2011 (10) TMI 659 - AT - Income Tax

Summary

Issues Involved:
1. Addition on account of undisclosed sales.
2. Addition on account of compounding fees for illegal mining.
3. Denial of benefits u/s 80IB of the Income Tax Act.

Summary:

Issue 1: Addition on account of undisclosed sales
The assessee challenged the addition of Rs. 45,46,457/- for undisclosed sales based on assumptions and third-party reports. The ITAT noted that similar cases involving other assessees from the same area had been remanded to the Assessing Officer (AO) for fresh adjudication. The Tribunal decided to restore the issue to the AO for re-adjudication, considering the outcome of the survey conducted by the Forest Department, PWD, and Revenue Department, and the pending appeal before the Divisional Commissioner, Nainital. The AO is to provide a reasonable opportunity of being heard to the assessee.

Issue 2: Addition on account of compounding fees for illegal mining
The assessee contested the addition of Rs. 25,000/- for compounding fees imposed by the District Magistrate, Nainital, which had not been paid or debited in the books. The ITAT, following the same rationale as in Issue 1, restored this issue to the AO for fresh adjudication, providing the assessee an opportunity to be heard.

Issue 3: Denial of benefits u/s 80IB of the Income Tax Act
The assessee argued that the benefits of section 80IB were not claimed in the original return due to inadvertence but should be allowed. The ITAT referenced multiple case laws and circulars emphasizing that the AO should guide the assessee in claiming eligible reliefs and ensure fair assessment. The Tribunal cited precedents where courts held that statutory exemptions should be granted even if not claimed initially. Consequently, the ITAT restored this issue to the AO for reconsideration and decision as per law.

Conclusion:
The appeal was allowed for statistical purposes, with all issues remanded to the AO for fresh adjudication, ensuring the assessee is given a fair opportunity to present their case. The order was pronounced in open court on October 25, 2011.