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Facts
The assessee company, Visible Chits (Maharashtra) Pvt Ltd, filed its original return showing NIL income for AY 2012-13. Subsequently, it filed a revised return declaring a total income of Rs. 3,61,930 after receiving a notice under section 148. The Assessing Officer treated unsecured loans from directors as income under section 68 and made an addition of Rs. 28,54,360. This order was upheld by the NFAC (CIT(A)). The assessee has appealed this decision.
Held
The Tribunal noted that the assessee had explained the genuineness of the transactions of loan creditors but the issue of their creditworthiness was in question. The Tribunal found that the CIT(A) had passed an order without considering the submissions made by the assessee, thus violating principles of natural justice. Therefore, the matter was remanded back to the CIT(A) for fresh adjudication.
Key Issues
Whether the CIT(A) erred in passing an order without considering the assessee's submissions and thereby violating principles of natural justice? Whether the unsecured loans from directors could be treated as unexplained cash credits under Section 68 of the Income Tax Act, 1961?
Sections Cited
148, 143(3), 147, 250, 68, 133(6), 156, 234A, 234B, 234C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “H (SMC
Before: SHRI. ANIKESH BANERJEE & SMT. RENU JAUHRI
Instant appeal of the assessee was filed against the order of theLearned National Faceless Appeal Centre (NFAC), Delhi [for brevity, ‘Ld.CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), for Assessment Year 2012-13,date of order04.12.2023. The impugned orderwas emanated from the order of the Ld. Income-tax Officer, Ward-15(3)(2), Mumbai (in brevity, ‘the Ld.AO’)passed under section 143(3)/ 147of the Act, date of order 28/12/2019.
The assessee has taken the following grounds: -
“1 The Appellant is a Company incorporated on 7th January 2010 and filed the Original Return Income for Assessment Year 2012-13 as on 30lh September 2012 showing NIL income. App« received Notice u/s 148 and in response to the notice u/s 148 revised ITR filed as on OB/12/ declaring Total income of Rs, 3,61,930.
2. The Appellant has taken unsecured loan from the Directors of the company and learned AO treating it as Income of the appellant and passed an order u/s 143(3) r.w.s!47 as on 28/12/ Against this Appellant filed an Appeal as on 23/01/2020 which got dismissed by Commissioner of Income Tax (Appeals).
The Learned Commissioner erred in law and in fact by passing the Order u/s 250 of the income Tax Act,1956.
4. The Learned Commissioner has erred in law and in fact by invoking section 68 by assuming Cash credits amounting INR 28.54,360/- into the bank account of the Appellant is belonging to and treated as Unexplained Cash Credits u/s 68 of the Income Tax Act, 1961 even though appellate has mentioned in the submission made to Commissioner of Income-tax in response to notice u/s 250 passed as on 03/10/2023 and response filed as on 08/10/2023 and 30/11/23subsequently, that the money deposited INR 28,53,360 into his Bank Account are Unsecured I received from the directors of the company,
The Learned Commissioner has erred in law and in fact by not taking cognizance of the details submitted by the appellant regarding the deposits amounting INR 28,54,360/- into his savings account which treated as Unexplained Cash Credits by the Commissioner and taxed u/s 61 made addition to the Income for the said period.
The Learned Commissioner has erred in law and in fact by not bothered to cross verify or commence scrutiny of the Directors who gave the loan to the Company just to save timeenergy as per Section 133(6) of the income Tax Act 1961 and assess the said income in appellant’s hand.
Visible Chits (Maharashtra) Pvt Ltd 7. The Learned Commissioner has erred in law and in fact by not giving the opportunity to be h after the submission made by the assessee as on 30* November 2023 and passed order as on 5th December without taking cognizance of the same.
8. The Learned Assessing officer has erred in law and in fact is raising a demand of INR 17,32,590 u/s 156 of the Income-tax Act, 1961.
The Learned Assessment Unit has erredin law andin fact by levying interest u/s 234A, 234B, 234C charged for the defaults made by the appellant as per income Tax Computation form,
The appellant prays for leave to add to, amend, or modify the grounds of appeal.”
3. When the appeal was called for hearing the ld. AR prayed for adjournment of appeal hearing. Considering the issue and ground of the appeal the ld. AR withdrew the adjournment application and proceeded for hearing.
The appeal was filed with a delay of 211 days. The Ld.AR explained the delay. The Ld.DR has not made any objection. So the delay of 211 days is condoned and the appeal is admitted for adjudication.
5. We heard the rival submissions and considered the documents available in the record. The assessment was completed with an addition of Rs.28,54,360/- for addition under section 68 related to unsecured loan due absence of creditworthiness of the loan creditors. The assessee filed an appeal before the ld. CIT(A) by challenging the assessment order. Before the ld. CIT(A) the assessee submitted all the relevant documents on different dates in its favour.
Visible Chits (Maharashtra) Pvt Ltd 6. The ld. AR argued; however, the arguments were primarily focused on the Ground No. 7, pressed by the ld. AR, pertains to the denial of a reasonable opportunity, resulting in a failure to adhere to the principles of natural justice. Upon examination, we find that the ld. CIT(A) has issued on 20/11/2023 and assessee had complied with the said notice on 30/11/2023, but without considering the submission of the assessee, the impugned appeal order was passed on 04/12/2023. We find that the evidence submitted by the assessee was not considered in 1st appeal stage. Accordingly, we remand the matter to the file of the ld.CIT(A) for fresh adjudication de novo.
We observe that the genuineness of the transaction of the loan creditorswere already explained. Only the creditworthiness is in question before the revenue. The Ld.DR has not placed any strong objection to the submission made by the Ld.AR. We refrain from expressing any views on merits of the case to avoid prejudicing the re-adjudication. Both the parties have agreed to remand the matter to the file of the Ld.CIT(A). It is imperative that the Ld.CIT(A) provides the assessee with a fair and adequate opportunity of hearing during the set aside proceedings. Any evidence or explanation submitted by the assessee in its defense must be admitted and considered by the Ld.CIT(A) in accordance with law. Similarly, the assessee is expected to act diligently and co-operate fully during the appeal proceedings for quick disposal of the appeal.
Considering the above, the ground No.7 is adjudicated in favour of the assessee. The remaining grounds are only remained for academic purposes and do not require any adjudication.