ITO, NEW DELHI vs. SHRI ARAVINDAKSHAN PILLAI, DELHI

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ITA 1642/DEL/2013Status: DisposedITAT Delhi15 January 2016AY 2009-106 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the Assessing Officer should be given an opportunity to examine the details and evidence furnished by the assessee for the first time before the CIT(A). Therefore, the matters were restored to the file of the AO for fresh examination.

What were the facts?

The Revenue appealed the deletion of an addition to fixed assets, while the assessee appealed sustained additions on account of sundry creditors and unsecured loans. The assessee claimed that evidence for these additions was not properly considered by the lower authorities.

What were the issues?

Whether the lower authorities erred in not providing a proper opportunity to the assessee to submit evidence for sundry creditors and unsecured loans, and whether the AO should re-examine the fixed asset additions.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘A’ NEW DELHI

Before: SHRI H.S. SIDHU & SHRI L.P. SAHU

For Appellant: Shri S.M. Mathen, C.A
For Respondent: Shri K.K. Jaiswal, D.R, Shri S.M. Mathen, C.A
Hearing: 13.01.2016Pronounced: 15.01.2016

ORDER

Per L.P. Sahu, Accountant Member:

1.

These are cross appeals filed by the revenue and the assessee against the order dated 24.12.2012 of ld. CIT(A)-XXVII, New Delhi for the assessment year 2009-10.

2.

The grounds raised by the Revenue in its appeal read as under : “(i). On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in deleting the addition of Rs.54,55,050/- made bythe AO on account of addition in fixed assets. (ii). On the facts and circumstances of the case, the order of the Ld. CIT(A) may be set aside and matter may be restored back to the file of the AO to take holistic view of the matter.”

3.

The concise grounds raised

by the assessee in its appeal are as follows : “1. That the Hon’ble Commissioner of Income Tax has erred in law as much as on the facts of the case by sustaining the unwarranted adhoc addition of Rs.27,40,562/- made by the learned Assessing Officer in respect of alleged unverified sundry creditors to the extent 10%.

2. That the Hon’ble Commissioner of Income Tax has erred in law as much as on the facts of the case by sustaining the additions of Rs.1.00 lac u/sec. 68 of the Act alleging that the assessee did not file confirmation to this loan.

3. That the Hon’ble Commissioner of Income Tax has erred in law as much as on the facts of the case by sustaining the unwarranted addition made by the learned Assessing Officer in respect of the additional capital of Rs.3,98,570/- introduced by the appellant during the financial year 2008-09 without appreciating that the appellant had already furnished the relevant documentary evidence vis-à-vis copy of bank account to support the said addition in the share capital.

4. That the Hon’ble Commissioner of Income Tax has erred in law as much as on the facts of the case by sustaining the additions in the hands of assessee company, without giving fair and proper opportunity of being heard to the appellant company thereby violating the principles of natural justice.”

4.

While dealing with the appeal of the Revenue, we find that the only dispute in this appeal is with respect to deletion of addition of Rs.54,55,050/- made by the AO on account of addition to fixed assets, i.e., plant & machinery and land at Bangalore. The brief facts are that the assessee during the year under consideration made addition in fixed assets on account of plant & Machinery and land at Bangalore amounting to Rs.15,00,000/-, Rs.35,00,000/- and Rs.4,55,050/-. Since no details were filed before the AO with respect to addition to fixed assets, therefore, the AO made addition of Rs.54,55,050/-. In appeal, the ld. CIT(A) deleted this addition observing that source of investment stood explained from the loan account of Federal Bank. It was also observed that the assessee had made investment in land before 31.03.2008 but the same was not added to the value of the land as on 31.03.2008 inadvertently by the assessee, but the same was added to the value of fixed assets in the year under consideration. Aggrieved by this order of ld. CIT(A), the Revenue is in appeal before us.

5.

The ld. DR relying on the order of the AO submitted that the ld. CIT(A) has wrongly deleted the addition after considering the details and submissions of the assessee, which were never submitted or placed before the Assessing Officer. In the remand report, the AO had categorically reported that the payments were made by the Federal Bank directly to the seller on 17.03.2008 and 24.03.2008 which did not fall in the year under consideration. He, therefore, submitted that the matter may be restored back to AO to take a holistic view on the issue.

6.

The ld. AR of the respondent, on the other hand, relied on the order of ld. CIT(A) on this issue.

7.

Having considered the rival submissions, we find that the Assessing Officer should be given reasonable opportunity to examine the details and evidences furnished by assessee before the ld. CIT(A) for the first time before the ld. CIT(A). Before accepting the explanation of assessee regarding inadvertent mistake in not showing the value addition to the fixed in the year when they were acquired or investment made, the details of transactions need to be examined by the AO, which is lacking in the present case. Accordingly, the matter is restored to the file of AO to examine the same and to take a holistic view in the matter after giving reasonable opportunity of being heard to the assessee. Accordingly, the appeal of the Revenue is allowed for statistical purposes.

8.

Adverting to the appeal of the assessee, ground No. 3 has not been pressed and the same is liable to dismissed as such. Regarding the issues raised in remaining grounds of appeal, the ld. Counsel for the assessee submitted that addition of Rs.27,40,562/- made by AO and sustained by CIT(A). The addition so made represents to 10% of the total sundry creditors shown by the assessee at Rs.2,74,05,626/-. The addition has been made on the ground that no details of sundry creditors were furnished before the authorities below. It was submitted that the assessee has not been afforded reasonable opportunity to submit the details, which shall be furnished if he is given one more opportunity to justify the sundry creditors. He also submitted that the assessee shall also be able to offer complete details/evidences with respect to unsecured loan, on account of which AO had made addition of Rs.3,89,691/- which was restricted to Rs.1 lac by the CIT(A) on the reason that a sum of Rs.2,89,691/- was in respect of loan from Barclays Bank and had been brought forward from the preceding year. He therefore, urged that matter be restored to the file of AO for deciding these issues afresh after giving the assessee an opportunity of hearing. The ld. DR, on the other hand relied on the order of the CIT(A) on these issues. He, however, did not vehemently object to the prayer of assessee regarding restoration of the matter to AO.

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