INCOME TAX ACT, 1961

Section 250 Section 251(4) Section 68

Appeal [CIT(A)] - Powers of CIT(A) - Inquiries/investigation/verification, etc., required by AO -

Addition was made by aO while possing order undr section 147/143(3) in respect of certain alleged accommodations entires after recording reason. Addition as such was made on share application money and unsecured loans. AO was of the view that assessee did not file any reply within required time. After it moutes the reply was given by the assessee. Assessee's contention that since transaction was through banking channel, the same proved the genuineness of the transaction cannot not he accepted for the reason that there is no such law. Therefore, assessee's contention was not acceptable and accommodation entries were treated as income from undisclosed sources and added to the income of the assessee company. The CIT(A) held that indepth enquiry/investigation/verification werenot carried out by AO and afger a eloborated discussion additions were deleted.Held: Once CIT(A) taken the view that further inquiries/investigation/verification were necessary, it was incumbent upon the CIT(A) to have the necessary inquiries/investigation/verification carried out during the appellate proceedings before him either by himself or by remand to the AO. A perusal of section 251(1)(a) shows that in an appeal against an order of assessment, CIT(A) may confirm, reduce, enhance or annul the assessment. However, with effect from 1-6-2001, as a result of amendment to IT Act, the power of CIT(A) to set aside an order of assessment has been withdrawn. Therefore, any necessary inquiry/investigation or verification is required to be carried out during pendency of the appellate proceedings before CIT(A). Further, perusal of section 250(4) shows that CIT(A) has powers, before disposing off any appeal, to make such further inquiry as he thinks fit, or he may direct the AO to make further inquiry and report the result of the same to the CIT(A). It is well settled that powers of CIT(A) are coterminous with powers of the AO. It was gross error on the part of the CIT(A), having himself been of the view that further inquiries/investigation/verification; to not ensure that such further inquiries/investigation/verification were done during the pendency of appellate proceedings before the CIT(A); and in accordance with section 250(4). Therefore, the Tribunal set aside the order of the CIT(A) in respect of aforesaid additions amounting to Rs. 18,54,625 (subject-matter of ground 1 of appeal) and the further addition of Rs. 4,28,50,000 (subject-matter of ground 2 of this appeal) : and the CIT(A) was directed to pass fresh order on these issues, after further inquiries, in accordance with section 250(4).

Relied:CIT v. Kanpur Coal Syndicate (1964) 53 ITR 225 (SC) : 1964 TaxPub(DT) 339 (SC) and CIT v. Jansampark Advertising and Marketing 92015) 375 ITR 373 (Del) : 2015 TaxPub(DT) 992 (Del-HC).

REFERRED : CIT v. J.K. Hosiery Factory (1986) 159 ITR 85 (SC) : 1986 TaxPub(DT) 1427 (SC), CIT v. Diamond Product Ltd. (2009) 177 Taxman 133 (Del) : 2009 TaxPub(DT) 836 (Del-HC), Abheshek Industries Ltd. v. CIT (2009) 177 Taxman 335 (Punj. & Har.) : 2009 TaxPub(DT) 731 (P&H-HC), Asstt. CIT, (2006) 101 ITD 215 (Asr-Trib) : 2006 TaxPub(DT) 1112 (Asr-Trib), Bhilwara Spinners Ltd. v. CIT (2006) 101 ITD 237 (Jodh.) : 2006 TaxPub(DT) 835 (Jod-Trib), Pr. CIT v. NRA Iron & Steel (P.) Ltd. (2019) 103 Taxmann.com 48 (SC) : (2019) 262 Taxman 74 (SC) : (2019) 412 ITR 161 (SC) : 2019 TaxPub(DT) 1628 (SC), Pr. CIT v. NDR Promoters Pvt. Ltd. (2019) 102 Taxmann.com 182 (Del) : (2019) 261 Taxman 270 (Del) : (2019) 410 ITR 379 (Del) : 2019 TaxPub(DT) 886 (Del-HC), CIT v. Navodava Castle Pvt. Ltd. (2014) 367 ITR 306 (Del) : 2014 TaxPub(DT) 3789 (Del-HC), Konark Structural Engineering (P.) Ltd. v. Dy. CIT (2018) 96 Taxmann.com 255 (SC) : 2018 TaxPub(DT) 4127 (SC), Pratham Telecom India (P) ltd. v. Dy.CIt 2018-TIOL-1983-MUM-IT, Royal Rich Developers (P.) Ltd. v. Pr. CIT (2019) 108 taxmann.com 382 (Bom) : 2019 TaxPub(DT) 5365 (Bom-HC), CIT v. Nipun Builders & Developers (P.) Ltd. (2013) 30 Taxmann.com 292 (Del) : (2013) 214 Taxman 429 (Del) : (2013) 350 ITR 407 (Del) : (2013) 256 CTR 34 (Del) : 2013 TaxPub(DT) 526 (Del-HC), CIT v. Nova Promoters & Finlease (P) Ltd. (2012) 18 Taxmann.com 217 (Del) : (2012) 206 Taxman 207 (Del) : (2012) 342 ITR 169 (Del) : (2012) 252 CTR 187 (Del) : 2012 TaxPub(DT) 1558 (Del-HC) and CIT v. NR Portfolio Pvt. Ltd. (2014) 222 Taxman 157 (Del) (Mag)(Trib) : (2014) 264 CTR 258 (Del) : 2014 TaxPub(DT) 501 (Del-HC).

FAVOUR : Matter remanded.

A.Y. : 2002-03

INCOME TAX ACT, 1961

Section 250(1) Rule 46A

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