Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “B” BENCH KOLKATA
Before: SHRI RAJPAL YADAV & SHRI GIRISH AGRAWAL
Present for: Appellant by : Shri Siddarth Agarwal, Advocate Respondent by : Shri P. P. Barman, Addl. CIT, Sr. DR Date of Hearing : 16.10.2023 Date of Pronouncement : 29.11.2023 O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi vide Order No. ITBA/NFAC/S/250/2023-24/1053129088(1) passed against assessment order u/s. 144 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 24.12.2018 for AY 2016-17.
There is a delay of 29 days in filing the present appeal for which petition for condonation of delay is placed on record. Impugned order passed by Ld. CIT(A) is dated 24.05.2023, received by the assessee on the same day. The present appeal was ought to be filed on or before 23.07.2023 which in effect was filed on 22.08.2023. For this brief Coorg Commodities Pvt. Ltd., AY 2016-17 delay of 29 days, assessee had submitted that with the change towards e-governance by the Government through e-communication regime, assessee was not well conversant with the newly introduced digital regime. Director of the assessee did not access the e-mail frequently. As soon he came to know about the impugned order, necessary actions were taken, and appeal was filed. The delay of 29 days is attributable to the delayed access to the e-mail account. Considering these facts on record, we find it appropriate to condone the delay and take up the matter for adjudication.
Ground raised
by the assessee is in respect of addition made by the Ld. AO of Rs.2,20,70,320/- by taking ad hoc 10% of the total current liability, holding it as unexplained and unverified.
4. The impugned assessment order passed u/s. 144 is a very brief order whereby Ld. AO has resorted to making an addition by taking 10% of the total current liability in absence of any supporting evidence. The said impugned order is not a speaking order as nothing is discernible in terms of steps taken by the Ld. AO as well as any analysis done of the material available on record furnished by the assessee along with the return of income. The said assessment order is extracted below: “The assessee is a Domestic Company and filed its return of income through online on 18.10.2016 declaring total income of Rs.4,13,020/-. The case was selected for scrutiny under CASS, Category: Limited Scrutiny. Notices u/s. 143(2) and 142(1) of the I. T. Act were issued and duly served upon the assessee company. In response to the notices issued, there was no compliance by the assessee company. The case of the assessee was selected with reasons: "Whether the funds received in the form of share premium are from disclosed source and have been correctly offered for tax" and "Whether the current liabilities shown are genuine". On perusal of returns of income filed by the assessee, it is observed that no such Share Premium was received during the year under consideration. However, it is observed that the assessee has shown an amount of Rs.22,07,03,195/- under the head "Current Liabilities". The assessee was asked to furnish the details of the current liability claimed for the year under Coorg Commodities Pvt. Ltd., AY 2016-17 consideration. But, the assessee failed to furnish the details of same. The current liability of Rs.22,07,03,195/- claimed by the assessee company remained unexplained and unverified. Hence in view of above, 10% of the total current liability claimed by the assessee is disallowed in absence of any supporting evidence and added back to the total income of the assessee.”
From the above, we note that case of the assessee was selected for limited scrutiny with the following two reasons – (i) "Whether the funds received in the form of share premium are from disclosed source and have been correctly offered for tax" and (ii) "Whether the current liabilities shown are genuine".
On the first reason, Ld. AO has observed that no such share premium was received during the year under consideration. In respect of the second reason, Ld. AO observed that the assessee has shown an amount of Rs.22,07,03,195/- under the head ‘current liabilities’. From the audited Balance Sheet of the assessee, the details of these current liabilities are tabulated as under:
Coorg Commodities Pvt. Ltd., AY 2016-17 7. According to the assessee, bifurcation of the above stated ‘current liabilities’ was evident from the return of income filed by the assessee. It was submitted that Ld. AO failed to understand the nature of current liabilities and made addition of 10% of the total current liabilities simply based on assumption and surmises without application of mind. Ld. CIT(A) while disposing of the appeal has confirmed the addition made by the Ld. AO by observing that no details have been filed in respect of the liabilities, their nature and no supporting details have been furnished.
Before us, Ld. Counsel for the assessee strongly asserted that all the relevant documentary evidences in support of the current liabilities were placed on record before the Ld. CIT(A). Assessee had furnished confirmation letters from the unsecured loan creditor as well as trade creditor included in the trade payable group. Assessee had also furnished copy of ledger account for other liabilities and provisions, all of which are placed in the paper book. From these submissions, we note that we have not come across any provision in the Act, which authorises the tax authorities to arrive at such logic of making ad-hoc addition, as done in the present case. Also, there is no mention of any rationale in arriving at the percentage addition done by taking 10% of the total current liabilities reported in the balance sheet. The claim of current liabilities was duly reflected in the income tax return filed by the assessee and was known to the Ld. AO who has stated in the impugned order about examining the said return. Thus, the action of Ld. AO in arbitrarily making addition of 10% of total current liabilities demonstrates lack of understanding of the financial statements and transactions at the end of the Ld. AO. Since the genuineness of current liabilities remained to be examined at the assessment stage, in the interest of justice and fair-play, we find it appropriate to remit the matter back to the file of Ld. AO to revisit the Coorg Commodities Pvt. Ltd., AY 2016-17 reason for which the case was selected for limited scrutiny i.e. “whether the current liabilities shown are genuine”, since there were no submissions made by the assessee at the stage of assessment and the same was completed u/s. 144 of the Act. Ld. AO may call for necessary details and documents to examine the current liabilities for the purpose of limited scrutiny. Needless to say that assessee be given reasonable opportunity of being heard to present its case and furnish all the necessary details and documents as required for expeditious disposal of the matter. Accordingly, ground taken by the assessee is allowed for statistical purposes.