2017 (3) TMI 43 - HC - Income Tax

Revision u/s 263 - addition u/s 68 - Held that - It was necessary for the Commissioner and the Tribunal to have examined the issue in this light and to reach their conclusion based on the objections so raised and evidence led by the parties as to whether the amount of ₹ 50 lacs in respect of which additions had been made required to be made under Section 68 of the Act, had been found credited in the books of the account of the assessee in the previous year relevant to the assessment year 2008-09. No such finding having been recorded either by the Commissioner or by the Tribunal, the matter requires to be reconsidered in the light of the objections raised and evidence on record and a clear finding is required to be recorded before a direction could be issued to make such an addition. We, therefore, allow the appeal and remand the matter to the Tribunal to reconsider the matter. The matter on remand may be reconsidered within a period of three months from the date of production of a certified copy of the order before the authority concerned. A certified copy of the order may be placed before the authority concerned within next 15 days.

Summary

Issues:
1. Interpretation of Section 68 of the Income Tax Act, 1961 regarding unexplained cash credits.
2. Examination of the introduction of share capital of ?50 lakhs during the assessment year.
3. Assessment of whether the Assessing Officer properly examined the share capital introduction during the original assessment proceedings.

Analysis:
1. The case involved an appeal under Section 260A of the Income Tax Act, 1961 against a Tribunal order for the assessment year 2008-09. The main issue was whether the Assessing Officer adequately examined the introduction of share capital of ?50 lakhs. The appellant contended that the share capital was credited in the books of account in the previous year and should not be added as income under Section 68. The Commissioner initiated proceedings under Section 263, questioning the examination of share capital introduction. The Tribunal and Commissioner failed to consider the appellant's explanation, leading to ambiguity.

2. The appellant provided detailed responses and evidence to support the authenticity and genuineness of the share capital introduction. However, the Commissioner and Tribunal did not address the crucial point that the share capital was credited in the books of account in the previous year. The Court emphasized the importance of examining whether the amount in question was credited in the previous year relevant to the assessment year. The Court referred to relevant case law to support the interpretation of Section 68 regarding unexplained cash credits.

3. The Court held that a clear finding on the issue of share capital introduction was necessary before making any addition under Section 68. Since neither the Commissioner nor the Tribunal had addressed this crucial aspect, the matter was remanded to the Tribunal for reconsideration. The Court directed the Tribunal to reexamine the issue within three months and make a clear finding based on the objections raised and evidence on record. The appeal was allowed, and the matter was remanded for further consideration.

In conclusion, the judgment highlighted the importance of properly examining issues related to unexplained cash credits and share capital introduction under the Income Tax Act. The Court emphasized the need for authorities to consider all relevant explanations and evidence before making any additions to the income of the assessee.