The ITO, Ward-6(3), Hyderabad v. M/s. R.K. & Company, Hyderabad

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SHRI G.C. GUPTA VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.705/HYD/2010 ASSESSMENT 2006-07 THE INCOME TAX OFFICER WARD 6(3) HYDERABAD VS M/S R.K. & COMPANY HYDERABAD. (PAN AAIFR 2451 G) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.V.N. CHARYA DR RESPONDENT BY : SHRI MAHESH ADVOCATE O R D E R PER CHANDRA POOJARI ACCOUNTANT MEMBER: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) GUNTUR DATED 26.2.2010 AND PERTAINS TO THE ASSESSMENT YEAR 2006-07. 2. THE FIRST GROUND IN THE REVENUE APPEAL IS WIT H REGARD TO DELETION OF ADDITION MADE TOWARDS CAPITAL INTRODUCE D BY THE PARTNERS. 3. BRIEF FACTS OF THE ISSUE ARE THAT THE MANAGI NG PARTNER SHRI CHAITANYA RAVI KUMAR HAD INTRODUCED CAPITAL BY WAY OF BANK TRANSFERS FROM HIS PERSONAL BANK ACCOUNT AMOUNTING TO RS.90 4 6 903/-. BEFORE THE ASSESSING OFFICER THE ASSESSEE NOT ABLE TO PRODUCE ANY EVIDENCE REGARDING THE AVAILABILITY OF FUNDS WITH THE PARTNER HENCE T HE SAME WAS TREATED AS UNEXPLAINED CREDIT U/S 68 OF THE IT ACT. HOWEVER BEFORE THE CIT(A) THE ASSESSEE HAS PRODUCED A COPY OF THE BANK ACCOUNT OB TAINED FROM UNION BANK OF INDIA AS SUCH THE ADDITION WAS DELETED BY THE CIT(A). AGAINST THIS THE REVENUE IS IN APPEAL BEFORE US. ITA NO.705/H/2010 M/S RK & COMPANY HYDERABAD 2 2 4. AFTER HEARING BOTH THE PARTIES WE ARE OF THE OPINION THAT THE CIT(A) HAS DELETED THE ADDITION AFTER OBTAINING BAN K STATEMENTS AND COPY OF RETURN FROM THE MANAGING PARTNER WITHOUT CONFRON TING THE SAME TO THE ASSESSING OFFICER. THIS IS IMPROPER. IT IS THE DU TY OF THE CIT(A) TO CONFRONT THE EVIDENCE COLLECTED FROM THE ASSESSEE TO THE ASS ESSING OFFICER BEFORE COMING TO ANY CONCLUSION. SINCE THERE IS FAILURE O N THE PART OF THE CIT(A) IN NOT PLACING THE DOCUMENTS RELIED BY HIM BEFORE DELETING THE ADDITION TO THE ASSESSING OFFICER WE ARE INCLINED TO SET ASID E THE ISSUE TO THE FILE OF ASSESSING OFFICER FOR FRESH CONSIDERATION. ACCORDI NGLY THE ISSUE IS SET ASIDE TO THE FILE OF ASSESSING OFFICER TO REDO THE ASSESS MENT AFTER CONSIDERING THE DOCUMENTS PRODUCED BY THE ASSESSEE BEFORE THE CIT(A ). 5. THE NEXT GROUND IN THE REVENUE APPEAL IS WITH REGARD TO ADDITIONS MADE TOWARDS ADVANCE U/S 68 OF THE IT ACT . IN THE COURSE OF ASSESSMENT IT WAS FOUND BY THE ASSESSING OFFICER T HAT THE ASSESSEE HAS SHOWN AN ADVANCE OF RS.4 35 083/-. SINCE THE ASSES SEE NOT ABLE TO PRODUCE NAME AND ADDRESSES OF THE PARTIES FROM WHOM IT WAS RECEIVED THE SAME WAS TREATED AS UNEXPLAINED CREDIT U/S 68 OF TH E IT ACT. BEFORE THE CIT(A) THE ASSESSEE HAS EXPLAINED THAT IT IS RECEI VED TOWARDS SALES ADVANCES AND THE SAME WAS ADJUSTED TOWARDS SALES S UBSEQUENTLY THE SAME CANNOT BE TREATED AS UNEXPLAINED CREDIT. THE CIT(A) HAS AGREED WITH THE CONTENTION OF THE ASSESSEE AND DELETED THE ADDI TION. AGAINST THIS THE REVENUE IS IN APPEAL BEFORE US. ADMITTEDLY THE AS SESSEE HAS NOT ABLE TO FURNISH THE NAME AND ADDRESSES OF THE PARTIES FROM WHOM IT HAS BEEN RECEIVED BEFORE THE ASSESSING OFFICER. THE EVIDENC E COLLECTED BY THE CIT(A) HAS NOT BEEN PUT BEFORE THE ASSESSING OFFICER FOR C ONFRONTATION. HENCE IN THE INTEREST OF JUSTICE WE SET ASIDE THE ISSUE TO THE FILE OF ASSESSING OFFICER TO RECONSIDER THE ISSUE IN THE LIGHT OF EVIDENCE PR ODUCED BY THE ASSESSEE BEFORE THE CIT(A). ITA NO.705/H/2010 M/S RK & COMPANY HYDERABAD 3 3 6. IN THE RESULT THE APPEAL OF THE REVENUE IN I TA NO.705/H/2010 IS PARTLY ALLOWED FOR STATISTICAL PUR POSES. ORDER PRONOUNCED IN THE OPEN COURT 7.1.2011 SD/- SD/- G.C. GUPTA CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT MEMBER DATED THE 7 TH JANUARY 2011 COPY FORWARDED TO: 1. THE ITO WARD 6(3) HYDERABAD 2. M/S RK & COMPANY 8-2-602/C ROAD NO.10 BANJARA HILLS HYDERABAD 3. CIT(A)-GUNTUR 4. CIT HYDERABAD 5. THE D.R. ITAT HYDERABAD. NP