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Before: SMT. P. MADHAVI DEVI
Date of hearing: 11/03/2020 Date of pronouncement: 29/04/2020 O R D E R
This is assessee’s appeal for the AY 2009-10 against the order of CIT(A) – 1, Hyderabad, dated 22/01/2019 wherein it was submitted that the order of CIT(A) was ex- parte-qua-assessee and, therefore, prayed for remand the matter to the file of AO.
Brief facts of the case are that the assessee, an individual, filed her return of income for the AY 2014-15 on 12/02/2016 admitting an income of Rs. 2,05,500/-, i.e., income from house property of Rs. 1,57,500/- and income from other sources of Rs. 48,000/-. During the course of assessment proceedings u/s.143(3) of the Act, the AO noticed that the assessee had made certain fixed deposits with the Adarsh Cooperative Urban Bank Ltd. and derived interest of Rs. 2,39,152/-, therefrom but, has not admitted the same to tax.
2.1 The assessee was therefore asked to show cause for not admitting the above interest. The assessee filed a letter stating as under:
“With reference to the above cited subject, I would like to submit for your consideration that I have been filing IT returns for the last 10 years and during the financial 2013-14 I filed my return of income including interest of Rs.48,000/- on Rs.4,00,000/- @ 12% per annum which is not the subject matter of mismatch.
Basically we are from agriculture family having ancestral property in the form of agriculture land about acre 16.19 guntas. Our HUF has invested Rs.22.00 lakhs on my name in M/s.Adarsh Co-operative Bank, Hyderabad and earned interest of Rs.2,23,321/- out of this total investment my account is Rs.4,00,000/-, so I earned income of Rs.48,000/- and shown in my return and the balance amount belongs to our HUF. Hence, I have not shown in my return of income. The relevant documents are herewith enclosed for your information and record”.
The AO, however, did not accept the assessee’s contention and held that the assessee’s husband has also given similar explanation in his assessment and that they have claimed that the sources for the deposits were out of agricultural income of HUF. The AO observed that the assessee has been filing returns of income admitting income only from house property and had never offered interest income to tax. Therefore, he disbelieved the assessee’s claim of source for the investments as out of agricultural income of the assessee. He, therefore, made the addition of Rs. 2,39,152/-.
2.2 Further, the AO also noticed that the assessee has repaid a mortgage loan amounting to Rs. 10,00,786/- on 17/08/2013. When the assessee was asked to furnish the source for the repayment of the said loan with evidence, the assessee submitted that she was having OD facility with the bank but was not using it due to lack of business, and the same was used by her cousin, Shri Parasuram Reddy for himself and he had closed loan account along with interest with his funds due to pressure from the banker to close the account. The AO did not accept this contention of the assessee since there was no confirmation letter from Shri Parasuram Reddy and, therefore, he treated the said sum of Rs. 10,00,786/- as unexplained u/s.68 and brought it to tax.
Aggrieved, the assessee preferred an appeal before the CIT(A), who confirmed the order of the AO since none appeared for the assessee and the assessee is in second appeal before the Tribunal by raising the following grounds of appeal:
1. The Order of Ld. CIT(A) is erroneous in law, contrary to the facts, probabilities of the case and against to the principles of equity and natural justice. General in nature, no tax effect.
2. The Ld. CIT(A) erred in simply relying on remand report of AO which is without examining and verifying the documents forwarded by CIT(A) calling for comments/objections and without invoking provisions of section 133(6) or 131 of the act to examine the person who discharged the loan which is germane to subject matter of appeal and therefore additions shall be deleted. Legal ground, no tax effect.
3. The order of Ld. CIT(A) in alleging that appellant has not appeared for hearing on 16.01.2019 where in fact no such hearing notice was received by the appellant which was stated to be sent through email without specifying the email ID to which such notice was sent and dismissing the appeal on that basis is bad in law and contrary to principles of justice, equity and good conscience and therefore additions shall be deleted. Legal ground, no tax effect.
Subject to above, Ld. CIT(A) failed to appreciate the substantial material evidence produced in the course of appeal proceedings in the form of written submissions along with supporting documents such as affidavit, IT returns, agricultural land holdings of the person who discharged the loan amounting to Rs. 10,00,786/- which was not considered by AO even in the remand report who reiterated his submissions stated in the assessment order and therefore shall be deleted. Tax effect, Rs. 3,33,595/-.
5. Ld. CIT(A) further erred in law by sustaining the addition made by AO of Rs.2,39,152/- being interest earned by HUF of appellant's husband which is supported by documentary evidence like letter received from bank, in the hands of appellant. Tax effect, Rs. 79,717/-.
6. For these and other reasons that may be urged at the time of hearing, the appellant prays the Honorable Tribunal to kindly delete the additions made by AO and sustained by Hon'ble CIT(A). General in nature, no tax effect.”
4. The ld. counsel for the assessee submitted that the assessee has all the relevant evidences and has filed the same before the AO and the CIT(A), but, they have not been considered properly. He has also referred to the affidavit of Shri Parasuram Reddy and also the interest certificates for FDs filed by the assessee. He submitted that the FDs have been made in the earlier AYs and therefore, the source of such FDs may not be examined in the AY under consideration. He, therefore, prayed that the matter may be remanded to the AO for reconsideration.
The ld. DR, however, supported the orders of revenue authorities.
Having regard to the rival contentions and material on record, I find that the assessee has filed relevant details before the AO as well as CIT(A), but, the CIT(A) has confirmed the order of the AO only because the assessee has not appeared before him. Since the material evidence filed by the assessee needs reverification, I deem it fit and proper to remand the matter to the file of the AO for de-novo consideration in accordance with law after giving assessee a fair opportunity of hearing. The assessee also is directed to cooperate with the AO for speedy completion of the assessment.
In the result, appeal of the assessee is treated as allowed for statistical purposes. Pronounced in the open court on 29th April, 2020.