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2018 (10) TMI 732 - AT - Income TaxAdmission of additional evidences - Additions u/s 68 - share capital and share premium - creditworthiness and genuineness of the transaction. - assessee-company filed documentary evidences of each of the shareholder - Held that - The delay in filing the additional ground is of no consequence because when appeal is filed within the period of limitation, the additional ground could be raised at any time during the pendency of the appeal before the Tribunal. The decisions relied upon by the Ld. D.R. would not support the case of the Revenue. Considering the totality of the facts and circumstances of the case and above discussion, we admit the additional ground of appeal for the purpose of deciding the matter in issue. Since this issue goes to the root of the matter and authorities below has no occasion to examine the correctness of the additional ground raised by the assessee-company for the first time before the Tribunal, therefore, we are of the view that the additional ground should be set aside to the file of A.O. for deciding the same in accordance with law. Once legal ground is restored to the file of A.O. for adjudication as per Law, therefore, this issue on merit shall also be restored to the file of A.O. for deciding the same afresh after taking decision on the legal issue.
Issues Involved:
1. Addition of ?100 crores under Section 68 of the Income Tax Act, 1961. 2. Disallowance under Section 14A read with Rule 8D of the Income Tax Rules, 1962. 3. Admission of additional ground of appeal regarding precedence of assessment order under Section 153C/153A over the impugned order under Section 143(3). Issue-wise Detailed Analysis: 1. Addition of ?100 Crores under Section 68 of the Income Tax Act, 1961: The assessee-company filed a return declaring an income of ?19,92,354/- for the assessment year 2008-2009. During the scrutiny, it was found that the assessee had increased its share capital from ?3,02,09,000/- to ?13,02,09,000/- and received a share premium amounting to ?90,00,00,000/-, totaling ?100 crores. The assessee provided a list of shareholders and various documents to prove the identity, creditworthiness, and genuineness of the transactions. However, the Assessing Officer (A.O.) found discrepancies in the bank accounts and the functioning of the shareholder companies, leading to the conclusion that the transactions were sham and added the entire amount to the income under Section 68. The CIT(A) upheld the addition, noting nominal profits and frequent changes in the directors of the shareholder companies, which indicated non-genuine activities. The assessee's inability to produce shareholders and the Inspector's adverse report further supported this conclusion. The Tribunal admitted an additional ground of appeal regarding the precedence of the assessment order under Section 153C/153A over the impugned order under Section 143(3). The Tribunal set aside the orders of the authorities below and restored the matter to the A.O. for fresh adjudication, emphasizing the need to confront the assessee with all adverse materials and to consider all documentary evidence in detail. 2. Disallowance under Section 14A read with Rule 8D of the Income Tax Rules, 1962: The A.O. disallowed ?22,74,040/- under Section 14A read with Rule 8D, as the assessee earned a dividend income of ?590/-. The CIT(A) upheld the disallowance in principle but reduced it to 1/3rd of the expenditure claimed, amounting to ?5,27,32,100/-. The Tribunal, referring to the Delhi High Court's decision in Joint Investment Pvt. Ltd. vs. CIT, held that the disallowance under Section 14A should not exceed the exempt dividend income of ?590/-. Consequently, the Tribunal restricted the disallowance to ?590/- and partly allowed this ground of appeal. 3. Admission of Additional Ground of Appeal: The assessee filed an additional ground of appeal, arguing that the assessment order under Section 153C/153A should take precedence over the impugned order under Section 143(3). The Tribunal admitted this additional ground, citing the Supreme Court's decision in National Thermal Power Co. Ltd. vs. CIT, which allows raising new legal grounds if they are necessary to assess the correct tax liability. The Tribunal found that the additional ground was supported by the Delhi High Court's decision in CIT vs. Anil Kumar Bhatia, which stated that only one assessment order should be passed for each assessment year, including both disclosed and undisclosed income. The Tribunal set aside the orders of the authorities below and restored the additional ground to the A.O. for fresh adjudication. Conclusion: The Tribunal partly allowed the appeal, setting aside the orders of the authorities below on the addition of ?100 crores under Section 68 and the disallowance under Section 14A, and restored the matters to the A.O. for fresh adjudication. The Tribunal also admitted the additional ground of appeal regarding the precedence of the assessment order under Section 153C/153A and directed the A.O. to decide this issue in accordance with the law.
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