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Facts
The assessee company, engaged in manufacturing and sale of tea, declared a loss for AY 2015-16. The assessment was selected for scrutiny due to a large increase in sundry creditors and a significant difference in the written down value (WDV) of assets.
Held
The Assessing Officer made additions on account of suppression of asset value and unverified creditors. The CIT(A) upheld these additions. The Tribunal restored the appeal to the Assessing Officer for re-examination.
Key Issues
Whether the Assessing Officer correctly rejected the assessee's revised calculation of depreciation and reconciliation statement, and whether the additions made were justified.
Sections Cited
250, 143(3)
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Income Tax Appellate Tribunal, “A” BENCH KOLKATA
Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey
order
: December 10, 2025 ORDER
Per Pradip Kumar Choubey, Judicial Member:
This appeal filed by the assessee is directed against the order dated 29.07.2025 of the National Faceless Appeal Centre (hereinafter referred to as the “CIT(A)”) passed u/s 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).
Brief facts of the case are that in this case, the assessee is a resident company deriving income from the manufacture and sale of tea. For A.Y 2015-16, the assessee declared a loss of Rs. 2,35,697/- in its return of income and the return was selected for scrutiny under CASS on account of (a) large increase in the sundry creditors and reduction in business income in the current year vis-à-vis that of the preceding year and (b) huge difference between opening written down value (WDV) of current year and closing WDV of the preceding year in schedule DPM. During the course of assessment proceedings, notices were issued by the A.O seeking relevant details such as list of sundry creditors with Chiranjilal Tea Company Pvt. Ltd complete postal addresses, reasons for the huge increase in the balances and depreciation charts for A.Y 2015-16 and 2015-16. Though the appellant furnished details like audited accounts, bank statements, list of sundry creditors etc, there was considerable delay on the part of the appellant in submitting these details. After considering the submissions made by the assessee, the Assessing Officer held that the assessee failed to furnish a satisfactory explanation regarding discrepancy in depreciation and was also unable to establish the genuineness of its creditors. Accordingly, the Assessing Officer made additions of Rs.72,97,419/- on account of suppression of asset value and income and Rs. 61,54,025/- on account of unverified creditors, to the returned loss of Rs. 2,35,697/- after allowing credit for the brought forward losses of earlier years by assessing total income of the assessee at Rs. 88,39,915/-.
Aggrieved by the said order, the assessee preferred an appeal before the ld. CIT(A) wherein the appeal has been dismissed by upholding the addition of Rs.72,97,419/- as done by the Assessing Officer on account of difference of closing WDV as on 31.03.2014 and the opening WDV as on 01.04.2014.
Aggrieved and dissatisfied, the assessee has come in appeal before us. The ld. AR submitted that the ld. CIT(A) while dismissing the appeal of the assessee vide para 9.3.1 has observed as under:
“9.3.1. In this ground, the appellant has challenged the addition of Rs. 72,97,419/-made on account of discrepancies in depreciation, by claiming that disallowance was done without considering the reconciliation statement submitted in this regard. The appellant has explained that the reason for the variance between the opening WDV of current year and closing WDV of preceding year in schedule DPM was on account of erroneous computation by its accountant as per old method instead of the modified method of calculation of depreciation as mandated in revised provisions of Companies Act 2013, applicable with effect from the year under consideration. On being confronted about the said mistake by Ld. AO during the course of scrutiny proceedings, the appellant submitted a 2 Chiranjilal Tea Company Pvt. Ltd revised Balance Sheet with correct statement of calculation of depreciation before the Ld. AO. The appellant has claimed that despite submitting a revised calculation of depreciation along with revised balance sheet, duly signed by the statutory auditor, the same was wrongly rejected by the A.O and the entire depreciation was added to its income in an arbitrary manner and on the basis of a hypothetical calculation. The appellant has averred that since it did not have any mala fide intent of evading legitimate taxes, the rejection of its revised calculation of depreciation and reconciliation statement and contention regarding under-statement of its income is unjustified and bad in law.” 4.1 The ld. AR submitted that the ld. CIT(A) has clearly stated that the appellant has claimed that despite submitting revised calculation, Assessing Officer was wrongly rejected the revised calculation of depreciated along with revised balance sheet and the Assessing Officer arbitrarily added the entire depreciation to the income of the assessee. The ld. AR prayed for one more opportunity by restoring the appeal of the assessee to the file of the Assessing Officer for fresh consideration by affording opportunity to the assessee of hearing.
The ld. DR did not raise any objection if the matter is remitted back to the file of the Assessing Officer.
After hearing the submissions of the counsels of the respective parties and perusing the orders of the lower authorities, it appears to us that the Assessing Officer made the addition of Rs.72,97,419/- on account of difference of closing WDV as on 31.03.2014 and the opening WDV as on 01.04.2014. We find that the assessee explained before the Assessing Officer that the reason for the variance between the opening WDV of current year and closing WDV of preceding year in schedule DPM was on account of erroneous computation by its accountant as per old method instead of the modified method of calculation of depreciation as mandated in revised provisions of Companies Act 2013, applicable with effect from the year under consideration. We also find that in this respect, the assessee submitted a revised Balance Sheet with correct statement of calculation of depreciation duly signed by the statutory 3 Chiranjilal Tea Company Pvt. Ltd auditor but the same was not accepted by the A.O. We further find that the ld. CIT(A) in his order has mentioned that the entire depreciation was added to the income of the assessee in an arbitrary manner by the Assessing Officer. Considering the above facts and the request of the ld. AR and in the interest of substantive justice, we restore the appeal of the assessee to the file of the Assessing Officer with the direction to re- examine the matter afresh after affording sufficient opportunity to the assessee of hearing and examining the explanations and documents submitted by the assessee. The assessee is directed to fully cooperate in the remand proceedings by submitting all evidences/documents and if necessary, the assessee may file new evidences u/r 46A of the I.T. Rules to substantiate its case.
In the result, the appeal of the assessee is allowed for statistical purposes.
Kolkata, the 10th December, 2025.