SHRI RUSHANG RAJNIKANT MANIAR,,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD-11(2),, AHMEDABAD

The assessee has raised following grounds of appeal:- ITA No. 2048/Ahd/2016 “(1)Ld. CIT(A) -5 has erred in facts and in law in accepting remand report of Ld. Assessing officer without appreciating additional evidence and mechanically accepting version of Ld. Assessing officer in remand report. (2)Ld. CIT(A)-5 has erred in facts and in law in accepting version of assessing officer in remand report even though said remand report is silent about mode of verification of interest amount and other expenses with bank statements;

The brief fact of the case is that the assessee has filed return of income declaring income of 165070/- on 30th October, 2002. Subsequently, the return of income was selected under scrutiny by issuing of notice 143(2) of the act on 23rd October, 2003. During the course of assessment proceedings, the assessing officer has submitted details of expenditure incurred as under:- 1. Telephone Expenses Rs.24608/- 2. Depreciation Rs. 18496/- 3. Petrol Expense Rs.15800/- 4. Interest Expense Rs.24800/- Total Rs.83704/- The assessing officer has stated that assessee has debited total expenses of Rs. 9,34,930/- but he has not submitted the detail of remaining expenditure due to failure of hard disc of computer. The assessing officer has not accepted the explanation of the assessee and added the 100% expenses of Rs. 8,55,226/ after deducting expenses of Rs.83,704/ out of total expenses of Rs.9,34,930- to the total income of the assessee.

Aggrieved assessee has filed appeal before the ld. CIT(A) who has dismissed the appeal of the assessee holding that assessee was unable to furnish the other details before the assessing officer. Thereafter the assessee has filed appeal before the ITAT, Ahmedabad. The Co-ordinate Bench of the ITAT Ahmedabad vide ITA No. 3555/Ahd/2007 dated 8th October, 2010 has held that the order of the ld. CIT(A) was an ex-parte order, therefore, the appeal was remitted back to the file of ld. CIT(A) for re-hearing after providing reasonable

We have heard the Ld. DR and perused the material on record. The coordinate bench of the ITAT Ahmedabad vide ITA 3555/Ahd/ 2007 dated 8 October 2010 has held that the learned CIT (A) has decided the appeal in the case of the assessee on ex parte order therefore the matter was set aside to the file of the Commissioner of income tax appeal for deciding the appeal a fresh after providing adequate opportunities of heating to the assessee. The learner Commissioner of income tax appeal has re adjudicated the appeal of the assessee vide order dated 31st 2016 holding that during the course of appellant proceedings the assessee had submitted additional evidences which were forwarded to the assessing officer and assessing officer was of the opinion that on the basis of evidences produced by the assessee genuineness and creditworthiness of the creditors cannot be proved. The learner Commissioner of income tax appeal has accepted the finding of the assessing officer by deleting the addition to the extent of Rs.4,7,025 and confirmed the remaining additions. After perusal of the above facts and material on record we observe that learned Commissioner of income tax appeal is not justified in disallowing the expenses as suggested by the assessing officer without giving any specific findings and without disproving the correctness of the documents and materials furnished by the assessee during appellant proceedings before him. It is undisputed fact that assessee could not produce books of account because of corruption in hard disk of computer, however, the assessee has produced vouchers, bank statements etc. It is also demonstrated by the assessee that most of expenditures have been paid by way of account payee cheques. It is also stated that assessee has produced all invoices and vouchers paid by cash for verification. In respect of interest payable to the depositors

In the result, the appeal of the assessee is partly allowed.

The assessee has raised following grounds of appeal:- ITA No. 2049/Ahd/2016 “(1)Ld. CIT(A)-5 has erred in facts and in law in treating additions income in assessment order as concealment by accepting remand report of Ld. Assessing officer without appreciating additional evidence and mechanically accepting version of Ld. Assessing officer in remand report. (2)Ld. CIT(A)-5 has erred in facts and in law in accepting version of assessing officer in remand report even though said remand report is silent about mode of verification of interest amount and other expenses and said remand report at no stage record finding of concealment. (3)Ld. CIT(A)-5 has erred in facts and in law disregarding additional grounds preferred by appellant against remand report by Ld. A.O in appeal against assessment order u/s. 143(3) of the I.T. act,1961; adjudication of said grounds on merits ought to have no finding of concealment. (4)Ld. C.I.T. (A)-5 has erred in facts and in law that though there is no satisfaction by Ld. A.O. in remand report or fresh show-cause notice by C.I.T.(A) hence prima-facie there is complete absence of satisfaction as to concealment by assessee and still penalty has been confirmed.”

All the grounds of appeal are inter-connected to the common issue of confirming the penalty levied by the assessing officer u/s. 271(1)(c) of the act to the amount of Rs. 8,51,226/-.

The assessing officer has disallowed the claim of expenses of Rs. . 8,51,226/- as the assessee failed to furnish the detail due to failure of hard disk of computer as elaborated supra in the order pertaining to the quantum addition in the case of the assessee . On appeal, the ld. CIT(A) has sustained the said addition. During the course of penalty proceedings, the assessee has explained that he has not concealed any particulars of income and nor furnished inaccurate particulars of income. The assessing officer has not agreed with the explanation of the assessee and levied penalty u/s. 271(1)(c) of the act to the amount of Rs. 2,60,480/-. Thereafter, the ld. CIT(A) vide his order dated 14th May, 2017 has deleted the penalty levied by the assessing officer. However, the revenue has filed appeal before the ITAT Ahmedabad against the order of ld. CIT(A) deleting the penalty levied by assessing officer. The Co-ordinate Bench of ITAT vide ITA 2537/Ahd/2009 dated 7th June, 2011 has restored the penalty matter to the file of ld. CIT(A) with a direction to decide the issue u/s. 271(1)(c) after he disposed

We have heard the rival conditions and perused the material on record. It is undisputed fact that the assessee could not produce the relevant accounts because of corruption in the hard disk of the computer. However the assessee has produced all the relevant bills, vouchers, copies of account payee cheques, confirmation letters, copies of bank statement etc. We have considered that quantum addition on the basis of which the impugned penalty levied has been restricted to 40% of the total expenditures for want of proper verification on estimation basis as adjudicated vide ITA 2048 supra in this order. The assessing officer has not done any verification /investigation to disprove these basic and primary material furnished by the assessee because of failure of hard disk of the compute in which the required books of accounts were maintained. In the light of the above facts and circumstances we don't find any justification for levying the penalty in the case of the assessee, therefore, the appeal of the assessee is allowed.

In the result, the appeal of the assessee is allowed.