INCOME TAX OFFICER, MANDSAUR vs. OREF SECURITIES PVT. LTD., MANDSAUR

Feeling aggrieved by appeal-order dated 23.05.2023 passed by learned Commissioner of Income-Tax (Appeals), NFAC, Delhi [“CIT(A)”], which in turn arises out of assessment-order dated 26.12.2018 passed by learned ITO, Mandsaur [“AO”] u/s 143(3)/147 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2011-12, the revenue has filed this appeal on following solitary ground:

The brief facts are such that the assessee-company filed return of income of relevant AY 2011-12 on 24.03.12 declaring a total income of Rs. Nil which was assessed by department. Subsequently, the AO received an information that during the financial year 2010-11 relevant to AY 2011-12 under consideration, the assessee had provided accommodation entries in the form of share capital etc. to certain shell entities. After recording reasons for reopening, the AO re-opened assessee’s case u/s 147 vide notice dated 31.03.2018 u/s 148. Thereafter, the AO issued statutory notices u/s 143(2)/142(1) which were duly complied by assessee. Finally, the AO completed re-opened assessment vide order dated 26.12.18 after making an addition of Rs. 4,21,40,000/- u/s 68 in respect of share premium received by assessee from four (4) companies. The relevant details are as under :-

Aggrieved by AO’s order, the assessee carried the matter in the first appeal. During first-appeal, the CIT(A) deleted entire addition. Aggrieved by order of CIT(A), the Revenue has come in this appeal before us.

Ld. DR for Revenue/appellant re-iterated the para 4.3 to 4.5 of the assessment-order passed by AO which reads as under :-

Replying to above, Ld. AR for assessee/respondent relied heavily upon the order of CIT(A) which reads as under:

Basically, the crux of the case is such that the AO made additions treating the amounts received by assessee from four shareholders (4), as mentioned in foregoing paragraph, as bogus or unexplained u/s 68. But the CIT(A) deleted those additions precisely following the order of ITAT in assessee’s own case for AY 2013-14 where the amounts received from those very persons were held to be genuine or explained. Ld. DR for revenue could not contradict the case on facts but, however, emphasized the claim made by revenue in its ground that the revenue’s quantum-appeal against the order of ITAT for AY 2013-14 is pending before Hon'ble High Court of M.P., therefore the CIT(A) has erred in granting relief to assessee. We are not inclined to accept such a plea of revenue when no change in facts of the case are brought before us. However, as a matter of caution, we raised a pointed question to Ld. AR as to whether all of the four (4) shareholders involved in present appeal of AY 2011-12 before us were also involved in assessee’s case of AY 2013-14 decided by ITAT? In reply, Ld. AR mentioned that out of four shareholders, first one i.e. “Luxo Foams Private Limited” is different and other three are same. When it is so, we find that the order of CIT(A) is partly suffering from infirmity to the extent of deletion of addition of Rs. 98,00,000/- made by AO qua the amount received by assessee from “Luxo Foams Private Limited”. The issue of addition of Rs. 98,00,000/- received from “Luxo Foams Private Limited” requires an apt adjudication by CIT(A). To that extent, we are remanding matter back to CIT(A) for ITO, Mandsaur vs. OREF Securities P.Ltd., Mandsaur AY 2011-12 adjudication afresh after giving opportunity to assessee. Other additions deleted by CIT(A) are, however, approved and no interference is made.

Resultantly, this appeal of revenue is partly allowed for statistical purpose.