The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has directed re-adjudication as non-issuance of show cause notice as to dissatisfaction on insufficient evidence was a sufficient cause preventing from filing additional evidence.
The application of assessee, Shark Packaging (India) P. Ltd was that the CIT(A) had erred both on facts and in law in confirming the addition of Rs. 25 lakh made by the Assessing Officer on account of share application money treating the same as unexplained by invoking provisions of Section 68 of the Income Tax Act.
It was also submitted that the CIT(A) had confirmed the addition by rejecting the detailed explanation and rejecting prayer of admission of additional evidence placed under rule 46A of Income Tax Rules 1962 whereas the assessee had sufficient cause for which the said evidence was not placed before the Assessing Officer as the A.O. did not show cause the assessee asking it to provide more details or evidence before making addition under Section 68 of the Income Tax Act which prevented the assessee from giving said additional evidence during assessment proceedings despite possessing the same at the point of time.
Mayank Patawari, on behalf of the assessee submitted that the said cause was a bonafide and sufficient cause explaining the reason due to which said additional evidence could not be provided before the A.O. he vehemently pointed out that the entire material and evidences including additional evidence clearly established that the identity and creditworthiness of investors and genuineness of transaction but the same was dismissed at the threshold without any consideration or attention to the same by the CIT(A). Therefore, it was submitted that additional evidence be admitted for consideration.
Anuj Garg, opposed to the contentions of assessee and submitted that despite sufficient opportunity by the Assessing Officer the assessee did not produce all relevant details, explanation and documentary evidence discharging its onus as per requirement of Section 68 of the Income Tax Act.
The two-member Bench of Chandra Mohan Garg, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) observed that the assessee had filed copy of Appellant’s ITR acknowledgment for AY 2012-13, copy of appellant’s auditor’s report, balance sheet, statement of P&L account, notes on accounts & other notes, shareholding patters details, unsecured loan details etc.
However, except above noted documentary evidence the assessee has not filed any other documents before the Assessing Officer. During first appellate proceedings the assessee filed an application seeking admission of additional evidence i.e. copies of name change certificate, copies of confirmation of share application amount and premium from said entity, compliance certificate and notes on accounts and other notes of said investor company.
But said evidence was not admitted by the CIT(A) by observing that there was no reason explaining the cause which prevented the assessee from filing the same before the Assessing Officer.
The Bench further noted that the Assessing Officer, taking on record said evidence but without any examination or verification thereof, directly proceeded to hold that the assessee had not been able to prove identity & creditworthiness of subscriber and genuineness of transaction. In case the Assessing Officer was not satisfied with the documentary evidence submitted by the assessee then it was his duty to caution the assessee by way of show cause notice or note sheet entry showing his intention and dissatisfaction about insufficient of evidence and absence of details and plausible explanation, but the Assessing Officer directly proceeded make addition under Section 68 of the Income Tax Act without any efforts.
Therefore, the Bench dismissed the impugned order and allowed this ground of appeal filed by the assessee.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
