2018 (7) TMI 1481 - AT - Income Tax

Non compliance with CIT-A s Revision order u/s 263 - CIT-A directing the Assessing Officer to conduct a thorough enquiry to examine the genuineness and creditworthiness of the assessee s share application/premium - Held that - Neither of the lower authorities in assessment as well as in the appellate proceedings has complied with the CIT s section 263 directions (supra). It emerges that the Assessing Officer had sent section 131 process to the assessee s investor entities. He thereafter made the impugned addition without going through the corresponding particulars of the said investors on his own quoting the assessee s and said investors failure in substantiating their respective claims in support of the impugned share application/premium. We observe that a coordinate bench of this tribunal in M/s. Sukanya Merchandise Pvt. Ltd. Vs ITO in this backdrop of facts 2017 (12) TMI 1547 - ITAT KOLKATA restores the very issue of genuineness and creditworthiness of share application/premium on account of lower authorities failure in ensuring compliance of CIT s identical section 263 Learned Departmental Representative fails to rebut the above factual position as well as corresponding similar legal developments herein above. We therefore restore the instant lis as well back to the Assessing Officer for fresh adjudication as per law after affording adequate opportunity of hearing to the assessee. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Appeal against CIT(A)'s ex parte order upholding AO's action on share application money received.

Analysis:
1. The CIT(A) rejected the appeal due to the assessee's non-appearance during lower appellate proceedings, but no confirmation of notice service was found.
2. The Assessing Officer framed the assessment in question in 2010, revised later under section 263 to examine share application money's genuineness.
3. The AO added the share application money in 2014 due to unanswered notices to share subscribers, not complying with CIT's directions.
4. Lower authorities failed to comply with section 263 directions, leading to an unexplained addition without thorough investigation.
5. A similar case cited by the assessee highlighted lack of fair opportunity for presenting evidence, leading to restoration for fresh assessment.
6. The Tribunal emphasized the need for proper inquiry and compliance with CIT's directions, remanding the matter for de novo assessment.
7. The orders of lower authorities were set aside, and the matter was restored to the AO for fresh adjudication with proper hearing and evidence consideration.

This detailed analysis of the legal judgment highlights the issues involved, the procedural lapses by the lower authorities, and the Tribunal's decision to remand the case for a fresh assessment, emphasizing the importance of fair opportunity and compliance with legal directions.