IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P.GEORGE , ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO. 1470 & 1471/MDS/2012 (ASSESSMENT YEAR: 2008-09) M/S. SHRI SAKTHI PAPER INDIA PVT. LTD., 195, 2 ND FLOOR, N.H.ROAD, COIMBATORE-641 001. PAN: AAJCS1949Q VS. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-I(3) COIMBATORE. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. G.BASKAR, ADVOCATE RESPONDENT BY : MR. GURU BASHYAM, JCIT DATE OF HEARING : 24 TH SEPTEMBER, 2013 DATE OF PRONOUNCEMENT : 27 TH SEPTEMBER, 2013 O R D E R PER CHALLA NAGENDRA PRASAD, JM : ITA NO.1470/MDS/2012:- THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, CO IMBATORE DATED 6.6.2012 FOR THE ASSESSMENT YEAR 2008-09. THE MAIN GRIEVANCE OF THE ASSESSEE IN ITS APPEAL IS THAT T HE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE SEEN THAT ASSESSMENT WAS COMPLETED AT THE FAG END OF THE LIMITATION PERIOD, WHEN VARIOUS DETAILS WERE CALLED FOR, THE ITA NO. 1470 & 1471/MDS//2012 2 SAME COULD NOT BE SUBMITTED WITHIN SHORT TIME AND H ENCE NOT JUSTIFIED IN SUSTAINING THE ADDITION MADE BY THE AS SESSING OFFICER, AS THE APPELLANT DID NOT GET FAIR OPPORTUN ITY TO EXPLAIN ITS CASE. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMP ANY ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF PAPERS AND PAPER PRODUCTS FILED ITS RETURN OF INCOME ORIG INALLY ON 30.9.2008 AND REVISED RETURN ON 26.02.2010 DECLARI NG LOSS OF ` 1,22,12,840/-.THE ASSESSMENT WAS COMPLETED UNDER SE CTION 143(3) OF THE ACT ON 27.12.2010 DETERMINING THE IN COME AT ` 15,68,552/-. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER MADE ADDITION OF ` 1,37,81,396/- TO THE LOSS RETURNED. THE ASSESSING OFFICER MADE ADDITION OF ` 94,70,948/- AND ` 11,06,331/- AS UNPROVED CREDITS IN RESPECT OF LIABILITY FOR PURCHASES BASED ON A LETTER DATED 24.12.2010 ADDRESSED BY MR. K.P.KRISHNAPPA, PROPRIETOR OF EASW ARAN AGENCY, WHO HAD DENIED HAVING ANY TRANSACTION WITH THE ASSESSEE COMPANY. ON APPEAL, THE COMMISSIONER OF IN COME ITA NO. 1470 & 1471/MDS//2012 3 TAX (APPEALS) SUSTAINED THE ADDITION RELYING ON THE SAID LETTER AND THE CONTENTIONS OF THE ASSESSING OFFICER. 3. NOW, THE ASSESSEE IS IN APPEAL BEFORE US CONTEND ING THAT THE ASSESSING OFFICER HAD TAKEN UP THE SCRUTIN Y ASSESSMENT AT THE FAG END OF THE YEAR AND HE HAD MA DE ADDITION WITHOUT CONFRONTING THE ASSESSEE WITH THE LETTER OBTAINED FROM THE PURCHASERS, WHO HAD STATED TO HAV E DENIED THE TRANSACTIONS WITH THE ASSESSEE COMPANY. THE AS SESSING OFFICER HAD NOT GIVEN SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE TRANSACTIONS. THEREFORE THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THERE IS NO JUSTIFICATION IN MAKING ADDITIONS WITHOUT GIVING ADEQUATE OPPORTUNITY TO EX PLAIN THE TRANSACTIONS. THE COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT THE MATTER MAY BE REMANDED TO THE ASSESSING OF FICER FOR FRESH EXAMINATION. 4. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE O RDERS OF LOWER AUTHORITIES. THE DEPARTMENTAL REPRESENTAT IVE HAS ITA NO. 1470 & 1471/MDS//2012 4 NO SERIOUS OBJECTION, IF THE MATTER IS REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH EXAMINATION. 5. HEARD BOTH SIDES. PERUSED THE ORDERS OF LOWER AUTHORITIES. FROM THE RECORDS BEFORE US, WE FIND TH AT THE ASSESSING OFFICER HAS NOT GIVEN ADEQUATE OPPORTUNI TY TO THE ASSESSEE TO EXPLAIN THE TRANSACTIONS WITH THE PURCH ASERS. THE ASSESSING OFFICER OBTAINED THE LETTER ONLY ON 24.12 .2010 AND COMPLETED THE ASSESSMENT ON 27.12.2010 WITHOUT CALL ING FOR EXPLANATION FROM THE ASSESSEE ON THE LETTER RECEIVE D FROM THE PURCHASERS BY THE ASSESSING OFFICER. THE COMMISSIO NER OF INCOME TAX (APPEALS) ALSO DID NOT CALL FOR ANY REMA ND REPORT BY PROVIDING OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THESE TRANSACTIONS. 6. IN THE ABOVE CIRCUMSTANCES, IN THE INTEREST OF J USTICE, WE FEEL THAT THE ASSESSING OFFICER SHOULD RE-EXAMINE T HE WHOLE ISSUE AFRESH. WE THEREFORE, SET ASIDE THE IMPUGNED ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE ITA NO. 1470 & 1471/MDS//2012 5 AFRESH THE ADDITION MADE IN RESPECT OF LIABILITIES FOR PURCHASES OF ` 1,05,77,279/- ( ` 94,70,948 + ` 11,06,331/-) AS UNPROVED CREDITS AFTER PROVIDING ADEQUATE OPPORTUNITY TO TH E ASSESSEE. ITA NO.1471/MDS/2012:- 7. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, CO IMBATORE DATED 6.6.2012 FOR THE ASSESSMENT YEAR 2008-09. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS THAT T HE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF THE ADDITION SUSTAINED BY THE COMMISSIONER OF INCOM E TAX (APPEALS) ON ACCOUNT OF LIABILITIES FOR PURCHASES. 8. SINCE WE HAVE SET ASIDE THE IMPUGNED ORDER OF T HE COMMISSIONER OF INCOME TAX (APPEALS) IN RESPECT OF ADDITIONS IN THE QUANTUM APPEAL AND REMITTED THE MA TTER BACK TO THE FILE OF ASSESSING OFFICER TO EXAMINE AFRESH, THIS APPEAL IS ALSO REMITTED TO THE FILE OF THE ASSESSING OFFI CER FOR DE NOVO CONSIDERATION. ITA NO. 1470 & 1471/MDS//2012 6 9. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 27 TH DAY OF SEPTEMBER, 2013 AT CHENNAI. SD/- SD/- (ABRAHAM P.GEORGE ) (CHALLA NA GENDRA PRASAD) ACCOUNTANT MEMBER J UDICIAL MEMBER CHENNAI, DATED THE 27 TH SEPTEMBER, 2013. SOMU COPY TO: (1) APPELLANT (4 ) CIT(A) (2) RESPONDENT (5 ) D.R. (3) CIT (6 ) G.F.