2023 (2) TMI 557 - AT - Income Tax

Appeal dismissed for delay; income issue remanded; expenses appeal allowed for verification

Nirav Harendrabhai Kanbar (Prop. Of Heena Electronics) Versus The ITO, Ward-1 (4) Dwarka

The ITAT Rajkot dismissed the appeal due to delay in filing, as the explanation provided was deemed insufficient. The Tribunal remanded the issue of ... Addition for the difference between income as per books and income as reflected in 26AS - Disallowance being 20% of the expenses claimed by the appellant - Assesseee submitted that addition on account of reconciliation in respect of commission income earned by the assessee is also fully explained and if given an opportunity, the assessee shall prove the genuineness of all the expenses claimed in the return of income - HELD THAT:- Assessee, both during the course of assessment and appellate proceedings displayed a non-cooperative attitude, as a result of which the orders by the AO and Ld. CIT(Appeals) had to be passed only on the basis of material available on record in absence of any corporation forthcoming on the part of the assessee. Accordingly, in interest of justice, we are restoring the matter to the file of AO for necessary verification, subject to assessee paying nominal cost of 5000/- to be paid in the “Prime Minister Relief Fund” in view of the facts narrated above. A ppeal of the assessee is allowed for statistical purposes. Issues:1. Delay in filing appeal and condonation of delay.2. Addition of Rs. 37,000 for income discrepancy.3. Disallowance of Rs. 9,96,586 as expenses.Issue 1: Delay in filing appeal and condonation of delayThe appeal arose from an order of CIT(A) related to the assessment year 2016-17 under the Income Tax Act, 1961. The assessee had raised grounds challenging the rejection of the appeal due to a delay in filing. The assessee cited a medical emergency as the reason for the delay, but the CIT(A) found the explanation vague and lacking supporting evidence. The CIT(A) noted that the appellant failed to provide specific details in the prescribed form for condonation of delay. Despite the appellant's contentions, the delay was not condoned, leading to the dismissal of the appeal.Issue 2: Addition of Rs. 37,000 for income discrepancyThe Assessing Officer (AO) made an addition of Rs. 37,000 to the income of the assessee due to a variance between the income as per books and the income reflected in Form 26AS. The AO's decision was challenged by the assessee, arguing that the addition was made on an estimated basis. However, the Tribunal observed the non-cooperative attitude of the assessee during the assessment and appellate proceedings, leading to decisions based solely on available records. In the interest of justice, the Tribunal decided to remand the matter back to the AO for further verification, allowing the assessee an opportunity to substantiate the genuineness of the expenses claimed.Issue 3: Disallowance of Rs. 9,96,586 as expensesAnother ground of appeal raised by the assessee was the disallowance of Rs. 9,96,586, representing 20% of the expenses claimed. The AO had disallowed this amount, which was challenged by the assessee. The Tribunal noted the lack of cooperation from the assessee throughout the proceedings but decided to give the assessee a chance to prove the legitimacy of the claimed expenses. Consequently, the Tribunal allowed the appeal for statistical purposes and directed the matter back to the AO for further examination, subject to the assessee paying a nominal cost of Rs. 5000 to be donated to the Prime Minister Relief Fund.In conclusion, the ITAT Rajkot allowed the assessee's appeal for statistical purposes, remanding the issues of income discrepancy and disallowed expenses back to the Assessing Officer for further verification. The Tribunal emphasized the importance of cooperation from the assessee in tax proceedings and directed the assessee to make a charitable donation as a nominal cost.