Tribunal upholds deletion of unexplained share premium addition; affirms admissibility of fresh evidence

The tribunal dismissed the revenue's appeal, affirming the CIT(A)'s decision to delete the addition on unexplained share premium receipt. The tribunal upheld the admissibility of fresh evidence, considering the evidence provided during appellate proceedings, including the application filed before the Settlement Commission. The order was pronounced in Chennai on 26th July 2023.

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Issues involved:
The issues involved in this case are the procedural irregularity in the reopening of assessment, deletion of addition on unexplained share premium receipt, and the admissibility of fresh evidence.

Procedural irregularity in reopening of assessment:
The revenue challenged the reopening of assessment, arguing that there was no procedural irregularity in serving the notice u/s.148. The Assessing Officer had recorded reasons for reopening, and the notice was re-served after obtaining the whereabouts of the assessee. The CIT(A) erred in not following the guidelines from the GKM Driveshafts case. The assessee had objected to the reopening upon receiving the notice. The tribunal upheld the reopening of assessment based on the facts presented.

Deletion of addition on unexplained share premium receipt:
The Assessing Officer made an addition of Rs. 15,45,81,700 on unexplained share premium receipt. The assessee provided evidence during appellate proceedings, including an application filed by M/s. RPP Infra Projects Ltd. before the Settlement Commission, which was not presented during the assessment proceedings. The CIT(A) admitted the fresh evidence and deleted the addition, citing that the income had been admitted by the assessee group before the Settlement Commission. The tribunal agreed with the CIT(A)'s decision to delete the addition.

Admissibility of fresh evidence:
The revenue contended that the CIT(A) erred in admitting additional evidence contrary to Rule 46A of I.T. Rules, 1962. The assessee had filed an application before the Income-tax Settlement Commission, Chennai Benches, disclosing additional income related to investment with M/s. Luncar Finance Pvt Ltd. The Settlement Commission accepted the income declared by the assessee group. The tribunal found that the addition made by the Assessing Officer had already been subjected to tax in the hands of M/s. RPP Infra Projects Ltd, as per the Settlement Commission's order. Therefore, the tribunal upheld the CIT(A)'s decision to delete the addition.

Final Decision:
The tribunal dismissed the appeal filed by the revenue, upholding the CIT(A)'s decision to delete the addition on unexplained share premium receipt based on the evidence presented during the appellate proceedings. The order was pronounced in the court on 26th July, 2023, at Chennai.

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