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Facts
The assessee filed an appeal against the order of the CIT(A) concerning assessment years 2016-17. The appeal raised issues regarding the CIT(A)'s failure to consider submissions, non-consideration of revised returns, an addition made under Section 68, and disallowance of expenses.
Held
The tribunal dismissed the first ground of appeal concerning non-consideration of submissions. For the second ground regarding revised returns, the tribunal set aside the AO's order and directed him to verify figures from original records. For the third ground related to Section 68, the tribunal also set aside the lower authorities' order and directed the AO to reconsider the issue after giving the assessee an opportunity to be heard and by passing a speaking order.
Key Issues
Whether the lower authorities properly considered the assessee's revised returns and submissions, and whether additions under Section 68 and disallowances of expenses were justified without proper verification and speaking orders.
Sections Cited
68
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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI ABY T VARKEY & SHRI AMITABH SHUKLA
Assessment Years: 2016-17 Precision Hydraulics Private Limited, The Deputy Commissionner of No.83,84 & 117, Income Tax, SIPCOT Industrial Complex, Corporate Circle-5(2) Export Promotion Industrial Park, Chennai. Gummidipoondi, Tiruvallur Dist, Tamil Nadu-601201. [PAN: AADCP7054M] (प्रत्यर्थी/Respondent) (अपीलार्थी/Appellant) अपीलार्थी की ओर से/ Assessee by : Shri Sandeep Pincha, C.A, प्रत्यर्थी की ओर से /Revenue by : Shri N.Rajakumar, Addl.CIT सुनवाई की तारीख/Date of Hearing : 13.05.2025 घोषणा की तारीख /Date of Pronouncement : 16.05.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M :
This appeal is filed by the assessee against the order bearing DIN & Order No.ITBA / NFAC / S / 250 / 2024-25 / 1072408646(1) dated 22.01.2025 of the Learned Commissioner of Income Tax [herein after “CIT(A), National Faceless Appeal Center[NFAC], Delhi, for the assessment years 2016-17.
2.0 The first issue raised by the assessee through its grounds of appeal are regarding the failure of Ld.CIT(A) in not considering the submissions made by the appellant before him . The contest of the assesse is not supported by facts on records. Para 4.1 of Ld.CIT(A) order shows that written submissions filed by the appellant were perused and considered by him. Thus seen, no case of any non-consideration of submission has been borne out from records. The ground of appeal number 1 is therefore dismissed. 3.0 The next issue raised by the appellant through the ground of appeal No.2 is regarding non-consideration of the figures given in its revised returns by the Ld.AO. Short brief factual matrix of the cases is that the assessee had filed to two revised returns after filing the original return of income. The Ld. Council for the appellant has submitted that the Ld.AO took the income figures of the first revised return amounting to ₹2,34,73,190 as against the figure of ₹2,10,39,830 filed in the second revised return. In support of its contentions, the Ld.AR has filed a paper book as evidence. The Ld. DR fairly conceded that the issue can now be addressed at the level of the Ld. AO by way of verification from original records. 4.0 We have heard rival submissions in the light of material available on records. We have noted that a case of reverification of records and taking a decision in accordance with law at the level of Ld.AO has arisen. Page - 2 - of 7 We have also noted that this issue was not raised by the assessee before the first appellate authority. The tribunal rules however, mandate admission of a new ground even if the same was not contested before lower authority. Be that as it may be in the interest of justice, we deem it appropriate to set aside the order of Ld. AO and direct him to verify the figures from original records and take a decision in accordance with law. Due opportunities of being heard would be given. The ground of appeal raised by the assessee is there for allowed for statistical purposes. 5.0 The next issue raised by the assessee through its ground of appeal No.3 is regarding an addition of ₹1,44,13,957 made by the learned assessing officer, invoking provisions of section 68 of the Act. The Ld. Counsel for the assessee submitted that the learned AO has taken a constricted view of the matter by simply recording that the assessee has not provided any break up of liabilities. The Ld. AR has contested that the Ld.CIT(A) confirmed the action of the Ld.AO on incorrect parameters . It is the case of the assessee that the impugned confusion has arisen in the mind of lower authorities as the assessee had re-classified and disclosed a portion of its liabilities of ₹4,35,95,430 as current liabilities , under the head, current borrowings. Ld.Counsel submitted that the impugned current liabilities have been erroneously treated as unexplained cash credits under section 68. The Ld.AR
Page - 3 - of 7 submitted that it had not availed any additional loan during the year under consideration to warrant any addition under section 68.
6.0 Per contra, the Ld.DR supported the order of lower authorities. 7.0 We have heard rival submissions in the light of material available on records. We have noted that the Ld.AO has not passed a speaking order while making the impugned additions. The Ld.CIT(A) has also not given any reasoned findings before confirming the order of the Ld.AO. It is the case of the assessee that the Ld.CIT(A) had asked the Ld. assessing officer to submit a remand report and, even though, no adverse comments were given by the Ld.AO he proceeded to confirm the impugned addition. We have noted that the view of the assessee in respect of non-furnishing of any adverse report by the assessing officer are unfounded. We have noted that in para 4.2 of his order the Ld.CIT(A) has merely recorded that a reference was made to the assessing officer for verification of particulars of appeal and that as no adverse report has been received from the Ld.AO he proceeded with the case for adjudication. The Ld.CIT(A) has merely stated that no report, including an adverse report, has been received from the assessing officer. It is not a case where the assessing officer has submitted a remand report accepting averments made by the assessee in remand proceedings. It is a case where actually no report has been submitted by the assessing Page - 4 - of 7 officer, even though it was requested by the lower appellate authority. Non-submission of remand report by the assessing officer cannot be construed as submission of an “no adverse report”. We find sufficient force in the argument of the assessee regarding the disclosure of certain items in the balance sheet in compliance to accounting standards. We are the considered view that the matter deserves to be remitted back to learned assessing officer. Accordingly, we set aside the order of the lower authorities and direct the Ld. assessing officer to reconsider the entire issue after affording due opportunity of being heard to the assessee and by passing a speaking order, in accordance with law. The assessee shall be bound to comply with all the statutory notices issued by the learned assessing officer and any non-compliance would be adversely viewed. All the grounds of appeal raised by the assessee on this issue are there for allowed for statistical purposes. 8.0 The next issue raised by the assessee through the ground of appeal, number 4 is regarding an addition of ₹ 12,23,615 made by the Ld.AO on account of disallowance of certain expenses. As per the assessment order, assessee had failed to provide supporting details like ledger, bills, vouchers, etc, as a result of which the Ld.AO proceeded to disallow 30% of the expenditure amounting to ₹2,22,05,151/-. In appeal, the Ld.CIT(A) provided part relief to the assessee by holding that as against 30%, a disallowance of 5% would be reasonable in this case. The Page - 5 - of 7. Ld.Counsel for the assessee submitted that the addition confirmed by the Ld.CIT(A) is also wrong.
9.0 Per contra, the Ld.DR supported the order of lower authorities. It was submitted that non-production of requested details has led to the impugned addition and that therefore, the action of lower authorities cannot be questioned. 10.0 We have heard rival submissions in the light of material available on records. We have noted that both the lower authorities have recorded that the assessee has not been submitting requested details for verification. Before us, the assessee has reiterated the arguments taken before the lower authorities. Production of all evidences in respect of claims of an expenditure is Primary responsibility of every taxpayer and the same cannot be loosely brushed the site. We are convinced that non- production of requisite details and supporting evidences, Qua Impugned expenses lies at the core of the controversy. Both the lower authorities have clearly observed that the assessee has not provided requested details. The assessee has not been able to provide during the present proceedings, also any details qua justification of impugned expenses. Consequently, the estimation of 5% allowance made by the Ld.CIT(A) has been found to be reasonable and in order. Accordingly, we are of the opinion that there is no case for any intervention to the order of the Page - 6 - of 7 11.0 In the result, appeal of the assessee is partly allowed. Order pronounced on 16th , May -2025 at Chennai.