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Facts
The revenue appealed against two separate orders of the CIT(A). For AY 2013-14, the CIT(A) deleted an addition made by the AO regarding unsecured loans (Rs.1.25 Cr) and share application money (Rs.45 Lakh) from a company deemed a "shell company." For AY 2022-23, the appeal concerned the valuation of shares adopted by the assessee, where the CIT(A) had not found any discrepancies by the AO.
Held
The Tribunal restored the first appeal (AY 2013-14) to the AO for readjudication, emphasizing the need for adequate opportunity to the assessee, production of directors for examination, and allowing cross-examination if adverse evidence is used. The second appeal (AY 2022-23) was restored to the CIT(A) for readjudication to pass a speaking order after granting the assessee adequate opportunity. Both appeals were partly allowed for statistical purposes.
Key Issues
1. Whether additions for unsecured loans and share application money were valid given alleged natural justice violations. 2. Proper valuation of shares and the requirement for a speaking order from the CIT(A).
Sections Cited
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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA
O R D E R Per George Mathan, JM : These are the appeals filed by the revenue against the separate orders passed by the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, both dated 21.01.2025, for the assessment years 2013-2014 & 2022- 2023.
Shri Priyavrat Gupta, AR appeared through online without uniform and consequently both the appeals of the are being are being disposed off without hearing the AR.
Shri P.N.Barnwal, CIT-DR appeared on behalf of the revenue.
A perusal of the assessment order in the case of the assessee for the assessment year 2013-2014, shows that the addition was made in respect of certain unsecured loans taken by the assessee from M/s Bhuvneshwari Vyapaar Pvt. Ltd. The transactions were in respect of Rs.1,25,00,000/- received as unsecured loan and Rs.45,00,000/- as share application money. The Assessing Officer did not accept the contention of the assessee on the ground that M/s Bhuvneshwari Vyapaar Pvt. Ltd. was a shell company existing only on paper. The ld. CIT(A), NFAC has deleted the addition by holding that the Assessing Officer has merely relied upon the information provided by Investigation Wing. The ld. CIT(A) has also mentioned that there is gross violation of principle of natural justice. When there is violation of principle of natural justice, it is an irregularity in the assessment proceedings and it is not an illegality in the assessment proceedings. This being so, the issue in respect of irregularity must be restored to the point of irregularity. In the present case, admittedly, the Assessing Officer has not provided the assessee adequate opportunities to substantiate its case. This being so, in the interest of justice, the issues in this appeal are restored to the file of Assessing Officer for readjudication after granting the assessee adequate opportunity of being heard. The assessee shall produce the directors of M/s Bhuvneshwari Vyapaar Pvt. Ltd. before the Assessing Officer for examination and to substantiate its claim of the short-term loan received and the share application money received. It is noticed that only paper documents have been produced before the Assessing Officer. It is also incumbent upon the assessee to produce the directors before the Assessing Officer for examination. If the Assessing Officer proposes to use any evidence against the assessee or which are detrimental to the assessee, the Assessing Officer shall also provide the assessee an opportunity to rebut the same and if the evidences in respect of any statements are being relied upon, the Assessing Officer