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Before: Shri V. Durga Rao & Shri G. Manjunatha
O R D E R
PER V. DURGA RAO, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 1, Chennai dated 29.03.2019 relevant to the assessment year 2012-13. The assessee has raised following grounds of appeal: “1. The order of the Ld. CIT(A), is contrary to law, facts and circumstances of the case to the extent prejudicial to the interests of the appellant and is opposed to the principles of natural justice.
2. The Ld. CIT(A) has grossly erred in law in not adjudicating all the grounds of appeal taken before him and passing a non-speaking order which is against the law, so the order passed requires to be quashed.
3. The Ld.CIT(A) has erred in law in upholding the addition of Rs.58,27,800/- made by the Assessing Officer without adjudicating the ground no's 1 to 4 of Appeal wherein the objections against the initiation of re-assessment proceedings was raised.
4. The Id. CIT(A) erred in not treating the re-assessment proceeding u/s 143(3) r.w.s.147 of the Income Tax Act, 1961 as invalid, bad in law, unjust and contrary to the facts and law. 5. The Id. CIT(A) erred in sustaining the addition of Rs.58,27,800/- being notional interest calculated at the rate of 12% on the share application money pending for allotment for the reason that the same is pending for long time. 6. The Ld.CIT(A) ought to have appreciated the fact that the appellant company has made investment in the subsidiary company, M/s.Bharat Medicare Private Limited to the extent ofRs.4,85,65,006/- out of its own funds and not out of borrowed funds. 7. The Ld.CIT(A) failed to appreciate the fact that the subsidiary company is also engaged in the same line of business carried on by the appellant and the said subsidiary company has utilized the money received from the appellant for the purpose of business. Therefore there exists business expediency in the investment. 8. The appellant objects to the levy of interest u/s.234B 9. For these grounds and such other grounds that may be urged before or during the hearing of the appeal it is most humbly prayed that the Hon'ble Tribunal may be pleased to: a) Direct the Assessing Officer to delete addition of Rs.58,27,800/- being notional interest and b) Pass such other orders as the Hon'ble Tribunal may deem fit.” 2. Brief facts of the case are that the order of assessment under section 143(3) of the Income Tax Act, 1961 [“Act” in short] was completed on 27.04.2015 by making various additions. Subsequently, the assessment order under section 143(3) of the Act was reopened for the reason that an amount of ₹.4,85,65,006/- on account of share application money was pending for a long in the hands of the assessee. During the course of reopening proceedings, the interest on pending share capital money calculated at the nominal rate of 12% was assessed to tax in the absence of any reasoning/reply from the assessee. Therefore, the amount of ₹.58,27,800/- was disallowed and brought to tax. On appeal, the ld. CIT(A) confirmed the addition made by the Assessing Officer.
When the appeal was taken up for hearing, the ld. Counsel for the assessee has submitted that the assessee could not file the details before the Assessing Officer due to the circumstances beyond its control and submitted that one more opportunity may be granted to substantiated its case before the Assessing Officer.
On the other hand, the ld. DR strongly supported the order passed by the authorities below.
We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, the assessee has not filed any reasons for pending share capital money either before the Assessing Officer or before the ld. CIT(A).
However, considering the prayer of the ld. Counsel for the assessee to afford one more opportunity to substantiate its case, we are of the opinion that the assessee shall be given an opportunity to substantiate its case before the Assessing Officer. In view of the above facts and circumstances, we set aside the order of the ld. CIT(A) and remit the matter back to the file of the Assessing Officer to decide the issue afresh in accordance with law by affording an opportunity of being heard to the assessee to substantiate its case and the assessee is also directed to furnish complete details before the Assessing Officer for verification and deciding the issue.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on 22nd March, 2022 at Chennai.