The Kolkata bench of Income Tax Appellate Tribunal ( ITAT ) while directing the readjudication observed that procedure of disposal of appeal with respect to investment in equities is not in accordance with mandate given under Section 250(6) of the Income Tax Act, 1961
The Assessee Aryavrat Vintrade Pvt. Ltd was filed the return of income by declaring declaring ‘NIL’ income,Thereafter the case was selected for scrutiny ,
During the proceedings the AO observed that there is a substantial increase of Rs.47,00,000/- and Rs.25,00,000/- under the head “Current Investments” in unlisted equities and investment in preference shares respectively.
Assessing Officer further recorded a finding that the assessee failed to substantiate the source of such investments and, therefore, these investments are to be treated as unexplained cash credit, though he made addition under section 69 instead of section 68..
Aggrieved by the order the assessee filed appeal before the CIT(A), who dismissed the appeal. Therefore the assessee filed another appeal before the tribunal.
Miraj D. Shah, Counsel for the assessee argued that for making any addition under section 69, there should be an investment, which was not recorded in the books. Also The opening sentence of section 69 would contemplate that in the financial year immediately preceding assessment year, the assessee has made investment and such investment has not been recorded in the books of account maintained by the assessee.
Hence the assessee counsel argued that the Assessing Officer has himself observed that investments are recorded in the books, therefore, how such investments can be treated as unexplained investment.
P.P. Barman, Counsel for Revenue, supported the order of assessing officers.
The tribunal observed that the sub-section (6) of section 250 contemplates that 1st Appellate Authority would state the points in dispute and thereafter record reasons on such points. Moreover the CIT(A) has issued number of notices to the assessee, which remained un-complied with and thus it be concluded that assessee failed to substantiate the appeal with any new materia. whereby appeals were dismissed for want of prosecution.
Therefore the tribunal concluded that this procedure of disposal of appeal is not in accordance with the mandate given under subsection (6) of section 250. Hence, the order of CIT (Appeals) is not sustainable.
After analyzing the submission of both parties the bench comprising Rajpal Yadav (Vice-President) and Dr. Manish Borad (Accountant Member) set aside this issue to the file of CIT (Appeals) and observed that the procedure of disposal of appeal with respect to investment in equities is not in accordance with mandate given under Section 250(6) of the Income Tax Act.
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