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TMI Blog2019 (4) TMI 1430X X X X Extracts X X X X X X X X Extracts X X X X ..... the satisfaction of the ingredients of Section 68 w.r.t these unsecured loans and sundry creditors. It was also incumbent on the part of learned CIT(A) to have looked into applicability of provisions of Section 56(2)(viia) to transaction for purchase of equity shares of M/s M/s Asmeeta Infratech Private Limited by the assessee from M/s Kanchan Developers Private Limited and Malav Shah, to verify whether any income chargeable to income-tax within provisions of the 1961 Act has arisen which needed to be brought to tax. The learned CIT(A) in the instant case keeping in view circumstances of the case ought to have stepped into shoes of the AO to compute income chargeable to tax keeping in view conduct of the assessee during the course of assessment proceedings of non co-operating with the AO or should have directed the AO to do the same. The decision of Hon‟ble Delhi High Court in the case of CIT v. Jansampark Advertising and Marketing Private Limited [ 2015 (3) TMI 410 - DELHI HIGH COURT] is relevant. Under these circumstances, we are of the view that the appellate order of learned CIT(A) is clearly not sustainable in the eyes of law which we are inclined to set aside. We a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hares and that no adequate evidence had come before the AO to substantiate the transactions. 4. The order of the CIT(A) may be vacated and that of the Assessing Officer may be restored. 5. The appellant craves to leave to add, amend , alter or delete any ground of appeal. 3. The brief facts of the case are that the assessee filed its return of income for AY 2011-12 declaring Nil income on 27.09.2012. The return of the assessee was processed u/s 143(1) of the 1961 Act. The case of the assessee was the selected through CASS for framing scrutiny assessment and notice dated 16.08.2013 u/s 143(2) of the 1961 Act was issued to the assessee. The AO also issued notices u/s 142(1) of the 1961 Act from time to time. The assessee did not participated in the assessment proceedings conducted by the AO u/s 143(2) read with Section 143(3) of the 1961 Act which led to framing of an best judgment against the assessee by the AO u/s 144 of the 1961 Act vide assessment order dated 19.03.2014 , wherein income assessed was ₹ 2,70,12,330/- as against Nil income declared by the assessee in return of income filed with the tribunal. The AO had made tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned CIT(A) during appellant proceedings which were not earlier submitted by the assessee before the AO during assessment proceedings as in the opinion of the AO there was no reasonable cause shown by the assessee for not producing these additional evidences before the AO during assessment proceedings despite being available with assessee at assessment stage. 4.4 Without prejudice to the stand taken by the AO objecting to admission of these additional evidences in its remand report , the AO verified these additional evidences in remand proceedings . Notices u/s 133(6) were issued by the AO to these parties who replied to the said notices and furnished details. The AO in its remand report stated that the assessee had purchased 2300 equity shares of M/s Asmeeta Infratech Private Limited , on 21.09.2010 for ₹ 1,89,40,500/- from Kanchan Developers Private Limited . Out of which ₹ 81,19,000/- was paid by M/s Bhimrao Mercantile Private Limited , on behalf of the assessee to M/s Kanchan Developers Private Limited . The assessee and M/s Bhimrao Mercantile Private Limited are related parties. The AO noted that M/s Bhimrao Mercantile Private Limited was ama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Infratech Private Limited from M/s Kanchan Developers Private Limited and Mr. Malav Shah , but no valuation report was submitted by the assessee to substantiate fair market value of the shares so acquired. The AO required learned CIT(A) to verify whether any incomearose to the assessee keeping in view provisions of Section 56(2)(viia) of the 1961 Act with respect to these share transactions as the same could not be verified by the AO. 4.9 The learned CIT(A) decided the issue in favour of the assessee by holding that the AO has accepted genuineness of creditors and unsecured loans. So far as the AO‟s second remand report intimating learned CIT(A) that in the absence of valuation report and other details, it could not be ascertained whether any income arose to the assessee u/s 56(2)(viia) of the 1961 Act, the learned CIT(A) refused to look into this issue as the AO has not made any enquiry into the fair market value of the shares of M/s Asmeeta Infratech Private Limited and had not indicated in any manner as to how the assessee had obtained any benefit out of the purchase of shares of M/s Asmeeta Infratech Private Limited. The learned CIT(A) passed the appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The case of the assessee was selected through CASS for framing scrutiny assessment and notices both u/s 143(2) and 142(1) of the 1961 Act were issued and served by the AO on the assessee but the assessee chose not to co-operate with the AO and no details were furnished before the AO as the assessee never entered appearance before the AO. Even the AO is not aware of the business carried on by the assessee. Left with no alternative, the AO proceeded to frame an ex-parte best judgment assessment u/s 144 of the 1961 Act , wherein two additions were made by the AO after looking into whatever material available on record including return of income filed by the assessee, in the absence of the assessee. This led to framing of an best judgment assessment against the assessee by the AO u/s 144 of the 1961 Act vide assessment order dated 19.03.2014 wherein income assessed was ₹ 2,70,12,330/- as against Nil Income declared by the assessee. The AO had made two additions to the income , firstly an addition of ₹ 1,15,06,840/- towards unsecured loans raised by the assessee by invoking provision of Section 68 of the 1961 Act as no details or explanation regarding nature and source ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated during assessment proceedings and the AO was left to frame best judgment assessment u/s 144 of the 1961 Act in the absence of the assessee. The additions were made by the AO based on material available on record while framing assessment u/s 144 originally. It was incumbent on the part of learned CIT(A) to have made proper enquiries and to satisfy independently as to the satisfaction of the ingredients of Section 68 of the 1961 Act wrt these unsecured loans and sundry creditors. It was also incumbent on the part of learned CIT(A) to have looked into applicability of provisions of Section 56(2)(viia) to transaction for purchase of equity shares of M/s M/s Asmeeta Infratech Private Limited by the assessee from M/s Kanchan Developers Private Limited and Malav Shah, to verify whether any income chargeable to income-tax within provisions of the 1961 Act has arisen which needed to be brought to tax. The learned CIT(A) in the instant case keeping in view circumstances of the case ought to have stepped into shoes of the AO to compute income chargeable to tax keeping in view conduct of the assessee during the course of assessment proceedings of non co-operating with the AO or should hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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