Narang Wires Pvt. Ltd., Ludhiana V. ITO, W-5(3), Ludhiana

ITA 1623/CHANDI/2017

AI Insights

This case involves an appeal by Narang Wires Pvt. Ltd. against the order of the Ld. CIT(A)-2, Ludhiana, which pertained to the Assessment Year 2013-14. The primary contention was the wrongful upholding of an addition of Rs. 1.19 crores under section 68 of the Income Tax Act, 1961, which was argued to be based on an incorrect application of the law and facts. The assessee challenged the CIT(A)'s decision for not considering additional evidence that could substantiate the creditworthiness and genuineness of the transactions in question. The Income Tax Appellate Tribunal (ITAT) found that the CIT(A) had neither accepted nor rejected the application for additional evidence, leading to the decision to remand the matter back to the CIT(A) for a fresh evaluation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127783 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-03-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 29-11-2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 133(6)

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “बी” , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH ी आकाश द प जैन, उपा य! एवं ी %व&म (संह यादव, लेखा सद-य BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM ITA NO. 1623/Chd/ 2017 Assessment Year : 2013-14 Narang Wires Pvt. Ltd. B-IX-221, Gurudwara Kalgidhar Road Ludhiana (Punjab) The ITO Ward 5(3) PAN NO: AABCN6267A Appellant Respondent ! " Assessee by : Shri Vibhor Garg, C.A # ! " Revenue by : Shri Akashdeep, JCIT, Sr. DR $ % ! & Date of Hearing : 16/03/2023 '()* ! & Date of Pronouncement : 20/03/2023 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. CIT(A)-2, Ludhiana dt. 26/09/2017 pertaining to Assessment Year 2013-14 wherein the assessee has taken the following revised grounds of appeal: 1. That the impugned order is bad both on facts and law. 2. That the Ld. CIT(A) has wrongly and illegally upheld the addition of Rs. 1.19 crores u/s 68 of the Income Tax Act, 1961 against the facts and circumstances of the case. 3. That the Ld. CIT(A) wrongly and illegally upheld the additions relying on the 1 st proviso of sec. 68, after ignoring that the investment in share capital was made by corporate assessee who declare their sources and investments in balance sheet which were placed on record and also filed along with ITR and were before the AO. 4. That the Ld. CIT(A) has wrongly and illegally ignored the application for additional evidence neither rejecting nor accepting the same. 5. That the appellant craves to add, amend, delete any ground of appeal before or during the appellant proceedings. 2 2. In Ground No. 4, the assessee has challenged the action of the Ld. CIT(A) in ignoring the application for additional evidence under Rule 46A filed by the assessee. 3. During the course of hearing, it was submitted by the ld AR that the said application was neither rejected nor accepted by the Ld. CIT(A). It was submitted that the application of the assessee for filing additional evidence before the Ld. CIT(A), Ludhiana is placed at assessee’s paper book at page 158 wherein the assessee has prayed for admission of additional evidence by way of an Affidavit of Shri Nipun Goyal, Promoter Director of M/s S.P. Scrips & Commodities Pvt. Ltd. 3.1 It was submitted that the said Affidavit could not be submitted before the AO as the same was not available with the assessee at the relevant point of time and thereafter after great difficulties, the assessee has obtained the said Affidavit and the copy of the Affidavit is also placed on record at page 219 of the assessee’s paper book. 3.2 It was submitted that during the year under consideration, the assessee company has allotted 165000 shares of M/s SP Scrips & Commodities Pvt. Ltd. @ 80/- per share and during the course of assessment proceedings the AO inquired about these transactions. However not been satisfied with the submissions and the documentation filed by the assessee, the AO had invoked the provisions of Section 68 of the Act, by treating the share capital / share premium as assessee’s company own income from undisclosed sources on the ground that the assessee company could not established the credit worthiness of the investor company and genuineness of the transaction. 3.3 It was submitted that during the course of assessment proceedings, various documents were filed by the assessee company to substantiate the creditworthiness and genuineness of the transaction. Further the AO also undertaken independent inquiry and information under section 133(6) were also sought directly from the investor company and to which the investor company have also responded and filed necessary documentation. 3.4 It was further submitted that the AO further issued summons to Director of M/s S.P. Scrips & Commodities Pvt. Ltd. Ludhiana and in response Shri Vipan Arora , Employee 3 Director of M/s S.P. Scrips & Commodities Pvt. Ltd appeared before the AO on 14/03/2016 and recorded his statement on oath and in his statement, he had said that he is employee Director of the Company and affairs of the company are run by Shri Pramod Kumar, father of Shri Nipun Goyal Promoter Director of Company and further in support of the same, the assessee Company seek to submit additional evidence by way of Affidavit of Shri Nipun Goyal Promoter Director of M/s S.P. Scrips & Commodities Pvt. Ltd confirming that M/s S.P. Scrips & Commodities Pvt. Ltd had invested Rs. 50,00,000/- in the assessee Company. 3.5 It was submitted that the Ld. CIT(A) has taken cognizance of the assessee’s prayer for admission of additional evidence under Rule 46A as apparent from page 10 of the impugned order. However, while recording his findings, he has neither admitted the additional evidence nor has rejected the same. It was accordingly, prayed that the additional evidence so sought to be submitted by the assessee be allowed to be taken on record and the matter should accordingly be decided taking the same into consideration and other documentation so submitted by the assessee. 4. Per contra, the Ld. DR has relied on the findings of the lower authorities and submitted that the assessee has failed to discharge the initial onus caste on it in terms of credit worthiness and genuineness of the transaction and the Ld. CIT(A) in the impugned order has given specific findings as to why the assessee Company had failed to discharge the initial onus. At the same time, regarding the assessee’s prayer for admission of additional evidence, it was fairly admitted that there is no finding which has been recorded by the Ld. CIT(A) in this regard. 5. We have heard the rival contentions and perused the material available on the record. We find that there is a prayer for admission of additional evidence filed by the assessee during the course of appellate proceedings before the ld CIT(A) which is very much on record as apparent from the impugned order as well as the Paper Book submitted by the assessee Company. At the same time, we find that there is no findings which has been recorded by the Ld. CIT(A) disposing off the assessee’s prayer for admission of additional evidence under Rule 46 of the Act. Therefore we deem it appropriate that the matter is set aside to the file of the Ld. CIT(A) to consider the 4 assessee’s prayer for admission of additional evidence under Rule 46A as per law after providing reasonable opportunity to the assessee. 6. In light of the same, the other grounds of appeal and rival contentions raised in context thereof are left open and not adjudicated upon and the same are also set- aside to the file of the ld CIT(A) to decide the same a fresh after taking into consideration the assessee’s prayer for admission of additional evidence. 7. In the result, appeal of the Assessee is allowed for statistical purposes. Order pronounced in the open Court on 20/03/2023. Sd/- Sd/- आकाश द प जैन %व&म (संह यादव (AAKASH DEEP JAIN) ( VIKRAM SINGH YADAV) उपा य! / VICE PRESIDENT लेखा सद-य/ ACCOUNTANT MEMBER AG Date: 20/03/2023 ( + ! , - . - Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. $ / CIT 4. $ / 0 1 The CIT(A) 5. - 2 ग 4 5 & 4 5 678 ग9 DR, ITAT, CHANDIGARH 6. ग 8 : % Guard File ( + $ By order, ; # Assistant Registrar