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2019 (9) TMI 5 - AT - Income TaxAddition u/s 68 - Addition made on account of share capital and premium - HELD THAT - As relying on M/S JANSAMPARK ADVERTISING AND MARKETING (P) LTD. 2015 (3) TMI 410 - DELHI HIGH COURT we find in the present case the issue is involving an addition u/s 68 of the Act. The said provision requires an explanation to the satisfaction of AO regarding the three ingredients i.e identity creditworthiness and genuineness of the transactions. As discussed above the Assessing Officer discharged his duty in the remand proceedings by examining the additional evidences filed by the assessee before the CIT(A) and found satisfied with the correctness in respect of the three ingredients mentioned above. Therefore the ratio laid down by the Hon ble High Court does not come to the rescue to the appellant-Revenue. Having considered the submissions of ld. DR case laws as discussed above the submissions of ld. AR and facts and circumstances of the case the finding of the Assessing Officer wherein it establishes that the assessee proved identity creditworthiness and genuineness of share subscribing companies and we find no infirmity in the order of CIT(A) and it is justified. Thus grounds raised by the Revenue are dismissed.
Issues Involved:
1. Justification of CIT(A) in deleting the addition made on account of share capital and premium. 2. Compliance with Rule 46A regarding additional evidence. 3. Validity of the remand report and its consideration by CIT(A). 4. Jurisdiction of the Assessing Officer (AO) to appeal against his own findings. Issue-wise Detailed Analysis: 1. Justification of CIT(A) in Deleting the Addition Made on Account of Share Capital and Premium: The primary issue was whether the CIT(A) was justified in deleting the addition made by the AO on account of unexplained cash credit under Section 68 of the Income Tax Act. The AO had added ?9,15,00,000/- to the assessee's income, treating the share capital and premium as unexplained cash credit due to non-compliance with summons and lack of a track record or asset base. The assessee appealed, submitting extensive documentation to prove the identity, creditworthiness, and genuineness of the investor companies. The CIT(A) considered these documents and sought a remand report from the AO. The AO, in his remand report, verified the documents and found no discrepancies, thus confirming the identity, creditworthiness, and genuineness of the transactions. Consequently, the CIT(A) deleted the addition, finding no adverse findings in the remand report. 2. Compliance with Rule 46A Regarding Additional Evidence: The Revenue contended that the CIT(A) did not follow Rule 46A, which governs the admission of additional evidence. The CIT(DR) argued that the CIT(A) failed to specify the additional evidence admitted and did not pass an order admitting such evidence before remanding the matter to the AO. The CIT(A), however, had called for a remand report under Rule 46A and provided the AO with an opportunity to examine the additional evidence submitted by the assessee. The AO's remand report, which found no discrepancies, was duly considered by the CIT(A). The Tribunal found that the CIT(A) had complied with Rule 46A by allowing the AO to examine the additional evidence and thus dismissed the Revenue's contention. 3. Validity of the Remand Report and Its Consideration by CIT(A): The Revenue challenged the validity of the remand report, arguing that the AO's investigation was perfunctory and contradictory to his original assessment order. The CIT(DR) pointed out that the AO did not examine all the creditors' bank statements and took statements from only two directors. However, the Tribunal noted that the CIT(A) had thoroughly examined the remand report, which confirmed the identity, creditworthiness, and genuineness of the investor companies. The Tribunal upheld the CIT(A)'s decision, stating that the AO had conducted a detailed examination during the remand proceedings and found no discrepancies. 4. Jurisdiction of the Assessing Officer (AO) to Appeal Against His Own Findings: The Tribunal addressed the issue of whether the AO had the jurisdiction to appeal against his own findings in the remand report. The Tribunal referred to various case laws, including decisions from the High Courts of Kerala, Allahabad, and Madras, which held that an AO cannot appeal against findings that he himself had agreed to in the remand report. The Tribunal found that the AO had no jurisdiction to file an appeal against the remand report, which he had submitted without any adverse findings. Consequently, the Tribunal dismissed the Revenue's appeal, supporting the CIT(A)'s order. Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the addition made on account of share capital and premium. The Tribunal found that the CIT(A) had complied with Rule 46A, the remand report was valid and properly considered, and the AO had no jurisdiction to appeal against his own findings. The Tribunal concluded that the assessee had successfully proved the identity, creditworthiness, and genuineness of the investor companies, and there was no infirmity in the CIT(A)'s order.
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