Tribunal allows Revenue's appeal, remands for fresh assessment, provides assessee with hearing opportunity.

The tribunal allowed the Revenue's appeal, setting aside the CIT(A)'s order and remanding the matter to the AO for a fresh assessment. The tribunal directed the AO to admit the evidence and provide the assessee with an adequate opportunity to be heard. The decision in ITA No. 3291/Mum/2017 for AY 2011-12 was applied mutatis mutandis to the other two appeals (ITA No. 3293/Mum/2017 and 3338/Mum/2017) for AY 2011-12, as the facts were similar in all these appeals.

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Issues Involved:
1. Admission of additional evidence by CIT(A).
2. Genuineness of unsecured loans and sundry creditors.
3. Applicability of Section 56(2)(viia) of the Income Tax Act, 1961.
4. Powers and duties of CIT(A) in appellate proceedings.
5. Conduct of the assessee during assessment proceedings.

Detailed Analysis:

1. Admission of Additional Evidence by CIT(A):
The assessee filed its return of income for AY 2011-12 declaring Nil income, which was processed under Section 143(1) of the Income Tax Act, 1961. The case was selected for scrutiny, and notices were issued under Sections 143(2) and 142(1), but the assessee did not cooperate, leading to an ex-parte best judgment assessment under Section 144. The assessee then filed an appeal with CIT(A), which was delayed by 85 days but was condoned by CIT(A). The assessee submitted additional evidence during the appellate proceedings, which CIT(A) admitted and forwarded to the AO for a remand report. The AO objected to the admission of this additional evidence, arguing that no reasonable cause was shown for its non-production during the original assessment.

2. Genuineness of Unsecured Loans and Sundry Creditors:
The AO made two additions to the income: Rs. 1,15,06,840 towards unsecured loans under Section 68 and Rs. 1,55,27,426 towards sundry creditors. The assessee provided additional evidence to CIT(A), who forwarded it to the AO. The AO verified the evidence through notices under Section 133(6) and received replies from the concerned parties. Despite verifying the evidence, the AO maintained that the source of the loans was not beyond doubt, as the lender company had not conducted any business activities during the relevant period and was closely related to the assessee.

3. Applicability of Section 56(2)(viia):
The AO's remand report also raised the issue of the applicability of Section 56(2)(viia) concerning the purchase of shares of M/s Asmeeta Infratech Private Limited. The AO noted that the valuation report for the shares was not submitted by the assessee, making it difficult to ascertain whether any income arose under this section. CIT(A) refused to look into this issue, stating that the AO had not made any inquiry into the fair market value of the shares or indicated how the assessee obtained any benefit from the purchase.

4. Powers and Duties of CIT(A):
The CIT(A) has co-terminus powers with the AO, including the power of enhancement. The CIT(A) deleted the additions without independently verifying the evidence or addressing the AO's comments. The tribunal noted that CIT(A) should have made proper inquiries to satisfy the requirements of Section 68 and the applicability of Section 56(2)(viia). The tribunal cited the Delhi High Court's decision in CIT v. Jansampark Advertising and Marketing Private Limited, emphasizing the need for CIT(A) to conduct independent inquiries.

5. Conduct of the Assessee:
The assessee did not cooperate during the assessment proceedings, leading to an ex-parte best judgment assessment. The tribunal noted that the CIT(A) should have stepped into the AO's shoes to compute the income chargeable to tax, considering the assessee's non-cooperation. The tribunal set aside the appellate order of CIT(A) and remanded the matter to the AO for a fresh assessment, directing the AO to admit the evidence and provide the assessee with a proper opportunity to be heard.

Conclusion:
The tribunal allowed the Revenue's appeal for statistical purposes, setting aside the CIT(A)'s order and remanding the matter to the AO for a fresh assessment. The tribunal directed the AO to admit the evidence and provide the assessee with an adequate opportunity to be heard. The decision in ITA No. 3291/Mum/2017 for AY 2011-12 was applied mutatis mutandis to the other two appeals (ITA No. 3293/Mum/2017 and 3338/Mum/2017) for AY 2011-12, as the facts were similar in all these appeals.

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