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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai
The assessee has filed this appeal challenging the order dated 22-11- 2019 passed by Ld CIT(A)-20, Mumbai and it relates to the assessment year 2006-07. The assessee is challenging the order passed by Ld CIT(A) on the following issues:-
(a) Validity of reopening of assessment u/s 147 of the Act. (b) Addition of Rs.4,97,000/- made u/s 68 of the Act.
The facts relating to the case are stated in brief. The assessee filed its return of income for the year under consideration declaring loss of Rs.39,982/- The said return of income was processed u/s 143(1) of the Act. Subsequently, the AO reopened the assessment by issuing notice u/s 148 on 26.03.2013. The AO has mentioned the reasons for reopening as under in the assessment order:- “The information forwarded by the DCIT (Central)-VII, Kolkatta that the assessee has taken accommodation entries from certain companies. From 2 Goldstone Trading Company Pvt. Ltd.
the documents submitted alongwith the forwarding letter, it was found that the assessee’s share premium account was increased by Rs.4,34,500/- compared to figure as on 31.3.2005. Further it is also observed that the assessee’s paid up in respect of equity shares has also increased by Rs.62,500/- during the year. Thus, income chargeable to tax of Rs.4,97,000/- (Rs.4,34,500 + 62,500) has escaped assessment for AY 2006- 07 by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the said assessment year. Accordingly necessary approval u/s 151(1) of the I T Act has been taken for issue of notice u/s 148 of the I T Act, 1961.”
The assessee did not co-operate before the AO and hence the AO completed the assessment to the best of his judgement u/s 144 of the Act by assessing the above said amount of Rs.4,97,000/-.
Before Ld CIT(A), the assessee challenged the addition on merits. It was noticed that the assessee has issued shares to M/s Clix Securities P Ltd and furnished details relating to the same. It was submitted that these details could not be furnished before the AO for want of co-ordination between the CA and the client. Hence the Ld CIT(A) called for a remand report from the AO. During the remand proceedings, the AO issued notice u/s 133(6) of the Act to M/s Clix Securities P Ltd, but he did not receive any reply. Hence the AO stood by the addition made by him.
The remand report of the AO was communicated to the assessee by Ld CIT(A). However, the assessee did not furnish any comments on the remand report and hence the Ld CIT(A) confirmed the addition. Aggrieved, the assessee is in appeal before the Tribunal.
Before the Tribunal, the assessee has raised the legal ground challenging the validity of reassessment proceedings. The Ld A.R submitted that the assessee does not have copy of reasons recorded by the AO. He submitted that the AO, however, has incorporated the reasons for reopening in the assessment order. A perusal of the same would show that the said reasons are vague without mentioning the details of share applicant. Further the AO has not pointed out the income, which has escaped the assessment. He submitted
3 Goldstone Trading Company Pvt. Ltd. that the mere receipt of share capital & share premium, per se, would not lead to believe that there was escapement of income. Considering the contentions of Ld AR, the bench directed Ld D.R on 01st of September, 2022 to get a report from AO along with the copy of original “reasons recorded”. However, it is noticed that the assessing officer has not furnished report by the next date of hearing, i.e., on 04th October, 2022. On that date, the Ld D.R agreed to furnish copy of reasons recorded before 12.10.2022.
However, till date the assessing officer’s report has not been furnished to the Tribunal. I have noticed earlier that the assessee has raised this legal issue for the first time before the Tribunal, i.e., the assessee did not ask for reasons before the AO during the course of assessment proceedings and also did not raise this legal issue before Ld CIT(A) also. In the absence of report of AO and the copy of original reasons recorded, it would not be possible for us to adjudicate this issue. Accordingly, in the facts and circumstances of the case, I am of the view that this legal issue may be restored to the file of the AO so that he could furnish copy of reasons for reopening to the assessee. If required, the assessee may object to the reasons. After disposing of objections, the AO may pass the assessment order afresh, if it is considered necessary to do so.
Accordingly, I set aside the order passed by Ld CIT(A) and restore all the issues to the file of AO. The assessee should be provided with adequate opportunity of being heard.