with a reasoned order.
However, in the final assessment order, the Assessing Officer has failed to deal with the issue. Further, he submitted, the DRP's direction to consider the evidences and submissions of the assessee relating to the additions made under section 68 of the Act pass a speaking order was not implemented by the Assessing Officer. He submitted, in the final assessment order the Assessing Officer, in verbatim, has incorporated the observations made by the Assessing Officer in draft assessment order. Thus, he submitted, while passing the final assessment order, since, the Assessing Officer has not implemented the directions of learned DRP, it is in gross violation of provisions contained under section 144C(10) and 144B of the Act. In support of such contention, he relied upon the following decisions:
1. ESPN Star Sports Mauritius SNCET Companies Vs. Union of India, 388 ITR 383 (Del.)
2. Global One India (P.) Ltd. Vs. DCIT [2019] 112 taxmann.com 185 (Del.-Trib.) 4 S.A. No.158/Del/2022
4. Without prejudice, he submitted, the assessee has a strong case on merits as well. He submitted, the addition under section 68 of the Act is unsustainable in law and wholly without jurisdiction, as, the assessee has furnished all documentary evidences regarding receipt of share capital from existing non-
resident shareholders. He submitted, the assessee cannot be called upon to prove the source of source.
5. Thus, learned counsel submitted, since, the assessee has a strong prima facie case, the demand raised should be stayed and the appeal may be heard on an out of turn basis.
6. Strongly opposing grant of absolute stay, learned Departmental Representative submitted, the assessee may be directed to pay 20% of the outstanding demand. However, he did not object assessee's request for early hearing of the appeal.
7. We have considered rival submissions and perused the materials on record. It is evident, assessment proceedings in case of the assessee was taken up under the faceless assessment scheme as contemplated under section 144B of the Act. In fact, NFAC has proposed a draft assessment order on 21.09.2021. Before learned DRP, the assessee had taken a specific ground challenging the validity of the draft assessment order due to non- 5 S.A. No.158/Del/2022 compliance with the conditions of section 144B of the Act. The case of the assessee qua the violation of section 144B of the Act is, without issuing a show-cause notice and providing the assesse an opportunity of hearing, the Assessing Officer has proposed the draft assessment order. It is observed, while disposing of assessee's objection in this regard, learned DRP has directed the Assessing Officer to pass a speaking order on assessee's allegation of violation of provisions of section 144B of the Act. However, in the final assessment order, the Assessing Officer has remained completely silent on the issue.
8. It is further observed, the major addition resulting in the present demand is an amount of Rs.134,99,99,904/-, being share capital received from non-resident shareholders treated as unexplained investment under section 68 of the Act. While disposing of assessee's objection on this issue, learned DRP, while observing that the Assessing Officer has not considered the evidences filed by the assessee, directed him to consider the evidences and pass a speaking order. However, as we find, the Assessing Officer, while passing the final assessment order on the issue has simply repeated the observations made in the draft assessment order. Thus, the aforesaid facts clearly reveal that 6 S.A. No.158/Del/2022 while passing the final assessment order the Assessing Officer has failed to implement the directions of learned DRP in letter and spirit. Thus, the Assessing Officer, as it appears, has not followed the mandatory provisions of sub-section (10) and (13) of section 144C of the Act. Though, at this stage, we are not required to dwell upon the merits of the disputed issues, however, on appreciation of facts and materials placed before us and keeping in view the relevant statutory provisions and ratio laid down in the judicial precedents cited before us, we are convinced that the assessee has made out a strong prima facie case in its favour. Therefore, considering the prima facie case and balance of convenience, we are inclined to grant stay on recovery of outstanding demand for a period of 180 days from the date of this order or till the disposal of the corresponding appeal, whichever is earlier.
9. Further, accepting assessee's prayer for early hearing of appeal, which was not opposed by learned Departmental Representative, we direct the Registry to fix the appeal for hearing on 29.08.2022 on an out of turn basis. Paper-books, if any, must be filed by the parties sufficiently ahead of the date of hearing of appeal. Since, the date of hearing of appeal was announced in open court, in presence of both the parties, there is no need for issuance 7 S.A. No.158/Del/2022 of separate notice of hearing to the parties. It is made clear, in case, the assessee seeks unnecessary adjournment, the stay granted will be vacated.
10. Before parting, we make it clear, the observations made by us in this order are purely in the context of grant of stay on recovery of outstanding demand and will have no bearing on the decision to be taken in deciding the appeal.
11. In the result, stay application is allowed.
Order pronounced in the open court on 24th June, 2022 Sd/- Sd/-
(G.S. PANNU) (SAKTIJIT DEY)
PRESIDENT JUDICIAL MEMBER
Dated: 24th June, 2022.
RK/-
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar, ITAT, New Delhi