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Before: SHRI J. SUDHAKAR REDDY & SMT SUCHITRA KAMBLE
This appeal is filed by the assessee against the order dated 01/02/2010 passed by CIT (A) New Delhi.
Facts in brief:
The assessee is a company and it filed its return of income on 30.04.2002 declaring NIL income. The same was processed under Section 143(1) on 16.01.2003. The Assessing Officer received information from Investigation Wing of the department. He recorded reasons for re-opening of Assessment and issued Notice under Section 148 on 25.03.2008.
In response, the Assessee, through M/s. Vinod Kumar Bindal & Co., Chartered Accountant filed a letter dated 29.03.2008 signed by Ms. Vidhi Goel, requesting that the return of income filed earlier, be treated as a return filed in response to notice issued under Section 148. The Assessing Officer vide letter dated 18.09.2008 stated that no cognizance can be taken of this letter filed by the CA Firm as no Power of Attorney have been filed. The Assessee do not respond. The Assessing Officer issued one more letter on 14.11.2008 proposing to proceed ex-parte under Section 144 of the Act. In this letter he mentioned as to why notice under Section 143(2) has not been issued. He suo moto issued the copy of reasons for re-opening to assessee and also sought certain details which are points 1 to 5 at page 3 of the Assessment Order. He also asked assessee to file return of income and collect Notice under Section 143(2) of the Act.
In this letter the Assessee was asked to prove the genuineness of the credits in the book along with the creditworthiness and identity of the creditors.
Ms. Vidhi Goel appeared on 26.11.2008 and filed a letter along with Power of Attorney. This letter dated 26.11.2008 was treated as a return of income filed by the assessee in response to notice under Section 148 of the Act. Ms. Vidhi Goel submitted that reasons for re-opening was not provided. The Assessing Officer records that on this date, reasons for re-opening for assessment was handed over to Assessee and that a notice under Section 143(2) was served on assessee.
Ms. Vidhi Goel again appeared on 28.11.2008 and requested for copy of the report of Investigation Wing and the material on the basis of which case was re-opened. Some explanation on share application money received from M/s. Sehgal Television Pvt. Ltd. of Rs. 7,50,000/- was given. The Assessing Officer records that the assessee company received share application money in April, 2000 and there was no allotment of share, nor payment of interest. Certain comments were made on address of the company. The assessee was asked to produce the Director of M/s. Sehgal Television Pvt. Ltd.
Ms. Vidhi Goel appeared on 05.12.2008 and submitted that they cannot produce directors and requested the Assessing Officer to issue summons under Section 131 to those directors of the company. After couple of hearing the Assessing Officer made addition under Section 68 of the Act of Rs. 7,50,000/- being share application money received from M/s. Sehgal Television Pvt. Ltd. and Rs. 2,50,000/-from M/s Database Computers Pvt. Ltd. He further added an amount of Rs. 25,000/- as Commission paid for these accommodation entries @ 2.5% of Rs. 10,00,000/-.
Aggrieved, the Assessee carried the matter in appeal. Before the first appellate authority the re-opening of the assessment under Section 148 was not challenged. The additions were challenged on merits and also on the ground that they are outside the scope of Section 148. It was specifically pleaded that Assessing Officer has not confronted the assessee with a copy of the report of the Investigation Wing along with evidences gathered by them and thus, the principles of natural justice was violated.
The CIT (A) confirmed addition partly. He held that the amount received from M/s. Sehgal Television Pvt. Ltd. is a loan and not share application money as claimed by the assessee. The CIT(A) held that line of decisions applicable to addition under Section 68 relatable to share application money cannot be applied. As no confirmation letter field by the assessee, the addition was confirmed. As regards the amount of Rs.2,50,000/- received from M/s. Database Computers Pvt. Ltd. the addition was confirmed as no documentary evidence was filed by assessee.
Regarding addition of Rs. 25,000/- as commission paid, the CIT(A) deleted the same as without evidence.
Aggrieved the assessee is before us on the following grounds:
“1. The learned CIT(A) erred in law and on facts in confirming the addition for share application money made by the assessing officer relying on some report/ information received from investigation wing but without confronting the same to the assessee though specifically asked for by the assessee vide its letter dated 27/11/08. Thus the addition so confirmed ignoring the principles of natural justice should be deleted.
2. The learned CIT(A) erred in law and on facts in confirming the addition of Rs. 10,00,000/- u/s 68 for the amount received as share application money ignoring the evidences placed on record and ignoring the judgments of the Hon’ble Apex Court in the case of CIT Vs Lovely Exports (P) Ltd. (2008) 216 CTR (SC) 195 and also in CIT vs Divine Leasing & Finance Ltd 2008- TIOL-118-SC-IT. Therefore the addition so made should be deleted.
3. The appellant craves the leave to add, substitute, modify, delete or amend all or any ground of appeal
either before or at the time of hearing.”
12. The Assessee has filed an application for admitting an additional grounds which reads as follows:
“1. The re-assessment proceedings initiated u/s 147/148 of the Act should be held invalid for want of jurisdiction as the pre- conditions for initiation of the said proceedings as stipulated in Section 147 of the Act were not satisfied; and whereas the “reasons to believe” recorded were scanty & vague and also based on non-specific information.”
We first take up the issue of admission of the additional ground.
After hearing rival contentions, we find that this is purely a legal ground which does not require investigation into fresh facts. All the facts are on record. In view of the decision of National Thermal Power Company Ltd. Vs. CIT (1998) 229 ITR 383 (SC), we admit this additional ground of appeal.
15. After considering rival submission as this ground has not been considered by the CIT(A) we deem it fit to set aside this issue of validity of re-opening to the first appellate authority for adjudication.
In result, appeal is allowed for statistical purpose.
The order is pronounced in the open court on 20th of May, 2016.