2019 (5) TMI 9 - AT - Income Tax

Defective return - N.P. determination - assessee declared presumptive income less than 8% of gross receipt declared in the return of income - as argued proceedings u/s. 143(3) of the Act is void since the return was declared defective - case was selected for scrutiny by CASS - HELD THAT - Assessee has appointed a new AR in First Appeal and no effort has been made to either produce the AR who filed the return nor any affidavit or even a confirmation of the previous AR has been filed to corroborate the error that was apparently committed by him. However, before the Ld. CIT(A) a technical ground was raised that the proceedings u/s. 143(3) of the Act is void since the return was declared defective - no such plea was taken during the assessment proceedings in which the assessee not only participated but even his statement was recorded. It is also to be noted that the case was selected for scrutiny by CASS which is computer based selection and not manual selection of the cases for scrutiny. So, the plea of the AR that the return was defective does not have any basis. In the absence of any third party evidence in the form of confirmation or admission by the original counsel who filed the return with regard to the error attributed to him, the affidavit of the assessee filed at the time of assessment whose unsigned and unverified extract has been filed before the CIT(A), has very little evidentiary value as it does not corroborate the version of the assessee. CIT(A) has rightly held that no sufficient evidence was brought on record to interfere the findings of the AO in the assessment order, which does not need any interference on our part. - Decided against assessee.

Summary

Issues:
1. Assessment of net profit based on turnover discrepancy.
2. Validity of proceedings under section 143(3) of the Income Tax Act.
3. Adequacy of evidence to support the assessee's claim.

Analysis:

Issue 1: Assessment of net profit based on turnover discrepancy
The appeal was filed against the Order of the Ld. CIT(A) pertaining to the assessment year 2013-14. The assessee declared a net profit based on a gross turnover of ?9,65,000, calculated at 20%. However, a clerical mistake led to the turnover being incorrectly stated as ?96,50,000. The Assessing Officer (AO) assessed the income at ?7,72,000, being 8% of the gross receipt of ?96,50,000. The assessee contended that this assessment was not justified, as the turnover was overstated due to a clerical error. The Tribunal upheld the AO's assessment, stating that no sufficient evidence was presented to support the assessee's claim, and therefore, the appeal was dismissed.

Issue 2: Validity of proceedings under section 143(3) of the Income Tax Act
During the hearing, a technical ground was raised that the proceedings under section 143(3) were void due to a defective return. However, it was observed that this plea was not raised during the assessment proceedings, where the assessee actively participated. The case was selected for scrutiny through a computer-based system (CASS), and the argument of a defective return lacked a basis. The Tribunal noted that no third-party evidence or confirmation from the original counsel who filed the return was presented to support the error attributed to him. As a result, the Tribunal upheld the Ld. CIT(A)'s decision, ruling that there was insufficient evidence to challenge the AO's findings.

Issue 3: Adequacy of evidence to support the assessee's claim
The Tribunal emphasized the lack of effort by the assessee to produce the previous Authorized Representative (AR) who filed the return or any corroborating evidence to support the claimed clerical error. The affidavit filed by the assessee had limited evidentiary value as it was unsigned and unverified. The Tribunal concluded that the evidence presented was insufficient to overturn the AO's assessment. Consequently, the Tribunal upheld the Ld. CIT(A)'s decision and dismissed the assessee's appeal.

In conclusion, the Tribunal upheld the assessment made by the AO, emphasizing the importance of presenting sufficient evidence to support claims during tax proceedings.