This article provides a comprehensive analysis of the tribunal proceedings in ITA No. 1124/DEL/2019, involving Kuber Products P. Ltd., New Delhi, and the Assistant Commissioner of Income Tax, Central Circle-30, New Delhi. The case addresses the addition of share capital and share premium based on statements and documents found during a search operation.
The appellant, Kuber Products P. Ltd., filed an appeal against the order dated 1st January 2019 of the CIT(A)-30, New Delhi, for the assessment year 2013-14. The appeal was taken up for hearing on 13th July 2021, and the decision was pronounced on 13th September 2021.
The case was heard by the ITAT Delhi Bench ‘C’ through video conferencing. The bench consisted of Shri Sudhanshu Srivastava, Judicial Member, and Shri Prashant Maharishi, Accountant Member.
The appellant, represented by Shri P.C. Yadav, Advocate, challenged the order of the CIT(A)-30, New Delhi, for the assessment year 2013-14. The primary issues included the addition of share capital and share premium based on unverified statements and the violation of principles of natural justice.
During the hearing, the learned counsel for the assessee argued that the CIT(A) upheld the assessment based on unverified and unsubstantiated statements without providing the opportunity for cross-examination of the witnesses. The counsel emphasized that no incriminating documents were found during the search to justify the additions made by the AO.
‘On the facts and in the circumstances of the case, the learned Ld. CIT (A) has erred, both on facts and in law, in sustaining the assessment by the Ld. AO and in making additions of Rs.1,45,00,000/- on account of share capital and share premium, ignoring the facts and circumstances of the case.’
The Revenue, represented by Ms. Sunita Singh, CIT DR, argued that the statements made by Mr. Mul Chand Malu, although uncorroborated by documents, justified the additions as they were part of a larger investigation into the Kuber Group of companies.
The tribunal concluded that the assessment orders were based solely on the statements of Mr. Mul Chand Malu without any corroborative evidence. It emphasized that mere statements without supporting material could not justify the additions made. Furthermore, the tribunal highlighted the importance of providing the opportunity for cross-examination to uphold the principles of natural justice.
The tribunal’s final judgment stated:
‘In the result, the appeal filed by the assessee is allowed, and the orders of the lower authorities are reversed. The assessment based on unverified statements without corroborative evidence and denial of cross-examination violates the principles of natural justice.’
This judgment underscores the necessity of corroborative evidence in tax assessments and the adherence to procedural fairness, especially the right to cross-examine witnesses whose statements are used as the basis for additions.
This case serves as a precedent for similar disputes, emphasizing the need for corroborative evidence in tax assessments and the importance of procedural fairness. It highlights the tribunal’s role in ensuring that tax assessments are conducted in accordance with the principles of natural justice.
The following sections provide a detailed account of the tribunal’s deliberations and the legal arguments presented by both sides during the hearing of ITA No. 1124/DEL/2019.
The appellant, Kuber Products P. Ltd., New Delhi, filed the appeal against the Assistant Commissioner of Income Tax, Central Circle-30, New Delhi, challenging the order of the CIT(A)-30, New Delhi, for the assessment year 2013-14.
The Commissioner had issued an order on 1st January 2019, which was subsequently challenged by the appellant. The primary issue was the addition of Rs.1,45,00,000/- on account of share capital and share premium based on unverified statements.
‘The CIT(A) upheld the assessment based on unverified and unsubstantiated statements without providing the opportunity for cross-examination of the witnesses.’
The tribunal emphasized the importance of adhering to the principles of natural justice and providing the opportunity for cross-examination, especially when the assessment is based on statements.
The tribunal’s decision in ITA No. 1124/DEL/2019 underscores the importance of corroborative evidence and procedural fairness in tax assessments. By allowing the appeal and reversing the orders of the lower authorities, the tribunal reinforced the principles of natural justice and highlighted the necessity of supporting statements with concrete evidence.
This case serves as an important reference point for future tax litigation, emphasizing the tribunal’s role in ensuring fair and just tax assessments.
Order pronounced in open court on this 13th day of September, 2021.
Per Sudhanshu Srivastava, Judicial Member, and Prashant Maharishi, Accountant Member.
Tax Appeal: Kuber Products P. Ltd. vs. ACIT, Central Circle-30, New Delhi – ITA No. 1124/DEL/2019
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