INCOME TAX RULES, 1962

Rule 46A

Appeal [CIT(A)] - Admission of additional evidences by CIT(A) - Violation of rule 46A -

Assessee-company received share capital along with huge share premium. AO took the view that assessee had accepted huge amount of share premium without any justification. In order to verify genuineness of said transaction, AO issued notice under section 133(6) to investors, which returned unserved. Accordingly, AO treated the transaction as unexplained credit under section 68. Before CIT(A) assessee contended that AO had not provided proper opportunity to the assessee. CIT(A) accepted additional evidences furnished by assessee and deleted addition. AO alleged violation of rule 46A of IT Rules, 1962. Held: CIT(A) merely accepted assessee's contention that AO had not provided proper opportunity to assessee. Except for the statement of assessee there was nothing on record to suggest that AO had not provided necessary opportunity. There was nothing on record to rule out that amount of share premium granted to company having a very poor financial record was not out of circuitous route of rotation of share capital with premium. It was also not the case that CIT(A) had himself examined the issue that AO was doubting the very identity of company when there was no service of notice under section 133(6) at the given address. There was no detail as to what was the authorized capital, whether assessee company was authorized to raise amount of share capital. In this view of the matter, CIT(A) clearly erred in admitting that additional document in violation of rule 46A and in the interest of justice, issue was remanded to AO with direction to examine veracity of additional documents submitted by assessee before CIT(A).

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2009-10

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