ACIT NON CORPORATE CIRCLE 15, CHENNAI vs. NANDA NISHA, CHENNAI

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ITA 1229/CHNY/2019Status: DisposedITAT Chennai21 August 2019AY 2014-155 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in admitting additional evidence without giving the AO an opportunity to examine it. Therefore, the matter was remitted back to the AO for fresh examination.

What were the facts?

The Assessing Officer (AO) made additions to the assessee's income under Sections 41(1) and 68 of the Income Tax Act. The CIT(A) deleted the addition under Section 68 and restricted the addition under Section 41(1). The assessee appealed this order.

What were the issues?

Whether the CIT(A) erred in admitting additional evidence without providing the AO an opportunity to examine it, and if so, whether the matter should be remanded.

Which sections of the Income-tax Act were involved?

Section 41(1),Section 68

AI-generated summary — verify with the full judgment below

Before: Shri Duvvuru RL Reddy & Shri S. Jayaraman

Pronounced: 21.08.2019

आदेश /O R D E R

PER DUVVURU RL REDDY, JUDICIAL MEMBER:

1.

This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals)-15, Chennai dated 30.01.2019 relevant to the assessment year 2014-15. The grounds raised

by the assessee are reproduced as under: “1. The order of the Ld. CIT(A) is contrary to the law and facts of the case.

2. The Ld. CIT(A) erred in deleting the addition u/s 41(1) of the Act amounting to Rs. 12.51 lakhs when in fact no substantial proof thereof had been given by the assessee.

3. The Ld. CIT(A) erred in deleting the addition u/s 68 of the Act to the tune of Rs. 54 lakhs by considering new evidences which were produced by the assessee during the appellate proceedings, but were never placed before the AC. 3.1. The Ld. CIT(A) erred in admitting additional evidence without giving opportunity to the AC under rule 46A of the Rules.

4.

For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the Ld. CIT(A) be set aside and that of the Assessing Officer be restored.”

2.

Brief facts of the case are that the assessee is an individual and filed return of income electronically for the assessment year 2014-15 on 26.02.2015 declaring income of Rs. 21,50,380/-. Subsequently, the case was selected for scrutiny and accordingly notice u/s. 143(2) of the Income Tax Act, 1961 (in short ‘the Act’) was issued on 31.08.2015 and the same was served on 05.09.2015. The scrutiny assessment was completed u/s. 143(3) of the Act on 29.12.2016 determining the total income of Rs. 91,17,330/- after making the following additions:

1) Balance sundry creditors treated as income u/s. 41(1) of the Act of Rs. 15,66,950/-.

2) Unexplained unsecured loan treated as income u/s. 68 of the Act of Rs. 54,00,000/-.

3. The AO treated the above two additions as unexplained credit u/s. 68 of the Act and charged maximum marginal rate of tax of 30% as per the provisions of s. 115BBE of the Act.

4. Aggrieved, the assessee preferred an appeal before ld. CIT(A). After considering the submissions of the assessee, the ld. CIT(A) allowed the ground raised by the assessee and directed the AO to delete the addition of Rs. 54,00,000/-. So far as Rs. 15,66,950/- u/s. 41(1) of the Act is concerned, the ld. CIT(A) restricted the aforesaid amount to Rs. 3,07,535/- and partly allowed the grounds raised by the assessee. On being aggrieved, the assessee preferred an appeal before this Tribunal.

5.

The main contention of the Revenue is that the ld. CIT(A) erred in admitting the additional evidence without giving any opportunity to the AO u/r. 46A of the Income Tax Rules, 1962.

6.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. Upon perusal of the order of ld. CIT(A), the ld. AR has filed some documents before the ld. CIT(A) and in this order, the ld. CIT(A) has mentioned about the said documents in para 4.2.1, which reads as follows::

“1. IMC (Jyoihi Educational Society) to Navtek (Proprietor: Nisha Nandakumar) of Rs. Rs.37,00,000 • Confirmation from IMC regarding the Rs.37,00,000 unsecured loan. • Enclosing the IMC filed Financial Statement with auditor sign. • Enclosing the ledger copy of IMC and Navtek duly signed by Secretary and Proprietor.

The extract of subsequent changes are:

Financial In the books of IMC In the books of Year Navtek

14-15 Rs. 37,34,041 Dr Rs. 37,34,041 Cr 15-16 Rs. 40,34,041 Dr Rs. 40,86,316 Cr 16-17 Rs. 40,86,316 Dr Rs. 40,86,316 Cr 17-18 Rs. 21,72,873 Dr Rs. 21,72,873 Cr

2. ‘Nisha Nandakumar to Navtek (Proprietor: Nisha Nandakumar of Rs. 15,60,000 • Confirmation from Nisha Nandakumar regarding the Rs. 15,60,000 loan. • Enclosing the ledger copy duly signed by Nisha nandakumar. • In Financial Year 14-15 the Fund of Rs. .15,60,000 was taken to Capital account the ledger copy of same is attached.

3.

Elektronik Lab (Proprietor: Nandakumar Krishnan) to Navtek of Rs. 1,40,00 • Confirmation from Elektronik lab (Nandakumar Krishnan) regarding the Rs. 1,40,000 loan. • Enclosing the ledger copy of Elektronik lab and Navtek duly signed by Proprietor, • Enclosing the Elelctronik Lab Filed Financial Statement with auditor sign. • In Subsequent Year the amount is transferred to Capital account. 4. Automatic Power Inc. • Enclosing the ledger copy in Navtek books duly signed by Proprietor (Nisha Nandakumar)”

7.

On this aspect, the ld. DR submits that the above said documents are not placed before the AO and the ld. CIT(A) failed to ask for remand report from the AO therefore, the AO has no opportunity to look into the above said documents and the AR did not file any proof to establish that the above said documents were placed before the AO. Considering the above said facts and circumstances of this case, we find force in the arguments of the ld. Departmental Representative that the AO had no opportunity look into the documents which were filed before ld. CIT(A). Therefore, we are of the firm opinion that the orders of the ld. CIT(A) liable to be set aside and the matter remitted back to the AO with a direction to examine this issue afresh. The assessee is directed to file all the above said documents before the AO and AO is also directed to dispose of this appeal after giving opportunity to being heard.

8.

In the result, the appeal filed by the assessee is allowed for statistical purpose. Order pronounced on the 21st August, 2019 at Chennai.

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