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Income Tax Appellate Tribunal, DELHI BENCH “SMC”, NEW DELHI
Before: SHRI R. K. PANDA
PAN : AAACC0332L (Appellant) (Respondent) : Shri Amit Jain, Sr.DR Department by Assessee by : Shri Suresh Kr. Gupta, CA Date of hearing : 26-10-2017 Date of pronouncement : 08-11-2017 O R D E R
PER R. K. PANDA, AM :
This appeal filed by the assessee is directed against the order dated 06.09.2013 of CIT(A)-1, New Delhi relating to assessment year 2003-04.
Facts of the case, in brief, are that the assessee is a company and filed its original return of income on 30.11.2006 declaring loss of Rs.7,850/-. The assessment was completed u/s 143(3) on 17th December, 2008 accepting the returned loss. Subsequently, on the basis of receipt of report of the Directorate of Income Tax (Investigation), New Delhi that the assessee has received a sum of Rs.41,00,000/- from various accommodation entries providers, the Assessing Officer reopened the assessment by issuing notice u/s 148. In response to the said notice, the assessee filed its return of income on 19.07.2010 declaring loss of Rs.10,658/-. The Assessing Officer confronted the various entries appearing in the bank account of the assessee. In respect of the accommodation entry providers on various dates to the tune of Rs.41,00,000/-, he asked the assessee to furnish complete details of share application money giving name, address and amount received and also establish the identity of the persons from whom the share application money was received. He also asked the assessee to substantiate their creditworthiness and the genuineness of the transaction.
The assessee filed undated photocopies of the confirmations in respect of the share application money received. The assessee also filed in some of the cases a print out of the master data downloaded from the website which according to the Assessing Officer can be downloaded by any person.
However, despite being confronted to produce the parties i.e. the Principal Officers of the companies from whom the assessee has received share application money, the assessee failed to produce these persons. In view of the above, rejecting the various explanations given by the assessee and invoking the provisions of section 68, the Assessing Officer made addition of Rs.41,00,000/- to the total income of the assessee.
Before the ld. CIT(A), the assessee challenged the validity of the re- assessment proceedings on the ground that the Assessing Officer had not disposed of the objection against the re-assessment proceedings. So far as the merit of the case is concerned, the assessee submitted that the assessee has discharged the onus cast on it by giving full details regarding the identity and creditworthiness of the companies and genuineness of the transactions. So far as the non-production of the persons is concerned, it was argued that after lapse of more than six years from the final investigation to final re-assessment it was not possible to produce those persons. Further, the Assessing Officer had not given sufficient opportunity to the assessee to produce the said persons.
Relying on various decisions, it was argued that the addition made by the Assessing Officer is not justified.
Based on the arguments advanced by the assessee, the ld. CIT(A) deleted the addition of Rs.41,00,000/- made by the Assessing Officer u/s 68 of the I.T.
Act. So far as the legal ground is concerned, ld. CIT(A) dismissed the same for want of non-pursuance by the assessee.
Aggrieved with such order of the ld. CIT(A), the Revenue is in appeal before the Tribunal by raising the following grounds :-
“1. The Commissioner of Income Tax (Appeal) erred in law and on facts in deleting the addition of Rs.41,00,000/- made by the AO as unexplained cash credit u/s 68 of the Act. 2. (a) The order of the CIT(A) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal.”
Ld. counsel for the assessee at the time of hearing filed an application under Rule 27 of the Appellate Tribunal Rules, 1963 by raising the following grounds :-
“1. There was lack of independent application of mind by the AO while initiating action u/s 147 of the Act which draws support from the following facts: a. the reassessment is reopened on the basis of Report of Directorate of Income Tax (Inv) New Delhi alone without having benefit of any material in support of allegation contained therein and the said report indisputably is the basis of the action u/s 147: b. the detail of Bank account is wrongly mentioned in the reason; c. There is no mention in the reason of the material or evidence except the fact of investigation done by the DIT (Inv) New Delhi and there was no material forwarded to the AO to enable AO to apply his mind to the report; d. The AO has not referred in the reason recorded the fact of the return of income filed by the Respondent assessee, amount of income disclosed therein and final accounts enclosed with the return of income; e. The allegation as per the reason recorded is the accommodation entries of Rs 41,00,000/- but the reason does not deal with the exact nature of accommodation entries availed by the assessee although the AO does mention in the reason types of accommodation entries such as gifts, share application money, loans etc through banking channels but what kind of accommodation entries availed by the assessee shows non application of mind in the absence of balance sheet, return of income and the corroborating material.
2. There in non application of the mind by the authority too recording satisfaction u/s 151 (2) of the Act which is evident from the letter dated 23.03.2010 wherein like in the reason recorded there is no mention of the material on the basis of which the satisfaction was recorded by the authority u/s 151.”
He submitted that although the ld. CIT(A) has deleted the addition of Rs.41,00,000/- made by the Assessing Officer u/s 68 of the I.T. Act, however, he has not allowed the relief on the legal ground raised before him. Referring to para 10-11 at page 15-16 of the order of the ld. CIT(A) of the assessee’s submissions which has been reproduced by him at page 15-16 of the order, he drew the attention of the Bench to the arguments advanced before the ld. CIT(A) regarding non-application of mind by the Assessing Officer while invoking provisions of section 147 of the I.T. Act, in absence of any tangible material and has challenged the validity of the re-assessment proceedings.
Since ld. CIT(A) has not adjudicated the legal grounds including the grounds raised as per Rule 27 of the Appellate Tribunal Rules, 1963, ld. counsel for the assessee submitted that he has no objection if the matter is restored to the file of the ld. CIT(A) with a direction to adjudicate the legal grounds.
Ld. DR on the other hand while supporting the order of the Assessing Officer submitted that he has also no objection if the matter is restored to the file of the ld. CIT(A) with a direction to adjudicate the legal grounds.
I have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the ld. CIT(A) and the Paper Book filed on behalf of the assessee. Since the ld. CIT(A) has not adjudicate the legal grounds raised before him as well as the grounds now raised by the assessee under Rule 27 of the Appellate Tribunal Rules, 1963, I deem it proper to restore the legal grounds to the file of the ld. CIT(A) for adjudication. Since the matter is being restored to the file of the ld. CIT(A), the issue on merit is not being decided.
Since no argument was advanced by either side regarding merit of the case. Ld. CIT(A) shall decide the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. I hold and direct accordingly.
In the result, the appeal filed by the Revenue is allowed for statistical purposes. Order pronounced in the open Court on this 08th day of November, 2017.