2014 (5) TMI 312 - AT - Income Tax

Various additions made Proper facts not appreciated Held that - Assessee contended that the AO made various uncalled for and unjustified additions - assessee derives income from trading of bags etc. and declared the turnover of Rs.1.33 crores on which gross profit of Rs.10,12,007/- and net income of Rs.1,21,650/- was declared - after considering the submissions of both the sides and perusing the material placed also, considering the facts of the case and arguments of both the sides, the matter is required to be remitted back thus, the matter is remitted back to the AO for fresh adjudication AO is directed to allow adequate opportunity of being heard to the assessee - the assessee is directed to produce the books of account before the AO and also furnish necessary evidences/explanation before him Decided in favour of Assessee.

Summary

Issues:
1. Addition on account of cash deposited in savings bank account
2. Addition considering income being addition to capital account
3. Addition of twenty percent of total expenditure claimed in profit and loss account

Analysis:

Issue 1: Addition on account of cash deposited in savings bank account
The appellant contested the addition of Rs.12,23,561 made by the Assessing Officer, arguing that the amount deposited in the bank account was from sale proceeds already reflected in the profit and loss account. The appellant maintained that the deposit was legitimate and related to the business turnover. The Assessing Officer's decision was challenged as unjustified and uncalled for. The appellant sought deletion of this addition. The learned DR supported the Assessing Officer's decision, emphasizing that the appellant failed to produce proper explanations or books of account during the assessment proceedings. The Tribunal, after considering both parties' submissions, set aside the orders of the lower authorities. The matter was remanded to the Assessing Officer for a fresh assessment. The Tribunal directed the appellant to cooperate, produce the books of account, and provide necessary evidence for re-examination.

Issue 2: Addition considering income being addition to capital account
The appellant also disputed the addition of Rs.14,80,000 as income credited to the capital account, explaining that it was a loan received from a bank and not additional income. The Assessing Officer's decision was criticized as lacking proper consideration of the appellant's submissions and documents provided during assessment and appellate proceedings. The Tribunal, after a thorough review of the facts and arguments presented, decided to set aside the previous orders and remand the matter to the Assessing Officer for a fresh assessment. The appellant's appeal was deemed allowed for statistical purposes.

Issue 3: Addition of twenty percent of total expenditure claimed in profit and loss account
Regarding the addition of Rs.170,035, representing twenty percent of the total expenditure claimed in the profit and loss account, the appellant contended that the expenses were incurred for business purposes. The Assessing Officer's decision to disallow this amount was challenged as unjustified. The Tribunal, after careful consideration of the submissions from both sides, decided to set aside the orders of the lower authorities and directed a fresh assessment by the Assessing Officer. The appellant was instructed to provide the necessary documentation and explanations during the reassessment process.

In conclusion, the Tribunal's judgment involved setting aside the decisions of the lower authorities and remanding the matters to the Assessing Officer for fresh assessments in all three issues raised by the appellant. The appellant was directed to cooperate, produce relevant documents, and provide explanations during the reassessment process.