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Income Tax Appellate Tribunal, KOLKATA BENCH ‘C’, KOLKATA
Before: Dr. Manish Borad & Shri Sonjoy Sarma]
ORDER
Per Sonjoy Sarma, JM:
The present appeal has been preferred by the revenue against the order of Ld. CIT(A)-2, Kolkata (hereinafter referred to as the “ld. CIT(A)” dated 21.02.2019 for A.Y. 2012-13. The revenue has raised the following grounds of appeal: “i. That on the facts and circumstances of the case, the ld. CIT(A) erred in deleting the additions of Rs. 1,69,83,000/- under the head share capital raised on the basis evidence produced before the ld. CIT(A) without giving any opportunity to the AO under Rule 46A of the I.T. Rules.
ii. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in accepting the views that provision of section 68 of the I.T. Act is not applicable in this case though the assessee company raised share capital during the year under consideration and allotted to the various parties which was not verified and examined during the course of assessment proceedings. The identity, genuineness and credit worthiness of the share holders remained unexplained. iii. The appellant craves, leave to adduce addition and/or supplementary ground/grounds and to amend and/or alter the ground/grounds any time before or at the time of hearing of the appeal.”
At the outset, it is noted that there is a delay of 4 days on the part of the revenue in filing this appeal before the Tribunal. In this regard, the Revenue has filed an application seeking condonation of the said delay and keeping in view the reasons given therein, we are satisfied that there is a sufficient cause for the delay of 4 days on M/s. Etibar Tracom Pvt. Ltd. the part of the Revenue in filing this appeal before the Tribunal and delay in filing the instant appeal is accordingly condoned.
When the case was called for none appeared on behalf of the assessee. On perusal of the file, it shows that number of notices of hearing were sent including RPAD. The assessee has not filed any paper book or written submission in such circumstances, it seems that assessee is not interested to contest this appeal. We, therefore, deem it proper to adjudicate the appeal on the merits ex-parte qua on the basis of material available on record with the assistance of ld. DR.
Brief facts of the case are that the assessee is a private limited company. The source of income is stated to be from investment in shares and securities. Assessee filed its return for A.Y. 2012-13 relevant to F.Y. 2011-12 on 11.03.2013 showing total income at Nil. The return of the assessee was duly processed u/s 143(1) of the Act. The case of the assessee was selected for scrutiny followed by serving of statutory notice u/s 143(2) and 142(1) upon the assessee. But the assessee has failed to comply with any of the said notices. Since the assessee has failed to appear before the AO, the AO had issued notice u/s 131 of the Act upon the directors of the assessee company for their personal appearance. But in compliance of such notice, the directors of the assessee company too failed to comply with the same. In such circumstances, the AO has no other alternative but to frame the assessment u/s 144 of the Act. The AO noticed that from the balance sheet, the assessee has received share application money of Rs. 1,69,83,000/- during the assessment year in question. Since the assessee has completely failed to provide any details/documents in support of the said share application money and justify the basis of such huge share premium and share capital. Therefore, the ld. AO proceeded to frame the assessment u/s 144 of the Act on the basis of material available before him. The ld. AO was not satisfied with the identity, creditworthiness and genuineness of the said transaction of share capital and share premium of Rs. 1,69,83,000/- received by the assessee company from the alleged subscribers/creditors. He accordingly completed / passed the assessment u/s M/s. Etibar Tracom Pvt. Ltd. 144 of the Act making addition u/s 68 of the Act for unexplained cash credit of Rs. 1,69,83,000/-. Further he disallowed expenditure which has no nexus with the earning of Rs. 2,07,008/- in the hands of assessee and assessed the income at Rs. 1,69,83,000/-.
Aggrieved by the above order, the assessee preferred an appeal before the ld. CIT(A) challenging the impugned addition made by the ld. CIT(A). The ld. CIT(A) partly allowed the appeal of the assessee and granted certain relief to the assessee. The relevant portion of aforesaid impugned order dated 21.02.2019 passed by the ld. CIT(A) is reproduced hereunder:
“I find that the assessee company had not received any share capital during the year under assessment. The share capital of the assessee was received in an earlier year and allotted during the year. I also find form the balance sheet filed during the appellate proceeding that there was share application money of Rs 1,69,83,000/- since 2007-08 and there was no change in the share application money, the share were allotted during the year under consideration. It is evidence from the balance sheet of the year 2010-11 that the amount of share application money is same in both the years i.e. year ending 2010 and 2011. It is also evidence from the balance sheet of year under consideration i.e. 2011-12 that the amount of share application money has been transferred to share capital and reserve and surplus accounts. The Copy of the Audited accounts of the company for the financial year ended 31st March, 2010, 31st March, 2011 and year ended 31st March 2012 reveals the same. Thus, the records available with the AO at the time of assessment proceedings, clearly show that no share capital was received by the assessee during the financial year under assessment i.e. 2011-12. Further, from the other records available with the Assessing Officer, like the Income tax return for the Assessment year 2011-12, it is clear that no share application was received in earlier years and was allotted during the year As such the provisions of Section 68 are not applicable in the instant case. Thus from the above it is apparent the assessing officer erred in application of Section 68. The Assessing officer failed to appreciate facts and circumstances of the case in proper perspective and came to wrong conclusion and made various allegations and insinuations against the appellant for receiving share premium without any cogent reasons and legal support. Hence the addition made by the Assessing Officer needs to be deleted.”
M/s. Etibar Tracom Pvt. Ltd.
The ld. DR placed strong reliance on the order passed by the ld. AO. He further drew our attention to the fact that the ld. CIT(A) had collected the material and evidences behind the back to the Assessing Officer and had deleted the aforesaid addition of Rs. 1,69,83,000/- without sharing the aforesaid material and evidences without giving any opportunity to the ld. AO to rebut the same. The ld. DR further submitted that the ld. Assessing Officer should have given an opportunity to examine and rebut the material and evidences concluded by the ld. CIT(A) and therefore, the ld. DR submitted that the issue in dispute should be restored to the file of ld. AO for passing a fresh order. On perusal of the aforesaid impugned order dated 21.02.2019, we find that the ld. CIT(A) had indeed collected material and evidences during the appellate proceeding. There is no mention in the impugned order dated 21.02.2019 of the ld. CIT(A) that the material collected by him details of which are included in the aforesaid impugned order passed by the ld. CIT(A), were shared with the assessing officer. There is also no mention in the impugned order that any opportunity was given to the assessing officer to examine this material and evidences and to rebut the same. It is correct that under Rule 46A(4) of Income Tax Rules, 1962, the ld. CIT(A) has powers to direct the production of any documents or the examination of any witnesses. However where any materials / evidences were collected by the ld. CIT(A) in exercise of power under Rule 46A(4) of the I.T. rules, the same should be shared by ld. CIT(A) with the assessing officer and the assessing officer should be given reasonable opportunity to examine the same. In the instant case the AO is a interested party in the appellate proceeding before the ld. CIT(A) and in accordance with all settled principles of natural justice, ld. CIT(A) required to confront the AO if any additional evidences / materials submitted or produced by the assessee were going to be used by the ld. CIT(A) for granting relief to the assessee. If any additional evidences or materials gathered by the ld. CIT(A) at the back of the AO and used by the ld. CIT(A) to grant relief to the assessee. This is violation of principles of natural justice. When the ld. CIT(A) accepted the additional evidences / materials under Rule 46A(4) of the I.T. Rules, then reasonable opportunity must be provided by the ld. CIT(A) to the Assessing Officer to examine such additional evidences/materials and to produce any M/s. Etibar Tracom Pvt. Ltd. evidences for documents in rebuttal of additional evidences/materials submitted or produced by the assessee before the ld. CIT(A).
In view of foregoing reasons, we agree with submission of the ld. DR that the issue in dispute should be set aside to the file of AO for fresh order. Accordingly, we set aside the impugned order dated 21.02.2019 passed by the ld. CIT(A) and restored the instant issue in dispute regarding the aforesaid addition of Rs. 1,69,83,000/- to the file of assessing officer with the direction to pass fresh order on this issue in accordance with law and in the light of material available on record after providing reasonable opportunity of being heard to the assessee.
In the result, the appeal of the revenue is allowed for statistical purposes.