The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the Commissioner of Income Tax (Appeals) cannot CIT(A) can’t adjudicate issue by introducing a new source of income not discussed in the original assessment.
The return filed by the assessee declaring nil income was rejected by the Assessing Officer. a search conducted in the premises of the assessee revealed that the assessee group had received a substantial amount of share capital from various non-descript and shell companies which did not have any factual identity and creditworthiness. The search action established beyond doubt that the assessee company like other group companies had received share capital from various non-descript and shell companies/entities which grossly lacked creditworthiness and were in the nature of accommodation entries He observed that during pre-search verification spot enquiries were made at the registered address of M/s MSG Finance India Pvt. Ltd. at 201H, Gautam Nagar, New Delhi from whom Rs.3.50 crores were shown to have been received by M/s Heritage Beverages Pvt. Ltd. It was found that no company is being run from the stated address. He observed that Kandhari group also had received bogus share premium from Indogulf Infrastructure Investment Pvt. Ltd. who had also provided share premium to M.M. Agrawal group of companies.
On first appeal, the CIT(A), made an addition amounting to Rs.3,58,65,500/- by invoking the provisions of section 56(2)(viib).
The Tribunal noted that the Assessing Officer in the body of the assessment order has neither discussed this issue nor made any addition on this account.
“Under these circumstances, it has to be seen as to whether the ld.CIT(A) has jurisdiction to make such addition on an issue which was never considered by the Assessing Officer. Although the powers of the CIT(A) are co-terminus with that of the powers of the Assessing Officer, yet, he has jurisdiction only on those items which have been considered by the Assessing Officer irrespective of the fact whether the issue is subject matter of appeal or not. However, in our opinion, he does not have any jurisdiction over an issue which has not been considered by the Assessing Officer. In case it is accepted that the ld.CIT(A) has power to consider an issue which was not considered by the Assessing Officer, then, the provisions of section 263 or 147 will become otiose,” the Tribunal said.
While disposing the case, the Tribunal said that “Considering the fact that the Assessing Officer in the assessment order has neither discussed this issue nor made any addition u/s 56(2)(viib), therefore, respectfully following the decisions cited above, we are of the considered opinion that the ld.CIT(A) has no power to adjudicate the issue by introducing a new source of income and his order has to be confined to those items of income which is subject matter of original assessment. We accordingly set aside the order of the CIT(A) and direct the Assessing Officer to delete the addition.”
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