2020 (1) TMI 863 - AT - Income Tax

Protective assessment in the hands of the assessee - Bogus Purchases - statement recorded at the back of assessee - HELD THAT - Addition on protective basis was made on the basis of statement of Shri Aditya Chirman, Director of M/s. Safeco Projects Pvt. Ltd. A.O. did not get any information as to in whose case substantive addition have been made. This fact is also not clarified by the D.R. during the course of arguments. The other addition of ₹ 22,28,600/- is made on the basis of statement of some entry provider of bogus bills. Even his name is not mentioned in the assessment order. It, therefore, appears that both these statements were used against the assessee for making the additions. It is not clear from the Order whether such statements were provided to assessee for explanation or any right of cross-examination have been given to assessee to cross-examine these witnesses. In this view of the matter both the parties rightly suggested that the matter may be directed to the file of A.O. for re-consideration of the issues. In this view of the matter, we set aside the Orders of the authorities below and restore both the additions to the file of A.O. with a direction to re-decide the same by giving reasonable, sufficient opportunity of being heard to the assessee.

Summary

Issues:
1. Addition of &8377; 4,39,90,559/- upheld by CIT(A) without considering submissions.
2. Disallowance of &8377; 22,28,600/- for alleged bogus purchases.
3. Addition in returned income not linked to incriminating material post search.
4. Assessment u/s.153A/143(3) upheld without providing reasonable opportunity of being heard.

Analysis:

Issue 1:
The Assessee challenged the addition of &8377; 4,39,90,559/- upheld by CIT(A) without considering submissions. The A.O. made the addition on a protective basis due to information received regarding bogus expenses. The Tribunal found that the statements used against the Assessee were not provided for explanation or cross-examination. Thus, the matter was remanded to the A.O. for re-consideration, directing to provide all statements and incriminating material to the Assessee for explanation and cross-examination.

Issue 2:
The disallowance of &8377; 22,28,600/- for alleged bogus purchases was also challenged. The A.O. made this addition based on information received about bogus bills. However, the Tribunal noted that the name of the entry provider was not mentioned in the assessment order, and the Assessee was not given a chance to cross-examine. Therefore, this issue was also remanded to the A.O. for re-decision after providing the Assessee with a reasonable opportunity to be heard.

Issue 3:
The Assessee contended that the addition in the returned income was not linked to any incriminating material found post search. The Tribunal observed that even though no incriminating material was found during the search, the A.O. was justified in passing the order under section 153A r.w.s. 143(3) as the return for the assessment year was filed after the search date. Thus, this ground of appeal was dismissed.

Issue 4:
The Assessee raised concerns about the assessment u/s.153A/143(3) being upheld without providing a reasonable opportunity to be heard. The Tribunal agreed that the matter required re-consideration at the A.O. level due to lack of clarity on in whose case substantive additions were made. Therefore, the Tribunal directed the A.O. to re-decide the issues after providing a sufficient opportunity of being heard to the Assessee.

In conclusion, the Tribunal allowed the Assessee's appeal for statistical purposes, remanding all the issues back to the A.O. for re-consideration with proper procedures and opportunities for the Assessee to present their case effectively.