Loading judgment…
Facts
The assessee, ALPS Tradecom LLP, converted from a private limited company, prepared two sets of accounts. The AO made additions based on alleged differences in purchases/sales and loans/advances/net asset reduction between these two sets of accounts. The CIT(A) upheld these additions.
Held
The Tribunal held that confusion arose due to the presence of multiple sets of accounts. To ensure substantive justice, the matter was remanded back to the AO for a fresh appraisal of the accounts after the assessee presents all facts.
Key Issues
Whether the additions made by the AO and upheld by the CIT(A) were justified, considering the assessee presented two sets of accounts due to conversion from a company to an LLP, and if the matter should be remanded for fresh factual verification.
Sections Cited
250, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
Appearances by: Assessee represented by : Miraj D. Shah, AR Department represented by : Sallong Yaden, Addl. CIT (DR) Date of concluding the hearing : 18.06.2025 Date of pronouncing the order : 25.06.2025 O R D E R
PER SANJAY AWASTHI, ACCOUNTANT MEMBER
The present appeal arises from order u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”), passed by Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi vide order dated 09.08.2024.
1.1 In this case, the Ld. AO made an addition of Rs.1,68,36,550/- on account of alleged difference between the figures of purchase and sales as per the assessee’s own accounts. The second addition of Rs. 15,53,711/- has been made on account of alleged difference between the figure of loans and advances shown and the figure of net asset reduction in his books of accounts.
2.1 Aggrieved with this action of the Ld. AO, the assessee approached the CIT(A) where also he could not succeed as the Ld. CIT(A) affirmed the action ALPS Tradecom LLP (Converted from ALPS Tradecom Pvt. Ltd.) of Ld. Assessing Officer by holding that the books of accounts of the assessee themselves indicated contradictions thereon.
2.2 Further aggrieved, the assessee has approached the ITAT with the following grounds:
“1. For that in the facts and circumstances of the case the assessment order and appellate order passed was in violation of principals of natural justice and also perverse. Hence the same was bad in law and be quashed.
For that in the facts and circumstance of the case the Learned Commissioner of Income Tax Appeals erred in upholding the addition of Rs.1,68,35,550 on account of difference between suppressed sales and inflated purchases. The addition is not called for and hence the same be deleted.
3. For that in the facts and circumstance of the case the Learned Commissioner of Income Tax Appeals erred in upholding the addition of Rs. 15,53,700 on account of difference between net loans/advances and net loan liability for FY 2013-14 and FY 2014-15 as mismatching of Net Asset reduction and net reduction in lability of the assessee. The finding of Learned Assessing officer and upholding the same by the Learned Commissioner of Income Tax Appeals is bad in law and the same should be deleted.
For that in the facts and circumstance of this case, the Ld Assessing Officer be directed that audited accounts be considered for the purpose of assessment proceedings.
5. For that in the facts and circumstances of the case the assessment made u/s 143(3) of the Income Tax Act 1961 was bad in law and hence the appellate order passed by the Ld CIT(A) based on the assessment order is bad in law and be quashed.
For that in the facts and circumstances of the case the Learned Assessing officer issuing the notice in this case did not have jurisdiction over the case, hence the assessment order is bad in law and be quashed.”
Before us, the Ld. AR argued that the assessee had converted its status from a Private Limited Company to LLP and hence prepared two sets of accounts with two balance sheets. It has been averred that this fact was duly brought to the notice of authorities below, but still they chose to take figures from the two sets of accounts and mistakenly worked out irreconcilable differences in them. In conclusion, the Ld. AR fairly submitted that the matter should be remanded back to the Ld. AO for factual verification from the two sets of accounts so that the alleged differences in them could be properly reconciled.
3.1 The Ld. DR relied on the orders of authorities below.
ALPS Tradecom LLP (Converted from ALPS Tradecom Pvt. Ltd.) 4. We have carefully considered the rival submissions and have also gone through the documents before us. It is seen that there is considerable strength in the Ld. AR’s argument that some confusion has arisen due to the presence of multiple sets of accounts. Accordingly, it is felt that in the interest of substantive justice this matter deserves to be remanded back to the file of Ld.AO for a fresh appraisal of the accounts. To this effect, we set aside the impugned order and direct that the assessee must present the full set of facts before the Ld. AO, who will fairly examine the same and arrive at a decision in keeping with the law and facts.
In result, this appeal is allowed for statistical purposes.
Order pronounced on 25.06.2025