2010 (3) TMI 1229 - AT - Income Tax

Summary

Issues Involved: Appeal against deletion of addition of cash credited in books and commission payment u/s 147 and 143(3) for AY 2001-02.

Summary:
1. The revenue appealed against the deletion of additions made by the Assessing Officer regarding unexplained cash credits and commission payments. The assessment was framed u/s 147 read with sec. 143(3) of the Income-tax Act, 1961. The assessee challenged the reopening of assessment, which was not adjudicated by the CIT(A) as the additions were deleted. The assessee filed its return declaring a loss, and the assessment was accepted initially. Subsequently, the assessment was reopened, and the taxable income was determined with certain disallowances. The revenue contended that the reopening was justified based on information from the Investigation Wing. The assessee argued that the reasons for reopening did not demonstrate any failure to disclose material facts. The ITAT ruled that the Assessing Officer was not justified in reopening the assessment without specific failure on the part of the assessee, quashing the assessment.

2. The ITAT considered Rule 27 of the ITAT Rules, 1963, which allows the respondent to support the order appealed against on grounds decided against them. The rule states that if a jurisdictional issue is decided against the assessee but relief is granted on merit, the respondent can defend the order. The ITAT found that the Assessing Officer did not point out how the assessee failed to disclose particulars fully and truly regarding the share application money. As the assessment was reopened without specific failure by the assessee, the ITAT held that the reopening was unjustified. The CIT(A) should have adjudicated this issue, and the ITAT allowed the ground of appeal and quashed the assessment.

3. On the merit of the issue, the ITAT noted that the CIT(A) had deleted the addition based on the assessee's evidence identifying the share applicant. The Assessing Officer had treated information from the Investigation Wing as true but failed to consider the evidence provided by the assessee. The ITAT found that the summons sent to the director of the company was unserved, and the Assessing Officer should have conducted further investigation. Considering these aspects, the ITAT upheld the CIT(A)'s decision to delete the addition and dismissed the appeal filed by the revenue.

4. The appeal by the revenue was dismissed, and the decision was pronounced in the open court on 18.03.2010.