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2024 (6) TMI 792 - AT - Income TaxCIT(A) Jurisdiction u/s 251(2) - enhancing taxable income based on unexplained investment from a foreign entity - HELD THAT - Assessee has received investments in foreign remittance from Singapore and all the clearance from RBI were obtained. The only issue needed examination is the source for this money in terms of Section 68 of the Act as proposed by the ld. CIT(A) and the same need to be examined and hence I set aside the order of the ld. CIT(A) and that of Assessing Officer and remit the issue back to the file of the Assessing Officer who will examine the entire investments of foreign remittance received from M/s. Darlington Investments P Ltd Singapore under section 68 of the Act denovo. In terms of the above discussions I remit the issue back to the file of the ld. Assessing Officer for fresh consideration. Appeal filed by the assessee is allowed for statistical purposes.
Issues involved: Jurisdiction of CIT(A) u/s 251(2) of the Act to enhance taxable income based on unexplained investment from a foreign entity.
The Appellate Tribunal ITAT Chennai considered an appeal arising from an order by the Commissioner of Income Tax (Appeals)-16, Chennai regarding the assessment year 2011-2012 u/s.143(3) of the Income Tax Act, 1961. The assessee contested the jurisdiction of CIT(A) to enhance taxable income based on a sum received from a foreign entity, M/s. Darlington Investments P Ltd, Singapore, without proper justification. The case involved a search and seizure action revealing inward remittance of Rs. 6,88,00,000/- from M/s. Darlington Investments P Ltd, Singapore. The Assessing Officer sought clarification on the source of this amount, leading to the enhancement proposal by CIT(A) u/s 251(2) of the Act. The CIT(A) increased the unexplained income of the appellant company to Rs. 6,54,50,000/-, questioning the creditworthiness of the foreign entity. The Tribunal noted that the CIT(A) did not adequately examine the evidence provided by the assessee, including bank statements and necessary permissions related to the foreign investments. The Tribunal set aside the orders of CIT(A) and Assessing Officer, remitting the issue back to the Assessing Officer for a fresh examination of the foreign remittance under section 68 of the Act. The appeal was allowed for statistical purposes, emphasizing the need for a thorough investigation into the source of the foreign investment. The judgment highlights the importance of proper examination of evidence in cases involving foreign investments and the necessity for adherence to legal procedures outlined in the Income Tax Act, 1961.
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