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TMI Blog2019 (12) TMI 1550X X X X Extracts X X X X X X X X Extracts X X X X ..... principle of due natural justice. 3. That the Ld' CIT (A), Ghaziabad and the Ld' Dy. Commissioner of income Tax, Circle - 1, Ghaziabad have erred in law and on facts in making the addition of Rs. 1,15,00,000/- u/s 68 of Income Tax Act, 1961 in share capital only by making a reference of RBI Inspection Report, despite and ignoring the facts that the assessee had submitted all the evidence to prove their credit worthiness. After providing all the related documents the Ld' Assessing Officer neither raised any query for the same nor objected on any submitted documents. It is also worthwhile to mention here that the RBI Inspector had no role to justify the credit worthiness of the shareholder. They have only to give the report on financial discipline of the Bank according to rules and regulations of the RBI. 4. That the learned Dy. Commissioner of Income Tax, Circle - 1, Ghaziabad has erred in law and on facts in making the addition of Rs. 29,50,000/- u/s 68 of income Tax Act, 1961 in share capital made by three companies despite and ignoring the facts that the assessee had submitted all the evidence to prove their credit worthiness. After providing all the related docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's side, the letter seeking adjournment lacks legitimacy. Moreover, as nobody was present at the time of hearing before us from assessee's side, we had no assistance at the time of hearing, in fully understanding and in obtaining clarity regarding reason stated for seeking adjournment, vaguely worded as "...some personal reason". In cumulative consideration of these facts and circumstances, we proceed to decide this appeal in accordance with Rule 24 of Income Tax (Appellate Tribunal) Rules, 1963. (C) Vide Assessment Order passed under Section 143(3) of the I.T. Act, income of the assessee was assessed at Rs. 5,53,11,095/- as against returned income of Rs. 1,90,65,466/-. The relevant portion of the Assessment Order is reproduced as under: "3. The assessee, Mahamedha Urban Co-operative Bank Ltd. is a Co-operative Bank which has been registered under the Co-operative Societies Act, 1965 and possess license for functioning as Bank from RBI and doing the following activities. Accepting the deposits from the members/public, Granting the secured and unsecured loans including bills/cheques discounting, investing the funds according to the norms of the RBI and Co-operative Socie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion an increase of Rs. 126.76 lack (31.00%) from Rs. 408.89 lakh since the date of last inspection, i.e. March 31, 2011. The bank had raised Rs. 303.43 lakh of fresh share money during the year under review. During the yer 34 members contributed more than Rs. 1.00 lakh each. The major individual contributors during the year included Sunita Bhati, wife of Raj Singh Bhati, Chairman of the bank (Rs. 45.00 Lakh) ; Anita Bhati, Director (Rs. 35.00 Lakh); Raj Singh Bhati, Chairman (Rs. 30.00 Lakh); Udaiveer Singh, Director (Rs. 15.00 Lakh) etc. The source of the contribution was not ascertainable. The bank was charging 10% share money from the borrower as against the norm of 2.5% & 5% from the secured and unsecured borrowers respectively. The bank had not prepared the share certificates of the members ice February 11,2007, further, 47 Share certificates issued during January 2, 2002 and April 5, 2002 had not been handed over / dispatched to the members. Share certificate bearing number from 5301 to 7200 issued between July 4, 2005 and February, 11 2007 prepared with signature of only one Director (signature of the Secretary and Chairman not appended) are also yet to be delivered to the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d amount of Rs. 1530.55 lacs has been diverted which if interpreted with respect to the provision of the Income-tax Act, 1961, renders the cost of obtaining these funds of Rs. 1530.55 Lacs as nor - business expenditure and hence should be disallowed U/s 37 of the Income Tax Act, 1961. The Bank has deposits of Rs. 138,06,37,294,7/- during the year and direct the indirect expenses on these deposits in Rs. 19,60,08,132/-. If we take this proportion, the cost of diverted fund of Rs. 15,30,55,000/- comes to Rs. 2,17,95,628,5/-. You are requested to show-cause why this proportionate cost of fund should not be disallowed for being an expenses not related to business. (C.1) The assessee filed appeal before the Ld. CIT(A). Vide impugned appellate order dated 31.03.2017, the Ld. CIT(A) dismissed the assessee's appeal. The relevant portion of the order of the Ld. CIT(A) is reproduced as under: "3. Aggrieved by the order of the Assessing Officer (hereinafter 'AO') the appellant has filed this appeal taking the following grounds of appeal:- 3.1 Grounds of appeal: 1. That the learned Dy. Commissioner of income Tax, Circle - I, Ghaziabad has erred in law and on facts in making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as fixed for hearing on number of times, the details of which are given below, but no compliance was made to any of the notices issued. All these notices were sent to the appellant through Speed Post on the address given in the appeal petition i.e. Form No. 35: SI. No. Date of notice Date fixed for hearing Remark 1. 06.04.2016 25.04.2016 None Attended 2. 27.04.2016 05.05.2016 An application filed for adjournment on the ground that counsel is out of station and the case fixed for hearing on 3. 18.05.2016 An application filed for adjournment for time to file written submission and the case fixed for hearing on 09.06.2016 4 17.03.2017 28.03.2017 An application filed for adjournment counsel out of station adjourned to 30.03.2017 5 30.03.2017 not attended 5. From the above it is clear that despite several opportunities none appeared on behalf of the appellant for hearing only applications for adjournment have been filed before the undersigned. Hence the appeal filed by the appellant is liable to be dismissed for non-prosecution. In may above view, I find support from the following decision:- (i) In the case of CIT Vs. B.N. Bhattachargee & A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by AO are upheld and accordingly appellant's grounds of appeal are dismissed." (D) This present appeal has been filed by the assessee against the aforesaid impugned appellate order dated 31.03.2017 of the Ld. CIT(A). At the time of hearing, Revenue was represented by Ms. Rakhi Vimal, the learned Senior Departmental Representative (in short 'Ld. Sr. DR'). However, as mentioned earlier, none was present from the assessee's side. In the absence of any representation from assessee's side, at the time of hearing before us, we heard the Ld. Sr. DR. The Ld. Sr. DR relied upon the order of the Assessing Officer and the aforesaid impugned order dated 31.03.2017 of the Ld. CIT(A). After perusal of the order of the AO and the aforesaid impugned order dated 31.03.2017 of the Ld. CIT(A), we find that the Ld. CIT(A) has passed speaking order on merits. Relevant portion of the impugned appellate order of the Ld. CIT(A) has already been reproduced in foregoing paragraph (C.1) of this order. We find that the Ld. CIT(A) has given detailed reasons for his decision on merits in the aforesaid impugned appellate order dated 31.03.2017 of Ld. CIT(A). During appellate proceedings in Income Tax Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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