2018 (6) TMI 1599 - AT - Income Tax

Tribunal restores appeal, emphasizes natural justice, orders fresh examination of share capital.

The Tribunal set aside the ex-parte order of the Ld. CIT(A) dismissing the assessee's appeal and restored the matter to the AO for a fresh decision, ... Order passed by CIT(A) ex-parte - DR contented no compliance on the part of the assessee even during the course of assessment proceedings before the AO and the matter therefore may be sent back to the AO in order to give him an opportunity to examine the claim of the assessee of having received share capital and share premium amount - HELD THAT:- The impugned order of the Ld. CIT(A) passed ex-parte is accordingly set aside and the matter is restored to the file of the AO for deciding the same afresh on merit in accordance with law after giving one more opportunity of being heard to the assessee. As undertaken by the learned counsel for the assessee, the assessee shall make due compliance before the AO and shall extend all the possible cooperation in order to enable the AO to complete the assessment afresh expeditiously. - Appeal of the assessee is treated as allowed for statistical purpose. Issues:1. Dismissal of appeal by Ld. CIT(A) ex-parte.2. Treatment of share capital and share premium as explained cash credit.3. Disallowance under section 14A.Issue 1: Dismissal of appeal by Ld. CIT(A) ex-parteThe assessee's appeal was dismissed by the Ld. CIT(A) as ex-parte due to non-compliance with hearing notices. The assessee claimed to have sought adjournments on three occasions, supported by applications duly received by the Ld. CIT(A) office. The Ld. CIT(A) failed to consider these applications, leading to a violation of the principle of natural justice. The Tribunal found merit in this contention, setting aside the ex-parte order and restoring the matter to the AO for a fresh decision after providing the assessee with another opportunity to be heard.Issue 2: Treatment of share capital and share premium as explained cash creditDuring assessment proceedings, the AO examined the claim of the assessee regarding received share capital and share premium. The AO issued a notice under section 131 for verification, requiring the assessee to justify the share premium amount. However, the assessee failed to comply despite sufficient opportunity, leading the AO to treat the entire amount as explained cash credit under section 68. The Tribunal acknowledged the lack of compliance but decided to send the matter back to the AO for a fresh examination on merit after providing the assessee with another opportunity to be heard.Issue 3: Disallowance under section 14AAdditionally, the AO made a disallowance under section 14A amounting to &8377; 67,918. This disallowance was part of the total income determination at &8377; 2,42,67,918. The Tribunal did not delve into this issue specifically as the focus was on the dismissal of the appeal and treatment of share capital and share premium. Consequently, the appeal of the assessee was treated as allowed for statistical purposes, and the matter was remanded to the AO for fresh assessment in compliance with the principles of natural justice and law.