TMI Blog2019 (9) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... hare subscribing companies and we find no infirmity in the order of CIT(A) and it is justified. Thus grounds raised by the Revenue are dismissed. - I.T.A No.1882/Kol/2017 - - - Dated:- 30-8-2019 - Shri P. M. Jagtap, Vice President And Shri S.S. Viswanethra Ravi, Judicial Member For the Appellant : Shri Dr. A.K. Nayak, CIT-DR For the Respondent : Shri Miraj D. Shah, FCA ORDER SHRI S.S. VISWANETHRA RAVI, JM: This appeal by the Revenue against the order dated 08.06.2017 passed by the Commissioner of Income Tax (Appeals)-23, Kolkata [ CIT(A) ] for Assessment Year 2012-13. 2. The only issue to be decided is as to whether the CIT(A) is justified in deleting the addition made on account of share capital and premium in the facts and circumstances of the case. 3. The brief facts relating to the case on hand is that the assessee is a company and filed return of income showing total of ₹ 2,624/-. Notices u/s 143(2) and 142(1) of the Act issued. In response to which none appeared on behalf of the assessee but only submissions/docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under: The assessment order, submission of AR and remand report was duly considered. Assessing Officer added share capital share premium to be of ₹ 9,15,00,000/- in this absence of presence of directors of investor. Companies and appellant company. Since it was an assessment U/s 143(3) of Income Tax Act, AO was granted opportunity to examine and investigate the papers submitted of investors companies as additional evidence Under Rule 46A. In this report AO submitted a report and concluding para is reproduced as below:- In the course of the remand proceedings the directors of the assessee company as well as the investor companies were issued summon, The personally appeared with documentary evidences, bank statement and other details/documents to support the identity, creditworthiness and genuineness of transactions. These have been verified without noticing any discrepancies. One of the reason for addition was failure to comply summon. In this regard directors said that they personally appeared in time but statement was not recorded as AO was busy. The Assessee company has claimed that the identities of each of the Inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olkata-700001 verified with relevant entries recorded in the statement of bank accounts maintained by investor companies. In fact notices/summons were issued to investor companies during the course of assessment proceeding where sources of fund have been explained. However, addition was made on the ground of none appearance of directors of assessee company as well as investor companies against summon issued u/s 131 and on the basis of principal of preponderance of probability. I have now verified the documents and evidences submitted by the assessee company in remand proceeding and in the assessment proceeding and satisfied with the nature and source of credit entries. On examination of information contained in the assessment records, paper books and the submissions made by the assessee in remand proceedings as stated above no infirmity in the matter related to standard mode of financial transaction, creditworthiness of investors, source of fund and genuineness of transaction is found. The observations of A.O in remand report is crystal clear to establish identity, creditworthiness and genuineness of investor companies. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed to adjudicate the matter on the basis of facts and law. Thus, when the details submitted by the respondent assessee before the learned CIT Appeal was itself very much speaking with respect to non-discharging of onus created by the statute on the respondent in proving the identity, creditworthiness and genuineness of the transaction of credit of share application money and the relevant premium, mere reliance by the learned CIT Appeal in reaching a conclusion is not based on facts and law and is legally unsustainable. 8. Shri Dr. Abani Kanta Nayak submits that it can be seen from the copy of the order-sheet noting in the case records placed on record that the AO was very perfunctory in his investigation in the sense that he notes that statement of Shri Jitendra Kumar Goyal, director of the assessee company was recorded whereas in fact he took a statement from Mr. Pankaj Marda and Mr. Pradeep Kumar Agarwal who are directors of M/s. ABM Finelease Private Limited and M/s. Virat Leasing Ltd respectively. The learned AO did not take any statement with respect to the other creditors and the director of the assessee company whereas summons have been issued to all these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant Revenue and the ld. DR should be restrained from making submissions of the violation of Rule 46A of Rules. He submits that mere mentioning of wrong section does not vitiate the proceedings and the power u/s 251 of the Act is a statutory power available to CIT(A) in the First Appellate Proceedings. All the directors of subscriber investing companies were summoned and their statements were recorded. Further in compliance to the notices u/s 143(2) and 142(1) of the Act, all the details were filed and examined by the Assessing Officer and the original assessment proceedings itself. In support of his contention, the ld. AR referred to Page No.80 of the impugned order. Further he referred to Page No.488 to 489 of the Paper Book and submits that there was no adverse remark against the directors of assessee company and subscriber investing companies were made by the Assessing Officer. The Assessing Officer fully examined all the details and evidences submitted by the assessee in the remand proceedings and found satisfied with the nature and source of credit entries. Further he submits that when there is no adverse remark against the assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt is not based on the ground that the plaintiff has failed to raise a specific plea that the property belonged to the tarwad. As a matter of fact, the trial Court went into the question of family character of property and came to the conclusion on the basis of the materials on record that the evidence does not support the claim of the plaintiff that the plaint schedule property belonged to the thavazhi. As indicated above an issue was framed on the question whether property is a tarwad property or not. In the circumstances, I do not find any justification for the appellate Court to remand the matter to enable an amendment of the plaint. Supreme Court has pointed out in Nedunuri Kameswaramma v. Sampati Subba Rao, AIR 1963 SC 884 that when each party went to trial fully knowing the rival case and led all the evidence not only in support of its own contentions but in refutation of those of the other side, it cannot be said that the absence of an issue was fatal to the case. In the instant case, not only the parties went to trial fully knowing the rival contention and led evidence, but a specific issue in regard to the question whether the property is a tarwad or not was also framed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, the ratio rendered by the Hon ble High Court of Kerala is of no help to the contention of ld. DR. 13. Further, Dr. Nayak, CIT(DR) the ld. DR referred to the decision of Hon ble High Court of Allahabad in the case of Haji Lal Mohd. Biri Works v. CIT reported in [2005]145 taxmann 578 (All.) wherein it was held as under: 7. A bare perusal of the aforesaid rule clearly shows that the appellant is not entitled to produce fresh oral or documentary evidence, as a matter of right, in appeal. However, under certain circumstances as mentioned in Clauses (a), (b), (c) and (d) of Sub-rule (1) of Rule 46A, additional evidence can be filed. Sub-rule (2) of Rule 46A provides that no evidence shall be admitted under Sub-rule (1) unless the authority admitting it records in writing the reasons for its admission. The provision for recording reasons has been made to enable the higher forums to examine the issue, if raised by an aggrieved party, before it, in further appeal, etc., and to avoid arbitrariness in the matter. The authority should not act whimsically while exercising the jurisdiction under Rule 46A of the Rules. Sub-rule (2) caste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the context of the facts on that case and in the context interpretation of the statutory provision involved therein. Therefore no help can be drawn from the aforesaid ruling of the Supreme Court. It has not been found as a fact that the additional evidence was taken by the first appellate authority after application of mind and in the absence of any reason on record, it is not possible to come to such conclusion at this stage. Be that as it may there is nothing on record of the present case to show that the additional evidence was taken with the assent of both sides. The argument that the assessing authority was present during the course of hearing of appeal will not absolve the appellate authority not to pass order in writing with the reasons for admission of fresh evidence. Mere presence of the assessing authority will not give presumption that he assented for taking the additional evidence on record. 14. On perusal of the afore-mentioned finding of Hon ble High Court of Allahabad, it was held that it is not a matter of right to produce fresh documentary evidence in the appellate proceedings and if at all fresh evidence is produced, the req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re dismissed and the findings in the judgment are contained in paragraphs 9 10. We find that while dismissing the assessee's appeals, the question which was required to be considered is whether the Tribunal is right in disallowing the claim of agricultural income of the assessee, having failed to appreciate the evidence available on record and traversing beyond the scope of the records and findings given by authorities as also the admission made in the remand report by the Assessing Officer himself. Thus, what was required to be considered, was the effect of the findings given by the authorities more particularly, the admission made in the remand report by the Assessing Officer himself. Thus, a subsidiary substantial question of law, which would arise out of the substantial question of law framed is whether the Revenue was entitled to maintain an appeal as against the order of CIT (A), which itself was based upon a remand report 25.11.2002. If the answer to this subsidiary question of law is answered in favour of the assessee, then the appeal filed by the Revenue before the Tribunal has to be not maintainable in the light of the decisions quoted above. Thou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings under Section 154, were rightly invoked. The Division Bench held that the reference itself was incompetent for the reason that in the original assessment for the year 1962-63, a mistake at crept in while making out interest under Section 139(1)(iii). Thereafter, the Income Tax Officer issued a notice to the assessee proposing to rectify the mistake under Section 154 and calling upon the objections of the assessee. The said notice expressly referred to the tax effect which would result as a consequence of the rectification. The mistake was that instead of treating the assessee as an unregistered firm for the purpose of calculating the interest, the Income Tax Officer had treated the assessee as a registered firm. The assessee appeared before the Income Tax Officer and stated that he had no objection to revision proposed by the Income Tax Officer. Thereafter, the Income Tax Officer passed an order rectifying the mistake under Section 154 of the Act. Notwithstanding the admission before the Income Tax Officer, the assessee preferred an appeal before the Appellate Assistant Commissioner of Income Tax. The appeal was dismissed upholdin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 154. 22. In the light of the above, we are of the clear view that the question of law as framed for consideration in the appeals, TCA Nos.819 to 821 of 2010, should have been re-framed or in the alternative, the subsidiary question arising out of the question framed namely as to whether the appeal before the Tribunal was competent, was required to be decided. That apart, since the issue touches upon the jurisdiction of the Tribunal to entertain an appeal, the Tribunal ought to have first answered the said question before proceeding to take up the other issues. 23. As already noticed, the Tribunal verbatim repeated the order passed by the Assessing Officer, dated 29.03.2001, and ignored the remand report, dated 25.11.2002 and the findings rendered by the CIT (A) based on such remand report. Thus, if such is the situation, the appeal itself would have been incompetent. Hence, this question, which touches upon the jurisdiction of the Tribunal, has not been considered by the Tribunal, we are inclined to review the judgment and remand the matter to the Tribunal for fresh consideration. 16. In the light of the observations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax Act wherein, besides it being obligatory for the right of hearing to be afforded not only to the assessee but also the AO, the first appellate authority is given the liberty to make, or cause to be made, further inquiry , in terms of sub-section (4) which reads as under:- The Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals). 39. The further inquiry envisaged under Section 250(4) quoted above is generally by calling what is known as remand report . The purpose of this enabling clause is essentially to ensure that the matter of assessment reaches finality with all the requisite facts found. The assessment proceedings re-opened on the basis of preliminary satisfaction that some part of the income has escaped assessment, particularly when some unexplained credit entries have come to the notice (as in Section 68), cannot conclude, save and except by reaching satisfaction on the touchstone of the three tests mentioned earlier; viz. the identity of the third party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sting on account of non- delivery of the processes, the initial burden on the assessee to adduce proof of identity cannot be treated as discharged. 41. We are inclined to agree with the CIT (Appeals), and consequently with ITAT, to the extent of their conclusion that the assessee herein had come up with some proof of identity of some of the entries in question. But, from this inference, or from the fact that the transactions were through banking channels, it does not necessarily follow that satisfaction as to the creditworthiness of the parties or the genuineness of the transactions in question would also have been established. 42. The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT (Appeals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, particularly in the face of the allegations of the Revenue that the account statements reveal a uniform p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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