RAJAT BHANDARI,KOLKATA vs. ITO, WARD-62(3), KOLKATA. , KOLKATA

The assessee in this appeal is aggrieved by the action of the ld. CIT(A) in confirming the addition made by the Assessing Officer of Rs.24,19,646/- on account of disallowance of miscellaneous expenditure claimed by the assessee in the return of income.

The Assessing Officer disallowed the aforesaid amount on account of miscellaneous expenditure observing that the assessee had failed to Assessment Year: 2017-18 Rajat Bhandari provide the necessary details and evidences relating to the aforesaid claim of miscellaneous expenditure.

Before the ld. CIT(A), it was submitted that the aforesaid expenditure was not miscellaneous expenditure, rather, it was relating to the business of the assessee. That even the receipts shown as ‘income from other sources’ were, in fact, sale proceeds of the assessee. However, the ld. CIT(A) also dismissed the appeal of the assessee for want of supporting documentary evidences/vouchers etc.

Being aggrieved by the said order of the ld. CIT(A), the assessee has come in appeal before us. The ld. counsel for the assessee has made the following submissions:

“The Assessee is an individual and derives income from salary and other sources. The Assessee has filed its return of Income u/s 139 of the Income Tax Act 1961 for AY 2017-18 on 28/03/2018 showing returned Income/(Loss) as NIL. Subsequently the case of the assessee is selected under CASS for Limited Scrutiny having reason of Scrutiny "as deduction against income from other sources" and accordingly issued notice u/s 143(2) on 13.08.2018 which were duly served and complied with. Thereafter the ld. A0 have issued notices) u/s 142(1) from time to time which were also duly complied with by the assessee. The assessee in its submission before the Ld. A0 and also in the Statement of Facts before the CIT(A) stated that:

The Tax practitioner, While filing the return of Income, Shown Sale of products as MISCALLANEOUS RECEIPT (Rs. 1865057/-) and The Purchase Expenses along with Other Expenses amounting Rs.25,81,367/- Shown as "MISCELLANEOUS EXPENSES" in DEDUCTIONS UNDER SECTION 57 under the head "Income from other sources"

We have heard the rival submissions and perused the materials available on record. The ld. AR, as per the above reproduced submissions, has contended that in this case the tax practitioner of the assessee has inadvertently shown the business receipt as ‘income from other sources’ and the entire expenditure incurred towards purchases has been shown as ‘miscellaneous expenditure’ and owing to the aforesaid inadvertent mistake, the assessee has been burdened with the impugned additions. In our view, the interests of justice will be well- served if the assessee is given an opportunity to explain the aforesaid contentions before the Assessing Officer, which will be subject to verification by the Assessing Officer. In view of this, the impugned order of the ld. CIT(A) is set aside and the matter is restored to the file of the Assessing Officer for de novo assessment.