M/S. STAR TRACK AGENCY (P) LTD.,KOLKATA vs. ITO, WARD - 3(2), KOLKATA, KOLKATA

by the assessee therein read as under: “1. For that the assessment order is illegal and bad in law. Without issuing any show cause notice the assessment was made u/s 144/147 of the I.T. Act, 1961.

At the time of hearing before the Tribunal, the learned counsel for the assessee has not pressed ground no 1 and 3 raised in this appeal of the assessee. The same are accordingly dismissed as not pressed.

As regards the common issue involved in ground no 2 and 4 relating to the disallowance of 20% out of purchases made by the A.O. and confirmed by the Ld. CIT(A), the material fact of the case relevant to this issue are that the assessee is a company which is engaged in the business of letting out warehouses and trading. The return of income for the year under consideration was filed by it on 30.09.2008 declaring a total income of Rs. 4,48,360/-. In the said return, the assessee company had declared a loss of Rs. 9,25,361/- from the business of trading. During the course of assessment proceedings, the claim of the assessee for the said loss was examined by the A.O. On such examination, he found that the purchases of Rs. 51,72,532/- claimed to be made by the assessee from ‘sundry parties’ were not supported by a proper documentary evidence. The assessee company also failed to produce its books of accounts and furnish the names and complete address of the concerned parties despite sufficient opportunity afforded by the A.O. The assessee company also expressed its inability to produce all the concerned parties before the A.O. for verification. The A.O., therefore, held that the claim of the assessee for purchase of Rs. 51,72,532/- was not verifiable and a disallowance of 20% of such purchases was made by him in the assessment completed under section 144/147 of the Act vide an order dated 30.12.2011.

Against the order passed by the A.O. under section 144/147, an appeal was preferred by the assessee before the Ld. CIT(A). During the course of appellate proceedings before the Ld. CIT(A), it was contended on behalf of the assessee that proper and sufficient opportunity had not been given by the A.O. to support and substantiate its claim for the purchases in question. When a remand report was sought by the Ld. CIT(A) from the A.O. on this aspect, the A.O. furnished the relevant details to show that proper and sufficient opportunity had already been given to the assessee during the course of assessment proceedings to support and substantiate its claim for the impugned purchases. Being satisfied with the remand report submitted by the A.O., the Ld. CIT(A) did not find merit in the contention raised by the assessee that proper and sufficient opportunity had not been given by the A.O. to support and substantiate its claim for the impugned purchases and proceeded to confirm the disallowance of 20% made by the A.O. out of such purchases. Aggrieved by the order of the Ld. CIT(A), the assessee has preferred this appeal before the Tribunal.

I have heard the arguments of both the sides and also perused the relevant material available on record. As submitted by the learned counsel for the assessee, the assessee during the course of appellate proceedings before the Ld. CIT(A) had not only raised the issue of lack of opportunity given by the A.O., but had also made a submission on merit challenging the disallowance of 20% made by the A.O. out of the purchases in question. In this regard, he has invited our attention to a letter dated 06.06.2016 filed before the Ld. CIT(A) (copy at page no 8 Star Track Agency Pvt. Ltd. & 9 of the Paper Book) to show that the details of such purchases amounting to Rs. 51,72,532/- were duly furnished by the assessee giving names and complete address of the concerned parties from whom the said purchases were made. In the said letter dated 06.06.2016, the reason for the failure of the assessee to furnish the said details before the A.O. was also explained by the assessee. Even the copies of bills for the relevant purchases were also filed by the assessee. As rightly contended by him, the issue relating to the disallowance made by the A.O. out of purchases thus was specifically raised by the assessee during the course of appellate proceedings before the Ld. CIT(A) and the relevant details and documents in support of the claim were also filed by him. It appears that the Ld. CIT(A) however did not take cognizance of the same and proceeded to dispose of the appeal of the assessee by deciding only the preliminary issue raised by the assessee about lack of opportunity given by the A.O. Even the learned DR has not been able to dispute this position clearly evident from the record. He however has contended that since the relevant details and documents in support of its claim for the purchases in question were filed by the assessee for the first time before the Ld. CIT(A) and the same were not available before the A.O., an opportunity may be given to the A.O. to verify the same I find merit in this contention of the learned DR. The impugned order of the Ld. CIT(A) is accordingly set aside and the matter is restored to the file of the A.O. for deciding the same afresh after verifying the details and documents filed by the assessee before the Ld. CIT(A) and after giving the assessee proper and sufficient opportunity of being heard.