On September 23, 2022, the Income Tax Appellate Tribunal, Delhi Bench ‘F’, addressed a significant dispute in the case of Ridhi Sidhi Shares Pvt Ltd for the assessment year 2011-12. This appeal was lodged against the backdrop of an order dated May 23, 2019, by the Commissioner of Income-Tax (Appeals)-38, New Delhi, which pertained to a substantial unexplained credit addition of Rs. 2.75 crores to the assessee’s income.
The core issue revolved around the addition made by the Assessing Officer during the reassessment under Section 148/143(3) of the Income Tax Act, based on the assumption that these credits were unexplained. The primary contention from the assessee challenged the initiation of the proceedings under Section 147, arguing there was no failure to disclose fully and truly all material facts necessary for assessment, which is a prerequisite for invoking Section 147 after four years from the end of the relevant assessment year.
The appellate proceedings initially dismissed by the CIT(A) were ex-parte, which led to further contention from the assessee about the fairness of the hearing process. The complexities of the case were compounded by related transactions and credits from previous years that were interconnected with assessments from subsequent years.
The Tribunal’s decision to remand the matter back to the Assessing Officer for a fresh adjudication reflects a commitment to ensuring procedural fairness and thorough examination of the facts. This case highlights the importance of clear and full disclosure in tax filings and underscores the complexities involved in dealing with unexplained credits in corporate tax assessments. It serves as a pertinent case study for tax professionals and corporate entities navigating similar challenges.
ITA 1613/DEL/2020: Ridhi Sidhi Shares Pvt Ltd Challenges Addition of Unexplained Credits
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