2014 (4) TMI 942 - AT - Income Tax

Confirmation of addition u/s 145(3) and section 68 of the Act - Rejection of books of accounts Held that - The contention of the assessee for setting aside the matter on the file of the AO is just and appropriate because during the search, books of accounts have been seized and there is nothing placed on record to show that such books of accounts have ever been handed over to the assessee and assessee had along been contesting for verification of the accounts from the books of accounts being held with the tax authorities thus, the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee.

Summary

Issues involved:
1. Challenge against additions and rejection of books of accounts under sections 145(3) and 68 of the Income Tax Act.
2. Challenge against levy of interest under section 234B of the Income Tax Act.

Analysis:

Issue 1: Challenge against additions and rejection of books of accounts under sections 145(3) and 68 of the Income Tax Act.
The appeal was directed against the order passed by Ld. CIT(A)-II, New Delhi, challenging the additions of Rs.10,00,000/- and Rs.28,77,283/- under sections 145(3) and 68, respectively. The assessee, engaged in construction business, faced search and seizure operations resulting in the original assessment completed under section 144. The CIT(A) deleted the additions, but the Tribunal restored the matter to the AO for further proceedings. In the subsequent assessment, the AO rejected the book results under section 145(3) and made additional additions. The assessee contended that the additions were ad hoc and not in line with ITAT directions, emphasizing the unavailability of books of accounts. The CIT(A) upheld the AO's order, leading to the appeal. The ITAT, after considering the submissions and records, found it just and appropriate to set aside the matter and direct the AO to re-decide the case after giving the assessee an opportunity to present the books of accounts held by tax authorities. Consequently, the appeal was accepted for statistical purposes.

Issue 2: Challenge against levy of interest under section 234B of the Income Tax Act.
The consequential charging of interest under section 234B was set aside along with the main appeal, as the ITAT decided to restore the case to the AO for fresh consideration. This decision was made in the interest of justice and fair play, ensuring that the assessee has the opportunity to present the books of accounts held by the tax authorities for a proper assessment. The ITAT's direction to re-decide the case afresh after providing the assessee with a chance to verify the accounts from the seized books of accounts led to the acceptance of the appeal for statistical purposes.

In conclusion, the ITAT's judgment set aside the previous orders, directing a fresh assessment by the AO with the involvement of the books of accounts held by the tax authorities. The decision aimed at ensuring fairness and justice in the assessment process, ultimately accepting the appeal for statistical purposes and nullifying the levy of interest under section 234B.