ACIT, CHENNAI vs. K.N.RAHMMATULLA, TIRUNELVELI

The assessee is an individual engaged in the business of running a jewellery shop by name Rahmat Jewellers. He was also a partner in M/s. Jewel Palace as also Nachyar Supermarket. A search under section 132 of the Income Tax Act, 1961 [“Act” in short] was conducted in the residence of the assessee as a connected case of Shri Maya Venkatesan, who was also a director in Nellai Cements as was the assessee. Proceedings under section 153A of the Act were initiated in response to which, the assessee filed the return of income for the assessment year 2004-05 declaring an income of ₹.3,48,390/- and the assessment was completed under section 143(3) r.w.s. 153A of the Act by making an addition of ₹.50.00 lakhs on protective basis and ₹.20.00 lakhs by way of investment in jewellery.

The assessee carried the matter in appeal before the ld. CIT(A). After considering the submissions of the assessee and facts of the case, the ld. CIT(A) deleted both the additions.

Aggrieved, the Revenue is in appeal before the Tribunal. The ld. DR has submitted with regard to addition made on protective basis that the substantive addition made is under appeal is pending before the ld. CIT(A) and the issue has not become final. Thus, the deletion of addition by the ld. CIT(A) is premature. On the other hand, the ld. Counsel prayed that the issue may be remitted back to the file of the ld. CIT(A) for readjudication along with the case of Shri Maya Venkatesan in whose hands substantive addition of ₹.50 lakhs has been made and pending for adjudication.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, during the course of assessment in the case of Shri Maya Venkatesan, against the loan credit of ₹.50.00 lakhs, the Assessing Officer has made substantive addition as well as in assessee’s case, the addition towards investment was made on protective basis. Since the addition on substantive basis in the case of Shri Maya Venkatesan is pending for adjudication before the ld. CIT(A), similar addition in the hands of the assessee on protective basis is remitted back to the file of the ld. CIT(A) for fresh adjudication along with the case of Shri Maya Venkatesan and decide issue in accordance with law after allowing an opportunity of being heard to the assessee.

With regard to the addition of ₹.20.00 lakhs worth of jewellery being treated as unexplained investment, this issue is interconnected with the addition of ₹.50.00 lakhs made protectively. Accordingly, we remit this issue also to the file of the ld. CIT(A) for fresh adjudication along with main addition by affording an opportunity of being heard to the assessee.

In the result, the appeal filed by the Revenue is allowed for statistical purposes. Order pronounced on the 24th September, 2019 at Chennai.