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TMI Blog2022 (6) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... ht from the earlier years. The ld. 1st appellate authority has categorically recorded a finding that these amounts were not received by the assessee during the accounting year relevant to the assessment year. Therefore, no addition can be made in this assessment year. The ld. 1st appellate authority for buttressing his finding made reference to the CBDT Circular bearing No. 246/151/2017-A PAC-1 dated 10.01.2018. After perusal of the finding of the ld. CIT(Appeals), we do not find any error in it and there is no substance in the grounds of appeal raised by the Revenue. Accordingly, this appeal is dismissed. - I.T.A. No. 386/KOL/2019 - - - Dated:- 20-5-2022 - Shri Rajpal Yadav, Vice-President (KZ) And Shri Girish Agrawal , Accountant Member Smt. Ranu Biswas, Addl . CIT (DR), appeared on behalf of the Revenue None, appeared on behalf of the assessee ORDER Per Rajpal Yadav , Vice-President ( KZ ) : - The Revenue is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals)-5, Kolkata dated 02.11.2018 passed for the assessment year 2013-14. 2. The Revenue has taken two grounds of appeal, which read as under:- (1) Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the appellant and perused the relevant assessment records. The original assessment order u/s. 144 of the Act was passed on 30.12.2015 by the AO by making the addition of Rs. 4,75,00,000/- u/s. 68 of the Act. On perusal of the assessment order, the facts emerged that the AO had added the share capital received by the appellant to the tune of Rs. 4,75,00,000/- during the year under consideration as unexplained cash credit under provisions of section 68 of the IT Act, 1961. The A/R of the appellant in his submission had categorically stated that no share capital was received during the assessment. year 2013-14- The A/R further submitted that his submission is supported by the balance sheet and the income tax return. There is merit in the submission made by the appellant. The AO in the assessment order had disallowed share premium receive in A.Y. 2011-12 as unexplained cash credits u/s. 68 of the Act in A.Y. 2012-13. On verification from the balance sheet of the appellant for F.Y. 2007-08, it is found that share premium of Rs. 1,90,00,000/- was raised in the A.Y. 2007-08 and Rs. 2,85,00,000/-'was raised in A.Y. 2008-09. It is apparent that the share premium of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sonable nexus to the available material and the circumstances of each case. 3. The decision of Privy Council in CIT vs. Laxminarayan Badridas (1937) 5 ITR 170 (PC) rendered on the provisions in the 1922 Act is a classic one in which it was observed that the officer making best judgment, assessment should not act dishonestly, vindictively or capriciously because he must exercise judgment in the matter. He must make what he honestly believes to be a fair estimate of the proper figure of assessment and for this purpose, he must take into account local knowledge and' repute in regard to the assessee's circumstances and all other matters which he thinks will assist him in arriving at a fair and proper estimate and though there must necessary be a guesswork in the matter it must be a honest guesswork. The addition of share premium u/s. 68 has been made in the wrong year and the assessment order is, therefore, bad in law. Section 68 of the Income Tax Act under which the additions have been made, reads as follows:- Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the, nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule of law which is as under: The expression 'Rule of Law' describes a society in which Government must act in accordance with law. A society governed by law is the foundation of personal liberty. It is also the foundation of economic development. Investment will not take place where rights are not respected. It is in that sense that the expression Rule of Law constitutes an over arching principle embodied in Article 21, on aspect of which is equality. It is in that context the Hon'ble Supreme Court has used the phrase Article 21 read with Article 14 of the Constitution of India, Therefore, the principle of Rule of Law mandate the Government i.e. in this case the AO to act only in accordance to law. The 'Rule of law' is an over arching principle of law, which is basic feature of the Constitution. So read together with Article 265 of the Constitution, that no tax shall be levied or collected without authority of law , means that the AO should assess the income of the assessee only in accordance to law and, therefore, the addition u/s. 68 of the Act could not have been legally added in the hands of the assessee company in this assessment year, so consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income of the assessee for the financial year preceding the assessment year. This distinction is purposeful. Section 68 accepts the entry as representing the correct financial position of the assessee with regard to the quantum of money and the date of its acquisition but when its source is unexplained or not adequately explained then for the purposes of income it should be treated as the income of the assessee's previous year. Section 69, however, deals with investments which are at large and neither recorded in any account book nor is it possible to precisely locate their date of acquisition. In such a situation law permits the department to deem that it accrued in the preceding financial year for the purposes of roping in such income to tax .. In this regard, reference may be made to Standard Procedure for applying provisions u/s. 68 of the Act for the guidance of AO issued by CBDT vide Circular No. 246/151/2017-A PAC-1 dated 10.01.2018 where the AO was directed to follow the sequence as noted below for applying the provisions of section 68 of the Act: Step 1: Whether there is credit of a sum during the year in the book's of accounts maintained by the taxpay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore allowed. 4. In the result, the appeal is allowed . 8. In the ground of appeal, the Revenue has pleaded that the ld. CIT(Appeals) has entertained fresh evidence and did not provide an opportunity to the Revenue for rebutting this fresh evidence and, therefore, the ld. 1st Appellate Authority has violated the conditions enumerated in Rule 46A of the Income Tax Rules, 1962. There is no doubt that if on the request of appellant, the ld. 1st Appellate Authority admits certain fresh evidence as an additional evidence, then, an opportunity is to be granted to the ld. Assessing Officer for rebutting that evidence. This has been provided under Rule 46A sub-clause (3) of the Rules. 9. With the assistance of the ld. D.R., we have gone through the record carefully, but she was unable to pin-point, which is the additional evidence, filed before the ld. CIT(Appeals). The ld. 1st appellate authority has re-appreciated the position of accounts available in the balance-sheet right from the earlier years. The ld. 1st appellate authority has categorically recorded a finding that these amounts were not received by the assessee during the accounting year relevant to the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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