ITO Vs Angel Cement Pvt. Ltd (ITAT Delhi)
Now coming to the issue of fresh addition made by the ld. CIT (A) by making enhancement on account of alleged commission income in three cases. Though as discussed above, the ld. CIT (A) has deleted the addition made u/s.68 on the ground that no unaccounted funds have come in the bank account of the assessee companies, nevertheless, has held that assessee company might not have not availed any accommodation entry but has merely provided facility to route the fund of Bhushan Steel Ltd. in view of some of alleged commission @ 2%. This finding is purely based on guesswork and surmises. In nutshell, ld. CIT (A) has treated the accommodation entry, i.e., jamakharchi providing facility to route transaction in view of some commission income. The relevant findings of the ld. CIT (A) in all the three cases have already been incorporated above. First of all, it is neither the case of the Assessing Officer nor has been discussed in any of the assessment orders. What ld. CIT (A) is trying to do is, introducing a new source of income and that to be based on some hypothetical presumption. No show cause notice has been issued to the assessee. Ld. CIT (A) before fastening such presumptive addition in the hands of the assessee company. This is in gross violation of the provisions of the Act but also the principles of natural justice. The Act provides that before enhancing any income Ld. CIT (A) is required to give opportunity to the assessee. These additions have neither been disclosed in the return of income nor have been considered by the Assessing Officer in the assessment order and therefore, making such addition of new source of income is beyond the scope of enhancement by the ld. CIT (A).
From the various judgments relied upon by the ld. counsel on this point, the proposition which can be culled out are as under:
(i) That the C.I.T.(A) has no jurisdiction to travel beyond the subject matter of the assessment or beyond the record, i.e. the return of income and the assessment order; and his power of enhancement relates only to that income which has been subjected to the process of assessment.
(ii) That the process of assessment includes not only taxing an income but also holding that a particular income is not taxable.
(iii) That, therefore, the C.I.T.(A) can tax the income which the A.O had, expressly or by clear implication, considered and held to be not taxable – irrespective of the question whether the income falls under a head with regard to which an appeal has or has not been preferred. However, the C.I.T.(A) cannot tax an item of income, the taxability of which had not been considered at all by the A.O.
Thus, such an addition made by the ld. CIT (A) is definitely beyond the scope of jurisdiction conferred upon the ld. CIT(A) on u/s.251 by introducing new source of income and that without giving any reasonable cause against enhancement.
FULL TEXT OF THE ORDER OF ITAT DELHI
The aforesaid bunch of 22 appeals relating to above named 16 assessees pertain to quantum of assessment passed u/s 143(3) for the assessment years 2012-13 and 2013-14 arising out of 9 separate impugned appellate orders. The issues involved in all the 22 appeals are arising out of identical set of facts and are inextricable interconnected with each other and common issue is permeating in all the appeals with similar additions.
Brief Background of the case
2. The above named assessee-companies are essentially controlled and managed by the promoters of the erstwhile company, M/s Bhushan Steel Ltd., now known as TATA Steel Ltd. (TSL) after the acquisition of BSL by Bamnipal Steel Ltd. which is a wholly owned subsidiary of TATA Steel Ltd on 18th May, 2018 under the Insolvency and Bankruptcy Code, 2016. In nutshell the primary addition in all the appeals pertain to additions u/s.68 on the credits in the form of share capital/share premium and/ or loan and advances appearing in the books of assessee companies in the Assessment Year 2012-13 in 15 cases; in A.Y. 2013-14 in 3 cases; and Assessment Year 2014-15 in one case. The core contention of the assessee before us has been in a nutshell is that the funds have been channeled from the regular books of account of Bhushan Energy Ltd. which is a subsidiary of Bhushan Steel Ltd. into a maze of group companies in the form of share capital and/or loan and advances. The accounted funds, i.e., recorded in the Bhushan Energy Ltd. have been routed through web of group companies and finally re-routed back into the books of Bhushan Energy Ltd. The Assessing Officer on the other hand has treated the share capital/ share premium and or loan and advances appearing in the balance sheet of aforesaid assessee companies as alleged introduction of unaccounted funds of the assessee companies into the regular books of account which has been added u/s.68. In six cases, the bonus share issued by the respective assessee company has also been added by the Assessing Officer which was merely in the nature of transfer entries representing capitalization of reserve and surplus. Apart from that, commission expenses on notional basis u/s.69C alleged to have been paid by the assessee for availing such accommodation entries from the group companies has also been added by Ld. CIT (A) by way of enhancement. Though in majority of cases Ld. CIT (A) has deleted the addition made u/s 68. At a glance the addition made in the case of the assessee can be tabulated in the following manner:
