A. B. MOTORS PVT. LTD. ,PATIALA vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE, PATIALA , PATIALA

Since the issues involved in both the above appeals are common and the appeals were heard together therefore they are being disposed of by this consolidate order.

We shall take up the appeal of the Assessee in ITA No. 990/Chd/2024 for A.Y. 2017-18 as a lead case for discussion, wherein Assessee has raised the following grounds:

Briefly, the facts of the case are that the assessee is a company engaged in the business of automobile dealership. The return of income for the year under consideration was filed declaring income of Rs.1,51,23,380/-, which was originally processed under section 143(1). Subsequently, based on information received from the Directorate General of GST Intelligence (DGGI), Ludhiana, the case was reopened under section 147 of the Act. The information suggested that the assessee had received

1 During reassessment proceedings, the Assessing Officer observed that despite issuance of notices, the assessee did not furnish a satisfactory explanation in time and, accordingly, treated the entire amount of Rs. 4,98,83,964/- as unexplained income and added the same to the total income of the assessee.

Aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A). The Ld. CIT(A) upheld both the reopening and the addition made by the Assessing Officer. The Ld. CIT(A) held that the information received from DGGI constituted tangible material for reopening of assessment and that the Assessing Officer had validly assumed juri iction under section 147. 5.1 On merits, the Ld. CIT(A), after considering the submissions of the assessee and the remand report of the Assessing Officer, concluded that the assessee failed to satisfactorily reconcile the amount of incentives/discounts with its books of account. It was observed that the assessee could not conclusively establish that the entire receipts had been duly accounted for, and therefore, the addition made by the Assessing Officer was justified. However, from the discussion contained in the appellate order, particularly at pages 73 to 77 , it is noticed that although detailed submissions and additional evidence were placed on record, there is no specific and item- wise adjudication of the reconciliation furnished by the assessee nor a clear finding on the accounting treatment of such receipts.

Against the order of the Ld. CIT(A), the assessee preferred an appeal before the Tribunal.

During the course of hearing the Ld. AR submitted that the reopening is bad in law being based on borrowed satisfaction without independent application of mind by the Assessing Officer.

1 On merits, it was contended that the incentives/discounts received from Ford India Pvt. Ltd. were duly recorded in the books of account under various heads such as discounts, incentives, and adjustments in purchase cost. It was submitted that a detailed reconciliation was furnished before the lower authorities, which has not been properly appreciated.

2 The Ld. AR further contended that both the Assessing Officer and the Ld. CIT(A) failed to examine the evidence in a proper perspective and made/confirmed the addition merely on presumptions.

Per contra, the Ld. DR relied upon the orders of the lower authorities and submitted that the assessee failed to furnish satisfactory explanation during assessment proceedings. It was argued that the information received from DGGI clearly indicated suppression of income and the addition has been rightly made and confirmed.

We have heard the rival submissions and perused the material available on record. The core issue in the present appeal relates to the addition of Rs.4,98,83,964/- on account of incentives/discounts allegedly not disclosed by the assessee.

1 It is an undisputed fact that the addition has been made by the Assessing Officer primarily on the basis of third-party information received from DGGI. The assessee, on the other hand, has consistently maintained that the said receipts were duly accounted for in its books of account, though under different heads, and has furnished a reconciliation in support thereof.

2 On careful examination of the record, we find that though the assessee has placed reconciliation statements and supporting evidence on record, the same have not been properly examined either by the Assessing Officer or by the Ld. CIT(A). The findings recorded by the Ld. CIT(A), particularly in the relevant portion of the order, are general in nature and do not deal with the specific reconciliation submitted by the assessee.

3 Further, the appellate order does not contain a clear and categorical finding as to whether the impugned receipts have already been accounted for in the books or not. The issue has been decided largely on the basis of observations that the reconciliation was not satisfactory, without detailed verification of the underlying evidence.

4 In our considered opinion, the issue requires thorough examination of facts, including verification of books of account, ledger entries, nature of incentives/discounts, and their treatment in the financial statements. Such factual verification is best carried out by the Assessing Officer.

5 Accordingly, in the interest of justice, we set aside the orders of the lower authorities and restore the matter to the file of the Assessing Officer for fresh adjudication.

6 The Assessing Officer is directed to: • Examine the reconciliation of incentives/discounts furnished by the assessee; • Verify the accounting treatment of such receipts in the books of account; • Consider all evidences and explanations that may be furnished by the assessee; • Conduct necessary enquiries, if required; and • Pass a speaking and reasoned order in accordance with law.

In the result, the appeal of the assessee is allowed for statistical purposes.

Both the parties fairly submitted that the facts and circumstances of the other appeal, i.e., ITA No. 1006/Chd/2024, are exactly identical to those in ITA No. 990/Chd/2024, and that similar contentions raised therein may be considered. Therefore, our findings and directions given in ITA No. 990/Chd/2024 shall apply mutatis mutandis to the other appeal as well. Accordingly, the same is allowed for statistical purposes.

In the result, both the above appeals are allowed for statistical purposes.

""थ"/ The Respondent 3. आयकर आयु"/ CIT 4. आयकर आयु" (अपील)/ The CIT(A) 5. िवभागीय "ितिनिध, आयकर अपीलीय आिधकरण, च"ीगढ़/ DR, ITAT, CHANDIGARH 6. गाड" फाईल/ Guard File