Prime Dyestuff Industries, Ahmedabad vs Assessee

आयकर अपील सं./I.T.A.No.687/Ahd/2011 ( नधा रण वष / Assessment Year : 2007-08) Prime Dyestuff Industries बनाम/ The ITO 119, GVMM, Odhav Vs. Ward-3(1) Ahmedabad Ahmedabad थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AAGPP 1591 D (अपीलाथ% /Appellant) .. (&'यथ% / Respondent)

अपीलाथ% ओर से /Appellant by : Shri U.S. Bhati, A.R. &'यथ% क) ओर से/Respondent by : Shri Dinesh Singh, Sr.DR

ु वाई क) तार,ख / सन Date of Hearing 26/02/2015 घोषणा क) तार,ख /Date of Pronounce ment 19/03/2015

आदे श / O R D E R

PER SHRI KUL BHARAT, JUDICIAL MEMBER :

This appeal by the Assessee is directed against the order of the Ld.Commissioner of Income Tax(Appeals)-XVI, Ahmedabad ('CIT(A)' in short) dated 29/12/2010 pertaining to Assessment Year (AY) 2007-08. The assessee has raised the following grounds of appeal:-

1.0 The learned Commissioner of Income-tax (Appeals) erred in law and on facts in not allowing some of the grounds of appeal although he was satisfied with the reasonable cause pleaded before him vide Ground No.1 of the appeal.

ITA No.687/Ahd/2011 Prime Dyestuff Industries vs. ITO Asst.Year - 2007-08 -2-

2.0 The learned Commissioner of Income-tax (Appeals) erred in law and on facts in confirming the assessment order passed u/s.144 of the Income Tax Act, 1961 though the ld.A.O. had not issued any Show Cause Notice to the effect of framing assessment u/s.144 or for other additions and disallowances despite the fact that the last hearing was fixed on 23rd October, 2009 and the impugned assessment order was passed on 30th December, 2009. 3.0 The learned Commissioner of Income-tax (Appeals) erred in law and on facts in directing the ld.A.O. to allow only opening balances of unsecured loans, if the details filed by appellant are found verifiable.

4.0 The learned Commissioner of Income-tax (Appeals) erred in law and on facts in not adjudicating the issue regarding addition of Rs.8,50,081/- on account of differential amount of unsecured loans made u/s.68 of the Act.

5.0 The learned Commissioner of Income-tax (Appeals) further erred in law and on facts in allowing interest on the unsecured loans to the extent of opening balances of unsecured loan creditors only although the ground raised was in respect of interest amount disallowed Rs.1,02,009/- pertaining to the year under appeal. 6.0 The learned Commissioner of Income-tax (Appeals) erred in law and on facts in partly allowing the ground relating to unexplained investment in assets amounting to Rs.2,94,896/- and depreciation in respect of such assets although the details of additions during the year were available to him. 7.0 The learned Commissioner of Income-tax(Appeals) erred in law and on facts in confirming the disallowance of expenses to the extent of Rs.2,21,487/-.

8.0 The appellant may be allowed to add, amend, alter or raise additional grounds of appeal.

2. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.144 of the Income Tax Act,1961 (hereinafter referred to as "the Act") was framed vide order ITA No.687/Ahd/2011 Prime Dyestuff Industries vs. ITO Asst.Year - 2007-08 -3-

dated 30/12/2009, thereby the Assessing Officer (AO in short) made addition on account of unexplained unsecured loan of Rs.8,50,081/-, interest on the above loan of Rs.1,02,009/-, unexplained investment in assets of Rs.2,94,896/-, depreciation on the net assets of Rs.44,234/- and out of expenses for want of verification of Rs.2,21,487/-. Against this, assessee filed an appeal before the ld.CIT(A), who after considering the submissions of the assessee, partly allowed the appeal. Aggrieved by the order of the ld.CIT(A), the assessee preferred the present appeal before us.

3. At the outset, the ld.counsel for the assessee Shri U.S.Bhati submitted that the assessee could not place any evidence before the AO as the assessee did not appear before the AO due to ill-health. He submitted that relevant evidences were placed before the ld.CIT(A). However, he has not obtained any remand report from the AO. The ld.CIT(A) rejected the evidences furnished in respect of the credit balances. He submitted that in the interest of natural justice, the assessee may be given an opportunity to present its case.

4. On the other hand, ld.Sr.DR Shri Dinesh Singh vehemently opposed the submissions of the ld.counsel for the assessee and submitted that the assessee was given sufficient opportunity.

ITA No.687/Ahd/2011 Prime Dyestuff Industries vs. ITO Asst.Year - 2007-08 -4-

5. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the assessee has raised before the ld.CIT(A) ground No.1 which reads as under:-

"1. Your kindness is earnestly requested that as I was suffering from severe health problems due to heavy losses suffered in the business and capital problems, my case be considered sympathetically and I must be given a chance of hearing and this assessment be cancelled/set aside and fresh assessment be ordered. I produce herewith copies of medical certificates issued by my doctors. It may be noted that in similar case before VAT authorities my case was considered sympathetically and I was given a chance for appearing before the concerned authorities for scrutiny process."

5.1. The ld.CIT(A) has allowed the aforementioned ground, by observing as under:-

"2.1. This is regarding the appellant being given a chance of appearing before the appellate authorities, because he was suffering with severe health problems due to losses in business and other problems. As stated above, the partner attended on four occasions and the adjournment so given as requested by him from 19/10/2010, 23/12/2010 that is for almost 2 months. The appellant still did not file any detail at all. On 27th the appellant has filed copies of some papers but no details which are taken into account. Hence this ground has been allowed and taken care of."

5.2. However, the ld.CIT(A) proceeded the matter despite having allowed the ground No.1 without seeking any remand report from the AO. We are of the considered view when the ld.CIT(A) came to the conclusion that the assessee was prevented by reasonable cause for not furnishing the details before the AO, Under these facts, he ought to have ITA No.687/Ahd/2011 Prime Dyestuff Industries vs. ITO Asst.Year - 2007-08 -5-

sought remand report from the AO in respect of the evidences placed before him before proceeding the matter. Therefore, we hereby set aside the orders of the authorities below and hereby direct the AO to make de novo assessment. The assessee is also directed to furnish the relevant material before the AO in support of its claim. The assessee would not seek frivolous adjournment. Thus, grounds raised in the assessee's appeal are allowed for statistical purposes.

6. In the result, assessee's appeal is allowed for statistical purposes.

Order pronounced in the Court on Thursday, the 19th day of March, 2015 at Ahmedabad.

Sd/- Sd/- (जी.डी.अ वाल) (कुल भारत) उपा य या यक सद य ( G.D. AGARWAL ) ( KUL BHARAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER

Ahmedabad; Dated 19/ 03 /2015 ट,.सी.नायर, व. न.स./T.C. NAIR, Sr. PS ITA No.687/Ahd/2011 Prime Dyestuff Industries vs. ITO Asst.Year - 2007-08 -6-

आदे श क! " त$ल%प अ&े%षत/Copy of the Order forwarded to :

1. अपीलाथ% / The Appellant

2. &'यथ% / The Respondent.

3. संबं6धत आयकर आयु8त / Concerned CIT

4. आयकर आय8 ु त(अपील) / The CIT(A)-XVI, Ahmedabad

5. 9वभागीय & त न6ध, आयकर अपील,य अ6धकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड< फाईल / Guard file.

आदे शानुसार/ BY ORDER,

स'या9पत & त //True Copy//

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad

1. Date of dictation .. 26.2.2015 (dictation-pad 6- pages attached at the end of this File)

2. Date on which the typed draft is placed before the Dictating Member ..10.3.2015

3. Other Member...

4. Date on which the approved draft comes to the Sr.P.S./P.S.................

5. Date on which the fair order is placed before the Dictating Member for pronouncement......

6. Date on which the fair order comes back to the Sr.P.S./P.S.......19.3.15

7. Date on which the file goes to the Bench Clerk.....................19.3.15

8. Date on which the file goes to the Head Clerk..........................................

9. The date on which the file goes to the Assistant Registrar for signature on the order..........................

10. Date of Despatch of the Order..................