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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI N.V. VASUDEVAN & SHRI CHANDRA POOJARI
Per Chandra Poojari, Accountant Member
This appeal by the revenue is directed against the order of the CIT(Appeals)-I, Bengaluru dated 24.10.2018 for the assessment year 2015-16 on the following grounds:-
“1. The order of the Learned CIT (Appeals), in so far as it is prejudicial to the interest of revenue, is opposed to law and the facts and circumstances of the case. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in deleting the addition of Rs. 3,00,00,000/- made by the Assessing Officer u/s 68 of the IT Act in respect of credits received from Directors by admitting additional evidence in violation of Rule 46 A of IT Act 1961. 3. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the Ld. CIT (A) be reversed and that of the Assessing Officer be restored. 4. The appellant craves leave to add, to alter, to amend or delete any of the grounds that may be urged at the time of hearing of appeal.”
The facts of the case are that the assessee is said to have received Rs.2 crores from Mahavir Chand and Rs.1 crore from Mahendra Kothari. The assessee did not file any details in respect of the above two credits including the confirmation letters and documents to prove their creditworthiness. Hence the AO inter aliamade the addition of Rs.3 crores on this count.
The CIT(Appeals) after calling remand report from the AO observed that regarding the loan from the Directors of Rs. 3,00,00,000, the assessee has submitted the detailed account copies, copies of IT Returns, the copies of the Firm Account, Dank account extract etc., explaining the sources in the hands of the Directors who have withdrawn the said amount from another sister concern (Partnership Firm) namely, Miss. Ambika Sales Corporation in which they are partners. M/s. Ambika Spies Corporation is dealing in bullion havinq recorded a turnover of Rs. 4,324 crores for the relevant Asst Year and having sufficient funds to lend money to the partners. In the case of Sri Mahaveerchand, an amount of Rs. 2,00,00,000 was received from the firm on 26.03.2015 from ICICI Bank and it was repaid to the firm on 31.03.2015 into the ICICI Bank on the same date from the individuals account. The said amounts were transferred from Sri Mahaveerchand's account to the assessee and vice versa. Thus, the sources for the said cash credit stands explained beyond doubt. Likewise, in respect of Sri Mahendra Kumar, an amount of Rs. 1,00,00,000 was received on 28.8.2014 and returned back on 31.03.2015 through ICICI Bank from the funds advanced by the same partnership firm. Sri Mahendra Kumar had also drawn the said amount of Rs. 1,00,00,000 from Ambika Sales Corporation, a partnership firm. Mahendra Kumar havinq received the amount on 28.08.2014 immediately transferred the same to the appellant's bank account and the same was returned back on 31.03.2015 by the assessee and consequently Mahendra Kumar transferred it to the firm's bank account. Thus, explaining the transactions in respect of Rs. 1,00,00,000 and Rs. 2,00,00,000 credited to the books of the assessee in the names of Sri Mahendra Kumar and Sri Mahaveerchand. In view of the above, the amount of Rs. 3,00,00,000 received from the Directors stands explained. Therefore the addition made by the AO u/s. 68 was deleted by the CIT(Appeals).
We have heard both the parties and perused the material on record. As seen from the above facts of the case, the CIT(Appeals) at the time of hearing before him admitted the evidence in the form of account copies, copies of IT returns, firm accounts, bank account extract, etc. and observed that the sources for cash credit in the hands of the directors to advance money to the assessee stands explained. However, these evidence were not confronted to the Assessing Officer for his comments. Being so, there is violation of Rule 46A of the Income-tax Rules. Accordingly, in the interest of justice, we remit this entire issue in dispute to the file of AO and set aside the order of the CIT(Appeals) on this issue. The AO is directed to examine the material evidence furnished before the CIT(Appeals) and decide the issue afresh in accordance with law, after affording opportunity of being heard to the assessee.
In the result, the appeal by the revenue is allowed for statistical purposes.
Pronounced in the open court on this 14th day of September, 2021.