AO rejects books of account u/s 145(3) of the Income Tax Act in absence of documents: ITAT directs CIT(A) decide afresh [Read Order]
The assessee has filed evidence as additional evidence before me and requested to remit the matter back to the file of Assessing Officer
In a recent case, the Kolkata bench of the Income Tax Appellate Tribunal (ITAT) directed the Commissioner of Income Tax Appeal (CIT(A)) to decide afresh on the issue of rejection of books of account under section 145 (3) of the Income Tax Act, 1961, in the absence of documents.
Chinmastika Sidhartha (JV), the assessee, challenged the order of Addl./Joint Commissioner of Income Tax (Appeals)-2, Noida dated 30th August 2024 passed for Assessment Year 2015-16.
The assessee derives income from contract work. The appellant-assessee is a joint venture of Chinamastika Construction and Developers Pvt. Limited (mentioned as 1st party) and Siddharth Construction & Trading Pvt. Ltd. (mentioned as 2nd party) The assessee filed its return of income on 19.01.2016 showing total income of Rs. NIL. The case was processed under section 143(1) of the Act and selected for scrutiny through CASS.
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Accordingly notice under section 143(2) of the Act was issued by the Assessing Officer on 29.07.2016 and served upon the assessee. In response to the notice, ld. Advocate on behalf of assessee produced details and documents with written submission. On perusal of the return of income, it is seen that the assessee has received an amount of Rs.2,36,37,299/- by way of contract receipt and from the audit report of AOP, it is seen that the assessee had paid the amount of Rs.2,30,93,711/- to the members of AOP and amount of TDS on the aforesaid amount was Rs.5,43,658/-.
The total amount of payment aggregated to Rs.2,36,37,299/-. In the audit report of the assessee AOP in Form No. 3CB in Column 9, the profit-sharing ratio of two persons have been shown as 97% and 3%. In the audit report vide clause 23, the contract payment to both the members has been shown as Rs.2,24,00,832/- (Rs.. 2,29,28,180/- minus TDS Rs.5,27,348/-) to first party and Rs.6,92,809/- (Rs.7,09,119/- minus TDS Rs.16,310/-) to second party.
As the assessee failed to produce the relevant details and documents in support of the books of account of JV, therefore, there was no alternative in the hands of Assessing Officer but to reject the books of account of the assessee under section 145(3) of the Income Tax Act. Assessing Officer estimated the net profit of JV @ 6% of the total contract, which comes to Rs.14,17,262/- and added to the total income of the assessee. Being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals).
The contention of the Counsel for the assessee is that the Addl./JCIT(Appeals) dismissed the appeal of the assessee exparte without going into the merit of the case. Counsel therefore, pleaded to set aside the order of Addl./JCIT(Appeals).
On the other hand, the Departmental Representative submitted that sufficient opportunity was being provided to the assessee but the assessee failed to appear before the CIT(Appeals) as well as to produce the relevant supporting documents in support of its claim. Therefore, the CIT(Appeals) has no other option except dismissing the appeal and he pleaded to uphold the order passed by the Addl./JCIT(Appeals).
Since the assessee has filed evidence as additional evidence before me and requested to remit the matter back to the file of the Assessing Officer to decide the issue afresh and to examine these documents.
The Departmental Representative did not raise any objection if the matter was remitted back to the file of the Assessing Officer to decide it afresh.
The single bench of Duvvuru RL Reddy, Vice-President (KZ) remitted the matter back to the file of Assessing Officer with a direction to dispose of the appeal without any inference on the observations of earlier order passed by him.
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