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Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश /O R D E R
PER S. JAYARAMAN, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-1, Coimbatore, in dated 15.07.2016.
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In the assessment made for assessment year 2012-13, the AO found that the assessee had received Rs. 1,18,70,000/- as unsecured loan from related parties. The Assessing Officer was satisfied with creditworthiness of two persons and hence he added the remaining sum of Rs. 1,03,20,000/- u/s.
Aggrieved, the assessee filed an appeal before the CIT(A). The CIT(A) dismissed the appeal and held, inter alia, that the assessee filed return of income on 27.08.2012, which is nearly 4 years from the date of filing of return and the assessee was not able to produce confirmation from any of the creditors. Therefore, it is evident that the credit of appearing in the names of these persons are bogus.
Aggrieved, the assessee filed this appeal, primarily pleading that it was not given adequate opportunity. It is submitted that the case came up before the CIT(A) on 14.07.2006, the appellant sought adjournment by a couple of days to cause the then directors, who had lend money, to appear and produce the documents confirming their lending. The adjournment was refused and the order passed on 15.07.2016 was served on 03.09.2016. The appellant was ready with the confirmation from unsecured creditors who were the then directors/shareholders of the company. Subsequently, substantial portion of loan were converted to equity shares and the balance loans were settled to the parties during the financial year 2014-15. Therefore, without considering the facts the CIT(A) erred in treating the loans taken as :-3-: I.T.A. N0. 3058/Mds/2016 unexplained credit in the books of the Company when the facts demonstrate that the loans were obtained from the directors/shareholders of the company.
Thus, the assessee primarily pleads that it was not given adequate opportunity of being heard. Per contra, the DR relies on the orders of the CIT(A) to say that the CIT(A) has given adequate opportunity
We heard the rival submissions. The assessee company was incorporated on 16.12.2010 and is engaged in the manufacturing and selling of casting of products. It also does job work of casting items. Thus, this assessment year happens to be first year of its operation. The Assessing Officer found that the assessee has received unsecured loan from seven persons ranging from 3.5 lakhs to 37.3 lakhs and hence, required all of them to appear under summons. Except one person, who was out of the country, all other made compliance. The AO required to produce their returns and bank statement. Out of which, she was satisfied with sources of two persons.
For the remaining of them, she found that the loans given by them to the company were out of the cash deposit made in their bank accounts on the previous day or on the same day. Other than that, the Assessing Officer has not stated anything about the financial statues, capacity etc about the impugned creditors. It is seen from the CIT(A) order that the CIT(A) posted the case on 06.06.2016, on seeking adjournment, final hearing was fixed on 22.06.2016. The AR appeared and sought adjournment for filing the :-4-: I.T.A. N0. 3058/Mds/2016 confirmation from creditors and hence the case was adjourned to 14.07.2016.
On 14.07.2016, the AR did not appear but filed a letter stating that the confirmation will be filed within 15 days. In the impugned appeal order passed on 15.07.2016, the CIT(A) observed that till 29.07.2016, i.e., almost a fortnight after passing the impugned appeal order, the assessee did not comply. Thus, prima facie, the assessee was not given effective opportunity of being heard.
Considering the above facts and circumstances, including the interest of justice, we are of the view that the assessee should be given effective opportunity of being heard before deciding the appeal. In view of that, the appeal order is set aside and the issues are remitted back to the CIT(A) for deciding the appeal afresh, on merit, after affording opportunity to the assessee. The assessee shall vigorously pursue the appeal by complying with the requirement of the CIT(A) in accordance with law.
In the result, the assessee’s appeal is treated as allowed for statistical purpose.
Order pronounced on Thursday, the 03rd day of August, 2017 at Chennai.
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