SMT RAJ RANI ,TIPTUR vs. INCOME TAX OFFICER WARD-1 , TIPTUR

O R D E R

Per Shri A.K. Garodia, Accountant Member

by the assessee are as under.

1. That the learned Commissioner of Income Tax (Appeals)-7, Bengaluru has erred both in law and on facts in upholding addition of Rs.12,00,000/-representing loans received by the Assessee and, held to be unexplained cash credit u/s 68 of the Act. 1.1 That the learned Commissioner of Income Tax (Appeals)-7, Bengaluru has failed to appreciate that unsecured loans aggregating to Rs.12,00,000/- had been received by account payee cheques from an identifiable party who had duly confirmed in their statement that loans had been advanced to the appellant and as such, addition so sustained is invalid and untenable. 1.2 That the learned Commissioner of Income Tax (Appeals)-7, Bengaluru has further failed to appreciate the substance of the evidence that the Assessee has placed on record to substantiate the genuinity of the transaction which include amongst others - confirmation letter, bank statement, copy of income tax return and extract of books of account of the loan creditor.

1.3 Without prejudice to ground 1.2, That the learned Commissioner of Income Tax(Appeal)-7 failed to appreciate that the inability of the Assessee to explain source-of-source cannot be a basis to confirm addition u/s 68 of the Act.

2. That the learned Commissioner of Income Tax (Appeal)-7, Bengaluru has erroneously placed reliance on a disputed statement of the loan creditor in confirming the addition made by the AO without giving the Assessee an opportunity to verify a copy of the statement of the loan creditor (who has retracted the disputed statement and confirmed the extraction of the initial statement in an atmosphere of fear and tension) nor giving the Assessee an opportunity to cross- examine the maker of the statement in the interest of natural justice despite praying for it in the grounds of appeal

3. That the Learned Commissioner of Income Tax (appeals)-7 erred by not adjudicating on the incorrect levy of interested under 234B and 234C of the income Tax Act, 1961 thereby depicting the hurry of confirming the addition made by the AO and absent-mindedness of the Learned Commissioner of Tax (Appeals)-7, Bengaluru

4. That the various adverse findings recorded by the learned Commissioner of acre Tax (Appeals) are contrary to record and law and thus unsustainable. It is therefore prayed that the above addition may please be deleted as learned members of the tribunal may deem it proper

5. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal”

3. It was submitted by ld. AR of assessee that as per grounds filed before CIT (A), this was the contention raised before CIT (A) that the AO has decided the issue without furnishing a copy of the statement given by Shri Sunil kumar Gupta to the assessee. He further pointed out that this contention was also raised before CIT(A) that the AO has erred in the facts and circumstances of the case by not giving the assessee any opportunity to confront and cross examine Shri Sunil kumar Gupta. He submitted that CIT (A) has not decided these aspects and he has not ensured that the copy of the statement given by Shri Sunil kumar Gupta be provided to the assessee and the assessee be also provided with the opportunity to confront and cross examine Shri Sunil kumar Gupta. He submitted that under these facts, the matter may be restored back to the file of AO for fresh decision after providing the copy of statement of Shri Sunil kumar Gupta to assessee and also after providing an opportunity to the assessee to cross examine Shri Sunil kumar Gupta. The ld. DR of revenue supported the order of CIT(A).

4. I have considered the rival submissions. I find that as per the copy of Form No. 35 submitted along with the appeal memo, these two grounds were very much raised before CIT (A) that AO has erred to decide the issue without furnishing a copy of statement given by Shri Sunil kumar Gupta to the assessee and the AO has also erred in deciding the issue without giving opportunity to the assessee to confront and cross examine Shri Sunil kumar Gupta. In spite of this, this aspect of the matter is not decided by CIT (A) and from the assessment order also, it comes out that the decision of AO is based on the statement of Shri Sunil kumar Gupta and there is no indication in the assessment order that the copy of statement of Shri Sunil kumar Gupta was provided by the AO to the assessee and an opportunity was provided by AO to assessee to cross examine Shri Sunil kumar Gupta. Under these facts, I feel it proper to set aside the order of CIT (A) and restore the entire matter back to the file of AO for fresh decision after providing the copy of statement of Shri Sunil kumar Gupta to the assessee and if the assessee ask for an opportunity to cross examine Shri Sunil kumar Gupta then the AO should also provide opportunity to the assessee to cross examine Shri Sunil kumar Gupta and then pass necessary order as per law after providing adequate opportunity of being heard to the assessee. In view of this decision, no adjudication is called for at this stage regarding merit of the case. Hence I do not make any comment on the merit of the case.

Order pronounced in the open court on the date mentioned on the caption page.