2021 (4) TMI 242 - AT - Income Tax

Tax Appeal Emphasizes Evidential Material & Due Process

The Appellate Tribunal partly allowed the appeal, emphasizing the importance of providing proper evidential material and following due process in tax ... Surrender of undisclosed income in post search proceedings - discrepancies with reference to stock physically found at the factory of the assessee vis-à-vis the stock as per stock register was found - head under which the surrender has been made are different than those of declared in the return of income - as per AO assessee fail to file or furnish any transport bills for the goods which are claim to be purchased from M/s. Vishal Traders and M/s. Sanjay Traders - HELD THAT:- AO as well as the CIT(A) has given a clear finding that no evidential material related to the original bills were properly field before the Assessing Officer as well as CIT(A). The so called confirmations and the response to Section 133(6) notices were also not on record. From the assessment order and the order of the CIT(A), it emerges that the assessee has not filed original bills before the Assessing Officer as well as CIT(A). Therefore, it will be appropriate to remand back this issue to the file of the Assessing Officer to examine the original bills and vouchers along with the proper confirmations from the respective parties and thereafter make the adjudication. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Appeal of the assessee is partly allowed for statistical purpose. Issues:Appeal against order dated 29/03/2013 passed by CIT(A)-XXXI, New Delhi for assessment year 2009-10.Analysis:1. The Revenue appealed against the CIT(A)'s order, raising concerns about the rejection of books of accounts under sec. 145(3) and the framing of assessment under section 143(3) instead of section 144 post search action under section 132. The Revenue argued that the additions made on account of differences in purchases were unjustified due to proper accounting in the books of accounts.2. Following a search under section 132, discrepancies in stock were found at the assessee's factory, leading to a surrender of undisclosed income. The Assessing Officer made additions due to discrepancies in stock and rejected the books of account. The CIT(A) upheld the Assessing Officer's decision, prompting the assessee to appeal.3. The assessee contended that explanations and supporting documents were provided during assessment proceedings, disputing the Assessing Officer's findings. The assessee explained the surrender of income and discrepancies in stock, highlighting that the difference was below &8377; 5 lakhs. The assessee argued that the AO miscalculated the difference in stock and failed to consider valid purchase bills and transport receipts.4. The Appellate Tribunal noted the absence of original bills and proper confirmations from relevant parties in the assessment records. Consequently, the Tribunal remanded the issue back to the Assessing Officer to examine the original bills, vouchers, and confirmations, ensuring the principles of natural justice are followed.In conclusion, the appeal was partly allowed for statistical purposes, emphasizing the importance of providing proper evidential material and following due process in tax assessments.