I.T.O.,WARD-1(2), KOLKATA vs. M/S LEADING VANIJYA PVT. LTD., KOLKATA

This is an appeal preferred by the revenue against the order of Ld. CIT(A)-1, Kolkata dated 20-03-2019 for the assessment year 2012-13.

of revenue is against the action of the Ld. CIT(A) in deleting the addition of Rs.3.23 cr. made by AO u/s. 68 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”).

4. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the AO has added to the total income of the assessee of Rs.3.23 cr. u/s. 68 of the Act primarily due to non-appearance of the shareholders and directors before him on 24.02.2015. The AO thereafter drew the conclusion after going through the submission and documents produced before him that the share subscribers must be dubious due to which they preferred not to attend before him. We note that AO gave only one notice to the share subscribers and thereafter have drawn the adverse inference against the assessee without issuing any other notices. On appeal, the Ld. CIT(A) sought a remand report from M/s. Leading Vanijya Pvt. Ltd. AY- 2012-13 the AO on 07.01.2019 and gave AO time till 07.02.2019 to file report. However, according to Ld. CIT(A), the AO did not bother to file the remand report called for by him in respect of the submission of Ld. AR filed before him. So the Ld. CIT(A) concluded “he has no option but to accept the position taken by the assessee” ; and has allowed the appeal of the assessee without spelling out the reasons as to how he finds the assessee was able to prove the identity, creditworthiness and genuineness of the share transaction. We note that the impugned Ld. CIT(A)’s order is per-se non-speaking and passed without application of mind, therefore, it has to be set aside. However, we note that the AO has given only one opportunity to the share subscribing companies to produce their directors and since they failed to produce them the AO drew adverse view against the assessee. According to Ld. AR the directors were out of station, so they could not appear and given an opportunity they will be produced. Since we note that during the assessment stage the AO has not given proper opportunity to assessee and in such scenario then the matter needs to be remanded back to AO for fresh adjudication. Coming to such a decision, we rely on the Hon’ble Supreme Court decision in Tin Box Company Vs. CIT (2001) 249 ITR 216 (SC) wherein it was held that if the assessee did not get proper opportunity before AO, then the matter needs to be remanded back to AO. In the said judgment, the Hon’ble Apex Court has held as under (Head Note): “Held, reversing the decision of the High Court, that once the Tribunal found that the Income-tax Officer had not given to the assessee proper opportunity of being heard, that the assessee could have placed the evidence before the appellate authority or before the Tribunal was really of no consequence for it was the assessment order that counted: that order had to be made after the assessee had been given a reasonable opportunity of being heard.”

Therefore, in view of the above facts, we set aside the order of the Ld. CIT(A) and restore the matter back to the file of the AO for fresh adjudication after affording reasonable opportunity of being heard to the assessee. Therefore, appeal of revenue is allowed for statistical purposes.