AI Drafter 
TaxTMI 
TaxTMI 
2019 (3) TMI 1201
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....e order of the learned Pr. Commissioner of Income Tax-1, Visakhapatnam is contrary to the facts and also the law applicable to the facts of the case. 2. The learned Pr. Commissioner of Income Tax is not justified in assuming jurisdiction u/s 263 of the Act in as much as the assessment order dated 28.01.2016 u/s 143(3) of the Act is neither erroneous nor prejudicial to the interests of revenue. 3. The learned Pr. Commissioner of Income Tax is not justified in directing the assessing officer to verify the correctness of the claim of the appellant towards: a. Interest of Rs. 6,59,971/- b. Chit loss of Rs. 6,65,217/- 4. The learned Commissioner of Income Tax ought to have appreciated that the assessing officer initiated enquiries in re....
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....in the assessee is a partner. However, on perusal of the capital account of the assessee in the books of M/s. Shine Steels, it is noticed that the assessee has invested in the said firm Rs. 18,85,000/- only as against the bid amount of Rs. 36.00 lakhs. Ignoring this fact the Assessing Officer has allowed the entire chit loss claimed under the head 'income from other sources', instead of allowing the proportionate chit loss on the bid amount against income from M/s. Shine Steels received by way of interest & remuneration. The chit amount not invested of Rs. 17,15,000/- which works out to Rs. 3,16,900/- ought not to have been allowed either under the business head or income from other sources. Thus, in view of the above, assessment order d....
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....18 lakhs respectively and consequently incurred chit loss. The both prized chit monies were invested by the assessee in M/s.Shine Steel a partnership firm of Visakhapatnam in which the assessee is a partner. So he received interest of Rs. 4,90,829/- from the said firm on his capital in the previous year 2012.13 relevant to the Asst. year 2013-14. So the accec.cee is eligible to claim the chit loss of Rs. 6,65,217/- against the above interest income as per the provisions of the law and also as per judicial pronouncements. In fact the I-/on 'b/c Jurisdictional High court of Andhra Pradesh also held in the case of CiT vs. Kovvur Textile('1982,I1361ITR 67(AP) that chit loss was allowable against the Income of the assessee. In t....
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....erest in the assessment is not acceptable in view of the reason that the assessee has not furnished details of the concerns with whom the amounts overdrawn were invested and the proceeds from the said impugned investments either before the assessing officer during the assessment proceedings or before the undersigned during the present proceedings. The AO has simply accepted the assessee's claim without making proper verification regarding the utilization of the amounts overdrawn and thereby the correctness of the interest claim. With regard to the second part relating to the claim of chit loss, the explanation furnished by the assessee contending that he is entitled for the deduction of entire chit loss with a reason that the entire chi....
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.... Consequently, the assessment is set aside to the file of the AO with a direction to the Assessing Officer to examine the correctness and entitlement of the assessee's claim of interest of Rs. 6,59,971/- and the chit loss of Rs. 6,65,217/- in the light of the discussions made above and the explanation filed by the assessee before the undersigned during the present proceedings, as the same was filed for the first time, which was not a part of assessment proceedings and complete the assessment accordingly. Needless to say, the assessee shall be afforded reasonable opportunity of being heard to state his case before completion of the set aside assessment." 5. On being aggrieved, assessee carried the matter in appeal before ....