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Before: SHRI Saktijit Dey & SHRI ASHWANI TANEJA
Date of hearing 19.04.2017 Date of order 03.05.2017
O R D E R Per Ashwani Taneja, AM:- This appeal has been filed by the Revenue against the order passed by Ld. CIT (A)-1 Mumbai[in short ‘CIT(A)’], dated 29.11.2013 passed against the assessment order u/s 144 of the I.T. Act, dated 05.03.2013 for AY 2010-11 on the following grounds.:-
“On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made u/s 68 of the I.T. Act, 1961 on account of unexplained cash credit of Rs.6,01,00,000/- relying upon the additional evidence and remand report despite confirming
2 Dipankar Steel Pvt. Ltd. the action of AO in assessing the income by ex-parte order u/s144 of the I.T. Act.” 2. “On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in admitting or accepting the additional evidences furnished by the assessee before him without appreciating the fact that the same were not produced before the AO at the time of assessment proceedings and hence was in violation of Rule 46A of the I.T. Rules.”
None appeared on the behalf of the assessee. It is noted that on earlier occasions also none has appeared on behalf of the assessee. Under these circumstances, we have no other option but to dispose of appeal exparte qua the assessee. During the course of hearing before us, Ld. Departmental representative relied upon the order of the Assessing Officer. However, he also fairly submitted that in this case remand report has been submitted by the AO, wherein detailed examination was made by AO before sending the remand report.
We have gone through the orders passed by the lower authorities. It is noted that the solitary issue involved in this case is with regard to addition made u/s68 by the AO on account of share application money received from two parties namely, M/s Siddham Infrastructure Pvt. Ltd. and M/s Sundaram Clothing Pvt. Ltd. It is noted by us, that addition was made by Assessing Officer by passing an order exparte u/s144 on the ground that no details or evidences were submitted by assessee to the AO for substantiating these amounts as envisaged u/s 68 of the Act. However, during the course of hearing before Ld. CIT(A) various evidences were submitted by the assessee which was sent by the Ld. CIT(A) to assessing officer for detailed examination and sending remand report. The perusal of order passed by the Ld. CIT(A) reveals that remand report was sent by the AO wherein amount received from both the above said parties were examined by the AO and he found it to be dully verified. After
3 Dipankar Steel Pvt. Ltd. considering the remand report Ld. CIT(A) deleted the addition made by the AO by making following observations.:-
“The appellant has contested addition of Rs.6,01,00,000/- vide Ground No.2 of appeal. During the appellate proceedings, submissions were made and filed vide letter dtd. 24.10.2013 containing the copies of final accounts of the investors in the assessing company alongwith confirmation of accounts duly signed and submitted alongwith the PAN numbers. It was submitted vide letter dtd. 24.10.2013 that- With reference to the above and under the instruction from our above referred client, we would like to state that the appellant has filed e-return of the above mentioned assessment year declaring total loss of Rs.47,509/- on 29.03.2011. The return was processed u/s143(1) of the I.T. Act, 1961. Subsequently, the case was selected for scrutiny and notice u/s 143(2) and 142(1) of the Act were issued. Since the notices were served by affixture, the appellant was not aware of the notices served by the assessing officer. The appellant did not comply with the notices. Finally, the assessment was completed u/s 144 (Best judgment Assessment) of the I.T. Act, 1961 determining total taxable income of Rs.6,01,00,000/-. The non compliance on part of the appellant was only because of not knowing the fact that notices had been served. We are submitting herewith detailed submission in form of paper book of your kind perusal. The documents (copy of financial statements, confirmation letters and copies of Return of Income of investors and appellant alongwith submissions) was forwarded to the AO for comments vide letter dtd. 28.10.2013 of this office, placed on record. The Remand Report was received from the AO vide his letter dtd.18.11.2013 bearing No. ITO-1 (1)(1)/ Remand Report/2013-14 after due verification of the documents. The AO has reported that- “During the remand proceedings notices u/s 133(6) of the I.T. Act, 1961 were issued to the share applicants i.e. M/s Siddham Infrastructure Pvt. Ltd. and M/s Sundaram Clothing Pvt. Ltd. In response to the notices both the share applicants provided the following details (i) copy of share application (ii) copy of return of income (iii) copy of balance sheet and copy of bank statement
4 Dipankar Steel Pvt. Ltd. highlighting the transactions. On verification of the above documents, it is noticed that M/s Siddham Infrastructure Pvt. Ltd. and M/s Sundaram Clothing Pvt. Ltd. invested Rs.2,80,00,000/- and Rs.3,20,00,000/- respectively out of their share capital in the case of M/s Bestian Steel Pvt. Ltd.” (Bestian Steel i.e. appellant) In view of the facts and circumstances of the case on this issue, it can be seen that the investments and credit entries to the extent of Rs.6,00,00,000/- are reportedly verified and explained in terms of section 68 of the I.T. Act, 1961 based on which the addition was made by the AO in appealed order without considering any submissions/explanations of the appellant and without any verification. However, since the investments/credits remain verified in reference to confirmations of the parties, transactions in the respective books of accounts of the parties and PAN held by the transacting parties as also to the satisfaction of AO as per Remand Report. I find that the credit entries are duly explained within the meaning of section 68 of the I.T. Act. Accordingly, the AO is directed to delete the addition of Rs.6,00,00,000/- and addition of Rs.1,00,000/- is confirmed as no explanation has been filed either before the AO or in appellate proceedings. Hence, Ground No.2 of appeal is partly allowed.”
It is noted that from the perusal of the above that the Assessing Officer has given a remand report wherein he has confirmed that he has verified requisite details and confirmations about the share application money received by the assessee. Nothing wrong has been found by the Ld. AO in the impugned transactions. Relying upon the same, Ld. CIT(A) has deleted the addition. It is noted that nothing wrong was found by Ld. CIT(A) also. During the course of hearing before us also Ld. DR was not able to point out anything wrong in the order of Ld. CIT(A). Rather, he fairly submitted that once positive remand report has been given by the AO, then, Ld. DR can have no objection and the appeal filed by the revenue is without any legal basis. It is also noted that in the central scrutiny report prepared by the assessing officer and submitted to the concerned CIT for filing of appeal, it has been clearly mentioned that Ld. CIT(A) had allowed the appeal of the assessee in view of 5 Dipankar Steel Pvt. Ltd.
the remand report submitted by the AO after necessary verification. Therefore, decision of the Ld. CIT(A) was acceptable and hence second appeal was not recommended on this ground i.e.the ground with regard to addition of share application money u/s 68 of the Act. Under these circumstances, we are not able to understand as to how and why this appeal has been filed by the revenue, which is prima facie not maintainable. Thus, taking into account all the facts and circumstances of the case, we find that no interference is called for in the order of Ld. CIT(A). Thus, same is hereby upheld. As a result, appeal filed by the revenue is hereby dismissed. Order was pronounced in the open court at the conclusion of the hearing.