2015 (7) TMI 412 - HC - Income Tax

Refund/ forfeiture of advance amount - Appellant unable to produce necessary facts during proceedings - Held that - It is important to note that in the remand report the AO himself stated that the appellant was probably unable to adduce all the facts due to shortage of time in the original assessment proceedings. We are inclined to accept Mr. Alok Mittal s alternate submission on behalf of the appellant that in view thereof the appellant must at least be afforded an opportunity of establishing her case. He rightly pointed out that in view of this finding the Tribunal ought to have remanded the matter to the AO to adduce the necessary facts on this limited issue. In these circumstances, the ends of justice would require granting the appellant an opportunity of establishing the facts in this regard. However, considering that the matter has been agitated at three levels before the authorities under the Income Tax Act, 1961, we deem it appropriate to remand the matter to the CIT (Appeals) to reconsider the issue in this regard alone. It will be open to the CIT (Appeals) to seek a remand report from the AO pertaining to the facts in this regard. The appellant will be entitled to adduce additional evidence in this regard including of the respective proposed purchasers and proposed sellers under the said three transactions. - Matter remanded back.

Summary

Issues:
1. Appeal against Tribunal's order setting aside CIT's deletion of addition made by AO in original assessment order for the assessment year 2007-2008.
2. Substantial question of law: Whether the addition of Rs. 20 lacs based on presumption and against material on record is sustainable?
3. Discrepancy in transactions: Three agreements involving advance payments, cancellations, and refunds leading to the addition of Rs. 20 lacs by AO.
4. Disagreement between authorities: CIT (Appeals) accepted appellant's case of refunding amount to one party, while Tribunal reversed the finding as perverse.
5. Burden of proof on appellant: Failure to establish the utilization of refunded amount to make payment to the other party.
6. Opportunity for appellant: Need for remand to allow appellant to establish facts due to shortage of time during original assessment proceedings.

Analysis:
The High Court heard an appeal challenging the Tribunal's decision to set aside the CIT's deletion of an addition made by the Assessing Officer (AO) in the original assessment order for the assessment year 2007-2008. The substantial question of law raised was whether the addition of Rs. 20 lacs, based on presumption and against the material on record, was sustainable. The case involved three transactions where the appellant entered agreements for sale, made advance payments, cancellations, and refunds, leading to the disputed addition by the AO. The CIT (Appeals) accepted the appellant's claim of refunding the amount to one party, but the Tribunal deemed this finding as perverse, highlighting the discrepancy in the evidence presented. The appellant failed to prove the utilization of the refunded amount to make payments to the other party, shifting the burden of proof onto the appellant. Despite the Tribunal's decision, the High Court acknowledged the appellant's need for an opportunity to establish facts, considering the shortage of time during the original assessment proceedings. Consequently, the High Court remanded the matter to the CIT (Appeals) for reconsideration, allowing the appellant to present additional evidence and seek a remand report from the AO to clarify the facts related to the transactions. The appeal was disposed of, emphasizing the importance of granting the appellant a fair chance to establish the facts in the case.