2019 (3) TMI 999 - AT - Income Tax

Addition u/s 68 - treating the share capital and share premium as unexplained cash credit - non-compliance on the part of the assessee - CIT(A) passed ex-parte order - HELD THAT - Matter to be sent back to the A.O. for examining the issue on merit after considering the said details and documents and after giving one more opportunity to the assessee of being heard. We find merit in this contention of the learned DR. The impugned order of the CIT(A) passed ex-parte is accordingly set aside and the matter is restored to the file of the A.O. for deciding the same afresh. - Assessee treated as allowed for statistical purpose.

Summary

Issues:
1. Addition made u/s 68 by treating share capital and share premium as unexplained cash credit.

Analysis:
The appellant, a company engaged in investment and trading in shares, filed a return declaring a total income of ?7,320. During assessment proceedings, the Assessing Officer (A.O.) examined the claim of receiving share capital and share premium amounting to ?4,96,00,000. Despite filing relevant details and documents, neither the appellant nor its directors responded to the summons issued by the A.O. u/s 131. Consequently, the A.O. completed the assessment u/s 144, adding the share capital and share premium to the total income as unexplained cash credits.

An appeal was made to the Ld. CIT(A) against the A.O.'s order u/s 144. However, due to non-compliance with notices for hearing, the Ld. CIT(A) dismissed the appeal ex-parte, upholding the addition made by the A.O. u/s 68. Dissatisfied with this decision, the appellant approached the Tribunal.

During the Tribunal hearing, no representation was made on behalf of the appellant. The learned DR contended that the issue of addition u/s 68 was not properly examined by the A.O. or the Ld. CIT(A) due to non-compliance by the appellant. The DR argued that the relevant details and documents supporting the receipt of share capital and share premium were indeed submitted during assessment proceedings. The Tribunal found merit in the DR's argument and set aside the ex-parte order of the Ld. CIT(A), remanding the matter back to the A.O. for a fresh decision on merit after considering the documents and giving the appellant another opportunity to be heard.

Consequently, the Tribunal allowed the appeal of the appellant for statistical purposes, directing the A.O. to re-examine the issue of addition u/s 68 in light of the documents submitted by the appellant and after affording the appellant a further opportunity to present their case.

This judgment highlights the importance of compliance with assessment proceedings and the need for a thorough examination of issues on merit, ensuring that the principles of natural justice are upheld throughout the process.