2018 (9) TMI 74 - HC - Income Tax

Validity of best judgment assessment order under Section 144 - Held that - Given the nature of disputes raised Tribunal was justified in remanding the matter to the Assessing Officer on all questions which were somewhat inter connected. This was a case of best judgment-assessment which had lead to a detailed inquiry by the CIT (Appeals). Issues raised and to be decided, were pending on remand before the Assessing Officer in proceedings for other years. As appellant-assessee submits that they are not per se objecting to remand but apprehend that the Assessing Officer would issue notice to all parties with whom they had business transactions. This, it was submitted that would cause harassment and inconvenience. This would adversely impact business of the appellant/assessee. Assessing Officer has to examine factual aspects. We hope and trust that the Assessing Officer will duly take into consideration apprehensions and fears of the appellant/assessee and hold enquiry as required and necessary, as per the procedure prescribed by law.

Summary

Issues Involved:
1. Best judgment assessment under Section 144 of the Income Tax Act, 1961 for the assessment year 2011-12.
2. Additions made on account of low net profit ratio and difference in receipts as declared and shown in Form No.26AS.
3. Upholding of additions by the Commissioner of Income Tax (Appeals) and subsequent proceedings.
4. Restoration of the issue of 'receipt' to the Assessing Officer by the Tribunal.
5. Reexamination of ad hoc deduction issue by the Assessing Officer.
6. Addition made under Section 40(a)(ia) of the Act and related arguments.
7. Compliance with assessment proceedings and alleged non-compliance by the appellant/assessee.
8. Justification of remanding the matter to the Assessing Officer by the Tribunal.
9. Apprehensions of the appellant/assessee regarding potential harassment due to notice issuance.
10. Trust in the Assessing Officer to conduct a thorough and fair enquiry.

Analysis:
1. The case involved a best judgment assessment under Section 144 of the Income Tax Act, 1961 for the assessment year 2011-12. The appellant, Cheil India Private Limited, contested the additions made by the Assessing Officer based on low net profit ratio and differences in declared receipts. The Commissioner of Income Tax (Appeals) upheld some additions but directed further examination. The Tribunal referred to previous orders and remanded the issue of 'receipt' to the Assessing Officer for detailed verification, emphasizing the need for factual and legal scrutiny.

2. The Tribunal highlighted the necessity to reexamine the ad hoc deduction issue thoroughly, as no notices had been issued to relevant vendors. The matter required exhaustive assessment by the Assessing Officer after obtaining essential information. Additionally, the Tribunal addressed the addition made under Section 40(a)(ia) of the Act, indicating the need for fresh determination and verification, providing the appellant/assessee with a fair opportunity to present their case.

3. The compliance with assessment proceedings was a crucial aspect, with conflicting claims of non-compliance between the appellant/assessee and the Assessing Officer. The Tribunal justified remanding the matter to the Assessing Officer for a comprehensive review, considering the interconnected nature of the raised issues and pending disputes from previous years.

4. Despite the appellant/assessee's apprehensions of potential harassment due to notice issuance to all parties involved in business transactions, the Court expressed trust in the Assessing Officer to conduct a fair enquiry, taking into account the concerns raised by the appellant/assessee. Ultimately, the Court dismissed the appeals, maintaining the remand of issues to the Assessing Officer for fresh decision and adjudication, with no order as to costs.