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Facts
The assessee company filed its return of income declaring a loss. The Assessing Officer (AO) made additions to the income concerning share capital and premium received, and also disallowed a portion of payments made due to non-deduction of TDS. The assessee appealed to the CIT(A), who partly allowed the appeal by directing the AO to examine certain details.
Held
The Tribunal found that the CIT(A) had exceeded his jurisdiction in remitting the issue of addition u/s 68 back to the AO for verification, as the assessment was made u/s 143(3) and not u/s 144. The CIT(A) had also not adjudicated the issue of disallowance u/s 40(a)(ia). Therefore, the Tribunal remitted the entire case back to the CIT(A) for fresh adjudication.
Key Issues
Whether the CIT(A) exceeded his jurisdiction by remitting the matter for verification to the AO, and if the CIT(A) had adjudicated all the grounds of appeal.
Sections Cited
68, 115BBE, 40(a)(ia), 143(3), 251(1)(a), 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI ‘A’ BENCH,
Before: SHRI SATBEER SINGH GODARA, & SHRI NAVEEN CHANDRA
This appeal by the assessee is directed against the order of the NFAC, Delhi dated 10.03.2025 pertaining to A.Y 2017-18.
2. The grounds raised by the assessee read as under:
“1. Whether the Id. A.O has erred in law and facts of the case in considering loss of Rs. 15,39,98,889/- declared by the assessee company as Income.
Whether the ld. A.O has erred in law and facts of the case in making addition u/s 68 of Rs. 14,85,07,750/- and charging tax u/s 115BBE (as per para 4 of assessment order) 3. Whether the Id. A.O has erred in law and facts of the case in making disallowance of u/s 40a(ia) amounting to Rs. 4,05,631/-.
4. The assessee retain the right to add/delete/modify any of the above grounds of appeal.”
Brief facts of the case are that the assessee filed its Return of Income on 31.10.2017 declaring loss of Rs. 15,39,98,889/-. Return was selected for scrutiny assessment through CASS and accordingly, statutory notices alongwith questionnaire were issued and served upon the assessee.
During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has received share capital and premium of Rs. 14,85,07,750/- for subscription of total 9737 shares at Rs. 15,251/- per share. The share capital and premium from non-
Page 2 of 6 resident (foreign companies) was Rs 12.54 crore and from resident shareholders, it was Rs 2.31 crore. The assessee was asked to prove the identity and credit worthiness of the allotees to whom the shares had been allotted along with the genuineness of the transactions and finding the explanation inadequate, treated the amount of Rs. 14,85,07,750/- as unexplained credits found in the accounts of the assessee and taxed the same u/s 68 of the Act.
Further, the assessee was asked to reconcile the disallowances made u/s 40(a)(ia) of the Act in the ITR and Audit Report alongwith supporting documentary evidences. The assessee submitted that the assessee had made payments of Rs. 13,52,106/- to various vendors on which TDS was not deducted. Since the assessee failed to deduct TDS on making payment to certain entities, the Assessing Officer disallowed 30% of the payment which comes to Rs. 4,05,631/- u/s 40(a)(ia) of the Act and added the same to the income of the assessee.
Aggrieved, the assessee went in appeal before the ld. CIT(A) who after considering the facts and submissions, partly allowed the appeal of the assessee by directing the AO to examine and verify the details of investment made in the company as capital/premium as well as the Page 3 of 6 creditworthiness of the subscribers. Now the assessee is in appeal against the impugned order of the ld. CIT(A).
The ld AR of the assessee vehemently argued that the assessee had filed all the necessary documents and evidences and that the CIT(A) had no power to remit the matter for verification to the AO as the assessment was not made u/s 144. Per contra, the ld DR relied on the orders of AO/CIT(A).
We have heard the rival submissions and have perused the relevant material on record. We find that the AO made the assessment u/s 143(3) of the Act and hence the CIT(A) exceeded his jurisdiction under proviso to section 251(1)(a) in referring the issue of addition u/s 68 back to the AO for verification. We also find that the CIT(A) has not adjudicated the issue of disallowance u/s 40(a)(ia). In such a factual matrix of the instant case, we deem it appropriate to remit the entire case to the file of the CIT(A) to adjudicate afresh the issue of addition of share capital and premium u/s 68 and disallowance u/s 40(a)(ia). The CIT(A) is directed to examine the documents/evidences submitted before him and if required seek an enquiry report from the AO for a fresh adjudication on the issues involved. Needless to add that the CIT(A) shall afford a Page 4 of 6 reasonable opportunity to the assessee to explain its case. The assessee is likewise directed to cooperate and present evidences/documents as required by the concerned authorities.
In the result, appeal of assessee in is allowed for statistical purpose.
Order pronounced in open court on 08.10.2025.