2023 (8) TMI 1024 - HC - Income Tax

Addition u/s 68 - unexplained share capital and share premium - According to the CIT(A) assessee had satisfied the triple test, i.e., i.e., established the identity, genuineness and creditworthiness of the investors, but this conclusion was reversed by the Tribunal, with a direction to the AO to make a fresh enquiry. HELD THAT - The reversal of the CIT(A) s order has taken place, without the Tribunal discussing as to what part of the order was unsustainable. A direction of remand has been issued, without indicating to the AO what exactly he is required to examine afresh.We are of the view that the Tribunal will have to deliberate on the matter afresh and articulate in the order its reasoning, if it chooses not to agree with the order of the CIT(A). Consequently, the impugned order is set-aside. Accordingly, the question of law is answered in favour of assessee.

Summary

Issues involved:
The judgment concerns the misdirection of the Tribunal in passing an order without providing reasons, specifically related to the addition made by the Assessing Officer under Section 68 of the Income Tax Act, 1961.

Summary:
The High Court framed a question of law regarding the Tribunal's misdirection in law due to the absence of reasons in the impugned order. The appeal was admitted for Assessment Year 2008-09 where the appellant contested the addition made by the Assessing Officer under Section 68 of the Income Tax Act. The Tribunal reversed the CIT(A)'s decision without providing any reasons and issued a direction for a fresh inquiry without specifying the unsustainable part of the order. The High Court set aside the impugned order, answered the question of law in favor of the appellant, and remanded the matter to the Tribunal for a de novo hearing.

The issue revolved around the addition of Rs. 3 crores to the appellant's income, received in the form of share capital and share premium from two entities. The CIT(A) found the appellant had satisfied the triple test of establishing identity, genuineness, and creditworthiness of the investors, but the Tribunal disagreed without providing any reasoning. The Tribunal's order lacked discussion on the unsustainable part of the CIT(A)'s decision and failed to specify the aspects to be examined afresh by the Assessing Officer.

In conclusion, the High Court found the Tribunal's order lacking in reasoning and clarity, leading to setting it aside and remanding the matter for a fresh consideration with proper articulation of reasoning in the order if disagreeing with the CIT(A)'s decision.