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Facts
The assessee, Amita Multitrade Pvt. Ltd., filed its return of income for AY 2010-11. The case was reopened under Section 147, and an addition of ₹1 crore was made by the Assessing Officer under Section 68. The CIT(A) upheld the addition, dismissing the assessee's appeal ex-parte despite multiple opportunities.
Held
The Tribunal found that the assessee was not heard by the CIT(A) and therefore, the appeal should be restored on the issue of addition. The Tribunal directed the assessee to deposit a cost and submit details, allowing the CIT(A) to decide the addition on merits after providing an opportunity of hearing.
Key Issues
Whether the CIT(A) erred in disposing of the appeal ex-parte without hearing the assessee and whether the addition under Section 68 was justified.
Sections Cited
143(3), 147, 148, 133(6), 68, 143(2)
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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI RAJ KUMAR CHAUHAN, JM
A.Y. 2010-11 by Amita Multitrade Pvt. Ltd., Mumbai [ Assessee/ Appellant] against the appellate order passed by the learned Commissioner of Income-tax (Appeals)-52, Mumbai dated 1st December, 2023, wherein the appeal filed by the assessee against the assessment order passed under Section 143(3) read with section 147 of the Income-tax Act, 1961 (the Act) dated 25th October, 2017, was dismissed.
“1. The Id. CIT(A) erred in disposing of the appeal ex- parte.
1.1. In any event, the Id. CIT(A) in deciding the appeal ex-parte erred in not disposing the grounds judiciously in as much as the facts brought to his notice in Form No. 35 were not enquired into by him having regard to the record available with the AO.
The Id. CIT(A) erred in holding that the assessment pursuant to notice u/s 148 of the Act was validly made.
2.1. In doing so, the Id. CIT(A) did not appreciate that assumption of jurisdiction u/s 147 of the Act based on reasons recorded as reproduced in the assessment order is void & illegal and, therefore, bad in law.
2.ii. Further in doing so, the Id. CIT(A) did not appreciate that commencement of assessment proceedings by issue of notice u/s 143(2) of the Act simultaneously with the furnishing of reasons recorded is not in accordance with the decision of the Apex Court in the case of GKN Driveshaft [259 ITR 19(SC)] as held by the jurisdictional high court in the case of Allana Cold Storage Co. vs. ITO 287 ITR 1 (Bom.); in the case of Asian Paints Ltd. vs. Dy. CIT (2008) 290 ITR 90 (Bom); and in the case of Bayer Material Science (P) Ltd. 382 ITR 333 (Bom.).
The Id. CIT(A) erred in holding that furnishing of statement of third party relied upon by the AO and opportunity of cross-examination of said party is not necessary in the present scenario which is in total disregard of the facts stated in the memo of appeal and contrary to the principles laid down by the Apex Court in the case of Andaman Timber Industries reported in (2015) 62 Taxmann.com 3(SC).
4. The Id. CIT(A) erred in confirming the addition u/s 68 of the Act of Rs. 10000000/- in respect of shares allotted at a premium.
4.1. In doing so, the Id. CIT(A) did not appreciate that the initial onus which lay on the appellant was fully discharged & the onus shifted to the AO who neither dislodged the material & evidence placed on record nor made any independent enquiry.
4.ii. Further in doing so, the Id. CIT(A) did not appreciate that in the facts of the case no addition could have been made in the hands of the appellant based on the binding decision of the jurisdictional high court in the case of Gagandeep Infrastructure (P) Ltd. in dt. 20.03.2017.
The reasons recorded showed that search on Mr. R.K. Kedia group of cases on 3rd June, 2014, wherein it was found that assessee has issued shares on substantial premium of ₹98 lcas for face value of ₹3 lacs. The shares
The assessee was asked to explain the genuineness of the transaction. The assessee furnished some documentation about the compnies which invested in the assessee. The learned Assessing Officer issued notices under Section 133(6) of the Act, however, the information received from the parties was not on the issues on which reply was called for. Summons was issued for further verification.
The learned Assessing Officer reproduced the statement of various persons and based on that concluded that assessee is unable to prove the nature of amounts received as share capital and amount of ₹1 crore received by the assessee is an accommodation entry through persons mentioned in the assessment order such as Mr. R.K. Kedia and Mr. Pravin Agarwal. The amount was added under Section 68 of the Act and assessment order was passed under Section 143(3) read with section 147 of the Act on 25th October, 2017.
The assessee aggrieved with the assessment order preferred the appeal before the learned Commissioner of Income-tax (Appeals). The learned CIT (A) provided ten opportunities to the assessee. The assessee did not avail any of the opportunities. Therefore, based on the statement of facts and information available, he upheld
Aggrieved with that order, assessee preferred the appeal before us. Before us, the learned authorized representative has submitted a paper book containing 79 pages. However, the assessee did not give any reason that why the assessee could not appear before the learned Commissioner of Income-tax (Appeals). However, we find that as per ground no.1, the appeal was decided ex-parte. In this regard, we find that assessee has been given ten opportunities which are listed in paragraph no.1 of the appellate order. Three occasions assessee requested for adjournment. On seven occasions, there was non- compliance by the assessee. The learned CIT (A) categorically mentioned that all these notices are served on the assessee. The adjournment request of the assessee on three occasions were considered and accepted by the learned Commissioner of Income-tax (Appeals). Despite all these opportunities, the assessee did not appear before the learned Commissioner of Income-tax (Appeals). Therefore, the assessee is totally non-compliant before the learned Commissioner of Income-tax (Appeals).
Therefore, the learned CIT (A) considering the statement of facts decided the issue on the merits of the case. The appeal of the assessee was dismissed.
In paragraph no.11 of the learned CIT (A)’s order, he has reproduced the reasons given by the learned Assessing
In the result, the appeal of the assessee is allowed with above direction.
Order pronounced in the open court on 26.07. 2024.