M/s Dynamic Knits Pvt. Ltd. name changed to M/s Shree Radhey Terra Pvt. Ltd., Ludhiana V. ITO, W-6(1), Ludhiana

ITA 473/CHANDI/2019

AI Insights

The case involves M/s Dynamic Knits Pvt. Ltd., which appealed against the order of the CIT(A)-3, Ludhiana, concerning the assessment year 2012-13. The primary issue was the addition of Rs.2.25 Cr as unexplained investment under section 68 of the Income Tax Act, 1961, along with a disallowance of Rs. 5,62,500 on account of unexplained commission expenditure. The Assessing Officer (AO) had scrutinized the share capital and premium received by the assessee and found most of it inadequately explained, leading to the additions. The CIT(A) upheld these additions, prompting the appeal to the Tribunal. The Tribunal noted procedural lapses in the handling of the assessee's additional grounds of appeal and set aside the matter for re-evaluation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127480 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-06-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 11-04-2019
• Other Referred Cases: NTPC Vs CIT 229 ITR 383, SEBI Vs M/s Dhamlaxmi Lease Finance Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARI OM ARORA
• Keywords: Unexplained investment; Question of law; Set aside
• Section: 68; 142(1); 143(2)

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘A’ CHANDIGARH BEFORE: SHRI A.D.JAIN, VICE PRESIDENT AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 473/CHD/2019 नधा रण वष / Assessment Year : 2012-13 M/s Dynamic Knits Pvt. Ltd., (now M/s Shree Radhey Terra P.ltd., 66, Sukhmani Enclave, South City Road, Ludhiana. VS The ITO, Ward 6(1), Ludhiana. थायी लेखा सं./PAN /TAN No: AACCD0069P अपीलाथ /Appellant यथ /Respondent नधा रती क ओर से/Assessee by : Shri Hari Om Arora,Advocate & Shri Gaurav Sharma, CA राज व क ओर से/ Revenue by : Smt. Amanpreet Kaur, Sr.DR तार ख/Date of Hearing : 13.06.2023 उदघोषणा क तार ख/Date of Pronouncement : 19.06.2023 आदेश/ORDER PER VIKRAM SINGH YADAV,A.M. This is an appeal filed by the assessee against the order of ld. CIT(A)-3, Ludhiana dated 01.09.2018 pertaining to assessment year 2012-13. 2. Briefly the facts of the case are that the assessee is engaged in the business of hosiery and real estate and has filed his return of income declaring total income of Rs.2,31,329/- which was selected for scrutiny. Thereafter, notices u/s 143(2) and 142(1) of the Act were issued. During the course of assessment proceedings, the AO noticed that the assessee company has received share capital/share ITA 473/CHD/2019 A.Y.2012-13 Page 2 of 5 premium from M/s Techno Overseas Ltd. amounting to Rs.50 lacs, Rs.25 lacs from Mr. Vijay Miglani and Rs 1.75 Cr from M/s Saral Mining Ltd. totaling to Rs.2.50 Cr and the assessee was asked to furnish the necessary details and documentation in this regard. In response, the assessee company submitted details of the shareholders in form of ITR, PAN, Bank Statements etc. and on perusal thereof, the genuineness of Rs.25 lacs received from Mr. Vijay Miglani, Director of the assessee company was found acceptable to the AO. However, the remaining amount of Rs.2.25 Cr was not found satisfactorily explained and AO made an addition of Rs.2.25 Cr u/s 68 treating the same as unexplained investment. Further, an amount of Rs. 5,62,500/- was disallowed on account of unexplained commission expenditure and the assessment was completed at an assessed income of Rs.2,39,62,500/- against the returned loss of Rs.2,31,329/-. 3. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) who has since sustained the said addition. Against the said findings and direction of ld. CIT(A), the assessee is in appeal before us. 4. At the outset, the ld. AR submitted that the assessee has moved a prayer for admission of the two additional grounds of appeal which are purely question of law arising from the assessment and appellate records and does not require any further finding of fact and it was submitted that in light of the Hon'ble Supreme Court ITA 473/CHD/2019 A.Y.2012-13 Page 3 of 5 decision in case of NTPC Vs CIT 229 ITR 383, the same may be admitted for necessary adjudication. 5. It was submitted that the first additional ground of appeal relates to the fact that the assessee has taken ground of appeal No.12 before the ld. CIT(A), which has not been adjudicated upon by the ld. CIT(A). In this regard, our reference was drawn to ground No.12 taken by the assessee before the ld. CIT(A), which reads as under : "12 That the Ld. Income Tax Officer has misconstrued the Provisions of Section 68 of the I.T. Act, 1961 in the Appellant's case and he has applied the amended provisions of section J58_of the I.T. Act, 1961 without considering that the Assessment Year involved is A.Y. 2012-13 whereas Provisions of Section 68 of the I.T. Act, 1961 have been amended for subsequent years". Non consideration of the Ground of Appeal has resulted in erroneous order.” 6. The second additional ground of appeal relates to the fact that the ld. CIT(A) has referred to the order of Securities Appellate Tribunal dated 04.03.2008 in case of Sebi Vs M/s Dhamlaxmi Lease Finance Ltd. It was submitted by the ld. AR that the said order was never confronted to the assessee and therefore, principle of natural justice has been violated in the instant case. It was, accordingly, submitted that this ground of appeal, therefore, need to be admitted for necessary adjudication as an order of Securities Appellate Tribunal has been used by the ld. CIT(A) against the assessee without confronting the same to the assessee. 7. The ld. DR has fairly admitted that the assessee has taken Ground No.12 before the ld. CIT(A), however, the same has not been adjudicated upon. Further, it was also fairly submitted that the ld. ITA 473/CHD/2019 A.Y.2012-13 Page 4 of 5 CIT(A) has referred to the assessee's transaction with M/s Dhamlaxmi Lease Finance Ltd. as well as the order of the Securities Appellate Tribunal dated 04.03.2008 in case of Sebi Vs M/s Dhamlaxmi Lease Finance Ltd. It was submitted that the said order has only been used in support of the other facts which are already on record in respect of assessee's transaction with M/s Dhamlaxmi Lease Finance Ltd. 8. After hearing both the parties and considering the material available on record, admitted position which is emerging from the record is that ground No.12, though taken by the assessee before the ld. CIT(A), however, the same has not been adjudicated upon and further the fact that the ld. CIT(A) has referred to the order of the Securities Appellate Tribunal dated 04.03.2008 without confronting the same to the assessee, it is essential that the assessee be provided an opportunity before the said order is used against the assessee even in support of other facts which are on record. 9. In view of the same, we find that these two additional grounds of appeal deserves to be admitted as the same are germane to the issue under consideration wherein the additions have been made u/s 68 of the Act. In view of the same, these two additional grounds of appeal are hereby admitted and we deem it appropriate to set them aside to the file of the ld. CIT(A) to adjudicate the same after providing reasonable opportunity to the assessee. ITA 473/CHD/2019 A.Y.2012-13 Page 5 of 5 10. Given that we are setting aside these additional grounds of appeal, other grounds of appeal and the respective contentions raised therein are left open and the same are also set aside to the file of the ld. CIT(A) who shall pass a consolidated order considering the entirety of facts and circumstances of the case including the two additional grounds of appeal so admitted herein as per law after providing reasonable opportunity to the assessee. 11. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 19.06.2023. 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 “Poonam” आदेश क琉 灹ितिलिप अ灡ेिषत/ Copy of the order forwarded to : 1. अपीलाथ牸/ The Appellant 2. 灹瀄यथ牸/ The Respondent 3. आयकर आयु猴/ CIT 4. िवभागीय 灹ितिनिध, आयकर अपीलीय आिधकरण, च瀃डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड榁 फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar