ITO, KARAIKUDI vs. R.KARUPPIAH, SIVAGANGAI

The appeal filed by the revenue and the cross objection filed by the assessee are directed against the order dated 28.8.2014 passed by Ld CIT(Appeals)-I, Madurai and they relate to the assessment year 2010-11. u/s 271D of the Act, having been cancelled by the Ld CIT(Appeals), the revenue has filed this appeal challenging the decision of Ld CIT(Appeals). The assessee has filed the cross objection to support the order of the Ld CIT(Appeals).

We heard the parties and perused the record. The revenue, inter alia, has raised a ground relating to violation of Rue 46A of the IT Rules in entertaining a new plea without confronting the same to the assessing officer. A perusal of the penalty order would show that the assessee has failed to furnish any explanation for receiving loan of `10.00 lakhs from close relatives by way of cash in violation of the provisions of sec. 269SS of the Act. However, before Ld CIT(Appeals), the assessee has furnished an explanation to the effect that he has borrowed money from close relatives to repay the LC credit facilities availed from the bank. We notice that the Ld CIT(Appeals) has deleted the penalty by accepting the said explanations on the face of it without causing any further examination and also without confronting the same with the assessing officer. In our considered opinion, the said action of Ld CIT(Appeals) results in violation of the provisions of Rule 46A of the IT Rules.

The cross objection filed by the assessee only supports the order passed by Ld CIT(Appeals) and hence the same does not require any adjudication.

In the result, the appeal filed by the revenue is treated as allowed for statistical purposes and the cross objection of the assessee is dismissed.