2014 (7) TMI 415 - AT - Income Tax

Non-speaking order - Addition u/s 68 of the Act Money lender expired Best possible evidences produced before AO Held that - The AO asked the assessee to submit the evidence of the unsecured loan of ₹ 6,60,000/- received from Mrs. Manorma - The assessment was completed on 24.12.2009 - the CIT(A) has reproduced the assessee s submission, the remand report, reply of the assessee on that remand report and thereafter, concluded his order just with one line - CIT(A) had not applied his mind thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee.

Issues involved:
1. Addition of unsecured loan under section 68 of the Income Tax Act.
2. Denial of adequate opportunity to produce evidence.
3. Sustaining the addition by the lower authorities without proper consideration.
4. Disallowance of 10% expenses for personal use of car and telephone.

Analysis:

Issue 1: Addition of unsecured loan under section 68 of the Income Tax Act
The appellant contested the addition of Rs. 6,60,000 as an unsecured loan under section 68 of the Income Tax Act. The appellant argued that the Assessing Officer did not provide adequate opportunity to produce evidence regarding the loan. The creditor had passed away, causing delays in obtaining confirmation from the legal heir. The appellant claimed that before the CIT(A), necessary details were presented, but the CIT(A) upheld the addition without proper consideration. The Tribunal found that the CIT(A) merely reproduced submissions without applying his mind, leading to an unjust decision. Consequently, the Tribunal set aside the orders of the lower authorities and directed the Assessing Officer to allow the appellant a fair opportunity to present evidence and re-evaluate the issue in accordance with the law.

Issue 2: Denial of adequate opportunity to produce evidence
The appellant argued that the Assessing Officer did not allow sufficient time to produce evidence concerning the unsecured loan. Despite the creditor's demise, the Assessing Officer proceeded with the assessment quickly, leaving inadequate time for confirmation from the legal heir. The Tribunal acknowledged the appellant's contention that proper opportunity was not granted by the Assessing Officer, leading to a flawed decision. The Tribunal emphasized the importance of providing a fair chance to be heard and directed the Assessing Officer to reconsider the issue after allowing the appellant adequate opportunity to present evidence.

Issue 3: Sustaining the addition without proper consideration
The Tribunal noted that the CIT(A) upheld the addition without thorough consideration. The CIT(A) merely reproduced submissions and the remand report before confirming the addition, indicating a lack of proper evaluation. Recognizing the deficiencies in the decision-making process, the Tribunal set aside the orders of the lower authorities and instructed a reevaluation of the matter by the Assessing Officer after affording the appellant a fair opportunity to be heard.

Issue 4: Disallowance of 10% expenses for personal use of car and telephone
The appellant contested the 10% disallowance of expenses related to personal use of car and telephone. The Tribunal upheld the disallowance, considering personal use of such assets cannot be denied. The Tribunal deemed the 10% disallowance fair and reasonable, rejecting the appellant's challenge on this ground.

In conclusion, the Tribunal partially allowed the appeal for statistical purposes, emphasizing the importance of providing adequate opportunity for presenting evidence and ensuring a thorough evaluation of the issues at hand.

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