Passing an assessment order by not following order of ITAT is patently illegal and against judicial propriety, as ruled by the Income Tax Appellate Tribunal (ITAT), Indore Bench.
The appellant was represented by Shri Anil Kamal Garg and the respondent was represented by Shri P. K. Singi.
The assessee, M/s. SVM Builders Pvt Ltd is a private limited company engaged in the business of real estate development and was regularly assessed for income tax for the last many years.
The AO framed the assessment on 30-01-2015 under s. 153A r.w.s. 143(3) of the Act determining the total income of the assessee at Rs.7,50,00,000/- as against the Returned Income of Rs. Nil thereby making an addition of Rs. 7,50,00,000/- under s.68 of the Act, on account of share capital and share premium receipts, claimed to have been made by the assessee company, during the relevant previous year.
The appellant preferred an appeal before the CIT(A)-III, Indore and was disposed off by deleting the entire addition of Rs.7,50,00,000/- by giving a finding that the assessment year under consideration was non-abated, no addition could have been made without having recourse to any incriminating document found during the search.
The revenue and assessee preferred a second appeal before the ITAT which confirmed the action of the CIT(A) in deleting the addition made by the AO on account of receipt of share capital by the appellant by holding that during the search, no incriminating material was found relating to the share capital and the addition was made without having recourse to any incriminating material.
By the order, the assessment proceedings under S.153A which were held to be void-ab-initio got revived, retrospectively, from the date on which such proceedings were initiated.
It was observed that the AO passed the impugned assessment order, in haste and on a back date merely for escaping to give the effect of the order of the ITAT in the assessee’s case as patently illegal, unwarranted, unjustified and against the spirit of judicial propriety.
As per law, lower authorities are expected to follow the direction of the higher authority and the order of the ITAT is binding on the AO and CIT(A).
Shri Mahavir Prasad, judicial member & Shri Bhagirath Mal Biyani, accountant member observed that during proceedings under S. 153A of the Act, the assessee furnished all the necessary documentary evidence in support of the genuineness of share capital which did not get rebutted by the AO at any stage and allowed the appeal filed by the assessee.
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