2019 (5) TMI 1330 - HC - Income Tax

Remand made by the ITAT to the AO - addition of unexplained expenditure based on seized document HELD THAT - It is seen that the ITAT remanded the matter to the AO was after examining the complete books of accounts and vouchers of M/s. Rashiwa International Ltd. asked to be produced by the Assessee. The ITAT was of the view that the exercise of reconciling the amounts appearing in the seized documents with the books of accounts of M/s.Rashiwa International Ltd. had to be actually carried out by the AO. That not having been done, due to failure of the Assessee, the matter required to be remanded to the AO. The Court is, therefore, unable to accept the plea of the learned counsel for the Revenue before us that the ITAT had mechanically remanded the above issue to the AO for redetermination. The Court is not persuaded that the impugned order calls for any interference. No substantial question of law

Summary

Issues:
Appeal against ITAT order for block period 1989-2000; Remand of 5 issues by ITAT; Revenue questions remand of 3 issues; Decision on addition of unexplained expenditure; Reconciliation of outstanding debtors; Failure to produce complete books of accounts and vouchers; Mechanical remand by ITAT.

Analysis:
The High Court judgment pertains to an appeal by the Revenue against an ITAT order for the block period 1989-2000. The ITAT had set aside the assessment order passed by the Assessing Officer (AO) and remanded 5 issues for redetermination. Of these 5 issues, the Revenue questioned the remand in respect of 3 issues. The Court noted that the Revenue could only raise one ground regarding the remand made by the ITAT. This ground concerned the addition of unexplained expenditure based on seized documents amounting to a specific sum. The ITAT remanded the issue to the AO for redetermination, emphasizing the need for the Assessee to produce complete books of accounts and vouchers for reconciliation. The Court highlighted that the ITAT's decision was based on the failure of the Assessee to provide necessary documentation, leading to the remand. The Court rejected the Revenue's argument that the remand was mechanical, emphasizing the importance of reconciling the seized documents with the books of accounts. Ultimately, the Court found no substantial question of law warranting interference and dismissed the appeal.