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TMI Blog2014 (12) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of the expenses claimed – the order of the CIT(A) is upheld – Decided against assessee. Unexplained cash credits u/s 68 disallowed – Held that:- Though the CIT(A) called for Remand Report in respect of the credits, the AO failed to submit the same – thus, the matter is required to be remitted back to the AO for reconsideration and the assessee shall be provided sufficient opportunity to produce the required material before him – Decided in favour of assessee. - ITA No. 487/Hyd/2013 - - - Dated:- 12-3-2014 - SHRI CHANDRA POOJARI AND SHRI SAKTIJIT DEY, JJ. For the Appellant : Sri P. Muralimohan Rao For the Respondent : Sri P. Soma Sekhar Reddy ORDER Per: Chandra Poojari: This appeal by the assessee is directed against the order of the CIT(A)-III, Hyderabad dated 8th February, 2013 for assessment year 2007-08. 2. The assessee raised the following grounds: (1) The Learned CIT(A) has erred both in law and on facts while dismissing the appeal. (2) The Learned CIT(A) erred in confirming the rental income as Income from House Property of ₹ 1,55,232/-. (3) The learned CIT(A) ought to have appreciated the fact that the income der ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the CIT(A) adjudicated the case based on the information on record and Remand Report already received in his office. 5. Regarding the first issue relating to consideration of rental income declared as business income by the assessee under the head 'income from house property', the CIT(A) observed that during the appeal proceedings the assessee only stated that the rental income was to be considered as income from business and not from house property. No evidence or reasons were provided for the same. The CIT(A) observed that the assessee is in the business of trading in various items and not in the business of purchasing properties and letting them out. Secondly in order for rental income to be considered as income from business, the assessee has to demonstrate that certain well planned activities were being carried out in that property for the purposes of profits so as to have that income qualify as business income. No such evidence or information has been provided by the assessee. On the contrary from the information available on record it is clear that the assessee is only a passive receiver of rent. He observed that the AO has rightly classified the rental income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced to substantiate the veracity of the expenses claimed. Accordingly, the CIT(A) confirmed the addition made by the AO and decided the issue in favour of revenue. 10. We have heard both the parties and perused the material on record. Before us also, the assessee did not produce any evidence to substantiate the veracity of the expenses claimed. We, therefore, are inclined to confirm the finding of the CIT(A) on this issue and the ground taken by the assessee is dismissed. 11. The next ground (i.e., ground No. 7) is with regard to confirming the disallowance of ₹ 13,88,78,085 u/s. 68 of the Income-tax Act, 1961. During the year assessee company claimed to have received advances amounting to .Rs 13,88,78,085/- Details furnished by assessee during scrutiny proceedings showed that advances were introduced in the following names: S. No. Name of the concern Advances received (Rs.) 1. Charminar Granite Export Ltd. 600 2. Future Tech Industries Ltd. 5,01,42,731 3. GB Trading Inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are supposed to have given the advances to the assessee. This evidence has been with the AO for many months and a direction had been issued to the AO to conduct enquiries as she deems fit. In view of the reasons given by the assessee the additional evidence the CIT(A) directed the AO to admit the additional evidence. The CIT(A) observed that it is a settled laws that for the purposes of satisfying the rigour of section 68 of the income tax act, three conditions need to be fulfilled: o Identity of the creditor o Creditworthiness of the creditor o Genuineness of the transaction 14. The CIT(A) observed that the evidence provided by the assessee has not been certified or authenticated by it. These are only photocopies with no authenticity. However, since all the permanent account numbers are mentioned in these letters the benefit of doubt can be given to the assessee as far as the identity of the creditors is concerned. However, with regard to the creditworthiness absolutely no information has been provided by the assessee. It is not clear as to what business is being carried out by the creditors, what are their turnovers and whether they were in a positi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, there were transfers of entries from one company to another company, which have not been examined by the AO at all. Not only that even when the further information was furnished before the CIT(A), the CIT(A) refused to entertain the same as can be seen from para 6.1 of CIT(A)'s order. We are of the opinion 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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