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Income Tax Appellate Tribunal, “SMC-C” BENCH : BANGALORE
Before: SHRI SUNIL KUMAR YADAV
Per Sunil Kumar Yadav, Judicial Member
This appeal is preferred by the assessee against the order of the CIT(A) interalia on following grounds:
Page 2 of 4 1. The orders of the authorities below in so far as they are against the appellant, are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.
2. The learned CIT[A] is not justified in sustaining the addition of Rs.15,40,350/-- being the cash deposit made in the bank account ignoring the explanation tendered by the appellant that a sum of Rs. 11,12,458/- was deposited from out of the collections in the kirana business carried on for which the appellant had also admitted sales of Rs.11,12,458/- in the return of income filed and the same undoubtedly would explain the cash deposits made in the bank account of the appellant to the aforesaid extent under the facts and in the circumstances of the appellant's case.
3. The learned CIT[A] ought to have appreciated that the appellant had received a sum of Rs. 5,53,000/- from Sri Surendra Bhandari of Navkar Chit Fund Pvt.Ltd., Raichur, and the learned A.O. had recorded a statement from the said person, who had reportedly denied the same and the reliance placed on the said statement without the same being confronted to the appellant to lead evidence and rebuttal was bad in law and consequently the addition to the extent of Rs. 5,53,000/- deserves to be deleted.
Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies himself liable to be charged to interest u/s. 234-A and 234-B of the Act, which under the facts and in the circumstances of the appellant's case and the levy deserves to be cancelled.
5. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.
During the course of hearing, the learned counsel for the assessee has invited our attention to the fact that the AO has made addition of Rs.5,53,000/- received from Shri. Surendra Bhandari of Navkar Chit Fund Pvt. Ltd., Raichur, on the basis of the statement of Shri Surendra Bhandari recorded after summoning under section 131 of IT Act hereinafter called the Act, at the back of the assessee.
In the statement Shri. Surendra Bhandari has denied the advancement of the loan to the assessee but the statement was neither confronted to the assessee nor the assessee was allowed to cross examine him. The other contentions of the assessee with regard to the deposit in the bank was accepted by the revenue. Since the addition was made having relied upon the statement of Mr. Surendra Bhandari without confronting the same to the assessee, the addition is not sustainable in the eyes of the law.
The learned DR placed reliance upon the orders of the lower authorities.
4. Having carefully examined the orders of the lower authorities, in the light of the rival submissions, I find that the assessee has made the deposits in the bank of Rs.15,40,350/- out of which Rs.11,12,458/- was considered to be the trading receipts and receipt of loan of Rs.3,08,450/- as agricultural income from his uncle was also accepted by the revenue. But the receipt of loan of Rs.5,53,000/- from Shri. Surendra Bhandari was not accepted having relied upon the statement recorded under section 131 of the Act. But the statement which is a sole basis of the addition was neither confronted to the assessee nor any cross examination was allowed. These facts demonstrate that there is a violation of the principle of natural justice. I am therefore of the view that without confronting the statement to the assessee, the same cannot be used against the assessee. Therefore I set aside the order of the CIT(A) in this regard and restore the matter to the file of the AO with a direction to readjudicate the issue afresh after confronting the statement of Shri. Surendra Bhandari to the assessee. If the assessee seeks any cross-
Page 4 of 4 examination of Shri. Surendra Bhandari, the same may be allowed to him and thereafter the issue may be adjudicated afresh in the light of the evidence collected during the course of enquiry. Accordingly, the appeal of the assessee stands allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Pronounced in the open court on 26th May, 2017.