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TMI Blog2024 (9) TMI 959X X X X Extracts X X X X X X X X Extracts X X X X ..... r special category falling u/s 144C was also codified u/s 144B of the Act. The procedure laid out in such a way that after the initial assessment by the assessment units, they will forward the same to the NFAC, NFAC will send the draft assessment order, if required after the review of the same in special cases, to the respective assessee. After giving opportunity of being heard to the assessee or by allowing them to submit relevant information through the e-portal, the final assessment orders are being finalized and forwarded to the respective assessee. The process of one more opportunity at the stage of draft assessment order to the assessee are duplicate in nature, even if there is violation it is only curative in nature since the assessment is not complete. Whereas in the case of other assessment like assessments u/s 143(3), 144 and 147 once the draft assessment are issued and after granting opportunity or non granting of opportunity to the assessee, the outcome is the final assessment order. The courts have held that the passing of FAO without granting opportunity of being heard is bad in law and held that the relevant assessment is deserves to be quashed. Whereas in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the issues of NFAC. Beyond his capacity, therefore, we do not see any violation on the part of JAO. Ld DRP gave direction to the NFAC and ultimately the assessment was completed by the JAO. Hence, we do not see any reason to make the assessment bad in law. FAO passed without considering the submissions and evidences before the AO, is a serious issue and needs to be addressed - This issue can be resolved by remitting the issue back to the file of AO. However, we observed that the issue relating to section 68 is issue of share capital to its AE s and this issue was already considered in the TP stage itself and TPO has not passed any adverse comments and accepted that there is no variation. Instead of remitting the issue back to the file of AO, we are inclined to adjudicate the issue on merit. Addition u/s 68 - Share capital subscribed by a non resident and received through proper banking channel, the same cannot be disallowed invoking the provisions of section 68. In this case, the assessee has already proved the identity of the share holders since the same shareholders have invested in the previous assessment year and relevant documents submitted to prove the identity before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide order dated 29.04.2022 passed under section 143(3) read with section 144C of the Income Tax Act, 1961 ('the Act') ['impugned order'] is illegal and bad in law. 1.1. That on the facts and circumstances of the case and in law, the impugned assessment order having been passed not only in gross violation of principles of natural justice but also the mandatory procedure prescribed in section 144B of the Act is illegal, bad in law and liable to be quashed. 1.2. That on the facts and circumstances of the case and in law, the impugned assessment having been completed without passing and serving upon the appellant, the draft assessment order as per provisions of clause (xiv)(b) of sub-section (I) to section 144B of the Act, is non-est, illegal, bad in law and liable to be quashed. 1.3. That the impugned assessment order [including draft order passed by National Faceless Assessment Centre (NF AC) under section 144C] having been passed without allowing personal hearing (either physically or virtually), in gross violation of mandatory provisions of the Act and principles of natural justice, is without jurisdiction, illegal, bad in law and liable to be quashed. 1.4. That on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders. 4.5. That the assessing officer erred on facts and in law in not appreciating that similar capital was received by the appellant from same non-resident shareholder in preceding year(s) which have been accepted as genuine after due examination in completed scrutiny assessments. Re: Disallowance of PF/ ESI Contribution 5. That the assessing officer erred on facts and in law in disallowing an amount of Rs. 54,031 under section 36( 1 )(va) of the Act, being employees' contribution to Employee State Insurance Fund ( ES),') and other welfare funds on the ground that the same was deposited beyond the time specified under relevant statute. 5.1. That the assessing officer erred on facts and in law not appreciating that employees' contribution had been deposited before the due date of filing return of income as prescribed under section 139(1) of the Act and the same is, therefore, allowable as deduction. 5.2. That the assessing officer erred on facts and in law in making the aforesaid disallowance without considering the legal position/ judicial pronouncements, and in gross violation of binding directions of the DRP. 5.3. That the assessing officer erred in making double ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d pass speaking/reasoned order in this regard and also directed to restrict the TP adjustment as per rectification order passed u/s 154 of the Act and directed the Assessing Officer to consider the evidences and submissions filed by the assessee with regard to addition u/s 68 of the Act. 8. After considering the directions of the ld. DRP, final assessment order was passed by the jurisdictional Assessing Officer (JAO) on 29.04.2022 assessing the total income of the assessee at Rs. 146,19,11,543/-. 9. Aggrieved with the above order, assessee is in appeal before us. 10. At the time of hearing, the assessee first pressed the jurisdictional issues raised by the assessee in grounds no.1 to 2.1 and also made submissions alongwith filed a synopsis. The same is reproduced as under :- 11. It is respectfully submitted that the assessment completed under section 143(3)/ 144C of the Act is illegal and bad in law since the same has been passed in gross violation of provisions of sections 144B, 144C of the Act as also principles of natural justice inasmuch as: (a) the impugned assessment has been completed without passing and serving upon the appellant show cause notice- cum- draft order as manda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such draft assessment order to the NFAC. (b) Thereafter, the NFAC, in terms of clause (xvi) of sub-section (1) to section 144B of the Act , is, upon receipt of such draft order, mandated to examine the same in accordance with the risk management strategy and then, to either : a) finalise the assessment, in case no variation is proposed which is prejudicial to the interest of the assessee, by passing and serving such final assessment order accompanied with notice of demand specifying the amount payable along with notice for initiating of penalty proceedings, if any, to the assessee; or b) provide an opportunity to the assessee, in case any variation is proposed, by serving a notice directing the assessee to show-cause as to why the proposed variation should not be made; or c) assign the draft assessment order to the review unit. (c) That thereafter, it is only in cases where no response to the show-cause notice is received from the assessee, that the NaFAC is, on the basis of material available on record, permitted to finalise the assessment on the basis of draft assessment order [refer section 144B(1)(xxiii)(a) of the Act]. (d) In cases where inputs/ response is received from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee. Thus, the assessee has been assessed at Rs. 75,79,980/- (rounded off). 3.3. In view of this, it is evident that variation was made to declared taxable income of the assessee which, as noticed above, was Nil, albeit, without issuance of a show cause notice-cum-draft assessment order. Admittedly, the assessee had no opportunity to respond to the additions made . 4. Given these admitted circumstances, the impugned assessment order as also the consequential notices, issued under Section 156 and 270A of the Act, dated 15.04.2021, would have to be set aside. It is ordered accordingly . 4.1. Liberty, however, is granted to the revenue to take next steps in the matter, in accordance with the law. 5. The writ petition and the pending applications are disposed of in the aforesaid terms. (emphasis supplied) Reliance is also placed on the decision of the Bombay High Court in the case of Shreeji Investment Advisory Services v. National Faceless Assessment Centre: (2021) 323 CTR 505/ WP No.13235 of 2021. In that case, the Petitioner challenged in assessment order passed under section 143(3) r.w.s section 144B of the Act for assessment year 2018-19 on the grounds that- a) no dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vit in reply of respondent, there is no denial of this fact. In the affidavit in reply, the affiant has gone on the merits of the two additions but does not deny the fact that neither the alleged draft assessment order or any of the notices have not even referred to this proposed additions under Section 68 of the Act. Issuance of show cause notice is the preliminary step which is required to be undertaken. The purpose of show cause notice is to enable a party to effectively deal with the case made out by respondent (Om Shri Jigar Association Vs. Union of India) 1 Therefore, on this ground also the impugned order is required to be set aside. 5 In our view, having heard Mr. Syal and Mr. Pinto and having considered the petition and the affidavit in reply, the prayer as prayed for in prayer clauses (a) and (c) of the petition has to be granted and is hereby granted. The same read as under: (a) that this Hon ble Court be pleased to issue a Writ of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records of the case leading to the passing of the impugned order dated 24 th May 2021 under Section 143(3) r.w.s. 144B of the Act f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Gujarat High Court in the case of Dr. K R Shroff Foundation v. ACIT: R/Special Civil Application No. 14779 of 2021 dated 11.03.2022 emphasized on the effective and real opportunity of hearing to be granted to the assessee before conclusion of assessment. The Court was pleased to quash the assessment order that resulted in demand of Rs. 633.50 crores over disrupted VC hearing provided prior to completion of assessment. 24. Attention is also invited to the observations Sanjay Aggarwal vs National Faceless Assessment Centre, Delhi: [2021] 436 ITR 180 (Del) : Conclusion: 12. Therefore, in our view, given the aforesaid facts and circumstances, it was incumbent upon the respondent/revenue to accord a personal hearing to the petitioner As noted above, several requests had been made for personal hearing by the petitioner none of which were dealt with by the respondent/revenue. 12.1 The net impact of this infraction would be that, the impugned orders will have to be set aside. It is ordered accordingly. 13. This brings us to Mr. Chandra's submission that; the respondent/revenue should be allowed to proceed afresh in the matter, in accordance with the law. To our minds if the law perm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any opportunity, much less adequate opportunity, of being heard to the appellant calls for being quashed at the threshold . Re (c): Impugned assessment order passed by JAO instead of NFAC bad in law 27. In terms of mandatory provisions of section 144B of the Act, the assessment is required to be in a faceless manner ; the notices are required to be issued by NFAC and also the assessment order(s) are required to be passed by NFAC. 28. In the facts of the present case, it may be noted that: (a) various notices from time to time during the course of assessment proceedings were issued by the National e-Assessment Centre/ NFAC; (b) the draft assessment order dated 21.09.2021 under section 144C of the Act was passed by NFAC ; (c) pursuant to directions of the DRP, a notice dated 30.03.2022 requiring the appellant to file information was also issued by the NFAC [refer pages 155-156 of paperbook], which was duly complied with by the appellant vide reply dated 11.04.2022; (d) a notice dated 13.04.2022 was received from TPO which was replied to by the appellant vide letter dated 18.04.2022; (e) no notice was, during the course of assessment, issued by the jurisdictional assessing officer, vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment within the time allowed under sub-section (13) of section 144C and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, alongwith the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment; 30. On perusal of the aforesaid, it will kindly be appreciated that section 144B clearly mandates that notwithstanding the provisions of section 143, NFAC shall pass the final assessment order. In fact, clause (xxx) of section 144B(1) mandates the NFAC to pass an order in conformity with the directions of the DRP, which is thereafter, to the finalized and served on the assessee. 31. In blatant violation of the aforesaid statutory mandate, to the utter shock of the appellant, the final assessment order dated 29.04.2022 impugned in the present appeal was passed by the jurisdictional assessing officer, viz., Asst. Commissioner of Income Tax, Circle 7(1) and not by NFAC. The said action is clearly in gross violation of the statutory mandate of section 144B of the Act, which required only the NFAC to pass the assessment order and hence the impugned order is invalid and bad in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the reasons in this regard, while passing the final order in this case . The Panel reiterates the need to pass a speaking order in this regard. (emphasis supplied) Despite the aforesaid specific direction of the DRP,the assessing officer has failed to record any reasons for violation of provisions of section 144B of the Act in the impugned order. In fact, the assessing authority continued to conduct assessment in violation of section 144B of the Act and passed the impugned order as explained supra in violation of the mandatory provisions. (b) In respect of addition under section 68 of the Act, the DRP had directed the assessing officer to consider the material/ evidence placed on record before passing the final order [refer para 3.2.3 of DRP order ]. The assessing officer has without considering the said directions, proceeded to repeat the addition as made in the draft order. Most importantly, paras 6.1 to 6.8 of the final assessment order dated 29.04.2022 are verbatim copied from the very same paras in the draft assessment order dated 21.09.2021 [except that some reproductions in the draft order as missing in the final assessment order]. There is thus, not only blatant violati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd various High Courts. Assessment conducted in such a manner ignoring the submissions of the appellant is illegal and bad in law [Refer: RKKR Foundation vs NFAC: W.P.(C) 5277/2021 (Del.), KBB Nuts Pvt Ltd vs NFAC: W.P.(C) 5234/2021 (Del.), DJ Surfactants vs NeAC: W.P.(C) 4814/2021 (Del.)]. 42. For the aforesaid cumulative reasons, it is patently clear that the impugned assessment order is beyond jurisdiction, illegal and bad in law and thus calls for being quashed at the threshold. (II) WITHOUT PREJUDICE- ON MERITS Re: Ground of Appeal No. 3: General Re: Grounds of Appeal Nos.4-4.5: Addition u/s 68 on account of share capital received from non-resident holding company 43. The appellant is a closely held company and was incorporated in March 2013.The shareholding pattern of the appellant as on 01.04.2017 [opening balance at beginning of relevant year] was as under: Name of shareholder Number of shares % Shareholding Herba Foods SLU, Spain 13,99,91,856 99.99% Herba Rice Mills SLU, Spain 8,144 0.01% Total 14,00,00,000 44. During the year under consideration, i.e., previous year relevant to assessment year 2018-19, assessee issued equity shares to the aforesaid existing non-resident s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the TPO vide order dated 25.07.2021 read with rectification order dated 29.07.2021 without any adverse inference or adjustment therefor. 49. The NFAC, however, vide draft assessment order dated 21.09.2021 passed under section 144C(1) of the Act proceeded to treat the aforesaid sum of Rs. 134.99 crores as unexplained credit under section 68 of the Act. While making the said addition, the NFAC vaguely alleged that the assessee has not filed the requisite details/ documentary evidence to establish the nature and source of credit in the form of share capital, nor it is proved that the amount has been received from the non-resident. Re: Proceedings before DRP: 50. In the objections filed against the addition proposed in the draft order, during the course of proceedings before the DRP, the appellant further submitted the following documentary evidence(s) to substantiate the nature/ source of the share capital: Confirmation from the shareholders/ subscriber [refer pages 143-144 of paper-book ]; Financial statement of assessee disclosing amount as share capital; Copy of bank account statements of the assessee highlighting the transaction of receipt of share application money [refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtunity of being heard as discussed in facts above. Therefore, assessee was not able to furnish the details as desired by the Assessing Officer vide notice dated 03.09.2021. The Panel finds that the AO has not considered the evidence stated above. The Panel, accordingly, directs the Assessing Officer to consider this evidence and pass a speaking order in this regard. (Emphasis supplied) Re: Final assessment order: 52. Pursuant to the order/ directions of the DRP, the assessee, in response to notice dated 30.03.2022 issued by NFAC filed reply dated 11.04.2022 whereby all the documents/ evidences alongwith justification as to why no addition in respect of share capital issued is called for, was furnished by the appellant. 53. Later the jurisdictional assessing officer, as elaborately explained above, illegally usurped jurisdiction and without any further notice, passed the impugned final assessment order. 54. In the final assessment order dated 29.04.2022, the assessing officer, however, without considering the submissions and contemporaneous documentary evidence(s) proceeded to pass the final assessment order, in gross violation of the mandatory directions of the DRP, which categori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory . 61. In terms of the aforesaid provisions of section 68 of the Act, where any amount is found credited in the books of the assessee, the assessing officer is empowered to make enquiry as to the nature and source of the sum so credited. If the assessee fails to offer any explanation or explanation offered by the assessee about the nature and source of the sum so found credited is, in the opinion of the assessing officer, unsatisfactory, the assessing officer may bring the amount to tax under section 68 of the Act. 62. It is well settled that to fall out of the rigors of deeming provisions of section 68 of the Act, the assessee has to prima facie prove: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 68 of the Act. Pr. CIT vs. Softline Creations (P) Ltd: 387 ITR 636 (Del): The Hon ble Court held that where the assessee has provided sufficient indication(s) including by way of permanent account number, to highlight the identity of the share applicants and produced affidavits of directors of the companies along with bank details of share applicants, then it would be a valid discharge of the identity of the share applicants, genuineness of the transaction and their creditworthiness. CIT v. Som Tobacco India Ltd.: 222 Taxman 58 (All.)(Mag.) - Where names, addresses and PAN of depositors were provided to assessing officer, which were sufficient to prove their identity and creditworthiness, addition under section 68 was held to be unsustainable. CIT v. Green Infra Ltd.: [2017] 78 taxmann.com 340 (Bom.)- Where i dentity of subscribers was confirmed and genuineness of entire transaction was recorded in books of account and reflected in financial statements of assessee company since subscription was done through banking channels as evidenced by bank statements and other documents relating to subscriber placed on record, no addition under section 68 of the Act could have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) NO. 262 OF 2014 (Mad.) 66. The ratio decidendi emanating from the aforesaid decisions may be summarized as under: (i) The assessee has to provide documents to prove the identity and creditworthiness of the creditor as well as genuineness of the transaction; (ii) The identity stands established if any information regarding PAN or other identity/ document is provided; (iii) The creditworthiness of the investor needs to be proved by the assessee to establish that the creditor was having sufficient source wherefrom credit has been given. The assessee is, however, not required to prove source of source. (iv) The genuineness of the transaction shall, prima facie, stand established where the amount has been transmitted through banking or other indisputable channels; (v) Once identity and genuineness of transaction is prima facie established as aforesaid, the burden of proof shifts on the Revenue; (vi) The Revenue, then, in order to invoke the provisions of section 68 has to bring on record, evidence to controvert the evidence furnished by the assessee; (vii) The Revenue should prove that the money introduced as subscription to share capital was, in fact, emanating from the coffers of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after complying with the applicable RBI norms. iv. The receipt of share capital and premium have been duly disclosed in the audited financial statements . v. It is pertinent to note that the shareholder had in fact earlier invested in the assessee-company as under: Date Face Value-INR Issue price-INR Number of shares Total value received-INR 18.4.2013 10 10 8,59,50,121 85,95,01,210 23.10.2013 10 16.47 5,40,49,879 89,02,01,507 Total 174,97,02,717 vi. The aforesaid receipt of share capital by the very same shareholder to the tune of Rs. 175 crores in financial year 2013-14 (relevant assessment year 2014-15) was accepted and genuine by the Revenue Department after thorough examination as explained hereunder: During the assessment proceedings for assessment year 2014-15, the assessing officer vide notice dated 26.07.2016 required the assessee to file details of the share capital receipt [refer pages 165-166 of paperbook ]. In response thereto, the appellant vide reply dated 29.08.2016 duly submitted the details of the share application money received alongwith Form-2 filed for allotment of shares [refer pages 167-177 of paperbook ]. Subsequently, on further enquiry in raised the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich found its way back in the form of share capital (refer Delhi High Court decision in the case of CIT vs. Value Capital Services (P.) Ltd: 307 ITR 334 ). In the facts of the present case, no such allegation has been made in assessment order much less any evidence being brought on record to substantiate the same. 69. In view of the aforesaid, it would be appreciated that addition in respect of share capital received by the appellant is liable to be deleted. 70. Reliance in this regard is also placed on the decision of the Delhi Bench of the Tribunal in the case of Russian Technology Centre Pvt Ltd. v. DCIT: 155 TTJ 316 , wherein it was held that the funds received could not be deemed as income under section 68 of the Act considering that the identity of the non-resident remitter and flow/ source of funds stood established through FIPB approval and FIRCs issued by the authorized dealer/ RBI. The relevant observations of the Tribunal as under: 11. We have heard rival contentions and perused the material available on record. The first and foremost question to be decided is whether on the basis of material furnished by the assessee and available on the record, the assessee has discha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of evidence available on the record and the discharge of burden by the assessee is also to be decided on the basis of documents filed by the assessee and facts and circumstances of each case and on that basis a reasonable view is to be taken as to whether the assessee has discharged the primary onus of establishing the identity of share applicant, its creditworthiness and genuineness of the transaction. From the documents filed during the course of assessment and before CIT(A), the independent existence of the share applicants in Russia is clearly established. The assessee's application to FIPB for raising the capital contains all the relevant details which is favourably accepted by the Board, particularly by allowing the assessee to raise further capital without approaching the FIPB. The transactions are through banking channels. Thus, the gamut of evidence does not leave any doubt in the discharge of primary burden of the assessee. On the issue CBDT circular and Finlay Corporation Ltd. Judgment (supra) also we are in agreement with the learned counsel for the assessee that in these circumstances of the case, moneys remitted by non-residents through banking channel outside I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tified and accepted. Therefore, once in earlier year the AO has accepted such fact then there remains no question of any doubt on the same. 2.32 From the record, we found that the identity and genuineness of the said entities is clearly established from the following documents which has been conveniently ignored by the AO. 2.32 From the record, we found that the identity and genuineness of the said entities is clearly established from the following documents which has been conveniently ignored by the AO. - Financial Statements (attached as Annexure 8a to 8i of paper book) - Tax Returns (attached as Annexure 9a to 9i of paper book) - Letters of Mauritius Revenue Authorities (attached as Annexure 10a to 10i); - Bank Statements (attached as Annexure 11a to 11h) Additionally, to further establish the identity and genuineness of the shareholding entities, the Certificate of Incorporation and Tax Residency Certificates of each of the said entities were also furnished by the Assessee. The Copies of the same are attached as Annexure 12a to 12i and 13a to 13i respectively. Further, we observed that the Foreign Investment Promotion Board ( FIPB‟), Ministry of Finance, Government of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stablished the source of funds of such shareholders. Therefore, since the assessee has fully discharged its onus in this regard, there is clearly no case of unexplained credit. (emphasis supplied) 73. Reference may also be made to the observation of the Mumbai Bench of the Tribunal in the case of Syntensia Network Security India Pvt. Ltd. v ITO: ITA No. 2927/Mum/2017 : 9. Furthermore, the law is section 68 is not apply to remittances made in India by non- resident is strengthened by the proviso to u/s.68 inserted w.e.f. asst. yr. 2013-14. According to the said proviso, if an assessee company, in which public are not substantially interested, receives money by way of share capital, then the source of funds of resident shareholder has to be established by the assessee in order to get out of the kin of the deeming provision under s. 68. Hence, the proviso talks of the source being established only when the shareholder is a resident of India. There is no such requirement if shareholder is a non-resident. Therefore, the creditworthiness of the shareholders, if he is a non-resident, does not have to be established by the assessee in respect of remittance received by him. 74. Attention is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date for filing return of income under section 139(1), the same calls for being allowed under section 36(1)(va) read with section 43B of the Act. The DRP directed the assessing officer to consider the judicial precedents referred by the appellant and pass a speaking order. 80. The assessing officer, however, in violation of the directions of the DRP, without considering the legal position, repeated the disallowance. 81. In this regard, it is respectfully submitted that the aforesaid issue is squarely covered in favour of the appellant by the following judgements: CIT v. AlomExtrustions Ltd.: 319 ITR 306 (SC) CIT vs. AIMIL Limited: 321 ITR 508 (Del.) CIT v. Dharmendra Sharma: 297 ITR 320 (Del.) Pr. CIT vs. Pro Interactive Service (India) Pvt. Ltd. [ITA 983/2018; decided on 10.09.2018] (Del. HC) Pr. CIT vs. Planman Consulting Pvt. Ltd. [ITA 1221/2018; decided on 02.11.2018] (Del. HC) Spectrum Consultants India (P) Ltd. v. CIT: 215 Taxman 597 (Kar.) CIT v. Kichha Sugar Company Ltd.: ITA No.50 of 2009 (Utt.) CIT vs. Ghatge Patil Transports Ltd : 368 ITR 749 (Bom.) S.R Batliboi Co. vs ACIT : 100 taxmann.com 328 (Cal.) Sagun foundry (P.) Ltd. vs. CIT : 291 CTR 557 (All.) Pr. CIT vs. Raj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer grossly erred on facts and in law in initiating penalty under sections 271AAC and 270A of the Act. 11. On the other hand, ld. DR for the Revenue argued the matter and filed the written submissions which are reproduced below :- After the introduction of faceless assessment scheme, lot of legislative changes were also made in the Income Tax Act, for example till 31.03.2022 the NeAC was mandated to pass all the assessment orders. From 01.04.2022, the Act has been amended and instead of NeAC, assessment order was required to be passed by the faceless AO or the jurisdictional AO and requisite amendment has been made in the Act. From 01.04.2022 section 144B was amended and the NeAC was no longer remained the AO and it was given the task of coordination. The amended provisions have been discussed in detail during the course of physical hearing. Further, after the receipt of DRP directions, the NeAC was required only to ensure that the AO receives the DRP directions and passed the orders in line with the provisions of section 144C(13 r.w.s section 144B xxix. Also section 144C(8) has also been introduced in the Act and the legislature authorized the Pr. CCIT or the Pr. DG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esides this, the TPO has also provided due opportunity to the assessee. In the draft assessment order, the assessee response dated 10.09.2021 has been duly considered, as evident from the order. Thus the assessee was duly provided opportunity to submit the documents and its reply which has been duly considered by the AO. So it cannot be said that no opportunity was provided to assessee. The assessee main grievance is that show cause notice u/s 144B 1 (xvi)b was not served. The assessee has mentioned in Ground of Appeal no. 1.2 that draft assessment order, as per provisions of section 144 B (1) (xvi) has not been served on the assessee. The assessee contentions are without any basis, incorrect and also misleading. At the outset, it is submitted that assessee is eligible assessee as per section 144C (15) (b) of the I.T Act, and this fact is not disputed. As the assessee, is eligible assessee, it is covered under section 144C of the I.T Act. For the assessee covered under section 144C, draft assessment order is required to be forwarded to the eligible assessee, if the AO proposes a variation, which is prejudicial to the interest of such assessee. For ready reference, the provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh the opportunity was provided but still even if for a moment assessee's ground is accepted for speculative purposes, even then it is humbly submitted that this issue is squarely covered by the decision of the Hon'ble Supreme Court in the case of NeAC Faceless Assessment Center Vs Automotive Manufacture Pvt. Ltd. in Civil no.1829 of 2023 and other appeals like DCIT and other vs. Abacus Real Estate Pvt. Ltd. in Civil Appeal no. 1830 of 2023. On identical issue, violation of 144B(xxvi) the Hon'ble Supreme Court has remanded the matter back to the AO and the relevant extract of the facts of the case and decision of the Supreme Court is reproduced below: The facts of the case are identical to the assessee's case and for ready reference are reproduced below 2. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court of judicature at Bombay in Writ Petition (L) No. 16281/2021, by which the High Court in exercise of powers under Article 226 of the Constitution of India has set aside the Assessment Order declaring it as non est as the mandatory requirement under Section 144B of the Income Tax Act, 1961 for short the Act ), namely, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections of the Hon'ble Supreme Courts on identical issues I facts is fully binding on the Hon'ble Tribunal. [2] On ground no. 2: Personal hearing not provided to the assessee. As it is proved from the above discussion that due opportunity was provided to the assessee and its reply I contentions was duly considered in the draft assessment order /final order, but still the assessee has raised the baseless allegations/ ground that personal hearing has not been provided to the assessee. The assessee's case, indisputably is covered under the section 144 C of the IT Act and it is submitted that, after the receipt of the DRP directions, no personal hearing is required to be given by the AO, in line with section 144C(13) of the IT Act and accordingly no personal hearing was provided. Further it is fully established in the case that assessee was given reasonable opportunity to represent its case till passing of such of draft assessment order. Also, as the assessee contentions are duly considered, accordingly no prejudice is caused if personal hearing is not provided which is clearly in line with the provisions of law i.e. 144 C (13) of the IT Act. Though no opportunity was requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2022. From 01.04.2022, the provision of section 144B(1) has been amended and after that the assessment order is passed by the respective AO i.e. faceless Assessing Officer (FAO) or Jurisdictional Assessing Officer (JAO). The reference is also invited to provision of section 144B(8) of the IT Act introduced from 01.04.2022 which for ready reference is reproduced below: 8) Notwithstanding anything contained in sub-section (1) or sub-section (2), the Principal Chief Commissioner or the Principal Director General, as the case may be, in-charge of National Faceless Assessment Centre may, at any stage of the assessment, if considered necessary, transfer the case to the Assessing Officer having jurisdiction over such case, with the prior approval of the Board.] Thus in line with the provision of section 144C(8) with the approval of the board, the assessee case was duly transferred on 15.04.2022 from faceless AO to the jurisdictional AO and the same has been duly mentioned in the case history noting, a copy of which has already been given to the Hon'ble bench. It is respectfully submitted that the provisions of section 144B(8) are not challenged before the Hon'ble Bench. Thus, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evious idea about the assessment proceedings in the case. However it is pointed out, that, even during the DRP stage and even after providing opportunity by AO, the assessee could not submit any evidence with respect to bank statement of assessee and also about sources of funds contributed. Thus till the completion of assessment proceedings, the assessee couldn't file the complete documents to prove credit worthiness of the investor company. Moreover, the AO in this final order has again stated the same facts that the assessee has failed to prove the conditions stipulated in section 68 of the I.T act and made additions. In fact, it appears that the assessee is raising jurisdictional grounds only to hide its failure in submitting the documents to prove credit worthiness of the investors companies and genuineness of transactions. (E) DRP Directions Fully Followed By AO: It is submitted that the AO took the cognizance of the DRP objections and also of the letter issued by NeAC ( Please refer second last Para of Pg no. 02 of final assessment order) and after considering the documents filed, has framed his order. Thus from the perusal of the order, it is seen that the AO has conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. The fact of recent launch of faceless regime, has been duly acknowledged by Hon'ble Supreme Court also. (F) Without prejudiced to the fact that the AO has passed the order in compliance with the DRP directions, even then for a moment, for speculative purposes, the Hon'ble Bench accepts the assessee's contention that the AO should have passed more speaking order and somehow has not fully followed the DRP directions, but still the department case is fully covered by the Decision of the Hon'ble coordinate bench in the case of Hitachi Astemo Haryana (P) Ltd VS DCIT Circle 22(2) Delhi, in ITA no. 100S/Delhi/22. The facts of the Hitachi Astemo case are that the AO has not completely followed the DRP directions and for making additions in the final order has relied on the additions in draft assessment order. The assessee has raised the similar ground of AO not following the directions of the DRP completely in framing the final assessment order. In that case also, the assessee has relied on the same case laws i.e, the decision of the Hon'ble High Courts/Delhi Tribunal/other Tribunal decisions mentioned in para 4 of the Hitachi Astemo order). The department vehement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. For ready reference the relevant extract of the order of Hon'ble High Court is reproduced below:- 7. As rightly contended by the learned counsel for the petitioner, the undisputed material on record clearly indicates that in response to the draft Assessment Order dated 29-9-2021 issued to the petitioner, petitioner submitted objections before the DR? on 28-10-2021, within the prescribed period and intimated the same to the Assessing Officer on 15-11-2021 pursuant to clarification sought for by the Assessing Officer on 12-11-2021; the explanation offered by the petitioner as regards his inability and omission to file objections with the Assessing Officer earlier in addition to the DRP merits acceptance, particularly in view of the Government Orders, circulars etc. as well as the orders of the Apex Courts extending the period of limitation coupled with the intimation provided by the petitioner to the Assessing Officer as sought for by him prior to passing the Assessment Order. At any rate, the petitioner had chosen to exercise the option of filing objections to the draft Assessment Order warranting the DRP to proceed further before the Assessing Officer takes further steps as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment, thereby creating a judicial uncertainty with regard to the declaration of law involved on an identical issue in respect of the same Exemption Notification. It needs to be emphasised that if a Bench of a Tribunal, in identical fact-situation, is permitted to come to a conclusion directly opposed to the conclusion reached by another Bench of the Tribunal on earlier occasion, that will be destructive of the institutional integrity itself. What is important is the Tribunal as an institution and not the personality of the members constituting it. If a Bench of the Tribunal wishes to take a view different from the one taken by the earlier Bench, the propriety demands that it should place the matter before the President of the Tribunal so that the case is referred to a larger Bench, for which provision exists in the Act itself. In this behalf, the following observations by a three judge Bench of this Court in Subinspector Rooplal Anr. Vs. Lt. Governor Ors. are quite apposite: At the outset, we must express our serious dissatisfaction in regard to the manner in which a Coordinate Bench of the Tribunal has overruled, in effect, an earlier judgment of another Coordinate Bench of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in para 31 of the Hon'ble High Court order, the AO has also chosen to label the order of the DRP is invalid and refused to follow the DRP directions. In the instant case, the AO has followed the DRP directions. (3) I.A.R. System Aktiebolag Vs. DCIT 152 taxmann.com 626 (Mumbai Tribunal)(2023) : it is a Mumbai ITAT order and as mentioned in para 18, the AO in that case has taken a divergent view that the DRP directions and not followed the DRP directions of treating the receipt as FTS and passed his own assessment order against the directions of the DRP on the basis of draft order. Further, the assessee in that case, has relied on the decisions of Hon'ble Bangalore ITAT in the case of Software Paradigm vs. ACIT (2018) 89 taxmann.com 339, which has been duly considered by Hon'ble Delhi Tribunal in the case of Hitachi Astemo. (4) Oxbow Energy Solutions LLC, USA vs. DCIT, International Taxation 2(2)(2), New Delhi ITA No. 574/Del/2021 for A.Y. 2012-13. The facts of this case are also different as the DRP has deleted the additions of Rs. 53,14,19,634/- whereas the Assessing Officer in total defiance, has made addition of Rs. 26,56,35,337/- which he himself accepted as expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen a claim is made in time and the assessment is made on the HUF without holding an inquiry as contemplated by section 25A(1), the assessment is liable to be set aside in appeal as it is in clear violation of the procedure prescribed for that purpose. The Tribunal was, therefore, right in holding that the assessments in question were liable to be set aside as there was no compliance with section 25A(l). It is, however, difficult to agree with the submission made on behalf of the assessee that the duty of the Tribunal ends with making a declaration that the assessments are illegal and it has no duty to issue any further direction. It is well known that an appellate authority has the jurisdiction as well as the duty to correct all errors in the proceedings under appeals and to issue, if necessary, appropriate directions to the authority against whose decision the appeal is preferred to dispose of the whole or any part of the matter afresh unless forbidden from doing so by the statute. The statute does not say that such a direction cannot be issued by the appellate authority in a case of this nature. In interpreting section 25A(1), we cannot also be oblivious to cases where there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the Hon'ble High Court which quashed the entire assessment proceedings because opportunity to cross examine was not granted to the assessee. In this case, the Hon'ble Supreme Court has held that the Hon'ble High Court should not have quashed the entire assessment proceedings and instead should have directed the AO to grant an opportunity to the assessee to cross examine the concern witnesses. By applying the ratio laid down by the Hon'ble Supreme Court, it is humbly stated that the entire proceedings should not be quashed and if the Hon'ble bench holds that the assessing officer has committed some error with regard to wrong mention of two additions in the assessment order, then AO may kindly be directed to incorporate DRP directions / OGE of TPO. (N) It is humbly submitted that the Hon'ble Supreme Court in several judgment including the seminal judgment in the case of Shyam Lal Murari and other (1976) 1 SCC 719 has repeatedly held that the prejudice caused should be the main factor in deciding the issues. Infact, the Hon'ble High Court of Bombay in the recent case of Income Tax Appeal no. 302 of 2002 in Veena Estate vis CIT, Mumbai City -IX, (11-Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - invalid 4. It is reiterated that the impugned assessment order has been passed by the JAO (and not by NFAC) without following the binding directions of the DRP as summarised hereunder: (a) First and foremost , the impugned final assessment order has been passed by JAO and not by NFAC. It is emphatically reiterated that JAO had no authority whatsoever to pass the impugned final assessment order and therefore, the impugned order is wholly without jurisdiction, illegal and bad in law [refer detailed submissions at paras 27 to 35 of Synopsis]. (b) Secondly , the DRP had held that draft assessment order under section 144C(1) was passed in breach of the provisions of section 144B of the Act and directed the NFAC to spell out the reasons for the same in the final assessment order- para 3.1.1 of DRP order . Despite the aforesaid specific direction of the DRP, JAO has failed to record any reasons for violation of provisions of section 144B of the Act in the impugned order. In fact, JAO continued to conduct assessment in violation of section 144B of the Act and passed the impugned order (as explained infra) in violation of the mandatory provisions. (c) Thirdly , in respect of addition unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, since as on that date TPO s order was not received by the assessing officer; the said assessment order was, however, passed subject to modification on the basis of TPO s order. Thus, it was, in the light of the said peculiar factsthe Tribunal remanded the matter to the file of assessing officer. Further, the judgements relied upon by the Tribunal in that case are completed different since the same dealt with cases where the final order was passed without noticing that the assessee has filed objections before the DRP against the draft assessment order passed under section 144C of the Act. 8. On the contrary, in the present case, the DRP issued specific and express directions in respect of various issues including satisfaction of conditions under section 144B of the Act, adjudication on the basis of evidence(s) placed with respect of merits and consideration of legal position. 9. The impugned assessment order has, however, been passed by JAO (and not by the NFAC), that too, without following the express binding directions of the DRP. Furthermore, it is evident from the records that paras 6.1 to 6.8 of the final assessment order are verbatim copied from the very same paras of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no other direction by learned DRP. Instead of implementing the direction of learned DRP in letter and spirit, the Assessing Officer has attempted to overreach the direction of learned DRP by making addition of an item of income, which was not made at the draft assessment stage, hence, not a subject matter of dispute before learned DRP. 11. At this stage, it is necessary to refer to certain provisions of section 144C of the Act. As per sub-section (8) of section 144C, the DRP may confirm, reduce or enhance the variation proposed in the draft assessment order and issue necessary direction to the Assessing Officer. Sub-section (10) of section 144C makes it clear that every direction issued by learned DRP shall be binding on the Assessing Officer. Sub-section (13) of section 144C provides that after receiving the direction of learned DRP, the Assessing Officers shall in conformity with the direction complete the assessment without providing any further opportunity of being heard to the assessee. The requirement of providing a personal hearing to the assessee at the final assessment stage has been dispensed with only for the reason that the Assessing Officer has no other scope bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [2023] 152 taxmann.com 626 (Mumbai - Trib.)[02-05-2023] wherein it has been held that where DRP had given clear cut finding that income earned by assessee, a foreign company supplying software through intermediaries in India and various companies, would fall under FTS but the assessing officer completed assessment treating income under head 'royalty', said assessment order passed by assessing officer was bad in law and against directions specified under section 144(13) of the Act and thus liable to be quashed. The pertinent observations of the Tribunal are reproduced hereunder for ready reference: 18. Considered the rival submissions and material placed on record, we observe from the record that assessee has received certain funds by supplying software through intermediaries in India and the various Companies are listed in Para No 3.1 of the Assessment Order. It is also fact on record that assessee has received the receipts as categorized by the Ld. DRP in their order at Page No. 32 as per which assessee has received income from sale of software licence, hardware, support services to those parties who are intended to purchase the latest software from IAR and certain freight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Ld.DRP. We observe that in that case there is an issue of determination of arm's length price of payment towards management fees, global sales and marketing activities fees. We do not intend to follow this decision of the ITAT Bengaluru bench for the simple reason that the Assessing Officer will get extended period of time by passing such orders which are clearly violation of the specific direction specified u/s. 144C(13) of the Act. Therefore, such violation cannot be ignored and in the given case under consideration we observe that Ld. DRP has given clear cut finding that income earned by the assessee will fall under FTS and Assessing Officer by following his own analysis and applied and completed the final Assessment Order under the head Royalty and not even he has bothered to follow the directions of the Ld. DRP and he could have atleast followed the directions of the Ld. DRP to the extent of support services under the head FTS and balance he could have brought to tax under the head Royalty. Further, we observe that the majority of the receipts received by the assessee are for sale of software licence and hardware and portion of the receipt which are received towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Turner International India (P) Ltd vs. DCIT [2017] 398 ITR 177 (Del) - PCIT vs. Headstrong Services [2021] 278 Taxman 224 (Del) - ACIT vs. Mon Mohan Kohli [2022] 441 ITR 207 (Del) Reference may also be made to the decision of the Hon ble Delhi High Court in Haryana Acrylic Manufacturing Co. vs. CIT [2009] 308 ITR 38 (Del) on the proposition that s teps/ procedure prescribed laid down must be strictly followed; any deviation would be fatal to validity of proceedings/ order [para 23 of judgement]. (c) Moreover, it is submitted that the scheme of Act requires completion of entire mandatory procedure/ proceedings within prescribed time limit. In simple words, the provisions of limitation require the assessing officer to validly complete the assessment proceedings in the statutory time limit. No statutory authority, including this Hon ble Tribunal, in our respectful submissions, has any power of extension of such statutory time limit. Remanding of the matter to conduct fresh assessment would, in our submissions, be in violation of the aforesaid statutory timelines and provisions of the Act. The law does not permit an interpretation which results in/ amounts to lifting the bar of limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a statutory provision; the ITO has no power to make a reassessment beyond the period prescribed by sub-section (2) of section 153, unless the case falls under any of the other sub-sections under section 153 or other provision extending the said period of limitation; it cannot be understood as empowering the High Court to give a direction to the authority under the Act to ignore the period of limitation prescribed in the Act. Thus, it was held that the High Court was justified in holding that no direction could issue compelling the ITO to make an order of assessment beyond the period of limitation prescribed by section 153(2) of the Act. In the present case, since the time limit for completion of entire procedure viz. issuance of SCN and draft order, hearing, passing of order under section 144C(1), filling of objections before DRP and passing of final assessment order already stands expired, the Tribunal, in our respectful submissions, has no power to extend time and confer jurisdiction to now undertake the mandatory assessment procedure again by remanding the matter back to the file of the assessing officer. (d) Decisions relied by the ld. CIT(DR) not applicable to the facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring was provided to the assessee. On the contrary, the case of the appellant deals with multiple jurisdictional defects as pointed out supra (and in earlier synopsis) and not just absence of opportunity of personal hearing. That apart, the subsequent decision of the jurisdictional Delhi High Court in the case of D.B. Engineering (P.) Ltd. vs. NFAC[2023] 147 taxmann.com 472 (Del) after taking due consideration of the earlier cases set aside the assessment order passed in contradiction to mandate of section 144B of the Act, i.e., without granting personal hearing to the assessee therein. Pertinently, the Hon ble Court echoed the observation of the Court in Sanjay Aggarwal (supra) and allowed the Respondents therein to take next steps, if, law permits . Thus, even the Hon ble Court deemed it unnecessary to remand the matter to the assessing officer rather granted liberty to the respondents to take next steps if legally permissible. 22. It is important to note that apart from the fact that impugned order has been passed without issuance of SCN and allowing opportunity of hearing, the impugned assessment order has been passed by jurisdictional assessing officer (JAO), that too without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the cases. The set procedure u/s 144B was codified to facilitate the process of completing the assessments. In the same codification of process of assessment, the procedure laid down for special category falling u/s 144C was also codified u/s 144B of the Act. The procedure laid out in such a way that after the initial assessment by the assessment units, they will forward the same to the NFAC, NFAC will send the draft assessment order, if required after the review of the same in special cases, to the respective assessee. After giving opportunity of being heard to the assessee or by allowing them to submit relevant information through the e-portal, the final assessment orders are being finalized and forwarded to the respective assessee. 15. In our considered view, the process of one more opportunity at the stage of draft assessment order to the assessee are duplicate in nature, even if there is violation it is only curative in nature since the assessment is not complete. Whereas in the case of other assessment like assessments u/s 143(3), 144 and 147 of the Act, once the draft assessment are issued and after granting opportunity or non granting of opportunity to the assessee, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way. But this involves administration interference to smooth functioning of the assessment process. We are aware that at the time of introduction of faceless assessment scheme, there were several confusions and were several administrative constrains. In order to cope up with the administrative constrains, the relevant administrative heads were given several directions to ease the assessment process and take corrective measures. One of them, in our view, is to transfer certain cases to JAO. There is no illegality involved in the finalizing the FAO, Ld DR has brought to our notice that the respective administrative heads/NFAC were given suitable permission to transfer the cases to JAO. Therefore, as far as assessee is concerned, the FAO has to be completed within the statutory period. In this case, the assessment was completed within the time and the assessment was completed by the JAO and not any other officer. As per system, the jurisdiction always lies with the JAO. In our view, there is no prejudicial caused to the assessee by this FAO. 18. Next on the issue of JAO not followed the directions of DRP, we observed that Ld DRP has directed the AO to verify and spell out the reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to our notice that the assessee has received similar share capital from the same share holders in the AY 2014-15 and the same was accepted by the revenue as genuine after due verification while passing the assessment order vide order dated 23.12.2016, the same is submitted in the form of paper book before us. In the impugned assessment year, the assessee has received investment from the same share holders thru banking channel with the prior approval of the RBI and relevant documents were submitted before the authorities below. In our considered view and in several decisions of the coordinate benches have decided the similar issues that the share capital subscribed by a non resident and received through proper banking channel, the same cannot be disallowed invoking the provisions of section 68 of the Act. Particularly, the coordinate bench in the case of Russian Technology Centre P.Ltd (supra) held as under: 11. We have heard rival contentions and perused the material available on record. The first and foremost question to be decided is whether on the basis of material furnished by the assessee and available on the record, the assessee has discharged its onus as cast by s. 68 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord and the discharge of burden by the assessee is also to be decided on the basis of documents filed by the assessee and facts and circumstances of each case and on that basis a reasonable view is to be taken as to whether the assessee has discharged the primary onus of establishing the identity of share applicant, its creditworthiness and genuineness of the transaction. From the documents filed during the course of assessment and before CIT(A), the independent existence of the share applicants in Russia is clearly established. The assessee's application to FIPB for raising the capital contains all the relevant details which is favourably accepted by the Board, particularly by allowing the assessee to raise further capital without approaching the FIPB. The transactions are through banking channels. Thus, the gamut of evidence does not leave any doubt in the discharge of primary burden of the assessee. On the issue CBDT circular and Finlay Corporation Ltd. Judgment (supra) also we are in agreement with the learned counsel for the assessee that in these circumstances of the case, moneys remitted by non-residents through banking channel outside India have to be held as capital r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on after all the relevant documents before him. Further he has not considered the voluminous documents submitted before him shows that recklessness in which the FAO was passed by the JAO. Therefore, we are inclined to direct the AO to delete the addition made u/s 68 of the Act. In the result, the ground no 4 raised by the assessee is allowed. 25. With regard to other addition of ESI/PF, we observed that the assessee has remitted the employee shares of ESI/PF belatedly but before filing the return of income. The same was disallowed by the JAO. We observed that the assessee has raised ground against the above disallowance, however, after the decision of Hon ble Supreme Court decision in the case of Checkmate Services Private Limited 143 taxmann.com 278(SC)) which has rested all the controversy of deduction of belated remittance of employee shares of ESI/PF and distinguished the various decisions relied by the assessee before us. Therefore, the relevant ground no 5 raised by the assessee is accordingly dismissed. 26. The ground no 6 in consequential in nature and ground not 7 is premature at this stage, accordingly, both these grounds are also dismissed at this stage. 27. In the resul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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