2021 (10) TMI 876 - AT - Income Tax

Addition of unexplained cash credit u/s. 68 - assessee had failed to discharge its onus of establishing the genuineness and creditworthiness of source of funds received - non-production of Directors/Principal officers of the Share applicant companies - HELD THAT - It is pertinent to note that in Assessment Order, the Assessing Officer has categorically stated that the Directors or persons related to share applicant were never produced before the AO despite giving notice under Section 133(6) of the Act. But the CIT(A) in para 3.2 (k) mentioned the correct names and addresses which was not given to the AO by the Assessee at the initial stages of the assessment proceedings but at the end period of the Assessment proceedings. The parties with correct address were never inspected by the AO - CIT(A) without verifying the actual existence of the share applicant parties at those addresses, simplicitor accepted the contentions of the assessee, which is not just and proper. Therefore, we are of the view that the matter needs to be adjudicated after taking cognizance of the new addresses of the share applicants provided by the assessee by issuing fresh notice under Section 133(6) to those parties. And thereafter, take cognizance of the relevant material and adjudicate the matter. Thus, the matter is remanded back to the file of the Assessing Officer for proper adjudication after issuing fresh notice under Section 133(6) to those share applicant parties and thereafter, adjudicate the issue a fresh as per the due process of law - Appeal of the Revenue is partly allowed for statistical purpose.

Summary

Issues:
Appeal against order deleting unexplained cash credit under section 68 of the Income Tax Act, 1961.

Analysis:
1. Background: The appeal was filed by the Revenue against the order passed by CIT(A) for the assessment year 2012-13, concerning the deletion of an addition of ?1,98,50,000 on account of unexplained cash credit under section 68 of the Income Tax Act, 1961.

2. Assessing Officer's Observation: The Assessing Officer noted that the assessee company received share application money during the year, along with amounts from previous years, and un-allotted share application money. Subsequently, an addition of ?1,98,50,000 was made as unexplained credit under section 68 of the Act.

3. Appeal Before CIT(A): The assessee filed an appeal before the CIT(A), who allowed the appeal, leading to the Revenue's challenge. The Revenue contended that the CIT(A) overlooked the genuineness and creditworthiness of the parties and accepted the assessee's contentions without proper verification.

4. Arguments: The Revenue argued that the CIT(A) failed to consider that the parties did not respond to the notices issued under section 133(6). In response, the assessee highlighted that all payments were made through banking channels, parties were tax-assessed in Delhi, and necessary documents were submitted to establish the genuineness of the credits.

5. Judicial Analysis: The Tribunal observed discrepancies in the addresses provided by the assessee and directed a fresh notice under section 133(6) to the share applicant parties for proper verification. The Tribunal emphasized the need for due process of law and remanded the matter back to the Assessing Officer for further adjudication.

6. Outcome: The Tribunal partly allowed the appeal for statistical purposes, emphasizing the importance of verifying the new addresses provided by the assessee and ensuring adherence to principles of natural justice in the proceedings.

This detailed analysis highlights the key arguments, observations, and the judicial decision made by the Tribunal in response to the appeal concerning the unexplained cash credit issue under section 68 of the Income Tax Act, 1961.