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Income Tax Appellate Tribunal, S M C BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN
आदेश /O R D E R
The appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-2, Tiruchirapalli, dated 15.04.2015 in ITA No.340/2008-09/CIT(A)/TRY. The appeal arises out of the assessment under Section 143(3) and 250 of the Income- tax Act, 1961 (in short 'the Act').
The assessee has raised grounds in respect of addition of `1 lakh as undisclosed income and also the Ld. CIT(Appeals) not considering the evidence filed by the assessee and also workings of the assessee for the purpose of allowing interest on funds diverted and further the CIT(Appeals) has erred in not considering correct value of business assets.
The brief facts of the case are that the assessee is running a jewellery shop and filed the income-tax return for the assessment year on 27.03.2008 with total income of `4,92,110/-. The return was processed under Section 143(1) of the Act on 19.05.2008.
Subsequently the case was considered for scrutiny with the approval of Chief Commissioner of Income Tax, Trichy vide C.No.910(1)/CCIT/TRY/08-09 dated 26.09.2008 and the notice was issued under Section 143(2) of the Act. In the assessment proceedings, authorized representative of the assessee appeared on various dates and produced books of account for examination and also filed other details. The Ld. Assessing Officer perused the information and examined the books of account. The assessee is also partner in three sister concerns which are having interconnection business transactions of jewellery. The Assessing Officer found the balance as per books of account produced by the assessee and the account copies of sister concerns are not tallied, Assessee filed explanations on 24.11.2008 mentioning of reconciliation of sister concerns is due whereas his accounts were closed before specified date for tax audit. Inter-connected transactions are to be reconciled with entries in books of accounts. Ld. A.O. rejected the submission and made addition of `1 lakh received from Shri Navneeth Kumar as unexplained investment under Section 69 of the Act. The A.O. calculated interest on the amount utilized out of bank loans and sundry debtors for non- business purpose and made proportionate disallowance of `3,37,642/- and assessed the total income of `9,29,750/- and demand raised to `2,03,963/-.
Aggrieved by the order of the Assessing Officer, the assessee filed an appeal with CIT(Appeals), Kumbakonam and filed written submissions and other details in the appellate proceedings.
The Ld. CIT(Appeals) ignored the written submissions and confirmation letter of `1 lakh from assessee’s son Shri I. Navneeth Kumar Sethia, who is assessed to income-tax by the same Assessing Officer for advance of ` 1 lakh to the assessee and additional information with calculation that that no amount was diverted for non-business purpose on which the Ld. A.O. disallowed the interest. Further, the Ld. CIT(Appeals) without considering the submissions, evidence and explanations, confirmed the order of the Assessing Officer by dismissing the appeal of the assessee.
Assessee aggrieved by the order of the CIT(Appeals), filed an appeal before the Tribunal and raised grounds for non- acceptance of evidence by the CIT(Appeals) and disallowance of interest on funds diverted. The Ld. AR argued that the evidence produced are genuine and bonafide, and the creditworthiness of Shri I. Navneeth Kumar Sethia, who has advanced `1 lakh to the assessee, can be substantiated with his income-tax assessment.
Further, the CIT(Appeals) ignored the detailed workings of the assessee for utilization of funds. The Ld. AR has emphasized that the CIT(Appeals) has overlooked the information which is very crucial for assessment purpose and prayed the Tribunal to delete the addition made by the A.O. and supported the case with submission of paper-book containing intimation of the financial status and creditworthiness of the loan creditor.
On the other hand, the Ld. Departmental Representative relied on the order of the CIT(Appeals) and argued that the CIT(Appeals) has considered the written submissions and passed the orders.
The Tribunal, after hearing the rival submissions of both the parties and perusing the material available on record, is of the considered opinion that the assessee has filed details before the CIT(Appeals) having evidential value and are necessary for assessment, to prove the correctness of the claims. Therefore, this Tribunal is of the considered opinion that the matter needs to be reconsidered. Accordingly, the orders of the authorities below are set aside and the issue is remitted back to the file of the A.O. for examining the materials filed in the appellate proceedings before the CIT(Appeals). The A.O. shall provide adequate opportunity of hearing to the assessee and thereafter decide the issue in accordance with law.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on 13th November, 2015 at Chennai.