ROLAX AUTO PVT. LTD.,NEW DELHI vs. ITO, WARD- 21(4), NEW DELHI

Appellant, M/s. Rolax Auto Pvt. Limited (hereinafter referred to as ‘the assessee’) by filing the present appeal sought to set aside the impugned order dated 01.12.2017 passed by the Commissioner of Income - tax (Appeals)-38, New Delhi qua the assessment year 2008-09 on the grounds inter alia that:-

That, the CIT (A) failed to appreciate the fact that the assessee made donations and paid through cheques to charitable institution and also submitted information of the recipient society and CIT(A) has upheld the addition.

Further the CIT (A) erred in law and fact and partly allowing the appeal of assessee in ignoring the explanation before him and evidences placed on records at the time of hearing before CIT(A).”

Briefly stated the facts necessary for adjudication of the controversy at hand are : On the basis of information received through Non-filers Monitoring System of i-taxnet, AO noticed cash transaction exceeding Rs.10,00,000/- during Assessment Year 2008-09, for which assessee has not filed any ITR. Proceedings under section 147/148 of the Income-tax Act, 1961 (for short ‘the Act’) were initiated by issuing a notice u/s 148 of the Act. Due to non-appearance of the assessee despite service, AO proceeded to frame assessment under section 144 of the Act.

Assessee is into manufacturing of auto-parts. AO noticed form the documents available on record that there is an increase in the sundry creditors during the year under assessment to the tune of Rs.86,71,196/-. AO proceeded to make addition thereof on the ground that since detail of sundry creditors has not been filed by the assessee, increase in the sundry creditors has been treated income of the assessee from undisclosed sources. AO also made addition of Rs.70,762/- on account of interest received from M/s.

We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.

Ld. AR for the assessee challenging the impugned addition contended that he has supplied complete details of the sundry creditors to the AO as well as ld. CIT (A), which is available at pages 22 to 24 of the paper book, and has also referred to written submission filed with ld. CIT (A), which are available at pages 1 to 14 of the paper book. However, on the other hand, ld. DR for the Revenue to repel the arguments addressed by the ld. AR contended that since assessee has been negligent through-out in supplying the details, addition is liable to be confirmed.

When we peruse the order passed by the AO which carries the categoric observation made by the AO that, “It is observed that the assessee is engaged in the manufacturing of auto parts. Copies of the bank statement of the accounts maintained by the assessee company are available on record. Copy of ‘audited’ Balance Sheet, P&L account with Form No.3CD were also obtained. But the authenticity of the audit report could not be established due to paucity of time and moreover, no address of the auditor/CA has been mentioned on the papers signed by the auditor/CA.”, the addition has been made on the basis of surmises in haste.

Even the findings returned by ld. CIT (A) that, “In the course of appeal proceedings the appellant has submitted that “….the parties are such where even the confirmation are not readily available being old records….” In this situation there is no choice but to uphold the action of assessing officer. The addition of Rs.,87,71,196/- on account of Sundry Creditors is accordingly confirmed.” are cryptic and we are unable to comprehend if the issue canvassed before the ld. CIT (A) was discussed and decided in right earnest.

In these circumstances, we are of the considered view that when the entire detail was brought on record by the assessee during the first appellate proceedings, though assessee was negligent in appearing before the AO, adequate opportunity of being heard is required to be given to the assessee to decide the issue once for all.

AO made addition of Rs.70,762/- after noticing from 26AS details of Individual Transaction statement of the assessee company which shows that assessee received interest of Rs.23,162/- and Rs.47,600/- totaling Rs.70,762/- from M/s. Intec Securities Ltd. on which tax has also been deducted at source u/s 194A of the Act and treated the same as interest income of the assessee. At the same time, ld. CIT (A) decided the issue by returning following findings:-

Again, ld. AR for the assessee contended that he has brought on record the entire details viz. P&L account with Form 3CD, audited balance sheet, bank statements, which is evident form para 3 of the assessment order, as well as before the ld. CIT(A), but no cognizance has been taken of the documents. Since all these documents are required to be examined by the AO, this issue is also remitted back to the AO to decide afresh after providing adequate opportunity of being heard to the assessee. So, Ground No.5 is determined in favour of the assessee for statistical purposes.

Ground No.6 being general in nature does not require any adjudication.

Resultantly, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in open court on this 24th day of September, 2021.