Income Tax Appellate Tribunal - Gauhati
Income Tax Officer, Ward-1, Silchar vs Rohit Kumar Gulgulia, Silchar on 16 August, 2023
IN THE INCOME TAX APPELLATE TRIBUNAL GAUHATI BENCH
VIRTUAL HEARING AT KOLKATA
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER
AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER
ITA No.182/GTY/2020
Assessment Year: 2011-12
Income-tax Officer, Ward-1, Rohit Kumar Gulgulia,
Silhar C/o, Gulgulia Trade
Vs.
Corporation, Hospital Road, N.
S. Avenue, Silchar-788005.
(PAN: AEKPG1983L)
(Appellant) (Respondent)
Present for:
Appellant by : Shri Babu Lal Jain, FCA
Respondent by : Shri N. T. Sherpa, JCIT
Date of Hearing : 08.06.2023
Date of Pronouncement : 16.08.2023
ORDER
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
Appeal filed by the assessee is against the order of Ld. CIT(A), Shillong dated 18.03.2020 against the assessment order of ITO, ward-3, Silchar u/s. 143(3) r.w.s. 147 of the Income-tax Act, 1961 (hereinafter referred to as the "Act"), dated 24.12.2018 for AY 2011-12.
2. Re venue has raised the following grounds of appeal:
"• W he ther on f ac ts and in the c ircums tances of the c ase the Ld. CIT( A) was justif ied in holding th at the assess ment order passed by AO was bad in law only bec ause the AO had based h is f or matio n of be lief on the f inding s recorded in the repor t of survey under sec tio n 133A of the I. T Ac t, 1961?
• Whe ther on f ac ts and in the c ircumstances of the c ase the Ld. CIT( A) was justif ied in holding th at the assess ment order passed by AO was b ad in la w only bec ause the AO did no t condu ct an y f ur ther 2 ITA No.182/GTY/2020 Roit Kumar Gulgulia., AY: 2011-12 enquiry of his o wn and re lied on the conclus ive f ind ings of the of f ice r(s) of the inv es tiga tio n Wing of th e In co me T ax De par tmen t to reco rd the re asons f or reopening the assessmen t?
• Whe ther on f acts and in the cir cums tances of th e case the Ld.CIT(A) was justif ied in deciding th at the as sessmen t order passed by AO was bad in law bec ause the objec tions r aised by the assessee ag ains t in itia tion of proceedings u/s 147 were no t disposed of by the AO by any spe aking order in wr iting as required under the law withou t proper con sider ation of the AO's vie w expre ssed in h is letter dated 24.04. 2019 and withou t giv ing any f urther o ppor tun ity to the AO of bein g heard bef ore dis posal of the appe al as pr ayed f or in the said letter ?
• Whe ther on f acts and in the cir cums tances of th e case the Ld.CIT(A) was justif ied in deciding th at the as sessmen t order passed by AO was bad in law bec ause the objec tions r aised by the assessee ag ains t in itia tion of proceedings u/s 147 were no t disposed of by the AO by any spe aking order in wr iting as required under the law, withou t tak ing in to consider atio n the dec is ion of th e Hon'b le cour ts c ited by the AO in h is rep ly d ated 24.04.2019, accord ing to wh ich a time span of f our weeks was to be given to the assessee af ter the ob je ctio ns are disposed of by way of speak ing order, which was n o t possible in the c ase because the as sessee has f iled the obje c tions only three weeks pr ior to the time bar r ing d ate?
• Whe ther on f ac ts and in the c ircumstances of the c ase the Ld. CIT( A) was justif ie d in dele ting he additio n made by th e AO on the ground th at the ma ter ial relied upon by the 40 f or comp le tio n of assess men t were n o t conf ron ted to the assessee, s ince the mater ial available with the AO f or disclosure to the assessee was only the conf essional s ta temen t recorded on oath under sec tio n 131 if the LT . Ac t, 1961 in cours e of survey operation under se ction 133A of the said ac t and such conf ession was made by the assess ee's f ather and theref ore, already kno wn to the assessee?
• Whe ther on f acts and in the cir cums tances of th e case the Ld.CIT(A) was justif ied in ho ld ing that the assess men t order passed by AO was b ad in law because the additio ns made by the AO were based mere ly on the conf essional state men ts, s ince such s tate me nt under section 1 31 of the Inco me tax Act, 1961 was given separ ately by three D irec tors of the s he ll compan y through wh ic h the conce aled inco me of the asse ssee as rou ted, it was g iven suo mo to and there was on induce men t, threat or coerc ion when the s tate men ts were reco rded?
• Whe ther on f ac ts and in the c ir cumstances of the case the Ld. ClT (A) was jus tif ied in deleting the addition made by the AO on the ground that the retraction made by th e assessee was no t co ns idered in assess men t because even though th e re tr ac tio n was f iled at the 3 ITA No.182/GTY/2020 Roit Kumar Gulgulia., AY: 2011-12 last mo ment, it was duly considered by the AO bef ore rejec ting it be ing no t bonaf ide in assess men t?
• Whe ther on f ac ts and in the c ircumstances of the c ase the Ld. CIT( A) was jus tif ie d in de le ting the additio n made by AO on the ground that the addition of opening balance in the cred ito r's account made by the AO is not per miss ible under sec tion 68, s ince the loan itse lf was ad mitted to be bogus in s tateme nts under se ction 131 of the Inco me- tax Ac t, 1901 given separ ately b y three d ire ctors of the shell co mp any th ro ug h wh ich the con cealed in co me of the assessee was routed and it was merely a book entry whic h the assessee had made in an attempt to projec t a sham transac tion as genuine?
• Whe ther on f ac ts and in the c ircumstances of the c ase the Ld. CIT( A) was jus tif ie d in de le ting the additio n made by AO on the ground that the addition of opening balance in the cred ito r's account made by the AO is no t per missible under sec tio n 68, s ince an amoun t appe ar ing as opening balance is also a cre d it and the explana tion off ered by the assessee regarding the nature and so urce of which was no t s a tisf ac tory in the opinion of the AO? "
3. From the perusal of above listed grounds, department is in appeal primarily on two issues, one relating to the jurisdictional and legal aspect of the reassessment and the second one on the merit of the relief granted by the Ld. CIT(A).
4. On the jurisdiction and legal issues, se veral grounds have been raised which formed the basis of giving relief by the Ld. CIT(A). They are all in the nature of peripheral arguments on the moot point of jurisdictional and legal aspect of the impugned reassessme nt. We thus, first deal with the jurisdictional and legal aspe ct of the appeal.
5. Brief facts of the case are that assessee is an individual engaged in the business of hardware, sanitary, building material, contract etc. He is a proprietor of the concern in the name of M/s. Gulgulia Trade Corporation. Assessee is also a partne r in the firm M/s. A. A. Builders. Return of income was 4 ITA No.182/GTY/2020 Roit Kumar Gulgulia., AY: 2011-12 originally filed on 23.11.2011, reporting total income of Rs.19,05,460/-.
5.1. A survey u/s. 133A of the Act was conducted on 06.07.2017 in the office premises of Gulgulia Trade Pvt. Ltd., Silchar. In the post survey report issued by Dy. Director of Income-tax, Unit-II(2), Guwahati [DDIT(Inv.)], it was stated that Shri Ram Lal Gulgulia group has purchased a paper/shell company Thirdwave Suppliers Pvt. Ltd. (TSPL) which is a 'Jamakharchi/paper company' as per the Department database prepare d by the Directorate of Investigation, Kolkata. The said company was controlled by an entry operator of Kolkata, Shri Akash Agarwal who has raised bogus share capital with premium and subseque ntly utilised by Ram Lal Gulgulia group in the form of unsecured loans in their concerns. Based on this, Ld. AO observed that assessee be longs to the Gulgulia Group, more particularly, Ram Lal Gulgulia group and that assessee is a son of Shri Ram Lal Gulgulia.
5.2. In respect of TSPL, Ld. AO observed that a survey action was conducted in the case of this company in Kolkata on 10.02.2015 which is prior to more than two years of the survey conducted in the case of Gulgulia Trade Pvt. Ltd., Silchar. Ld. AO observed that during the time of raising of capital by TSPL, Shri Akash Agarwal was a Director who then sold this company and the new Dire ctors of the said company took it over. Shri Ram Lal Gulgulia is one of the Directors of TSPL. Shri Bijoy Singh Lodha is another Director in TSPL and who is also an Accountant of the Ram Lal Gulgulia Group.
5 ITA No.182/GTY/2020Roit Kumar Gulgulia., AY: 2011-12 5.3. In the course of survey conducted at the premise of Gulgulia Trade Pvt. Ltd., statement of Shri Bijoy Singh Lodha and Shri Ram Lal Gulgulia were recorded u/s. 131 on 06.07.2017. From their statements, it was observed that TSPL had given unsecure d loans to various concerns of the Ram Lal Gulgulia group, de tails of which are tabulated as under:
5.4. From the statements of both Shri Ram Lal Gulgulia and Shri Bijoy Singh Lodha, Ld. AO inferred and held that they have confessed in unambiguous terms that the loan transaction was sham. He thus, treated the loan transaction of the asse ssee with TSPL of Rs.2,63,13,383/- as bogus loan along with payment of interest of Rs.10,96,241/- thereon. In this respect submissions made by the assessee that there is an opening balance of Rs.1,75,00,000/- and that the statements made by the two persons had been retracte d was negated by the Ld. AO while completing the assessment. Aggrieved, assessee went in appeal before the Ld. CIT(A). Ld. CIT(A) has elaborately dealt with jurisdictional and legal issue of reopening of the assessment and quashed the same by holding it to be invalid as there was non-application of mind on the part of the Ld. AO. Aggrie ved, revenue is in appeal before the Tribunal.6 ITA No.182/GTY/2020
Roit Kumar Gulgulia., AY: 2011-12
6. Before us, Ld. Sr. DR put-forth the multi-fold conte ntions which have been raised in the grounds on the jurisdictional and le gal aspect of the relief granted by the Ld. CIT(A). Per contra, Ld. Counsel for the assessee placed on record detailed written submission along with corroborative evidences in the form of a paper book containing 68 pages. Ld. Counsel for the assessee has dealt with each of the aspect of jurisdictional and legal issue of reopening of the assessment. The submissions made by the Ld. Counsel are multi-fold, each of them are dealt hereunder:
6.1. Primarily, reasons to be lieve recorded by the Ld. AO are base d on reproduction of the survey report submitted by DDIT (Inv.), Guwahati and the statements recorded of Shri Ram Lal Gulgulia and Bijoy Singh Lodha in the case of survey of Gulgulia Trade Pvt. Ltd., Silchar. Satisfaction arrived at by the Ld. AO on escapeme nt of income is not out of any independent enquiry or indepe ndent application of mind but, is borrowed from the report of Investigation Wing and the statements recorde d. It is important to note at this juncture that Ld. CIT(A) has adjudicated on the appeals of various appellants of the Ram Lal Gulgulia group, together. Thus, Ld. CIT(A) was place d in a position to take a holistic view of the inter se transactions which had been unde rtaken to arrive at justifiable conclusion.
6.1.1. In this re spect, Ld. CIT(A) has categorically observed that for each of the appellants in the group, reasons to believe finds its genesis in the purported survey report only. He further noted that re asons to believe of all the seven appellants 7 ITA No.182/GTY/2020 Roit Kumar Gulgulia., AY: 2011-12 which the Ld. CIT(A) adjudicated upon together of the Ram Lal Gulgulia group are reproduce d verbatim in the survey report.
In all these reasons to believe, no reference has been made to any purported independent enquiry for verification or examination of any evidence or the assessee. He observed that no enquiry was conducted by the respective AOs of the constituent particulars of the group.
6.1.2. He thus, observed by analysing the reason to belie ve by way of putting up a common table in respect of all the seven appellants of the Gulgulia group that unequivocally, it has prove n that no enquiry or whatsoever was conducted by the Ld. AO and that the reasons to believe recorde d are based solely on the information supplied to Ld. AO by the Inv. Wing. From the perusal of the reasons to believe in the case of the assessee, Ld. CIT(A) has observed the expression of Ld. AO that "in view of the above f indings and circumstances detailed in the survey report and also admission in the reasons recorded, I have reason to believe." According to Ld. CIT(A), AO has formed his belief on the basis of the averments and the survey report of Inv. Wing. No othe r materials or e vidence was given by the AO to form a belief that income of the assessee had escaped assessment. Ld. CIT(A) accordingly, conclude d that satisfaction arrived at by the AO on the escapement of income from assessment is a borrowed satisfaction which is fatal to the impugned proceeding. Reliance was placed on the decision of Hon'ble Supre me Court in the case of Calcutta Discount Co. ltd. [1961] 41 ITR 191 (SC) who had analysed the phrase "reasons to believe" and observed that -
8 ITA No.182/GTY/2020Roit Kumar Gulgulia., AY: 2011-12 "It is f or him to dec ide th at inf ere nces of f acts c an be reasonably drawn and wha t leg al inf e rences have ultimate ly to be dra wn. It is no t f or somebody else to te ll the assess ing au thor ity wh at inf erences, whe the r of f acts or la w, should be dr a wn. "
6.2. Ld. Counsel has raised the contention that Ld. AO has not disposed of the objection filed during the course of reassessment proceedings by passing a speaking orde r as mandated by Hon'ble Supreme Court in the case of G K N Driveshaft (India) Ltd. Vs. ITO [2013] 259 ITR 19 (SC). According to the Ld. Counsel, non-disposal of the objection of assessee by the Ld. AO by way of a speaking order renders the assessment order bad in law. Assessee had file d the objections on 10.12.2018 placed in the paper book. Ld. CIT(A) had called for clarification from the Ld. AO in respect of disposal of objections to the reope ning, raise d by the assessee. To this effect, Ld. AO had replie d vide letter dated 24.04.2019, scanne d copy of which is reproduced in the order of Ld. CIT(A). From its perusal it is noted that Ld. AO has admitted that objections to the reopening of the assessment as raised by the assessee were not disposed of by him by way of any written/speaking order.
6.2.1. The mandate of Hon'ble Supreme Court in the case of GKN Driveshaft (India) Ltd. (supra) is reproduced as under:
"We see no justif iable reason to interf ere with the order under challeng e. Ho wever , we clar if y tha t when a no tice under sectio n 148 of the Inco me- tax Act is issued, the proper course of ac tion f or the notic ee is to f ile a re turn and if he so desires, to seek reasons f or issuing no tices. The Assessing Of f icer is bound to f urnish reasons with in a re ason able time. On receipt of reasons, the no ticee is entitled to f ile ob jec tions to issuanc e of notic e and the Assessing Of f icer is bound to dispo se of the same by pass ing a spe ak ing order. In the ins tan t c as e, as the reasons have been d isc los ed in these proceeding s, the Asses sing Of f icer has to d ispose of the objec tions, 9 ITA No.182/GTY/2020 Roit Kumar Gulgulia., AY: 2011-12 if f iled, by passin g a speaking order, bef ore proce eding with the assess men t in respec t of the abovesaid f ive assess men t years.
[emphasis supplied by us by underline] 6.2.2. In the case of Fomento Resorts & Hotels Ltd. vs. ACIT [2019 (9) TMI 1284 - Bombay High Court], it was held/averred, as follows, by the Hon'ble Bombay High Court:
"Reopening of assessmen t - ultr a vires to Sec tion 11 of Expend iture Tax Ac t, 1987 - non dispos al of the objec tions to the reasons in the assess men t order - whe ther it was necessary f or the Assessing Of f icer to h ave f irs t disposed of the Appe llan t's objectio ns by pass ing a spe aking order and only upon co mmunic a tion of the same to the Ap pe llants, proceeded to reopen th e assess me nt? -
HELD THAT:- Since , in the presen t case, the Asse ss ing Of f icer has purpor ted to ass ume the jur isdic tion f or reopening of the assess men t, with o ut h aving f irst disposed of th e Assessee 's abje c tions to the reasons by passing a speak ing order, f ollo wing the law laid do wn in GKN Dr iveshaf ts ( India) L td [2002 (1 1) TM I 7 - SUPREME COURT ] , Bayer Ma ter ial Sc ience (P) L td. [2016 (3) T M I179 BOMBAY H IGH CO URT] and KSS Pe tr on Pr iv ate L td. [ 2016 (10) TM I 1112 - BOMBAY H IGH COURT] we are constr ained to ho ld th at su ch assump tion of jur isdic tion by the Assessing Of f icer was ul tr a v ires Section 11 of the said Ac t. The f irst substan tial ques tion of law will, accord ing ly, h ave to be ans wered in f avour of the Ap pe llant and agains t the Responden t- Revenue. "
6.3. In view of the above, non-disposal of the obje ctions of the assessee by the Ld. AO without passing a written/speaking order renders the assessment order and the consequential additions as bad in law.
7. Another contention raised by the Ld. Counsel is that Ld. AO has not provided the copy of statements of all the three persons which formed the basis of arriving at the reasons to believe. Further, no opportunity has been given to the assessee to cross examine these three persons though specific request had been made in the course of assessment proce eding. Ld. Counsel contended that on one hand Ld. AO 10 ITA No.182/GTY/2020 Roit Kumar Gulgulia., AY: 2011-12 had taken recourse to the reassessment solely on the basis of the purported statement and on the other hand, Ld. AO did not deem it proper or reasonable to confront such purported statement to the assessee.
7.1. To buttress the contention, Ld. Counsel placed reliance on the de cision of Hon'ble Supreme Court in the case of Andaman Timber Industries Ltd. Vs. Commissioner of Central Excise [2015] 281 CTR 241 (SC) wherein it is held as under:
"5. We have heard Mr. Kavin Gula ti, le arned sen ior counsel appe ar ing f or the assessee, and Mr. K. R adh akr ishnan, le ar ned senior counse l who appeared f or the Revenue.
6. Accord ing to us, no t allo wing the assessee to cross-examine the witnesses b y the Adjudic ating Au thor ity tho ugh the s ta te me n ts of those witnesses were made the basis of the imp ugned order is a ser ious f law wh ic h makes the order n ullity in as much as it amo unted to v io latio n of princip les of natur al jus tice becaus e o f wh ich the assessee was adversely af f ected. It is to be borne in mind th at the order of the Co mmissioner was based upon the s tate men ts given by the af o resaid two witnesses. E ven when the assessee d ispu ted the correc tness of the statements and wanted to cross -e xamine, the Ad jud ic ating Au th or ity did not gr an t this oppor tu nity to the assessee. It wou ld be per tinen t to note tha t in the impu gned order passed by the Adjudicating Author ity he has specif ically me ntioned that such an o ppor tu nity was sought by the assessee. Ho wever, no such oppor tu n ity was gr an ted and the af oresaid p le a is no t even deal t with by the Adjudica ting Au tho r ity. As f ar as the Tribun al is concerned, we f ind that re jec tion of th is ple a is to tally untenab le. The Tribunal h as s imp ly s ta ted tha t cross-ex amin ation of the s aid dealers could no t h ave brough t ou t any mater ial whic h would not be in possess ion of the appellan t the mselves to ex plain as to why their ex-f actory pr ices r e main sta tic . It was not f or the T r ibunal to h ave guess wor k as to f or what pur poses th e appe llan t wan ted to cross- examine those dealers and wh at ex traction the appe llant wanted f rom the m.
7. As men tio ne d above, the appellant had con tes ted the tru thf ulness of the s tate men ts of these two witnesses and wan ted to d iscred it the ir tes timony f or wh ich purpose it wan ted to av ail the oppor tun ity of cross-e xamin atio n. That apar t, the Adjudic ating Au tho r ity s imply relied upon the pr ice-lis t as main taine d at the depo t to d e ter mine the pr ice f or the p urpose of levy of excise duty. Whe ther the goods were , in f ac t, so ld to th e said de ale rs/ witnesses at the pr ic e whic h is men tio ne d in the pr ice-list itself could be the subjec t ma tter of cross-11 ITA No.182/GTY/2020
Roit Kumar Gulgulia., AY: 2011-12 examination. Theref ore, it was not f or the Ad jud icating Author ity to presuppose as to wh a t could be the subje c t ma tter of the cross- examination and make the re marks as mentioned ab ove. We may also po int ou t tha t on an ear lier oc c asion when the ma tte r came bef ore th is Cour t in Civil Appe al No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case b ack to the Trib unal with the d irec tio ns to decide the appeal on mer its giv ing its reasons f or accep ting or rejecting the submis sions.
8. In v ie w the abo ve, we are of the opin ion th at if the tes timony of these two witn esses is discredited, th ere was no mater ial with th e Depar tmen t on the basis of which it could jus tif y its action, as the state men t of the af oresaid two wit nesses was the only bas is of issuing the Sha w-Cause No tice.
9. We, thus , set as ide the impugned order as passed by the Tribunal and allo w th is app eal. No cos ts."
7.2. Further, Ld. Counsel placed reliance on the decision of Hon'ble Delhi High court in the case of CIT Vs. Ashwani Gupta 322 ITR 396 (Del.) where in it was held as under:
"The Tribun al con f irmed the Order passed by the Co mmis s io ner (Appe als) wh ic h h eld the en tire add ition made by the Assessing Of f icer to be invalid and had de le ted it on the ground that the Assess ing Of f icer had passed the as sessmen t Order in v iola tion of the pr inc iples of natur al jus tice inasmuch as he had ne ither provided copies of the seize d mater ial to the assessee nor had he allo wed the assessee to cross-examine the person on the bas is of whose s tate ment the addition was made. On appe al:
Held, d is miss ing the appe al, tha t the Reve nue had ac cep ted the f ind ing s of the Tr ibun al on f ac ts as also the pos ition th at there had been a v io latio n of the pr in ciples of natur al jus tice. H o wever, its plea was tha t the v io lation of the pr inc iples of natur al jus tice was no t f atal so as to jeopardize the entire proceed ings. The T ribunal correc tly he ld th at once there was a violation of the pr inc iples of natur al jus tice in asmuc h as seized ma ter ial was no t prov ide d to an assessee nor was cross-examina tion of the person on whose s tate ment the As sess ing Of f icer relied upon, granted, then, such def ic ie nc ies wou ld amount to a denial of oppor tunity and, conseq uently, wou ld be f atal to the proceed ings. No subs tan tial ques tion of law arose."
7.3. Ld. Counsel reiterated that additions have been made merely on the basis of statement of third parties without any corroborative evidence, copy of which were not supplied to the 12 ITA No.182/GTY/2020 Roit Kumar Gulgulia., AY: 2011-12 assessee nor the y were made available for cross examination and that these parties had retracted their statement. Reference was made to the decision of Coordinate Bench of ITAT Rajkot in the case of Smt. Ranjnaben Mansukhlal Shah Vs. ACOT [2004] 83 TTJ 369 (Raj. Kol), wherein it was held that additions made only on the basis of disclosure statement normally should not be confirmed in the absence of corroboration. In the eyes of law, the general rule of practice is that it is unsafe to rely upon a confession only without any corroboration.
7.4. In respect of re traction made by the persons giving statements, the ir affidavits are placed on re cord. This fact was brought to the knowledge of the Ld. AO in the course of assessment proceedings. Ld. Counsel submitted that in the case of retracted statements, it is not as if the retraction from a statement would put an e nd to the procedure which ensued on account of survey. The beneficiary value of a retracted statement becomes diluted and its looses its stand on its own. Once the statement is retracted, the AO is burdened to produce some corroborative material to the statement relied upon for the purpose of asse ssment. Ld. AO has to give support to his findings on the basis of the other material. If he does not have any other material, in a way it refle cts upon the very perfunctory nature of the survey. In the present case, ld AO has not accepted the re traction made by the persons on whose statement the reasons to believe were , to initiate the reassessment proceeding. He has neither made any enquiry 13 ITA No.182/GTY/2020 Roit Kumar Gulgulia., AY: 2011-12 from the persons retracted their statements to support the additions made by him.
8. By taking into account the above multi-fold contentions discussed in respect of jurisdictional and legal issue , the conspectus of our findings find favour with the asse ssee, upholding the observations and findings given by the Ld. CIT(A). From the perusal of the impugned order and the reasons to believe, it is seen that Ld. AO has not applied his mind to the purported information received from the Investigation Wing. The approach adopte d is a mechanical approach and falls in the category of borrowed satisfaction. It is important to note that survey was conducted in the case of GTPL wherein asse ssee is not a director. Statements of directors of TSPL i.e. Shri Ramlal Gulgulia and Shri Bijoy Singh Lodha were recorded in the course of survey of GTPL on 06.01.2017 which we re relied upon by the Ld. AO. These had also bee n retracted. Another important fact which is borne in mind is that statement of Shri Akash Agrawal, erstwhile director of TSPL was re corded in the course of survey of TSPL on 10.02.2015 which is much prior to the conduct of survey in the case of GTPL (Ram Lal Gulgulia Group).
8.1. Furthe r, the material on the basis of which reasons to believe were recorde d have not been confronte d to the assessee, thus, the impugned order suffers from non- compliance with the principles of natural justice and thus, deserves to be quashed. Accordingly, grounds taken by the revenue in this respe ct are dismisse d.
14 ITA No.182/GTY/2020Roit Kumar Gulgulia., AY: 2011-12
9. Ld. Counsel has also brought the attention of the Bench to point out that without prejudice to the legal issue, addition of opening balance of Rs.1.75 Cr. has been made u/s. 68, out of the total addition made in the assessment. According to him, the addition of opening balance in the creditors' account is not permissible u/s. 68 since it does not represent a credit in the books of account during the year. To substantiate its claim, copy of loan confirmation, balance sheet, bank statement and affidavit of TSPL were placed on record. On perusal of the confirmation, statement and the other documents, it is evident that amount of Rs.1.75 Cr. was received by the assessee during the preceding years and not in the year under conside ration. However, Ld. AO has disre garded the submissions made by the assessee by observing that amount appearing as opening balance is also a credit and the explanation offered by the assessee for its nature of sources is not satisfactory in the opinion of the AO 9.1. Ld. CIT(A) has dealt with this issue after corroborating the same with the documentary evidence placed on record. We do not find any reason to interfere with the finding given by the Ld. CIT(A) in this respect. It is trite law that in case the liabilitie s are old and no cre dit has been made in respect of those liabilities in the books of account in the year under consideration, no addition can be made u/s. 68 of the Act. Accordingly, ground taken by the revenue in this respect is also dismisse d 15 ITA No.182/GTY/2020 Roit Kumar Gulgulia., AY: 2011-12
10. In the conclusion, we hold that the reassessme nt proce eding is invalid. Accordingly, merits of the case are not adjudicated upon which are rendered as mere academic exercise. Accordingly, the appe al of the revenue is dismissed.
11. In the result, appe al of the revenue is dismissed.
Order pronounce d in the open Court on 16 t h August, 2023.
Sd/- Sd/-
(Sanjay Garg) (Girish Agrawal)
Judicial Member Accountant Member
Dated: 16 t h August, 2023
JD, Sr. P.S.
Copy to:
1. The Appellant:
2. The Respondent
3. CIT(A), Shillong
4. CIT
5. DR, ITAT, Guwahati Bench, Guwahati
6. Guard file
//True Copy//
By Order
Assistant Registrar
ITAT, Kolkata Benches, Kolkata