2012 (9) TMI 225 - AT - Income Tax

Addition made on account for rejection of books u/s 145 - Assessee is not disclosing its correct business turnover AO has given one hour to produce details - Assessee fail to produce complete books of accounts - AO applying survey calculations of the earlier year to compute turnover AO has not been given adequate opportunity to produce necessary papers and documents - CIT (A) delete addition basis on earlier years ITAT order Held that - As there is a considerable distance and it was not practically possible to produce details within the given time which was very short - CIT(A) failed to remand back the matter to the AO for giving opportunity to the assessee to produce necessary books in order to do proper verification. No parity in facts and circumstances in this year and in the earlier years. Case remand back to AO

Summary

Issues Involved:
Assessment of undisclosed sales and addition of Rs.2 crores to income for assessment year 2007-08 based on rejected books of account.

Analysis:
1. The Assessing Officer made an addition of Rs.2 crores to the declared income of the assessee for the assessment year 2007-08 due to unaccounted sales. The assessee challenged this addition on grounds of inadequate opportunity to provide relevant material and evidence, claiming the order was unjust and improper. The basis for the addition was also questioned, stating it lacked support from relevant material and record.

2. The Ld.CIT(A) considered the reasons for rejecting the book results and making the addition, along with the submissions by the assessee. The CIT(A) noted discrepancies in the Assessing Officer's findings, such as the non-production of complete books of account, ledger accounts, and original bills. The CIT(A) concluded that the Assessing Officer's decision was based on the assessment order for the previous year, where a similar addition was made and later deleted on appeal.

3. The department appealed against the deletion of the addition, arguing that the CIT(A) accepted the assessee's submissions without referring them to the Assessing Officer. The department contended that the Assessing Officer had valid reasons for the addition, including defects in accounting methods and non-cooperation from the assessee. The department sought to reverse the CIT(A)'s decision and uphold the Assessing Officer's addition.

4. The ITAT reviewed the case and found that the assessee failed to produce essential documents like cash book and wage register during assessment proceedings. Various defects in the accounting methods were identified, and the assessee could not explain or provide evidence to address these issues. The ITAT noted discrepancies in the assessee's disclosure of business turnover and upheld the addition of Rs.2 crores. The ITAT also highlighted the lack of similar circumstances between the current year and the previous year, where a remand report was obtained before part of the addition was upheld.

5. In light of the discrepancies and lack of similarity with the previous year's case, the ITAT set aside the orders of the authorities below and directed the matter to be reconsidered by the Assessing Officer. The ITAT emphasized the importance of providing the assessee with adequate opportunity to present necessary documents and evidence. Consequently, the department's appeal was accepted for statistical purposes.