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2023 (3) TMI 395 - AT - Income TaxReopening of assessment u/s 147 - addition u/s 68 - Reason to believe - onus is on the assessee to prove the identity creditworthiness and genuineness of the transaction which he had failed at the time of scrutiny proceedings - HELD THAT - We find that it cannot be said that the CIT(A) while allowing the appeal of the assessee that there was no material before the assessing officer to brought on record any satisfaction or reason to believe that income chargeable to tax has been escaped assessment therefore notice issued u/s 148 was void-ab-initio. In the present appeal AO has issued notice u/s 148 on the basis of information received from DIT that the assessee has received share application money from several entities which were only engaged in business of providing accommodation entry to the beneficiary concern. It cannot be said that there was no basis that the AO to frame reason to believe and in such situation it cannot be said that the ld. AO has issued notice u/s 148 upon the assessee as void-ab-initio. Since the ld. AO had made instant enquiry u/s 133(6) and u/s 131 of the Act from the directors of the companies from where share premium was received by the assessee company and he discovered that assessee company had rooted its own fund/unaccounted money through the shareholders company - we are not convinced with the view taken by the CIT(A) by which he treating the notice issued u/s 148 AO was void-ab-initio and allow the appeal of the assessee without going through the merits of the case. Therefore we remand back to the whole issue to the file of the ld. CIT(A) to decide the merits of the case. Ground nos. 1 is allowed and ground no. 2 taken by the revenue is allowed for statistical purposes.
Issues:
1. Delay in filing the appeal before the Tribunal by the revenue. 2. Treatment of notice issued under section 148 of the Income Tax Act, 1961 as void ab-initio by the ld. CIT(A). 3. Addition of undisclosed income in the hands of the assessee under section 68 of the Act. 4. Appeal by the revenue against the order passed by the ld. CIT(A) without proper examination of the merits of the case. Issue 1: Delay in filing the appeal before the Tribunal by the revenue The revenue filed an application seeking condonation of a 20-day delay in filing the appeal before the Tribunal. The Tribunal found sufficient cause for the delay and accordingly condoned the delay. Issue 2: Treatment of notice issued under section 148 of the Income Tax Act, 1961 as void ab-initio by the ld. CIT(A) The ld. CIT(A) treated the notice issued under section 148 of the Act as void ab-initio without considering the findings and observations made by the ld. AO during the assessment proceedings. The ld. AO had issued the notice based on information that the assessee received share application money from entities engaged in providing accommodation entries. The Tribunal disagreed with the ld. CIT(A) and remanded the issue back to the ld. CIT(A) to decide on the merits of the case. Issue 3: Addition of undisclosed income in the hands of the assessee under section 68 of the Act The ld. AO added a sum of Rs. 1,53,00,000 in the hands of the assessee as undisclosed income under section 68 of the Act. This addition was based on the failure of the assessee to prove the identity, creditworthiness, and genuineness of the transaction related to share capital and share premium received from certain companies. Issue 4: Appeal by the revenue against the order passed by the ld. CIT(A) without proper examination of the merits of the case The revenue appealed against the order passed by the ld. CIT(A) which allowed the appeal of the assessee on legal grounds without delving into the factual matrix of the case. The revenue contended that the ld. CIT(A) did not appreciate the findings and observations made by the ld. AO regarding the failure of the assessee to prove the legitimacy of the transactions. The Tribunal set aside the order of the ld. CIT(A) and sustained the order of the ld. AO, directing a reexamination of the case by the ld. CIT(A). In conclusion, the Tribunal partly allowed the appeal of the revenue for statistical purposes, remanding the issue back to the ld. CIT(A) for a detailed examination of the merits of the case.
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