What did the Tribunal hold?

The Tribunal found that the assessee claimed to have material to support their claims and that giving an opportunity to produce it would promote justice. Therefore, the lower authorities' orders were set aside.

The Assessing Officer made additions for unexplained cash deposits and disallowed timber business losses and miscellaneous expenses. The CIT(Appeals) confirmed these additions due to lack of evidence from the assessee.

What were the issues?

Whether the assessee should be given an opportunity to produce evidence for unexplained cash deposits and business losses, and if losses from one business can be set off against profits from another.

V.Krishnamoorthy vs ITO | ITAT Chennai 2017

Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN

For Respondent: Shri AR.V. Sreenivasan, JCIT

Hearing: 08.06.2017Pronounced: 29.06.2017

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-13, Chennai, dated 29.01.2016 and pertains to assessment year 2011-12.

Shri K. Santhanakrishnan, the Ld. representative for the assessee, submitted that the Assessing Officer made addition of `6,10,890/- towards unexplained cash deposit. The Assessing Officer has also disallowed the loss claimed by the assessee to the extent of `11,03,222/- in timber business besides disallowing `12,657/- being the miscellaneous expenses. The CIT(Appeals) simply confirmed the order of the Assessing Officer on the ground that the assessee has not filed any evidence in respect of his claim apart from making a claim in written submission. The Ld. representative submitted that the assessee has all the material to support the claim made before the Assessing Officer, therefore, an opportunity may be given to the assessee to produce all the material before the Assessing Officer so that the correct taxable income can be computed in accordance with law.

On the contrary, Shri AR.V. Sreenivasan, the Ld. Departmental Representative, submitted that the assessee could not explain satisfactorily the deposit of `6,10,890/-. Moreover, the loss claimed by the assessee to the extent of `11,03,222/- in timber business was also not substantiated by producing necessary material. The Ld. D.R. further submitted that the proprietary business of M/s Venkatesh Travels is a separate entity, therefore, the loss suffered in timber business cannot be set off against the profit of the travel business. Hence, according to the Ld. D.R., the CIT(Appeals) has rightly confirmed the addition made by the Assessing Officer.

We have considered the rival submissions on either side and perused the relevant material available on record. In the assessment proceeding, the Assessing Officer found that unexplained cash credit could not be substantiated by the assessee by producing necessary material. Moreover, the claim of loss also found to be from different business, therefore, it cannot be set off.

The fact remains that Venkatesh Travels is a proprietary concern.

The constitution of timber business is not known. The assessee claimed before the Assessing Officer that the timber business was closed during the assessment year under consideration by transferring the stock of `1,34,12,620/-. Since the assessee claims that necessary material can be produced before the Assessing Officer, this Tribunal is of the considered opinion that giving one more opportunity to produce necessary material before the Assessing Officer would not be prejudicial to the interests of Revenue. It would definitely promote the cause of justice.

Accordingly, the orders of the lower authorities are set aside and the entire issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter afresh in the light of the material that may be produced before him and thereafter decide the issue in accordance with law, after giving a reasonable opportunity to the assessee.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced on 29th June, 2017 at Chennai.

V.KRISHNAMOORTHY,CHENNAI vs. ITO, CHENNAI

What did the Tribunal hold?

What were the facts?

What were the issues?

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