TMI Blog2018 (8) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was trying to put forward supporting evidences before the CIT(A), in that circumstances, it was appropriate for the CIT(A) to call for remand report from the Assessing Officer and to decide the matter afresh. Merely because the assessee failed to file his objections to the variation suggested in the notice under section 144B, it cannot be said that the assessment ceases to be an assessment under section 143(3). Hence, the assessee can file an appeal against the assessment before the Appellate Assistant Commissioner in spite of his failure to file objections to the draft assessment order under section 144B - Matter restored before AO - Decided in favor of assessee. Additions u/s 68 - proving source of cash credits - Held that:- If the assessee files only confirmation letters and offers no explanation regarding the nature and source thereof, the explanation offered by the assessee cannot be considered as satisfactorily explained before the AO. Then the sum so credited is to be treated as unexplained credits. In the present case, though the amount was contributed by the partners as their capital introduction, only confirmation letters from the partners cannot prove all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not able to explain with documentary evidences the nature of source of these credits, loans in cash and interest paid for an amount aggregating to ₹ 60,56,699/-. According to the AO, during the course of assessment proceedings he himself vide letter dated 28/12/2010 agreed for an addition of ₹ 60 lakhs to cover up the deficiencies as pointed by the AO for various entries. 5. On appeal, the CIT(A) observed that during the course of appellate proceedings before him, the assessee was trying to put forward that it had all supporting evidences available and the same should be considered. The CIT(A) held that since the assessee during the course of assessment proceedings had himself agreed to the addition of ₹ 60 lakhs, there was no reason why the appeal should be taken up on merits as it was only because that he was not able to explain various entries and agreed to treat the same as his undisclosed income, that the AO did not conduct further enquiries to prove that the entries were not genuine. In view of this, the CIT(A) observed that there was no case for filing the appeal against such addition. 6. Against this the assessee is in appeal before us. The Ld. AR s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or getting of evidence in support of the assessee s claim, the provisions of section 246(i)(c) of the I.T. Act entitle an assessee to file an appeal against the order of the assessment before the CIT(A) where the assessee is denied his liability to be assessed under the Act. In the present case, the CIT(A) mentioned in his order in para 5.3 that the assessee tried to put forward that it had all supporting evidences available and the same should be considered. Further, he observed that the assessee had agreed for the addition for avoiding penalty and other legal complications and getting peace of mind. The assessee had himself agreed for addition of ₹ 60 lakhs, the CIT(A) refused to take up the appeal on merits. Since the assessee was trying to put forward supporting evidences before the CIT(A), in that circumstances, it was appropriate for the CIT(A) to call for remand report from the Assessing Officer and to decide the matter afresh. 8.1 It is pertinent to mention the judgment of the Jurisdictional High Court in the case of CIT vs. K.N. Thankappan Pillai (191 ITR 300), the following question was referred before the Jurisdictional High Court: Whether, on the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by cash and the details of the amounts of loan, confirmation letters from the parties, their whereabouts etc. had not been disclosed. It was observed that the assessee during the assessment year 2008-09 failed to withstand the scrutiny of such credits and came forward to offer the loan credits to tax. Since the assessee was not able to confront the findings of the AO with evidence, the CIT(A) held that the disallowance made by the AO was appropriate and upheld the addition made by the AO. 9.3 Against this, the assessee is in appeal before us. The Ld. AR submitted that the assessee had given the names of loan creditors who were very much existing. According to the Ld. AR, these are not unexplained cash credits but interest paid on loans and advances taken from various parties existing in the financial statements for the AY 2009-10. 9.4 On the other hand, the Ld. DR relied on the orders of the lower authorities. 9.5 We have heard the rival submissions and perused the record. In this case, the assessee seeks the allowance of interest paid to the loan creditors of ₹ 2,44,920/- on the credits which were found not in existence in the AY 2008- 09. The assessee offered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01/10/2009 3,00,000/- AA Antony 01/10/2009 3,00,000/- KJ Antony 01/10/2009 3,00,000/- Anthony Vezhaparambil 01/10/2009 3,00,000/- OK Thomas 01/10/2009 3,00,000/- KJ Devassy 01/10/2009 3,00,000/- Hormis Steephen 04/11/2009 3,00,000/- PC Ouseph 04/11/2009 3,00,000/- Thressiamma Antony 04/11/2009 3,00,000/- Anish Anthony 04/11/2009 3,00,000/- Golfy Jose 04/11/2009 3,00,000/- Jibi Siju Total 58,33,000/- 10.1 The assessee was requested to furnish the source of these cash c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.18,00,000/- (six entries of ₹ 3 lakhs each) On 04/11/2009 Rs.15,00,000/- (five entries of ₹ 3 lakh each) From the above statement, the AO found that major credits were of huge sums, split in many names, and brought into the accounts. As the assessee had not made any efforts to substantiate the sources of cash credits into its accounts, even after giving ample opportunities and time, the AO considered that the assessee had no valid source and hence, the total cash credits amounting to ₹ 58,33,000/- was treated as assessee s income u/s. 68 of the I.T. Act. 10.1 On appeal, the CIT(A) confirmed the addition made by the AO. 10.2 Against this, the assessee is in appeal before us. The Ld. AR submitted that the above amount was contributed by the partners who were assessed to income tax with the same AO and all the partners confirmed the introduction of capital by them. Moreover, the assessee has placed on record the confirmation letters from various persons as mentioned above. Being so, the addition cannot be made in the hands of the assessee which is a firm. 10.3 On the other hand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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