2011 (2) TMI 1477 - AT - Income Tax

Summary

Issues involved: The issues involved in the judgment include the recall of an ex-parte Tribunal order, addition of share capital u/s 68 of the I.T. Act, enhancement of income by CIT(A), appeal before the Tribunal, dismissal of appeal as in fructuous, reversal of CIT(A)'s order u/s 154 of the Act, and revival of the appeal.

Recall of Ex-parte Tribunal Order:
The assessee filed a Miscellaneous Application seeking the recall of the ex-parte Tribunal order dated 29.01.2010. The Tribunal had dismissed the assessee's appeal as in fructuous, granting liberty to move an application for revival if the order passed by the CIT(A) u/s 154 of the Act was disturbed by the Tribunal.

Addition of Share Capital u/s 68 of the I.T. Act:
The CIT(A) confirmed the addition of &8377; 1,38,00,000/- made by the AO on account of share capital u/s 68 of the I.T. Act, treating it as unexplained. Additionally, the CIT(A) enhanced the assessee's income by &8377; 92 lakh on account of unexplained cash credit representing share capital. The Tribunal observed that the CIT(A) had confirmed the addition by finding that the identity of the assessee's creditors was sham, creditworthiness was not proved, and the transactions were not genuine.

Appeal Before the Tribunal:
The assessee filed an appeal before the Tribunal, contending that all disputed additions had been deleted by the CIT(A) in a subsequent order. The Tribunal, in its order dated 16.02.2009, dismissed the appeal as in fructuous but granted liberty to move for revival if the CIT(A)'s order u/s 154 of the Act was disturbed.

Reversal of CIT(A)'s Order u/s 154 of the Act:
The Tribunal allowed the department's appeal against the CIT(A)'s order dated 23.01.2009, where the CIT(A) had reversed his earlier order confirming and enhancing the addition made by the AO on account of bogus share capital. The Tribunal found that the earlier order was based on the lack of creditworthiness of share applicants, which could not be sustained in light of subsequent legal developments.

Revival of the Appeal:
The Tribunal, in light of the High Court's observation and the reversal of the CIT(A)'s order, allowed the assessee's appeal, reviving it for further consideration. The High Court directed the Tribunal to consider the application for revival in accordance with the liberty granted earlier. The Tribunal accepted the assessee's request, reviving the appeal for hearing on merits.