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169 orders · Page 3 of 4
The Tribunal held that in ITA No. 2847/KOL/2025, the CIT(A) had inadvertently referred to facts of a different assessee concerning Section 2(22)(e) while adjudicating the issue of share capital under Section 68. This procedural error led to the confirmation of the addition of ₹30 lacs. To ensure the ends of justice, the Tribunal restored the appeal to the file of the CIT(A) for fresh adjudication after providing the assessee with a reasonable opportunity of hearing. The appeal was allowed for statistical purposes. In ITA No. 2848/KOL/2025, the Tribunal found that the CIT(A) had passed an ex-parte order concerning the addition under Section 2(22)(e) because the assessee failed to appear despite opportunities. To serve the ends of justice, the Tribunal restored the issue to the CIT(A) with a direction to decide it afresh after affording the assessee an opportunity of hearing. Consequently, this appeal was also allowed for statistical purposes.
The Tribunal held that the approval granted by the Principal Commissioner of Income-tax (PCIT) under section 151 for reopening the assessment was invalid because it was obtained mechanically, evidenced by a mere "Yes" and signature without any recorded satisfaction. Consequently, the notice issued under section 148 and the assessment framed were also deemed invalid.
The Tribunal decided each issue as follows: Issue 1 (Donations and Subscriptions): The Tribunal held that expenses incurred for festivals, sports, or pujas, if made to maintain good relations for business purposes, can be allowed as business expenditure under Section 37(1). The Tribunal found these types of expenses to be common in Kolkata for business entities. Therefore, the order of the CIT(A) was set aside, and the AO was directed to delete the addition. This issue was allowed. Issue 2 (Repairs and Maintenance Expenses): The Tribunal found that the individual bill amounts for repairs and maintenance were below the threshold requiring TDS deduction. Furthermore, as these expenses were incurred on different dates, the provisions of Section 40(a)(ia) were not applicable. Consequently, the order of the CIT(A) was set aside, and the AO was directed to delete the addition. This issue was allowed. Issue 3 (Preliminary Expenses): The Tribunal noted that the assessee had incurred these expenses in an earlier assessment year and was claiming 1/5th of the said expenses annually, which had been allowed in previous years. Considering the facts and the assessee's plea, the order of the CIT(A) was set aside, and the AO was directed to delete the addition. This issue was allowed. Issue 4 (Interest Income): The Tribunal found that the interest income represented interest accrued on a security deposit which the assessee had not shown in the return of income. Therefore, the Tribunal found no infirmity in the order of the authorities below and dismissed the ground raised by the assessee, upholding the order of the CIT(A). This issue was dismissed. The Tribunal expressly left undecided no issues.
The Tribunal held that the reopening of assessment was based on borrowed satisfaction without proper application of mind and without independent inquiry. The approval for reopening under section 151 was also mechanical. Therefore, the reopening of assessment was quashed.
The Tribunal held that in ITA No. 2847/KOL/2025, the CIT(A) had inadvertently referred to facts of a different assessee concerning Section 2(22)(e) while adjudicating the issue of share capital under Section 68. This procedural error led to the confirmation of the addition of ₹30 lacs. To ensure the ends of justice, the Tribunal restored the appeal to the file of the CIT(A) for fresh adjudication after providing the assessee with a reasonable opportunity of hearing. The appeal was allowed for statistical purposes. In ITA No. 2848/KOL/2025, the Tribunal found that the CIT(A) had passed an ex-parte order concerning the addition under Section 2(22)(e) because the assessee failed to appear despite opportunities. To serve the ends of justice, the Tribunal restored the issue to the CIT(A) with a direction to decide it afresh after affording the assessee an opportunity of hearing. Consequently, this appeal was also allowed for statistical purposes.
The Tribunal held that once an assessee opts for the presumptive taxation scheme under Section 44AD of the Income Tax Act, no further additions can be made to the income. The assessee is engaged in the catering business and filed the return under Section 44AD, disclosing a profit rate of 8% on gross receipts. The Tribunal found that the CIT(A) failed to appreciate that the return was filed on a presumptive basis and that the assessee was engaged in a business with a proper trade license. The addition made by the AO and partly sustained by the CIT(A) was considered unreasonable. The Tribunal relied on the Punjab & Haryana High Court decision in CIT-II vs. Surinder Pal Anand, which held that if income is shown at 8% under Section 44AD, there is no obligation to explain each cash deposit. The Tribunal set aside the order of the CIT(A) and directed the AO to delete the addition.
The Tribunal held that the assessment framed by the National Faceless Appeal Centre (NFAC) was indeed without jurisdiction and therefore invalid. The Tribunal noted that Section 151A of the Income-tax Act, 1961, providing for faceless assessment, was notified from 29.03.2022 vide notification no. 18/2022. However, the assessment order in question was dated 13.03.2022. Consequently, the assessment was framed prior to the effective date of the notification enabling faceless assessment. The Tribunal relied on decisions of co-ordinate benches and High Courts, including MD Mahimud SK Vs ITO, Kankanala Ravindra Reddy vs. Income-tax Officer, Triton Overseas (P.) Ltd. vs. Union of India, and Samp Furniture (P.) Ltd. vs. Income-tax Officer, to support its view. The Tribunal quashed the assessment framed by the AO/NFAC. The appeal of the assessee was allowed.
The Tribunal held that the addition of ₹70,00,000 as bogus sundry creditors is incorrect and cannot be sustained. The Tribunal noted that the assessee received ₹1,10,00,000 under a joint development agreement, with ₹40,00,000 in FY 2014-15 and ₹70,00,000 in FY 2015-16. Crucially, the MOU was cancelled, and the entire amount was refunded through banking channels in April 2016. The Tribunal relied on the decision of the Hon'ble Gujarat High Court in 'Ambe Tradecorp (P.) Ltd.' ([2022] 145 taxmann.com 27 (Gujarat)), which held that once repayment of a loan is established by documentary evidence, credit entries cannot be viewed in isolation. The Tribunal found that the action of the AO and CIT(A) was incorrect. Consequently, the order of the CIT(A) was set aside, and the AO was directed to delete the addition. Regarding the second issue, the Tribunal held that the repayment of a loan of ₹21,07,456 to M/s Wonder Procon Pvt. Ltd. cannot be treated as bogus. The assessee had provided proof of payment through banking channels, and the loan was treated as genuine in the year it was borrowed. The Tribunal, relying on the reasoning in the first ground, set aside the CIT(A)'s order and directed the AO to delete the addition. Ground No. 3 was dismissed as not pressed, and Ground No. 4 was considered in support of Ground No. 1. Ground No. 5 was general.
The Tribunal condoned the delay of 103 days in filing the appeal, finding the reasons to be bonafide and genuine. The Tribunal noted that the appeal was decided ex-parte by the learned CIT(A) despite numerous notices, and that the CIT(A) passed an ex-parte order without deciding the issues on merit. The Tribunal held that this was a violation of the provisions of Section 250(6) of the Income Tax Act. In the interest of justice and fair play, the Tribunal restored the appeal to the file of the learned CIT(A) with a direction to decide the same on merit after affording a reasonable opportunity of hearing to the assessee. The Tribunal also clarified that the assessee should not seek adjournments unless required for valid and reasonable cause. The appeal was allowed for statistical purposes.
The Tribunal held that the initial non-filing of Form 10B was a procedural defect that was cured by the subsequent filing of the form. Therefore, the denial of exemption under Section 11 of the Act on this ground was not sustainable.
The Tribunal held that in both AYs 2016-17 and 2017-18, the Assessing Officer (AO) and the Commissioner of Income-tax (Appeals) had erred in their computation of book profit under Section 115JB of the Income-tax Act, 1961. For AY 2016-17, the Tribunal found that the AO had wrongly taken the book profit at ₹1,38,52,920/- instead of the correct figure of ₹1,15,26,057/-. The Tribunal noted that the assessee had credited deferred tax of ₹23,26,863/- to the profit and loss account, which should have been considered to arrive at the correct book profit as per Section 115JB(1) Explanation 1(vii). Similarly, for AY 2017-18, the Tribunal observed that the deferred tax credit of ₹11,27,426/- was not taken into account, leading to an incorrect book profit. The Tribunal reasoned that the exclusion of deferred tax credit from the book profit calculation was contrary to the provisions of the Act. Consequently, the Tribunal set aside the orders of the CIT(A) and directed the AO to recompute the book profit at the correct figures of ₹1,15,26,057/- for AY 2016-17 and ₹82,28,375/- for AY 2017-18. The ratio decidendi is that deferred tax credit, when credited to the profit and loss account, must be considered for the computation of book profit under Section 115JB of the Act.
The Tribunal condoned the delay in the assessee's appeal. It was noted that the AO-CPC did not allow the credit of TDS amounting to Rs. 40,220/-, despite the income being disclosed. The CIT(A) had dismissed the appeal without condoning the significant delay.
The Tribunal held that the PCIT had invalidly exercised jurisdiction under Section 263. The AO had specifically queried the Section 54 claim, and the assessee had provided a comprehensive reply with supporting evidence, which the AO considered before passing the assessment order.
The Tribunal held that the assessee company had received the amount as sale proceeds from shares it held in M/s Positive Commotrade Pvt. Ltd. since 2011, which were sold in FY 2016-17. The addition made under Section 68 of the Act was considered not applicable, as the transaction was a sale of investment, not an unexplained cash credit. The Tribunal relied on a jurisdictional High Court decision in a similar case.
The Tribunal noted that the assessee's case falls under the jurisdiction of ITAT, Mumbai, not ITAT, Kolkata. Therefore, the present appeal filed in Kolkata was dismissed.
The Tribunal held that the grant was specifically for the repayment of a long-term loan and interest, making it a capital receipt and therefore not taxable as income. The purpose of the grant was to augment the company's capital for loan repayment.
The Tribunal held that the excess expenditure incurred by the insurance company, even if exceeding regulatory limits, should be allowed as a deduction under Section 37(1) of the Income Tax Act, 1961. Consequently, the penalty levied under Section 270A was cancelled.
The Tribunal held that the excess expenditure incurred by the insurance company, even if exceeding regulatory limits, should be allowed as a deduction under Section 37(1) of the Income Tax Act, 1961. Consequently, the penalty levied under Section 270A was cancelled.
The tribunal held that the assessment orders passed for AY 2016-17 and AY 2021-22 were void ab initio and quashed them. This was because the assessment orders were passed in the name of the company (Happy Suppliers Pvt Ltd) which had ceased to exist after its amalgamation with Rishi Securities & Finance Private Limited, effective from 01.04.2022.
The Tribunal held that the grant was in the nature of a capital receipt, as its purpose was to increase the capital of the assessee company to enable it to repay a loan. This conclusion was based on the 'purpose test' derived from Supreme Court decisions, which determines the character of a grant by its objective. The Tribunal noted that the grant was for repayment of a long-term loan, a capital item, and thus not taxable revenue income.
The tribunal held that the assessment orders passed for AY 2016-17 and AY 2021-22 were void ab initio and quashed them. This was because the assessment orders were passed in the name of the company (Happy Suppliers Pvt Ltd) which had ceased to exist after its amalgamation with Rishi Securities & Finance Private Limited, effective from 01.04.2022.
The Tribunal held that the excess expenditure incurred by the insurance company, even if exceeding regulatory limits, should be allowed as a deduction under Section 37(1) of the Income Tax Act, 1961. Consequently, the penalty levied under Section 270A was cancelled.
The Tribunal held that Section 56(2)(viia) applies to the allotment of shares, not just the transfer of existing shares. The term 'receipt' is of wide import and includes acquisition by modes other than transfer.
The Tribunal held that the filing of Form 10B is a procedural requirement and not mandatory, especially when the report was available at the time of processing the return. The disallowance made via rectification under Section 154 was considered beyond its scope, as the exemption was initially allowed. The matter was remanded to the AO.
The Tribunal noted that the assessment was completed under section 143(3) of the Act, implying that any default in complying with the notices was implicitly condoned by the AO. If there was a default, the assessment should have been made under section 144, which would not imply condonation. Therefore, the penalty was unjustified.
The Tribunal noted that the CIT(A) relied on case laws not directly applicable to the issue of Section 36(1)(viia) deductions. The dispute centers on the method of calculating aggregate average advances for rural branches as per Rule 6ABA, with the assessee arguing for a method that includes opening balances, which the AO and CIT(A) did not fully consider.
The Tribunal held that the CIT(A) erred in upholding the change of status of the assessee from a co-operative society to a company. It also found that the method adopted by the AO for calculating aggregate average advances for rural branches, which led to a short deduction under Section 36(1)(viia), was contrary to Rule 6ABA of the Income Tax Rules.
The Tribunal partly allowed the appeals for statistical purposes. Specifically, it held that penalty under section 271C for non-deduction of TDS under section 194LBB was not tenable as the provisions were not applicable for AY 2013-14. For other grounds related to TDS, the matters were remanded to the AO for further examination.
For AY 2018-19, the Tribunal noted that the assessee did not provide complete details for calculating the disallowance under Section 14A and Rule 8D, leading to the matter being set aside and remitted to the AO for de novo assessment. For AY 2020-21, the Tribunal set aside the CIT(A)'s order and remanded the issue of Section 80G deduction to the AO for verification due to discrepancies in donation details and fund approval.
The Tribunal found that the CIT(A) passed an ex parte order without affording proper opportunity to the assessee. In the interest of natural justice, the matter was remanded back to the Assessing Officer.
The Tribunal noted that the assessee's income might be exempt under Section 10(26AAB), but Section 44AB mandates an audit based on turnover exceeding a threshold, irrespective of income exemption. Since the assessee did not provide a reasonable cause for not obtaining the audit, the matter was remanded to the CIT(A).
The Tribunal held that the CIT(A) erred in not allowing the assessee an opportunity to be heard through VC and in not considering the request to defer the hearing. The Tribunal also found that the CIT(A) erred in affirming the addition made by the AO under Section 14A without proper consideration of the assessee's submissions regarding the disallowance calculation.
The Tribunal held that Section 56(2)(viia) applies to the allotment of shares, as the term 'receipt' is of wide import and includes acquisition by modes other than transfer. The Tribunal agreed with the CIT(A)'s reasoned order and confirmed the addition.
The Tribunal held that the order of the CIT(A) deleting the addition of Rs. 8,75,30,700/- was not infirm. The Revenue failed to establish its case. The Tribunal found no reason to interfere with the CIT(A)'s findings. The CIT(A) had observed that the purchase of shares on 30.04.2014 was supported by purchase bills, contract notes, and ledger accounts, and was duly verified in the scrutiny assessment for AY 2015-16, where the AO had accepted the transaction as genuine. The AO in the present proceedings had not brought any cogent evidence to establish that the purchase price declared by the assessee was fictitious or inflated. The AO also did not dispute the fact of purchase, holding period, or the mode and timing of sale through a recognized stock exchange with STT payment. The Tribunal agreed that the unilateral substitution of the declared cost of acquisition with an artificially inflated figure without rebutting documentary evidence was not legally sustainable. The principle cited is that when share transactions are supported by verifiable documents and executed through recognized stock exchanges with STT paid, resultant gains are eligible for exemption under Section 10(38), and the burden of disproving genuineness lies with the Revenue, which was not discharged here. The CIT(A)'s deletion of the addition was upheld.
The Tribunal held that the addition of Rs. 6,99,50,000/- as unexplained cash credit under Section 68 of the Income-tax Act, 1961, was not justified and directed its deletion. The Tribunal found that the assessee had discharged its initial onus by furnishing details of all 20 share subscribers, including their PANs, CINs, and proof of service of notices under Section 133(6). The subscribers were regular income-tax filers, and their financial statements demonstrated sufficient strength to justify their investments, with their net worth being considerably higher than the amounts subscribed. The Tribunal noted that the AO had erroneously observed no compliance from the subscribers, whereas the records showed otherwise. Relying on the decision in PCIT vs. Omkar Parivahan Finance Pvt Ltd, the Tribunal stated that a higher net worth establishes creditworthiness. Furthermore, the Tribunal addressed the non-compliance with summons under Section 131 by directors, citing PCIT vs. Jealous Commercial Private Limited, which held that mere non-appearance of directors before the AO cannot lead to a finding of unsatisfactory explanation under Section 68, especially when other relevant materials are produced. The Tribunal also referred to the Calcutta High Court's decision in PCIT vs. Bright Commodeal Pvt Ltd, which highlighted that the AO and CIT(A) did not verify the evidence filed by the assessee. The Tribunal concluded that the assessee had provided all necessary evidence proving the identity, creditworthiness of investors, and genuineness of the transactions, and the AO had not commented on these evidences. The ratio decidendi is that when an assessee provides substantial evidence for identity, creditworthiness, and genuineness of share transactions, and the AO fails to point out specific falsity or conduct proper verification, the addition under Section 68 is unsustainable, even if there was non-compliance with summons by directors of subscribing entities, especially when the transactions are old.
The Tribunal held that the addition made by the AO under Section 56(2)(viib) was unjustified and directed its deletion. The Tribunal found that the AO could not have substituted the DCF method adopted by the assessee. The DCF valuation was based on valid assumptions and reasonable parameters, resulting in an FMV of Rs. 189.40 per share. The Tribunal noted that the assessee's business was real estate development, and it had acquired land, obtained project sanction, and secured a construction loan. The Tribunal observed that the assessee followed the completed contract method, explaining why revenues and costs were not recognized in the financials during the period under review. Furthermore, the Tribunal found that even if the NAV method was applied, valuing the land parcels at their prevailing circle rates (Rs. 126.87 crores) for FY 2014-15 would result in an NAV per share of Rs. 310, which is higher than the issue price of Rs. 189.40 per share. The lower authorities had erred by arbitrarily using the book value of land (Rs. 33.66 crores) instead of its market value. The Tribunal concluded that the share premium charged was not excessive.
The Tribunal held that the disallowance of ₹1,78,019/- on account of miscellaneous expenses was incorrect and could not be sustained. The authorities below had disallowed the expenses merely on presumption and surmises at the rate of 10% without providing plausible and reasonable findings as to how these expenses were non-genuine. The Tribunal, relying on the decisions in CIT vs. Daulat Ram Rawatmull and Omar Salay Mohamed Sait vs. Commissioner of Income-tax, set aside the order of the CIT(A) and directed the AO to delete the addition. Regarding the disallowance of ₹2,72,91,922/- for provisions for NPAs, the Tribunal found that Section 36(1)(viia) of the Act specifically provides for provisions for bad and doubtful debts created by co-operative banks. The Tribunal observed that these provisions are independent of Section 36(1)(vii) and are based on NPA guidelines issued by RBI and NABARD. The assessee's case was squarely covered by the decision of the Hon'ble Apex Court in Catholic Syrian Bank Ltd. Vs CIT. The Tribunal also noted that the decision relied upon by the AO in Southern Technologies Ltd. vs. Joint Commissioner of Income-tax was not applicable as it was rendered in the context of Section 36(1)(vii). The Tribunal, considering these facts and the decision in Tamilnadu State Apex Coop Bank Ltd Vs ACIT, set aside the order of the CIT(A) and directed the AO to delete the addition. Consequently, grounds 3 and 4 were allowed. The decision for AY 2012-13 was applied mutatis mutandis to AYs 2013-14 and 2014-15.
The Tribunal noted that the assessee had obtained provisional registration and commenced activities. The error in mentioning the clause was due to inadvertence and unawareness of new laws. In the interest of justice, the case was restored to the CIT(E) for fresh adjudication.
The Tribunal held that the assessment order was void ab initio due to the absence of a valid notice u/s 143(2) of the Income Tax Act, 1961. The Tribunal noted that the notice u/s 143(2) is crucial for conferring jurisdiction on the AO to proceed with the assessment, and its invalid service renders the assessment a nullity. The Tribunal relied on the Supreme Court's decision in ACIT Vs Hotel Blue Moon Hotels Limited (321 ITR 362) and other pronouncements, which established that the issue of notice u/s 143(2) by an officer lacking jurisdiction is an incurable infirmity, not a mere procedural irregularity. The Tribunal found that the notice u/s 143(2) dated September 4, 2014, was purportedly signed by Mr. Barun Kumar Roy, who, according to the assessee and not controverted by the revenue, never held the office of ITO, Ward 7(4), Kolkata. The Tribunal also noted the discrepancies in the dates of issuance and service of the notice, the lack of proof of service, and the incorrect assertion regarding the notice u/s 142(1). Consequently, the Tribunal quashed the impugned assessment order dated March 19, 2015, allowing the legal ground raised by the assessee. The grounds raised on merits were rendered academic and not adjudicated.
The Tribunal held that the disallowance of ₹1,78,019/- on account of miscellaneous expenses was incorrect and could not be sustained. The authorities below had disallowed the expenses merely on presumption and surmises at the rate of 10% without providing plausible and reasonable findings as to how these expenses were non-genuine. The Tribunal, relying on the decisions in CIT vs. Daulat Ram Rawatmull and Omar Salay Mohamed Sait vs. Commissioner of Income-tax, set aside the order of the CIT(A) and directed the AO to delete the addition. Regarding the disallowance of ₹2,72,91,922/- for provisions for NPAs, the Tribunal found that Section 36(1)(viia) of the Act specifically provides for provisions for bad and doubtful debts created by co-operative banks. The Tribunal observed that these provisions are independent of Section 36(1)(vii) and are based on NPA guidelines issued by RBI and NABARD. The assessee's case was squarely covered by the decision of the Hon'ble Apex Court in Catholic Syrian Bank Ltd. Vs CIT. The Tribunal also noted that the decision relied upon by the AO in Southern Technologies Ltd. vs. Joint Commissioner of Income-tax was not applicable as it was rendered in the context of Section 36(1)(vii). The Tribunal, considering these facts and the decision in Tamilnadu State Apex Coop Bank Ltd Vs ACIT, set aside the order of the CIT(A) and directed the AO to delete the addition. Consequently, grounds 3 and 4 were allowed. The decision for AY 2012-13 was applied mutatis mutandis to AYs 2013-14 and 2014-15.
The Tribunal held that the assessee's contention regarding the actual reduction in valuation for the relevant financial year was meritorious. It was noted that the assessee society had already provided for a reduction of Rs.99,10,235/- in the value of old/damaged stock up to 31.03.2014. Therefore, the reduction in the valuation of closing stock debited in the accounts for FY 2014-15 was Rs.26,88,599/-, not Rs.1,25,98,834/- as quantified by the AO. Regarding the basis of valuation, the Tribunal found that the assessee demonstrated a scientific and reasonable manner. The Director of Societies supervised stock exercises, identified damaged stock, and estimated net realizable value with auditor approval. The Tribunal concluded that the valuation method was neither arbitrary nor unreasonable. Furthermore, the AO had not invoked Section 145(3) to reject the audited books of accounts. Consequently, the addition of Rs.1,25,98,834/- on account of closing stock valuation was held to be unjustified and directed to be deleted. Ground Nos. 2 and 3 were dismissed as not pressed.
The Tribunal found that the CIT(A) dismissed the appeal solely on the ground of delay without dealing with the merits. Citing Supreme Court judgments, the Tribunal emphasized that condonation of delay should be liberally construed to advance substantial justice, especially when the cause for delay is beyond the assessee's control.
The Tribunal found that the assessees had initially filed an application with a clerical error regarding the specific clause and subsequently filed a fresh application correcting this inadvertent mistake. Considering these circumstances, the appeals were allowed for statistical purposes, remanding the matter back to the CIT(E) for fresh adjudication.
The Tribunal held that the disallowance of miscellaneous expenses was based on presumption and surmises, not on plausible findings, and could not be sustained. Regarding NPA provisions, the Tribunal noted that Section 36(1)(viia) of the Income Tax Act allows such deductions for cooperative banks in accordance with RBI and NABARD guidelines.
The Tribunal quashed the reassessment proceedings. Regarding the validity of reopening, the Tribunal found the reasons recorded by the AO to be vague and generic, based on suspicion rather than concrete material. The AO did not objectively satisfy himself that income had escaped assessment, nor did he explain how the sale of investments constituted escaped income. The Tribunal noted that the approval for reopening under Section 151 was granted mechanically. The Tribunal relied on decisions like M/s. Ganesh Ganga Vs. ITO and United Electricals Co. Pvt Ltd. Vs. Commissioner of Income Tax to support its view that casual reopening based on vague reasons and mechanical approval is unsustainable. On merits, the Tribunal held that the sale of investments, which were held since earlier assessment years and reflected in the balance sheets, could not be added under Section 68 as unexplained money. The Tribunal followed the ratio laid down in PCIT vs. Tulsyan and Sons (P.) Ltd. (Calcutta High Court), where it was held that sale proceeds of investments are not unexplained money. The Tribunal found the facts of the present case to be substantially similar to the cited decisions. Consequently, the reassessment proceedings were quashed, and the appeal was allowed.
The Tribunal held that the loan of Rs. 72,78,469/- received by the assessee from Welcome Distilleries Pvt. Ltd. was not to be treated as deemed dividend in the hands of the assessee company. This was because the loan was received by the concern (assessee company) in which the shareholder (Shri Heera Lal Jaiswal) had a substantial interest, and it should have been assessed as deemed dividend in the hands of the shareholder, not the company.
The Tribunal upheld the deletion of additions, finding that the assessee had discharged the primary onus of establishing the identity, creditworthiness, and genuineness of the loan transactions. The repayment of loans further supported the genuineness.
The Tribunal found that the rejection was solely due to a procedural/technical lapse and no adjudication on the merits of the claim was made. The matter was restored to the CIT(Exemption) for re-examination on merits after allowing the assessee to rectify the defects.
The Tribunal, after considering the rival submissions and the material on record, was of the considered view that the issue requires fresh adjudication in the interest of justice. Consequently, the matter was set aside to the file of the learned CIT(A) with a direction to decide the issue afresh on merits. The CIT(A) was instructed to provide a reasonable opportunity of being heard to the assessee and to pass a speaking order. The assessee was also directed to comply with notices issued by the CIT(A) and furnish all relevant evidence in support of its claim. The Tribunal did not decide the substantive issue of the allowability of the expenditure claim but remanded it for fresh consideration.