2021 (10) TMI 1003 - AT - Income Tax

Unexplained trade receivable - CIT-A deleted the addition for want of proper enquiry by the AO - HELD THAT - When no evidence has been given by the assessee company during the assessment proceedings and no remand report has been called, and accepting the contentions of the assessee as a gospel truth without conducting any enquiry is not sustainable in the eyes of law. Findings returned by the ld. CIT(A) are cryptic and without any reasons, hence set aside. So, this issue is remitted back to the ld. CIT(A) to decide afresh after examining all the evidences brought on record by the assessee during the first appellate proceedings by passing a reasoned order. Consequently, grounds no. 1 2 are determined in favour of the Revenue for statistical purposes. Disallowance of depreciation - AO disallowed the depreciation on the ground that assets were not put to use during the year - HELD THAT - We are of the considered view that when the financials of the assessee company are audited one u/s.44AB of the Act which has not been disputed by the AO and date of purchase of the assets has been brought on record which have not been purchased during the year under assessment as is evident from the table extracted in preceding para no. 10, we find no illegality or infirmity in the findings returned by the dl. CIT(A). However, deletion of addition is subject to the verification by the AO as to the date of purchase of the assets as claimed by the assessee. - Decided against Revenue.

Summary

Issues:
1. Deletion of addition of ?2,24,00,000 on account of unexplained trade receivable without proper enquiry by the Assessing Officer.
2. Deletion of addition of ?2,24,00,000 on account of unexplained trade receivable without recording reasons for reaching the conclusion.
3. Deletion of disallowance of depreciation of ?28,76,386 without considering facts recorded by the AO.
4. Deletion of addition of ?2,24,00,000 and disallowance of depreciation of ?28,76,386 by accepting self-serving claims without fulfilling conditions under Rule 46A.

Analysis:

1. Issue 1 & 2:
The Appellant, DCIT, sought to set aside the order passed by the Commissioner of Income-tax (Appeals) regarding the addition of ?2,24,00,000 on account of unexplained trade receivable. The AO made the addition due to lack of supporting evidence from the assessee. The CIT(A) deleted the addition without providing reasons for the decision. The Tribunal found the CIT(A)'s decision unsustainable as no evidence was presented by the assessee during assessment, and no remand report was requested. The issue was remitted back to the CIT(A) for a fresh decision based on all evidence presented during the first appellate proceedings.

2. Issue 3 & 4:
Regarding the deletion of the disallowance of depreciation amounting to ?28,76,386, the assessee claimed no new assets were added during the assessment year. The AO disallowed depreciation stating assets were not put to use. The CIT(A) deleted the addition based on the assets' purchase dates and turnover. The Tribunal upheld the CIT(A)'s decision, noting that the financials were audited and the assets were not purchased during the assessment year. However, the deletion of the addition was subject to verification by the AO regarding the purchase dates of the assets.

In conclusion, the appeal filed by the Revenue was partly allowed for statistical purposes, with the Tribunal providing detailed analysis and directions for each issue raised in the appeal.