SHRI VAARI ELECTRICALS PVT. LTD.,CHENNAI vs. ITO, CORPORATE CIRCLE-3(1), CHENNAI

The assessee is a private limited company, filed its return of income declaring total income of Rs. 4,78,52,530/-. The case was selected for scrutiny for the large payments made u/s. 194H to parties who have not filed return of income and for low net profit. The A.O, in the assessment order passed u/s. 143(3) of the Act, made disallowance of Rs. 2,01,01,937/- in respect of various payments made to non-filers. On appeal, the Ld. CIT(A) confirmed the addition, observing that the assessee had not produced any corroborative evidence apart from the invoices and ledger extracts already examined during the assessment proceedings. It was further noted that the assessee did not produce bank statements showing actual credit of funds to the payees, nor were any confirmations from the concerned parties furnished.

The Ld. Authorized Representative (A.R.) for the assessee that adequate opportunity was not provided to furnish the required details either before the A.O. or before the Ld. CIT(A). It was therefore prayed that one more opportunity may be granted to substantiate the assessee’s claim before the A.O.

On the other hand, the Ld. Departmental Representative (DR), has relied on the orders of lower authorities.

We have heard the rival submissions, and perused the materials available on record. We find that the A.O. has made the disallowance on the ground that the assessee failed to establish the genuineness of the expenditure. The Ld. A.R. submitted that the assessee had declared income of Rs. 4,78,52,530/- and that its books of accounts are audited. It was further submitted that the assessee now possesses all relevant evidence to support its claim of expenditure and therefore seeks one more opportunity to produce the same. Keeping in view the principles of natural justice, we are of the considered view that one more opportunity should be granted to the assessee to substantiate its case before the A.O. Accordingly, we set aside the impugned order and remit the matter back to the file of the A.O. for de novo assessment in accordance with law, after affording reasonable opportunity of being heard to the assessee. The assessee is also directed to comply with all notices issued by the A.O. and furnish all relevant details for fresh consideration. In view of the above, the appeal filed by the assessee is allowed for statistical purposes.

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