2012 (9) TMI 580 - AT - Income Tax

Addition u/s 68 - share application money - assessee contesting the assessment framed u/s 143(3) on ground of wrong assumption of jurisdiction - non-serving of notice u/s 143(2)(ii) - assessee also contesting non-admission of additional evidences by CIT(A) - Held that - Finding recorded by the AO in his remand report and also by CIT(A) in his appellate order with regard to issue and dispatch of notices, on the said address given by the assessee in its PAN application has not been controverted by assessee by brining any positive material on record. Since assessee was in actual receipt of intimation u/s 143(1) and also refund order which was encashed by assessee in its bank account, there is no reason for accepting assessee s contention for non-service of notice u/s 143(2) on the very same address. Ground taken by the assessee with regard to non service of notice is hereby dismissed. Additional evidences produced by the assessee before the CIT(A) goes to the root of the issue for deciding the identity, creditworthiness and genuineness of transaction in respect of share application money. In the interest of justice, we accept the additional evidence filed by the assessee and direct the AO to consider the issue afresh - Decided in favor of assessee for statistical purposes.

Summary

Issues:
1. Assessment of unexplained credit as income.
2. Validity of notice u/s 143(2).
3. Treatment of share capital as unexplained credit.

Assessment of unexplained credit as income:
The Assessing Officer observed that the appellant, a registered company, raised paid-up capital and received share application money during the relevant year. Despite submitting shareholder confirmations and share certificates, the Assessing Officer treated a significant amount as unexplained credit, adding it to the appellant's income. The CIT(A) upheld this addition, emphasizing the appellant's failure to establish the creditworthiness of shareholders and the genuineness of transactions, as required under section 68 of the Income-tax Act. The CIT(A) concluded that the appellant did not discharge the onus of proof, leading to the confirmation of the addition.

Validity of notice u/s 143(2):
The appellant contested the jurisdiction of the Assessing Officer, claiming that a notice u/s 143(2) was not served, rendering the assessment order void. However, the CIT(A) found that the notice was dispatched and served within the stipulated time frame, based on the PAN address provided by the appellant. The CIT(A) highlighted that the appellant had received other communications at the same address, including a refund order, further supporting the validity of the notice. The tribunal agreed with the lower authorities, dismissing the appellant's argument regarding the non-service of the notice u/s 143(2).

Treatment of share capital as unexplained credit:
Regarding the share capital issue, the appellant sought to introduce additional evidence related to ledger accounts and share application money of specific shareholders. The CIT(A) rejected this evidence, citing the appellant's failure to submit it during the original assessment proceedings despite opportunities provided. However, the tribunal recognized the significance of the additional evidence in establishing the identity, creditworthiness, and genuineness of transactions. In the interest of justice, the tribunal accepted the additional evidence and directed the Assessing Officer to reconsider the issue, taking into account all evidence presented. Consequently, the tribunal allowed the appeal in part for statistical purposes, emphasizing the importance of considering the additional evidence in the assessment of the share capital/application money issue.