What did the Tribunal hold?

The Tribunal held that the CIT(A) deleted the additions without giving the AO an opportunity to examine additional evidence. Therefore, the case was set aside to the AO for fresh examination and a speaking order.

The Assessing Officer (AO) made additions for ceased liabilities and unaccounted investment. The assessee contended that liabilities were from regular trading transactions supported by invoices and sales tax returns. The Commissioner of Income Tax (Appeals) deleted these additions.

What were the issues?

Whether the CIT(A) was justified in deleting additions based on additional evidence without providing an opportunity to the AO to examine them and call for a remand report.

ITO vs M.Karthikeyan, Tiruppur | ITAT Chennai 2017

Income Tax Appellate Tribunal, “A” BENCH, CHENNAI

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

Hearing: 06.06.2017Pronounced: 09.06.2017

आदेश /O R D E R

PER S. JAYARAMAN, ACCOUNTANT MEMBER:

This is an appeal filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-3, Coimbatore in dated 25.11.2016.

:-2-: I.T.A. N0. 267/Mds/2017

Shri M. Karthikeyan, the assessee, an individual and Proprietor of M/s.

Sun Yarn, trader in Yarn and Knitted Fabrics. In the assessment made for assessment year 2013-14, the AO obtained information u/s. 133(6) from certain parties and other material, verified them with books of account of the assessee etc., and found that Rs. 2,72,14,085/-, the liabilities in the balance sheet have ceased to exist and hence made an addition of Rs. 2,72,14,085/-.

Further, the Assessing Officer found that the assessee has purchased a house property at 227 & 228 of Vijaya Gardens during the period relevant to this assessment year at Rs. 33 lakhs which was not recorded in the books of account and hence he treated Rs. 33 lakhs as unaccounted investment and assessed the same. Aggrieved, the assessee filed an appeal before CIT(A)-3, Coimbatore. Before the CIT(A), the assessee contended that all the liabilities are from entities with whom the assessee had regular trading transactions.

The AO merely relied on the averments of other parties without verifying the veracity of the same in the books of account of the assessee, which are supported by evidence in the form of invoices raised by other parties and the returns filed the assessee before the sales tax/value added tax authorities.

The assessee furnished copies of invoices and the entries shown in the return submitted to the commercial tax authorities before the CIT(A) and contended that if major portion of purchases are disallowed, how the sales made by the assessee can be accepted by the AO etc. The CIT(A) without giving any opportunity to the Assessing Officer examined them and deleted the addition

:-3-: I.T.A. N0. 267/Mds/2017 made in the case of M/s. Win Traders, M/s. TRK Textile Pvt. Ltd., M/s.

Pandarinadhan Textile Mills, Shri Deepika International and M/s. S.L. Tex at Rs. 17,85,920/-, Rs. 20,75,022/-, Rs. 7,31,525/-, Rs. 30,39,160/- and Rs. 1,48,55,480/- respectively, aggregating to Rs. 2,24,87,107/-. Further, the CIT(A) deleted the addition of Rs. 33 lakhs as unexplained investment stating that the investment in the immovable property was made on 30.03.2012 i.e., during the earlier assessment year i.e. in assessment year 2012-13 and not in this assessment year i.e. in assessment year 2013-14.

Aggrieved, the Revenue filed this appeal on the ground that whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified; in deleting the addition of Rs. 2,24,87,107/- without giving an opportunity to AO under Rule 46A of the I.T. Rules by calling for a remand report in view of the additional evidences produced by the assessee during the appellate proceedings, such as sales invoice raised in the name of parties and entries submitted to the commercial tax authorities and in deleting the addition of Rs. 33 lakhs, when it is seen from the assessment records that the property transaction was made by the assessee on 28.08.2012 and hence, it is income for assessment year 2013-14.

We heard the rival submissions and gone through the CIT(A) order. It is clear that the CIT(A) has not given an opportunity to the AO under Rule

:-4-: I.T.A. N0. 267/Mds/2017 46A of the I.T. Rules and hence, we set aside this case to the AO, who shall after examining the relevant material and after giving due opportunity to the assessee shall pass a speaking order on the above issues.

In the result, the Revenue’s appeal is allowed.

Order pronounced on Friday, the 9th day of June, 2017 at Chennai.

ITO, TIRUPPUR vs. M.KARTHIKEYAN, TIRUPPUR

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