2018 (11) TMI 1006 - AT - Income Tax

Unexplained credit and consequential interest on such excess unexplained credit - Held that - AO made a request to Andhra Bank Manager for confirmation of bank loan and as per the reply received from the bank, there was outstanding of only ₹ 2,95,55,466/- receivable by the bank from the assessee as against the dues shown by the assessee payable to the bank of ₹ 5,90,99,428/- as per the books of the assessee and on this basis, regarding the balance amount of ₹ 2,95,43,962/-, addition was made by the AO as unexplained credit and consequential interest on such excess unexplained credit. CIT(A) has decided the issue on the basis of subsequent confirmation letters received from the bank as per which the outstanding amount as per bank tallied with the outstanding amount as per assessee s books being payable to the bank. CIT(A) has not obtained remand report from the AO in respect of these additional evidences furnished before him for the first time. Hence, we feel it proper to set aside the order of CIT(A) and restore the matter back to his file for fresh decision after obtaining remand report from the AO - Appeal filed by the revenue stands allowed for statistical purposes.

Summary

Issues:
Appeal against CIT(A) order for Assessment Year 2012-13 - Discrepancy in outstanding secured loan amount - Admissibility of additional evidence - Violation of Rule 46A of Income Tax Rules, 1962.

Analysis:
The appeal filed by the revenue challenged the order of the ld. CIT(A)-5, Bangalore for Assessment Year 2012-13. The grounds raised by the revenue primarily focused on the discrepancy in the outstanding secured loan amount as per the assessee's records and the bank loan account, amounting to a difference of ?2,95,43,962. The revenue contended that the CIT(A) erred in allowing this difference without giving the Assessing Officer a reasonable opportunity to cross-verify and provide comments, which was considered a violation of Rule 46A of the Income Tax Rules, 1962.

The appeal proceedings faced delays due to adjournments requested by the assessee's representative. Eventually, the appeal was heard ex-parte as the assessee did not appear. The revenue argued that the CIT(A)'s decision was based on additional evidence, specifically confirmation letters from the bank, which were not produced before the Assessing Officer during the assessment. The CIT(A) relied on these letters to conclude that the outstanding amount as per the bank's records matched the amount in the assessee's books, resolving the discrepancy.

Upon reviewing the submissions and the CIT(A)'s order, the Tribunal noted that the AO had not been given an opportunity to provide input on the additional evidence considered by the CIT(A). As a result, the Tribunal set aside the CIT(A)'s decision and remanded the matter back for a fresh decision after obtaining a remand report from the AO. The Tribunal emphasized the importance of following proper procedures and obtaining all necessary reports before making a final decision on the discrepancy in the outstanding loan amount. The appeal was allowed for statistical purposes, and no further adjudication was deemed necessary at that stage.

In conclusion, the Tribunal's decision highlighted the significance of adhering to procedural requirements and ensuring that all relevant evidence is properly considered and verified before reaching a final decision in matters involving discrepancies in financial records, such as outstanding loan amounts.