2013 (11) TMI 1608 - AT - Income Tax

Unexplained credit - Held that - Assessee deserves another opportunity to explain the transactions, particularly, in the context that many of the credits pertain to earlier years. Accordingly, we are of the opinion that the issues raised in this appeal are required to be re-examined by the AO, as Assessee was not given due opportunity. With reference to rental income received but assessed under the head income from house property and also computation of short-term loss and long term loss, which even the CIT(A) found that there are mistakes vide para 10 of the impugned order, are required to be verified by the AO with claims in various years. Therefore, after considering the totality of the facts of the case, we are of the opinion that orders are to be set aside and restore all the issues raised in the grounds to the file of AO for fresh examination and to decide the same in accordance with law and facts, after providing reasonable opportunity of being heard to the Assessee. Assessee is directed to put-forth the necessary material/evidence if any, in support of its claims. We order accordingly.

Summary

Issues:
Appeal against CIT(A) order on various issues including credits, rental income, and computation of losses.

Analysis:

1. Credits Issue:
The Assessee, part of a group under special audit due to search and seizure operations, faced challenges in furnishing evidence to the Assessing Officer (AO). The AO accepted some credits as genuine but added others under section 68 of the IT Act. The Assessee later provided confirmations, with the CIT(A) accepting a portion as genuine. Discrepancies remained due to transfers and mergers within group entities. The ITAT found that the AO and CIT(A) did not adequately consider the nature of group transactions and discrepancies, leading to the decision to re-examine the issue. The Assessee was directed to present necessary material for a fresh examination.

2. Rental Income Issue:
The rental income received was assessed under "income from house property," leading to disallowed depreciation. The ITAT noted mistakes in the computation of short-term and long-term losses, as acknowledged by the CIT(A). The tribunal decided that these issues required further verification by the AO, considering claims across various years. The orders were set aside, and the matters were directed to be re-examined by the AO, providing the Assessee with a reasonable opportunity to be heard and present supporting evidence.

3. Overall Decision:
The ITAT allowed the Assessee's appeal for statistical purposes, emphasizing the need for a fresh examination of all raised issues by the AO. The tribunal highlighted the importance of providing the Assessee with a fair opportunity to explain transactions and claims, especially regarding credits, rental income, and computation of losses. The decision aimed to ensure that the issues were decided in accordance with the law and facts, promoting a thorough and just assessment process.