2019 (8) TMI 1558 - AT - Income Tax

Unexplained cash credit u/s 68 - denial of natural justice - assessee submitted that there was no satisfactory compliance on the part of the concerned share subscribers to the summons issued by the Assessing Officer under section 131 during the course of assessment proceedings - As argued relevant documentary evidence to explain the relevant cash credits representing share application money including premium in terms of section 68 was not filed before the AO but still the ld. CIT(Appeals) considered that insufficient evidence available on the assessment records and decided the issue against the assessee - HELD THAT - We consider it fair and proper and in the interest of justice to give one more opportunity to the assessee to support and substantiate its case on the issue under consideration by sending the matter back to the AO. Even the ld. D.R. has not raised any objection for sending the matter back to the AO - set aside the impugned order of the ld. CIT(Appeals) and restore the matter to the file of the Assessing Officer for deciding the same afresh in accordance with law after giving one more opportunity to the assessee to support and substantiate its case - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Addition of share application money as unexplained cash credit under section 68 of the Income Tax Act, 1961.

Analysis:
The appeal was filed against the order confirming the addition of ?129.43 crores as unexplained cash credit by treating share application money as such under section 68. The assessee, a company engaged in investment and trading in shares, received a substantial amount of share application money during the year. The Assessing Officer issued summons under section 131 to verify the amount but faced non-compliance from the directors of share-subscribing companies. Consequently, the Assessing Officer held the cash credits unexplained, leading to the addition in the assessment completed under section 143(3).

During the appellate proceedings, the assessee contended that the addition was unjustified as the relevant documentary evidence was not filed due to non-cooperation from the share subscribers. The CIT(Appeals) upheld the addition, noting the lack of creditworthiness of the share applicant companies and nominal nature of the transactions. The Tribunal, after hearing both sides, found it fair to give the assessee another opportunity to substantiate its case. The matter was thus sent back to the Assessing Officer for fresh consideration, with the assessee required to provide necessary cooperation and evidence for expedited assessment.

In conclusion, the appeal was treated as allowed for statistical purposes, and the order was pronounced in the open court on August 09, 2019.