2014 (1) TMI 1531 - AT - Income Tax

Disallowance of loan credit - Held that - The CIT(A) passed the order without giving sufficient time to the assessee to file paper book and concludes that the assessee is not interested in prosecuting the appeal and the appeal can be dismissed at the outset - The Tribunal has now restored the matter to the file of AO for fresh adjudication.

Summary

Issues:
Appeal against disallowance of loan credit, violation of natural justice, misapplication of Section 68 of the Income Tax Act, failure to allow opportunity for case presentation.

Analysis:
1. The appeal was filed against the disallowance of a loan credit received by the assessee from a creditor. The appellant argued that the CIT(A) erred in confirming the disallowance, claiming that the creditor had shown the amount in her own statement of affairs. The appellant also contended that the CIT(A) failed to consider written submissions and documents, did not follow principles of natural justice, and wrongly applied Section 68 of the Income Tax Act along with judgments from Calcutta High Court and Punjab & Haryana High Court.

2. During the hearing, the Authorized Representative requested time to file a paper book. The Tribunal noted that this was the second round before them, with the first round involving facts related to the creditor not being served summons and the AO not verifying the creditor's records. The Tribunal found that the CIT(A) failed to consider material evidence and directed the issue to be restored to the CIT(A) for re-decision in accordance with the law.

3. Following the Tribunal's direction, the impugned order was passed, noting the lack of compliance by the assessee to the notices sent. The CIT(A) considered the facts on record and confirmed the AO's action. However, due to the appellant's request for time to file a paper book and the impugned order being passed without hearing the assessee, the Tribunal deemed it appropriate to restore the issue back to the AO for a fresh speaking order after considering relevant facts and hearing the assessee.

4. The Tribunal allowed the appeal for statistical purposes, directing the AO to pass a fresh order after hearing the assessee and ensuring full participation in the assessment proceedings. The appellant was cautioned that failure to utilize the opportunity properly may result in the AO passing an order based on the available record. The order was pronounced in the presence of the parties in the open court on 15th January 2014.