ELITE RECREATIONS AND RESORTS PRIVATE LIMITED,HYDERABAD vs. INCOME TAX OFFICER, WARD-17(2), HYDERABAD

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ITA 948/HYD/2019Status: DisposedITAT Hyderabad17 December 2020AY 2015-165 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A) erred in remitting the matter of unsecured creditors back to the AO as the CIT(A) does not possess such powers. Considering the need for additional evidence, the Tribunal set aside the CIT(A)'s order and remitted the entire appeal back to the AO for fresh consideration.

What were the facts?

The assessee company filed a return of income admitting a loss. The Assessing Officer disallowed a significant portion of the claimed loss towards unexplained cash deposits and loans. The CIT(A) confirmed the addition for cash deposits but remitted the issue of loans back to the AO.

What were the issues?

Whether the CIT(A) had the power to remit the issue of unsecured loans back to the AO. Whether the assessee was provided with a fair opportunity to present its case.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES “B” : HYDERABAD

Before: SMT. P. MADHAVI DEVI & SHRI A. MOHAN ALANKAMONY

BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER Assessment Year: 2015-16 M/s.Elite Recreations and Income Tax Officer, Resorts Private Limited, Vs Ward-17(2), HYDERABAD HYDERABAD [PAN: AACCE5121B] (Appellant) (Respondent) For Assessee : Shri P.Murali Mohana Rao, AR For Revenue : Shri Rohit Mujumdar, DR Date of Hearing : 15-12-2020 Date of Pronouncement : 17-12-2020 O R D E R PER A.MOHAN ALANKAMONY, A.M. : This appeal is filed by the assessee aggrieved by the order of the Ld. Commissioner of Income Tax (Appeals)–1, Hyderabad, in appeal No.0201/2017-18/ITO, Ward-17(2), Hyd/CIT(A)-1/Hyd/2018-19, dated 28-03-2019.

2.

Brief facts of the case are that the assessee is a Private Ltd., company, engaged in the business of providing recreation to its members, filed its return of income for the AY.2015-16 on 28-09-2015 admitting loss of Rs.25,08,631/-. Subsequently, the case was selected for scrutiny under CASS. Thereafter notices u/s.143(2) & 142(1) of the [Act], dt.21-03- 2016 & dt.17-01-2017 respectively, were issued to the assessee. In response to the above notices, the Authorised Representative of the assessee submitted the information called-for.

2.1. Thereafter the Ld.AO completed the assessment u/s.143(3) of the Act on 18-12-2017 by determining the total loss at Rs.2,477/- wherein an amount of Rs.36,58,417/- (1,92,717 + 34,65,700) was disallowed towards ‘unexplained cash deposits’ and ‘unexplained loans’.

3.

Aggrieved, the assessee filed an appeal before the CIT(A). However, the Ld.AR failed to appear before the Ld.CIT(A) in his proceedings. Therefore, the Ld.CIT(A) passed an ex-parte order, wherein he has sustained the addition of Rs.1,92,717/- towards unexplained cash deposits, because the deposits were not substantiated with cogent evidence. However, with respect to addition made towards unexplained loans, as the assessee has furnished certain details and confirmation letters, the Ld.CIT(A) remitted the matter back to the file of Ld.AO for verification.

4. Aggrieved by the order of the Ld.CIT(A), the assessee has filed this appeal before the Tribunal, raising the following Grounds:

“1. The Ld.CIT(A) erred both on facts and in law. 2. a. The Ld.CIT(A) erred in confirming the addition made of Rs.1,92,717/- representing cash deposits in bank account. b. The Ld.CIT(A) grossly erred in appreciating the fact that all the cash deposits including the impugned amount of Rs.1,92,717/- made into bank account of the assessee represent receipts from its customers only. c. The Ld.CIT(A) ought to have appreciated that the Assessing Officer, before making the addition of Rs.1,92,717/- has not given a reasonable opportunity of being heard. d. The Ld.CIT(A) ought to have appreciated that the amount of Rs.1,92,717/- has already been offered to tax in the return of income filed. 3. a. The Ld.CIT(A) ought to have appreciated that the Assessing Officer during the course of scrutiny has not called for any details with regard to the unsecured loans of Rs.34,65,700/-. b. The Ld.CIT(A) ought to have allowed the grounds of appeal with regard to the addition made of Rs.34,65,700/- representing unsecured loans. c. The Ld.CIT(A) erred in not deleting the addition made of Rs.34,65,700/- in view of the confirmations filed.

4.

The appellant may, add or alter or amend or modify or substitute or delete and/or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal”.

5. At the outset, Ld.AR submitted before us that the Ld.AO has not offered proper opportunity to the assessee and passed ex-parte Order. It was further submitted that assessee- company had incurred huge losses and is under the process of closing down its business. It was further submitted that, the assessee is now in possession of the confirmation letters from the unsecured loan creditors. Therefore Ld.AR requested the case to be remitted back to the file of Ld.AO for fresh consideration.

6.

The Ld.DR vehemently opposed the submissions of the Ld.AR and requested for confirming the order of the Ld.CIT(A).

7.

We have heard the rival submissions through video conference and carefully perused the material on record. On verifying the facts of the case, we find that, neither the assessee nor its Authorised Representative appeared before the Ld.CIT(A) during the proceedings before him, though several opportunities were provided. Therefore, the argument advanced by the Ld.AR that proper opportunity of being heard was not provided to the assessee by the Ld.CIT(A), does not have any merit. However, we find that the Ld.CIT(A) has remitted back the issue with respect to unsecured creditors to the file of Ld.AO for verification which is erroneous because the Ld.CIT(A) does not have such powers under the Act. Further, considering the submissions of the Ld.AR that additional evidence is required to be produced before the Ld.Revenue Authorities, we hereby set aside the order of the Ld.CIT(A) and remit the entire appeal back to the Ld.AO for fresh consideration. Needless to mention that the assessee shall be provided with fair opportunity of being heard admitting the additional evidence if any. We also make it clear that if the assessee or its Counsel fail to co-operate before the Ld.CIT(A) in his proceedings, the Ld.CIT(A) shall be at liberty to pass appropriate Order in accordance with law and merit based on the materials before him.

8.

In the result, the appeal of the assessee is treated as allowed for statistical purposes.

Order pronounced in the open court on the 17th December, 2020

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