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Facts
The assessee, a firm, filed its return of income for AY 2015-16. The case was selected for limited scrutiny regarding differences in sales turnover and interest income. The Assessing Officer (AO) made additions, which were confirmed by the CIT(A). Subsequently, a PCIT order under Section 263 directed a fresh assessment, leading to higher additions.
Held
The Tribunal noted that the AO and CIT(A) had not properly considered the assessee's submissions regarding sales differences and interest income. Therefore, the matter was remanded back to the AO for proper adjudication on merits, ensuring the assessee is given an opportunity of hearing.
Key Issues
Whether the lower authorities properly adjudicated the additions made on account of differences in sales turnover and interest income, and whether principles of natural justice were followed.
Sections Cited
263, 143(3), 142(1), 234A, 234B, 234C, 234D, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH
Before: Dr. BRR Kumar & Ms. Suchitra Kamble
आदेश/ORDER
Per Suchitra Kamble, Judicial Member:
This is an appeal filed against the order dated 09-02- 2024 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2015-16.
The grounds of appeal
are as under:- “1. The Ld. CIT(A) has erred in law and on facts of the case in confirming addition of Rs. 1,38,05,007/-made by Ld. AO on account of difference in sales between sales register and sales reflected in return of income.
2. Both the lower authorities have failed to appreciate the accounting treatment of sale of export incentives. The difference of 3. Both the lower authorities have failed to understand the sales register furnished by the appellant. The sales register consists of indirect taxes (VAT & CST) on sales of Rs. 3,39,966/- which does not represent income. Further, such sales register does not contain credit notes of Rs. 6,120 which needs to be deducted in arriving at correct sales figure.
4. The Ld. CIT(A) has erred in law and on facts of the case in confirming addition of Rs. 1,83,105/- made by Ld. AO on account of interest on fixed deposit which has already been offered to tax in preceding years.
5. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed.
6. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in levying interest u/s. 234A/B/C/D of the Act.
7. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of Ld. AO in levying penalty u/s. 271(1)(c) of the Act.
8. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal.
Total tax effect Rs. 41,96,434/-”
The assessee is a firm and filed return of income for assessment year 2015-16 on 23-09-2015 admitting total income of Rs. 2,02,39,390/-. The case was selected for limited scrutiny relates to sales in sales registered difference of Rs. 1,38,57,00/- in sales turnover and the interest shown at Rs. 7,135/- in respect of interest received on Dena Bank FD at Rs. 1,90,240/-. Assessment was completed u/s. 143(3) on 11-12-2017 by accepting the returned income to Shyam Industries, A.Y. 2015-16 Rs. 2,02,39390/-. Later on after scrutiny of the assessment records by the PCIT on the very same issue, the PCIT passed order u/s. 263 of the Act dated 30-03-2021 directing the Assessing Officer to make fresh assessment. The Assessing Officer issued notice u/s. 142(1) of the Act on 28-01-2022 to verify the issues pointed out by the PCIT. The assessee filed responses to the notices but the Assessing Officer has not taken cognizance of the same and passed assessment u/s. 143(3) r.w.s. 263 of the Act on 30-03-2022 thereby determining the taxable income at Rs. 3,42,27,500/- as against returned income of Rs. 2,02,39,390/-.
Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) has dismissed the appeal of the assessee.
The ld. A.R. submitted that the matter be remanded back as the Assessing Officer as well as CIT(A) has not taken cognizance of the issue involved in the appeal as well as the details filed by the assessee.
The ld. D.R. relied upon the assessment order and the order of the CIT(A).
We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the Assessing Officer as well as the CIT(A) has not taken the cognizance of the assessee’s submission at Annexure 2B as well as the details determining the Shyam Industries, A.Y. 2015-16 difference of sales registered and sales disclosed in the return of income as well as the details related to the interest income derived by the assessee on FD kept in Dena Bank. Therefore, it will be proper to remand back this matter to the file of the JAO/A.O. for proper adjudication of the issues on merit as per provisions of Income Tax Act. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice.
In the result, the appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 13-05-2025 Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 13/05/2025 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद