2013 (2) TMI 528 - AT - Income Tax

Addition on account of net profit - assessing officer made an addition towards net profit on the ground that there was lower rate of net profit compared to the preceding year Held that - This addition is made on ad hoc basis AO was directed to complete the assessment after examining the books of accounts of the assessee and the disallowance if any to be made, that is to be specific and not on ad hoc basis. Disallowance of depreciation in computers on the addition - In the interest of justice, AO was directed to give an opportunity to the assessee to prove its case by producing valid bills and usage of said computers in its business AO was directed to verify all purchase bills and using of computers in assessee s business and decide the issue in accordance with law. Addition of Rs.221.10 crores being fixed deposits made by the assessee - According to the assessee 237.04 crores received from M/s. Cargill International Trading Pvt. Limited, Singapore through State Bank of India, Overseas Branch and he has not been given proper opportunity to explain the same Held that - Request of the assessee was acceded remitted this issue back to the file of the assessing officer for fresh consideration to decide the same in accordance with law after affording an opportunity of being heard to the assessee. Addition on account of share capital - There was an addition of Rs.1,04,70,000/- towards share Capital - share capital said to have been received from some parties Held that - Issue was set aside to the file of AO with a direction to to the assessee prove the identity, creditworthiness and genuineness of the transaction by filing necessary information from the investors to the satisfaction of the assessing officer. Enhancement of the amount - on account of difference between the receipt of funds from Cargill, Singapore and the deposits made in the SBI , Overseas Branch - Since this issue has been set aside in related issue raised in this appeal to the file of the assessing officer for fresh consideration in accordance with law, this issue also should go back to the file of the assessing officer for fresh consideration in accordance with law - appeal filed by the assessee is treated as allowed for statistical purposes.

Issues:
1. Confirmation of additions/disallowances by CIT (A)
2. Passing of ex parte order by assessing officer u/s 144
3. Adequate opportunity not provided to assessee by assessing officer and CIT (A)
4. Addition on account of share capital
5. Disallowance of depreciation on computers
6. Addition of fixed deposits made by the assessee
7. Addition on account of net profit
8. Enhancement of amount on account of difference between funds receipt and deposits

Analysis:

Confirmation of additions/disallowances by CIT (A):
The appellant challenged the order of CIT (A) confirming the additions/disallowances made by the assessing officer. The Tribunal dismissed the first ground as general in nature. The subsequent grounds related to the passing of an ex parte order by the assessing officer and the adequacy of opportunities provided to the assessee were found to be infructuous due to other findings in the appeal.

Passing of ex parte order by assessing officer u/s 144:
The Tribunal dismissed the second ground concerning the ex parte order passed by the assessing officer under section 144 of the Income-tax Act, stating that it did not emanate from the order of CIT (A).

Adequate opportunity not provided to assessee by assessing officer and CIT (A):
The third and fourth grounds raised by the appellant regarding the lack of adequate opportunity before the assessing officer and CIT (A) were deemed infructuous in light of other issues being set aside for fresh consideration.

Addition on account of share capital:
The Tribunal addressed the addition of Rs.1,04,70,000 towards share capital received from various parties. The CIT (A) confirmed the addition citing insufficient evidence. The Tribunal allowed the appellant to provide necessary information to prove the identity, creditworthiness, and genuineness of the transactions before the assessing officer.

Disallowance of depreciation on computers:
Regarding the disallowance of depreciation on computers, the Tribunal directed the assessing officer to provide the appellant with an opportunity to substantiate the claim by producing valid bills and evidence of computer usage for business purposes.

Addition of fixed deposits made by the assessee:
The Tribunal remitted the issue of Rs.221.10 crores fixed deposits back to the assessing officer for fresh consideration, emphasizing the need for the assessee to be given a proper opportunity to explain the transaction.

Addition on account of net profit:
The Tribunal found the addition towards net profit made on an ad hoc basis. It directed the assessing officer to examine the books of accounts and make specific disallowances, not on an ad hoc basis, for a fair assessment.

Enhancement of amount on account of difference between funds receipt and deposits:
The Tribunal set aside the issue of enhancement of Rs.14,94,82,890 for fresh consideration by the assessing officer in accordance with the law, emphasizing the cooperation required from the assessee in providing necessary evidence.

In conclusion, the appeal filed by the assessee was treated as allowed for statistical purposes, with various issues remitted back to the assessing officer for fresh consideration.

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