SHRI PRAVIN BALKRISHNA KHANNA,MUMBAI vs. DY CIT - RANGE-30(2), MUMBAI

Briefly stated, the assessee who is a wholesale dealer in steel tubes/pipes had filed his return of income for A.Y 2012-13 on 28.09.2012, declaring an income of Rs. 1,41,82,226/-. Assessment was thereafter framed by the A.O vide his order passed u/s 143(3) of the Act, dated 27.02.2015 and the income of the assessee was determined at Rs. 1,53,46,870/- after, inter alia, making the following additions /disallowances : Sr. No. Particulars Amount 1. Disallowance of 20% of motor car expenses : (i). Motor car expenses : Rs. 2,87,548/- (ii). Interest on car loan : Rs. 2,48,220/- Shri. Pravin Balkishan Khanna Vs. Dy. CIT, Mumbai A.Y 2012-13 (iii). Insurance on car : Rs. 1,49,815/- (iv). Depreciation on car : Rs.10,59,363/- Rs. 3,48,989/- 2. Difference in AIR information Rs. 4,94,420/-

Aggrieved, the assessee carried the matter in appeal before the CIT(A). However, as neither the assessee nor any of his authorized representative had appeared in the course of the appellate proceedings, therefore, the CIT(A) disposed off the appeal after considering the orders of the lower authorities and the material available on record. The disallowance of motor car expenses was in all fairness scaled down by the CIT(A) to 10%. Also, finding favor with the claim of the assessee that there was an arithmetical mistake as regards the addition that was made by the A.O w.r.t the unrecorded income as per AIR information, the CIT(A) corrected the said mistake and restricted the addition to the correct amount of Rs. 1,98,171/-.

The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. We have heard the ld. Authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find substance in the claim of the ld. Authorized representative (for short “A.R”) that though the assessee had duly participated in the appellate proceedings and had e-filed his written submissions on the web-site of the Income-tax department, however, the CIT(A) had wrongly observed that there was no compliance to the notices issued by his office. Our aforesaid observation is duly supported by the e-proceedings response acknowledgement that was issued by the Income-tax department, Page 2-3 of the Assessee‟s „Paper Book‟ (APB). 5. On merits, we find substance in the claim of the ld. A.R that the addition made by the A.O w.r.t the unrecorded income as per AIR information suffers from certain serious infirmities. As stated by the ld. A.R, and rightly so, the addition made by the A.O towards unrecorded income at Page 4 – Sr. No. 6 (item 206) and Sr. No. 7 (item 223) are not reflected in the assessee‟s AIR information which has only 188 items, Page 27-35 of APB. As regards the addition of the balance amount of Rs. 1,39,171/- the ld. A.R took us through Page 9-10 of the APB and submitted that no addition was called for as regards the said respective amounts. After deliberating at length on the issue in hand, we are of the considered view that though the aforesaid claim of the assessee as regards the addition sustained by the CIT(A) qua the unrecorded income as per AIR information carries substance, but then, the same cannot be accepted on the very face of it and would require necessary factual verification. We, thus, restore the issue to the file of the A.O with a Shri. Pravin Balkishan Khanna Vs. Dy. CIT, Mumbai A.Y 2012-13