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2017 (12) TMI 1056 - AT - Income TaxRevision u/s 263 - Unexplained cash credit by invoking the provisions of sec. 68 - Held that - We take note that the Ld. CIT with his experience and wisdom has given certain guidelines in the backdrop of black money menace should have been properly enquired into as directed by him. The AO ought to have followed the investigating guidelines and method as directed by him to unearth the facts to determine whether the identity, genuineness and creditworthiness of the share subscribers. We note that the Hon ble Supreme Court (three judges bench) in the case of Tin Box, (2001 (2) TMI 13 - SUPREME Court) has held that since there was lack of opportunity to the assessee at the assessment stage itself, the assessment needs to be done afresh and thereby reversed the Hon ble High Court, Tribunal and CIT(A) s orders and remanded the matter back to AO for fresh assessment
Issues Involved:
1. Addition of ?24,55,00,000/- as unexplained cash credit under Section 68 of the Income-tax Act, 1961. 2. Procedural fairness and opportunity to the assessee during the assessment process. 3. Validity of the revisional order under Section 263 of the Income-tax Act, 1961. Issue-wise Detailed Analysis: 1. Addition of ?24,55,00,000/- as unexplained cash credit under Section 68 of the Income-tax Act, 1961: The main grievance of the assessee was the confirmation of the addition of ?24,55,00,000/- made by the Assessing Officer (AO) as unexplained cash credit by invoking Section 68 of the Income-tax Act, 1961. The AO noted discrepancies in the assessee's balance sheet, identifying share capital of ?2,45,50,000/- and share premium of ?22,09,50,000/-. Notices under Section 133(6) were issued to shareholders, and replies were received. However, the AO concluded that the identity and creditworthiness of the shareholders could not be proved beyond doubt due to non-appearance of directors of shareholder companies. Consequently, the AO added the sum as undisclosed cash credit. The CIT(A) upheld the AO's decision. 2. Procedural fairness and opportunity to the assessee during the assessment process: The assessee argued that the AO did not provide sufficient opportunity to prove the identity, genuineness, and creditworthiness of the shareholders. The AO issued notices for personal appearance of directors on 18.03.2014 and subsequently issued a show-cause notice on 21.03.2014, fixing the hearing on 26.03.2014. The Tribunal noted that the assessee had less than five days to respond, which was insufficient. Citing the Supreme Court’s decision in Tin Box Company Vs. CIT, the Tribunal emphasized that proper opportunity must be given to the assessee before making an assessment. 3. Validity of the revisional order under Section 263 of the Income-tax Act, 1961: The CIT invoked revisional jurisdiction under Section 263, setting aside the AO's order for fresh assessment with specific guidelines for investigation. The Tribunal referenced similar cases where the revisional jurisdiction under Section 263 was upheld by higher courts, including the Supreme Court. The Tribunal agreed that the AO should have followed the CIT's guidelines for thorough investigation into the identity, genuineness, and creditworthiness of the shareholders. The Tribunal found that the AO’s investigation was inadequate and did not comply with the CIT’s directions. Conclusion: The Tribunal set aside the CIT(A)'s order and remanded the matter back to the AO for de novo assessment, ensuring compliance with the CIT's guidelines and providing the assessee sufficient opportunity to present evidence. The Tribunal emphasized the need for detailed scrutiny and proper inquiry to establish the identity, genuineness, and creditworthiness of the shareholders, in line with judicial precedents. The appeal of the assessee was allowed for statistical purposes.
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