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TMI Blog2025 (5) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit without appreciating the fact that AO passed assessment order exparte u/s.144 of the Act in absence of any plausible reason for low G.P?. 2. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) was justified in deleting the addition made on account unexplained credits under the head securities premium of Rs.56,09,248/- u/s.68 of the Act.?. 3. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) was justified in admitting the additional evidence produced by the assessee without giving opportunity to the revenue in violation of Rule 46A of the IT Rule, 1962?" 3. The relevant facts in brief are that the Assessee filed return of income for the Assessment Year 2014-2015 on 15/09/2014 declaring 'Nil' income which was processed under Section 143(1) of the Act. Subsequently, the case of the Assessee was selected for regular scrutiny. However, during the assessment proceedings, no response was received on behalf of the Assessee and therefore, the Assessee was proceeded ex-parte. The Assessing Officer noted that the Assessee had disclosed Gross Profit of INR. 87,39,451/- during the relevant previous year as against to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20/02/2024, after taking into consideration additional evidenced furnished by the Assessee and deleted the entire addition made by the Assessing Officer. 5. Being aggrieved, the Revenue has preferred the present appeal before the Tribunal on the grounds reproduced at paragraph 2 above. 6. We have heard both the sides and perused the material on record (including the orders passed by the authorities below, Remand Report, dated 11/01/2018 and Letter, dated 31/08/2017, written by the Assessee to the Assessing Officer explaining the reasons for non-compliance with the notices issued during the assessment proceedings. 7. During the course of hearing it was contended on behalf of the Revenue that the additional evidence furnished by the Assessee was considered by the CIT(A) without considering the provisions contained in Rule 46A of the Income Tax Rules 1962 (for short 'IT Rules'). We do not find any merit in the aforesaid contentions advanced on behalf of the Revenue. On perusal of Letter, dated 31/08/2017, [placed at page No. 7-8 of the Paper Book] filed by the Assessee, we find that the Assessee had explained reasons for failure to comply with notice, dated 13/06/2016, issued unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... audited accounts. The AO is directed to delete the addition on this account and the ground is allowed." 9. On perusal of material on record, we find that the findings of the CIT(A) are supported by the material on record. The Assessee had vide Letter, dated 09/02/2018, provided explaining for variation in gross profits for the Assessment Year 2014-2015 as compared to Assessment Year 2012-2013 and 2013-2014. "Gross profit: We have submitted all the details desired by the assessing officer vide notice under section 142(1) dated 13.06.2016 before him during the remand hearing and also the same has been accepted by the Assessing Officer without any adverse comments. We submit that the stand taken by the Assessing Officer to adopt the Gross Profit of the earlier years was incorrect due to the fact that there was change in the line of business compared to the previous year. The Assessing Officer during the course of assessment failed to observe the fact that in previous year the sale of product is higher than the Sale of Service and during the above said assessment year the sale of product is declined and sale of service is substantially increased. Hence the GP adopted by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of gross profits. Accordingly, Ground No. 1 raised by the Revenue is dismissed. 11. As regard Ground No. 2 raised by the Revenue is concerned, we find that CIT(A) has returned a finding that the share premium was received by the Assessee Company from its holding company Nittei Corporation, Japan. "3.1.4. With regard to the addition under Section 68 of the Act, it has been stated that the money was received as share capital and premium and was from the holding company, which holds 99.9% of the shares in the assessee company. It is also stated that Rule 11U, mentioned by the additional commissioner in his forwarding letter does not apply since the addition has not been made under section 56(2)(viib). It is also stated that since the money has been remitted by a nonresident company to its subsidiary Rule 11U is not applicable in this case. Notwithstanding that the valuation of the shares based on the DCF method has been furnished to the RBI while taking permission. 3.2. xx xx 3.3 The appellant has furnished an extract of the resolution passed by the Board of Directors of the company on 28.06.2013, with respect to the infusion of capital in the assessee company by the holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tificate in respect of the foreign investor issued by the Authorized Dealer Bank. 13. On perusal of the Remand Report, it is clear that the Assessing Officer did not find any infirmity in the above documents furnished by the Assessee during the remand proceedings. It is admitted position that share premium was received by the Assessee from its 99.99% holding company which is not resident in India. The inward remittance was made after making proper disclosure with the RBI. Thus, the nature and source of the transaction stands explained. The Assessee had discharged the onus cast upon the Assessee in terms of Section 68 of the Act. The CIT(A) has, after considering the above documents, was satisfied that addition under Section 68 could not be made in the hand of the Assessee. Therefore, the CIT(A) deleted the addition of INR. 56,09,248/- made by the Assessing Officer under Section 68 of the Act. We do not find any infirmity in the approach adopted by the CIT(A). Concurring with the order of the CIT(A), we declined to interfere with the order passed by the CIT(A) on this issue. Accordingly, Ground No. 2 raised by the Revenue is dismissed. 14. In result, the appeal preferred by the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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