The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) held that the additions made by the Assessing Officer ( AO ) cannot be sustained due to lack of proper persuasion by the appellant before the authorities below.
The appellant-assessee, Rina Egg Centre, filed its return of income on 27.03.2018, declaring its income from wholesale trading of eggs, which was subsequently picked up for scrutiny assessment.
The Assessing Officer made several additions, including Rs. 11.20 Lakh for cash deposited in the bank account Rs. 16,67,83,650 for differences in accounts with Dhanlaksmi Poultries, Rs. 2,63,165 on account of difference in turnover disclosed and gross receipts evidenced from the bank account,) Rs. 13,19,354/- on account of difference in the accounts of appellant and one M/s. Gopal Krishna Traders and M/s. Mulpuri Poultries,Rs. 11,51,363/- on account of disallowances from various expenses claimed and Rs. 28,800 disallowed u/s 40(a)(ia) of Income Tax Act,1961.
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Aggrieved by the additions made by the Assessing Officer, the assessee filed an appeal before the CIT(A), who upheld the findings of the Assessing Officer.
The assessee, being dissatisfied with the order of the CIT(A), filed a further appeal before the Tribunal, raising grounds that the order of the CIT(A) is bad in law and in fact.
Polas Chattopadyay,counsel representing appellant argued that CIT(A) has made an incorrect and unfair decision by agreeing with the Assessing Officer (AO), who added ₹11,20,000 under Section 69A of the Income Tax Act, 1961. The addition was made without considering that the appellant deposited this cash during the demonetization period as per the Reserve Bank of India (RBI) instructions. This cash was part of the appellant’s existing cash in hand as on 08/11/2016, and not from any unaccounted source. Therefore, the addition made by the Assessing Officer is unjustified and should be removed.
Further contended that The CIT(A) erred in confirming the Assessing Officer’s decision to add ₹2,68,165 as profit from undisclosed business, based on incorrect calculations, ignoring inter-bank transactions and inter-branch transfers. Additionally, the CIT(A) wrongly upheld an addition of ₹16,67,83,605 for unexplained investment in undisclosed stocks, based on a reply to a notice, without allowing the appellant to justify the claim or considering that no transactions occurred in the relevant financial year. Both additions are unjustified and should be removed.
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Also,The CIT(A) wrongly confirmed the Assessing Officer’s decision to disallow ₹11,51,363 (5% of ₹2,80,18,601) for transport charges, despite ledger accounts being submitted. Additionally, the CIT(A) unjustly upheld the disallowance of ₹28,800 (30% of ₹96,000) for accounting charges, ignoring that these charges are not subject to tax deduction. Both disallowances are baseless and should be removed.
P.P. Barman,the Department Representative supported the decisions made by the lower authorities and mentioned that some aspects of the case, which seem clearly in favor of the appellant, could have been presented to the Assessing Officer (AO). If presented, the AO would have reviewed the documents and reached a fair conclusion.
The Bench observed that the case was affected by insufficient presentation before the lower authorities. At this point, we are unable to examine detailed account matching, turnover from bank accounts, or vouchers for expenses. However, it is clear that the matter needs to be sent back to the Assessing Officer (AO) to give the appellant an opportunity to prove the authenticity of their income claim.
The Tribunal comprising of Sanjay Garg ( Judicial Member ) and Sanjay Aswathy ( Accountant Member ) directed that The appellant should present all necessary documents to ensure a fair assessment. Therefore, the matter is remanded to the AO for a fresh review, with the appellant given a chance to be heard.
In conclusion, the appeal was allowed for statistical purposes.
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