2015 (11) TMI 1371 - AT - Income Tax

Disallowance of increase in share capital and unsecured loans - CIT(A) deleted the addition - Held that - The addition in the facts of the present case as far as increase in share capital is concerned was obviously limited to that portion of the source of increase in share capital which was found to be not genuine. The fact that the increase in share capital was over and above the addition is thus not relevant as its genuineness is not questioned by the AO. Thus that portion of the increase in share capital has necessarily to be excluded. Similarly if unsecured loans have not been explained, the addition on facts is warranted. It is further seen that the conclusion that in 2007-08 assessment year, amounts was repaid does not elaborate what is the evidence considered for arriving at the said conclusion since the impugned order is silent as the evidence taken into consideration the same cannot be sustained. The attempts of the ITAT to serve notice upon the assessee having failed has resulted that the assessee is also not in a position to throw light on these crucial aspects. Accordingly in view of the above reasons, the impugned order is set aside and the issues are restored back to the file to the CIT(A) with the direction to pass a speaking order in accordance with and if need to obtain a Remand Report from the AO after giving the assessee a reasonable opportunity of being heard. Since the facts, the circumstances and the grounds are identical in all the years except for the differences in amounts therefore, for similar reasons these appeals are also restored back after setting aside the finding arrived at in the respective impugned orders again back to the file to the CIT(A) with the direction to decide the same in accordance with law after giving the assessee a reasonable opportunity of being heard. - Decided in favour of revenue for statistical purposes

Summary

Issues:
Appeal against deletion of additions made by Assessing Officer on share capital and unsecured loans in assessment years 2004-05 to 2006-07.

Analysis:
The judgment pertains to appeals challenging the correctness of separate orders dated 26.09.2014 of CIT(A)-I, New Delhi for assessment years 2004-05 to 2006-07. The appellant contested the deletion of additions made by the Assessing Officer on account of an increase in share capital and unsecured loans. Despite no representation from the assessee during the hearing, the Tribunal proceeded with the case after hearing the Ld. Sr. DR. The Sr. DR highlighted a search and seizure operation on Mahesh Mehta Group cases in 2009, leading to the initiation of assessment proceedings under section 153C of the Income Tax Act. The AO made additions due to the assessee's failure to explain the increase in share application money and unsecured loans. The CIT(A) rejected the jurisdictional issue raised by the appellant, emphasizing compliance with notices and participation in proceedings. The CIT(A) reasoned that the additions lacked incriminating material and were deleted.

In challenging the deletion of additions, the Sr. DR argued that the CIT(A)'s reasoning was flawed, especially regarding the share capital increase and unsecured loans. The CIT(A) had deleted the additions based on the transactions being through banking channels and involving existing assessees. However, the Sr. DR contended that the reasoning was flawed as it did not consider the source of funds comprehensively. The Tribunal found merit in the Sr. DR's arguments, noting inconsistencies in the additions made by the AO and the lack of conclusive evidence for repayment in subsequent years. The Tribunal set aside the impugned order, directing the CIT(A) to pass a speaking order based on cogent evidence and potentially obtain a Remand Report from the AO.

The Tribunal observed that the issues were similar across the assessment years, and therefore, all appeals were restored back to the CIT(A) for a fresh decision after giving the assessee a reasonable opportunity to be heard. The appeals of the Revenue were allowed for statistical purposes, and the order was pronounced on 23.9.2015.