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Facts
The Revenue appealed against the CIT(A)'s deletion of an addition of Rs. 14.29 crores made by the AO as unexplained cash credit under section 68 of the Act. The AO claimed non-receipt of replies to section 133(6) notices and non-existence of investors, while the CIT(A) deleted the addition stating that replies were received and the AO failed to provide evidence of field inquiries.
Held
The Tribunal observed that the CIT(A) simply believed the assessee's submissions without verifying the facts or conducting independent inquiries. Therefore, the Tribunal restored the issue back to the CIT(A) with a direction to conduct necessary inquiries regarding the 15 parties and decide the matter afresh after affording the assessee a proper opportunity to be heard.
Key Issues
Whether the CIT(A) was justified in deleting the addition under Section 68 for unexplained cash credit without verifying the responses from investors or conducting independent inquiries.
Sections Cited
Section 68, Section 133(6), Section 254(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘C’: NEW DELHI
Before: SHRI N.K. BILLAIYA & SHRI YOGESH KUMAR US
This appeal by the Revenue is preferred against the order of the CIT(A)-23, New Delhi, dated 26.05.2017, pertaining to A.Y. 2013-14.
The solitary grievance of the Revenue is that the CIT(A) erred in deleting the addition of Rs. 14,29,00,000/- made by the AO on account of unexplained cash credit u/s 68 of the Act.
ITA No.-4858/Del/2017 Gaurisuta Infrastructure P. Ltd. 3. None appeared on behalf of the assessee inspite of several notices.
The DR was asked to serve the notice through the officer and inspite of the service of notice through DR, the assessee chose not to respond. Finally ITO, ward 10(1), New Delhi sent a report in respect of proof of service. The said report is read as under:
ITA No.-4858/Del/2017 Gaurisuta Infrastructure P. Ltd.
ITA No.-4858/Del/2017 Gaurisuta Infrastructure P. Ltd. 4. We decided to proceed it ex-parte. The DR was heard at length. The case records were carefully perused. The quarrel is in respect of the addition of Rs. 14.29 crores on account of unexplained share application money treated as cash credit u/s 68 of the Act.
The underlying facts as emanating from the assessment order show that the assessee has shown share application money pending allotment at Rs. 443,48,98,930/-. For ascertaining the credit-worthiness of the parties from whom the assessee company has received share application money and the genuineness of the transaction. The AO issued notice u/s 133(6) of the Act. The details of notices issued and the response is tabulated below:
ITA No.-4858/Del/2017 Gaurisuta Infrastructure P. Ltd. ITA No.-4858/Del/2017 Gaurisuta Infrastructure P. Ltd. ITA No.-4858/Del/2017 Gaurisuta Infrastructure P. Ltd.
Inspite of several opportunities the assessee could not furnish documentary evidences to discharge the initial burden cast upon it by the provision of section 68 of the Act. The AO concluded by holding that first, the investors were not found to be existent and secondly, During the course Page 7 of 10
ITA No.-4858/Del/2017 Gaurisuta Infrastructure P. Ltd. of assessment proceedings, the assessee is required to produce the main directors / controlling persons with supportive documentary evidence.
However, the assessee failed to discharge the onus cast upon it. The AO made addition of Rs. 14.29 crores.
The assessee challenged the addition before the CIT(A) and reiterated its claim of having discharged the initial burden cast upon it. After considering the facts and submissions, the CIT(A) observed that the AO is factually incorrect as the replies from the impugned 15 parties were duly received in his office much before the assessment was made. The CIT(A) further observed that though the AO has mentioned that field inquiries were conducted but no evidence has been brought on record and the CIT(A) went on to delete the impugned addition.
We have given a thoughtful consideration to the findings of the CIT(A). It is a settled proposition of law that powers of CIT(A) are co- terminus to that of the AO. This means what the AO can do the CIT(A) can also do. If the CIT(A) was of the opinion that the AO has not made any field inquiry then nothing prevented CIT(A) to conduct the field inquiry on his own. Further, when the AO has categorically mentioned that he has not received any reply from the impugned 15 parties then the CIT(A) ought to Page 8 of 10
ITA No.-4858/Del/2017 Gaurisuta Infrastructure P. Ltd. have verified from the assessment records whether any such reply was received or not. It appears that the CIT(A) has simply believed in the submission of the assessee and deleted the addition.
In the interest of justice and fair play we deem it fit to restore the issue to the files of the CIT(A). The CIT(A) is directed to make necessary inquiries in respect of the 15 parties under dispute and decide the issue afresh after affording a reasonable and adequate opportunity of being heard to the assessee.
In the result, appeal of the Revenue is allowed for statistical purpose.
Order pronounced in the Open Court on 02.01.2024