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Income Tax Appellate Tribunal, “C’’BENCH: BANGALORE
Before: SHRI PRASHANT MAHARISHI & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of CIT(A)/NFAC dated 31.7.2024 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1067183336(1) for the AY 2012-13 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”).
The assessee has raised following grounds of appeal:
1. The Order of the learned Commissioner passed under section 250 of the Act is opposed to law, equity, weight of evidence, probabilities and the facts and circumstances in the Appellant's case.
2. The Appellant denies to be assessed to tax on total income as determined by the learned AO of Rs. 1,60,40,450/- as against the total income reported by the Appellant of Rs. 14,46,650/- on the facts and circumstances of the case.
3. The learned Commissioner of Income-tax (Appeals) erred in law that the additional evidence produced should not be admitted under Rule 46A of the Income-tax Rules, 1962 as the conditions specified under the Rule are Gangadharappa Munindra Kumar, Bangalore Page 2 of 6 not satisfied despite the fact that the ex-parte order was passed on best judgement basis as the Appellant was not aware of the order passed in the facts and circumstances of the case.
The learned Commissioner of Income-tax (Appeals) erred in law by admitting additional evidence in part by holding that the additional evidence produced should not be admitted under Rule 46A of the Income- tax Rules, 1962 as the conditions specified under the Rule are not satisfied in the facts and circumstances of the case.
The learned Commissioner of Income-tax (Appeals) erred in law by invoking the rigorous provisions of section 69A of the Act where the source of income is business income rendering section 69A inapplicable in the facts and circumstances of the case.
6. The learned Commissioner of Income-tax (Appeals) erred in upholding the addition of Rs. 66,65,000/- as unexplained moneys u/s 69A of the Act despite the fact that this amount is carried forward balance of loan account reflecting as opening balance in the financials of the impugned year in the facts and circumstance of the case.
The learned Commissioner of Income-tax (Appeals) erred in upholding the addition of Rs. 66,65,000/- as unexplained moneys u/s 69A of the Act despite the fact that the source remains explained by way of providing the bank statement and confirmation letters in the facts and circumstances of the case.
8. The learned Commissioner of Income-tax (Appeals) erred in upholding the addition of Rs.46,29,000/- as unexplained moneys u/s 69A of the Act despite the fact that the source remains explained by way of providing the bank statement and confirmation letters in the facts and circumstances of the case.
The learned Commissioner of Income-tax (Appeals) erred in upholding the addition of Rs.24,00,000/- as unexplained moneys u/s 69A of the Act despite the fact that the source remains explained as it is a business loan in the facts and circumstances of the case.
The learned Commissioner of Income-tax (Appeals) erred in upholding the entire addition of Rs.1,45,94,000/- as unexplained moneys u/s 69A of the Act despite the fact that the Appellant provided the reason for necessity of borrowing for purchaseand construction of property in the absence of sanction of Bank loan in the facts and circumstances of the case.
The learned Commissioner of Income-tax (Appeals) erred in upholding the entire addition of Rs.1,45,94,000/- as unexplained moneys uf/s 69A of the Act despite the fact that the Appellant had repaid the borrowed funds once the Bank loan was sanctioned in the facts and circumstances of the case.
Gangadharappa Munindra Kumar, Bangalore Page 3 of 6 12. The learned Commissioner of Income-tax (Appeals) erred in upholding the applicability of section 115BBE in the facts and circumstances of the case.
Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies liable to be charged to interest u/s. 234A, 234B and 234C of the Act, which under the facts and in the circumstances of the Appellant's case deserves to be cancelled.
The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above.
In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity.
Brief facts of the case are that the assessee is an individual deriving income from business, House Property and other sources. For the assessment year 2012-13 under appeal, the assessee filed his return of income on 28/09/2012 declaring a total income of Rs. 14, 46,450/-.The return of income filed by the assessee was processed u/s 143(1) of the Act and thereafter the case of the assessee was taken up for the scrutiny under CASS by issuance of statutory notices u/s. 143(2) & u/s 142(1) of the Act. In the course of Assessment proceedings, the A.O. observed that in spite of issuing several notices, the assessee had not responded. Accordingly, the A.O. completed the assessment proceedings u/s 143(3) r.w.s. 144 of the Act assessing on a total income of Rs.1,60,40,450/- as against the returned income of Rs. 14,46,450/- by making a solitary addition of Rs. 1,45,94,000/- under the head "Unsecured loan", which comprises of the following:- 1 . Sundry Loans - Rs.66,65,000/- 2. Advance received - Rs. 9,00,000/- 3. Received from Ravikumar - Rs.24,00,000/- 4. Sundry loans - Rs.46,29,000/- Total - Rs.1,45,94,000/-
4. Aggrieved by the order of assessment, the assessee preferred an appeal before the ld. CIT(A)/NFAC.
5. The ld. CIT(A)/NFAC partly allowed the appeal for statistical purposes by upholding the remand report with the following observations:
Decision “6. 6.1 During the appeal proceedings, the appellant’s submission were carefully perused. Also, the submissions of the appellant does not contain any documentary proof/evidence to substantiate his claim. To ensure the creditworthiness and genuineness of the unsecured loans, a remand report was called for. Based on the remand report submitted by the AO, Addl. CIT, Range-3(2), Bangalore vide his letter dated 18.10.2019, has stated as below: “…… 1. The Assessing Officer has submitted that the additional evidence may not be admitted as the assessee has not satisfied any of the circumstances mentioned in Rule 46A(1) for producing the evidence before CIT(A) as notice u/s 143(2) has been served on the assessee and sufficient opportunities have been given to the assessee to submit necessary evidences during the time of assessment proceedings. …..
In view of the above, the additional submissions of the assessee with respect to sundry loans totalling to Rs.66,65,000/- & Rs.46,29,000/- and amount received from Shri Ravikumar for Rs.24,00,000/- may not be considered and additions may be upheld. However, the additional evidence with respect to advances of Rs.9,00,000/- may be considered as submitted by the Assessing Officer.”
6.2 In result, the appeal is partly allowed for statistical purposes by upholding the remand report.”
6. Aggrieved by the order of CIT(A)/NFAC the assessee has filed the present appeal before this Tribunal.
7. Before us, the ld. A.R. of the assessee vehemently submitted that the assessee could not appeared before the AO as the assessee was completely unaware of the proceedings going on before AO and for this reason the AO passed an ex-parte order based on best of his judgment. Further, the ld. A.R. of the assessee submitted that even before the ld. CIT(A), neither the copy of the remand report was Gangadharappa Munindra Kumar, Bangalore Page 5 of 6 provided nor the opportunity of being heard was given to file rejoinder against the remand report suo motto called for by the ld. CIT(A). Further AR of the Assessee submitted that the Ld. CIT(A)/NFAC erred in Law & in facts in not admitting the additional evidences produced as per Rule 46A of the Income Tax Rules,1962 and accordingly prayed that one more final opportunity may be granted to substantiate his case before AO and also undertakes to submit all the details/documents/records before the AO.
The ld. D.R. on the other hand relied on the order of the ld. CIT(A)/NFAC and requested to dismiss the appeal as the assessee failed to submit any details before the AO.
9. We have heard the rival submissions and perused the materials available on record. It is an undisputed fact that AO has passed an ex-parte order u/s 144 of the Act to the best of his judgment & determined the sum payable by the assessee. It is also an undisputed fact that assessee could not produce/submit any information/details/records before the AO as called for. Further during the course of first appellate proceedings, we find that the ld. CIT(A)/NFAC called for the remand report from the AO as the submissions of the assessee does not contain any documentary proof/evidence to substantiate his claim. We find that ld. CIT(A), based on the remand report submitted by the AO has partly allowed the appeal for statistical purposes by upholding the remand report without providing any copy of the remand report to the assessee. Further, we find that no opportunity of being heard is given to the assessee to file rejoinder/objections if any and the ld. CIT(A) based on the remand report of the AO had partly allowed the appeal by upholding the remand report. Therefore, in our opinion, when no details/documents/record have been filed by the assessee even before the AO during the course of Assessment proceedings and the remand report submitted by the AO is solely considered by the Gangadharappa Munindra Kumar, Bangalore Page 6 of 6 ld. CIT(A) for deciding the appeal that too without providing the copy of the Remand Report to the assessee & without giving the opportunity to the assessee to file rejoinder/Objection is illegal & bad in law as against the principles of natural justice. We are of the considered opinion that in the interest of justice and fair play and as requested by the AR of the assessee, we deem it fit to restore the entire issue in dispute to the file of AO to decide the issue afresh in accordance with the law after giving proper opportunity of being heard to the assessee. The assessee is also directed to submit all the relevant details/documents/record as called for by the AO for proper adjudication of the case and the assessee shall not unnecessarily seek time & shall also cooperate with the revenue authorities for early disposal of the matter. We further direct that in case of further default, the assessee shall not be entitled for any leniency.