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Income Tax Appellate Tribunal, “D” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
Both the assessee and the Revenue have filed appeals
against the order of the Commissioner of Income Tax (Appeals)-II,
Coimbatore dated 23.09.2013 and pertain to assessment year
2008-09. Therefore, we heard both the appeals together and
disposing of the same by this common order.
Shri S. Sridhar, the Ld.counsel for the assessee, submitted that the assessee challenged an addition of `20 lakhs under Section
68 of the Income-tax Act, 1961 (in short 'the Act') before the
CIT(Appeals). However, the CIT(Appeals) found that the assessee has not contended the addition of `20 lakhs as unexplained cash
credit. Accordingly, he confirmed the addition made by the
Assessing Officer. Referring to the grounds of appeal raised before
the CIT(Appeals), the Ld.counsel submitted that vide ground No.3, the addition of `20 lakhs was challenged before the CIT(Appeals).
Therefore, the CIT(Appeals) is expected to dispose of the ground of
appeal on merit.
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On the contrary, Dr. B. Nischal, the Ld. Departmental
Representative, submitted that no specific ground was raised with
regard to the addition made by the Assessing Officer under Section 68 of the Act to the extent of `20 lakhs. Ground No.3 raised before
the CIT(Appeals) is only in respect of adjustment of cash credit of `20 lakhs against the unabsorbed depreciation of previous years.
By raising this ground, according to the Ld. D.R., the assessee admitted that `20 lakhs is the unexplained cash credit which needs
to be set off against unabsorbed depreciation. That is why,
according to the Ld. D.R., the CIT(Appeals) found that the assessee
has not contested the issue of addition of `20 lakhs before him.
We have considered the rival submissions on either side and
perused the relevant material available on record. Admittedly, the Assessing Officer made the addition of `20 lakhs as unexplained
cash credit under Section 68 of the Act. The assessee has raised
following ground before the CIT(Appeals) as Ground No.3:-
“3. The learned Assessing Officer has erred in the income computation in the assessment order u/s 143(3) of the Income-tax Act, 1961, where an amount of `20,00,000/- treated as unexplained cash credits were not adjusted
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against the unabsorbed depreciation of the previous years.”
A bare reading of this ground shows that the assessee is aggrieved
against the order of the Assessing Officer refusing to adjust the unexplained cash credit of `20 lakhs with unabsorbed depreciation
of the previous years. As rightly submitted by the Ld. D.R., no
specific ground was raised challenging the merit of the addition
made by the Assessing Officer under Section 68 of the Act.
Therefore, this Tribunal cannot blame the CIT(Appeals) for observing that the assessee has not contended the addition of `20
lakhs made by the Assessing Officer as unexplained cash credit
under Section 68 of the Act.
However, it is to be mentioned that the assessment
proceeding before the Assessing Officer is to compute the correct
taxable income. The appeal is nothing but continuation of
assessment proceeding. Even though the assessee has not raised any specific ground with regard to addition of `20 lakhs under
Section 68 of the Act, the appeal before this Tribunal is only in
respect of the addition made by the Assessing Officer under Section 68 of the Act to the extent of `20 lakhs. Therefore, this Tribunal is
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of the considered opinion that the ground raised by the assessee
before this Tribunal needs to be adjudicated on merit. In other
words, the first Appellate Authority has to adjudicate the addition
made by the Assessing Officer under Section 68 of the Act on merit.
Remitting the matter to the CIT(Appeals) with a direction to consider the issue of unexplained cash credit of `20 lakhs on merit would not
prejudice the interest of Revenue in any way. This Tribunal is of the
considered opinion that giving one more opportunity to the
assessee to explain merit of the matter before the CIT(Appeals)
would promote the cause of justice. Therefore, the order of the CIT(Appeals) is set aside and the issue of addition of `20 lakhs as
unexplained cash credit under Section 68 of the Act, is remitted
back to the file of the CIT(Appeals). The CIT(Appeals) shall
reconsider the issue on merit and thereafter decide the same in
accordance with law after giving reasonable opportunity to the
assessee.
Now coming to Revenue’s appeal, the only issue arises for
consideration is with regard to direction of the CIT(Appeals) to set
off the unabsorbed depreciation against the income assessed as
income from undisclosed source under Section 68 of the Act.
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Since the addition made by the Assessing Officer under Section 68 of the Act is remitted back to the file of the CIT(Appeals) in the early part of this order, this Tribunal is of the considered opinion that the claim of the assessee with regard to set off of unabsorbed depreciation also needs to be reconsidered by the CIT(Appeals). Accordingly, the order of the CIT(Appeals) is set aside and the issue of adjustment of unabsorbed depreciation against the income from undisclosed source is also remitted back to the file of the CIT(Appeals). The CIT(Appeals) shall reconsider the issue afresh and thereafter decide the same in accordance with law after giving reasonable opportunity to the assessee.
In the result, both the appeals filed by the assessee and the Revenue are allowed for statistical purposes.
Order pronounced on 18th December, 2015 at Chennai. sd/- sd/- (ए. मोहन अलंकामणी) (एन.आर.एस. गणेशन) (A. Mohan Alankamony) (N.R.S. Ganesan) लेखा सद�य/Accountant Member �या�यक सद�य/Judicial Member
चे�नई/Chennai, �दनांक/Dated, the 18th December, 2015. Kri.
7 I.T.A. No.2163/Mds/13 I.T.A. No.2181/Mds/13
आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. Assessee 2. Assessing Officer 3. आयकर आयु�त (अपील)/CIT(A)-II, Coimbatore 4. आयकर आयु�त/CIT, Central-III, Chennai 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF.