ITO, WD-2(4), GANGTOK, SIKKIM vs. M/S KALSON PRIVATE LIMITED,, SIKKIM

The only issue is to be decided as to whether the CIT-A justified in deleting the addition made U/Sec. 68 of the Act in the facts and circumstances of the case.

At the time of hearing, none appeared representing assessee nor any application filed seeking adjournment. The ld.DR submits referring to grounds of appeal that it was an assessment order U/Sec. 144 of the Act and the assessee filed IT A No. 1135/Kol/14 M/s. Kalson Pvt. Limited 1 details of share capital and sundry creditors before the CIT-A. The CIT-A forwarded the same to the AO and notices in remand proceedings could not be served on the assessee and the authority below could not verify the same and argued that the AO could not examine the correctness of the details in the absence of any explanation by the assessee and urged to remand the issue to the AO.

In view of the same, we proceed to hear the case to decide the issue basing on the matrial evidence available on record.

That, we shall examine the brief facts relating to issue on hand. The assessee is a company and filed return on 28-03- 2011 declaring income of Rs.6,98,760/-, which was derived from other income. Under scrutiny, notices U/Sec. 143(2) and 142(1) of the Act were issued and for which no compliance on behalf of assessee was made.

The case was re-fixed for hearing on 09-01-2013 and the assessee remained absent. Again the AO issued a show cause letter as to why the assessment should not be completed ex parte and no response from assessee to that effect. Therefore, the AO conducted assessment proceedings in the absence of assessee. During such proceedings, the AO found that the assessee has shown paid up capital of Rs.11,00,000/- and an amount of Rs.24,62,119/- towards sundry creditors and added the said amount as unexplained cash credit U/Sec. 68 of the Act and to that effect an order U/Sec. 144 of the Act was passed.

The assessee filed an appeal and filed details of share capital and sundry creditors before CIT-A and the said details were sent to AO seeking remand report. But, however, the AO did not secure the presence of assessee as the notices issued by him could not be served due to postal department delays. Thus, the AO filed remand report stating that the details of share capital and sundry creditors could not be verified in the absence of assessee. The CIT-A observes that the AO failed to exercise the necessary powers to carry out verification and found fault with the comments of AO in the remand report and deleted the said additions basing on the confirmations from third parties as filed before him and directed the AO to inform the respective AO’s regarding the persons, who invested and shown as sundry creditors for necessary action. We find that as rightly pointed by the ld.DR that there was no occasion to AO to verify the details of share capital and sundry creditors in the original proceeding as well as in the remand proceedings. It is also noticed that the CIT-A deleted the said addition basing on details as furnished by the assessee, but, however, no reference or whatsoever made in his order, except, stating that details of share capital and confirmation from sundry creditors were filed and directed the respective AO’s for necessary action. Therefore, the details as submitted by the assessee were not examined by the CIT-A and AO as they required to do under the Act.

Be that as it may, coming to appeal before us, we noticed that the Registry issued notices dt: 5-7-2016, 21-12-2016 and 1-2-2017 informing the assessee the dates of hearing on 25-8- 2016, 12-01-2016 and 21-02-2017 respectively. The Tribunal IT A No. 1135/Kol/14 M/s. Kalson Pvt. Limited 3 also ordered notices through Appellant Revenue and in pursuance of which notices were issued on 14-9-2016 and 18- 11-2016 informing the dates of hearing 24-10-2016 and 22-12- 2016 respectively and there was no representation on behalf of assessee before us. It is pertinent to note that the notice dt. 5- 7-2016 with RPAD, which was posted on 21-07-2016 was returned unserved with an endorsement “No such addressee found and not known “. It is clear that the assessee did not avail the opportunities as afforded by the authorities including this Tribunal. In such circumstances and in the absence of any reference to the details of share capital as sundry creditors in the impugned order, we deem it fit and proper to remand the issue to the AO for his verification and to pass an order to that effect as per law. We shall direct the assessee to produce evidences, if any, to substantiate its claim. Accordingly, the grounds of the Revenue are allowed for statistical purpose as indicated above.

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