2018 (1) TMI 1072 - AT - Income Tax

Addition u/s 68 - unexplained cash credit - Held that - On 28.12.2017, Ld. DR has filed an Application dated 28.12.2017 stating therein During the course of previous hearing Hon ble Bench directed to obtain the case record from field formation. Letter were issued to the concerned AO, but assessment record are not received and sought adjournment. Accordingly, the case was adjourned for 18.01.2018. Again on 18.1.2018 the Ld. Sr. DR unable to produce the assessment records as asked by the Bench vide its order sheet dated 12.12.2017, as aforesaid and in the absence thereof the Bench is unable to decide the case in a proper manner. Therefore, in the interest of justice, the issues in dispute are remitted back to the file of the AO to decide the issues in dispute afresh, after giving adequate opportunity of being heard to the assessee - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Challenge to the order of CIT (A) by Assessee
2. Addition of share application money as unexplained cash credit
3. Lack of proper opportunity during assessment proceedings

Analysis:
1. The Assessee challenged the order of the Ld. CIT(A)-29, New Delhi relevant to the assessment year 2012-13, raising concerns about the legality of the order passed by the CIT(A). The Assessee contested the justification of upholding the action of the Assessing Officer (AO) in treating the share application money as unexplained cash credit under section 68 of the Income Tax Act. Additionally, specific grounds were raised regarding the lack of proper opportunity provided during the assessment proceedings by the AO, including issues related to the identity, genuineness, and creditworthiness of the investing companies.

2. The Assessee argued that the AO failed to consider the compliance made to notice issued under section 133(6) regarding the existence of the investing entities and overlooked crucial evidence supporting the legitimacy of the share capital transactions. Moreover, the Assessee highlighted the reliance on statements of the promoters without providing copies for rebuttal and cross-examination, contrary to legal precedents. The Assessee also pointed out the lack of opportunity to respond to inquiries conducted by the Investigation Wing on the investing companies and the absence of confrontation with findings during the assessment proceedings.

3. During the hearing, the Assessee emphasized the inadequate opportunity provided during the assessment, leading to a lack of proper confrontation of materials collected by the AO. The Tribunal noted discrepancies in the assessment process, including the failure to confront the Assessee with the outcomes of inquiries and statements recorded. As a result, the Tribunal remitted the issues back to the AO for fresh consideration, emphasizing the importance of providing adequate opportunity for the Assessee to be heard. Ultimately, the Assessee's appeal was allowed for statistical purposes, indicating a procedural victory based on the lack of proper opportunity during the assessment proceedings.