This is appeal by assessee, viz. M/s. Muthoot Bankers, Punalur, against appellate order dated 17-12-2004 of CIT(Appeals)-III, Trivandrum, pertaining to assessment year 1998-99. 2. grounds of appeal raised by assessee read as under: "1. CIT(Appeals) is not justified in confirming denial of interest on periodical credits in partners account. 2. Officers below failed to appreciate fact that as per Clause 5 of partnership Deed, capital of partners inclusive of accumulated profits and amount brought in shall be entitled to interest. 3. At any rate, service charges credited cannot be denied interest solely on ground that this forms part of firms income. 4. There is no stipulation in Deed that interest shall be allowed only on opening balance. 5. appellant has already considered drawings in case of two of partners in computing interest so much so adjustment made in assessment was not in order." 3. facts of case in brief are that assessee filed its return of income on 2-11-1998 declaring 3 net income of Rs. 11,11,510. assessee firm is engaged in money lending business. According to Assessing Officer, assessee used to collect interest on gold loans at rate of 27 per cent, out of which 18 per cent is accounted as interest and remaining 9 per cent is credited as service charges to accounts of partners in profit sharing ratio. Interest is debited in respect of balance in accounts of partners including credit made up of service charges. Assessing Officer was of view that as part of profit was credited to accounts of partners, interest should not have been allowed in respect of such credits. He was also of view that partners were entitled to interest on opening balance only for reason that other credits were out of service charges earned by assessee. firm. assessee explained that if service charges were credited to Profit and Loss Account instead of crediting to partners current account, partners share of profit will go up to same extend. Assessing Officer opined that explanation of assessee was not to point. He observed that by routing portion of profits of firm through current accounts of partners, firm has paid interest on such amount and debited same in Profit and Loss Account. If service charges have been credited to Profit and Loss Account directly, there would not have been any credit to current accounts of partners which in turn will show that partners are entitled for interest with reference to opening balance only. By routing service charges through current accounts of firm, excess debit towards interest has been made in accounts of firm. Therefore, he worked out such excess interest debited in accounts of firm at Rs. 2,76,037 and disallowed such excess debit and added back to income of assessee. Aggrieved, assessee moved matter in appeal before first appellate authority. CIT(Appeals) decided appeal ex parte, upholding findings of Assessing Officer. Hence, assessee is on second appeal before us with grounds of appeal extracted as above. 4. At time of hearing, Shri-R. Sreenivasan, C.A. appeared on behalf of assessee-firm. He filed Xerox copy of partnership deed dated 6-4-1992. He also filed Xerox copies of intimation under section 143(1)(a) for assessment years 1999-2000, 2000-01, 2001-02, 2002-03, 2003-04 and 2004-05 along with copies of Statement of total income of respective assessment years to show that service charges credited in partners current account was offered as income of assessee, which has been accepted by Assessing Officer as per intimation under section 143(1)(a)/143(1). By placing above materials on record, learned representative of assessee reiterated grounds of appeal raised before us as his submissions. He also submitted that assessee is following this consistent method of charging interest in earlier years and also revenue has accepted same even though assessments were made under section 143(1)(a)/143(1). 5. On other hand, learned departmental representative reiterated observations of Assessing Officer and first appellate authority as his submissions. In effect his submissions were that profit cannot be credited to submissions. In effect his submissions were that profit cannot be credited to partners capital accounts on piecemeal basis and same can be ascertained only on closing of books and after that only can be credited to Profit and Loss Account of partners. He pleaded that in this case, amounts credited to partners capital accounts on piecemeal basis were only revenue receipt of thee firm and same cannot be said to be income or profit of firm unless at year end profit and loss account is drawn up by firm. assessee is showing inflated capital balance during year by crediting such piecemeal receipts of firm before firm could draw up its Profit and Loss Account to ascertain profit/loss made by firm to be credited or debited to partners capital account. Thus, he pleaded that there is no need to interfere with orders of lower authorities. 6. We have heard rival submissions and considered facts and materials on record including papers filed before us by learned . representative of assessee, being copy of partnership deed and xerox copies of intimation under section 143(1)(a) for assessment years 1999-2000, 2000-01, 2001-02, 2002-03, 2003-04 and 2004-05 along with copies of Statement of total income of respective assessment years. At outset we find that learned Commissioner of Income-tax (Appeals) has posted case for hearing only once when assessee or his representative did not appear. CIT (Appeals) instead of giving further time has chosen to decide issue even without hearing assessee. In effect, order of CIT (Appeals) is ex-parte order qua assessee as well as revenue. Further we find some force in contention of learned representative of assessee that assessee has been following this practice consistently and CIT (Appeals) has not dealt with in her appellate order this aspect before coming to conclusion. In this view of matter, in interest of natural justice, we deem it fit and proper to restore matter back to file of CIT (Appeals) with direction to decide appeal afresh after giving effective opportunity of hearing to assessee and also after considering fact that assessee has been consistently following this method of crediting service charges to partners capital accounts on monthly basis. assessee is also directed to cooperate with CIT (Appeals) by providing necessary details that would be required by CIT (Appeals) to decide issue. Thus, appeal of assessee is allowed for statistical purposes only. 7. In result, appeal of assessee is allowed for statistical purposes only. *** Muthoot Bankers v. Deputy Commissioner of Income-tax, Circle-I, Kollam