2019 (2) TMI 632 - AT - Income Tax

Tribunal grants appeal, emphasizes procedural fairness, remands case for fresh examination

IRON BASE Versus ITO, Ward-5 (1), Bhubaneswar

IRON BASE Versus ITO, Ward-5 (1), Bhubaneswar - TMI Issues:Appeal against CIT(A) order confirming addition of unsecured loan of Rs. 4,00,000 as not genuine, without verifying if it was brought forward from the previous financial year. Application for admission of additional evidence regarding loan creditors, date of loan, mode of receipts, balance sheet, and profit & loss account for the relevant financial year.Analysis:Issue 1: Addition of unsecured loanThe appellant contested the addition of Rs. 4,00,000 as unsecured loan, arguing that the AO did not verify the loan's genuineness and did not provide sufficient opportunity to submit necessary details. The appellant submitted a list of 26 persons from whom the loan was taken but was not allowed to provide addresses and dates of the loans. The CIT(A) confirmed the addition without considering the appellant's submissions. The Tribunal noted that the AO did not provide adequate opportunity to the appellant to present relevant documentary evidence, violating Rule 29 of the ITAT Rules, 1963. The Tribunal allowed the appellant's application for admission of additional evidence and directed the AO to reexamine the issue with due opportunity for the appellant to be heard.Issue 2: Application for admission of additional evidenceThe appellant sought to submit additional evidence related to loan creditors, date of loan, mode of receipts, and financial statements for the previous financial year. The appellant argued that the loan in question was from the preceding assessment year and should not be treated as income. The Tribunal, after considering the arguments, allowed the admission of additional evidence under Rule 29 of the ITAT Rules, 1963. The Tribunal emphasized the importance of allowing the evidence to meet the ends of justice and directed the AO to consider the additional evidence for a fresh examination of the unsecured loan issue.ConclusionThe Tribunal allowed the appeal for statistical purposes, emphasizing the importance of providing the appellant with a fair opportunity to present relevant evidence. The decision highlighted the necessity of following procedural fairness and ensuring that all parties have a chance to substantiate their claims with appropriate documentation. The case was remanded to the AO for a fresh examination of the unsecured loan issue based on the additional evidence submitted by the appellant.