2000 (12) TMI 873 - AT - Income Tax

Issues Involved:
1. Gross profit addition and various additions under section 68.
2. Addition under section 43B.
3. Treatment of suspense account.
4. Disallowance of various expenses.
5. Grant of registration to the firm.

Issue-wise Detailed Analysis:

1. Gross Profit Addition and Various Additions under Section 68:
The assessee challenged the gross profit addition of Rs. 5,25,075, arguing that day-to-day quantitative records were maintained and detailed in the audit report under section 44AB. The assessee also contested various additions under section 68, including amounts from K.M. Enterprises (Rs. 5,02,000), Daxaben B. Patel (Rs. 5,14,447), Binaben B. Patel (Rs. 1,50,000), Syntex Dyechem (Rs. 3,27,000), and Minal A. Patel (Rs. 1,95,000), asserting that these deposits were genuine and made through cheques. The assessee further disputed an addition of Rs. 5,45,657 from Kotak Mahindra Finance Ltd. and a difference of Rs. 1,68,000 on account of balance confirmation by J.R. Patel Family Trust and J.R. Patel Individual, attributing it to a posting mistake.

2. Addition under Section 43B:
The assessee argued that the addition of Rs. 91,841 under section 43B was incorrect because the payment had been made.

3. Treatment of Suspense Account:
The assessee contended that the suspense account should not be considered income, as it was an adjustment pending in debtors and creditors accounts awaiting details from the bank.

4. Disallowance of Various Expenses:
The assessee contested the disallowance of various expenses, including sales commission (Rs. 1,57,800), sales promotion (Rs. 1,38,742), consultancy fee (Rs. 20,000), repairing expenses (Rs. 78,096), computer software (Rs. 40,500), and travelling expenses (Rs. 59,537). Additionally, the assessee argued against a lump sum addition of Rs. 10,000 from telephone expenses.

5. Grant of Registration to the Firm:
The assessee sought the grant of registration to the firm, asserting that necessary details had been filed before the Income-tax Authorities.

Additional Evidence and Tribunal's Decision:
The assessee's representative, Shri J.P. Shah, submitted a paper book containing 216 pages of additional evidence, explaining that these documents were not produced earlier due to the assessee's financial crisis and relocation from Ahmedabad to Surat. The Departmental Representative opposed the admission of additional evidence, arguing that sufficient opportunities had been provided by the Assessing Officer and CIT(A), which were not availed by the assessee.

The Tribunal considered the rival submissions and noted that the assessee's failure to appear before the Departmental Authorities was due to the termination of its agency by M/s. Transpeck Industries Ltd. and Tarak Sulphur & Chemicals P. Ltd., leading to business closure and financial crisis. The Tribunal observed that the various additions made by the Assessing Officer were of such nature that they would not have been made if the assessee had appeared and explained the return along with the books of account. For instance, the cash credits under section 68 were through cheques, and necessary confirmations were now provided. The addition under section 43B was also incorrect as the payment had been made before the filing date of the return.

In the interest of justice, the Tribunal decided to restore the matter to the file of the Assessing Officer for fresh adjudication, considering the additional evidence provided. The Tribunal emphasized that justice should transcend procedural technicalities, and substantial justice should be preferred over technical considerations.

Conclusion:
The Tribunal allowed the appeal for statistical purposes, setting aside the order of the CIT(A) and remanding the case to the Assessing Officer for fresh adjudication in accordance with the law and after giving due opportunity to the assessee.

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