2019 (6) TMI 919 - AT - Income Tax

Reopening of assessment - addition u/s 68 in respect of share capital received under foreign direct investment (FDI) group - HELD THAT - CIT(A) had ignored various submissions and documentary evidences filed by the assessee before the AO as well as before him and had not given any finding with regard to those evidences on merits. Assessee has filed documents to prove the identity and creditworthiness of the shareholders and genuineness of the transaction like Names of permanent account members alongwith copy of PAN card, addresses of domestic shareholder as well as Mauritius shareholder, Form FCGPRs filed with RBI for investment by Mauritius shareholder in the assessee company together with the following details in relation to Mauritius shareholder i.e. certificate of incorporation, tax residence certificates, audited financial statements, Copy of return of allotment filed by the assessee with Registrar of Companies and Copy of bank statements of Mauritius shareholder as well as the assessee company We find that these documents were not considered by the CIT(A) while disposing off the appeal for the A.Y.2008-09. Hence, in the interest of justice and fair play, we deem it fit and appropriate to remand this appeal to the file of the CIT(A) for denovo adjudication of the entire issues - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Validity of reopening the assessment
2. Addition made under section 68 of the Income Tax Act

Analysis:
1. The appeals in ITA Nos.2481/Mum/2019 & 2482/Mum/2019 for A.Yrs. 2008-09 & 2009-10 challenged the order by the ld. Commissioner of Income Tax (Appeals) against the assessment passed u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961. The common issue raised by the assessee was the validity of reopening the assessment and an addition made u/s.68 of the Act concerning share capital received under foreign direct investment (FDI) group.

2. The assessee, a private limited company engaged in a residential township project in Pune, raised share capital from its shareholders during A.Y.2008-09. The assessment for that year was reopened, and an addition was made u/s.68 of the Act in respect of share capital received. The ld. CIT(A) disposed off the appeal without considering crucial submissions and documentary evidence provided by the assessee, which included proof of identity and creditworthiness of shareholders, along with the genuineness of the transaction.

3. The Tribunal found that the documents submitted by the assessee were not considered by the ld. CIT(A) while disposing off the appeal for A.Y.2008-09. Therefore, in the interest of justice, the Tribunal remanded the appeal to the file of the ld. CIT(A) for a fresh adjudication of all issues raised. The assessee was granted the liberty to raise additional grounds and submit further evidence. The decision rendered for A.Y.2008-09 would apply for A.Y.2009-10 as well.

4. The stay applications related to the appeals were dismissed as infructuous since the appeals had been disposed of. Consequently, both appeals of the assessee were allowed for statistical purposes, and the stay petitions were dismissed as infructuous. The order was pronounced on 12/06/2019.