2022 (5) TMI 1129 - AT - Income Tax

Tribunal remands case for fresh review, admits additional evidence, stresses natural justice

M/s. Talent Engineering (Coimbatore) Pvt. Ltd. Versus The DCIT / ACIT, Corporate Circle – 2, Coimbatore. And (Vice-Versa)

The Tribunal allowed the assessee's appeal by remanding the matter back to the Assessing Officer for fresh adjudication. The Tribunal admitted additional ... Addition of share application money as unexplained credit u/s.68 - Unexplained sources of receipt of share application money from 15 parties - HELD THAT:- As noted from the evidences that the assessee has filed complete ledger copies of share applicants and also filed other details including confirmations. According to us, these additional evidences filed by assessee will go to the root of the matter and it will help in adjudicating the issue and hence, keeping in mind the principles of natural justice, we admit these evidences and remand the matter back to the file of the AO for fresh adjudication. Accordingly, this issue of assessee’s appeal is allowed for statistical purposes Addition by invoking the provisions of section 41(1) as against addition made u/s 68 by AO on sundry creditors - HELD THAT:- As assessee requested that the matter can go back to the file of the AO to decide the issue whether the additions are to be made u/s.68 or u/s.41(1) after considering the facts of the case, whether the sundry creditors are arising out of sales or not - we are of the view that in the above given facts and arguments, let the matter go back to the file of the AO for fresh adjudication as argued by both the sides. Hence, we set aside this issue in both the appeals i.e., Revenue as well as assessee, to the file of AO to re-adjudicate. Hence, both the appeals are allowed for statistical purposes. Issues involved:1. Addition of share application money as unexplained credit under section 68 of the Income Tax Act.2. Admissibility of additional evidences filed by the assessee.3. Treatment of sundry creditors under section 41(1) of the Act.Issue 1: Addition of share application money as unexplained credit under section 68 of the Income Tax Act:The appeal concerned the confirmation of the action of the Assessing Officer (AO) in upholding the addition of share application money as unexplained credit under section 68 of the Act. The AO added the credit appearing in the books of accounts of the assessee as share application money to the total income due to lack of proof regarding the sources of the money. The Commissioner of Income Tax (Appeals) confirmed the AO's action as the appellant failed to provide adequate proof. However, the assessee filed additional evidences before the Tribunal, including confirmation letters and identity documents from parties. The Tribunal admitted these evidences, noting that they would help in adjudicating the issue and remanded the matter back to the AO for fresh adjudication, allowing the issue in favor of the assessee for statistical purposes.Issue 2: Admissibility of additional evidences filed by the assessee:The assessee filed additional evidences before the Tribunal, including confirmation letters and identity documents from parties from whom share application money was received. The Tribunal admitted these evidences, considering them crucial for adjudicating the issue. The Tribunal noted that the additional evidences would assist in determining the genuineness of the transactions and the creditworthiness of the share applications. The Tribunal's decision to admit the additional evidences and remand the matter back to the AO for fresh adjudication was based on principles of natural justice, ensuring a fair opportunity for the assessee to prove the authenticity of the transactions.Issue 3: Treatment of sundry creditors under section 41(1) of the Act:The common issue in both the appeals of Revenue and assessee involved the treatment of sundry creditors under section 41(1) of the Act. The Revenue raised concerns about the violation of provisions of Rule 46 of the Income Tax Rules, 1962, regarding the consideration of additional evidences by the CIT(A) without giving an opportunity to the AO. The CIT(A) restricted the addition under section 41(1) of the Act, differing from the AO's assessment under section 68 of the Act. The Tribunal, after hearing arguments from both sides, decided to set aside the issue to the file of the AO for fresh adjudication, allowing both the appeals for statistical purposes. The Tribunal emphasized the need for the AO to re-examine the applicability of section 41(1) based on the facts of the case.In conclusion, the Tribunal's judgment addressed multiple issues related to the addition of share application money, the admissibility of additional evidences, and the treatment of sundry creditors under different sections of the Income Tax Act. The decision to remand certain matters back to the AO for fresh adjudication highlighted the importance of providing a fair opportunity for parties to substantiate their claims and ensuring compliance with legal procedures.