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Income Tax Appellate Tribunal, “B” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश/ O R D E R
PER S. JAYARAMAN, ACCOUNTANT MEMBER:
The assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals)-2, Chennai in dated 23.05.2017 for assessment year 2012-13.
Smt. Mohan Latha Chandra, the assessee , is a Proprietrix of Kanya Beauty Parlour having branches at various places in Chennai and Bangalore. She is also a Director in M/s Spalon India Pvt, Ltd., which is also in the business of running beauty parlours. Based on the information that the charges for the beauty services were exorbitant but the receipts shown in her return are comparatively very low, the net profit declared is only 2.62% of the turnover which is also very low for a service provider etc, a Survey was conducted in the business premises of the assessee on 10.5.2013 by the Investigation Wing of the Department to verify the correctness of the accounts maintained by the assessee. In the course of Survey, certain books and documents were impounded and the back-up of all the systems available in the Accounts Department were taken. A thorough study of them revealed that a very systematic and detailed procedure of accounting has been followed by the Kanya group, culminating in summarizing of the receipts pertaining to the various outlets, in a single file named ‘Outlet Metrics’, The Assessing Officer found that year after year, starting from FY 2008-09 to FY 2011-12, there was a clear difference, totalling Rs. 8.69 crores in all, between the turnover as reflected in the outlet metrics and in the returns of income filed by the assessee. For FY 2011-12 pertaining to AY 2012-13 i.e. the year in question, this difference came to Rs. 1,18 crores. Besides, a difference (i.e. excess claim) of Rs. 1.46 crores in the expenditure such as salaries, rent and staff welfare for FY 2011-12 in the return of income, as compared to the expenses reflected in the ‘outlet metrics’, was also found. Thus, while making the assessment for assessment year 2012-13, based on the material /documents /information found during the course of survey, concluded that there has been suppression of receipts and in view of the assessee’s admission to offer the difference in receipts as her income in the respective assessment years, the AO added back a sum of Rs. 1.18 crores to the returned income treating it as an unaccounted income.
Aggrieved, the assessee filed an appeal before the CIT(A) . The CIT(A) upheld the addition. Against that order, the assessee filed this appeal.
During the hearing, it was submitted, inter alia, that certain materials were not shown to the assessee etc. In this regard, the DR submitted that the AO complied with the directions of the Hon’ble ITAT, and invited our attention to the relevant portion of the AO’s letter dated 10.12.2018, which is extracted as under:
“ The Hon’ble ITAT had directed the revenue to open the hard disk in presence of the assessee. Accordingly letters dated 30.08.2018 and 06.12.2018 were issued to the assessee. In response, Smt. Latha C. Mohan attended this office on 07.11.2018. The impounded hard disk was opened in the presence of two witnesses. A print out of the excel sheet taken from the hard disc which was relied upon in the assessment order has been furnished to the assessee. Two certified copies of the said excel sheet has been enclosed herewith. Further, it is submitted that a mirror copy of the entire hard disk which was impounded during the course of the survey has been furnished to the assessee.”
However, the AR pleaded that copies of sworn statements recorded from the assessee was not furnished and hence, the assessee could not defend her case professionally. The Ld DR opposed it from the orders of the lower authorities.
We heard the rival submissions and gone through relevant material. The assessee pleads that the impugned additions were made based on unreliable material, statements etc, while the Revenue supports its stand from the orders of the lower authorities. Since the additions are claimed to have been made on the basis of impounded material etc, on the facts and circumstances of this case , we deem it fit to remit the issues back to the AO for a fresh examination with a direction to the AO to specify the issues on which the impugned additions are being made to the assessee , furnish copies of all relevant material, in accordance with established procedure, on which he relies in support of his stand to the assessee, afford adequate opportunity to the assessee and then decide the issues in accordance with law. The assessee shall lay all materials in support of her stand and comply with the requirements of the AO in accordance with law. The AO is also at liberty to conduct appropriate enquiry as deemed fit, however, shall
:-5-: afford adequate opportunity to the assessee on the material etc which would used against her, if any. Thus, the assessee’s appeal is treated as allowed for statistical purposes.
In the result, the assessee’s appeal is treated as allowed for statistical purposes.
Order pronounced on Thursday, the 27th day of December, 2018 at Chennai.