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Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI
Before: SHRI DUVVURU RL REDDY & SHRI G.MANJUNATHA
PER G.MANJUNATHA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals)-13, Chennai dated 10.07.2019 and pertains to the assessment year 2016-17.
The assessee has raised the following grounds of appeal:-
“1. The order of the Commissioner of Income Tax (Appeals) - 13, Chennai dated 10.07.2019 in I.T.A.No.120/18-19/A.Y.2016-17/CIT(A)- 13 for the above mentioned Assessment Year is contrary to law, facts, and in the circumstances of the case.
2. The CIT (Appeals) erred in dismissing the appeal ex-parte without proper adjudication of the issues raised emanating from the assessment order dated 26.12.2018 and consequently erred in sustaining the assessment without assigning proper reasons and justification.
3. The CIT (Appeals) failed to appreciate that any order passed in violation of the principles of natural justice should be reckoned as bad in law and ought to have appreciated that the powers of the appellate adjudication were completely brushed aside while further ought to have appreciated that non consideration of the issues raised in appeal would vitiate the ex-parte decision rendered in the impugned order.
The CIT (Appeals) failed to appreciate that the implied sustenance of the addition of Rs.94,53,000/- in treating other loans as unexplained cash credits in the computation of taxable total income was wrong, erroneous, unjustified, incorrect and not sustainable in law.
The CIT (Appeals) failed to appreciate that the decisions relied upon to decide the appeal ex-parte without adjudicating the issues on merits had no application to the present scenario whereby the First Appellate Authority ought to have considered the issues in appeal on merits, thereby negating the entire approach in dismissing the appeal in the impugned order without considering/examining the issues on merits.
The CIT (Appeals) failed to appreciate that the explanation offered by the appellant for establishing the credits under consideration from the letter dated 27.06.2016 and subsequent explanation/letters filed at various stages would fortify the wrong computation of taxable total income made by the Assessing Officer in the assessment order.”
Brief facts of the case are that the assessee is an individual derives income from business filed his return of income for the assessment year 2016-17 on 09.05.2016 declaring total income of `5,45,270/-. In this case, a survey was conducted in the business premises of the assessee on 28.12.2015 . During the survey, it was found that there was difference of ` 91,40,660/- on account of stock and the assessee has agreed for the same as undisclosed income. Further the assessee has offered unsecured loan of ` 94.53 lakhs as his undisclosed income earned over a period of time. The case has been selected for scrutiny and during the course of assessment proceedings, the Assessing Officer noticed that although the assessee has agreed for additional income on account of stock difference of `91,40,660/- found during survey and also on account of unsecured loan of ` 94.53 lakhs, but failed to offer both the items as undisclosed income and accordingly called upon the assessee to file necessary details including confirmation letters from parties to prove the genuineness of the unsecured loans. In response, the assessee vide letter dated 29.12.2018 has explained difference in stock and argued that value of stock has been taken at MRP rate, therefore there was difference and accordingly filed reconciliation explaining the stock found at the time of survey and stock as per books. The assessee has also explained unsecured loans recorded in its books of account as gifts received from relatives to the extent of `75.00 lakhs and the balance amount of ` 19,53,253/- was received from five other parties. The Assessing Officer after considering relevant submissions of the assessee and taken note of admission of assessee during the survey noted that assessee is able to reconcile the stock difference found during the course of survey except the difference to the extent of `16,361/- and accordingly accepted the explanation furnished by the assessee on difference in valuation of stock. Insofar as unsecured loans, the Assessing Officer noted that the assessee neither furnished any evidence to prove the gift received from their relatives nor filed necessary details to prove the loan taken from five other parties and accordingly made addition of `94,53,000/- to the returned income towards unsecured loans shown in books of account.
4. Being aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). Before the learned CIT(A), the assessee neither appeared nor filed any details to justify its case which is evident from record that despite various dates of hearing were provided, but the assessee could not file any details. Therefore, the learned CIT(A) left with no option has dismissed the appeal filed by the assessee ex-parte by following certain judicial precedents including the decision of ITAT in the case of CIT Vs. Multiplan (India) P.Ltd 38 ITD 320(Del) and confirmed the additions made by the Assessing Officer towards additions made on account of unsecured loans. Aggrieved by the order passed by the learned CIT(A), the assessee is in appeal before us.
5. Learned A.R for the assessee referring to grounds of appeal filed before us submitted that learned CIT(A) dismissed the appeal filed by the assessee for non-prosecution without discussing the issues on merit and hence the appeal needs to go back to the file of the learned CIT(A) or Assessing Officer to re-examine the issue of addition made towards unsecured loans, because the assessee has explained the loans with necessary evidences but the Assessing Officer did not accept the explanation furnished by the assessee merely for the reason that confirmation letters have not been obtained from the parties. The assessee is willing to file necessary evidence including confirmation from parties, therefore, one more opportunity may be given to the assessee to file necessary evidence before the Assessing Officer. In case, the Bench is not willing to set aside the appeal to the file of the Assessing Officer, at least the appeal may be set aside to the file of learned CIT(A), because the learned CIT(A) has not discussed the issue on merits.
6. The learned DR for the Revenue, on the other hand, submitted that despite various opportunities of hearing was provided to the assessee, the assessee has not filed any details either before the Assessing Officer or learned CIT(A) to justify unsecured loans shown in his books of account and hence, there is no need to give one more opportunity of hearing to the assessee either before the Assessing Officer or before the learned CIT(A).
7. We have heard both the parties, perused the material available on record and gone through the orders of authorities below.We find that the learned CIT(A) has disposed off the appeal filed by the assessee ex-parte for non-prosecution, as the assessee neither appeared nor filed any details to justify its case. No doubt, it is the obligation of the person who files appeal, to appear before the authorities, when the appeal is called for hearing to justify its case. In case, the assessee did not choose to appear before the authorities, then the appellate authority left with no option but to dispose off the appeal on the basis of materials available on record, but said appeal needs to be disposed off on merits on the basis of materials available on record. In this case, on perusal of the order of the learned CIT(A), we find that the learned CIT(A) has disposed off the appeal for non-appearance without discussing the issues involved in the appeal on merits. Therefore, we are of the considered opinion that the issue needs to go back to the file of the learned CIT(A) to give one more opportunity to the assessee to file necessary evidence in support of its case. Hence, we set aside the impugned order and remit the matter back to the file of learned CIT(A) and direct him to reconsider the issues after providing adequate opportunity of hearing to the assessee.
Needless to say, the assessee shall appear before the CIT(A) without seeking any adjournment unless or otherwise warrants.
In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 4th December, 2020