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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A” : HYDERABAD
Before: SMT. P. MADHAVI DEVI & SHRI A. MOHAN ALANKAMONY
PER A. MOHAN ALANKAMONY, A.M. : This appeal is filed by the assessee against the order of the Ld.CIT(A)-Tirupati, in Appeal No.10146/2017-18/ CIT(A)/TPT, dated 25-02-2019, for the AY 2016-17.
Brief facts of the case are that the assessee is an individual, deriving income from multiple sources, such as, commission, income from partnership firm, LIC Commission, trading in real estate and other sources, filed his return of income on 14-03-2017 for the AY.2016-17, admitting income of Rs.11 Lakhs. Initially the return was processed u/s.143(1) of the Income Tax Act and thereafter the case of the assessee was selected for scrutiny because it was revealed that the assessee has deposited large amount of cash in his savings bank account and, therefore, it was necessary to verify the source of such deposits and to ascertain that the income of the assessee has not escaped tax. Subsequently, the assessment was completed on 26/12/2018 u/s 143(3) of the Act wherein the ld. AO made several additions. On appeal, the ld. CIT(A) confirmed the order of ld. AO.
Aggrieved by the order of the Ld.CIT(A), the assessee has come in appeal before us, raising several elaborate grounds and they are extracted hereinbelow for reference:
“1. Realisation of debts from the Sundry debtors Rs.32,00,000- 00 and remitted in bank treated as Income brought from undisclosed sources and made addition U/s.68 of the Income tax Act 1961 is unwarranted and objections raised by the appellant on the following cross objections. a. The appellant has discharged the genuineness of transaction that the amounts lent to others are realized and deposited in bank account. It is clearly explained the nature of transaction from where money is brought into books of accounts i.e., "Realization of existing debt given by the appellant". b. The appellant maintained Sundry Debtors account which is an age old practice followed. The appellant case in respect of A.Y.2015-16 was scrutinized by the ITO Ward-2, Gudur and in so far as Sundry Debtors realizations are deposited in Bank has graciously accepted. The present AO only has taken a different stand. c. It is submit that realisation of the SUNDRY DEBTORS amount deposited in Bank treated as Income from UNEXPLAINED SOURCES is unjust on the part of the AO as well as CIT (A) since in absence of incriminating evidences and material has been found to be utilised in remitting in Bank. d. The appellant hereby reproduced abridged SUNDRY DEBTORS account Grawn from the Ledger book as detailed below:
Particulars Credit Debit Opening Balance as on 01-04- 66,76,391-85 2015 Amounts Given to Debtors 71,57,224-00 Amounts taken back from 33,30,027-00 debtors Interest Accrued during the year 16,92,759-00 Closing Balance with sundry 1,21,96,347-85 debtors as on 31-03-2016 Totals 1,55,26,374-85 1,55,26,374-85 It is surprising to note that the AO as well as CIT (A) have accepted the amounts given to Sundry Debtors Rs.71,57,224- 00 and Interest earned Rs.16,92,759-00 but disallowed the realisation of debts i.e., Rs.32,00,000-00.
So, while accepting interest as income in respect of Sundry Debtors account Net realisation i.e., (Rs.32,00,000-00 minus Rs.16,92,759-00 = Rs.15,07,241-00 has to be disallowed. So, it is clearly indicated that the interest amount realisation of Sundry debtors is taxed twice. e. For these and other reasons as may be urged at the time of hearing of the Appeal and the addition made may be deleting.
II. Sale proceeds of Car Rs.3,00,000-00 treated as Income from unexplained sources and made addition U/s.68 of the Income tax Act, 1961 is unwarranted and objections raised by the appellant on the following cross objections. a. The appellant was sold CAR for Rs.3,00,000-00 and credited to Car account and the amount utilized to purchase of New CAR. b. In absence of Sale receipt the appellant has requested the AO to enquire about the Sale of Car, however the AO did not make any enquiry and simply rejected and treated the Capital receipt i.e., Sale of Car amount Rs.3,00,000-00 unexplained sources and made addition U/s.68 of the Income tax act without making any enquiry from RTA office. In fact the AO did not disprove the sale of car. c. The appellant has filed Confirmation of Sale from the Purchaser before the Commissioner of Income Tax, Appeals at the time of hearing and same taken by CIT (A). d. The Learned CIT (A) on the barred ground that the appellant brought new evidence without request under Rule 46A of the IT Rules, and dismissed the ground raised by appellant is a vague and baseless. e. It is submitted that appellant filed Confirmation letter before the CIT (A) and he was taken same and signed on the Confirmation letter and tagged to file. At that instance the CIT (A) how he accepted at the time of hearing without rejecting the same. It is clearly indicating that CIT (A) has acted in utter disregarded to the provisions while upholding the contention of the AO. f. For these and other reasons as may be urged at the time of hearing of the Appeal the addition may be deleted.
III. Regarding LIC Policy premium collections Rs.5,93,880-00 treated as Income of the assess from undisclosed sources and made addition U/s.68 of the Income Tax Act, 1961 is unwarranted and objections raised by the appellant on the following cross objections. a. The appellant is an LIC Agent and paid Rs.5,93,880-00 to LIC by way of Cheque drawn from his bank account. Latterly the appellant was collected money from the Policy holders and credited to the account. b. The AO as well CIT (A) misconstrued the transactions that LIC policy holders paid in piece meal premium which were deposited with LIC subsequently. c. The Books of accounts with the AO as well as Ledger extract was filed with the CIT(A) it is clearly indicates that First the appellant was paid LIC premium Rs.5,93,880-00 by way bank Cheque and Lately, the amounts are realized by the appellant. d. It is submitted that without proper verification by the AO and CIT (A) realisation of LIC Policy premium realized from the Policy holders treated as unexplained income U/s.68 of the Income Tax Act is unwarranted and erred in application of mind”.
At the outset, Ld.AR submitted before us that he has filed additional evidence to establish the genuineness of the sundry debtors, the source for the investment made for purchase of car and receipts from LIC parties. He therefore pleaded that the matter may be remitted back to the file of Ld.AO for fresh consideration and thereby affording one more opportunity of being heard before the ld. Revenue authorities.
Ld.DR, strongly opposed to the submissions of the assessee and requested for confirming the orders of ld. Revenue authorities.
After hearing both the parties through video conference, we are of the considered view that the additional evidence submitted by the assessee is required to be examined by the Ld.AO in order to consider the matter on merits, though, there is gross negligence and lapse on the part of the assessee to submit the same before the ld. Revenue authorities at the appropriate time of hearing. Therefore, in the interest of justice, we hereby remit the matter back to the file of Ld.AO with directions to admit and consider the fresh evidence filed by the assessee and also any other evidence filed by the assessee, even, if it is for the first time and, thereafter, decide the matter in accordance with law and merit after affording proper opportunity to the assessee of being heard. We also hereby direct the assessee to promptly cooperate before the ld. Revenue authorities in their proceedings, failing which, they shall be at liberty to pass appropriate orders based on the materials on record.
In the result, appeal of the assessee is allowed for statistical purposes as indicated hereinabove.