2023 (5) TMI 26 - AT - Income Tax

Assessment u/s 153A - addition to the business income, deemed income under section 56(2)(vii)(a) of the Act, cash credit under section 68 of the Act and interest income - As argued unfortunately, all the persons responsible for the affairs of the company were in judicial custody and, therefore, the assessee could not produce all the relevant books, vouchers etc., before the authorities to prosecute the case diligently - HELD THAT - As material clearly establishes that from 12/02/2016 to 23/10/2018 all the persons responsible for the affairs of the company were in custody and in their absence, as claimed by the AR, some part of the material was produced before the authorities. There is nothing contrary to disbelieve the statement of the learned AR that the assessee could not prosecute the proceedings before the authorities diligently due to the fact of non-availability of the persons responsible for the affairs of the company. In fact, this peculiar circumstance is taken note by the Co-ordinate Benches of this Tribunal in the cases of the group concerns on earlier occasions as is evidenced by the copies of the orders in the case of DCIT vs. Agri Gold Constructions P. Ltd 2022 (11) TMI 1347 - ITAT HYDERABAD and M/s. Dream Land Ventures Private Limited 2023 (4) TMI 1185 - ITAT HYDERABAD . We are of the considered opinion that it would be in the interest of justice to set aside the impugned orders and to restore the matters to the file of the learned AO to adjudicate the same afresh giving an opportunity of being heard to the assessee and also to produce all the relevant material at their custody. Appeal treated as allowed for statistical purpose.

Summary

Issues involved:
The judgment involves appeals by both the assessee and Revenue against the order passed by the Commissioner of Income Tax (Appeals) for the assessment years 2009-10 to 2015-16. The main issues revolve around additions made to the business income, deemed income, cash credit, and interest income. The case also deals with the acquisition of shares below Fair Market Value and the treatment of interest income.

Assessment Year 2011-12:
The Assessing Officer proceeded under section 144 of the Income Tax Act based on a search and seizure operation, making additions to the business income, deemed income, cash credit, and interest income. The Commissioner of Income Tax (Appeals) directed the Assessing Officer to adopt a 5% rate for net profit estimation and revise the calculation of Fair Market Value for shares acquired below market value. Both the Revenue and the assessee challenged the deletions and additions made by the CIT(A). The assessee faced difficulties in producing relevant documents due to key personnel being in judicial custody. The Tribunal set aside the orders and directed the Assessing Officer to re-adjudicate after providing an opportunity to the assessee to present all relevant material.

Assessment Year 2012-13:
The issues and grounds for this assessment year were identical to 2011-12, leading to a similar conclusion. The Tribunal applied the same decision as for the previous year, allowing the appeals for statistical purposes.

Assessment Years 2009-10 and 2010-11:
No additions were made under section 56(2)(vii)(a) for these years. For the assessment years 2013-14 to 2015-16, there were no additions under section 68 of the Act. The Tribunal found similarities with the issues in the assessment year 2011-12 and directed the matters to be restored to the Assessing Officer for fresh adjudication after providing an opportunity for the assessee to present all relevant material. All appeals for these years were treated as allowed for statistical purposes.

Conclusion:
The Tribunal recognized the challenges faced by the assessee in presenting relevant material due to key personnel being in custody and directed a fresh adjudication by the Assessing Officer. The judgment emphasized the importance of providing a fair opportunity for the assessee to present their case and all relevant evidence.