2022 (9) TMI 250 - AT - Income Tax

Ex-parte order - Bogus share capital and share premium received - unexplained cash credits u/s 68 - CIT(A) noted that even after expiry of two years of filing of the appeal, the assessee has failed to provide any details or written submissions and despite service of notice, no one appeared and, therefore, the ld. CIT(A) held that the assessee/appellant was diligently and willfully avoiding the appellate proceedings and decided the appeal on merits and uphold the assessment order. HELD THAT - As noted above, despite service of notices no one has put up in appearance on behalf of the assessee. After going through the assessment order as well as the impugned order of the ld. CIT(A), we do not find any justification to interfere with orders of the lower authorities. The impugned orders of the lower authorities are, therefore, upheld and appeal of the assessee is hereby dismissed.

Summary

Issues:
Appeal against order of CIT(A) for Assessment Year 2012-13 regarding addition of share capital and share premium as unexplained credit.

Analysis:
The appeal was directed by the assessee against the order of the CIT(A) for Assessment Year 2012-13. Despite multiple opportunities, the assessee did not appear before the authorities. The CIT(A) passed an ex-parte order due to the non-appearance of the assessee. The grounds of appeal raised by the assessee challenged the CIT(A)'s order as arbitrary, illegal, and lacking proper opportunity for being heard. The main issue concerned the addition of Rs.5,38,16,000/- on account of share capital and share premium received by the assessee.

The Assessing Officer noted that the assessee had reinvested shareholders' funds in different Private Limited Companies through a chain of transactions. The AO raised concerns about the high premium on shares issued by the assessee without substantial assets or track record. The AO issued summons under Section 131 to inquire into the transactions and creditworthiness of the subscriber companies. However, none of the involved parties appeared before the AO. The AO found that the assessee failed to justify the high premium and the nature of the transactions, leading to the addition of the share capital and premium as unexplained cash credits.

The CIT(A) directed the AO to serve notices to the assessee, but the company could not be located at the provided address. The CIT(A) observed that the assessee willfully avoided the proceedings by not providing any details or submissions. Despite the lack of cooperation from the assessee, the CIT(A) upheld the assessment order. The Tribunal, after reviewing the lower authorities' orders and the assessment details, found no reason to interfere. The Tribunal upheld the orders of the lower authorities and dismissed the appeal of the assessee.

In conclusion, the Tribunal dismissed the appeal of the assessee against the order of the CIT(A) for Assessment Year 2012-13 regarding the addition of share capital and share premium as unexplained credit. The decision was based on the non-appearance and lack of cooperation from the assessee throughout the proceedings, leading to the affirmation of the lower authorities' orders.