2022 (3) TMI 1375 - AT - Income Tax

NP estimation - re-computation of net profit - assessee could not furnish the books of accounts and supporting documents as the factory of the assessee at that time was sealed - AO in the absence of books of account and documents and required verification etc. re-computed the net profits of the assessee against nil income by disallowing the deduction claimed by the assessee u/s 80IC - HELD THAT - DR as submitted that the Ld. CIT(A) has given substantial relief to the assessee on assumptions and presumptions of certain facts without appreciating the evidences on record. The Ld. DRs, therefore, have submitted that the matter may be restored to the file of the Assessing Officer for assessment afresh. It has been further submitted that since the facts in all the captioned appeals are identical, therefore, the matter in relation to all the appeal be restored to Assessing Officer. AR has submitted that even the assessee is not satisfied with the order of the ld. CIT(A). He has also requested that the matter may be restored to the file of the Assessing Officer for de novo assessment. In view of the submissions of the Ld. representatives of both the parties, the impugned orders of the CIT(A) are set aside in relation to the captioned appeals and matter is restored to the file of the Assessing Officer for de novo assessment in each case. Appeals of the assessee are treated as allowed for statistical purposes.

Summary

Issues:
- Re-computation of net profit by CIT(A)
- Allowance of expenses by CIT(A)
- Re-computation of income by CIT(A)
- Acceptance of Cash Book as a fresh submission
- Violation of Rule 46A of the Income Tax Rules
- Restoration of cases to Assessing Officer for de novo assessment

Re-computation of net profit by CIT(A):
The Revenue filed appeals against the orders of the National Faceless Appeal Centre under the Income Tax Act. The Revenue contended that the CIT(A) erred in re-computing the net profit of the assessee at a lower amount than initially declared. The Revenue argued that the CIT(A) accepted expenses without proper proof of business activities. The CIT(A) re-computed the income at a significantly lower figure, leading to disputes regarding the methodology used. The Revenue also objected to the acceptance of a Cash Book as a fresh submission without providing the Assessing Officer an opportunity to review it, alleging a violation of Rule 46A of the Income Tax Rules.

Restoration of cases for de novo assessment:
During the assessment proceedings, the assessee could not furnish books of accounts and supporting documents as the factory was sealed. Subsequently, the Assessing Officer re-computed the net profits of the assessee, disallowing deductions claimed under the Act. The appellate proceedings saw the assessee submitting necessary documents, prompting the CIT(A) to seek a remand report from the Assessing Officer. However, the Assessing Officer's report lacked detail due to time constraints. The CIT(A) expressed dissatisfaction with the follow-up work and lack of progress by the Assessing Officer. The CIT(A) then decided the issues and computed the net profit at a different amount. Both parties, the Revenue and the assessee, expressed dissatisfaction with the CIT(A)'s order, leading to the restoration of the cases to the Assessing Officer for de novo assessment in each instance.

Conclusion:
The appellate tribunal set aside the CIT(A)'s orders and directed the restoration of the cases to the Assessing Officer for fresh assessment. The decision was made due to the lack of examination of books of account and relevant documents by both the Assessing Officer and the CIT(A). The appeals of the assessees were treated as allowed for statistical purposes.