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2018 (11) TMI 115 - AT - Income TaxRevision u/s 263 - unexplained cash credit - since the director did not appear before the ld. AO the entire amount has been added to the income of the assessee - Held that - As argued before us that the AO has not made independent enquiry at his end to disprove the claim of the assessee company is really evident from the conduct of the AO which is placed before us. We find that the ld. CIT(A) also purposely overlooked such conduct of the AO and confirmed the same on the basis of the finding by the AO in a stereotyped manner without considering the relevant laws, the present legal position in the identical facts of the case, the judgements passed by this ld. Tribunal which has attained finality by the pronouncement of the Apex Court. Thus set aside the orders passed by the authorities below and restore the issue to the file of the AO to decide the same afresh positively upon making compliance of the guidelines/mandate as mentioned above in accordance with law. - Appeals of the assessee are allowed for statistical purposes.
Issues Involved:
1. Disallowance of filing fees. 2. Genuineness of share capital and share premium. 3. Non-appearance of directors and lack of independent enquiry by the AO. 4. Application of Section 68 of the Income Tax Act, 1961. 5. Compliance with guidelines/mandates under Section 263 of the Act. Issue-wise Detailed Analysis: 1. Disallowance of Filing Fees: The Assessing Officer (AO) disallowed the filing fees of ?24,500/- during the assessment. However, this specific disallowance was not the primary focus of the appeals. 2. Genuineness of Share Capital and Share Premium: The AO initially accepted the assessee's issuance of fresh equity share capital of ?46,00,000/- at a premium of ?4,14,00,000/- without thorough verification. The Commissioner of Income Tax (Appeals) [CIT(A)] noted a pattern of companies introducing share capital at a high premium to rotate unaccounted money. The CIT(A) found the AO’s assessment to be erroneous and prejudicial to the revenue’s interest, directing a fresh assessment with detailed enquiries into the share capital and premium. 3. Non-appearance of Directors and Lack of Independent Enquiry by the AO: During reassessment, the AO treated the entire share capital and premium of ?4,60,00,000/- as unexplained cash credit due to non-appearance of directors and lack of authenticated papers. The AO issued notices under Section 131 of the Act, but the directors did not appear. Despite the show-cause notices, the assessee did not provide explanations, leading to the addition of the share application money to the total income. The CIT(A) confirmed this addition based on the AO’s findings. 4. Application of Section 68 of the Income Tax Act, 1961: The AO invoked Section 68 of the Act, treating the share application money as unaccounted cash credit. The assessee argued that the AO failed to conduct a deep investigation to verify the identity, creditworthiness, and genuineness of the shareholders. The Tribunal noted that similar cases required a thorough enquiry, which was not done here. The Tribunal referenced cases like ITO vs. M/s Deepshika Distributors Pvt. Ltd. and Shriram Tie Up Ltd., where it was held that mere non-appearance of directors did not justify the addition without proper investigation. 5. Compliance with Guidelines/Mandates under Section 263 of the Act: The Tribunal observed that the AO did not follow the guidelines/mandates issued under Section 263 by the CIT(A), which required a deep investigation into the share capital and premium. The Tribunal emphasized the need for independent enquiry and proper opportunity for the assessee to present evidence, referencing the Hon’ble Supreme Court’s decision in Tin Box Company and the Hon’ble Delhi High Court’s decision in CIT vs. Jansampark Advertising & Marketing Pvt. Ltd. Conclusion: The Tribunal set aside the orders of the authorities below and remanded the matter back to the AO for fresh adjudication. The AO was directed to conduct a thorough investigation, following the guidelines/mandates under Section 263, and provide the assessee with adequate opportunity to present evidence. Both appeals were allowed for statistical purposes. Order Pronounced: The order was pronounced in the Court on 14.09.2018.
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