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Income Tax Appellate Tribunal, “A’’BENCH: BANGALORE
Before: SHRI N.V. VASUDEVAN & SHRI B.R. BASKARAN
PER B.R. BASKARAN, ACCOUNTANT MEMBER:
The revenue has filed this appeal challenging the order dated 24.7.2018 passed by Ld. CIT(A)-4, Bengaluru and it relates to the assessment year 2012-13. The revenue is aggrieved by the decision of Ld. CIT(A) in granting relief in respect of (a) addition relating to cash credit and (b) disallowance of loss arising from distribution of films.
The facts relating to the case are stated in brief. The assessee is engaged in the business of film production and distribution. The Shri Siddaramanna Shailendra Babu, Bangalore
Page 2 of 4 assessee filed his return of income for the year under consideration declaring a loss of Rs.11.52 crores. The AO completed the assessment by making various additions and the assessee got relief before Ld CIT(A). Aggrieved by the relief given by Ld CIT(A) on the above cited issues, the revenue has filed this appeal before us.
The first issue contested by the revenue relates to the addition of cash credits. The A.O. noticed that the assessee has borrowed funds from his wife Smt. Poornima Babu. The opening balance of the loan account stood at Rs.3.29 crores. During the year under consideration, the assessee has received further loan of Rs.3.17 crores from Smt Poornima Devi. Since the assessee did not furnish details in order to prove the creditworthiness of Smt. Poornima Babu, the A.O. assessed the above said Rs.3.17 crores as income of the assessee. The assessee had also received loan of Rs.62.70 lakhs from M/s. Bhagyawathi Combines. The A.O. added the same also as unexplained cash credit for identical reasons.
3.1 The Ld. CIT(A) however deleted the addition by considering details furnished before him. The grievance of the department is that the Ld. CIT(A) has granted relief without confronting those materials with the A.O. and accordingly violated the provisions of Rule 46A of I.T. Rules.
3.2 We heard the parties on this issue and perused the record. Even though the Ld. A.R. contended that all the details that were furnished before Ld. CIT(A) were available before A.O., yet she could not prove the same by furnishing evidence of furnishing those information before the A.O. We notice that, in the case of M/s. Bhagyawathi Combines, the Ld. CIT(A) has granted relief on the basis of confirmation letter dated 10.3.2016 given by M/s. Bhagyawathi Combines. However, the assessment order has been Shri Siddaramanna Shailendra Babu, Bangalore
Page 3 of 4 passed on 27.3.2015 and hence, the above said confirmation letter could not have been filed before the A.O. Accordingly, we agree with the contentions of Ld DR that there was violation of Rule 46A in not confronting the evidences with the AO. Since there is violation of Rule 46A, we have no other option but reverse the order passed by Ld. CIT(A) and restore both the additions relating to cash credits to the file of the A.O. for examining them afresh. We order accordingly.
The next issue contested by the revenue relates to disallowance of loss arising from distribution business. The assessee claimed a loss of Rs.60.61 lakhs from film distribution business venture. The assessee claimed that the above said distribution business was carried on along with M/s. Bahar Enterprises. Since the assessee did not furnish details in support of the claim of loss, the A.O. disallowed the above said claim of Rs.60.61 lakhs.
4.1 We notice that the Ld. CIT(A) presumed that the A.O. has proceeded to disallow the loss under the wrong notion that the experience of the assessee and M/s. Bahar Enterprises should have resulted in profit. On a careful reading of assessment order, we do not find any such observation made by the A.O. In any case, it is well settled proposition that the responsibility to prove the claim of loss/expenditure is placed upon the assessee.
4.2 Since the issue relating to cash credit addition is restored to the file of A.O., in the interest of natural justice, we restore this issue also to the file of the A.O. for offering an opportunity to the assessee to prove the claim of loss in distribution venture. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and restore this issue also to the file of A.O.
Shri Siddaramanna Shailendra Babu, Bangalore Page 4 of 4
After affording adequate opportunity of being heard and also by considering the details, that may be furnished by the assessee, the A.O. may take appropriate decision in accordance with law. We also direct the assessee to fully co-operate with the AO for expeditious completion of the assessment.
In the result, the appeal filed by the revenue is treated as allowed for statistical purposes.
Order pronounced in the open court on 16th Mar, 2022.