DHANRAJ R PAREKH,MUMBAI vs. INCOME TAX OFFICER 20(1)(4), MUMBAI

The grounds of appeal are in respect of various additions sustained by the ld. CIT(A) for want of proper details.

Brief facts of the case are that Assessing Officer (A.O. for short) in this case made the impugned additions primarily on the ground that details were not provided by the assessee’s counsel. In this regard, we may refer to the assessment order dealing with the addition as under: 3. The assessee is trading in ferrous and non ferrous metal under the name and style of M/’s. Rajsuri Metal Industries. 3. As per the show cause notice dated 11.03.2015, the assessee was requested to submit details of the sundry creditors as follows: a) Akash Steel Rs.35,41,168/- b) Atalas International Rs.16,96,228/- c) Keshav Industries Rs.20,76,284/-

Upon the assessee’s appeal, the ld. CIT(A) dismissed the assessee’s appeal also on the ground that the assessee’s counsel has not properly appreciated and canvassed the issue of additions. We may refer to the order of ld. CIT(A) as under: 5. Decision: I have carefully considered the matter and perused the material before me. I find that all the grounds are against what the appellant claims to be disallowance of bogus purchase by the A.O. I find from the assessment order that no such disallowance has been made. The A.O. has made addition towards unproved sundry creditors, unproved unsecured loans and interest disallowance. I also find from the grounds of appeal that no challenge is made against the disallowance of interest and addition of unproved loans. 5.1 Ground 1: This is directed against the action of the A.O. in adding back the closing balance of sundry creditors as no confirmation regarding the transaction were filed before him. In appeal, the appellant states that these creditors are relating to parties from whom purchases were made. He states that these parties were held as bogus suppliers by the Sales Tax Dept. He therefore requests for addition of a reasonable profit % of 12.5% of these bogus purchases. However I find that this issue does not emerge out of the assessment order. In the assessment, the A.O. has questioned the appellant on the genuineness of creditors and not the purchases. The appellant was specifically required to produce confirmations from these parties, and admittedly the appellant could not do so. Before me also instead of addressing the addition made towards unproved creditors, the appellant would have me believe that these are bogus purchases. This claim is made before me without any proof or substantiation. No confirmations from tehse creditors were filed before me also. In the circumstances, I am constrained to hold that the appellant cannot produce proof these creditors as genuine and therefore I uphold the action of the A.O. in making an addition of Rs.1,32,44,576/- on this count. Ground 1 is dismissed.

Against the above order, the assessee is in appeal before us.

We have heard both the parties and perused the records. Learned counsel of the assessee submitted that as it is evident from the orders of the authorities below that the earlier counsel has not represented the assessee properly and hence this has led to the additions which is not warranted as all the assessee details are available with the assessee.

The ld. Departmental Representative (ld. DR for short) did not have any objection to this proposition.

Upon careful consideration we find considerable cogency in the submission of the learned counsel of the assessee. We also note that the A.O. has not properly adjudicated the issues. He has simply added the various items for which he is writing in the assessment order that he has sought details and the same are not provided. What is the impact on the assessment of the non-provision of the details has been simply stated by the assessing officer by making the additions. These additions include sundry creditor and loans. Under what provision of law the assessing officer is making the additions as to whether he’s invoking is section 41(1) or section 68 is not at all specified. It is incumbent upon the assessing officer to mentioned as to whether the ingredients mentioned in the particular section warranting the addition is satisfied or not. Whether the assessing officer shall make the best judgment assessment in absence of the necessary details is also not discussed in the orders of authorities below. In this view of the matter, in our considered opinion, interest of justice will be served if the issue is remitted to the file of assessing officer. Assessing officer is directed to consider the issue afresh after giving the assessee proper opportunity of being heard. Learned counsel of the assessee has undertaken to provide full cooperation to the assessing officer in this regard.

In the result, this appeal by the assessee stands allowed for statistical purposes.