DCIT CC 1(1), MUMBAI, MUMBAI vs. EDELWEISS TOKIO LIFE INSURANCE COMPANY LTD, KURLA, MUMBAI

Brief facts of the case are that during the year under consideration, it was noticed by the ld.AO that the assessee had made transaction of Rs. 1,02,23,236/- with one M/s One Point One Solutions Pvt. Ltd (henceforth „OPOS‟). The assessee has availed certain service from it. In this case, an information was received from CGST Belapur that M/s OPOS was engaged in issuing/generating/providing fake/bogus invoices for passing of fraudulent input tax credit without supply of goods. In the course of assessment proceedings, the assessee was asked to detail of services

In the subsequent appeal before the ld.CIT(A), the assessee repeated the same contentions and also claimed that the disallowance was made without affording cross examination of the parties concerned. It was submitted that the assessee is a licensed Life Insurance Company registered in India, offering various Life Insurance Products/Policies. During appellate proceedings, it furnished certain documents related to services received from M/s. OPOS i.e. copies of ledger, invoices, GSTR2A downloaded from GST portal, copy of bank statement, copy of Master Service Agreement dated 18.09.2017 entered with M/s. OPOS, Statement of Income, Balances Sheet, Profit and Loss A/c. and Tax Audit Report. All the above documents were claimed to have been also submitted during the assessment proceedings before the AO, however, he has not accepted the same. The Ld. CIT(A) observed that the AO has made the addition as per information of Investigation Wing that M/s OPS is involved in availing fake input tax credits without any supply of service. This may be a good reason for making further investigation but the AO did not make any further investigation and merely completed the assessment on suspicion. Once the appellant has brought on record the details of supporting documents i.e. details of purchases made/services received, ledger account, payments made by account payee cheque, it was incumbent on the AO to have verified the payment details from the bank of the appellant and also from the bank of the P a g e | 5 A.Y. 2018-19 Edelweiss Tokio Life Insurance Company Ltd. suppliers to verify. No such exercise has been done. The AO also did not cross examine the supplier. Further, no adverse comment and no defect had been pointed out regarding the quantitative details and purchase-sales details provided by the appellant. The sales figure had not been disturbed. The A.O. completely disregarded these evidences and resorted to disallowances of expenditure. It was noted by the ld.CIT(A) that appellant during assessment proceedings as well as appellate proceedings submitted the linked documents in relation to services rendered from M/s. OPSO documents proved that the appellant has availed of genuine services from the said vendor. It is further stated that appellant's objection was that the AO has not granted an opportunity for cross examination of concerned persons of OPS. Ltd. In this regard, he stated that similar issue was covered by Hon'ble Apex Court in the case of M/s. Andaman Timber Industries Vs. CCE dated 02.09.2015 wherein the appellant raised a plea that it was not allowed to cross-examine the dealers whose statements were relied upon by the Adjudicating Authority in passing the order and Hon'ble Court has set aside the said impugned order and allowed the plea of the appellant. He also relied on order of Hon'ble ITAT, Jaipur Bench which deleted the addition made in violation of principles of natural justice in the case of Smt. Sunita Dhadda vs. The DCIT [ITA No. 751/JP/2011], which has been also upheld by Hon'ble Supreme Court (CIT vs. Smt. Sunita Dhadda)

Before us, the ld.DR has contested the deletion of the impugned addition by the CIT(A) claiming that there was sufficient basis for making the disallowance. He relied on the findings of the AO as per the assessment order.

Per contra, the ld. Counsel has vehemently supported the appellate order. It is argued that the allegation stemmed from an P a g e | 7 A.Y. 2018-19 Edelweiss Tokio Life Insurance Company Ltd. Investigation carried out by the CGST, Belapur, in the case of M/s. OPOS. wherein it was alleged that the said company was engaged in providing non-genuine services to various persons/ entities. The AO in the assessment order referred to the GST investigation of the said party allegedly claiming some fake input tax credits with another party, however there is no mention about assessee claim vis a vis GST investigation. Thus, the whole reassessment is based on unverified information without application of mind. Merely some wrong input credit claim of third party would not under any circumstances lead to conclusion that the services availed of by the assessee would be termed as non-genuine.

1 It is further contented that without providing any evidence for the allegation levied, not providing any cross-examination of said persons related to M/s. OPOS, and without even going into the merits of the services availed and evidence on record, the AO proceeded to make the said addition merely on whims and without any concrete or even circumstantial evidence. The stated GST credit is available and in the present case been availed of by the assessee in it return. Assessee GST returns are accepted. The party OPOS is still rendering services to assessee company. The said party is listed on stock exchange, registered with GST dept. filing GST return, MCA site shows company position, latest annual report shared on MCA site proves beyond doubt that the AO

2In this regard, the ld. Counsel has also cited certain judicial decisions in support of the above arguments. In the case of H.R. Mehta Vs. ACIT [2016] 387 ITR 561(Bombay) [30-06-2016]where assessee had taken loan from one and Assessing Officer added loan. amount in income of assessee under section 68 on basis that no confirmation letter had been obtained from, since loan was advanced and repaid vide account payee cheques, Assessing Officer should have provided assessee material used against him apart from providing him an opportunity to cross examine deponents whose statements were relied upon. Pr. CIT Vs. Kishore Kumar Mohapatra [2024] 162 taxmann.com 4 (Orissa) (para 3)where Assessing Officer denied exemption claimed by assessee under section 10(38) on long-term capital gain on sale of shares on basis of statement of entry operators recorded on various dates in some other proceedings not connected with assessee and no opportunity to cross- examine so-called entry providers was given to assessee thereby violating

4 It is concluded that in view of the factual and legal submission, Assessee submits that GST Investigation does not reveal any finding against or nexus with services availed' by assessee, hence allegation of department is arbitrary. GST investigation referred in Asst. order are not pertaining to the assessee or its services. Therefore addition rightly deleted by CIT(A). Dept appeal may be dismissed.

We have duly considered the rival submissions. It is worth mentioning here that the CIT(A) allowed the appeal inter alia with the remarks that though it was a good case for further investigation, the AO failed to do. He also held that the AO did not allow cross examination.

1 It is a settled law that the CIT(A) has been constituted as a revising authority against the decisions of the AO, a revising authority not in the narrow sense of revision what is the subject matter of the appeal, not in the sense of revising those matter about which the assessee makes a grievance, but a revising authority in the sense that once the appeal is before him he can revise not only the ultimate computation arrived at by the AO but he can revise every process which led to the ultimate computation or assessment. An appeal is a continuation of the process of assessment, and an assessment is but another name for adjustment of the tax liability to accord with the taxable event in the particular taxpayer‟s case.

2In a tax appeal, the appellate authority is very much committed to the assessment. The appellate authority can itself enter the arena of assessment, either by pursuing further investigation or causing further

3 Once an appeal is pending before the CITA, the Commissioner is given the full right to get the order of the AO revised in any manner he thinks necessary in the interest of public revenue. Powers of the Commissioner (Appeals) are narrated as below:-

4 A fine reading of the above powers in the light of various judicial pronouncements, we can exemplify the powers of the CIT(A). The Legislature has conferred very wide powers upon the Appellate Commissioner once an appeal is preferred to him by the assessee. An appeal is only a rehearing or a retrial. In the absence of any statutory inhibitions or restrictions, CIT(A) has precisely the same powers, exercisable or in the same manner and to the same extent, as the AO has, in the first instance. The powers of the CIT(A) are in the nature of reassessment and once an assessment order is brought before CIT(A), his power is not restricted to examining only those aspects of the assessment about which the assessee makes a grievance but his powers range over the whole assessment to correct the AO not only with regard to a matter raised by the assessee in appeal but also with regard to any other matter which has been considered by the AO and determined in the course of assessment.

5 Under sec 250(4)) of the Income-tax Act, the CITA is competent to make such further enquiry as he thinks fit or cause further enquiries to be made by the AO, under remand. He is further empowered to make such fresh assessment and determine, where necessary, the amount of tax payable on the basis of such fresh assessment. If an income is the subject-

6 In the landmark case of CIT v. Kanpur Coal Syndicate in 53 ITR 225, hon‟ble Supreme Court held that AAC has plenary powers in disposing of an appeal. The scope of his power is co-terminus with that of the ITO. He can do what the ITO can do and also direct him to do what he has failed to do. If the ITO has the option to assess one or other of the entities in the alternative, the AAC can direct him to do what the ITO should have done in the circumstances of a case. In cases of KapoorchandSrimal vs CIT(1981) 131 ITR 451,460(SC)/Jute P a g e | 14 A.Y. 2018-19 Edelweiss Tokio Life Insurance Company Ltd. opportunity of being heard to the assessee in accordance with principles of natural justice in the set aside remand proceedings for de novo adjudication of the assessee filed before him.

In the result, the appeal is allowed for statistical purposes.