2020 (3) TMI 120 - AT - Income Tax

Appeal partly allowed for statistical purposes. Trade payables issue remanded for further examination. Cooperation and documentation emphasized.

The appeal was partly allowed for statistical purposes. The main issue concerning the addition of Rs. 2,02,02,470/- as trade payables was remanded back to ... Order as passed ex-party in violation of the principle of the natural justice - HELD THAT:- It is evident from the above paragraph of the impugned order, that numerous opportunities have been provided by the Learned CIT(A) to the assessee, however, the assessee has avoided the hearings and did not avail the opportunities to represent before the CIT(A). In such circumstances, the action of the CIT(A) in passing the order on the basis of the material on record, cannot be said to be unjustified or in violation of the principle of the natural justice. Accordingly, this ground of the appeal of the assessee is dismissed. Non-speaking and unreasoned - We do not agree with the grounds raised by the assessee. We find that the CIT(A) has decided the issue in para 4.2 of the impugned order and supported his finding with the reasoning, which we will be referring while deciding the ground on merit of the addition. This ground of the appeal of the assessee is accordingly dismissed. Cessation of trading liability so as to apply section 41(1) - Balance-sheets filed by the assessee are neither signed by the Auditor nor by the Director and, therefore, the same are not reliable. The assessee has failed to produce any confirmation to the effect that the assessee received payment from M/s. Omax as interest free unsecured loan. The assessee has neither filed any agreement for obtaining unsecured loan from said party. In the facts and circumstances of the case and in the substantial interest of the justice, we feel it appropriate to restore this matter to the file of the Assessing Officer with the direction to the assessee to produce following documents and direction to the Assessing Officer to carry out enquiries deemed fit and then decide whether the remission of the liability in question is liable to be income under Section 41(1) Since the assessee has not cooperated before the learned First Appellate Authority it is its responsibility to produce all the documents required by the Assessing Officer and cooperate in the proceedings. Thus, ground no. 4 of the assessee is allowed for statistical purposes. Issues Involved:1. Violation of principles of natural justice.2. Non-speaking and unreasoned order.3. Addition of Rs. 2,02,02,470/- as trade payables.4. Charging of interest under sections 234A, 234B, and 234C.Detailed Analysis:1. Violation of Principles of Natural Justice:The assessee claimed that the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] was ex parte and violated the principles of natural justice. The Tribunal noted that the CIT(A) had issued multiple notices to the assessee, which were either not complied with or resulted in requests for adjournments. The Tribunal held that the CIT(A)'s action in passing the order based on the material on record was justified and did not violate the principles of natural justice. Consequently, this ground of appeal was dismissed.2. Non-Speaking and Unreasoned Order:The assessee contended that the impugned order was non-speaking and unreasoned. The Tribunal reviewed the CIT(A)'s order and found that the CIT(A) had provided reasoning for his decision in para 4.2 of the impugned order. Therefore, the Tribunal dismissed this ground of appeal as well.3. Addition of Rs. 2,02,02,470/- as Trade Payables:The main issue was whether the amount of Rs. 2,02,02,470/- transferred from trade payables to general reserve should be treated as income under Section 41(1) of the Income-tax Act, 1961. The assessee argued that this amount was an unsecured loan from M/s Omax and not a trade payable. However, the Assessing Officer (AO) had issued a notice under Section 133(6) to M/s Omax, which confirmed that the amount was related to trading transactions and had been written off before the financial year 2005-06.The Tribunal noted that the assessee failed to provide any confirmation from M/s Omax or any agreement regarding the unsecured loan. The balance sheets provided by the assessee were unsigned and thus unreliable. Given these circumstances, the Tribunal decided to remand the matter back to the AO for a fresh examination. The AO was directed to verify the nature of the transactions and whether the remission of liability should be considered income under Section 41(1). The assessee was instructed to provide certified balance sheets, ledger accounts, confirmations from M/s Omax, and any relevant agreements. This ground of appeal was allowed for statistical purposes.4. Charging of Interest under Sections 234A, 234B, and 234C:This ground was consequential in nature and did not require separate adjudication. The Tribunal did not make any specific ruling on this issue.Conclusion:The appeal was partly allowed for statistical purposes, with the main issue regarding the addition of Rs. 2,02,02,470/- being remanded back to the AO for further investigation. The Tribunal emphasized the necessity for the assessee to cooperate fully in the proceedings and provide all required documentation. The other grounds of appeal were dismissed.