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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.
3. 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 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 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.
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.