2019 (5) TMI 2020 - AT - Income Tax

Addition u/s 68 - action treating its share application / premium as unexplained cash credit - DR vehemently contends during the course of hearing that the CIT(A) s detailed findings under challenge have rightly affirmed the impugned addition on account of assessee s failure in proving the three ingredients of its share application / premium receipts in case of the seven entities in issue - HELD THAT - We find no merit in Revenue s instant arguments as the CIT(A) has neither framed any points of determination in view of documentary evidence placed at the assessee s behest on record nor has he taken recourse a detailed adjudication thereof as contemplated u/s. 250(6) of the Act. We notice that the co-ordinate bench s decision in M/s Primeline Sales Pvt. Ltd. 2019 (1) TMI 1562 - ITAT KOLKATA has restored the identical issue back to the AO on account of non-verification of the necessary facts / evidence before the AO. Thus, we restore the instant issue as well back to the AO for necessary factual verification as per law after affording adequate opportunities of hearing to the taxpayer. Assessee s appeal is allowed for statistical purposes.

Summary

Issues: Delay in filing appeal, treatment of share application as unexplained cash credit

The judgment addresses two main issues. Firstly, it deals with the delay in filing the appeal by the assessee and the reasons provided for the delay. Secondly, it focuses on the treatment of the share application/premium amount as unexplained cash credit under section 68 of the Income Tax Act, 1961.

Delay in Filing Appeal:
The judgment notes a 24-day delay in filing the appeal by the assessee. The delay was attributed to the non-availability of the directors during the prescribed limitation period. The Departmental Representative did not dispute the reasons provided for the delay, leading to the conclusion that the delay was not intentional or deliberate, but due to circumstances beyond the assessee's control. Consequently, the case proceeded to be heard on its merits.

Treatment of Share Application as Unexplained Cash Credit:
The primary substantive grievance of the assessee challenged the correctness of the lower authorities' action in treating its share application/premium as unexplained cash credit under section 68 of the Act. The assessee failed to prove the identity, genuineness, and creditworthiness of the share application money during the assessment proceedings. The CIT(A) affirmed the addition based on the lack of evidence provided by the assessee. However, the judgment highlighted that the CIT(A) did not frame any specific points of determination or conduct a detailed adjudication as required under section 250(6) of the Act.

Comparison with Previous Cases:
The judgment referenced a similar case involving M/s Primeline Sales Pvt. Ltd., where the issue was remanded back to the Assessing Officer for fresh adjudication due to non-verification of necessary facts and evidence. Citing precedents such as Sriram Tie Up Pvt. Ltd. and M/s. Sukanya Merchandise Pvt. Ltd., the Tribunal emphasized the importance of conducting a thorough investigation to determine the identity, genuineness, and creditworthiness of share subscribers. The judgment highlighted the need for a fair opportunity for the assessee to present evidence before the Assessing Officer.

Decision and Conclusion:
In line with previous rulings and considering the totality of circumstances, the Tribunal set aside the lower authorities' orders on the issue of treating share application as unexplained cash credit. The matter was remanded back to the Assessing Officer for fresh adjudication in accordance with the law, ensuring the assessee is given adequate opportunity to be heard. The appeal of the revenue was allowed for statistical purposes, and the assessee's appeal was also allowed for statistical purposes.

This detailed judgment underscores the importance of providing sufficient evidence to substantiate transactions and the necessity of fair opportunities for parties to present their case before the tax authorities. It also highlights the procedural aspects involved in tax assessments and the significance of conducting thorough investigations in such matters.