The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition under Section 68 of the Income Tax Act, 1961 citing denial of the opportunity to be heard.
The Respondent Saivi Finance Pvt. Ltd. company was a Non-Banking Financial Company ( NBFC ) engaged in the business of providing loans to various clients. It filed its return for AY 2015-16 on 29.03.2017 declaring income of Rs. 22,27,390/-. The case was selected for scrutiny under CASS in the limited category. Statutory notice(s) were issued/served upon the assessee. In response, the assessee submitted details asked for by the Assessing Officer who examined them.
The Assessing Officer found that the assessee received Rs. 4,00,00,000/- as share capital/premium from M/s. I-Tech Insurance Brokers Pvt. Ltd. during the year. Based on information received from the Investigation Wing, the AO treated the said sum as an accommodation entry, though in reply to notice sent under Section 133(6) of the Income Tax Act, 1961 to I-Tech Insurance Brokers Pvt. Ltd. information asked for, namely ITR, bank statement etc. were received by the Ld. AO.
Mr. Vivek Kumar Upadhyay, representing the revenue submitted that the content of the statement of Shri Nem Chand Gupta was not forthcoming either from the order of the AO nor that of CIT (A). Therefore, the content of Shri Nem Chand Gupta’s statement remains unverified. Further submitted that the CIT (A) has allowed relief to the assessee on the basis of documentary evidence furnished by the assessee. The AO was also not present before the CIT (A) during the appellate proceedings.
Mr Kapil Goel, representing the assessee submitted that the share subscriber (M/s. I-Tech Insurance Brokers Pvt. Ltd.) has responded to inquiry under Section 133(6) of the Income Tax Act and provided all relevant documents to the AO in assessment proceedings. He further submitted that statement of Mr. Nem Chand Gupta has never been confronted to the assessee much less offered for cross examination. Moreover, no independent inquiry has been made during assessment proceedings from Mr. Nem Chand Gupta. The documentary evidence filed in support of share capital remained unblemished. For these reasons the AR supported the order of the CIT (A).
It was obvious from the assessment order that the impugned addition(s) under Section 68 of the Income Tax Act have been made solely on the basis of a statement of Mr. Nem Chand Gupta recorded by the Investigation Wing of the Income Tax Department prior to assessment in the case of the assessee. It was the grievance of the assessee that sufficient opportunity of being heard was not provided to the assessee on the issue of information from Investigation Wing regarding statement of Mr. Nem Chand Gupta. It was also stated that the statement of Director of the assessee company was recorded by the AO but nothing adverse could be found
The bench concluded that it would be prudent to return the matter to the Assessing Officer (AO) for fresh consideration. Thus, the two-member tribunal bench, consisting of N.K. Billaiya (Accountant Member) and Astha Chandra (Judicial Member), nullified the CIT(A)’s order and remanded the case to the AO.
The AO was directed to furnish the assessee with a copy of Mr. Nem Chand Gupta’s statement, obtained by the Investigation Wing, along with any other relevant material utilized against the assessee. Furthermore, the tribunal mandated that witnesses whose statements were relied upon should be made available for cross-examination. The assessee will be granted ample opportunity to present their case. Consequently, the Revenue’s appeal deemed allowed for statistical purposes.
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