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Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA
Before: SRI SONJOY SARMA & SRI GIRISH AGRAWAL
order
: April 27th, 2023 ORDER
Per Girish Agrawal, Accountant Member:
This appeal by the assessee is directed against the order no. ITBA/NFAC/S/250/2022-23/1043659061(1) dated 29.06.2022 passed by the Ld. CIT(A), NFAC, Delhi for A.Y. AY 2009-10 against the assessment order u/s 143(3)/254 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by ITO, Ward-51(4), Kolkata dated 28.12.2017.
Grounds of appeal
taken by the assessee reads as under:
1. That the Appeal Order passed by Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi u/s 250 of the Act is unlawful, unwarranted and against natural justice.
I.T.A. No.: 511/KOL/2022 Assessment Year: 2009-2010 Manas Kumar Maitra.
2. That the addition of Rs. 16,80,000/- to the declared Total Income of your Appellant by invoking the provisions of Section 68 of the Act against withdrawals from two Private Limited Companies is against law as your Appellant has established the source of the withdrawals. [Relief claimed - Deletion of Addition of Rs. 16,80,000/-].
Your appellant craves leave to urge, to add, to alter, to amend or to adduce further grounds of appeal
on or before the date of appeal hearing.”
3. We note that there is a delay of 10 days in filing the present appeal for which petition for condonation of delay along with affidavit is placed on record. The impugned order of ld. CIT(A) is dated 29.06.2022 which was served on the assessee on the same date. From the perusal of the condonation petition and affidavit, we note that there were certain medical exigencies at the end of the assessee which caused the delay. Further, we note that the present faceless regime of appellate proceedings are new and requires better understanding of the procedures to be followed in this new regime. Considering the explanation furnished, we find it proper to condone the delay and admit the appeal for adjudication.
4. Brief facts of the case are that the present case arises from the earlier order of the Coordinate Bench of ITAT, Kolkata in order dated 11.03.2016 wherein the matter was set aside to the file of ld. AO. Assessee had filed his return of income on 30.07.2009 reporting total income of Rs. 3,71,179/-. Assessee carries on sole proprietorship business under the trade name of M/s. People’s Tannery which was formed by the dissolution of the partnership firm which carried the business under the same trade name. Assessee is also a director in two companies namely, S.G. International Pvt. Ltd. and Sree Exports Pvt. Ltd. In the course of assessment originally completed u/s 143(3) of the Act dated 20.11.2011, two additions were made in respect of credit card payments made by the assessee to three banks aggregating to Rs. 27,49,417/- and in respect of introduction of capital of Rs. 10,95,056/- in M/s. Peoples Tannery. These two additions were deleted by ld. CIT(A) vide order dated 12.12.2012 against which the Revenue was in appeal before the Tribunal. On these two issues, the Tribunal noted that ld. CIT(A) has deleted both the additions by relying on additional evidences filed by the assessee for the first time before him without giving any opportunity to ld. AO Page 2 of 6 I.T.A. No.: 511/KOL/2022 Assessment Year: 2009-2010 Manas Kumar Maitra. to verify the same and there is a clear violation of Rule 46A of the Income Tax Rules, 1962. Accordingly, Tribunal set aside the order of ld. CIT(A) on both the issues involved and restored the matter back to the file of ld. AO for deciding the same afresh after verifying the entire evidences brought on record by the assessee.
4.1. The relevant para 4 of the impugned order of the Tribunal is extracted below:
4. We have heard the arguments of both the sides arid also perused the relevant material available on record. In Ground No. 1 of its appeal, the Revenue has raised a preliminary issue that both the additions made by the Assessing Officer to the total income of the assessed have been deleted by the Id. CIT(Appeals) by relying on certain documents filed by the assesses for the first time before him without giving any opportunity to the Assessing Officer to verify the same and there is thus a clear violation of Rule 46A of the Income Tax Rules, 1962. While supporting the revenue's case on this issue, the Id. D.R. has invited our attention to the assessment order passed by' the Assessing Officer under section 143(3) as well as the copy of the relevant order-sheet entries recorded by the Assessing Officer during the course of assessment proceedings and the copy of ASR submitted by the Assessing Officer to the concerned Additional C1T dated 25.02.2013 to point out that the various documents submitted by the assessee before the ld. CIT(Appeals) were not filed before the Assessing Officer during the course of assessment proceedings and the same constituting additional evidence was relied upon by the ld. CIT(Appeals) to give relief to the assessee on both the issues without giving any opportunity to the Assessing Officer to verify the same. When this position clearly evident from the relevant documents placed on record was confronted to the Id. counsel for the assessee, he has not been able to dispute the same. It is thus clear that the ld. CIT(Appeals) vide his impugned order has deleted both the additions in question made by the Assessing Officer by relying on the additional evidence filed by the assessee for the first time before him without giving any opportunity to the Assessing Officer to verify the same and there is a clear violation of Rule 46A of the Income Tax Rules, 1962. We, therefore, set aside the impugned order of the ld. CIT(Appeals) on both the issues involved in this case and restore the matter back to the Assessing Officer for deciding the same afresh after verifying the entire evidence brought on record by the assessee. Needless to observe that the Assessing Officer shall give proper and sufficient opportunity of being heard to the assessee.
In the set aside proceedings before ld. AO, he found that the assessee has received an amount of Rs. 11 lakh and Rs. 5.8 lakh by cash from Sree Exports Pvt. Ltd. and S.G. International Pvt. Ltd., respectively. This amount Page 3 of 6 I.T.A. No.: 511/KOL/2022 Assessment Year: 2009-2010 Manas Kumar Maitra. was utilized for credit card bill payment by the assessee. Assessee clarified the nature and source of these amounts before ld. AO which were taken by the assessee for incurring expenses relating to the business activities of the two companies in which he was a director. Ld. AO being not satisfied with these submissions made by the assessee, observed that the assessee has shown these amounts in different ways in the cash flow statement since at some places it is shown as “being amount received against loan and advance” and at other places it is shown as “advance from Sree Exports Pvt. Ltd. and S.G. International Pvt. Ltd.” Ld. AO, thus, completed the assessment by treating these two amounts of Rs. 11 lakh and Rs. 5.8 lakh, totalling to Rs. 16.80 lakh as unexplained cash credit in the hands of the assessee u/s 68 of the Act.
Aggrieved, assessee went in appeal before the ld. CIT(A) who confirmed the additions so made by the ld. AO.
Aggrieved, assessee is now in appeal before this Tribunal.
At the outset, we note that it is a case of set aside proceedings by the Coordinate Bench in the first round on the two issues relating to credit card payments to three banks made by the assessee aggregating to Rs. 27,49,417/- and introduction of capital of Rs. 10,95,056/- in the proprietary concern of M/s. Peoples Tannery. The direction by the Tribunal while setting aside the matter to ld. AO is in respect of these two issues only which were to be decided afresh after verifying the evidences which were placed by the assessee before ld. CIT(A) for the first time and no opportunity was given to ld. AO to verify the same. In the present case before us, ld. AO has made addition in respect of a new issue raised by him in respect of amounts received by the assessee in cash from the two companies in which he is a director. The scope of assessment in a set aside proceedings is limited to and restricted to the direction given and the issues for which it has been so remanded. The impugned order of ld. AO is passed u/s 143(3) r.w. Section 254 of the Act. Thus, ld. AO has travelled beyond the two issues in respect of which the matter was restored back to the file of ld. AO by the Tribunal.
I.T.A. No.: 511/KOL/2022 Assessment Year: 2009-2010 Manas Kumar Maitra.
Nevertheless, on the addition made by the ld. AO in the present case, assessee has furnished his explanation along with supporting documents placed on record in the paperbook. Assessee has explained the nature of these amounts which have been accounted by him as an advance/loan from the two companies in which he is a director, for incurring the expenses relating to the business activities of the said two companies. On confrontation of these submissions made by ld. Counsel for the assessee to the ld. Sr. D/R, he could not controvert the same. Ld. Sr. D/R placed reliance on the order of ld. CIT(A).
We have heard the rival contentions and perused the material placed on record. We have also gone through the order of the Coordinate Bench in the first round of litigation whereby the matter was restored to the file of ld. AO on the two issues as aforesaid. We also take note of the fact that in the present assessment, ld. AO has raised a new issue and has made the addition for the same in respect of which the assessee has furnished the required explanation along with corroborating documents to explain the nature and source of the credit which has been treated as unexplained cash credit u/s 68 of the Act amounting to Rs. 16.80 lakh, received from the two companies in which he is a director. Considering the facts on record, submissions made, documentary evidences placed on record and the specific direction given by the Coordinate Bench while setting aside the order of ld. CIT(A) and restoring the matter to ld. AO on two specific issues, we are of the considered view that the additions made by the ld. AO in the present case are not sustainable. We accordingly delete the same. Hence, grounds taken by the assessee are allowed.