KUNAL SURANA,MUMBAI vs. ITO 14(1(3), MUMBAI

This is an appeal filed by the assessee against the order of CIT(A)- 25, Mumbai dated 16/03/2012 for A.Y.2006-07 in the matter of order passed u/s.143(3) of the IT Act. 2. In this appeal, assessee is aggrieved for addition of Rs.8,94,550/- on account of alleged introduction of capital u/s.68 and Rs.9,80,015/- on account of loan allegedly taken from M/s. Finishing Touch. Assessee is also aggrieved for addition of Rs.34,249/- out of labour charges and Rs.3,858/- out of telephone charges.

We have heard rival contentions and found from record that additions made by AO was originally confirmed by the CIT(A). The CIT(A) also did not condone the marginal delay in filing the appeal before him. Against this order of CIT(A), assessee approached to the Tribunal and the Tribunal vide order dated 19/04/2013 dismissed the appeal of the assessee against which assessee approached to the Hon’ble High Court. Hon’ble High Court vide order dated 16/06/2015 remitted the matter back to the file of the Tribunal for fresh disposal.

We have heard both the parties in terms of direction given by Hon’ble High Court in its order dated 16/06/2015. From the record we found that during the course of original assessment AO made addition u/s.68. Before the CIT(A) assessee has filed some additional evidence with regard to the loan taken and fresh capital introduced. The CIT(A) asked a remand report from the AO and sent the additional evidence filed before him. The AO has sent the following remand report.

It is clear from the remand report that AO has confirmed that during the year, assessee has introduced capital from personal bank account which was also reflected in the personal balance sheet of the assessee. The AO has confirmed that source of capital introduction is explained. The Shri Kunal Surana AO in his remand report further observed that assessee has also filed loan confirmation alongwith copy of bank statement, copy of balance sheet and copy of return of income of creditors M/s. Finishing Touch and on going through the said details, it was observed that amount of Rs.9,80,015/- was given by M/s. Finishing Touch to the assessee through cheque and the AO observed that capacity and identity of creditor is established. Thus, the AO has given positive remand report which has not been considered at all by the CIT(A). The additional documents so filed before the CIT(A) as well as remand report sent by the AO goes to the root of the issue. Accordingly, in the interest of justice, we restore the matter back to the file of CIT(A) for deciding the issue on merit after considering the remand report dated 07/04/2010 as reproduced above.

We also observe that Hon’ble High Court while restoring the matter back to the file of the Tribunal for fresh consideration also observed that assessee should also deposit the amount of tax due for the assessment year under consideration, as per order dated 16/12/2008 alongwith interest imposed. Accordingly, we direct CIT(A) to verify this fact before taking up the matter on merits. 8. The issue with regard to disallowance of labour charges and telephone charges is also restored back to the file of CIT(A) for deciding afresh as per law. We direct accordingly.