2021 (11) TMI 750 - HC - Income Tax

Addition u/s 68 - unexplained cash credit - assessee could not satisfactorily explain the genuineness of the transactions and creditworthiness of the share applicants in question - CIT-A deleted the addition - HELD THAT - Order passed by the CIT(A) does not suffer from any error. CIT(A) is entitled to exercise the power of the Assessing Officer. Therefore, two options were available before the CIT(A), in the event he found that facts were required to be brought on record. The first of the options available was to remand the matter to the Assessing Officer for fresh consideration. The second option would be to call for the remand report from Assessing Officer by keeping the appeal pending. CIT(A) exercised the second option which undoubtedly could go to save a lot of time in the matter of completion of the assessment. Upon direction being issued by the CIT(A) calling for a remand report, the Assessing Officer before us treated the matter with more seriousness and after thorough factual exercise reported that genuineness and creditworthiness of the share applicants have been established. In absence of any material available with the revenue to discard the remand report we find the CIT(A) was fully justified in accepting the remand report in deleting the addition. Tribunal has also re-examined the facts and rightly accepted the conclusion arrived at by the CIT (A). Thus we find there is no questions of law much less substantial questions of law arising for consideration in this appeal. - Decided against revenue.

Summary

Issues:
1. Addition of undisclosed cash credit under Section 68 of Income Tax Act, 1961.
2. Validity of remand by CIT (Appeals) under Section 250(4) of Income Tax Act, 1961.
3. Perversity of the conclusion reached by the Tribunal.

Issue 1:
The appellant challenged the addition of ?11,39,00,000 as undisclosed cash credit under Section 68 of the Income Tax Act, 1961. The Assessing Officer raised doubts about the genuineness of transactions and creditworthiness of share applicants. The CIT (Appeals) found that the Assessing Officer did not make serious attempts to serve notices on the assessee. After a remand report, it was concluded that the creditworthiness of share applicants and genuineness of transactions were established. The Tribunal upheld the CIT (Appeals) decision, stating that the Assessing Officer hurriedly completed the assessment due to time constraints. The appellant contended that the CIT (Appeals) should have remanded the matter instead of allowing the appeal. However, the Court found no error in the CIT (Appeals) decision, as the remand report supported the deletion of the addition. The Court distinguished the TIN BOX COMPANY case cited by the appellant, emphasizing that the opportunity at the appellate level cannot substitute the initial adjudication stage. The Tribunal's re-examination supported the CIT (Appeals) conclusion, leading to the dismissal of the appeal.

Issue 2:
Regarding the validity of the remand by CIT (Appeals) under Section 250(4) of the Income Tax Act, 1961, the Court found that the CIT (Appeals) had two options when additional facts were required. The CIT (Appeals) chose to call for a remand report from the Assessing Officer, which was a valid approach to save time in completing the assessment. The Assessing Officer's thorough factual exercise in the remand report supported the deletion of the addition. The Court concluded that the CIT (Appeals) was justified in accepting the remand report and dismissing the addition.

Issue 3:
The appellant contended that the Tribunal's conclusion was perverse. However, the Court found that the Tribunal re-examined the facts and correctly accepted the CIT (Appeals) decision. Consequently, no substantial questions of law arose for consideration, leading to the dismissal of the appeal and connected applications.