2022 (5) TMI 613 - AT - Income Tax

Assessee's Appeal Partly Allowed: Disallowance upheld for some expenses, relief granted for others.

Janpaksh Printing And Publishing Versus Income Tax Officer Ward-1 (1), Jabalpur

Janpaksh Printing And Publishing Versus Income Tax Officer Ward-1 (1), Jabalpur - TMI Issues Involved:1. Non-consideration of the assessee’s reply by the first appellate authority.2. Jurisdictional challenge of the assessing authority.3. Validity of the notice under section 143(2) issued via CASS.4. Territorial jurisdiction of the Assessing Officer.5. Opportunity for compliance with the assessment scheme.6. Disallowance of expenses under 'Other Expenses' (OE).Issue-wise Detailed Analysis:Non-consideration of the Assessee’s Reply:The assessee claimed that the first appellate authority did not consider its reply dated 17.02.2021. Despite submitting the reply late, the assessee argued that subsequent notices of hearing should have allowed for its consideration. However, the appellate authority did not reference this reply in the impugned order. The Tribunal noted that the assessee did not respond to three out of four notices and failed to draw attention to its submission during subsequent notices. The Tribunal concluded that remission to the first appellate authority is only warranted if new arguments or materials are presented, which was not the case here.Jurisdictional Challenge of the Assessing Authority:The first three grounds of appeal challenged the jurisdiction of the assessing authority. The assessee argued that the notice under section 143(2) was invalid as it was issued through CASS, which they claimed was contrary to the provisions of the Act. The Tribunal found that the first appellate authority had considered this ground and dismissed it, stating that the CASS scheme is formulated to encourage credibility and transparency. The Tribunal upheld this dismissal, noting that the assessee did not elaborate on its stand or provide supporting case law.Validity of the Notice under Section 143(2):The assessee argued that the notice under section 143(2) issued via CASS was invalid as the CBDT is not authorized to issue such instructions under section 119(1). The Tribunal examined whether the formulation of guidelines for case selection under CASS was ultra vires the powers of the Board under section 119. The Tribunal concluded that the Board has wide powers under section 119 for the administration of the Act and that the instruction did not require the AO to make an assessment in a particular manner. The Tribunal found no merit in the assessee's argument and dismissed this ground.Territorial Jurisdiction of the Assessing Officer:The assessee contended that the assessment should have been conducted by ITO, Ward-2, Jabalpur, instead of ITO, Ward-1, Jabalpur. The Tribunal noted that the notice under section 143(2) was issued based on the address in the PAN and tax returns, and any objection to jurisdiction should have been raised within 30 days of the notice. The Tribunal found the objection invalid and stated that the matter should be resolved through administrative channels, not appellate procedures.Opportunity for Compliance with the Assessment Scheme:The assessee claimed it was not given an opportunity to comply with the assessment scheme. The Tribunal found this argument baseless, noting that the assessee had opted for electronic assessment after the deadline and that the Board Instruction for electronic assessment applied only to specific cities, excluding Jabalpur. The Tribunal dismissed this ground as misconceived.Disallowance of Expenses under 'Other Expenses' (OE):The assessee's case was selected for scrutiny due to higher OE claims. The AO disallowed 20% of the OE due to the assessee's failure to produce relevant vouchers and books of account. The Tribunal agreed with the AO's exclusion of certain direct trading expenses from OE but upheld the disallowance of the remaining expenses due to lack of evidence. The Tribunal confirmed the disallowance of Rs. 7.56 lakhs and provided partial relief to the assessee.Conclusion:The Tribunal partly allowed the assessee's appeal, confirming the disallowance of certain expenses while providing relief for others. The Tribunal dismissed the other grounds raised by the assessee, finding no merit in the arguments presented. The order was pronounced on May 06, 2022.