2021 (1) TMI 51 - AT - Income Tax

Unsecured loan creditors - AR submitted before us that the Ld. AO has not offered proper opportunity to the assessee and passed ex-parte Order - As submitted that assessee-company had incurred huge losses and is under the process of closing down its business and the assessee is now in possession of the confirmation letters from the unsecured loan creditors - HELD THAT - Neither the assessee nor its Authorised Representative appeared before the Ld. CIT(A) during the proceedings before him, though several opportunities were provided. Therefore, the argument advanced by the Ld. AR that proper opportunity of being heard was not provided to the assessee by the Ld. CIT(A), does not have any merit. CIT(A) has remitted back the issue with respect to unsecured creditors to the file of Ld. AO for verification which is erroneous because the Ld. CIT(A) does not have such powers under the Act. Further, considering the submissions of the Ld. AR that additional evidence is required to be produced before the Ld. Revenue Authorities, we hereby set aside the order of the Ld. CIT(A) and remit the entire appeal back to the Ld. AO for fresh consideration. Needless to mention that the assessee shall be provided with fair opportunity of being heard admitting the additional evidence if any - Appeal of the assessee is treated as allowed for statistical purposes.

Issues:
- Disallowance of unexplained cash deposits
- Disallowance of unexplained loans
- Proper opportunity of being heard by the assessee
- Remittance of the case back to the Assessing Officer
- Additional evidence submission by the assessee
- Powers of the Commissioner of Income Tax (Appeals)
- Fair opportunity of being heard for the assessee

Disallowance of Unexplained Cash Deposits:
The assessee, a Private Ltd. company, filed its return of income for AY 2015-16, admitting a loss. The assessment completed by the Ld. AO disallowed an amount towards 'unexplained cash deposits' and 'unexplained loans.' The Ld. CIT(A) sustained the addition of cash deposits but remitted the matter of unexplained loans back to the Ld. AO for verification. The appellant challenged the order, arguing that all cash deposits were receipts from customers and that the amount had already been offered to tax. The Tribunal found that the Ld. CIT(A) erred in not providing a reasonable opportunity of being heard but lacked the power to remit the issue back to the AO. The entire appeal was remitted back to the Ld. AO for fresh consideration, emphasizing fair opportunity for the assessee to be heard.

Disallowance of Unexplained Loans:
Regarding the addition made towards unexplained loans, the Ld. CIT(A) remitted the matter back to the AO for verification as the assessee provided certain details and confirmation letters. The Tribunal found the remittance by the CIT(A) erroneous as he lacked the authority under the Act to do so. The Tribunal set aside the CIT(A)'s order and remitted the entire appeal back to the AO for fresh consideration, stressing the need for the assessee to be given a fair opportunity to present additional evidence.

Proper Opportunity of Being Heard by the Assessee:
The AR argued that the AO did not offer a proper opportunity to the assessee and passed an ex-parte order. The Tribunal noted that neither the assessee nor its representative appeared before the CIT(A) despite opportunities provided. While acknowledging the lack of proper opportunity, the Tribunal emphasized the need for fair hearings and remitted the case back to the AO for fresh consideration.

Remittance of the Case Back to the Assessing Officer:
The Tribunal found the remittance of the issue of unsecured creditors by the CIT(A) to the AO as erroneous, as the CIT(A) lacked such powers under the Act. The Tribunal set aside the CIT(A)'s order and remitted the entire appeal back to the AO for fresh consideration, ensuring a fair opportunity for the assessee to present additional evidence.

Additional Evidence Submission by the Assessee:
The Tribunal emphasized the requirement for additional evidence to be produced before the Revenue Authorities and directed the case to be remitted back to the AO for fresh consideration, highlighting the need for fair hearings and cooperation from the assessee or its counsel.

Powers of the Commissioner of Income Tax (Appeals):
The Tribunal clarified that the CIT(A) does not have the authority to remit issues back to the AO and set aside the CIT(A)'s order, remitting the entire appeal back to the AO for fresh consideration.

Fair Opportunity of Being Heard for the Assessee:
The Tribunal stressed the importance of fair opportunities for the assessee to be heard, directing the AO to provide such opportunities and admitting additional evidence if necessary. Failure to cooperate may result in appropriate orders being passed by the CIT(A) based on the materials before him.

In conclusion, the appeal of the assessee was treated as allowed for statistical purposes, and the case was remitted back to the AO for fresh consideration with a focus on fair hearings and the submission of additional evidence.

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