V.N.MEHTA & CO.,CHENNAI vs. ACIT, CHENNAI

The assessee has filed appeal against the order of the Commissioner of Income Tax (Appeals) - 13, Chennai, dated 12.05.2016 passed u/s. 143(3) and 250 of the Income Tax Act. At the time of hearing the Ld. AR has not pressed the ground No. 3 and 4 of grounds of appeal

The Brief facts of the case are that the assessee is a partnership firm and does trading in Copper and Aluminium wires and filed Return of income for the assessment year 2007-08 on 10.11.2007 and the Return of income was processed u/s. 143(1) of the Act. Subsequently, the case was selected for scrutiny under CASS and notice u/s. 143(2) of the Act was issued. In compliance to the notice, Ld. AR appeared from time to time produced books of accounts, Bills, vouchers for expenses, Bank accounts, loan confirmations, VAT order, Invoice of fixed assets and other details. In the assessment proceedings, the Ld. AO found the assessee has disclosed sundry creditors in Balance sheet and trade credits explanations are called for with Income Tax details and PAN. The assessee could not produce confirmations and support with genuineness of transactions and the Ld. AO due to non compliance of details made an addition of Rs. 4,20,000/- to returned income and assessed the total income of Rs. 75,66,260/- and raised the demand.

Aggrieved by the order, assessee filed an appeal before the CIT(A). In the appellate proceedings, the Ld. AR of the assessee reiterated the submissions in the assessment proceedings. The Ld. CIT(A) observed that the Assessing Officer made addition of trade credits without appreciating the fact that there is increase in trade credits compared to earlier years and the assessee could not file the details in the absence of any specific directions of the Assessing Officer and the assessee

Before us, the Ld. AR submitted that the assessee firm has been in business of dealing copper and aluminium wires and filed income tax returns regularly and the Ld. AR relied on the co-ordinate bench decision of S. Velumani Vs. ITO in dated 28.02.2014 on agreed addition emphasizing on the Hon'ble Supreme Court decision, and the Ld. CIT(A) has rejected the additional evidence vital to prove the creditability of creditors and prayed for allowing the ground of the appeal. Contra, the Ld. DR relied on lower authorities order and opposed the grounds.

We heard the rival submissions, perused the material on record and judicial decisions. The Ld. AR sole arguments that assessee has filed the confirmation in assessment proceedings and the Ld. AO has verified the ledger account of creditors and volume of business and made addition. Whereas, the Ld. CIT(A) rejected the additional evidence produced by way of confirmation of the creditors. We perused the lower authorities orders and the reasons envisaged by the CIT(A), on rejecting the additional evidence and the co-ordinate bench decision of S. Velumani (Supra), where the Tribunal has taken decision in the interest of justice relying on Supreme Court case in Urviben Chiragbhai Sheth Vs. Vijaybhai SLP(C) No. 896 of 2006. The assessee has failed to file the information before the :-4-: I.T.A. No. 1770/Mds/2016 Ld. AO and produce additional evidence before the CIT(A) which was rejected and appeal was dismissed on sole reason of agreed addition. Considering the facts and material on record and judicial decisions, we are of the opinion that the assessee should be given one more opportunity to represent the case with additional evidence before the CIT(A). Accordingly, we set aside the disputed issue to the file of the CIT(A) to adjudicate on merits and the assessee should produce additional evidence and shall co-operate with the appellate authority in disposal of appeal.

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